Solar firms cut operations as China floods market

Japan's major materials suppliers are scaling back solar pannel operations amid excess supply and brutal price competition from Chinese manufacturers.

Solar power generation capacity surged 40% worldwide from the end of 2011 to 100 million kW at the end of 2012, according to European Photo-voltaic Industry Association.

The market is expected to continue expanding at a rapid clip. But supply capacity for related materials is growing even faster, because Chinese firms are boosting output. Their effort have pushed down prices and causing shock waves across the Japanese solar industry.

JX Nippon Mining & Metals Corp., Toho Titanium Co. and JNC Corp. will dissolve a solar silicon joint venture, sustaining a combined ¥13 billion in extraordinary losses.

The trio had planned to raise output capacity for solar panel silicon around fiscal 2012 or fiscal 2013 from the current 3,000 metric tons annually. But the influx of Chinese products from around 2010 resulted in a massive glut in supply, and the price of silicon has plunged more than 90% from 2008 to roughly $15 per kilogram. With no prospect of earnings improving, the partners pulled out of the business.

Tokuyama Corp. will slash its domestic output capacity for silicon to one-third of current levels, to between 3,000 tons and 4,000 tons a year from fiscal 2013. It is expected to sustain a net loss of ¥41 billion for the current fiscal year through March 31 due to struggling operations in solar panel silicon. The firm intends to shift focus to silicon for use in semiconductors.

Among glass manufacturers, Asahi Glass Co. closed a solar panel glass plant in the U.S. state of Tennessee last November, reducing the group's output capacity for cover glass used in solar panels by more than 30%.

And at Nippon Sheet Glass Co., the April-December period sales of solar panel glass dropped 35% on the year. While cutting output at factories in Europe and the U.S., the firm is focusing on cost-competitive operations in Vietnam.

Toyo Tanso Co. has reduced output by 30-40% in high performance graphite, a solar panel material for which it controls nearly 30% of the global market.

Innovation focus

Major Japanese solar cell manufacturers are concentrating resources in high-efficiency cells because of the supply glut.

Panasonic Corp. says it has realized the world's highest efficiency in converting solar energy into electricity, at 24.7%. This is up 0.8 percentage point from its own old record and surpassing the world record set by U.S. firm SunPower Corp.

The Japanese electronics giant revealed the achievement at the International Photo-boltaic Power Generation Expo, which kicked off in Tokyo Feb, 27. Although photography of the technology was banned at Panasonic's exhibit, many foreigners tried to take sneak shots, a company official said.

Panasonic made the surface of the cells less light absorbent, meaning more solar energy can be used for power generation...

Resource: The Nikkei Weekly