sunnybloke

Greetings,

What a disappointment: If the International Energy Agency PV Power Systems Programme's (IEA-PVPS) 38.7 GW global solar market number for 2014 is correct, YoY growth was only 2.8% from 37.6 GW in 2013 (see documents published today at: http://www.iea-pvps.org/index.php?id=32).

This number is even worse than the preliminary numbers the European Photovoltaic Industry Association (EPIA) published last week at its annual market workshop in Brussels, which estimated a 40 GW market in 2014. I don't know if any one of these is correct, but when looking at the break-down - which is available for IEA-PVPS, this range seems quite plausible to me (I will try to analyze details in a later column).

However, both of them differ dramatically from what the the big solar consultancies, & analyst groups have been telling the sector for quite a while. The world's No. 1 solar consultancy, IHS, which recently took over competitor Solarbuzz, was still forecasting 45.4 GW in its Q3 report published in December.

I can totally understand PV-Tech writer Mark Osborne, who complained in his column on Friday about this market data chaos (http://www.pv-tech.org/editors_blog/will_the_real_2014_global_solar_installation_figure_please_stand_up). It's simply a totally different message when saying that the solar market grew year-on-year in the two-digit range or basically not all.

yours sunnybloke

Greetings,

If you look at the latest numbers on solar power registrations in Germany you wonder a lot why the German Government is so proud on its Energiewende (Energy Transition). The country’s energy regulator has just published that in October, newly installed photovoltaic (PV) power decreased to 75 Megawatt (MW), a 2-digit level! How embarrassing for the country, which once ruled the solar world. What a poor performance for Europe’s most populated and economically strongest country, which considers itself a leader in renewables.

You don’t event have to compare the numbers with the Solar Heydays in 2012 and the 2 years before (that was the time when the German market went totally wild and margins were similarly high as they are in Japan these days). But a further drop from 3.3 Gigawatt (GW) last year to around 1.8 GW in 2014 has pushed the German PV market to a dimension that is even below the Government’s new target corridor of 2.4 to 2.6 GW (which was decreased from 2.5 to 3.5 GW in the previous version of the EEG Feed-in Law). If it had not been for the peak in July, which led some investors to go solar before the EEG was changed, imposing extra fees on self consumed solar power for commercial size plants (>10 kW), total annual installed capacity would have even been nearly 10 percent lower.  

More than Grid-parity is needed

So what’s the key take-away? Well, what I have been saying for years - GRID PARITY alone is not enough, in particular in mature solar markets. If governments take away once high incentives, it will take quite a while before potential customers will consider buying solar for residential and commercial purposes. 

Explaining self-consumption, combination with storage, etc. is much more complicated than selling a feed-in PV system. Just an example: When I was having drinks at the Oktoberfest in Munich with a group of lawyers, one told me about his new house. So I asked him: “Why are you not putting solar on your roof?” Solar, was his answer, makes no sense anymore, they totally slashed funding. My reply: “Well, you can generate solar power for half the price of what you pay your utility. And to cover your family’s power needs you need a 4-5 kW PV system, which will cost you less than 7,500 Euro in Germany, which is very likely less than your monthly salary.” He looked at me, mentioned that he read that it would be difficult to get financing for solar under the new conditions. Then thought again, and said, Well for that amount of money I actually do not need a loan. Interesting, let me think about it. 

A lot of money for marketing needed 

Long story, short: PV companies will have to spend a lot of marketing money to sell its products to wealthy people but even more to the average house-owner in post feed-in tariff times. And that’s why E.on’s decision to divest from its fossil fuel part is so exciting. Unlike most other utilities, which have the dilemma that every electricity customer going solar is a ratepayer they are missing, E.on - freed from its fossil fuel assets - should in the future be able to fully concentrate to sell solar by using its strong brand, the bondage and trust of its customers in this brand.

Let’s hope Germany’s solar market has reached bottom (in fact, it probably has as, for the first time, 600 MW will be auctioned for ground-mounted PV systems next year). In any case, interesting times ahead. More soon.

Greetings from Munich,

How cool is this: It has waited too long, suffered heavily - but finally Germany's largest utility E.on has announced today (Sunday evening, 1st Advent!) that it will focus "on renewables, distribution networks, and customer solutions." The fossil fuels biz part will be divested in a separate company, E.on plans to bring public by 2016. 

When I organised the first SolarStammtisch Munich in early November - with almost all leading solar companies based in Munich participating - E.on was the only utility showing up. And when talking to them, it really felt they are now serious about solar. I wish them good luck with their new renewables strategy! More soon.

Greetings,

WOW! 5.986 ct/kWh from ACWA Power of Saudi Arabia was the lowest bid in Dubai state utility DEWA’s 100 MW PV tender. That was lower than almost anyone expected - and shows that solar power can be generated at very inexpensive levels even in "under-developed" PV markets. Interestingly, ACWA - a developer, operator and investor in power plants with a 16 GW generation portfolio - underbid even vertically-integrated US PV module makers and experienced EPC's First Solar and SunEdison, though the thin-film company will stay in the game. However, it will be interesting to see cost assumptions of ACWA, which will use First Solar modules for its 130 MW plant proposal. In any case, this transparent tender process, which several close observers I talked to emphazised, will likely serve as a blueprint for other solar projects in the region - and I am pretty sure the very low bids will also help propel the use of solar power in the Middle East.

To see the list of the final bidders with details on prices, plant size, etc., go to the DEWA website. More soon.

Greetings,

The Solar Energy Corporation of India (SECI) plans to publish the tender for a Pilot Scheme for Grid Connected SPV Systems for Warehouses in 2-3 weeks, said the organization’s R.K. Jain, last week at Intersolar India in Mumbai. SECI, a non-profit organization, is mandated by the Indian Government “to facilitate implementation of the National Solar Mission (JNNSM) and achieving the targets set therein.”

The new pilot program for warehouses, which will support 73 MW, plans to help kick-starting solar demand for the the vast unused roofspace available on these facilities in India. SECI estimates that a typical warehouse can accommodate about 500 kW. As the power demand of these facilities is considered rather small, operators will be supposed to feed most of the generated electricity into the grid. SECI targets the premises of the Central Warehousing Corp (CWC), Food Corporation of India (FCI), SWCs and private owners, with plant sizes ranging from 500 kW to 5 MW. 

Bidders need to willing to operate as renewable energy service companies (RESCOs), which will be eligible to rent the roofs for up to 50 paisa/kWh. SECI hopes that distribution companies (DISCOMs) could purchase the solar power to meet their Renewable Portfolio obligations (although there is still a problem that states are generally no punishing non-compliance with RPOs). However, the Indian Government will support the scheme with up to 2 Crore ($320,000) per MW  (see slide).

photo credit: sunnybloke.com

On a different note, SECI reported yesterday, that the deadline for bids of 5 MW PV power plants in Rajasthan and Gujarat was extended to Dec. 8, 2014. More soon. 

photo credit: sunnybloke

Greetings from Mumbai,

After India’s new Energy Minister Piyush Goyal was reportedly quoted in a number of media channels in the last few days that he wants to raise the country’s solar target from 22 GW by 2022 to 100 GW, sunnybloke was able to talk briefly talk to Tarun Kapoor, Joint Secretary in the Ministry of New and Renewable Energy (MNRE), at the Intersolar India trade fair in Mumbai. Asked if he believes that the market increase from less than 3 GW today to 100 GW in only 8 years - which would mean about 12 GW per annum - could be sustainably achieved, Kapoor said confidently:  “Yes. Though it needs to be ramped up, it can’t be done from the first year itself.” 

