Meyer Burger will strengthen its strategic focus on the US market, where it expects a high-margin business thanks to billions in subsidies through the Inflation Reduction Act (IRA), while the Swiss solar equipment and panel maker lamented a lack of “fair market conditions” in Europe due to alleged dumping practices of Chinese rivals.
“Chinese suppliers are massively distorting the market in Europe with unsustainable dumping prices and a lack of market protection,” the company said in an open letter to shareholders as part of its second quarter result report, adding that the local solar industry therefore needs support “in its struggle for independence”.
Chinese suppliers flooded the European market with 85GW of solar modules offered below manufacturing costs, the company claimed.
Chinese rivals backed by cheap state financing, low labour costs and at times dumping practices a decade earlier had already pushed most of Europe's, and in particular Germany's, previously flourishing solar manufacturing sector into bankruptcy.
The US had reacted strongly to the current pressure from China in the form of the IRA, which provides 4 cents per watt for solar cells and 7 cents per watt for solar modules as well as further market protection rules, the letter said.
“Due to a favourable market environment compared to Europe, Meyer Burger has decided to pursue the next step in its expansion in the US. We are also currently looking at additional steps, in terms of growth, based on additional purchase agreements with customers in the US.”
The company in late July has decided to build a 2GW new solar cell factory in Colorado Springs that will exclusively supply its module plant in Goodyear, Arizona.
For the US expansion, Meyer Burger will divert production equipment from Germany to the US, which originally was intended for the expansion at the company’s site in Bitterfeld-Wolfen in the German state of Saxony-Anhalt.
Production at the Arizona plant is being increased from 1.5GW to 2.0GW following the acquisition of two additional customers for modules in the power plant segment in BayWa r.e. and Ikea parent Ingka Investments.
Meyer Burger expects tax credits from the IRA to reach a cumulative eligible amount of up to 1.4bn Swiss Francs ($1.59bn) from the start of production in the US in mid-2024 until the end of 2032. Thanks to already signed offtake agreements for more than 5GW until 2029, the company sees an earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of 25% and more in its US business.
An Ebitda margin is a measure of operational profitability.
The manufacturer will still ramp up the output capacity at its German Freiberg and Thalheim module sites to 1.4GW as previously intended, but for now has halted further expansion plans in Germany.
During the first half of this year, Meyer Burger has produced more than 300MW of solar modules, increasing sales by 70.8% to CHF96.9m.
Due to the currently still ongoing ramp-up of its German production, as well as the US expansion, the company had a loss at the Ebitda level of CHF43.3m in the period, compared to an Ebitda loss of CHF24.4m in the second quarter of 2022.
This led to a net loss of CHF64.8m in the second quarter of 2023, compared to a net loss of CHF41m in the year-earlier period.
