Domestic manufacturers expand into new markets

As the European and US solar markets present more and more difficulties to Chinese photovoltaic companies, such businesses are changing their plans in an attempt at expanding into new markets.

Hanergy Holdings Group Co Ltd has opened its second factory within a month and the seventh in its production operations as the maker of thin films pursues its expansionary ambitions while the market for its products undergoes large changes.

The manufacturer is building production lines to make 1,000-megawatt solar cells in Hainan province.

Hanergy plans to build nine plants in China, operations that are to have a production capacity of three gigawatts by the end of 2012.

The installation of solar equipment is proceeding at a faster pace in the country. Last year, China adopted a feed-in-tariff for solar energy, which gives solar developers a payment for every kilowatt-hour of electricity they put into the country's grid.

The government is also subsidizing grid companies in an effort to encourage them to bring more renewable energy into the country's electricity system.

Yingli Solar said it plans to sell from 2,500 mW to 2,600 mW of solar panels in 2012, including 900 mW in China. If the goal is met, China will become the company's largest market for the first time.

Makers of solar panels are also building solar farms, installations where solar energy is converted into electricity on a large scale. Since panel prices took a plunge recently, running such operations has become more profitable than manufacturing the equipment.

Suntech Power Holdings Co Ltd plans to develop 100 mW of solar projects in Hainan province. Other companies that plan to build solar farms in China include Yingli, Canadian Solar Inc, LDK Solar Co Ltd and JA Solar Holdings Co Ltd.

Companies are expanding into places where the solar industry is just beginning to gain a foothold, such as Japan, where the government this summer will begin to offer feed-in-tariffs designed to boost industrial use of renewable energy.

Governments in Europe, the biggest market for solar power, are meanwhile reducing the subsidies they had offered to boost demand for the energy.

The United States, where Chinese module makers commanded almost half of the market in 2011, may see its demand for the technology fall in the near future, according to GTM Research, a US energy research firm.

Not all companies in the industry have been left unscathed by the changes. Several are reducing their workforces to control costs. LDK Solar let go employees at its wafer plant in April.

ET Solar closed its wafer plant last month, the first plant shut down in China this year.

The US market could be especially hard on Chinese photovoltaic makers, which will possibly see the tariffs on exports to that country increase in May.

In March, the Obama administration imposed tariffs of up to 4.73 percent on products imported from Chinese manufacturers of solar panel cells.