Up to 8 GW in 2015

Nevertheless, Kapoor would like to kickstart with an already quite big number. “Maybe next year we should be able to do 6,000 to 8,000 MW.” Afterwards, he believes, “it has to be a stable number to go on for several years.” Regarding sustainability, he seems very confident, that the industry can stem this volume in India.

Keeping some share for local cell makers

India has recently stepped back from its anti-dumping charges on module imports, but the Modi government intends to keep its domestic content rule, which requires the use of Indian cells in projects of the National Mission’s second phase. When asked if there will be a 50% domestic content share, Kapoor replied that on such a large scale 50 percent would be too much. “It has to be on a smaller percentage but in absolute numbers it will be large enough to grow the market for domestic manufacturers.” Kapoor would not give an absolute number. He only pointed out that the Indian cell capacity today is theoretically 900 MW to a 1 GW, but “actually not, because those guys did not get enough orders and most of them shut their plants.” 

Indian module makers, however, will not receive government protection. “Module manufactures can survive on their own,” Kapoor stressed. There are other reasons that several new companies have or are about to enter this production segment, which requires less capital and is much easier to set up. According to Kapoor, investors are hearing that the market is going to grow, that more people are going to get jobs. “It has more to do with the prospects of an increasing market, increasing demand - and the targets the new government is talking about.”

Pushing rooftop PV as well

While the PV systems in the National Indian Solar Mission have been getting larger and larger - increasingly exceeding the 100 MW level  - sunnybloke asked what role commercial and residential rooftop solar will play. “In India, we would like to have 30 to 40% rooftops, the rest would be large plants,” Kapoor said. More soon.

Greetings,

The three leading publicly listed Taiwanese solar cell manufacturers reported surprisingly good sales numbers, taking into account that the US market is basically blocked for their products. In September, Motech Industries Inc. increased sales by 30% month-on-month, Gintech Energy Corp. improved its numbers by 21% and Neo Solar Power Corp. (NSP) improved turnover by 5% (see chart 1). This is a very good development as Taiwanese companies were hit very hard when the US Department of Commerce (DOC) expanded its anti-subsidy/anti-dumping tariffs against Chinese modules to Taiwanese cells in June and July. In consequence Taiwanese solar companies' sales tanked in the summer months.

Good news for Taiwanese and beyond

The strong uptick in sales not only is good news for the Taiwanese companies, which urgently needed this boost for their under-utilized factories, but also a very good sign for the overall solar market. After hardly any solar power systems were installed in China in the first half of the year, the recent publication of the guidelines for the distributed generation solar segment has kick-started the long-awaited huge pull that is assumed to facilitate the country remains the world’s largest PV market this year. Together with the strong pull from Japan, US, UK and many other small emerging markets, there is so much demand the first analysts have even started talking about a product shortage.

“Positive revenue trend for Taiwanese cell makers may well extend into late 2014”

So why have the Taiwanese cell capacities not been used to satisfy demand in other countries? Simply because their prices were so high, some low-margin markets, like China, would not be attractive and in others it would have strongly shrunk margins of module suppliers. But now, apparently time has come again both needs are matched - the Taiwanese were so desperate that they have decreased prices and the  Chinese are willing to pay a little more also for usage of Taiwanese cells in their modules outside the US. “Cell and module prices have bottomed up since early September on stronger demand, especially from China domestically,” Herbert Lu, NSP’s head of Corporate Marketing, told sunnybloke. “As you can see many Taiwanese cells see positive revenue growth in September and I believe the trend may well extend into late 2014,” he said. Adding, “Considering the UK and Japan incentives review and adjustment due in Q2/2015, I think there will be a rush for installation, at least until end of 2014.”

Bonus for higher quality?

Lu believes that there’s another reason for Chinese companies to use Taiwanese cells. “Since the distributed generation incentivizes power output instead of installed capacity, there is a need for high quality and high efficiency cells - and that is where Taiwanese firms are good at and thus benefit.” However, while Taiwanese cells indeed are considered top quality, the top tier Chinese companies can do that as well - so new demand is much more triggered by the lower product price.

NSP produces at full capacity

“Our factories are currently at full capacity and many Taiwanese tier one also see 85% or higher utilization,” said Lu. If correct, that means that soon there will be little leeway for Taiwanese to supply more cells. After the DOC announcements Taiwanese companies put all domestic expansion plans on hold, but were even more thoroughly looking into expanding abroad. Gintech and NSP execs mentioned such plans to sunnybloke in interviews earlier this year, and in the meantime two smaller Taiwanese companies have announced exactly such ventures. In mid-September, Taiwanese news provider Digitimes published that Solartech and Tainergy intend to set up cell production in Malaysia and Vietnam.  

New cell price increase on the horizon?

However, if you look at the year-to-date sales number of the three largest Taiwanese cell makers they do not look so bad when compared with last year (see chart 3). In fact, they are at similar levels in 2013 and 2014 for both Gintech and Motech; the strong 2014 sales increase of NSP can be explained in the merger with DelSolar in late May 2013; for the first 5 months of 2013 DelSolar’s sales were not included in NSP’s sales statistics.

And if the year-run will come as anticipated than we might see cell prices to go up again in the coming months - there’s big markets with high margin-potential, like Japan and the UK, where it makes a lot of sense to get a system in place with somewhat more expensive Taiwan cells than not being able to finish the project in time at all. 

More soon.

source: Eurelectric

Greetings,

Would Europe’s large utilities have been able to circumvent the misery they are in today if they had looked seriously at things the US Solar Electric Power Association (SEPA) is trying to tell its members through its so-called Fact Finding Missions to other countries, where attendees can learn their lessons from local utilities, regulators, government representatives? 

Probably not. Oliver Schäfer, President of the European Photovoltaic Industry Association (EPIA) - and one of the speakers on the first day of SEPA’s trip to Germany in mid-September — pretty much hit the nail on the spot. “In Europe, such a meeting between execs of utilities and solar companies would have not taken place.” 

I fully agree. Even if you might argue that a few years ago, when solar output was still negligible in Europe’s large PV markets, no case studies were available on the problems PV causes to utilities by shaving peaks and profits. Well, at least as early as 2008 there was a chance to hear about what’s likely coming. At that time I was responsible for the Photon Group’s Conference Program - and we tried to wake up conventional utilities. Assuming that solar’s cost would decrease much quicker than most anticipated - with all its consequences, such as solar quickly shaving peak load and soon after medium load generation, dramatically dropping wholesale prices and negative network effects leading to shrinking customer base, revenues and profits -, we added a utility event to our conference series. But only polysilicon supply for solar was a hot top topic these days, pulling nearly 1,000 attendees to our silicon event, while just very few came to visit our first solar electric utility conference - and these were almost solely solar professionals. Representatives from traditional European electric utility companies were mostly unaccessible - we neither got them to talk nor to listen. As we envisioned the near-future impact of solar’s rise, our team tried harder. We published editorials and articles about that subject - e.g. The black Swan by Michael Rogol, the head of Photon Consulting, who also had the idea to rename the utility conference and call it “TECAF - Traditional Electricity Companies are F****d.” Admittedly not very welcoming at all. But the thinking was that the dramatic challenge arising for incumbent power companies needs a strong wake up call. Well, for the US TECAF event in 2008, we could win at least the California Energy Commission, the state’s power regulator, to talk - as well as the Chairman of the Board of SEPA.

