Bosch puts brakes on $590mln Malaysian solar project

German engineering firm Robert Bosch GmbH has frozen construction of a USD691 million solar panel plant in Penang due to cost pressures according to deputy head of Bosch's solar unit, Siegfried Dais, the Frankfurter Allgemeine Zeitung reported today.

In stepping back from what would be Malaysia’s largest solar project, Dais said the company will need to “reorient” itself technically as it wanted to be among those making a profit from the industry.

"If you invest too early, you run the risk to possibly commit to a less favorable technology," Dais said, according to the newspaper, adding that it will take until the end of the year to make a decision. He adds that Bosch adheres to its engagement in the solar sector.

Following a consolidation period, there will be still 20 big suppliers in five years, in Dais' view. "I can't predict where we will be on the ranking but we want to belong to those who make profits," Dais said.

Bosch’s decision to hold off on the fully-integrated manufacturing plant, which would have served its ASEAN operations, comes after the firm missed profitability targets last year as special charges ate into earnings.

Bosch doesn't usually give sales and profit figures for individual business units, although Dais admits that the solar unit didn't reach a turnover of RM3.97 billion (USD1.31) in 2011, a target it had set for the unit in 2009.

Construction of the plant in Batu Kawan, Penang, which has a capacity of 640MW per year, was scheduled to begin at the end of last year, with production to start in 2013.

Malaysia ranks fifth in the world in terms of solar megawatt output and the sector has been identified as a major growth area under the government’s Economic Transformation Program (ETP).