Struggling Chinese makers of solar panels turn themselves into customers by building solar farms

China’s loss-making makers of solar panels believe they may have found a way out of their nightmare – by becoming one-stop renewable energy shops with their own solar farms.

Manufacturers of solar panels, hit hard by the scaling back of solar-power subsidies in Europe, are taking advantage of a new package of government subsidies at home and diversifying into solar-power generation.

In an apparent bid to prop up its ailing solar panel sector, which has been hit by overcapacity and price and trade wars, Beijing unveiled a plan in July to quadruple solar generating capacity to 35 gigawatts (GW) by 2015. Construction costs are estimated at US$50 billion.

Spurred by a package of initiatives from tariffs to tax breaks, and continued low prices due to global oversupply, many of the country’s panel makers are now looking to invest in solar farms to help them return to profitability, industry officials say.

“Definitely the trend is Chinese manufacturers will make more downstream investment,” said a senior official at Chinese solar panel maker Canadian Solar. “Now the domestic market seems to be particularly exciting.”

For manufacturers, generating projects mean a predictable source of demand for their panels. Manufacturers are still mostly losing money, although panel shipment has improved this year on orders from China, Japan and the United States.