I don’t want to give the impression that traditional US utilities are generally more open than their European counterparts. They have been probably rather lucky that solar didn’t come as a storm like in Spain, Italy and Germany. Despite SEPA’s early efforts, many of the big utilities are still very reluctant when it comes to solar power - if at all, they usually leave their unregulated arms explore that terrain. But it looks like they all have the demise of RWE & Co. now pretty much on their radar.

Dissent - will solar, wind and gas be the winners?

It is simply hard to oversee how bad the big European Gencos are doing - and we can all witness it at least once a quarter they announce their financial results. However, when EPIA’s Schäfer showed the market capitalisation development of the largest European utilities you could see the US utility execs listening very thoroughly (see graph).

source: EPIA

“If this trend continues there is no future for utilities. The time of their monopolies is over, they have to adapt to the new reality.” Still, consolidation will continue, like in solar - and those who don’t change their business models will not survive. Regarding Europe, Schäfer believes that solar, wind and natural gas will be the winning trio (see graph).

source: EPIA

Significant new capacities were only added for these three technologies in recent years. Despite the war in the Ukraine and the EU having just added further sanctions on Russia, Schäfer does not believe that Russians will dare to cut its gas supply to the EU; they simply need this money, he underlined.

“I disagree on Oliver’s view that solar, wind and gas will be winners. A lot of things are starting - we should not loose sight,” replied Susanne Nies, head of the Distribution System Operators unit at European utilities association Eurelectric. “Gas is absolutely unprofitable and it is not coming back. You must be in the church to do gas business in Europe other than for heating,” she said. “It is cheap to build gas power plants, but very expensive in operation with todays gas prices.” Operation of so many gas power plants has been stopped in recent times. Moreover, Nies was much more concerned on energy security, which will be a major focus in the new term of the European Commission, she emphasized.

Agreement - sleeping giants!

But there was also agreement. “Utilities have been sleeping. They have to wake up and accept there is a prosumer,” Nies admitted openly. And continued her self-analysis. “We are paying the price for extremely bad communication.” In Germany, people were totally fed up by arrogant utilities, which didn’t take their concerns about nuclear power serious but gave them ridiculous explanations, such as ‘Don’t worry, power does not come from nuclear but from your socket.’ On the other hand, she said that the people’s dismay of utilities is also unjustified. “Customers should hate the state for rising prices, but they hate us.” In fact, retail prices stayed more or less stable, it is taxes, etc. that caused the price to increase by nearly 170 percent over the last 12 years, she said.

End of European utilities descent reached soon?

Eurelectric believes that the value creation of conventional generation will continue to decline, though much slower - from €62 billion in 2011 to €55 billion in 2012 and an estimated €49 billion in 2020, assuming commodity prices won’t change (see graph).

source: Eurelectric

At the same time, the European utility association sees new growth areas to offset the decline in the traditional business fields. This should even increase the European power industries EBIT from €114 billion in 2012 to €138 billion in 2020. Renewables are believed to contribute the largest part, €14 billion, followed by downstream products, such as DG, EV infrastructure - and also storage, which Nies, however, considers much too expensive today (see graph).

source: Eurelectric

One reason for optimism, Nies emphazised, is the European utilities openness toward innovation. Between 2000 and 2010, R&D spending of European companies active in the electricity, gas and water supply sector increased by over 7%, compared to 5.5% in the US and a 3.1 percent decrease in Japan (see graph).

source: Eurelectric

Unfortunately, as we all can see that was spent on the wrong ventures - and today is late-2014. However, Nies obviously appreciated the US delegation’s visit to Europe. When resuming her talk, she said, “Good you are coming to talk to us. You are in many fields much more advanced - in market design, demand response, etc.”

So low: Installed PV costs only 90 euro cents per W

While the US utility execs were quite pleased with Nies’ compliments, many eyes and mouths within the audience opened wide when Stefan Müller, COO of Enerparc, presented how much cost for solar have decreased in Germany and that installed cost for a 1 MW solar system would be as low as 90 euro cents per watt - when using modules at 50 euro cents/W (see graph).

source: Enerparc

Moreover, technical guidelines and financing structures are well established, generally very easy to access and use for developers. Not only would it be rather easy to get a 100% non-recourse finance loan for a as little as 2.5% interest, Müller said, installation for a 10 MW system would take no longer than 4 weeks, with grid-connection averaging only 4-6 weeks for all of the around 600+ MW Enerparc has installed and operates in Germany so far. These positive boundary conditions would allow his company to still build new ground-mounted power plants with a return of up to 5 percent in Germany, although the feed-in tariff is now as low as 8.8 eurocents/kWh for that category of solar systems. This year Enerparc will still install around 50 MW in Germany, Müller told sunnybloke. 

The second day of the mission, the US delegates visited Eon at its headquarters, where presenters from the leading German utilities presented their views on the consequences of Germany’s Energiewende (energy transition) project. It will be interesting to read SEPA’s take aways - and see in a few years which members will actually have used these insights for their strategic planning. More soon.

photo credit: sunnybloke.com

Greetings,

It’s moving towards the sun. A planned 100 MW (AC) PV project in Dubai could become the blueprint for further large-scale solar installations in the GCC region. A pre-bidders conference in mid-September was not only attended by the pre-qualified bidders, it was closely observed by representatives of other Middle-Eastern countries, a participant told sunnybloke.  

“We expect to see the winning bid ranging from $0.07 to $0.08 per kWh,” says the source. Of the nearly 50 submissions for the RfP that was released in July, only 24 were short-listed in August. The pre-qualified bidders have to hand in their proposals by Oct. 23, a winner will be selected on Dec.18, 2014. 

The 24 bidders (see list below) include many of the usual suspects - alone or as part of consortia - such as leading US PV developers/EPCs First Solar, SunEdison, NRG, SunPower, energy companies EDF, GDF, and Chinese solar companies, like Trina. But it also contains somewhat smaller IPP’s that have mostly focussed on their home markets in the past, like Enerparc from Germany or Solaire Direct from France. 

While the large western energy companies traditionally are very well connected on the Arabian peninsula, which explains that EDF subsidiary EDF Energies Nouvelles, GDF Suez, Total/SunPower entered the bid without local partners, it is surprising that several others - including Trina, Hanwha/Q-Cells, LG - are following the same strategy. Of the 24 pre-bidders 17 have formed consortia, only 7 companies go alone (marked * in list). Interestingly, some companies have entered 2 bids - Huaneng twice with the same partner, Enerparc with different partners.

The scheduled commercial operation start for the 100 MW power plant is April 2, 2017. The Dubai Electricity & Water Authority (DEWA) will own 51% of the project, the bid-winning IPP will hold 49%. 

However, “While the original idea was to award only one bid, the quality seems pretty high, so that we could imagine that DEWA finally contracts more offers,” the source says. If true, that could be an important sign for the whole Middle Eastern region, which is considered a huge potential market for solar and with several countries having outlined ambitious solar targets, but of which hardly anything has been installed so far. 

Dubai plans to have 5% of its electricity coming from solar by 2030. As part of a 1 GW solar program, a first phase 13 MW PV plant was awarded to First Solar, which build the system in 2013. The new 100 MW project marks the second phase of the project. More soon.

