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Multi-GW India manufacturing challenges to be the focus of new PV IndiaTech 2019 conference

During the past few years, we have had numerous requests at PV-Tech from a wide range of PV industry stakeholders (due mainly to the success of the PV CellTech and PV ModuleTech series of conferences) to launch an India-specific PV event in Delhi. The requests have come from Indian companies, overseas investors, government bodies, trade associations, and both upstream/downstream industry activists seeking to understand and drive future developments.

As a result of these requests, and given the key stage Indian PV manufacturing is going through today, we have decided to launch an annual event in Delhi, dedicated specifically to India PV manufacturing. PV IndiaTech 2019 will have its premiere on 24-25 April 2019.

This article discusses the need for such an event, and what the key objectives will be from the conference. More broadly, I outline here also just why any company with global PV aspirations (across the entire PV value-chain) either has, or needs to have, a carefully considered India-PV-strategy plan.

Once you have absorbed all the information, it would be great to get your thoughts on PV IndiaTech 2019, and how we should configure the event with the correct mix of global stakeholders needed to move the industry’s manufacturing forward over the next 10-20 years.

Unique focus on manufacturing that bypasses short-term opportunism

Every country that embarks on a solar or renewables plan does so with lofty ambitions of creating an indigenous manufacturing landscape that results in high-quality sustainable job creation. Conversely, no government wishes to bankroll a deployment gold-rush that ends up being cornered by Chinese imports. Chapters of thesis could be filled simply by solar activities in this regard over the past few years.

For the countries that have sought to impose domestic manufacturing restrictions, whether to bail out domestic companies such as in South Korea and Taiwan or show evidence of token manufacturing efforts by way of module assembly plants, there has been all too often an air of short-termism.

Linking a viable domestic manufacturing sector with a risk-free long-term pipeline needs a government commitment that extends beyond 10 years, and in this respect, we can start to see just why PV manufacturing ambitions within India today are different from anywhere else globally.

But there is much more. India has an embedded goal of being seen on the global stage as a high-quality technology leader, and not simply another Asian country (post Japan, Korea, Taiwan) that has labour costs or a sophisticated OEM-culture as its primary drivers (Thailand, Indonesia, Malaysia, Vietnam). This largely captures the Make-in-India mantra, but for solar there is also the deployment (energy demand) driver that moves things to another level.

Fundamentally, India is the only country today that has a multi-decade forward-looking plan – championed by the current Prime Minister – that covers both deployment and upstream full value-chain manufacturing. No other country comes remotely close to this, with the exception of China (that is barely open for business when it comes to inward investment).

What India wants is a massive challenge

India wants to have a solar manufacturing sector that has the technology-brand of Japan or South Korea, the processing capability of Taiwan, the cost structure of China and the inward-investment lure of Malaysia. And to top it off, the final product performance and quality will allow leading producers to access both domestic needs and export opportunities.

As aspirational as it may sound, if you don’t have those ambitions from the start, you are almost certain to fail. The issue with India though is that we are a long way away from this, when we look at the country’s manufacturing sector today and the ongoing tumultuous relationship it has with its downstream suppliers.

During the past couple of decades, there have been many plans tabled to unleash a multi-GW eco-system value-chain of PV manufacturing. Almost all of these were lauded by eager publicity-seeking activists, but many began and finished at the ceremonial MOU phase, never to be heard of again. Those were the days of polysilicon plants being built or thin-film factories piggybacking on the country’s displays-oriented ambitions.

What finally did emerge in the early days of India solar (that remains until today) can be seen, for example, at Greater Noida (Indosolar) and Hyderabad (then-named Solar Semiconductor), in what were the first purpose-built ‘modern’ cell fabs in the country. In fact, during an early trip to India almost 10 years ago, I remember vividly the pride that India has entered the fab-era.

The start-stop production characteristics of these early entrants, in addition to the never-ending existence of various state-owned loss-making solar business units, seems a long way off, given what has happened in the past few years that starts to paint a picture of what this India-solar paradise may look like if the different stakeholders can make it work.

Government driven upstream and downstream finance

The launch of the National Solar Mission within India changed everything. It put to an end to the notion that pure-play cell production could compete as an export industry. It created a multi-GW end-market that caught the attention of the world. It was inherited by a Prime Minister (Modi) that has no equal anywhere else in the world when it comes to an inherent love of solar and an understanding of how it can transform India as a global leader in a post-fossil-fuel world.

The long-term commitments by Modi for deployment of solar within India serve as the most risk-averse guilt-edged market driver that could be imaginable. Yes, there is downside that accompanies this rapid growth in India, and I will touch on this later in the article. But, either way, any other domestic solar segment globally would readily have this problem in exchange for a constant pipeline of opportunities.

During the past few years, the concurrent upstream drive has come from a succession of attempts to restart domestic cell and module production, through safeguarding, domestic-content carve-outs and the latest Solar Energy Corporation of India’s (SECI) tendering for 3GW of manufacturing linked with deployment guarantees.

Running alongside these policy-driven initiatives, there is of course Adani, and the Mundra-chapter in India-PV, where the multi-sector, multi-national, multi-billion-turnover conglomerate sought to self-fund a micro-solar eco-system at the GW-level.

As of now, none of these efforts has succeeded, and in almost every case (and of course with hindsight) one can easily point the finger at naïve-ambition or a general lack of awareness of technical and commercial factors that underpin the global solar manufacturing sector today.

However, what these efforts reveal is intention, or perhaps a crash-course in PV manufacturing learning that should serve to get it right going forward.

Getting it right

If there was a simple domestic recipe to scale up multi-GW solar manufacturing, spanning ingot/wafer and cell/module production with profitability, there would be PV fabs all around the world, and trade-related barriers would never be heard of. Similarly, if there was a means of curbing global China-export domination, the world would look radically different today.

As such, there is no slight on any of the proponent’s motives, nor should one take apart the flawed assumptions that ultimately led to non-success.

Regardless of the 25GW of solar deployed today within India, and the failure of the previous domestic manufacturing efforts, one should still see India at the start of a journey, perhaps even just finishing its formation lap.

The long-term goal remains intact: being a global PV manufacturing powerhouse, driving domestic demand and having an export-market for any surplus. And critically, there remains the promise of finance through direct government budgeting and inward-investment vehicles including overseas government agreements and energy/infrastructure investment vehicles.

In this respect, there is almost an inevitability that multi-GW PV factories will emerge within India over the next 5 years, but the fundamental question remains: can they get it right?

 

Finding a route where everyone benefits has to be the solution

Understanding what has to happen in the short-term is inextricably linked to what a successful outcome looks like; and working back to what steps need to happen to fulfil this.

The successful outcome sees many parties benefiting in different ways, but most seeing this through short-term profitability, healthy returns-on-investments or market-favourable asset-values. Other stakeholders – in particular the Indian government and overseas countries that have intrinsic connections – benefit directly and indirectly in terms of global leadership and secondary diplomatic positioning in a renewables-dominated climate.

However, it would appear today that the ingredients for success boil down to a few key issues that need to be resolved:

What stages in the value-chain (for c-Si manufacturing) are of value for Make-in-India? Is it necessary to install ingot pulling capacity or should the focus be firmly on cell production, with matched module assembly capacity?

Which technologies need to be selected today for manufacturing investments that – by the time the facilities are operational – are state-of-the-art in terms of cell efficiencies and panel performance?
How do GW-scale factories get completed in Chinese-based timelines of 3-6 months, and retain the flexibility in adopting any technology-adoption cycles that may impact the industry going forward?
What is needed to manufacture with profitability? Is the model based purely on buying wafers from China and hammering down in-house costs on a quarterly basis, or is there a supplier/customer model that sees both parties sharing profit margins?
What is the role of overseas companies, and how can they add value to the Indian sector, and not simply be a strategically-funded platform to expand global reach?
How can the downstream segment within India (developers/EPC/investors) benefit financially from the increased availability of Indian-made PV modules (using domestic produced cells and possibly even wafers)?
What policy-driven, government-backed vehicle can make the above questions work in parallel?

These questions are possibly the most pertinent when considering how India moves forward with PV manufacturing, and to get to the bottom of these it is clear that a broad range of stakeholders need to be part of the overall decision-making process: something that has probably not occurred until now.

PV IndiaTech to provide global platform to facilitate India-PV planning

In order to address the questions listed above, it is clear that a forum needs to be created that hears the voices of the different parties that will be needed to fashion a plan that works to everyone’s benefit.

This is the fundamental goal of the PV IndiaTech conference, the first event due to be held in Delhi on 24-25 April 2019.

While there are numerous PV events within India these days – as would be expected from a 10GW-level annual end-market – the role of PV-Tech, as a leading global PV platform and the host of the PV CellTech and PV ModuleTech events, should not be underestimated. India needs global expertise and a connection of its upstream/downstream segments, while having the understanding of which roadmaps are worth aligning with to be industry-competitive going forward; and also welcoming the expertise that exists from the correct overseas technical and financial investors.

We are currently in the process of finishing off the agenda for the forthcoming PV IndiaTech 2019 conference, including key partners, speakers and event contributors. If you would like to feed into this process, or be part of the event in Delhi on 24-25 April 2019, then please reach out to us by email at marketing@solarmedia.co.uk, or drop me a line directly (by clicking on my name at the top of this article) with your ideas and suggestions.

