IN DEPTH: Kyocera thinks big

As pilot projects go, this one was certainly not lacking in ambition.

The 70MW Nanatsujima solar plant — built on 1.27sq km of reclaimed land jutting into Kagoshima Bay, across from an active volcano — may be the largest PV array in Japan, but it was primarily built by Kyocera to establish itself as a total-solutions provider.

With nearly four decades of experience in solar production, the Kyoto-based company has been at the forefront of Japan’s explosive PV roll-out since the feed-in tariff (FIT) was introduced 18 months ago. Yet it is not resting on its laurels — and is now seeking to establish itself as an important downstream player.

Not only did Kyocera supply the 290,000 multicrystalline modules for the ¥27bn ($274.7m) plant, which came on line in November, but it took the lead in developing and running the project — on finance, EPC and O&M as part of a seven-strong consortium.

“Of course, before the Kagoshima project we supplied modules and provided engineering [services] for installations, in addition to handling construction and even maintenance. We’ve done all that,” explains Ichiro Ikeda, general manager of Kyocera’s solar marketing division.

“But really with Kagoshima we wanted to develop this skill set so we could become a total project solutions provider, including the financing side and running the actual business. That was our objective.”

Seated in a fifth-floor conference room at Kyocera’s 20-storey headquarters — one of Kyoto’s tallest buildings, with 1,392 solar panels up its south side and a 214kW array on its roof — Ikeda explains how the installation in Kagoshima city, southern Japan, represents a new business model for Kyocera.

“The FIT programme is making utility-scale power a viable business, so we wanted to do this ourselves to gain experience and see the perspective of those who are investing and companies involved in construction,” he tells Recharge. “We want to see how it’s done and where improvements can be made.” 

Over the years, Kyocera’s solar unit became convinced that its modules were more efficient than its competitors’, but a crucial piece of the project-development puzzle remained elusive to them.

“In reality, what does that [module efficiency] mean to investors and construction firms who are looking to run their own plants? [We felt] that our modules had higher output — for instance, on this amount of land, you could get a certain percentage more income or revenue from generating power,” Ikeda says. “But how can an EPC company lower costs or improve its business model? And these are some of the things we’re already learning [from the Kagoshima project].”

Nanatsujima was a test run for future endeavours of a similar nature. “We’re thinking about how we can use the skills we’ve learned from the 70MW project, including financing, to see where we can develop,” says Ikeda. The final goal, he adds, is for Kyocera to sell electricity as a fully fledged power supplier.

As a company spokesman later elaborates, full project ownership and development also provides insight into Kyocera’s own technologies: “We can collect data over 20-year periods and assess the performance of the modules over that duration... You can extrapolate from lab data, but there’s nothing like real-life data.”

Gaining financing expertise at Kagoshima, under a plan designed by Mizuho Corporate Bank, is also important. “Through this we’re learning about different types of financing schemes, and we can use this information to make proposals to other people who are working on projects,” Ikeda says.

In Japan, the core of its solar business, its deliveries are split evenly between residential and utility-scale projects.

“We believe that in 2014 there will still be a lot of opportunities in both the segments,” Ikeda says, adding that the company is also focusing on commercial rooftop installations of 10-50kW.

Of the 800MW of panels Kyocera shipped in the 2012-13 fiscal year (1.2GW is expected this year), roughly 80% went to Japan. But with module assembly plants in Japan, China, Mexico and the Czech Republic, Kyocera is positioned to adjust to fluctuating demand in a wide range of markets.

“Solar demand is so high in Japan that we’re assembling some modules abroad and then bringing them back here,” Ikeda says. “But we can use [our overseas plants] to fill orders around the world. Because at this point, it’s more efficient for us to look at all four [factories] together and see where we can up production to meet orders anywhere.”

Europe and the US remain priorities for Kyocera, but the company is actively seeking growth opportunities in Southeast Asian countries such as the Philippines and Indonesia, where it won a 55MW contract with an Australian developer last year.

“Thailand is where we’re seeing the biggest growth, partly because they have the most proactive stance on renewables. They already have an FIT and the government has been positive about supporting it,” Ikeda says. However, he adds: “There is a lot of uncertainty in Thailand now [due to political unrest], and that’s something we have to pay close attention to. But in the future, we see the most growth in Thailand.”

Indeed, Kyocera is supplying 250MW to one multi-site project in the country.

But with the Japanese PV sector growing so rapidly — nearly 4GW was brought on line in April-October last year — it will be a long time before any other country replaces Japan as Kyocera’s core market.