Yours sunnybloke

List of 24 pre-qualified bidders for 100 MW PV plant in Dubai

Abengoa Solar Ventures

Acciona Energia

ACWA, TSK*

Akuo Energy International, Enerparc Power Plants*

CECEP Solar Energy Technology, Solarig Holding*

CGN Solar Energy Development, Dubal Holding, Meiya Power Company*

Dallah Group Company, Enerparc Power Plants*

EDF Energies Nouvelles

First Solar, Corys Environment*

Fotowatio Renewable Ventures, Abdul Latif Jameel*

Hanwha Engineering & Construction, QCells*

Huaneng Power International, TUAS Power*

Huaneng Power International, TUAS Power*

International Power, GDF Suez*

LG International Corp., LG CNS*

Masdar, Corsan Construccion (ISOLUX)*

NRG Renew, Saudi Oger*

SECI Energia, Al Jeel Al Hader Trading, Enerray, Chint Solar*

Skypower, FAS Energy, EFECO*

Solaire Direct, Gulf Investment Corp.*

SunEdison Solar

Total Energie, SunPower

Trina Solar

Welspun Renewables Energy

Greetings,

Trina Solar is the world's largest module supplier in Q2/2014 - with chances to keep this position for the full year. The Chinese company shipped 943 MW from April to June 2014. That’s a nearly 70 percent quarter-on-quarter growth from its 558 MW shipment in Q1. It is the highest module volume shipped ever in a quarter - even larger than Yingli Solar's 937 MW shipped in Q4/2013. And it is also 55 MW higher than Yingli's Q2 shipments. Yingli, the former No. 1, has published today that it increased shipments by over 40 percent from 631 MW to 888 MW in the second quarter. However, if Yingli had met its upper target of the Q2 guidance it provided in its first quarter call (870 to 950 MW) it would have kept its first rank. 

Canadian Solar is the new No. 3 after increasing quarter-on-quarter module shipments by nearly 30 percent from 500 MW to 646 MW. It overtook ReneSola (499 MW) and continued to leave both Jinko (571 MW) and JA (446 MW) behind. Notably, ReneSola was the only module supplier of these six US-listed Chinese module makers that shipped less panel power than in the previous quarter.

Looking at the full year 2014, Trina might even defend its newly won position. While Trina maintained its full-year shipment guidance of 3.6 - 3.8 GW, Yingli lowered its 2014 target range from 4.0 - 4.2 GW down to 3.6 - 3.8 GW. More soon. 

photo credit: sunnybloke

The recent press release about Brazilian company S4 Solar do Brasil's investment in a 100 MW module factory in Goias is good news for the country’s very young PV market, which is expected to grow very strongly. The most important take away from S4’s line design, however, is that the module assembly equipment will be mainly sourced from China. 

While the new module fab will use one high-tech stringer from Swiss company Meyer Burger, another one comes from Confirmware - a Chinese equipment maker probably not too many people have heard of. The laminator and all automation equipment will be supplied by Jinchen Machinery Co. from Yingkou, China, which will deliver the lamination equipment and will also take care for the entire line integration process. “We have full order books,” Jinchen’s Frank Faller told sunnybloke. Most of the orders are from China, where basically all big module makers have been recently investing in automation for their solar panel assembly plants. But Jinchen’s business is slowly but steadily expanding beyond China’s borders. Recently, it sold its automation equipment to Turkey’s Zahit Aluminum, which is now making panels it is marketing under its Solarfield brand. There will be many such opportunities in the near future - with new solar markets popping up like mushrooms and many of those trying to protect their turf and create domestic production jobs by implementing import taxes, local content rules or minimum tariffs. Also Brazil's National Development Bank (BNDES) requires certain module parts to be produced locally to qualify for its low-interest financing offered for solar projects.

Jinchen’s Faller, who worked for many western PV companies - including Shell Solar, SolarWorld and Centrotherm - in the past, believes that Chinese module equipment will gain quite some market shares. “The Chinese equipment companies are learning quickly, and this is true for stringers as well,” he says. While Faller chose one Western stringer for S4’s line to have a long-time proven product and high-end workhorse, the price/quality ratio of the Chinese stringer was so attractive that he even was willing to deal with the headache of integrating two different soldering devices from very different manufacturers in one line. Moreover, he pointed out, that the quality of Confirmware is pretty good and that many machines have been already sold in China. Regular visitors of the annual SNEC trade show in Shanghai have been observing a steady increase of PV production equipment from Chinese companies; this year you could see also a lot of stringers made in China on display (see photo). 

photo credit: sunnybloke

If Faller’s predictions are right that could mean another blow for western module equipment makers at a time when the next global production expansion cycle is about to start. These companies have been strongly dominating the space for stringers, the most sophisticated machine in module manufacturing and a tool that is now commonly used for new factories even in non-OECD markets. In the past, Chinese module makers had their products usually soldered manually, but pressure from project investors and banks for better quality control as well as rapidly increasing salaries and frequently changing employees have led the top tier manufacturers move toward stringers. When big Chinese companies increasingly started to add large volumes of such automated soldering solutions in the last 24 months, they usually relied on non-Chinese devices, mostly choosing product from German company Teamtechnik, which considers itself the market leader and supplied dozens of its devices to Yingli and JA, among many others. While Teamtechnik even produces its machines in China to cut on cost and be close to its customers, it seems to be not too distant in the future until this part of module production lines will see a big portion coming from much lower-cost Chinese companies - in China and beyond. More soon.

When Wacker Chemie posted its excellent Q2 results on Aug. 1, 2014 - with poly division sales up +4.3% QoQ and +34% YoY - it showed an interesting slide on supply-demand for high-quality poly. For its high growth case (65 GW) in 2015, the German company sees demand exceeding supply for very pure polysilicon, because “only a limited number of producers still operate after 2012/13 consolidation” and because it considers “new entrants cost-efficiency questionable.”

source: Wacker Chemie

65 GW, however, seems to be a pretty upbeat market growth assumption for 2015, at least when compared to Bloomberg New Energy Finance, which currently forecasts 58 GW for 2015 in its optimistic scenario. And although there is indeed a strong trend to high-efficiency cells, which need very pure poly, there is also news that lower-quality silicon producers are seeing increasing demand and new business opportunities in solar. In May, Norway-based Elkem Solar announced it resumed production of its upgraded metallurgical silicon factory and was ramping towards full capacity utilisation; and in mid-July, US company Silicor Materials Inc. announced that it selected a production site in Iceland for its first 16,000 ton facility, which it plans to bring online in 2016. Silicor said that it expects to sell the full output by the end of this year. 

However, also in the low-case demand scenario for 2015 (49 GW) - which even current players will be able supply, according to Wacker -, the Bavarian company is very likely to do well. Wacker, which has had always one of the lowest cost structures, said it reduced cost through “operational performance” from Q1 to Q2 - though without providing details. Moreover, it is also not affected from recent anti-dumping/anti-subsidy tariffs China imposed on silicon made in Europe. According to Taiwanese consulting service EnergyTrend, Wacker was able to cut a deal with the Chinese Ministry of Commerce that keeps its products competitive. More soon.

photo credit: sunnybloke.com

Greetings,

If you are looking for the CEO of Canadian Solar Inc. (CSI), there are actually plenty of opportunities to spot and even talk to this busy man. I briefly met Shawn Qu in February at PV Expo in Tokyo, in May at SNEC in Shanghai, in June at Intersolar Europe in Munich and interviewed him in July at Intersolar North America. I don’t know any other leader of the world’s top PV companies being present at so many shows. Some might think - what a waste of time, a CEO should have operational staff, sales guys and probably a local head on the trade floor, I personally believe it makes a lot of sense for execs to be out in the “field” - and learn directly how solar markets in different geographies tick. What impresses me quite a bit is that Shawn Qu is always asking a lot of questions himself, very eager to understand what his counterpart thinks. There might be a reason why CSI has been the pioneer and leader in utility-scale solar among Chinese manufacturers and was the first of this group to be back in black.