During the build up to PV IndiaTech 2019, PV-Tech will be taking a closer look at many of the issues raised within this article, as well as highlighting the event in Delhi including interviews with all the parties seeking to find a solution to unlocking the potential of Indian PV manufacturing over the next 10-20 years.

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PV ModuleTech 2018 to reveal module technology and supplier landscape for 2019 utility solar

So far in 2018, the solar industry has been through a succession of changes that will reshape the module suppliers and technologies used for utility-scale solar deployment globally in 2019.

The segments of the value-chain this will affect most are companies and third-party agencies that specify, qualify, purchase, design, finance and build large-scale ground-mounted solar farms.

Having been through 5-10 years of minimal disruption, developers and EPCs are soon going to have to make critical decisions related to site design, yield calculations and asset valuations, in order to avoid ending up with stranded assets that will ultimately command increasingly lower secondary revenues when sold on.

Equally under the spotlight will be the banks and lenders for utility-scale solar, with IRR projections now subject to a far greater range of input variables, than seen in the past.

These topics are set to be central to PV-Tech’s forthcoming PV ModuleTech 2018 conference, in Penang, Malaysia, on 23-24 October 2018.

This event will provide clear guidance to downstream stakeholders, with visibility on what module types will be available from the 10-20 global/bankable module suppliers in the industry today.

In this article, I outline the background to these changes, and introduce the agenda and speakers for the PV ModuleTech 2018 event in October.

Mono, PERC and bifacial move to mainstream utility offering

As we have been discussing for the past few years on PV-Tech, utility-solar sites were historically biased to 60 and 72-cell p-type multi-cell based modules, with an increasing share of the supply coming from outsourced module assembly across Southeast Asia, in particular Vietnam.

Reverse-auction based tenders across various emerging global markets (especially India) kept the demand for multi modules high, with site capex being the main driver when choosing module supplier/technology.

This is now changing at a rapid pace, stimulated by mono wafer supply becoming high-volume and commoditized, the China-531 effect destroying the sales pipeline for multi in China, and the natural progression from PERC-based mono modules that is gripping the market today, namely bifacial modules.

Many parts of the world are still characterized by EPCs and developers proclaiming their preference for 72-cell multi panels, but ultimately this will be short-lived with a rapid technology change occurring in 2019 that will lead to p-type mono PERC bifacial modules becoming the mainstream industry-offering for utility solar in 2020.

Anyone currently citing the price delta that has generally been constant over the years between a multi and a mono panel, a non-PERC (standard, or Al-BSF based) and PERC-variant, and (shortly) a mono-facial and bifacial module – fear not! Within 12-18 months, the pricing for p-mono PERC bifacial modules will be as competitive with any relatively cautious ASP-erosion trajectory that could be applied to leading multi-based products on the market today.

Margins for niche high-performing technologies only exist, so long as they have supply tightness. Move this technology to mainstream and market-factors kick in and competition ultimately removes any delta that existed in the past with lower-performing alternatives.

So, why does it matter? If the question was simply being able to use higher-efficiency modules, then we have the obvious benefits for site footprint and lower BoS costs. But the use of bifaciality changes everything now. As I noted in a feature on PV-Tech last week, EPCs and developers are now going to have to spend more time on module mounting (height), what the ground/space looks like below the modules, and what type of multi-axis tracking system to use.

The reason for this is simple. Bifacial modules have the potential for site yield gain that ultimately feed directly into higher IRRs for investors. And there is simply no greater driver on the planet. Indeed, one needs to remember that IRR is everything, and way more than the upfront investment level. If double-digit enhancements to IRRs are on the cards, expect no arguments at all when seeking to up investment levels to accommodate higher component capex (mainly from the addition of trackers).

Again, there is nothing new here. It is just that bifaciality unlocks yield capability that was not on offer before.

While virtually all p-type silicon-based module suppliers will move en-masse to bifaciality (aside from a few small players serving local residential segments of the market), 2019 will also see high-volume supply of the utility-optimized Series 6 panel from First Solar, in addition to far more n-type availability that includes new commercial offerings from the likes of SunPower and others.

Back-to-basics: what do developers and EPCs need to know right now!

Having attended, moderated and presented at countless industry events over the past few years where bifaciality was promoted, championed and presented as a fait-accompli, there remains a gap between what the mainstream developers/EPCs know and what the module suppliers and testing houses would like them to know.

There are bifacial workshops appearing now as though there is a world road-trip tour in progress. However, as immensely valuable as these are, bifacial availability and expectations need to have a pragmatic approach that is founded on risk-mitigation and mainstream product availability.

It is largely on this basis that bifaciality will be addressed at PV ModuleTech 2018 in October, with the technology evaluated directly with all other module technologies (c-Si and thin-film, n-type and p-type, mono and multi) that will form the overall utility-solar mix over the next 12 months.

In setting up the agenda, topics, speakers and discussion forums for the event, the following questions came up as being critical to explain to the EPCs, installers and developers that are the main beneficiaries of the PV ModuleTech conferences:

  • Simple explanation of what the main differences are between standard (mono/single-sided solar panels) and bifacial
  • What changes are done in assembly lines to move from today’s offering to bifacial design? Do the fabs need new equipment? What are the new process steps? What are the differences in materials used? Are these materials reliable and tested in harsh environments?
  • Which companies are offering bifacial modules in volume supply today? Are these companies bankable from a financial standpoint? What track-record do they have in supplying bifacial modules? Which test houses have developed bankability tests for lenders?
  • Are there standard testing/auditing/certification channels available? Who are the different third-party agencies offering these today, and which end-markets are they applicable to?
  • How important is mounting, panel height, and tracking design? Are the module suppliers aligned with tracking providers when offering complete solutions? Should this be the industry norm going forward for bifaciality?

Actually, the list is much longer than this, as may be expected from a technology that is new to the vast proportion of developers and EPCs in the market today.

Moving on from bifacial modules, developers and EPCs also need to learn exactly what is coming through from new n-type modules and if the strong Chinese investments of the past year will be worth considering during 2019.

Again, most developers and EPCs do not have experience with n-type modules yet, aside from those that have been loyal supporters of SunPower’s E-Series panels in the past. Putting aside the efficiency gains (at STC) from n-type panels (compared to p-type), n-type (alongside all thin-film offerings such as Series 4 and 6 panels from First Solar) has one massive benefit to utility-solar through a significantly better elevated temperature coefficient. As greater products flow to the utility segment next year, this is clearly something for developers and EPCs to be aware of, especially if they have evolved using only 72-cell multi on fixed mounting schemes.

Introducing the agenda for PV ModuleTech 2018

The sessions at PV ModuleTech this year once again address module supply, technology and quality, through having all key stakeholders speaking and discussing the key themes for the market over the next 12-18 months.

To attend the PV ModuleTech 2018 event in Penang, Malaysia on 23-24 October 2018, please follow the link here. Now for a talk through the event agenda!

Opening Presentation from the Conference Chair

The opening talk will provide a detailed understanding of how module supply is changing in the PV industry today, with utility markets outside China set to drive the global PV market from 2019 onwards. The talk will outline the forecasted market-share allocations of the leading global suppliers in 2019, and the expected module technologies being shipped outside China. The topics covered will outline the key topics to be presented and discussed over the two days at PV ModuleTech 2018.

Non-China Global Module Supply for Utility Solar: Understanding the US, India, Japan & Australia Markets

The opening session will feature presentations on the four main utility-scale countries for PV demand today (excluding the Chinese market) namely the US, India, Japan and Australia. These four countries have emerged as multi-GW demand regions, with stable policy environments and long-term drivers that ensure they retain priority status for module suppliers.

Perspectives from Market Leaders: Quality in Module Supply, Materials & Panel Assembly

This session will hear from three of the leading companies today, impacting module technologies, materials and production equipment used in the supply of quality and reliable products for large-scale utility solar deployment. The companies and speakers will address the key metrics underpinning today’s state-of-the-art module assembly and supply, while addressing the next-generation product improvements that will offer improved reliability and higher output yield for EPCs and developers.

New Markets for Utility Solar: Module Demands & Requirements from Emerging Global Regions & India

Various panel discussions will be chaired on-stage during this session, with speakers and panellists chosen from a range of experience local developers, EPCs, O&Ms and Asset Owners active today in Southeast Asia, Middle-East & Africa, and Latin America. These regions comprise a wide range of countries where utility solar is being deployed today, often accompanied by government tenders and auctions. Coupled with the Indian market, there is expected to be a transition during 2019 as these regions see more higher-performing panels deployed, but how well prepared are the module suppliers to guarantee reliable operation over the lifetime of the plants?

Meeting the Demands of Leading Developers, EPCs & O&Ms

This session explores some of the key issues for module selection, operation and optimization at utility solar sites, from initial company/technology selection to maximizing plant asset value at the secondary site sales process – both when undertaking due diligence to acquire build sites or packaging owned sites for selling. Speakers will address the major factors that impact on module quality and reliability, from project development, site construction, site valuation and O&M.

