China's Suntech eyes plants in U.S. and Europe

Wed Aug 29, 2007 9:44AM EDT

By Leonard Anderson

SAN FRANCISCO (Reuters) - Suntech Power Holdings Co Ltd (STP.N: Quote, Profile, Research) expects to build manufacturing plants in the United States and Europe to serve growing demand for solar energy panels, a top official at the China-based company said.

"We are exploring the opportunity to have strategic manufacturing outside of China," Steven Chan, chief strategy officer for Suntech, said in a telephone interview late on Wednesday.

"Europe and the U.S. essentially are two key markets. We are looking at places, but we probably shouldn't break it out at this point," Chan said, adding that Suntech expects to identify manufacturing locations within two years. Its European market includes Germany, Spain, France and Italy.

Suntech will grow from about 480 megawatts of production capacity at the end of this year to more than 1,000 megawatts by the end of 2010, he said.

The company estimates it will be the world's second or third largest producer of solar power cells by the end of 2007.

Chan reaffirmed Suntech's third-quarter production target of 94 megawatts to 96 megawatts and about 325 megawatts of total production for the year.

Suntech has contracted this year's production and also signed contracts to deliver more than 150 megawatts for 2008 "so it's a very, very bullish environment for sales," Chan said. "Demand is higher than the supply of photovoltaic modules through 2009."

The company has not set production guidance for 2008, but Chan said it can add about 150 megawatts a year on a conservative basis.

Tight supplies of polysilicon, a key component of solar systems, have stalled panel production for some small companies, but analysts say more silicon refining will begin to come on line in 2008.

Chan sees improving silicon supplies for the solar industry in 2009.

More silicon and a potential reduction in product costs will help China adopt solar power within two-to-four years to feed the nation's ravenous appetite for new power generation, he said.

"I hear they are adding a new coal or gas-fired plant each week, that's 500 megawatts of additional generating capacity a week and a lot of air pollution."

Suntech Chairman and Chief Executive Zhengrong Shi has adopted former U.S. Vice President Al Gore's climate crusade and is encouraging Chinese political leaders and others to attack global warming and climate change, Chan said.

"He is saying you guys need to start acting soon."