Chinese oversupply sees cost of solar panels drop worldwide

Right now we’re seeing a glut of solar panels in the market largely due to an increase in Chinese manufacturers being able to produce panels a lot faster and cheaper than their more established European counterparts thanks to a flood of local Chinese investment in the industry.

According to a report in the New York Times last month, China’s solar manufactures are actually losing money on their solar panels; up to $1 for every $3 worth of sales is lost. This is seeing many scale back production and will also see many of the smaller players shut their doors. Li Junfeng, the director general for energy and climate policy at the National Development and Reform Commission in China says he’d like to see loans cut off from weaker solar companies and says over 60% of suppliers need to go: “If one-third of them survive, that’s good, and two-thirds of them die, but we don’t know how that happens”.

The end result would mean thousands of job losses across the country but may be the only way a more sustainable industry survives in the future. One of the best known Chinese solar panel brands, Suntech is temporarily shutting down 25% of its manufacturing capacity, with around 1,500 workers either moving to other parts of the business or being given redundancy payments.

Much like how Australian miners are experiencing weaker demand for their iron ore and therefore a much lower price, the reverse is happening to China in regard to exporting solar panels. However, the surplus amount of panels doesn’t mean the take up of solar energy is slowing any time soon. In fact it’s been steadily growing in Australia over the last two to three years.

The price war which has erupted as a result of the excess supply is great news for Australians thinking about installing solar panels. It’s never been cheaper to get hooked up to this cleaner, cheaper renewable energy source. Couple this with taking advantage of some great government rebates, your investment can be paid off in a number of years, meaning you can effectively enjoy free electricity thereafter.