Update 21 February 2012: Silex Solar has resumed production of solar panels.
Silex Solar, the solar photovolatic (PV) manufacturing wing of the Silex group and Australia’s only PV panel manufacturer, has halted production and closed down its manufacturing plant. The company cited financial stress and a ‘deteriorating market’ for solar PV, as panel prices become cheaper and cheaper.
The company’s move is only months behind its announcemet that it would cease manufacturing its own photovoltaic cells, while still assembling modules with imported components. This decision was made in the interest of making the business more financially sustainable, a hope which has not eventuated. With the closure of the factory comes the redudancy of most its manufacturing employees, plus a number of administrative, engineering, and technical staff.
Why did Silex close its factory?
The Silex Solar assembly plant will be ‘put under care and maintenance’ until further notice. There are a number of possible explanations for the company’s financial strife, all of which doubtless factored in its decision to shutter the Sydney manufacturing plant entirely.
Reductions in solar subsidies
One major reason is the withdrawal of subsidies for solar power across the country–most notably in New South Wales, where the state’s generous Solar Bonus Feed-in Tariff Scheme created a solar boom that ended with the disorderly withdrawal of the program in its entirety. (Most other states have followed suit, with Queensland the last state to still offer a generous rate–44c per kilowatt-hour(kWh)–for solar electricity fed into the grid.) Reductions in federal solar rebates also caused major issues for the solar industry, with some solar installation companies collapsing with the fall of the REC price.
A glut of solar panels in the Australian market
Subsidy reductions both in Australia in overseas have contributed to a glut of supply among installers who had stocked up on solar panels and inverters during the height of the subsidies but were no longer able to sell easily them due to low demand, forcing greater competition and lower prices. While this has been great for people in the market for solar power systems (the price of solar power has never been lower), it has resulted in hard times for manufacturers, who are finding it increasingly hard to find profitable markets for their products.
Then there is the issue of solar panels from China. Accusations of unfair trade practices by Chinese manufacturers are also flying, with a trade complaint lodged by several US solar panel manufacturers against China for ‘dumping’ solar panels onto the international market (and met with the counter-accusation that the US was dumping raw materials for polysilicon panels in China.) It is true that the vast majority of the solar panels sold in Australia (and the world) are manufactured in China, with ample government support for the industry, and China’s contribution to the solar PV market has increased from 6% to 60% since 2009. Silex Systems chief executive Dr Michael Goldsworthy also pointed to this as a factor in Silex’s decision. “Right now, we think we’re seeing dumping [of solar panels in Australia].”
Strong Aussie dollar
On top of all this comes the strong Australian dollar, which means that it is much more affordable to buy solar panels manufactured overseas than those made in Australia. As appealing as a ‘Made in Australia’ label may be to solar customers, it did not drive demand enough to maintain the profitability of the company’s solar panel wing.
What will Silex do next?
Silex Solar will retain about 20 employees, mostly in sales and marketing. Their future will be decided within the next few months, according to parent company Silex Systems chief executive Dr Michael Goldsworthy. The Silex Group will continue research in the area of alternative forms of solar energy harvesting at its Melbourne-based Solar Systems. Product development is expected to be complete by the end of the first financial quarter of 2012.
Interestingly, a spokeswoman for the NSW Energy Minister, Crish Hartcher, commented that it was ‘unusual’ that Silex did not wait until the IPART draft determination on NSW’s future solar feed-in tariff before making its decision to suspend production. The draft is due at the end of November, 2011.
© 2011 Solar Choice Pty Ltd
Resources and links:
SMH, “Local solar panel maker has to halt production”
Electronics news, “Silex Solar suspends manufacturing, lays off most staff“
James Martin II
He holds a master's degree in Environmental Management from UNSW, and a bachelor's degree in Philosophy from Bridgewater State University in his native Massachusetts.
He currently works remotely for Solar Choice from New York City.
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{ 1 comment… read it below or add one }
It is sad to here that some solar PV manufacturers are closing knowing that what they are producing greatly helps mankind. But I agree that if it is cheaper to buy imported solar panels than the ones which are manufactured locally many people will benefit from it. Common individual may not understand this clearly but in the business perspective it is very practical.