Solar panel manufacturers are set to cut their workforce by almost one-third as they struggle with an oversupply of panels and fierce competition.
Longi Green Technology Energy, a Chinese company, plans to reduce its staff by 30pc in a new round of layoffs. The first phase began four months earlier.
The move comes as China’s solar sector is undergoing a wave of redundancies after the prices for solar panels plunged to a record low.
Longi initially announced that it would start cutting its workforce, beginning with thousands of factory workers and management trainees, in November. Bloomberg reported that Longi is planning to increase the number of cuts.
It is unclear how many jobs have been cut. The company employed about 80,000 people in the past year.
The International Energy Agency (IEA), in January, warned that the world faced a massive supply glut. This year 1,100 gigawatts of solar panels are expected to be installed compared with just 402Gw demand.
The production capacity is expected to increase even further to 1,300Gw in 2028, against a projected demand of only 540Gw.
The IEA said that stockpiling had already occurred in European and American stores due to the “significant glut of supply”.
China’s solar sector dominates the global supply chain and fierce competition within China has driven down prices. This has forced companies cut costs, reduce staff and sell more inventory abroad.
According to EnergyTrend, since the beginning of 2022 the spot price for 182 millimetre ‘M10’ solar panels, one of the most popular sizes, has fallen by 70pc.
The IEA predicts that China will continue to dominate the solar industry, with 80-95pc control over supply chains.
Beijing has implemented policies that have led to the dominance of solar in global supply chains. Beijing views solar as a “strategic sector” and is pushing for lower prices.
It is harder for Western competitors to compete. It appears that the US has underestimated the threat of increased competition, as the Inflation Reduction Act is boosting some green energy sectors.
CubicPV, a company backed by Bill Gates, canceled plans last month to build a factory of 10Gw in the US. CubicPV had been one of many firms who initially expected to receive generous tax credits on American-made solar panel.
The rules announced in 2023, however, allowed solar companies the right to claim support, even if they used wafers made overseas. This removed the incentive for US-based supply chain establishment.