Thinking YieldCo

When we met in San Francisco in early July, I started the conversation with an open question. What’s the most interesting subject for you to talk about? Shawn Qu’s response came pretty fast. “First of all, as business model-wise people continue to move downstream, everybody talks about total solutions - and people increasingly start to talk about YieldCos.” While he added that this development is not totally new, but has been like that for a few quarters, “We are starting to see downstream and YieldCos strategies gain traction.” Qu sees investors are really getting hot about YieldCos. “They almost push us to move into adapting a YieldCo strategy,” he said. So far, CSI has typically developed projects and sold it to offtakers, partners -  a business model, which Qu says he likes, however, “Investors like to see us retain the good development projects, retain more value for shareholders.” Is CSI going to jump on the YieldCo train soon? “We have the ability, we certainly have the project assets, project development experience, pipeline and backlog in order to launch a YieldCo - so I keep this strategy in my pocket,” said Qu. However, there are already voices warning that YieldCos could be the next solar bubble to burst, I said. But Qu didn't seem concerned. There will be successful companies, there will be some who fail miserably, he replied. It will depend a lot on the quality of the projects, on who backs the feed-in tariff. “That’s why it makes a difference going to low-risk or high-risk countries,” he said. 

Possible expansion to leasing and loans to end-customers

The whole YieldCo concept is based on PV power plants but in many countries there is at some point of its solar evolution a tendency away from centralised to distributed solar power generation, with governments putting obstacles for utility-scale solar. But Qu believes utility solar will remain a large market. “Solar is both - it is for utility scale and also for DG. Solar system cost will go down so much that utilities can’t resist solar, even for utility generation,” he said. Regarding DG, with US integrator SolarCity going upstream through its take over of US cell maker Silevo, sunnybloke asked if that means that in return big Chinese module makers, like CSI, will expand further downstream, offering third-party-ownership or loans to end-customers - like automakers who are having their own banks? “Everything is possible, some solar companies already offer leasing models, it is very possible,” he answered.

The value of manufacturing

Another interesting phenomena Qu sees is what he “calls the resurgence of manufacturing, especially the efficiency game.”  People would start to ask questions about high efficiency solar cells and the manufacturing asset. “Especially the recent acquisition of Silevo by SolarCity is making investors realise that high-quality manufacturing is actually valuable,” he said. While investors mostly have been focussing on the downstream part of the value chain in the recent solar past, “My thought has always been that I want to have 2 lines in my business strategy. I am not going to abandon manufacturing, just to offer total solutions or solar projects, because both legs absolutely make sense.”

Virtual vertical integration

Although CSI considers manufacturing an important asset, Qu wants to keep his company flexible. “For solar cells we have always had a reverse pyramid structure - my module capacity has been always bigger than my cell capacity,” he said. CIS makes about half of the solar cells itself, the rest it purchases from long-term cell partners - from Taiwan for modules going to the US, from some Chinese cell-only companies for domestic applications. “I am pretty picky on the cell suppliers,” Qu emphasized. They are told which screen printing pastes need to be taken, which quality criteria (e.g. PID-free) need to be met. In the end, they must be able to produce the same quality as CSI, Qu even said he hopes they might do better. 

“The whole purpose of virtual vertical integration rather than a total self integration strategy is that I have the flexibility and I also maintain an external benchmark,” said Qu. The contracted external cell makers are allowed to produce for other module assemblers as well, only for certain technologies there are exclusive terms. 

Mostly multicrystalline - a “simple product portfolio”

“I have a very simple portfolio,” Qu underlined in our talk. Currently, he said, CSI focuses on multicrystalline cell technology, 80-90 percent of its modules are basically based on this technology - “Multicrystalline high efficiency modules, which we can ship at high volume and low cost.” Qu wants to improve multicrystalline cell technology from average 17.6/17.7 percent today to 19.5 to 20 percent, at the same time reducing cost from today’s around 50 to about 40 cents. He openly admits that he believes any good manufacturer can achieve 19 to 20 percent in the lab. It just needs black silicon and PERC to get to 19 percent, plus a few tricks to add another percentage point. “But you have to be able to achieve this on a large scale, with gigawatts of production - and that’s the challenge,” he pointed out. In CSI’s existing cell workshop, its best line - called the golden line - can produce traditional multi cells with 18 percent efficiency. While relying to a large extent on outsourcing to cover recent increase in demand, CSI will spend some money on new equipment for a new workshop. Here, the first stage will only have 60 MW new capacity - a line the company wants to use to demonstrate around 19 percent efficiency at the same manufacturing cost as for cells made on the older lines.

Hetero-junction cell technology needs several more years to mature

However, as CSI considers itself a technology leader, it also offers its proprietary high-efficiency cell technology, called ELPS - an metal-wrap-through (MWT) cell. It is also developing an n-type, hetero-junction (HJ) based cell structure, but Qu thinks that this HJ cells might need 4 to 5 years to get mainstream, so it “could be the next generation technology.” That’s a much more conservative view than Taiwanese company Gintech’s, which plans to start production already in 2016 (see Gintech blog post from June 24, 2014). But Qu points out that the key is low cost, high yield, high throughput manufacturing - and that would take time to mature. “Rather than having 100 products - most of them which do not generate profit at all, I rather like to have 3, 4, 5 key products, which generate 80 percent profit for me,” he said and pointed to 2 module types on display at the CSI booth - the CS6P - a 60-cell module - and the CS6X - a 72-cell module. “This accounts for probably around 90 percent of my total shipments,” he said. Adding, “Recently, Canadian newspaper The Globe And Mail quoted me saying i am a boring engineer - and in a way that’s my thinking. We are in the manufacturing business and not in internet shopping.”

New double-glass module

That doesn’t mean CSI is not adding anymore new products. At Intersolar North America it presented a glass-glass module (CS6K-250 I 255P-LG) as well as panels with 4-busbar cells. The new double-glass “Diamond” module contains 60 multicrystalline cells and is offered in two power classes (250 W, 255 W) with positive tolerance up to 5 W. It comes with a aluminum frame, measures 1,660 x 990 x 5.8 mm and has a 25 year linear power warranty. “I like the double glass module, because it has a better durability than modules with back sheets,” said Qu. “And weight was only an issue in the past, now tempered thin glass is available and lamination technology has improved.” Using a 2.5 mm thin tempered front cover glass, the new module weighs 23 kg - which is only about 4 kg more than glass-backsheet panels of that size. At Intersolar, CSI has started promoting this new module, for which IEC/UL certification is still pending. Production, however, is slated to start this year. It might take a while but sunnybloke is pretty certain that double-glass c-Si modules will find many customers (when still with Photon International, I wrote in my August 2013 editorial why I believe glass-glass modules have a great future - and as of today that view has not changed). However, several other module companies have presented double-glass c-Si products earlier than CSI, and at Intersolar you could see many of these panels on display. 

