Solar Frontier in talks to buy 'multiple' US project pipelines

Solar Frontier of Japan is in talks to buy “multiple pipelines” of utility-scale solar projects in the US, as it looks to project development and EPC work to counteract a sharp downturn in module prices.

Solar Frontier, whose primary business is selling the thin-film PV panels it manufactures in Japan, entered the US project business last year through its acquisition of a 10-project, 280MW pipeline from Spain’s Gestamp Solar.

The Tokyo-based company has since built and sold two of those projects in California – the 15MW Morelos del Sol and 20MW Calipatria – to Southern Power and Turner Renewable Energy. It has another 107MW under construction, and “we’re in discussions with a long-term buyer”, says Charles Pimentel, chief operating officer of Solar Frontier Americas.

The company is hungry for more US projects, Pimentel tells Recharge.

“We’ve expanded our greenfield development efforts,” he says. “We’re also in deep discussions on multiple pipelines, both for acquisitions and/or proceeding with JV agreements with early-stage developers.”

While maintaining a focus on California, “we’ve also begun looking very hard at some of the developing markets – Oregon, New York, Indiana, Tennessee, Louisiana, Florida and Texas.”

Downstream focus comes amid depressed module prices

Solar Frontier’s motivation for placing a heavier emphasis on development is simple: The US module market looks a lot less attractive than it did even a few months ago.

Module prices saw a “drastic drop” in the US last quarter, Pimentel says, as a slowdown in China’s solar market drove Asian manufacturers to push more product into the US.

China’s Trina Solar, the world’s largest panel maker, this week said it expects global module prices to drop at least another 10% in the second half of the year.

Solar Frontier may derive as much as two-thirds of its US revenues from its projects arm to ride out the module glut, Pimentel says.

Solar Frontier is not the first PV manufacturer to branch out into project development to shield itself from the vicissitudes of the module market. US-based First Solar, the world’s largest maker of thin-film panels, has been a major developer around the world for years.

But Solar Frontier is one of the few big Asian solar manufacturers to find success in the US projects business, Pimentel notes.

“The Chinese have certainly managed to drive down the price and thus the margin for anyone in the module business,” he says. “What they haven’t been able to do is diversify into project development [in the US], other than the likes of Canadian Solar with its acquisition of Recurrent.”

Solar Frontier spent considerable effort in the past year knocking down the additional balance-of-system (BOS) costs that can come with using thin-film modules, Pimentel says.

"It's something that all thin-film companies are focusing on," he says, citing First Solar's Series 5 modules.

“A year ago, only one single-axis tracker company had a tracker ready to accept our modules. At this point, I can safely say that all of the tier-one tracker companies can accept our module.”

Solar Frontier’s Midway series of projects under construction in California’s Imperial Valley are being built by EPC contractor Blattner using trackers supplied by NEXTracker.

US factory plans

Pimentel confirms that New York state is still a likely place for Solar Frontier to build its first factory outside of Japan, although he acknowledges that the final decision has been delayed.

“It’s still our intention to get to an agreement with New York,” he says.

One reason behind the delay was a slower-than-expected ramping process at the company’s new 150MW module plant in Tohoku, Japan, which entered commercial operation in June.

The highly automated Tohoku plant – which can make one of Solar Frontier’s CIS thin-film panels in one-third the time as the company’s flagship 900MW Kunitomi plant – will serve as the blueprint for the company’s future factories, including any built in the US.

The new plant “took a little longer than we’d hoped” but is “operating really well at this point”, Pimentel says. “We’re getting very good yield out of it and very good efficiencies out of the early modules.”