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World’s Top Solar Panel Producer Opens New Mega Factory

Renewables stocks have outperformed the broader energy markets in the last couple of months and, while Covid-19 has disrupted supply chains and caused a temporary dip in solar installations, the mid-and-long-term outlook for the sector as a whole remains bright.

This is especially true in China, where Jinko Solar, the world’s largest solar panel manufacturer has just started operations at the first phase of a $1.6 billion factory in the Zhejiang province. The total capacity of this new factory is estimated at 16GW of panels per year, effectively doubling the total production capacity of the solar giant.

With the completion of phase 1 today, the company adds some 4.8 gigawatts of capacity, which is about 4 times the amount of power that was needed to make Marty McFly and Doc Brown’s DeLorean travel through time. 

Despite investments in new capacity, profit margins are under pressure in the Solar PV market as manufacturers have had to slash prices of wafers, cells and panels time after time to stay competitive as both domestic and overseas demand has dropped as a direct result of the coronavirus.

Bloomberg research shows that costs for the abovementioned components such as wafers, cells and complete panels have fallen by as much as 20 percent, mentioning that prices of these manufactured products could be set to fall further in recent months as new mega-factories such as Jinko Solar’s latest venture are set to add to supply.

Related: Have Oil Traders Abandoned Fundamentals?

The steep drop in margins might not be the end of the world for solar giants such as Jinko or LONGi, but some of the smaller players in the markets could face some serious trouble if prices do not recover soon.

Solar PV market analysts have already warned of a wave of consolidation in the field as some of the mightier players are either wiping out or gobbling up smaller players.

This decade, prices for PV solar panels and components are expected to fall further as Chinese manufacturers have announced huge expansion plans. Tongwei solar announced in February that it would push ahead with plans to construct a 30GW solar cell manufacturing hub in Chengdu, while its peer GCL System Integration has announced the construction of a 60GW mega facility, a move that would make it the world’s largest solar panel maker. GCL’s megaproject, when completed, would supply about half of total global demand for solar panels.

By Tom Kool of Oilprice.com

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