photo credit: sunnybloke.com

AC module with China-made inverter, smart meter

It’s an AC module that was a much more interesting new product from CSI. While the panel is a typical 60-cell product, using monocrystalline cells and resulting in 250, 255 and 260 W power ratings, the outstanding feature is a microinverter that is directly attached to the backside of the CS6P-250/255/260M-EA (all black). The inverter has a nominal input power of 240 to 250 W, a maximum continuous input power of 270 W and on the AC side a peak AC output of 240 W. The peak efficiency is 96.5 percent, which is exactly the number of microinverter market leader Enphase’s new 250 W product M250. But this inverter is not sourced from this US inverter maker. “It is a co-development and made by an electronics manufacturer in China,” said Qu. CSI has a period it can sell this product exclusively, but Qu would not say how long this lasts. So why didn’t CSI cooperate with Enphase or attach the product from another US inverter producer, SolarBridge, which a number of other companies are using for their AC panels. “Do your numbers,” said Qu (smiling) - and provided an example. Let’s assume, he said, you would make no more than 10 cents per W gross margin for a microinverter, so 100,000 units would translate into around 25 MW, which would be a lot for such a product in the first year, but result only in $2.5 million gross margin. And you need to build all the infrastructure to handle the new product, the introduction, the field and customer service, etc. In other words, CSI sees potential in this technology, but wants to make sure that once this segment becomes really profitable as much of the money as possible lands in its pockets. It will be probably also about “big data” on system operators - CSI, which starts selling this AC module via selected partners in the US says in the data sheet it will provide “free basic lifetime monitoring” to its customers. This would also tie into another new product presentation - a smart meter. “Our aim is to bring integrated solutions to the market,” said Qu.

photo credit: sunnybloke.com

The AC module is just one segment of the residential market, you are not going to see microinverters on every module anytime soon, because there are competing options from microinverters to power optimisers. Who will win? “The jury is still out yet,” he said. Does that mean CSI has also plans to introduce panels with power optimisers from Tigo or SolarEdge, like Chinese competitors JA and Trina, or even go with a separate product? “Well, we have all these technologies in our kitchen,” Qu answered somewhat nebulous. And again he underlined that he wants to be a technology leader, providing solid products to his customers - but you need to be profitable to do that in the long run. “Sometimes it is better to focus on mainstream than paying too much attention to niche products, he said. “It’s not a sexy strategy, but it might be a more profitable strategy.” More soon.

Greetings,

When I met Neo Solar Power Corp. (NSP) President Andy Shen the last time before this meeting, the Taiwanese company had just announced its merger with DelSolar, which turned it into the island’s largest cell maker. About 12 month later, in early June at Intersolar Europe, I talked again to Andy and his VP Worldwide Sales and Marketing, Simon Li. Surprisingly, the company was still very bullish although the situation has changed quite a bit - a year ago, NSP was at the start of a strong upturn, backed by the US import tariffs on modules using Chinese cells. Just before this conversation, the US Department of Commerce (DOC) had announced preliminary countervailing tariffs to Taiwanese cells used in Chinese module, the rule on anti-dumping tariffs was still pending (see also blog entry on Gintech below, from June 24).

Expanding system business

However, first of all Andy pointed out that the merger with DelSolar worked well. “We have a cell capacity of 2.2 GW, which makes us the world’s largest merchant cell supplier.” Shen conceded that a number of Chinese companies have bigger capacities but almost all for in-house use. Still, he pointed out that NSP belongs to the top global 5 cell makers. The other “highlight” he pointed out was his company’s move downstream. It operates some “moderate” module capacity - currently at around 285 MW (155 MW in China and 130 MW in Taiwan), which will reach over 480 MW combined by the end of the year. “This is what we’ve promised and deliver.” And in addition, NSP is the major shareholder of a systems company called GES (General Energy Solutions). Last year, GES installed 62 MW in Japan, Taiwan and the US (see photo from solar system at Indianapolis airport); in 2014, the target is nearly 100 MW. “It is not yet very big, but we want to steadily increase it,” said Shen.

Photo credit: NSP

Subcontracting external manufacturers

When Shen said they are producing up to capacity, sunnybloke asked about expansion plans. “We are doing several things - optimisation, debottlenecking and sub-contracting,” he said. “When we met a year ago, we had 1.9 GW cell capacity; through buying some equipment here and there and debottlenecking we reached 2.2 GW.” Including outsourcing NSP has probably around 2.4 to 2.5 GW total processing capacity this year. “We are not doing large-scale sub-contracting, only around 10 percent of the total,” he said. Interestingly, Shen pointed also at the company’s social responsibility to use external unused capacities, but the main drivers are obviously different ones. “It is insane to spend fresh money for new equipment as long as there is available idle capacity,” he said. And NSP obviously tries to delay large capital expenditures for new lines as long as possible - that’s what everyone of the big cell & module makers does. 

  US antidumping probe causes sales drop for Taiwanese in June

Asked if NSP is worried that orders from China might collapse following the upcoming AD decision, Li answered that it’s the uncertainty that worries him most. “This is the worst case,” he said. “First, there is an announcement (from DOC), later it is postponed; so the market does not  know how to handle it,” he complains. If its customers have to deal with a fixed tariff, NSP could talk to its material suppliers - and everybody will adjust prices, Li thinks. “A certain percentage has a certain impact, but as long as nobody knows any exact numbers it can cause big problems,” he said. And Li's fears have come true. End of June, consultancy TrendForce had cited insider reports on Chinese module makers decreasing cell orders by one third from Taiwanese companies. Taipei Times reported on July 5 that NSP's revenue fell 15.8 percent to 2.21 billion TW$ in June from 2.62 billion TW$ in May, which would be the lowest level in around 10 months. Gintech sales had even dropped 46.2% percent to 917 million TW$ in June from 1.71 billion TW$ in May, and decreased by 33.5 percent year-on-year.

Starting to look for production outside Taiwan and China

A negative impact on demand for cells made in Taiwan might trigger some investments in new facilities abroad rather soon. “With all these trade disputes and friction in different places, we are also looking to have production sites abroad,” said Shen. NSP has large-scale production facilities in Taiwan today (1,800 MW cells, 130 MW modules) and a notable capacity in China (400 MW cells, 155 MW modules). But according to Shen, beyond a certain size you can not and do not want to concentrate just in one place for many reasons - which include risk management, customer requirement, better customer support and last but not least diversification of your production site. And when will this happen? “We do not have a particular timeline per say with a board approval, but indeed we are sending our teams to many places to see what we can do there,” said Shen.

New modules with PERC cells can reach up to 335 W

NSP’s only recent investments in equipment was money for technology improvements. And the technology of choice is PERC, because “you do not have to invest in a brand new line from beginning to end, it is just about adding a few pieces of equipment,” emphasises Shen.

At Intersolar Europe, the company introduced two modules using PERC cell technology - a mono model (D6M_B3A-WS) and a model with multicrystalline cells (D6P_B3A-WS). Both modules come with 60 cells (6 inch) - the mono panel series ranging from 255 W - 280 W, the multi series from 250 W - 275 W. According to Li, PERC’ cell production is already around 15% of total output. “In the next couple of months, the share will increase to 30%,” he said. PERC laboratory cell efficiencies reach around 20.5% for mono cells (called Black20) and 19.5% for multi cells (called Super19), average production scale efficiencies are 18.9% for multi and 20% for mono. That means, cell customers can produce 72-cell panels with power outputs of 325 W for multi or 335 W for mono c-Si.

Shen said that at least for this year and next year, “PERC technology probably gives you the best cost/performance combination.” Still, NPS is not planning to jump 100% on PERC, it is also looking at next-generation cells. But this is for later. “If you go exotic - heterojuction or IBC - the upfront invest is very high and people, including us, are still working with equipment suppliers to find ways to do a more cost effective, more advanced technology.” Adding, “When people look at 20 to 21% I think PERC will be the one technology that can reliably achieve such a performance.”

