Mon, May 30, 2011 - Page 8 News List

EDITORIAL: Not so bright in solar sector

About three years ago, the government planned to make the solar power and green energy sector the nation’s No. 3 industry by 2015, with annual revenues forecast to top NT$1 trillion (US$34.6 billion), after the semiconductor and LCD industries. The decision was taken within the global context of prioritizing energy policy when US President Barack Obama and President Ma Ying-jeou (馬英九) took office in 2008.

However, solar industry insiders’ expectations have not been met and progress has lagged behind the government’s expectations. Scant resources from the government, a relatively small domestic market, the small scale of local companies and fickle market demand are the main reasons for this.

Last year, revenue generated by Taiwan’s solar companies — mostly solar wafer makers and solar cell manufacturers — reached NT$102.8 billion, not the NT$150 billion the government had anticipated, according to Industrial Economics and Knowledge Center’s (IEK) statistics.

This year, their revenue is forecast to grow to NT$191.2 billion, less than one-fifth of the NT$1 trillion the IEK projected at the end of last year. Apparently, there is still a long way to go before Taiwanese solar companies shine.

It is a rough ride ahead for these local firms. The government’s green energy policy included a small budget of NT$50 billion over a five-year period to help finance solar firms and boost the installation of solar heaters to 140,000 households nationwide, based on solar projects unveiled in 2008, masterminded by then-premier Liu Chao-shiuan (劉兆玄). Liu’s successor Premier Wu Den-yih (吳敦義) shifted the focus to greenhouse gas emission reduction, rather than encouraging clean energy consumption.

Recently, Italy, the world’s second-biggest solar market after Germany, significantly cut subsidies to solar system installations because its government has adopted a deeper austerity plan to cut debts amassed during the financial crisis.

For the nascent solar industry, cuts in government subsidies mean cuts in orders as government incentives have played a key role in boosting adoption of solar power, as the cost of converting sunlight into electricity is much higher than conventional sources such as coal, hydro and nuclear.

The chairman of local solar wafer maker Sino-American Silicon Products Inc, Lu Ming-kuang (盧明光), expects solar power grid parity to arrive in 2013, but recent sluggish demand recently has already led to reduced factory usage and even large-scale layoffs among local firms because they are too small to absorb sudden industry slumps. Industry insiders have called for consolidation to enhance these companies’ competitiveness, but not a single merger and acquisition deal has closed. That said, they are not giving up hope yet.

E-Ton Solar Tech Co said last week it had adjusted its headcount by an unspecific number to cope with drastic industry changes after a local newspaper reported it had cut jobs by one-third.

Taipei-based TrendForce Corp said local companies have reduced the equipment loading rate to between 70 percent and 80 percent, which would add extra burden to an already weak financial situation, since solar prices fell to US$0.95 per watt last week, below most companies’ cost level of US$1 per watt. Equipment depreciation accounted for a big portion of the company’s operating expense, TrendForce said.

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