Bifacial Module Questions: What the Industry Needs to Know Today

With module supply for utility solar transitioning from 72-cell p-multi to p-mono PERC, the next phase of module technology upgrading will see widespread deployment of bifaciality, with rear-side efficiency gains creating strong upside to site yields. However, despite the obvious advantages in the field, many questions remain to be answered in order to fully understand what can be expected in the field over 20-30 years of operation. This session will hear from both module suppliers and the third-party organizations now offering benchmarking and yield tools to assist developers, EPCs and lenders to accurately predict bifacial site yields and return-on-investment.

New Module Technologies for Enhanced Site Performance: Why 2019 Represents a Breakthrough Year for Global Utility Solar Deployment

Closing out the first day of PV ModuleTech 2018, this session will feature talks explaining some of the new products that are set to impact the global utility solar segment in 2019. First, an overview will be provided revealing the full range of PV module technologies that are available today, including n-type and thin-film offerings that have a strong track-record in the industry going back more than ten years. This will be followed by First Solar, outlining some of the key features that make its Series 6 introduction one of the most significant and successful new product roll-outs yet seen within the PV industry.

Enhancing Module Site Performance through Material Optimization & Light Capturing

The use of new and advanced materials and films during the module assembly process is known to be critical to increase power levels and site yields over the lifetime of products. In addition to outlining the latest material innovations, this session will see strong focus on the use of light capturing films and related module performance, including how to model enhancement levels and supporting data from test and validation, and third-party agencies.

Defining Reliability Metrics for Utility-Scale Module Deployment

This session will focus on module reliability in the field, starting with an invited keynote presentation from SunPower, as one of the leading suppliers of modules to utility-scale solar over the past 20 years. The following panel discussion will then hear perspectives from various module stakeholders through the value-chain, supporting the need to make purchasing decisions based on maximising LCOE with minimal risk.

Learning from Established Multi-GW Global Module Suppliers

With only a small group of PV module suppliers having been serving the global utility market consistently over the past 10 years, these companies have accumulated significant knowledge on how to specify modules and design solar sites to maximize yield and returns. Two of these companies – Trina Solar and Talesun – have also been heavily involved in project development and as lead-contractor during EPC activities, often packaging portfolios of sites for to sell on to institutional investors. This session will hear from Trina Solar, Talesun and others on how these learnings will be impacting module availability and project development during 2019 and beyond.

Testing, Auditing, Insurance, Warranty & Bankability of PV Modules: What Developers & EPCs Need to Know Today

Selecting module suppliers, their technologies, and point-of-manufacture remains one of the biggest challenges to global developers, EPCs and lenders, with a wide range of third-party agencies operating both globally, regionally and at the country-specific level. This session will hear from some of the leading companies filling this need in the industry, providing key data-points for those specifying, using and owning utility-scale sites in the future.

Leading Global Chinese Module Suppliers Talk 2019 Module Supply How Prepared are Third-Party Agencies, Developers & EPCs for 2019 Module Offerings

The final sessions of PV ModuleTech 2018 will provide an ideal platform for conference attendees to piece together all the information and learnings from the two days. Configured as an ideal ‘tool’ for attendees mandated to feedback takeaways to company teams members or to report to corporate internally, the two sessions below will seek to provide conclusions, answers, and outstanding questions fundamental to module selection, performance and quality going into 2019.

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Tesla’s solar panel suppliers have changed rapidly

In the hotly contested Californian residential solar market, new data compiled by ROTH Capital Partners highlights, amongst many data points, that Tesla’s solar panel supply base and suppliers is undergoing a major transition and that it has been changing for several years.

PV Tech has well documented the dynamic US residential market and its key public listed installers, which used to be dominated by SolarCity but since its acquisition by Tesla, sales and business strategies have radically changed in an effort to create a sustainable business, instead of being market share driven.

US market leadership has changed hands in the past year but at the same time installation growth has been hard to achieve for the leading publically listed US installers. 

Tesla’s quarterly solar installation figures have declined rapidly but showed a small upward trend in the second quarter of 2018.

Data compiled by ROTH Capital, highlights that Tesla’s panel supplier base has changed rapidly from the SolarCity days. 

Back in 2016, Kyocera and REC Group had been the main panel suppliers to the company, accounting for 31% and 35% of supply to California installs, respectively. A much smaller share came from two ‘Silicon Module Super League (SMSL) members, Trina Solar and Canadian Solar with 7% and 6%, respectively. 

In that year, the company also sourced panels (only in the fourth quarter) from Hanwha Q Cells and LG Electronics, 1% and 3%, respectively. Unspecified ‘other’ suppliers accounted for 7% of the total through 2016. 
  
However, a lot of changes occurred in 2017.

The chart below shows Tesla’s module suppliers that were used for installations in California since the beginning of 2017 through to May 2018. 

In 2017, the company increased its use of Canadian Solar, Trina Solar and LG Electronics considerably. By year-end Canadian Solar’s share was 15%, while Trina Solar’s totalled 28%, but to highlight the growth, Trina Solar accounted for only 3% of supply in January, 2017 and ended with a share of 33% in December.

In the case of LG Electronics the supply would seem to have been a short partnership, having mainly started strongly in the fourth quarter of 2016, it peaked in February, 2017 (30% of supply) and leaned out significantly by December (2%) and accounted for 14% of supply in 2017.
 
Long-term trusted suppliers, Kyocera and REC Group lost out in 2017 as their shares declined to 4% and 10%, respectively. The others also were whittled down from the 7% share in 2016 to just 1% in 2017. 

But the supplier base has changed again in 2018. Although data is only available through May, the chart highlights that Canadian Solar’s erratic share through 2017, ended abruptly at the beginning of 2018 and only recovered to 2% of the total by May. 

Trina Solar, which had been the largest supplier to Tesla from the second quarter of 2017 saw its share fall from a peak of 45% in October, 2017 to 28% by May, 2018.

Although Hanwha Q CELLS share started relatively strongly in the first quarter of 2017, the chart shows an erratic pattern, similar to that of Canadian Solar. The only difference here is that Hanwha Q CELLS share suddenly bounced back from zero in April, 2018 to 17% in May this year. This is the only supplier to have gained meaningful share through the first five months of 2018.

Tesla’s own modules

However, the most dramatic change comes from within Tesla. Starting in March, 2016 it would seem that panels produced in-house at its Fremont facility (formerly Silevo), which was known to have around 100MW of annual capacity started supplying panels to projects in California. 

This ramped (dark blue line in the chart) through the rest of the year, accounting for an 11% share. However, Tesla’s own panel supply to California installs took a notable dive through May, 2017 but bounced back strongly, peaking in November with a 35% share and share for the year of 18%, which also highlights the capacity constraint of the Fremont production facility. Only Trina Solar had a bigger share (28%) in 2017. 

The supply dramatically changed again at the beginning of 2018, when Tesla’s panel share rocketed to 56% in January and peaked at 64% in April. This could be attributed to panel production finally ramping at the Panasonic managed Gigafactory 2 in Buffalo, New York state. 

Interestingly, reports of some re-tooling at Gigafactory 2 could be reflected in the peaks and troughs seen in 2018, as production levels may have fallen during equipment changes. 

Although still early to be sure, the chart also indicates that Tesla has in the first five months of the current year, narrowed down its panel supplier base, depending very much on its in-house capacity but retaining two SMSL members, Trina Solar and Hanwha Q CELLS as its major external suppliers. 

It should also be noted that Hanwha Q CELLS (Korea) has announced the building of at least a 1.6GW assembly plant in Whitfield County, Georgia. 

Finally a special thank you call-out to Philip Shen, financial analyst at ROTH Capital for sharing the volume of data that also covered companies such as SunPower, Sunrun, Sunworks, SolarEdge and Enphase.

 

Note: The California Distributed Generation Statistics publishes all IOU solar PV net energy metering (NEM) interconnection data from the three large California Investor Owned Utilities (IOUs) which include Pacific Gas & Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E). 

California Distributed Generation Statistics also publishes all IOU data from the California Solar Initiative incentive program and other publicly available incentive program data sets.

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Top-5 solar module suppliers shipped 20GW in first half of 2018

The top-5 module suppliers to the PV industry shipped more than 20GW of modules during the first half of 2018, representing Y/Y growth of 10%.

The analysis, conducted in the past few weeks by the PV-Tech Market Research team reveals the scale to which a select group of module suppliers continues to move away from the chasing pack.

Several years ago, we defined the criteria for being in the Silicon Module Super League (SMSL) as having >4GW shipments annually. Several of the companies in the top-5 exceeded 4GW in the first six months of this year alone.

While the rankings we do at PV-Tech are generally taken as among the most credible today (especially in light of few companies reporting official data these days), the real questions is: what does this mean, having companies exceeding 4GW during 1H’18; and can this be sustained during the second half, given that the Chinese government has essentially spooked its domestic industry in what is now being referred to (in US terminology) as the ‘China 531’ moment-in-time.

This article presents my thoughts on these issues, while touching on China/non-China module supply dynamics in the second half of this year and through 2019. The full analysis is contained in the August 2018 release of the PV Manufacturing & Quarterly report, and will be discussed in full at the forthcoming PV ModuleTech 2018 event in Penang, Malaysia on 23-24 October 2018.