Investment payback less than 2 years for new PERC equipment

Interestingly, NSP said that payback for incremental investment has to be less than 2 years. Heterojunction and other next gen cells do not have this short-term payback, thats why most people continue to have it only on the drawing board. Investments in fully-fledged lines for such new technologies will only get green light if payback is less than 4 to 5 years. “We are now very careful about brand new line expansion,” Shen underscored. Of course, you could purchase used equipment, but “when you know how much new equipment prices have come down, sometimes even several-years old and depreciated equipment has a similar prices,” he says. While Shen finds that “pretty amazing,” the next strategic decisions will very likely only be made once DOC has set individual tariffs for Taiwanese companies, probably by end of July. More soon.

photo credit: sunnybloke.com

sunnybloke talked to Taiwan’s top tier cell maker Gintech Energy Corp. at Intersolar Europe in early June after the island’s cell manufacturers had just learned about preliminary countervailing duties for Chinese cell and module imports to the US and were waiting for a decision on anti-dumping tariffs. “The anti-dumping case serves as a wake up call that Taiwanese tier one cell manufacturers need to diversify,” said Ben Pan, Assistant VP of Gintech’s International Business Division, who served prior as Executive Assistant to the company’s president. For Gintech, diversification means, not to be over-reliant on any single market as well as moving beyond cell manufacturing

From wafers to modules

At the time of the interview, Pan already told sunnybloke about Gintech’s new JV with Tatung to make modules, which was published in a Gintech/GET press release on June 18. He considers this JV the biggest mover for Taiwanese PV this year, after last year’s most important solar headline on the island was the merger between Neo Solar Power Corp. (NSP) and DelSolar Co. Ltd. The difference is that “Gintech is not merging, we are doing a JV with the Tatung Group,” Pan emphasised. With the Tatung Group being both the largest appliance maker in Taiwan and the parent company of wafer maker Green Energy Technology Inc. (GET), the idea was to form a partnership combining two market leaders. While Gintech is one of the best cell manufacturers in the world, GET is the best non-China wafer manufacturer, when you factor in quality of the wafer vs. cost to produce that wafer, claims Pan. “So they focus what they do best and we focus on what we do best - and we collaborate to create a module subsidiary.” The company is called Gintung Energy Corporation - with the first part of the name coming from Gintech, the second part from Tatung.

Expanding cell production

Pan point out that Gintech is still very bullish on the future. “We see the big potential.” That’s why Gintech is expanding its cell production capacity to about 1.8 GW this year from about 1.5 GW last year. Despite the foray into modules, Gintech at its core is still a cell manufacturer. “Our bread and butter is high-efficiency cells,” said Pan. While everybody is now looking into PERC cells, Gintech has already introduced its so-called Diamond technology last year. “The rest of the world is trying to catch up, but we announced the technology in April 2013 and we’ve been actually selling since last year,” he says. Currently, PERC is around 20 percent of Gintech’s cell output. Why not more? “Because the world isn't ready for this jump yet, it is doing it one bin at a time,” says Pan. In other words, only recently customers wanted average 17.4% cell efficiencies, now people want 17.6% average efficiencies, which would translate into 250 W modules for the top tier producers and for some even 255 W. But Gintech’s PERC multi c-Si cells go up to 18.4%. “The problem we are facing now is that a lot of customers find it difficult to pay that premium, but it is simply more expensive to make,” said Pan. The difference to standard multicrystalline cell technology is close to 3 cents.

Roadmap to n-type cells in 2015, IBC in 2016

When asked about further innovations, like MWT, EWT or IBC back-contact cells, Pan told sunnybloke that Gintech has done research and development on all those sorts of cells. “But it all boils down to cost - and what price the consumer is willing to pay.”  For that reason, Gintech continues to push the evolutionary cell technology path. “We have new products that we are going to introduce later this year,” said Pan. At its booth at the SNEC trade fair in Shanghai in May, Gintech gave some details on its 2014 plans: This includes improvements for its Douro Series to 19.4% (mono) and 17.6% (multi); the Diamond Series cell efficiency increases to 20.2% (mono), resulting in a 280 W 60-cell module, and 18.6%(multi), which translates into a 270 W 60-cell module. Moreover, new modules will comply with IEC standards for salt mist corrosion and ammonia corrosion (see photo below).

photo credit: sunnybloke.com

While Gintech will focus on Diamond PERC technology until 2016, its roadmap targets production start of n-type cells already in mid-2015. What’s even more interesting is that production of HIT/IBC cells is already slated for early 2016 (see photo below). 

photo credit: sunnybloke.com

Flexible module JV; factory already shipping for months

The JV will be a rather flexible partnership. Although GET has a much smaller wafer capacity (sunnybloke estimates it is a bit over 1 GW) than Gintech’s cell capacity, it will not necessarily provide all products to its new partner. “GET is free to sell their wafers to whomever they feel has a competitive advantage, just like Gintech is free,” said Pan. But ideally GET’s wafers will go into Gintech’s cells, so the JV will be very competitive with its modules. According to Pan, the module factory’s starting capacity is rather small at 170 MW with the final goal of reaching 400 MW (the PR says it plans to reach 320 MW in Q4). “We seek to be the biggest module maker in Taiwan.” However, surprisingly the module factory has already been up and running for a while. “We have been shipping for the last few months - under the ASEC brand,” revealed Pan. Apollo Solar Energy Co. Ltd. (ASEC), which is brought into the JV, had been GET’s original module company, with a 40 to 50 MW capacity. While the new module JV is called Gintung and the ASEC-branded panels will be kept for the moment, future modules will be Gintech branded. 

New modules - OEM and Gintech branded

Gintech plans to sell the modules initially to its main existing customers. If customers, however, would like to have Gintech do OEM modules for them, “we are perfectly fine with that,” said Pan. But obviously Gintech will also push its own brand, “because we are very strong in cell manufacturing, and everybody knows that the key component in any solar panel is the cell.” It is just a matter of finding the right team to run a module line. And if you have a very strong wafer source as well, believes Pan, you have a solid supply chain you control, which is everything you need for a very solid product. “If you can also control production cost, you can win the trust of you customer,” he concluded. 

Nobody takes over anybody

Tatung owns 45% of the new JV, Gintech 36%. According to Pan, Tatung will be the majority shareholder because good module makers need to have very strong bankability. “Tatung is such a very strong financial supporter,” said Pan. Asked if this could be the start of a take over, Pan made clear that this JV is not about a take over or even a start of a merger. “Gintech is not taken over, nor will Gintech take over,” he said. The goal is not to take over ASEC, just to make it bigger. “While Gintech has a very strong global footprint, it traditionally had lacked a module backup - and that’s what we were looking for.” However, according to the companies’ press release, GET will manage manufacturing and wafer procurement of the wafer production of Utech Solar, the wafer subsidiary of Gintech, which operates 450 MW of sawing capacity.

