Summary:

China’s clean energy strategy is in “disarray” due to an oversupply of solar panels and a price war. That means there’s massive consolidation coming.

Suntech at Bird's Nest

If you thought solar panel manufacturers in the U.S. were having a tough time, just look at Chinese solar makers. According to an article in the New York Times, China’s clean power strategy, despite huge demand for solar panels and wind turbines is in “disarray” due to a massive oversupply and price wars.

The result, says the NYT, is a looming “financial disaster,” for the solar manufacturers, for the Chinese banks that financed $18 billion in low-interest loans for the companies, and for the local governments that provided loan guarantees to the companies and also sold them land at cheap prices. The article says:

China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008.

Clearly a massive consolidation is coming, and many of the weaker Chinese players won’t survive. The bubble that is China’s solar production could soon burst.

That’s all part of the cycle of a commodity business. Solar panels are now a commodity. However, because of the Chinese government’s aggressive subsidies the bubble was inflated even more, as electricity from solar panels is still generally more expensive than electricity generated from coal.

Chinese solar companies also point to the solar trade dispute that tacked on a tariff as one of the problems. However, as Ucilia Wang reported for us on Thursday, concerns about the dispute seem overblown.

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