Chinese companies remain in control

Let’s review the top-5 now. Heading the list in number one place was JinkoSolar, by some margin. The actual ranking of the top-5 is as follows:

Regardless of any claims to globalization stimulating 1H’18 shipments by the top-5, what happened in China in the first six months (again!) was a key factor.

We have commented on JinkoSolar’s differentiated value-added in terms of non-China business operations on PV-Tech in the past couple of months, but it is now becoming clear that while the ‘China 531’ effect may have come as a surprise to most of the Chinese PV industry, there were probably a select group that foresaw this a couple of years ago, most notably the likes of JinkoSolar, Trina Solar and JA Solar.

Undertake any adjustment of China end-market consumption in 2H’18, or indeed 2019, and things change of course. Spook investors per China-531, and we have much more dramatic things to consider.

Top of the list here are the China-only cell/module guys, whose disappearance from the industry will be of almost zero consequence to the outside world (except for the impact of their parting-shot in fire-selling inventories, or coming back to life in 2-3 years only to meet the same fate, or offloading trucks of modules to India regardless of safeguard levels).

More interesting here however is what happens now outside China, not just for the five companies of this article, but the industry as a whole.

The reset to global normality post China-531

As normal as things have ever been in the PV industry, long-term drivers in terms of globalization in a post-subsidy environment would appear to have been restored. The fall out in China (mainly through a succession of postponed capacity investments) will rumble on for the rest of 2018, possibly grinding to a halt at year-end when stay-or-go decisions are taken by many Chinese domestic players of the past 3 years.

Expect a whole bunch of gung-ho capacity expansion plans out of China (covering the 2017/2018 period) to be conveniently brushed under the carpet on 1 January 2019. Even those clinging to false optimism during the Intersolar conferences of Europe/US, and stating that expansions will proceed no-come-what, will likely be left to eat humble pie and issue phrases like ‘currently reviewing timing schedules’.

As we noted before, this was inevitable and simply a matter of ‘when’, not ‘if’ as a 100GW industry does not need an extra 50GW overnight, come-what-may.

Investment reality aside, at this point, the focus for module supply is firmly non-China, with Chinese supply of modules being a secondary priority for those intent to be around globally going forward.
We are currently completing our analysis on what is potentially more relevant for the rest of 2018 and the whole of 2019: top-10 non-China-market module suppliers, including their technology mix and bankability. We expect to complete this piece of research within the next couple of weeks.

This topic is implicit across the two days at PV ModuleTech 2018 this year, and the global list of downstream stakeholders coming to this event in Penang in October backs this up completely.

Indeed, not simply the top-10 module suppliers (excluding China demand), but further, the top-10 serving the utility segment. This basically becomes the sub-set of players that will see continued growth, and are the contenders for module supply to large-scale or mega-solar deployment.

How much has technology differentiation helped the top-5 in 2018?

Digging behind the data for the first half of 2018 is actually revealing, in particular when looking at technology. The two issues (shipments and technology) are now inextricably linked.

Each of the top-5 has a slightly different technology-roadmap, ranging from exclusively-mono to mono/multi diversified, and bringing in the potential last-convert to the post-multi PV world of 2019 onwards (Canadian Solar).

While the technology positioning of LONGi is obvious to everyone in the industry, the shift of JinkoSolar from multi-biased (five years ago) to mono-dominant investments of the past 2 years has put JinkoSolar as potentially a global mono supplier that will do more to shift the buying habits of EPCs than any other company in 2019.

However, it is not LONGi that has been instrumental to moving utility solar over to mono. This prize surely goes to JA Solar. Back in 2016, when multi was all the vogue for utility solar (especially outside China), JA Solar was the one company that was pushing mono panels for utility in volume. Others are starting to copy JA Solar’s early push now (JinkoSolar and Trina Solar), as the product mix by 3 of the top-5 (JinkoSolar, Trina Solar, JA Solar) moves ever closer to mono-centric.

Indeed, while there are several factors in the mix, could it be that Canadian Solar’s stoic adherence to the multi-legacy and being almost the lone figure in forecasting a world in which multi kept mono at bay, has finally been shown to be out of touch with market reality?

Not only were third-party shipments from Canadian Solar well below company expectations in 1H’18, the company’s ASPs have been trending at double-digit percentage levels below the likes of JinkoSolar, Trina Solar and JA Solar. The short-term buffer of basement multi wafer prices (through GCL-Poly offloading inventories before impairment charges kick in) is only a tactical benefit, not a strategic goal.

We have been noting the market trends that would accelerate the transition from multi to mono, and China-531 provided just another nail in the coffin for multi. More on this early next week in a separate blog that will explain all, and hopefully finally put rest to the somewhat fake-news that continues to suggest that mono-vs-multi is actually a battle still to be won!

It is almost certain that Canadian Solar will now need to follow the technology path pioneered by JA Solar, then given a rocket booster by LONGi, and subsequently adopted rapidly by JinkoSolar and now Trina Solar (during 2018/1H’19).

Other module suppliers that occupy the lower rankings in the top-10 are also multi-heavy and these companies will be having daily meetings on what to do with existing capacity levels over the next 6-9 months.

The joy of being an EPC today

On the one hand, EPCs are seeing module performance and price levels that they had never expected to happen until at least 2020. While many will think this is all good-news, spare a thought for the project builders over the next 6 months that are potentially building sites whose yield levels could be 10-15% higher, if they made the correct risk assessment on higher performing products.

How appropriate then that the PV ModuleTech 2018 event on 23-24 October in Penang will offer them a 2-day crash-course in module-supplier/technology/quality selection for utility solar in 2019! 

Details on how to attend the event can be found here.

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PV ModuleTech to showcase top-10 global module suppliers for 2019

Today, there are well above 300 companies operating module assembly lines. This ranges from factories with just a few megawatts of equipment capacity, to multi-GW fabs. Module lines are installed today across all geographic regions, in more than 100 different countries.

However, very few module suppliers can be considered truly global, regardless of how one defines ‘global’ today in the solar industry. (I will take a fresh look at this topic again in the feature.)

The solar industry is now going through a harsh reality-check phase, having been somewhat distorted by what has been happening within China over the past few years; and this is poised to redefine the group of companies that will satisfy non-mainland-China module supply in 2019.

This article takes a closer look at the type of module companies that will be internationally known over the next 12-18 months, and beyond. The research has been done recently by PV-Tech’s in-house market research group, and will culminate in October during the PV ModuleTech 2018 conference in Penang, on 23-24 October 2018.

At the PV ModuleTech 2018 conference in October, the leading international module suppliers will be on stage, outlining their product offerings for 2019. This group of companies, including the likes of First Solar and SunPower, are among the most bankable suppliers to the industry today, and are routinely on the list of approved companies by utility-scale lenders.

Recap on leading global module suppliers

At the start of 2018, we presented our Top-10 Module Suppliers of 2017. Since our (very) early compilation, a few minor tweaks were reported to start-of-year estimates, in particular relating to the quantity of company-branded modules being supplied to the in-house project development work done by some of the companies listed.

The final revised Top-10 for 2017 is actually much better if we call this a Top-12, as this group is well ahead of all others, and there is not much between the ranking positions 10, 11, and 12.

The inclusion of Talesun and First Solar in the above list is crucial, as opposed to looking simply at a top-10 list in which the final few are close in terms of module shipments.

Indeed, companies such as Talesun and Risen are particularly relevant today as China demand sees its much-needed reality-check. There is no doubt that when we look at which of the hundreds of module suppliers headquartered in China will be the ones that can adapt to a global end-market in which China is less significant, then those that have international experience already will be firmly in the driving seat.

It remains a fact that only about 10 Chinese-headquartered module suppliers have been active globally in the past few years. Eight of these 10 companies are shown in the table above. Others have simply outsourced to contract makers in Southeast Asia when shipments to tariff-constrained regions presented themselves as immediate opportunities.

Indeed, Talesun and Risen typically receive less credit globally, compared to US-listed (albeit a dwindling number these days) China-HQ Silicon Module Super League (SMSL) players. However, the focus on utility solar and bringing finance into shovel-ready sites has many similarities to the route taken by companies like Canadian Solar in the past few years.

The most interesting fact from the above table however is that almost two-thirds of all MW shipments in 2017 came from the above module suppliers. And if we confine 2017 demand purely to utility-scale (remove all residential and C&I type installation), we move to above three-quarters.

75% of utility module supply from 12 companies: the real bankable Tier 1 grouping?

Surely this set of companies becomes the first port of call when talking about bankability prospects for utility scale solar? Certainly, these companies feature most on lender’s approved lists – or should do! Perhaps scanning through the other GW-plus suppliers there are obvious contenders to add here, such as SunPower and REC-Solar, but it is hard to get to more than 20 companies that ought to be on non-China utility-scale approved-supplier listings today.

Until now, the solar industry has not cracked the bankable-list conundrum, and this is perhaps one reason why so many EPCs and developers are left to contemplate on supplier choice once sites are fully operational.

PV ModuleTech 2018 to define the market leaders for 2019

Many of the module suppliers shown in the table above (and cited elsewhere in this article) will be at PV ModuleTech 2018, outlining their product offering for utility-scale solar sites in 2019-2020, and explaining the technology and financial metrics that underpin their bankability-status in the industry today. The learning potential for EPCs and developers (including asset owners/managers and O&Ms) is clearly evident.