Pan B for US import tariffs - keeping cell dominance

sunnybloke’s conversation with Gintech was too early to discuss the consequences of the US trade case as the Department of Commerce will only make its preliminary anti-dumping (AD) decision in late July. While Pan is expecting some sort of import tariff - as never in the history of the US has an AD investigation been opened and resolved without conclusion, he doesn't think that the tariff that comes out will be significant. “Anything is pure speculation so far, but Taiwanese cell makers are not dumping, their prices have been consistently the highest in the world. And Taiwan is a small player, the major player is still Mainland China, and so the bulk of the target is Mainland China,” he said. However, unexpectedly high tariffs could harm Gintech quite a bit, as about 30 percent of its shipments end up in the US. “It is significant but not backbreaking,” Pan believes. While there are other markets Gintech is trying to explore, also through its new module JV, Pan is confident that Taiwanese companies will defend their competitive technology advantages. “Traditionally Taiwan has been able to provide higher efficiencies than China and will continue to do so. Moreover, Taiwanese cell manufacturers are still the most consistent when it comes to producing high-efficiency cells on a megawatt level," Pan underlined. 

Thinking about production abroad

Module manufacturing is only a first diversification step. When asked if Gintech wants to produce outside Taiwan as well, Pan said, “That’s Phase 2.”  Phase 1 is to get the current plant running efficiently, then Phase 2 would be to consider diversifying to other countries. However, he clearly said that this will not come so quickly. Let’s see - this timeline will definitely depend on the consequences of the US trade case as well as the decision if the new partnership will finally not turn into a merger or take over. Just remember what Pan told sunnybloke - that Gintech traditionally is very low key. And by the time the public knows what Gintech is doing, it has been doing it for quite a while. We are not that kind of company that when people really come to talk to us following an announcement they find out that you are not even in production, he said. “That’s not Gintech’s way.” More soon. 

Late comer, still module leader: Now, that Yingli was the last one to post its Q1 results yesterday, it is official: The Baoding-headquartered module maker remains the world’s No.1 module supplier. While shipments of  traditional vertical-integrated leading Chinese panel producers dropped in Q1, Renesola, originally a wafer company, and JA Solar, originally a cell maker, increased their module shipments quarter-on-quarter (see graph below). 

Different fully integrated No. 1: But if you look at shipments of wafers, cells and modules, Renesola was the largest of the fully integrated Chinese top tier solar module companies in Q1/2014 (see graph below). And if you only take a look at cells and modules, JA would lead this group.

More soon.

On purpose I have waited a bit to see if other media channels would jump on the European Photovoltaic Industry Association’s (EPIA) foray to tie up with a rather surprising group - the natural gas industry. But the title of a presentation “Is a long term relationship between gas and renewables possible” by EPIA’s new President Oliver Schäfer on the agenda at the annual conference of the Gas Infrastructure Europe (GIE) association in Berlin had not triggered any response in the press before it actually took place on Thursday, June 12, 2014. In the aftermath of the talk I also couldn’t find any strong reactions. Again! We are seeing here that the association of the European photovoltaic sector discusses to go in bed with a part of the fossil fuel industry - and no one cares. Wow, that’s amazing! 

There might be several reasons for any missing coverage. Last week, the European solar sector, in particular its - for many, many years - largest market Germany, was paralysed as the latest agreement of German politicians on the revision of the Renewable Energy Law (EEG) has not brought the expected relief -  rather the opposite: small systems won’t be exempted as in previous drafts but also have to pay their share of the EEG allocation fee on PV power generated for self consumption. If passed, I am sure that Germany will install even less than 2 GW this year. But it’s rather that the European gas sector had not been on the radar of solar analysts and writers. EPIA has been trying to approach that subject very carefully, step by step - it hasn’t even published a press release about its new strategy so far. First, EPIA’s Schäfer called for new alliances at the opening conference of Europe’s leading PV event, Intersolar Europe, in early June (see blog entry from June 3, 2014); now he presents at a natural gas conference in the session following the keynotes. It will be interesting to see what’s next.

However, is such sort of a partnership really what the European solar industry needs today? Or does EPIA bet on the wrong horse? In the end gas is still a CO2 emitting fossil fuel with all its environmental implications, and just now we are seeing again issues regarding security of supply with Russia cutting off the Ukraine.

Well, I believe EPIA’s move could turn out to be the right strategy. Let’s face it: PV in Europe is in deep trouble. After years of gigantic growth, the prevailing forces have been successfully fighting back. Demand in all of the once major European PV markets is merely a shadow of what it used to be - true, there is one exception but it’s a pretty safe bet it won’t take long until the UK solar bubble will burst as well. Also the grid parity promise hasn’t come to fruition - by putting taxes on solar self consumption (what Germany is doing now) or implementing retroactive cuts (what Spain and several other European countries have already done) those in power can raise the bar for solar every time we are just about to pass it, discouraging new investors looking into solar power.

Not only has solar growth been stopped in Europe. Due to a wrong allocation strategy for carbon credits, lignite and hard coal were even able to increase their share by around 6.5 percent in electric power generation in Germany, the EU's largest economy, last year; at the same time, gas lost around 21 percent year-on-year. Investors will feel extreme pain on the utilisation of available gas generation capacity in Germany in 2013, as shown on a slide from Fraunhofer ISE (see graph below). 

source: Fraunhofer ISE

No wonder the European lobby association Eurogas says in the power section of its Long-Term Outlook for Gas to 2035 that “recent experience makes the short-term prospects very poor.” The reasons are “a weak price signal in the carbon market, combined with growing imports of competitively priced coal, and high subsidies and feed-in tariffs for selected preferred low carbon technologies, (which) have driven gas out of the merit order for power station dispatch.” If that continued, the worst case would be “coal-for-gas substitution leading to re-carbonisation in Europe,” warns Eurogas (see slow development cases in Eurogas graphs below).

source: Eurogas

While gas suffers a lot from renewables in today’s energy system in Europe, it is probably pretty obvious to gas executives that a partnership with the coal sector won’t help them at all - not in terms of image, not regarding business. Renewables are a much better fit, especially wind and solar, which need balancing power due to their variable nature. A new study from Energy Brainpool on behalf of German think tank Agora shows that between Dec. 2012 and Dec. 2013, the European Electricity Exchange EEX/EPEX recorded 97 hours with negative electricity prices, averaging -€41 per MWh. These negative prices were the result of conventional power generation plants’ low flexibility on very sunny and windy days - while power production of gas and hard coal power plants were reduced almost to nil, nuclear and lignite plants continued at high utilisation levels during times of negative electricity prices in Germany. Brainpool proposes several solutions - one is to integrate solar and wind power plants in the balancing markets, another is to better support gas-based CHP plants (e.g. Power-to-Heat).

You can argue that a partnership of solar and gas (I assume EPIA will also try to include wind) would slow down the path toward a 100% renewables generation scenario in Europe. And yes, the return on investments in new gas power plants is calculated over decades. You could also think that Schäfer has a hidden agenda (in the end, he is employed by SunPower, a subsidiary of French fossil fuel energy giant Total). Well, first there’s a lot of underutilized gas power plants today; Schäfer has been a renewables lobbyist before SunPower was taken over by Total; and again, PV is pretty much stuck in Europe, pushing clean energy is not on the Continent’s top agenda anymore (the latest target proposed in January by the European Commission is a mere 27 percent renewable power share by 2030 but without national binding goals). In addition, unfortunately most storage technologies - both on the small scale as well as Power-to-Gas - are presently no real economic options. Though no true love - it is worth thinking if gas might be one. Combining the rather weak powers of European solar and gas (and add wind) would offer the perspective of a comprehensive electricity supply scenario without much dirtier coal and nuclear here and now. Even if strongly debatable (solar must carefully watch out its clean image is not getting dark spots and it really profits from such a strategic partnership), it is good that EPIA is now thinking out of the box. More soon.