Solar manufacturers on firmer footing, says Canadian Solar

The dark days are over for the PV cell and module industry, with leading manufacturers set to continue growing more profitable as the global market expands and matures, says Canadian Solar’s Thomas Koerner.

“Tier 1 companies are getting stronger, bigger and more international,” the vice-president for global sales at the world’s second-largest module supplier in 2015 tells Recharge, noting that Canadian Solar now sells into about 45 countries.

“The cost of solar is at an all-time low, and it’s opening up new opportunities, new demand.”

Koerner is a “strong believer” that no additional subsidies or support programmes will be necessary for solar in the US after the investment tax credit phases down.

“And we’re seeing the same [cost dynamics] in other markets,” he says. “If you go to Brazil, to Panama, to Mexico, solar is competing in public tenders against wind, against gas, against whatever else is out there.”

In addition to its manufacturing operations, expected to turn out 5.5GW of modules this year, Canadian Solar is a major global project developer, having acquired Recurrent Energy from Sharp last year. The Ontario-based company was an early mover into Brazil and won a 63MW project in Mexico’s first renewables tender this year. 

While Koerner expects the cell and module sector to “continue to consolidate” around the top players, he also sees a growing opportunity for specialty or niche suppliers as markets mature.

“It’s not a ‘one product fits all’ market any more,” he says. “There are different market conditions, different needs, different applications, different installation methods, different environmental conditions.”

Module sector undervalued

Although by many measures the world’s top solar manufacturers would seem to have a bright future, investor confidence in the sector remains shaky.

According to Bloomberg New Energy Finance, solar will account for 43% of all generation capacity added globally between 2016 and 2040, and it will be the cheapest option in most countries by 2030.

Most top module suppliers returned to profitability several years ago, including Canadian Solar, which hauled in net profits totalling $463m over the past three years.

Yet the not-too-distant bankruptcies of one-time industry leaders such as China’s Suntech and Germany’s Q Cells still linger in the minds of many investors. Yingli, the world’s largest module supplier as recently as 2013, is fighting hard to avoid going bust.

The Guggenheim Solar exchange-traded fund, which owns shares in most of the world’s leading solar companies, is down more than 40% over the past year, while New York-listed Canadian Solar’s stock price fell 43% in that period.

But Koerner says the industry is in much better shape than it was a few years ago “and it will continue growing healthier”, he says.

“I’m not a stock expert, but I don’t believe the current stock pricing really reflects what the industry’s doing and what the industry’s capable of doing.”

Bullish on the Americas

Underscoring Canadian Solar’s confidence, it is expanding its manufacturing capacity substantially, including for wafers and cells, for which it has relied heavily on outside suppliers.

The company is ramping up a 1.6GW cell and module factory in Southeast Asia and, as Recharge revealed in April, a 350MW module-assembly plant in Brazil, to carve out share in a market notorious for its local-content rules.

The new capacity is due on line this year, and Koerner says things are going smoothly.

“These things are never going to go 100% as planned, but so far we’re happy with the results. We look forward to having products coming off these lines very soon.”

Despite the uncertainty injected by Brazil's government shake-up, including the postponement of a solar auction planned for this month, Koerner expects a big future for PV in Latin America’s largest economy.

“Don’t forget it’s a very, very new market,” he says. “There’s a lot of learning to be done and a lot of experience to be implemented, but so far it’s going well. It’s going significantly faster and better than someone might have expected.”

Canada, where the company commands a 60% share of the module market, is also “growing very strongly”.

“It’s very exciting to see the shift away from Ontario as the only [provincial market],” Koerner says.

“Especially on the residential and small commercial side, projects have been picking up, and local EPCs are getting more experienced.”