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Canadian Solar becomes the latest solar panel maker to cut Solar Panel expansion on overcapacity fears

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CSIQ to cut capacity expansion

The oversupply which has hit the industry hard and fast has made a number of solar panel companies revise their plans for expansion of solar panel capacity, which they had planned for 2016. First Solar has already announced that they would not go ahead with the increase in solar panel production lines but rather retrofit the existing lines, with better technology which could lead to some capacity increase. They have also cut their capex expenditure plans. SunPower has also fired almost 1200 workers in Philippines, which is their main manufacturing base. The company plans to use third party cells also to reduce the costs of its panels. The company has seen a sharp cut in guidance and an increase in losses.

Read more about solar panel reviews of different companies here.

The deferment of some projects has also hit the company’s stock price hard. Note most of the solar panel stocks have taken a huge hit with a decline in solar panel ASP in the last couple of months. The decline in Chinese demand has led to a decline in the solar panel prices. With oversupply from Chinese Tier 2 and Tier 3 makers flooding the market, the Tier 1 makers are seriously re-thinking their plans to expand solar panel capacity.

The last major oversupply situation had occurred in 2011-2012 and had led to a number of bankruptcies. This time too some companies should shut down though not on the scale that is required to lead to a permanent supply demand balance that the industry needs. Massive Chinese investment and cheap capital has kept alive hundreds of small Chinese solar companies that keep running in huge losses for years on an end preventing a sustainable development of the industry. Till the Chines bubble is burst, even the top tier Chinese solar panel companies such as Jinko, Trina and Canadian Solar will also suffer from the flooding of panels by their smaller brethren.

Canadian Solar plans to reduce the expansion plans by going slow on expanding factories in Vietnam, Indonesia and China that it was planning. The company which has a low cell to module production ratio will continue to work on the lower ratio. With solar cell prices also crashing to a low 23cents/watt down from around 35 cents/watt a year ago, it has no reason to increase in-house capacity. It would make more sense to buy from outside and conserve capital in this adverse oversupply situation.

Canadian Solar sees cell capacity only at 3 GW by the end of the year from a planned 3.9 GW, while its module plans sees total capacity only at 5.8 GW down from around 6.3 GW that it had planned by the end of the year in January 2016. I think most of the other large companies will also reduce their capacity expansion given the low prices being seen. Conserving capital in times of distress is a key survival strategy that most firms have learnt from the previous two down cycles that the industry has seen.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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