Trade Resources Industry Views The China-Based Upstream Solar Makers Therefore Have Asked for Shorter Payment Periods

The China-Based Upstream Solar Makers Therefore Have Asked for Shorter Payment Periods

China-based makers of solar wafers and cells have to pay cash or issue credit letters to procure materials, but need to wait when it comes time for them to get payment on products from downstream customers. There are examples of makers waiting a year and a half after delivery, resulting in a shortage of funds needed to maintain regular operations, according to industry sources in Taiwan. The China-based makers therefore have asked for shorter payment periods.

Solar makers in China believe that for the industry to operate normally, the chain of financial capital needs to be adjusted. Grid parity is hard to achieve if only downstream firms are making profits, said solar firms.

The ability to secure funds will be the key to survival for solar firms in 2013. Many China-based firms have not been able to manufacture products due to a lack of funding to procure materials, even if they have incoming orders.

The current internal rate of return (IRR) of solar PV systems varies due to the different subsidy programs in different countries. Some projects have an IRR around 3-6% while others enjoy more than 10%. This means downstream firms, especially system firms, have been performing relatively well compared to upstream makers that have been trying to lower variable and total costs in hopes of making profits.

Source: http://www.digitimes.com/news/a20130205PD204.html
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China Upstream Solar Makers Ask for Shorter Payment Periods
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