Bankruptcies start to plague Chinese solar

Analysts in China are blaming several factors for a number of recent bankruptcy filings among small producers of photovoltaic modules, saying the new energy economy's growth has been seriously dented.

Xinhua reports that China's solar cell module producers are expected to see a 5-percent drop of gross profit margin because of the devaluation of the euro, and lower prices for oil and coal. San Jose, Calif.-based SunPower (Nasdaq: SPWR) has also blamed the euro's devaluation for lowered earnings projections (see Dollar's strength hurts SunPower).

China Jianyin Investment Securities analyst Xiong Lin said a number of small producers of  modules in East China's Jiangsu Province have already filed for bankruptcy because of the tightened credit market and fewer orders.

Zhou Tao, an analyst with Greatwall Securities, said lower demand from Western countries is also a factor.

China's new energy economy is expected to bounce back because of the environmental benefits. Previously, the high cost of oil and coal were driving the sector.

A report in early 2008 by China Jianyin Investment Securities projected that the cost to generate solar photovoltaic electricity would equal that of traditional energy in 2030.

The falling price of oil has driven down the cost to produce traditional energy, making analysts less certain aboutsuch predictions.

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