Bookmark and Share

SouthEast Asia becomes new hub of Solar Manufacturing due to Western duties – but how long will it persist?

0 Comment

Why Leading Solar Companies have manufacturing base in SE Asian countries

SouthEast Asian countries such as Malaysia, Vietnam and Thailand have become the new hotspots for investment by large Chinese and Taiwanese silicon panel manufacturers. The anti-dumping duties imposed by USA on solar cells and panels made in Taiwan and China, have forced many companies to relocate their factories in other nearby countries. The delta between the prices of solar products made in those countries is as high as 20%, due to the duties imposed. Even Europe has imposed price and volume restrictions on Chinese solar panels.

As costs in SE Asia is not very high and they have favorable regulations and polices in place for manufacturing, companies such as Jinko Solar, JA Solar, Tainergy, Trina Solar and others have built large factories in these places. Malaysia has always been a favorite hunting ground for solar manufacturers, thanks to the extremely generous incentives given to foreign solar panel makers. First Solar has most of its manufacturing capacity located in Malaysia, due to a 19 year tax holiday that it had gotten way back in 2009. This makes a dramatic effect towards the company’s profitability. Others such as Sunpower and Panasonic have also followed First Solar into Malaysia, given the ease of doing business, good access to land, labor and capital.

The second wave of investments have been primarily driven by the anti-dumping duties. These investments are turning to be very profitable and Tainergy plans to double its cell production facility in Vietnam, from 400 MW now to 800 MW making it by far the largest production facility for the company. Vietnam will account for more than 50% of the overall capacity for the company. India is also trying to pitch for investments from the large players, with its large domestic market being the biggest carrot being offered. Many states are also offering a favorable environment and infrastructure for companies entering the sector. Trina Solar is setting up a solar cell and module factory in the eastern coast of the country, while a large domestic conglomerate Adani is setting up a large 1000 MW cell and module plant on the western coast near its port Mundra.

Also Read why Andhra Pradesh ahs become the leading Indian Solar state.

Other companies such as Canadian Solar and JA Solar had thought of setting up solar manufacturing, but have currently backed out. This is mainly on concerns of not being able to get any advantage through local manufacturing. India’s DCR requirements have been negated by the WTO ruling, while a new policy favoring domestic production is still in the works.

SE Asia manufacturing is not very sustainable in my view, given that there are no local markets to cater to the supply. Exporting to China is not possible and once Europe and USA remove the duties, then these factories may have a tough time justifying their existence.

PG

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 greensneha@yahoo.in

No Responses so far | Have Your Say!