Indeed, I have taken on the task of providing an independent overview of what we see at PV-Tech will unfold in 2019, once we remove China end-market supply, and the module suppliers in China that will not make the transition from domestic-supply-dominant to overseas-shipment leaders.

Details on how to participate in the PV ModuleTech 2018 event in Penang on 23-24 October 2018 can be found here, including information on how to register to attend.

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Module Quality Forum: What do EPCs and developers want from global module suppliers?

Heading into the PV ModuleTech 2018 event in Penang, Malaysia on 23-24 October 2018, PV-Tech is set to conduct a series of interviews with leading project developers and EPCs, to understand what downstream channels of the utility-scale PV segment are looking for, when choosing PV module suppliers and their respective module technology offerings.

With module supply globally seeing increased contributions now from countries outside China, developers and EPCs across the US, Europe, India, Japan and emerging global markets, are being confronted with greater choice in terms of companies offering modules and technology types that differ from the 72-cell p-type multi products that have dominated utility solar until now.

To address these critical issues – that impact on plant design, quality of build, and energy yields – the forthcoming PV ModuleTech 2018 event is being organized to provide developers and EPCs with a platform to explain their needs, while hearing from the leading global module suppliers of 2018-2020.

Ahead of the PV ModuleTech 2018 event, PV-Tech is featuring key-company interviews with some of the EPCs and project developers that will be speaking and attending the event, in order to learn what issues are facing downstream utility companies today, and what they need from module suppliers to ensure that utility plants are designed optimally with minimal risk, while delivering maximum return-on-investment to site owners.

Before we hear from the companies making the decisions on module-supplier and module-technologies for global utility projects going into 2019, I will address in this article some of the disconnects seen today with the propositions from module suppliers and the buyers of the modules, while considering what, if any, the impact of new module offerings (bifacial, half-cut, shingles/singulated-cells concepts) will be on utility-scale solar in the next 12-18 months.

Historical copy/paste cookie-cutter site-design tactic nearing its end-of-life

Being a planner (either outsourced or in-house by project developers) of large-scale solar farms in the past few years has been a relatively easy task!

Often, more time has been spent on working out how to rehome great crested newts, than factoring in the impact of the latest module technologies and their impact on the structural layout of modules/inverters, and upside delta on site yields. The only major change in plant layouts has come from the shift from 60 to 72-cell modules, higher operating voltages and higher adoption of string invertors.

In fact, the dearth of 72-cell p-type multi modules being offered simply meant that panel dimensions on call-out boxes in site layout plans, were accompanied by text that would read ‘indicative module layout/dimensions’, knowing that the final developer/EPC would then have the choice to drop in the 72-cell panel of choice from across multiple module supply channels. To a lesser degree this even extended to one of the thin-film champion developers of recent years, Belectric.

This preponderance of me-too products, from so many channels, may actually be one of the key factors behind the number of solar parks underperforming today.

So many developers and EPCs seemed to be of the opinion that because this module type was in such widespread supply, it implied that the technology was both mature and dependable. In this way, it was much easier to justify driving down site capex, while creating somewhat of an auction across module suppliers when sites approach the build phase.

At the extreme end of this, we have the Indian market which today epitomizes the above narrative. Ultimately, component supply and site capex is of course a trade-off between upfront costs and how much sites can be sold for when it comes to flipping to the institutional investment sector.

Performance over 20-30 years, site yields and ensuing costs to fulfil IRR’s sadly have no compromise in this regard; time-and-again, the conversations with asset owners and O&M’s in the past few years have sounded like a broken record when reflecting on module choice enacted prior to their acquisition phase.

Where is the system letting down asset owners, and can it be fixed easily? This would perhaps be the most mature place to start; to identify the gaps in the system that allow multi-MW sites to be populated with modules that can barely perform over 2-3 years, far less 20-30 years.

Plenty want to bury the fact that so many solar plants are underperforming today, as though this would be an indication that the industry was short-changing its funders (government, state or city-based). However, to a man, virtually all of these stakeholders would like nothing more than knowing how their future investments can outperform prior rounds of financing, and that the solar industry as a whole recognizes that module inspection, certification and testing is not just a bean-counting exercise, but a channel through which everyone can get their act together professionally.

OK, so now we have untried and untested modules coming on the market!

One can sympathise with asset owners today, when they are now starting to see module suppliers offer the next-best-thing after 72-cell utility-based p-type multi modules, to EPCs and developers that are lining up future portfolios of built solar farms.

The manufacturing sector seems to have hit the technology-upgrade button, almost overnight.

It is no longer simply p-type multi modules flooding the market; there is now mono-PERC, and thrown into the mix bifacial modules, half-cut cells and shingled products. (Note – the shingles term is actually a misnomer, as the correct assignation should be singulated cell strips, but for now this is not a big deal.)

For sure, many developers and EPCs are confused. Which of the new product types – and companies supplying them – are actually offering a higher spec product that has inherently lower degradation and lower risk than products of yesterday? And which – despite what it says on the tin – just need to be sidelined until there is field data to show real-world performance?

Knowing the answers to these questions is probably what will differentiate the solar farm builders globally over the next 12-18 months, and right now, everything leading into the PV ModuleTech 2018 event is being configured to have an independent platform to allow rational decisions to be made by EPCs and developers. And not to mention informing the asset owners of today’s multi-GW portfolios that can ultimately influence the lenders about component choice they need to pass down to the EPCs on-site.

Within the overall mix of higher performing products (let’s classify by stated panel powers at STC here), there are some excellent choices to be made. For example, the move from multi to mono is intrinsically advantageous from a degradation standpoint; and the use of glass-glass modules (mono or bifacial) has many benefits also. And on the thin-film side, moving from a First Solar Series 4 to Series 6 panel size opens up plant capex benefits that are highly-positive from a return-on-investment standpoint.

In short, the world is moving inevitably away from me-too 72-cell p-type multi modules to a mix of higher-performing and potentially more-reliable offerings. It is now down to the module suppliers to explain clearly what they are offering, to the third-party testing/auditing/certification labs to undertake the appropriate analysis of the companies/products, and of course to the EPCs/developers/owners to be adequately tooled to make qualified judgements.

Exception-not-the-norm summary statement needs to be turned upside-down

Despite the FiT driven residential early-adoption of solar, and the sustainability-motivated holistic approach from the corporates operating with acres of empty flat rooftops, the 100-GW-climate of the PV industry today is a utility-driven institutional-motived asset class that fulfils global energy needs in a post-fossil-fuel world.

As such, the importance of plant return-on-investment becomes the single most important metric judging the success of the solar industry as a whole. Therefore putting built utility-scale plants under the microscope is fully justified and essential to move performance levels forward.

There are hundreds of well-build, reliable and target-fulfilling solar plants in operation today, with asset managers and O&Ms monitoring, optimizing and maintaining energy yields. However, they are still outnumbered by the plants that see teething problems almost from the off. Flipping this ratio around is now the next big challenge of the industry, so that underperforming sites become the exceptions.

Over the next couple of months on PV-Tech, we will hear the views of EPCs, developers and asset owners/managers, pulling together a wish-list to the module supply community about the need for transparency in terms of product certification and reliability testing, down to factory operations and bill-of-materials. This wish-list will then become the basis of the talks and presentations delivered by relevant stakeholders at the PV ModuleTech conference in Penang, on 23-24 October, 2018.

Anyone wishing to contribute to the series of articles on PV-Tech can email me direct here. To sign up to attend and participate in the PV ModuleTech 2018 event, please visit our webpage here.

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First Solar’s Series 6 module ramp-up constraint issues, explained!

In reporting second quarter 2018 financial results, First Solar revealed that it was having Series 6 production issues at its lead Ohio factory.

The company took the time in its earnings call with analysts to detail the problems, which centred around a yield issue at a specific tool/process at the upstream cell level, that then impacted downstream assembly throughput, aggravated by insufficient buffer stations. 

Not surprisingly, and I would not blame them, First Solar’s management did not reveal the specific tool and therefore cell process that was giving them yield issues. However, the yield issue led to shutting down of specific tools to diagnose, fix and recalibrate before testing and restarting that production step.

In the earnings call, Mark Widmar, CEO of First Solar said, “We have a single point of failure on the production line today.”
It is also important to note at this time that the Ohio factory is still in initial ramp-up mode with the first iteration of a complete new toolset for the large-area Series 6 modules. This is not mature production line(s) and the ability to make a perfect ramp to full nameplate capacity with everything new would be seriously impressive but unlikely.

Theory of constraints

In the typical linear thin-film module manufacturing flow, rather than batch-based flow where steps are generally isolated and have buffer stations, a single point of failure as Widmar described can create bottlenecks or throughput constraints before and after the point of failure.

“If that tool goes down, everything upstream is shutting down and we’re starting the downstream processing, right? So, that tool is critical because it’s a single point of failure. We have to have the availability and we’ve identified where those points are and what we’re going to do is we’ll buffer it with inventory. So, if the particular tool goes down, we aren’t starving the balance of the production and we can continue to run the production as an example, right?

