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March 11, 2013Solarworld
Solarworld, which is one of the largest European solar companies surviving the current downturn, is in a bad shape. The company faces a large debt load which it cannot repay because of continuing losses. Despite its leadership role in getting duties imposted on imports of Chinese solar panels, the company has not benefited as imported panels continue to enjoy a huge advantage over US made solar modules. Solarworld is also trying to get Europe to impose penalties on imports of Chinese solar products, however we are not sure how that will help given the US experience.
Read about Solarworld Solar Panels Review on GWI.
In 2008, Solar world and other established solar companies such as Sunpower and Q-Cells enjoyed a huge advantage over their Chinese rivals, as they had long term contracts with polysilicon producers such as Wacker and Hemlock. This allowed them to get poly at a much lower price than spot prices which were ruling at an astronomical $400/kg. However as more companies got into the space, the prices of poly dropped to $20/kg , the advantage suddenly became a massive disadvantage as contract prices are now greater than spot prices. On top of this, Solarworld already has a cost disadvantage due to its higher cost factories in Europe and USA.
Solarworld is now facing a lawsuit of $83 million from the world’s largest producer of polysilicon for not following the terms of the “take or pay” contract. A number of poly producers are forcing solar cell and panel makers to cough up the money under such contracts given that most of these companies will go bankrupt and it does not make sense to renegotiate these contracts. LDK Solar and REC have already got a large number of multi million dollar payments from their customers. Suntech had paid a huge sum to MEMC to get out of one such contract. Solarworld had threatened to bankrupt its group company in order to force Hemlock to change the conditions of the contract. Hemlock is playing hardball with Asbeck to get the company to pay up the money. It will be interesting to see how Asbeck manages to come out of this contract. He has claimed that he won’t sell the company nor would he take a salary till he manages to get Solarworld out of the rut it is in.
Solarworld is Fighting to keep Alive
Solarworld is the only significant European solar company of any consequence to remain alive and that too is doubtful as it predicted to suffer a massive losses. Solarworld is already close to becoming a penny stock as investors have doubt about its prospects of being a going concern for long.
Solarworld lost marketshare to the Chinese companies in 2011. The company which has been at the forefront of leading anti-dumping charges against import of Chinese made solar modules into the USA, lost substantial amounts of money. Solarworld had earlier closed its panel making facility in California. The company sold lesser number of solar panels in 2011 compared to 2010 despite the global solar market increasing by 30-40%. With only around 800 MW of shipments, Solarworld has only 3-4% of the global marketshare compared to 10% for bigger Chinese rivals.
Hemlock Semiconductor Corp., the largest U.S. provider of polysilicon, sued a unit of Solarworld (SWV) AG, alleging it breached a contract to buy $83 million in material used to make solar cells.
Hemlock, a joint venture of Dow Corning Corp. and other companies, said Solarworld’s Deutsche Solar GmbH stopped buying polysilicon in 2012, violating a long-term supply agreement. Deutsche Solar had sought price and quantity concessions before stopping purchases, Hemlock said in a complaint filed today in federal court in Bay City, Michigan. Solarworld Chief Executive Officer Frank Asbeck threatened to put Deutsche Solar into bankruptcy if Hemlock didn’t agree to the concessions, according to the filing.
“Mr. Asbeck further threatened that Solarworld AG would seek to re-purchase Deutsche Solar’s assets out of bankruptcy for a de minimis amount and proceed with its solar panel business, thus freed of the supply agreements,” Hemlock said in the complaint. “Asbeck stated that Hemlock would then have little recourse but to attempt to recover against a bankrupt and assetless debtor.” Hemlock said the contract requires Deutsche Solar to pay for the product it agreed to purchase, even though it hasn’t taken delivery on it.