Europe to Asia shift has solar companies boosting production

The world’s largest solar-panel makers are boosting production this year on expectations that demand in China will double, a surprise shift as the USD36 billion market migrates from Europe to Asia, Bloomberg reported Friday.

The five biggest producers of polysilicon solar modules, led by China’s Suntech Power Holdings Co. (STP) and Yingli Green Energy Holdings Co., will increase shipments 27 percent to 37 percent from 2011 levels, according to the average of estimates compiled by Bloomberg. Chinese demand will partially offset declines in Europe that are driving the industry toward its first global sales decline since at least 1999.

China’s efforts to stimulate its photovoltaic industry at home and a 48 percent drop in panel prices in 2011 are boosting sales. The nation, which trails only Germany and Italy for new installations, will dominate growth this year and become the top solar market in 2013, after European nations cut subsidies for new projects, according to Bloomberg New Energy Finance.

“Europe is going down and Asia is going up,” said Matt Feinstein, an analyst at Lux Research Inc. in New York.

While the global demand shift eastward helps soak up excess factory output that is depressing worldwide prices, it may leave Western manufacturers with little hope to improve their profit outlooks and share prices this year.

The Chinese boom “will drive big shipment numbers from Chinese manufacturers, which are the only ones selling there,” said Sean McLoughlin, vice president for clean technology analysis at HSBC Bank Plc in London.

China may install as much as 5.5-GW this year and the same amount in 2013 while Germany may slide to 2.5-GW next year, the London research group estimates, while soma analysts predict it may reach as high as 8.5-GW if the government creates new incentives to spur domestic demand and offset declining sales in Europe.