In other words, the throughput impact of First Solar’s single point of failure (yield issue) at the specific tool can be reduced significantly if a sufficient amount of in-spec modules are produced and stored (buffer) so that the next steps are not starved of semi-completed modules so the final steps to complete modules can operate to their cycle time and throughput requirements.
 
The impact was and can be significant. Management noted that when the point of failure occurred, capacity would go from almost 100%, straight down to 20%.

This was certainly an unexpected point of failure as First Solar is rushing to provide enough buffer stations in the manufacturing flow to minimize the cycle time and throughput issues it is currently experiencing. 

“The layout at the back-end of the line was built according to the tool set availability specification which resulted in fewer acquired buffers. As we started to ramp the back-end of the line with a tool set availability not yet at a mature state, we realized there were multiple single points of failure in the line that could shut down production. Effectively, the line was not adequately buffered given the current format of the tool sets”, added Widmar.

“We are in the process of installing inventory accumulators to properly buffer the back-end of the line. Once completed in our Ohio factory, we will use our Copy Smart approach to roll out to Malaysia and Vietnam. Over time, as the tool set availability improves, while the inventory accumulators will remain in place, the need for inventory buffers will decline.”

First Solar noted that the resulting constraints, although minimized eventually would lead to an annual shortfall of finished module output of around 200MW. 

This is due in part to the fact that the company would not have all of the buffers in place to hold un-finished module inventory for back-end completion at the end of the third quarter of 2018 or near the beginning of the fourth quarter of 2018, according to Widmar. 

“It is important to note that despite the 2018 volume reduction with the actions we are taking we anticipate to exit the year at the originally anticipated throughput levels and enter 2019 on track to our previously announced Series 6 production volume,” noted Widmar in the earnings call.

Editors note: A short 2 hour video by the guru of ‘Theory of Constraints’ is posted below. 

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Leading GW-plus module suppliers to non-China PV global markets

As module suppliers adapt to the slowdown of Chinese module demand in 2018 and 2019, global EPCs and developers are likely to see new Asian-produced panels being offered for both rooftop and ground-mount installations.

This issue was discussed in a recent PV-Tech blog last week, and forms a key theme of the topics and agenda during the forthcoming PV ModuleTech 2018 event, on 23-24 October 2018, in Penang, Malaysia.

This article reveals who the GW-plus module suppliers are to the global end-market, once we remove module supply to the domestic Chinese market, and identifies some of the chasing pack that are hoping to increase global brand awareness going into 2019.

Twelve module suppliers account for two-thirds of non-China global demand

While there remain hundreds of companies producing modules today, from regional single-production-line start-ups, to the multi-GW capacities of the Silicon Module Super League players, once we remove China market supply channels and all the low-volume suppliers (typically into a small subset of non-China markets), we are left with 12 major global suppliers. This list (shown alphabetically) is displayed below.

In fact, collectively these companies are likely to account for about two-thirds of global PV module installation capacity (excluding China) during 2018, with much of the supply being to utility-scale projects where company and technology are two critical issues that undergo various forms of risk-mitigation, auditing and bankability.

The list of 12 companies can be grouped and discussed here, to illustrate the different profiles and strategies for non-Chinese global module supply.

While having different technology offerings, First Solar and SunPower have relatively similar downstream-driven operations, with SunPower’s rooftop activities being the main differentiator.

Canadian Solar, JA Solar, JinkoSolar and Trina Solar can also be put together, with Canadian Solar having a more arms-length projects business that is not tied to using the company’s branded modules.
Risen shares similarities to the above China-HQ companies, but without its own non-Chinese manufacturing operations. Risen has downstream tactics similar to Canadian Solar.

LONGi and GCL-SI form the next group-of-two, being legacy upstream China-based poly/wafer suppliers, but now having multi-GW cell/module capacity with ambitious non-China module supply aspirations.

LG Electronics and Hanwha Q-CELLS form the Korean-run subset here, with both companies having been focused strongly in the past few years on being leading suppliers to rooftop and ground-mount segments in the US. Not surprisingly, both companies have also revealed module assembly capacity expansion plans in the US, hoping to benefit from the 2.5GW of tariff-free cell imports.

This leaves REC Solar somewhat in a grouping of its own, having a different place in the PV industry, compared to the above companies. While REC Solar has dabbled on and off with projects business operations over the past decade, it retains a somewhat European-run company, despite Asian ownership.

The chasing pack

There are over 100 module suppliers that would love to be included in the above list. Indeed, many of these companies were seen stepping up trade exhibition visibility in Europe and the US during the past couple of months, hoping to connect more with developers and EPCs outside China.

The strongest challengers to the above top-12 are listed now:

Talesun has the potential to be included within the Jinko/JA/Trina grouping above, due to multi-GW status (very close to SMSL inclusion) and non-China cell/module plant operations.

Neo Solar Power remains the surprise package for 2019 possibly, with the collective resources of UREC being potentially available, and at a time when NSP has been repositioning itself with project financing and site acquisition globally.

Note that we have purposely excluded companies (mostly in Southeast Asia) that have been used purely as OEM contract module suppliers.

PV ModuleTech 2018 to explain more about the top-12 market leaders

While strong growth outside China set to be the driver for end-market growth going forward, knowing more about the financial and technical strengths of the above-mentioned module suppliers will be critical to project developers and EPCs, when designing and building out new solar sites.

Even from a list of 12 or 17 however, there is plenty to learn and understand. While the above text offers a basic segmentation, there are many differences between how the companies operate outside China (or Korea), and in the product portfolios offered from each company.

The goal of PV ModuleTech this year is to provide a platform to help in this respect, and many of the module suppliers discussed here (such as First Solar and SunPower) will be explaining how their module offerings are both bankable and performance-leading, backed up with field performance data linked to manufacturing excellence.

To participate in the PV ModuleTech 2018 event in Penang on 23-24 October 2018, please click here for further information.

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How many Chinese module suppliers can compete with JinkoSolar, outside China?

Since Chinese investments into major cell and module facilities started – more than 10 years ago – success ultimately has been driven by overseas market-share gains, above other technical or financial benchmarks that otherwise would be expected.

However, despite the efforts of well over 50 Chinese cell/module makers (where the cut-off is including those with >500MW of capacity), only 5-6 Chinese companies have actually succeeded in establishing global operations with brand-recognition, and can point to a successful overseas business plan.

However, only one of them has evolved into a company that, in several respects, operates as a non-Chinese company outside China – JinkoSolar.

This article looks at where JinkoSolar is placed in the PV industry today, from both a Chinese and global standpoint, and asks the question: can other Chinese companies do what JinkoSolar has done, and if so, can they do it before their Chinese supply pipeline disappears?

Furthermore, is JinkoSolar now unfolding global module supply operations that are setting benchmarks for western-run module suppliers that rely on non-Chinese demand to exist?

Many of the themes running throughout the narrative below are set to be featured in more detail, at the forthcoming PV ModuleTech 2018 event on 23-24 October 2018, in Penang, Malaysia, where the top 5-6 leading global module suppliers will be outlining their company’s module technology, quality, and reliability status.

Resuming overseas module supply much harder than before for Chinese companies

During the last major rush to export modules from China (driven mainly by European FiT demand before 2012), the requirement for a global presence was minimal. This was seen clearly at the time, with Chinese operations being trade-show sized replicas of domestic personnel, and where sales to intermediates (distributors, installers, EPCs) was largely sufficient.

The Asian companies then that sought to have a global presence (Yingli Green, Suntech, Sharp, Kyocera, etc.) ended up challenged by ASP declines and lack of product differentiation, and with global operations that were based largely on copying the Europe third-party sales approach, aside from the occasional frenzy into mainstream product placement activity (read Yingli Green and the 2014 FIFA world cup in Brazil, for example).

As trade barriers crept in (US and Europe), about 90% of the Chinese companies fell back to domestic module operations, in part due to the imminent market pull from local demand, but also arising from lack of desire/cash to have any Southeast Asia manufacturing.

In effect the period of 2012-2016 saw the second major phase of supply-channel consolidation (the first being the eradication of European and Japanese majors on the global stage), and left the only global module suppliers of note, with Chinese HQ operations, being JinkoSolar, JA Solar, Canadian Solar and Trina Solar. By the end of this period, Hanwha Q-CELLS had effectively become a South Korean-run operations, while having legacy Chinese manufacturing arising from the Solarfun days.

Collectively, these four Chinese-run companies (Jinko, JA, Canadian, Trina) have many similarities when it comes to manufacturing operations (China plus one-other Southeast Asia), technologies (p-mono and/or p-multi, PERC migration plans), and business models (aside from Canadian’s downstream activities).

The other feature that differentiates them from the 100+ remaining cell/module makers in China, is related to sales/marketing outside China, and understanding the difference between a Chinese company doing business in China and outside. This remains the key factor determining success rates from the other Chinese companies overseas, regardless of the RMB-levels allocated to being on the global stage.

However, over the past 5-6 years, no Asian company (and very few globally) has been able to come close to the global module supply business strategy of JinkoSolar. In contrast to the other Asian companies that have got to global market-share leadership in the past, JinkoSolar has simply used this as a springboard to move to a different level, and into largely unchartered waters when it comes to a solar module company.

