Chinese solar modules penetrating the German market
by
Rolf Hug and Martin Schachinger
10/11/2006
During the supply bottleneck of the years 2004 and 2005, large
and small German photovoltaic companies turned to China. Entrepreneur
trips were arranged to show German business people Chinese production
sites. Very often the conditions in the factories were far from
trustworthy, technical documentation or IEC Certification were
unheard of, so the comments by participants of such journeys. In
spite of this, the enthusiasm of certain importers was not dampened
and their clients, out of pure desperation, were willing to accept
qualitatively dubious modules. The prices for Chinese solar modules
increased rapidly from below 4 US dollars per watt peak in 2004
in the direction of 4,40 – 4,45 US dollars/Wp in November/December
2005.
The high demand for modules allowed Chinese manufacturers
to pay almost any price for raw materials, such as wafers, cells,
solar glass or sheets. European producers were pressurised severely
by these developments and had to acquire the remaining raw materials
at high prices or even had to resort to the spot market. Price
increases on the side of German companies soon had to follow.
All the more often they were not only justified with the shortage
of
solar cells but also with the generally increased purchasing costs.
German solar parks with modules “Made in China”
Solar power plant with Yingli solar modules on
the roof of the Kaiserslautern soccer stadium. Source: Solar-Energiedach
GmbH.
Products by Yingli, Suntech, Trina and Co. on the German market
In 2006 the situation is slightly different than in previous years:
Chinese producers have become larger and significantly more professional.
Many module types have in the meantime been certified which can be
traced back to the commitment of German and European importers and
distributors. Many of the very large companies have intensively sought
contact with China from the beginning of 2005 and ensured that they
received their piece of the cake through large-scale supply contracts.
That Chinese modules are of interest to German system integrators
is proven by current co-operation and supply agreements. For example,
Maaß Regenerative Energien GmbH, a subsidiary of Reinecke +
Pohl Sun Energy AG, entered into a supply agreement with Yingli in
June 2006 for over 162 MW up until 2010. Phönix Sonnenstrom
AG wants to purchase 6 MWp from Yingli in the current year and 143
MW by 2010.
Suntech ensures silicium supplies for further expansion
Also the expansion-oriented company Suntech Power Holdings Co. Ltd.,
that will penetrate the Japanese market with the planned purchase of
the Japanese module manufacturer MSK, is represented with its modules
in Germany. Suntech, according to its own statements one of the leading
producers of solar cells and modules worldwide, reported in June
2006 that it had entered into an agreement with the US silicon manufacturer
MEMC Electronic Materials for the supply of solar wafers for a period
of 10 years and a volume of five to six billion US dollars. Suntech
products are part of the portfolio of IBC Solar AG and SolarWorld
AG. Modules from Changzhou Trina Solar Energy Co. Ltd (Trina-Solar)
are distributed by Conergy AG/AET as well as Phönix Sonnenstrom
AG. Trina Solar, according to its own statements, currently produces
ingots, wafers and modules with a capacity of 30 MWp each per annum.
By 2010 an expansion of the module capacities to 100 MWp is planned.
PV production in China. Source: Changzhou Trina Solar Energy Co., Ltd
The appearance of European system integrators with their financial
power caused a kind of gold rush among Chinese producers and trading
companies.
Capacities were and are expanded and the production output is increased
at every price. The largest portion of production disappeared into supply
contracts, the rest was sold to those offering the most. This led to
some confusion in 2005, because smaller importers had to fear continuously
that
the volumes promised to them would not be delivered. In the first half
of 2006 the German market cooled off significantly. True brand products
are not quite as scarce anymore since the demand no longer grows more
rapidly than supply. Southern Europe as a photovoltaic market is up and
coming,
but, for example, Spanish companies have proven to be even more brand-conscious
than trading companies and fitters in Germany. On the grounds of bad
experiences, many German fitters turned away from Chinese imports, the
reason being
less the lack of quality of the products than the unsincere business
ethics of some newcomers in the sector. At one stage, Martin Schachinger
from
pvXchange remembers, every “carpet dealer” in Germany thought
that big money could be made in the photovoltaic business.
