Sharp has announced that it will cease solar PV production at its Wrexham manufacturing plant in February 2014.

The company cited the “rapid commoditisation” of the UK and European solar panel markets as the reason for the closure of the solar production line.

The move could result in significant job losses for the local area, with the manufacturer expecting redundancies for up to 250 employees and non-renewal of related agency worker contracts.

In a statement, Sharp CEO for Europe, Middle East and Africa, Hiroshi Sasaoka described the decision as “unavoidable in the current business conditions”.

Sasoka added: “It is with sincere regret that we have decided to end solar panel production in Wrexham. Our employees are our greatest asset, and we have been fortunate to have a loyal, hardworking and committed workforce since we began solar production here in 2004.”

Sharp had previously moved its sales and marketing operations to London from Germany in 2012 and reported that the module assembly plant in Wrexham was running at near full-capacity in September this year.

Commenting on the future of Sharp’s European business, Sasaoka explained that the company was currently trying to ensure its future regeneration, he said: “Sharp will continue its solar sales business in Europe, expanding our customer base, as we move towards a true energy solutions business that draws on our expertise in related areas, including energy storage and management systems.

“Market conditions in Europe have become increasingly severe over the past 18 months. A 30% drop in the unit price of European solar panels since the beginning of 2012 has left Wrexham’s output uncompetitive here in the UK, and in Europe.

“In line with the corporation’s shift in its solar business strategy towards Sharp’s domestic market, the majority of panels produced at the plant during 2013 have been sold in Japan. From 2014, production for the Japanese market will be outsourced. This means maintaining capacity of Wrexham’s solar production is, regrettably, unsustainable,” Sasaoka said.

Finlay Colville, vice president at NPD Solarbuzz said a number of facors had influenced the decision.

“Japanese module suppliers Sharp, Panasonic (Sanyo), Kyocera and Mitsubishi were among the front-runners in the European residential market until the end of 2011, benefiting from strong brand presence and having strong distribution channels across Europe. However, over the past 12-18 months, most Japanese module suppliers – with the exception of Kyocera – have been required to change their strategy to the European PV market,” he said.

“Several reasons have forced Japanese companies to shutter European module fabs, with Sharp’s recent decision for Wrexham being the latest casualty. First, European factories were focused only on final panel assembly, requiring cells to be imported often from Taiwan or Japan if cell lines were still running. Also, the European market has been seeing increased market-share from Chinese tier 1 brands, in particular for large ground-mount projects.

“However, the key factor behind Japanese companies withdrawing from the European market is due to the growth of the domestic Japanese market, with Japan set to become the second largest PV market globally for 2013,” he added.

“Japanese companies, like Sharp, retain premium pricing within Japan – itself the highest priced market for modules today. Therefore, the decision to shutter fabs in Europe, and focus on meeting the growing opportunity on the doorstep in Japan, is an easy one to make. Indeed, many Japanese module suppliers have increasingly been retiring uncompetitive c-Si cell and module lines in Japan, in favour of outsourcing or OEM supply to China and Taiwan. This makes the economic case for retaining a European module-only fab all the more challenging, with margins on rebadging not conducive to shipping third-party products from one region to another.

“Even the booming UK residential market that is stabilizing at the 400 MW per year level today has not appeared to offer Sharp any scope for optimism regarding its Wrexham activities. The UK residential market is currently being supplied by Chinese module suppliers, adhering to the €0.56/W Brussels/Beijing floor pricing agreement, or low-cost tier 2 suppliers pricing below this figure. The competition to meet the served market in Europe, once the 7 GW of Chinese module supply is removed, has become highly competitive now,” said Colville.