Solar photovoltaic companies suffered heavy losses in the European debt crisis

On July 8, Xiao Xiaoying, CEO of Ates Sunshine Power Group, the world's fifth largest PV module company, told reporters that the company's losses in the first quarter due to the unexpected fall of the euro were 17 million to 18 million US dollars.

Wuxi Suntech, the global solar panel manufacturer, expects the company's exchange loss in the first quarter to reach $25 million.

Many European countries are considering the policy factors of reducing solar subsidies. In the face of the biggest demand for domestic panels, Europe's decadence, PV companies that have just slowed down from the financial crisis may be "sick."

Prosperity is expected to decline
Zhou Tao, an analyst with New Energy Industry of Great Wall Securities, believes that as the largest terminal of PV consumption, Europe is in a national debt crisis. The important and fundamental solution is to reduce fiscal expenditure. "High-priced solar energy may be temporarily abandoned or reduced. In the case of Artes, from the current market distribution, Europe is the first largest district, with a share of more than 90%.

In fact, the “shrinking” plan of European countries has not only stayed at the hypothetical level. According to statistics from Bohai Securities Research Institute, Germany will cut the feed-in tariff in July according to the original plan; the Spanish government is considering reducing solar subsidies and limiting the operation time of solar power plants to reduce the amount of electricity subsidies; Italy, the Czech Republic, etc., which were expected to lower subsidies early next year. The country may also cut the time ahead of schedule, and international news has put pressure on the original demand of the European market, fertile soil.

Zhou Tao also said that the construction of individual European PV power plants will be postponed, and the orders for batteries and components that have been signed also have default risks, which further increase the uncertainty of the industry. In this regard, the product line is vertical and vertical, and the channel layout is particularly optimistic: "Because the proportion of self-produced battery chips will increase a lot in August and September this year, the overall gross profit margin will be obviously enhanced, and the components will be shipped. The amount will reach 700-800 MW. "However, Xiao Xiaoying's valuation of the first quarter gross margin is 13%-14%, which is lower than the broker's forecast for the photovoltaic integrated enterprise gross margin of around 30%.

Hedge coverage over 80%
Another impact of the European debt crisis on the photovoltaic industry is the shrinking of the euro by about 20% in five months. "China's battery production last year was about 4,100 megawatts, and Wuxi Suntech was about 700 megawatts, accounting for 17%. If Suntech lost $25 million, the overall exchange loss should far exceed 100 million US dollars," said Wang Liusheng, a researcher at China Merchants Securities.

In this regard, Xiao Xiaoying told reporters that although the euro has experienced a second wave of depreciation since April, the risk hedging level has increased in the second quarter. "The measures taken are mainly international market exchange rate hedging instruments including forward settlement. Now the company's foreign exchange collection and expected collections reach 80% and 90% protection level." The reporter learned that Suntech, Jingao and other companies have adopted a hedging strategy to protect the company's foreign currency assets and expected contracts.

It is worth mentioning that the raging exchange rate risk did not make the company suffer losses. "Accounting for a 2% decline in the exchange rate, companies still have a certain profit margin," said Zhu Yuanzhang, general manager of Jiaotong Taiyang Green Energy Co., Ltd., which currently has a 40% higher PV module than the January 2009. Bohai Securities Research Report also showed that in order to smooth the exchange loss, some component manufacturers have already raised the price, and the price increase of crystalline silicon battery components is between 10% and 15%.

Why is the domestic market deserted?
In the face of a relatively passive international market, have PV companies thought about launching the domestic market on a large scale and reducing external dependence? "There are subsidies in foreign countries, there is no subsidy in the country, and it can be recycled in foreign countries in 3-5 years," Li Mao, marketing manager of Artes, replied simply to the reporter. "If the European market does not come up, it can be more in Japan, the United States." Southeast Asia opens up new markets."

"The renminbi enters the appreciation track. If the bulk price is set according to international standards, the return on investment in China will increase. It must not be underestimated in the Chinese market. However, China currently lacks a unified and clear policy environment that can make long-term predictions. "When asked this question, Xiao Xiaoying also told reporters."

However, for the 280 MW photovoltaic grid-connected power generation concession project opened in China, Xiao Xiaoyu said that he will actively participate in the bidding this year. "According to the international 8% internal rate of return and the current cost of photovoltaic modules, the on-grid price of about 1.4-1.5 yuan / kWh is a reasonable level, it will be a virtuous circle." According to Artes The cost of components is about $1.7-1.8/W, and the cost of polysilicon is about 20%-25% of component cost.

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