Conergy`s Contract Cancellation May Trigger Wave in Taiwan

In the wake of Conergy AG`s announcement of its cancellation of a multibillion dollar polycrystalline silicon order with MEMC Electronic Materials, Conergy`s Taiwanese counterparts in the photovoltaic (PV) industry may follow suit soon.

The cancellation makes Conergy the world`s first PV maker to void a valid poly-si supply contract amid the economic downturn. It is a 10 year contract.

Taiwanese industry watchers see the German PV system integrator`s cancellation of the contract as a tactic to lead other peers to do likewise so that material suppliers will be pressured to cut selling prices.

In July last year, Conergy revised the contract with MEMC, successfully paring down the procurement price to $4 billion from $8 billion or so.

Industry watchers believe Taiwanese PV manufacturers may follow suit to cancel or adjust their procurement contracts with MEMC, with some of MEMC`s customers saying their revised contacts had made their products very competitive.

Industry watchers noted that behind the contract adjustments or cancellations is the anemic demand for solar energy products since the outbreak of the financial crisis, which has caused huge losses at many PV product manufacturers who signed contracts at high prices during a busy cycle.

For PV product manufacturers, crystalline silicon account for up to 80 percent of production costs.

Source: CENS