Performance guarantees and certificates
According to research conducted by pvXchange the prices of large German
and European system integrators for Chinese modules are approximately
3-5 % over the prices of direct imports. Qualitatively the modules from
China are of a good standard and they are cost-effective. It is only
the documentation that is at times unsatisfactory. The higher price of
German distributors may be justified with long-term security because
generally certificates in terms of IEC 61215 and TÜV Protection
Class II are currently being prepared or are already available. The well-known
distributors generally offer a performance guarantee of 90 % of the minimum
performance for 10 to 12 years and of 80 % for up to 25 years. Schüco
International KG (Solar Technology Section), for example, sells the Yingli
module "YL 160" under the name of "S 158-SP/4" and
emphasises that the product conforms with all international quality standards.
System suitability and qualification approval are given in terms of DIN
EN 61215 (IEC 61215), as well as electrical classification “Protection
Class II". Schüco issues a product guarantee for two years,
a performance guarantee of 90 % for 10 years and a performance guarantee
of 80 % for 25 years.
Fuzzy Market, origin of modules not always easy to establish
Contrary to direct imports as well as modules from less known Chinese
manufacturers or even no-name products, large German companies – not
only with their good reputation – stand for long-term security
of returns and investments. How the return is impacted through higher
prices for identical modules and decreasing feed-in tariffs, or how the
aspect of trustworthy guarantees should be rated, must be decided by
investors in each individual case. According to pvXchange dozens of unknown
modules appear on the German market and it is difficult to determine
whether these are actually new products from own manufacturing companies
or whether these are new labelled modules of well-known manufacturers.
It becomes even more difficult in the case of Chinese companies and/or
wholesalers who generally refer to themselves in Europe as “leading
Chinese manufacturer”. Martin Schachinger from pvXchange gives
the advice to scrutinise certificates and performance guarantees of direct
imports. He cannot provide exact information on the market share of Chinese
modules, but estimates that one out of every ten modules is of Chinese
origin.
Solar power systems with Chinese modules in Rheinfelden and Ehrenkirchen.
Photos: RV Energietechnik KG
Even among Chinese modules the big price battle has commenced:
almost every day containers of modules are being offered, even from more
well-known brands, pvXchange reports. For certified products, prices
would again drop to below 4,20 $/Wp, for non-certified modules to 4 $.
Certain
German distributors have stated that they are withdrawing from this segment
and are planning to promote primarily European brand products again.
Large system integrators are attempting to counteract the underpricing
through
their own labels and the implementation of their demanding quality directives
against their Chinese partners and to establish a price level just below
the well-known brands from Japan and Europe. Whether this strategy will
be successful and whether the end users will accept such “noble” modules
remains to be seen.
Dubious labels and certificates of small companies
Strange marginal appearances were discovered by Schachinger, when he
noticed German and European companies, that are mostly active in the
PV sector for less than two years, want to do the same as the big, established
companies – and develop their own label. They conveniently forget
that existing IEC and Protection Class II Certificates of the manufacturer
can become invalid through such actions and that even guarantees could
lapse. To avoid this, offers made under an own name would in every case
have to be authorised and already tested modules would have to be re-certified.
This is a costly exercise and thus in the end only non-certified products
are traded. To admit this on their self-compiled data sheet is difficult
for some of the companies. Schachinger expects that many of these “no-names” will
disappear from the market by no later than 2007.
“Made in China” certificates as a challenge: the model label
on the right was obtained from an engineering company that conducts EMV
tests on modules in China and issues the CE marking. The directives for
these tests are taken from the IEC Standard. On the model label of the
ST module the use of the IEC abbreviation suggests that a complete IEC
61215 certificate was obtained. In view of the high costs of certification,
such a method is approx. 20 times more cost-effective: a cheap, albeit
illegal, method to create certified products. Photo: pvXchange.
