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First Solar production closure comment from IMS Research | Europe

First Solar production closure comment from IMS Research

First Solar?s decision to permanently close its German production facility and indefinitely close four lines at its Malaysian facility once again demonstrates the intense pressure that even the ?lowest cost? PV producers are under today to reduce their manufacturing costs. First Solar?s costs (per watt) had been around 50% lower than a typical Chinese tier-1 c-Si manufacturer in 2009. Following rapid declines in polysilicon pricing, that difference is now less than $0.10/W and is predicted to close further throughout 2012.

Demand continues to be extremely volatile in the European PV market. This makes managing local production and supply very challenging and often expensive for manufacturers, particularly as employment law in the West can limit flexibility. We?ve seen a number of recent examples of major Western suppliers shutting down local production (of wafers, cells and modules) in favour of sourcing products from Asian manufacturers as it is lower cost and offers greater flexibility.

Changes in market dynamics in Europe have been driven by severe alterations to government incentives, all made to try and control the growth of the market and limit spending in tight economic times. All of these changes have also been made in such a way as to particularly limit the growth of large ground-mount projects. This is of course further bad news to First Solar, as this is predominantly its target market.
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Posted by Gloria Llopis | 2012-04-18