Phono Solar Technology Co., a state- owned solar module-maker, agreed to team with Suntech Power Holdings Co. (STP) in sun-powered businesses amid a supply glut and declining prices that have depressed profits.
“We’ll jointly seek opportunities to develop solar farms,” Cai Jibo, president of Phono Solar, said in a phone interview. “The partnership will make our advantages complementary.” Suntech is the biggest crystalline module maker.
Phono Solar is diversifying into project development as “purely producing modules faces intensified competition and irrational pricing,” Cai said yesterday. The company plans to develop 50 megawatts of solar farms this year in China’s eastern provinces of Jiangsu and Shandong and the northwestern region of Xinjiang.
Solar manufacturers are suffering from an oversupply as European governments cut back on subsidies. Module prices have tumbled almost 50 percent to 85 U.S. cents a watt, according to Bloomberg New Energy Finance.
“It’s a strategic framework agreement, we are still discussing terms on the cooperation,” Zhang Jianmin, a Suntech spokesman, said today by phone.
Phono Solar has a capacity to make 450 megawatts of solar modules each year, Cai said. The Nanjing-based company also plans to develop overseas solar-power projects in the U.S. and Greece.
Cai said the company expects to increase shipments by 35 percent from about 300 megawatts a year ago. China will account for 20 percent of Phono’s shipments this year, more than double from 2011, he said.
Phono Solar in April agreed to supply SYBAC Solar AG of Germany with 500 megawatts of solar modules within five years for 300 million euros ($388 million). Under the agreement, the modules will be for projects in Germany, France and the U.S.