Why JinkoSolar?

This is a question asked by many people globally in the past few years. Indeed, if the answer was simple and prescriptive, others would have done it long before now, or be rolling out 2-3 year plans to get there by 2020/2021.

Of course, one part is being in the right place at the right time (read entering the industry post margin-crippling long-term polysilicon contracts) and being able to juggle tactic and strategy effectively (flexible in-house, OEM, contract supply balancing). But if we were to make a stab at the main reasons for JinkoSolar’s success, it may simply come down to these three points:

Creating non-Chinese operations (sales and marketing) that were geography, culture and sales-pipeline savvy, in exactly the correct global locations at any given time. What is being seen now with the company’s multi-GW pipeline of contractual deliveries is likely a direct result of this being in place. It is the closest thing yet to a Chinese company operating in a non-Chinese way, outside China.

Putting in place a (real) technology roadmap with R&D spending and line upgrades, at the multi-GW level. This is one of the reasons previous market-leaders struggled, as many had effectively bankrupt themselves in getting to number-one with a me-too product, and had no what-next plan that should have been to be a market-leader as well as a technology-leader.

Seeing the Chinese market (especially over the past 2-3 years) as low-priority, and being focused on being either number-one or number-two in all other major end-markets (regional or country-specific).
The first point above can’t be charted as a benchmarked metric (its way more subtle and strategy based), but the others can, so let’s have a look here to emphasize these two points. The graphs below illustrate these points clearly enough.
 

China end-market-check forcing Chinese companies to globalize, or cease operations

Ironically, the dilemma facing most of the Chinese based module suppliers today has arisen purely from the domestic China market. Almost all companies expanded capacities, production and module supply purely on the expectation of local supply being available.

Indeed, many had been doing this, without any overseas business, or at best having discontinued their focus on export revenue streams. Therefore, in the absence of local supply options, these companies have to export, or effectively cease to operate efficiently with adequate utilization rates.

This largely summarizes the situation many Chinese companies are faced with today: how do they quickly work out the markets to focus on overseas; how can they convince module buyers that they have product quality and reliability to be bankable?

For many Chinese module suppliers that were relying purely on domestic demand, the problem is even greater, in particular those companies that were supplying modules mostly to parent-owned EPCs, themselves undertaking build-out for the same parent entity. The requirement to have third-party factory auditing, module inspection and risk-assessment is clearly not at the level here, compared to shipping half way around the world to a non-Chinese investor.

These questions are going to form a key part of the forthcoming PV ModuleTech 2018 meeting in Penang in October. To allow for this, we have supplemented last year’s agenda with a new session where leading market analysts/developers from all key markets outside China will present on what utility demand will look like in these regions over the next few years and what this means for module suppliers.

Not just China module suppliers, others having to change tactics quickly

The shifting module supply landscape of 2019 is also having an impact on remaining module suppliers headquartered in Japan and South Korea, not to mention Taiwan and Vietnam/Thailand. For many of the module companies based in these countries, the challenge is not so much on meeting demand in their HQ-country (e.g. for markets such as Taiwan and South Korea that are government-created to support domestic sectors), but in working out which of the countries (outside of US and Europe) to focus on.

Perhaps across all these countries however, the what-next for Neo Solar Power (NSP) in Taiwan may be the most interesting to view in 2019. Assuming NSP emerges as the dominant partner in the newly-created consortium of NSP, Gintech and Solartech (with modules rebranded as URE), then NSP may finally make the cell-maker-to-module-supplier/developer transition, on the global stage.

Of course, NSP would face exactly the same issues in terms of creating global sales and marketing, and branding. The advantage NSP would have however is making this transition, having started from a technology (and cell) focused heritage. This is not dissimilar to the path taken by JA Solar and Hanwha Q-CELLS in recent years, and having technology credibility is never a bad starting point when changing operational focus.

PV ModuleTech 2018 to showcase global module supply leaders

Last year, at PV ModuleTech 2017, the audience heard from the most of the top-10 module suppliers to the PV industry, based purely on module supply volumes over the previous 12 months, including both within and outside China.

For PV ModuleTech 2018, the contributions from module suppliers are shifting mainly to the leading module suppliers to the non-China segment of the PV industry, including companies such as First Solar, SunPower, and selected others that are existing (or potential) global suppliers over the next 12-18 months (and the main Chinese companies expected to survive the imminent shakeout).

This select group of companies is likely to form the basis of many of the proposals that will be seen by utility-scale developers and EPCs over the next few years. Therefore, understanding who these companies are, what module technology types they have been supplying recently, what their module supply roadmaps look like, and how their panels have performed in the field so far (from third-party verification standpoints) is vital.

To get involved in PV ModuleTech 2018, on 23-24 October, in Penang, Malaysia, please follow the links at the event website here.

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New module suppliers and technologies to create more opportunities and risks to developers and EPCs

Module selection for utility-scale solar sites in 2019 is likely to see the widespread availability of higher performance products with average selling prices significantly lower than witnessed over the past 12-18 months.

While on the surface, this may appear as a dream-come-true for project developers and EPCs (especially outside China), the challenges in identifying bankable suppliers with quality product offerings are set to increase dramatically, placing far more pressure on making the correct decision to mitigate against risk of plant underperformance over a 20-30 year operating lifetime.

This article explains the background to these imminent changes to module supply, including an outline of the module suppliers’ landscape for 2019, while also identifying the most challenging criteria for developers and EPCs in terms of module supplier and technology-type selection.

The discussion below on module technology (and supplier) selection is perhaps the key takeaway for EPCs and developers, providing top-level selection criteria on modules for 2019 and the areas where increased scrutiny will be required.

Data shown here is taken from PV Tech’s Market Research analysis, included in the May 2018 release of the PV Manufacturing & Technology Quarterly report.

Reference is also made to the themes set to be covered in the forthcoming PV ModuleTech 2018 meeting on 23-24 October 2018, in Penang, Malaysia, where module supplier benchmarking is addressed in detail.

72-cell multi modules met utility demand with few questions asked

Until the end of 2017, the PV industry had depended critically on the availability of p-type multi crystalline silicon (p-multi c-Si) modules somewhat as the default go-to choice for utility-scale deployment by many developers and EPCs.

The main exceptions were projects that used First Solar’s Series 4 thin-film panels, or SunPower’s E-Series c-Si premium (n-type back-contact) panels.

An uptick has been seen in the use of p-type mono c-Si panels over the past few years, with much of the deployment here being within China, using modules where the entire value-chain of manufacturing (poly/ingot/wafer/cell/module) has been domestic.

Otherwise, for the (non-China) global developers and EPCs, module selection has been mostly about which supplier of 72-cell p-type multi modules is successful, and less so on the technology type. It is this category of developers/EPCs that needs to be most aware of the changes set to unfold regarding module technologies (mono driven) and the new paradigm of ASPs on offer.

Why has multi been so dominant for utility-scale solar?

The answer to the subheading above is not complicated. Utility solar has been the main driver of growth in the solar industry in the past 10 years, and this has been accompanied by limited supply of mono-grown ingots (needed for mono wafers used to make mono cells/modules).

In fact, capacity and production levels of multi c-Si wafers and cells has rarely been in short supply, maintaining widespread low-cost product availability for developers and EPCs. Barriers-to-entry in making multi wafers have been low, and having GCL-Poly setting up tens of GW of low-cost/low-price wafers set the benchmark for every other multi wafer supplier in China/Taiwan.

Had the world decided collectively overnight that the choice of utility-scale solar was to be confined to First Solar, SunPower or p-type mono modules, then it would have seen more than 80% of utility-scale solar being removed, due entirely to lack of module availability from this subset.

Developers and EPCs have needed 72-cell p-type multi modules to exist. And many of them have been largely unconcerned with origin-of-manufacture, and whether the maker of the product was in Vietnam or Thailand or chosen ad-hoc from one of China’s many quasi-OEM state-funded institutions.

Pricing was low, often serving the primary goal of lowering site capex and maximising profits when flipping signed-off accredited/PPA-secured plants. Product was available in droves, even during the various trade-related cases in recent memory.

If module suppliers and their respective technologies had been created equal, then this would be the end of the story. However, the raft of underperforming solar plants globally today indicates this is clearly not the case, and anyone thinking that solar modules are a commodity offering needs to spend a few hours with asset owners and O&Ms to get a strong reality check.

For most of last year, for example, looking at many of the 72-cell modules installed globally (or at least reading off the datasheets) showed few if any differences across 50-100 module suppliers, differing only in frame dimensions.

It is therefore little surprise that one of the most frequent questions asked has been: which is the best module supplier – who should I buy from?

If EPCs and developers thought life was tricky in the past few years (having to select which company for 72-cell p-multi modules!), then they are in for a rude awakening by the end of this year, unless they become far more educated in what the GW-scale module supply landscape is set to become shortly. These changes are set to offer major opportunities for plant design, but come with an equal dose of risk should the wrong supplier or technology-type be deployed.

Mono, n-type variants, bifaciality, and Series 6 thin-film panels

Going into 2019, an increasing number of utility solar farms are going to be utilizing p-type mono modules (almost all of which will be PERC based), with ASPs largely at parity with p-type multi offerings and at sub 30c/W (EXW) pricing.

