You don't have to be in the solar business for long before you realize that the manufactured word stirs strong emotions.
In a nutshell, banks typically will only provide loans to utility-scale solar projects if the projects will be built with solar panels from a limited number of suppliers, i.e. SunPower, First Solar, Sharp, etc. China's Suntech Power Holdings is part of the bankability club, but most new entrants, and many Chinese suppliers, are often not considered bankable.
"Essentially, the bankability factor has restricted the field of available producers to a much smaller pool; those firms that are not considered bankable are effectively shut out of the market. Indeed, this is exactly why the current market is considered to be undersupplied: as shown below, there is no shortage of module capacity, but rather of bankable module capacity," wrote GTM Research's Shyam Mehta in July. "Bankability is the missing piece of the puzzle, and combined with Germany's ability to absorb high-cost modules, it is what has thus far insulated established, high-cost manufacturers from the twin effects of oversupply and commoditization."
Last month, we speculated that Chinese banks and government officials would try to correct that imbalance and make money at the same time by providing Chinese module makers with credit.
Stephen O'Rourke at Deutsche Bank released a report today with data backing that theory up. Chinese solar module makers have secured around $22.5 billion in credit from state-owned banks, and a good portion of that money will go to fund solar power plants. Suntech has obtained around $7.4 billion in credit, followed by Yingli Green Energy with $5.3 billion and Trina with $4.4 billion. The Chinese are trying to nurture a local industry, create jobs and hedge against pollution.
And U.S. bankers? No doubt yammering about a "reasonable rate of return" and trying to boost bonuses. Another warning sign along the road to the fall of the empire.
Meanwhile, Westinghouse Solar CEO Barry Cinnamon called up to tell us that Westinghouse (formerly Akeena Solar) is getting out of the installation business. The company earlier produced solar panels and performed installations. In the rest of the country it got out of installation so that it could position itself to sell panels to local installers. These installers were skeptical about buying panels and being forced to compete against Westinghouse at the same time.
By exiting installation in California, Westinghouse's biggest market, it hopes to expand its dealer network. Large dealer networks work. Suntech's increase in sales in the U.S. has been matched with a rapid expansion of a local dealer network.
A strategic shift like this, however, also means layoffs. Employees said that began today.