JinkoSolar Holding Co. (JKS:US), the eighth- biggest solar module maker, said it will increase the scale of plants it’s building in China by five- to 10-fold this year to make up for slowing sales in Europe.
“China will be a very, very important market in 2012,” Chief Executive Officer Chen Kangping said in an April 13 interview. “We’ll develop the projects mainly in the west.”
The company last year built solar farms with a total capacity of less than 100 megawatts. It expects its domestic market to account for as much as 12 percent of sales this year, doubling from a year earlier, Chen said.
Solar manufacturers are suffering from a supply glut as European governments cut subsidies for renewable energy. Panel prices have tumbled by 51 percent from a year ago in March to 87 U.S. cents a watt, according to Bloomberg New Energy Finance.
“Manufacturers currently have no room for further declines in solar-module prices in terms of gross margins,” Chen said. The price decline is likely to slow, as the industry “reshuffles the deck” and depletes inventories, he said.
JinkoSolar had a negative 4.4 percent gross margin in the fourth quarter compared with 3.7 percent a quarter earlier.
The company expects shipments to rise by 50 percent in 2012 from 950.5 megawatts last year even though global demand may not grow as strongly, Chen said. “Some will gain share as others shut down.”
“We won’t see equilibrium between supply and demand in the next 12 months,” Chen said. “It’s hard for solar-product makers to make profits this year.”
Chen expects returns to rise enough in the next 2-1/2 years that more companies take an interest in the solar industry and existing companies expand their plants.
To contact Bloomberg News staff for this story: Feifei Shen in Beijing at email@example.com
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