Swiss-headquartered solar module manufacturer Meyer Burger has published its financial results for the first half of 2023, reporting strong production figures of 302MW of new cell and module capacity, but total losses of US$49.4 million (CHF43.4 million).
The company’s cell and module production reached new highs in the first half of the year, with its 302MW of capacity almost exceeding the 321MW of capacity it added in the entirety of 2022. This helped drive sales of US$110.4 million (CHF96.9 million) in the first six months of 2023, a 70.8% increase over sales in the first half of the previous year.
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US expansion
The company’s leadership is also optimistic about its future in the US in particular, following its announcement of a new 2GW solar cell plant in Colorado last month, part of plans to expand its US production capacity to 5GW until 2029.
Meyer Burger expects this work, alongside the Inflation Reduction Act (IRA), which financially incentivises production of solar components in the US, to grant the company around US$1.7 billion (CHF1.4 billion) in potential tax benefits, which could drive improvements in earnings before inflation, taxation, depreciation and amortisation (EBITDA) of 25%.
“The plant will exclusively supply US-made solar cells to our solar module production facility in Goodyear, Arizona,” said Meyer Burger chair Dr Franz Richter in the announcement of the company’s half-year results. “Every day, the factory will produce 1.44 million high-efficiency heterojunction solar cells. For this expansion step, Meyer Burger was able to acquire a former semiconductor factory, which can be quickly equipped with our machinery.
“To this end, the next few quarters will see production equipment being diverted from Germany, shipped to the US, and installed with the aim of starting production at the end of 2024.”
European challenges
However, the company’s EBITDA fell from -US$27.7 million (-CHF24.4 million) to -US$49.4 million (-CHF43.4 million) between the first half of 2022 and the first half of 2023 as external conditions means the encouraging production figures have not translated to growth for the company.
“Although we maintained our prices at the beginning of the year, Meyer Burger also had to reduce prices relative to the market in the second quarter due to the general decline in solar module prices and had to provide its customers with contractually agreed credits from inventory protection clauses,” explained Richter.
“The global energy revolution is giving further impetus to renewable energies, especially in the solar sector,” added Richter, echoing concerns of China’s “anti-competition” practices mentioned in Meyer Burger’s reporting. “However, there is intense competition because Chinese suppliers are massively distorting the market in Europe with unsustainable dumping prices and a lack of market protection.”
While the significance of the import of Chinese modules on European solar prices is unclear, Europe is importing more Chinese-made modules than ever before, with research firm Rystad Energy expecting Europe to install 120GW of Chinese solar modules by the end of this year, a record figure.
Rystad also suggests that almost half of this imported capacity had been left in storage, raising the prospect of Europe importing more solar panels than it can currently use, significantly lowering Europe’s demand for new solar products, and further affecting prices.
Looking ahead
The company’s own expansion work has also cut into its profits, with Meyer Burger making a number of new investments into hiring and operating costs. The company reported that, between the first half of 2022 and the first half of 2023, personnel costs increased from around US$37.7 million (CHF33.2 million) to US$53.6 million (CHF47.2 million), while operating costs almost doubled from US$19 million (CHF16.7 million) to US$35.5 million (CHF31.2 million).
However, the company will be optimistic that these temporary increases in operating costs will translate to more module production, and more module sales, in the long-term, especially as it looks to shift the focus of its business away from Europe and towards the US, to avoid the potential consequences of large-scale Chinese imports.
“The implementation of the new solar cell production in the US is being driven forward with the highest priority and further multi-gigawatt offtake agreements in the US as well as the selection of another site for further production expansions are in progress,” said Richter.
“Meyer Burger is thus reacting consistently to the current market distortions in Europe and, until the market failure is cured, plans to further expand the company’s capacity under the industrially attractive and sustainable conditions in the US.”