Chinese solar modules penetrating the German market

by Rolf Hug and Martin Schachinger

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. Solar power plant with Yingli solar modules on the roof of the Kaiserslautern soccer stadium.
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.
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. Solar power systems with Chinese modules in Ehrenkirchen.
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.
“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.
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