While design and operation of solar farms will reflect the higher powers from p-type mono, the main question for module users is likely to come from the increased number of Chinese based suppliers, and which company to choose for site deliveries.

By now, it is no great secret that the Chinese market is not going to keep growing exponentially, simply to absorb the collective shipment targets of companies that have added capacity (from polysilicon through to modules) over the past couple of years. This single fact will see approximately 20-30 Chinese-based module suppliers seeking to grow export business, adding to the 10-20 existing Chinese companies that have appreciable overseas sales revenues today.

Which of the 30-50 Chinese module suppliers are truly bankable? How many of these companies have a level of manufacturing quality control that is low enough risk for external solar farm investors? Are their PERC modules reliable, with a fully-audited bill-of-materials?

But perhaps more pertinent, how many of these companies will be solvent 2-3 years out and able to honour 20-30 year performance guarantees?

In addition simply to increased p-type mono modules (72-cell PERC), there will be more offers for n-type modules than seen before. Several caveats apply here, as n-type now includes a wide range of company types and performance levels, not to mention strategies.

In theory n-type modules have the capability of higher efficiencies (power ratings) and superior elevated temperature operation, compared to p-type mono and multi modules, as explained below. EPCs and developers should at a minimum absorb these basic facts.

There are three basic types of n-type modules: n-type PERT (using manufacturing processes and equipment closely aligned with p-type mono PERC), n-type heterojunction (HJT), and n-type back-contact (or often assigned as interdigitated back-contact or IBC).

Currently, the efficiencies (STC power ratings) from n-type PERT modules are not that different from best-in-class p-type mono PERC variants, suggesting that the value-added proposition for n-type PERT lies mainly in the temperature coefficients.

At the top-end, LG Electronics version sits as the gold standard today, with several in-house differentiators (front/rear implanting, multi-wire front grid interconnections): however, LG’s priority (excluding its domestic market and a few isolated occurrences) is mainly on rooftops, and not mega-solar ground-mount deployment. Therefore, many global utility-based developers and EPCs will remain somewhat excluded from using these panels still.

Other n-type PERT modules are coming now from new Chinese companies, none of which has any strong heritage in solar cell production (aside from Yingli Green’s legacy PANDA lines). All of these companies have plans to export in volume to global utility projects in 2019, and this certainly points to a greater awareness of module users when it comes to qualifying these suppliers.

The next n-type architecture seeing increased attention is heterojunction. For years, HJT modules were synonymous with Sanyo’s trademarked ‘HIT’ modules, simply rebranded as Panasonic following the acquisition phase. HJT production is fundamentally different to all p-type cell/module assembly, and to n-type PERT variants. These lines are process and equipment tool specific and represent a step-up in terms of manufacturing complexity.

In the past 2-3 years, it is mostly HJT that has seen the investment dollars in China across new entrants in cell/module production that needed to select an advanced technology-type to differentiate from the p-type juggernaut that is already in operation. HJT has also been a convenient technology-transfer route for a number of a-Si thin-film fabs (extending outside China also) that had adaptable deposition equipment/know-how needed to make c-Si HJT cells.

In an ideal world, HJT deployment sits firmly on residential rooftops, commanding ASP premiums that are needed to absorb higher material and production costs compared to the leading multi-GW p-type suppliers today. While LG and Panasonic have been able to manage this mostly during their solar industry participation, these companies benefit from brand association and installer confidence levels built up over many years.

New HJT suppliers are therefore left to focus on ground/utility segments, suggesting again that global EPCs/developers are likely to see new offers from this grouping during 2019, as GW levels of production hits the market with no easy supply channels in China to absorb all produce.

The final n-type (and the most advanced and premium performance) category is based on the back-contact or IBC structure, something that (aside from pilot-line activity in Korea) is the sole domain of SunPower across its Southeast Asia fab operations. This is no indication at all that this will change in 2019 or the foreseeable future, such is the barrier-to-entry level in terms of in-house IP (process and equipment tooling based) that SunPower has meticulously crafted over 20 years of production experience.

This ensures that SunPower’s products will remain the highest-performing (STC and elevated temperatures) and with the highest ASPs in the industry, largely without technology-specific competition. This continues to allow SunPower to be selective (for its IBC product lines) in terms of application segments (residential, C&I and utility split), regional deployment, and shipment to in-house or third-party sales. Applying these factors, and given the GW level of IBC product available (compared to the 10GW mark now common to several of the global p-type module leaders), one can conclude that most of the global EPCs/developers will continue to be forced to make choices confined to the other module technology types.

The final technology type to consider of course is thin-film, with this technology belonging to one company today – First Solar. Yes, there are other thin-film companies in the solar sector still, but they are either seeing declining fortunes in terms of product availability and global competitiveness (e.g. Solar Frontier) or have limited if any market credibility or bankability (e.g. almost all Chinese based thin-film investments going back well over 10 years now).

Manufacturing exclusivity aside however, First Solar’s successful roll-out of its Series 6 panels (coupled with multi-GW of new fab builds across three countries now) is set to provide higher performance products in far greater volumes than seen in the past. However, this is not simply confined to product coming off the production lines, but the amount that is now being shipped or sold to third-party developers and EPCs.

To put this into context, during 2019, MW-levels of shipments to third-party developers/EPCs are forecast to increase by approximately one order of magnitude, compared to third-party shipments just 4-5 years ago, and could easily exceed the 4GW mark next year.

Given also that First Solar’s product is – for all purposes – utility-segment specific, this effectively propels First Solar to a new place in the PV industry, and will bring a whole bunch of new EPCs/developers into contact with thin-film products for the first time, or simply re-engage those that had been champions of thin-film panels for utility deployment in the past but were forced to rely on p-type multi-modules to fulfil build-out plans over the past few years.

What does this really mean for EPCs and developers?

In short, the companies and product types being considered for utility-scale solar in 2019 will be different to what has been seen for most of the past 2-3 years (where almost everything was 72-cell p-type multi).

Many of these companies have minimal track-records in exporting supply out of China, some are new to cell/module production and are trying to ramp up GW-levels of new process flows for the first time, while others (JinkoSolar, Canadian Solar, JA Solar, First Solar, for example) are firmly established with global EPCs/developers and will release new module versions with improved performance and reliability.

It is probably fair to say that any developer/EPC currently planning a utility-based solar site for 2019 based on 72-cell p-type multi-modules should pause, and ask whether this is the best option in terms of investment ROI or secondary site valuation figures in three years from now.

While not wanting to complicate the issues, seasoned campaigners may well be asking why there is no talk above of bifacial/half-cut/shingles. The reason for this is relatively simple.

Right now, these are still options, not necessities in the market. The benefits are not in doubt. It is just that they are more additive to existing plans (which are not yet fully implemented and qualified in production).

Bifacial remains a curiosity more than a must-have, with widespread confusion about just what is on offer in terms of yield deltas, and how it is possible at all to predict performance over 20-30 years. While the easy argument is to say that anything extra is always good, this is as dangerous a statement for investors and O&M’s as is anything impacting site underperformance.

How do you value the worth of a site, if you can’t forecast yield over 20 years? How can you set performance ratios for O&Ms or even dare to include upside payments based on over-performance relative to a fixed (unknown) reference line?

Either you bit the bullet and have some carefully-worded clauses into supply arrangements (power guarantees) or have highly-flexible O&M contracts (especially during the first 2-3 years), while baseline parameters (likely almost all site/environment specific) are established. Or you just wait a few years until the industry has worked out how to deal with double-sided absorption from solar modules.

Half-cut modules are less of an unknown or a differentiation and EPCs/developers have less reasons to fear them, other than diving into module supplier selection from an unknown entity. Until now, half-cut cell module design has been a key focus from REC Solar: it is unclear still how much the Chinese sector will fully embrace. Will China solar want to laser cut all its cells in two and re-assemble them all across its various cell/module supply-chains? Taking this one step further to multi-cut – or singulated cells designs – and potentially we enter more niche-status manufacturing today.

PV ModuleTech 2018 to provide clarity for EPCs and developers

Going into its second year, PV ModuleTech 2018 will focus specifically on utility-scale module supply and demand for the 2019/2020 period, in particular for all countries/regions outside China.

Therefore, this two-day conference should provide EPCs and developers with the tools they need to assess and benchmark module suppliers and product technologies for sites in preparation or going into planning/approval phases over the next 12 months.

The event will include a non-China specific geographic module supply session, where the demand for modules outside China in 2019/2020 will be explained, including company and technology market-shares in key regions globally today and how this may change going forward.

Leading module suppliers will then outline product availability, and what measures are in place to ensure bankability and product quality, and how these companies are placed to honour 20-30 year performance guarantees.

PV ModuleTech 2018 will again hear from leading independent engineers, test and inspection organizations, certification labs, factory auditors, and module assembly materials and equipment suppliers.

Findings from the event will be invaluable to companies (EPCs, investors, developers, O&Ms) whose business models are contingent on the correct module type and supplier being chosen.

Details on how to attend PV ModuleTech 2019 can be found here, including the event agenda. Speakers are by invite-only from the PV Tech team, and will be revealed by us in the coming weeks.

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