Interview: Chint Solar (Zhejiang) Co. Ltd Astronergy

Transcription

1 Shanghai, CN May 15, 2012 Interview: Chint Solar (Zhejiang) Co. Ltd Astronergy Dr. Liyou Yang, President and CEO and Alan Yuan, Senior Vice President and Chief of Sales and Marketing Officer, of Energy Company Chint Solar (Zhejiang) Co., Ltd Astronergy. Imagine Photovoltaics in the Future Are we there yet? A special interview on current market conditions, competitiveness and the reality of integrated energy solutions as a viable pathway to overcome a challenging PV market environment, by Daniela Schreiber, EuPD Research. Alan Yuan, Senior Vice President Chint Solar Co. and Dr. Liyou Yang, CEO Chint Solar Co., Source: EuPD Research, 2012 Increasing PV deployment through sinking photovoltaic system prices and grid parity levels in almost 100 countries worldwide can be seen generally as a huge success story. The upstream PV component suppliers however, struggle against the background of changing market environments, the fading out of FITs and the appearance of new and unknown market drivers. Survival of the fittest but how fit do companies need to be to survive? EuPD Research talked to Dr. Liyou Yang, President and CEO and Alan Yuan, Senior Vice President and Chief of Sales and Marketing Officer, of Chint Solar (Zhejiang) Co. Ltd Astronergy during the 6 th International Solar Industry and Photovoltaic Exhibition & Conference in Shanghai. How would you characterize the current PV market situation? Dr. Yang: The market is really energized by lower costs, more experience in the market and innovation, which is why the actual market development often exceeds the forecasts. Solar has become real and therefore there are emerging markets everywhere. The situation in Europe is unfortunate, but emerging markets, such as US, China, Japan, Africa, and Middle East may compensate for that. Mr. Yuan: The solar industry has gone through its ups and downs over the past five years. PV panels have been considered a commodity; the industry in the past was short of supply and purely driven by panel availability. Now the competitive level among panel manufacturing is strong and with the apparent scale it requires more than panel trading. Professional sales and marketing is a necessity but seeing the bigger picture of what photovoltaics is energy offers new opportunities. Having said that, it needs both energy expertise and working with utilities. This is a whole different set-up of industry, which requires more than being a pure manufacturer of components. The situation you just described reflects the developments that EuPD Research had already foreseen a number of years ago, but being part of the big picture sounds very challenging to me. How have you been dealing with these changes and challenges?

2 Dr. Yang: The nature of the business has made a clear transition from a manufacturing centric kind of business to more of a market-driven energy business, as a part of the energy mix. Innovative technologies need to be integrated in the conventional grid. The co-existence with conventional power was not part of the game in the past for the solar industry. The solar industry is in the midst of a transition from a manufacturing operation to an integrated energy solution provider. With it, we see more professionalism along the value chain, professional investors, developers and EPC companies that are operating the systems and optimizing its performance. Mr. Yuan: At the same time customers are concerned about the challenging situation solar panel firms are in, because of which, they appreciate a much more diversified group, which is financially healthy and sound. Pure solar component providers are, on the contrary, associated with higher risks. So it is all about doing business right, minimizing risks and convincing investors. But how would you describe your market position today, and what is your prognosis for the domestic market? Dr. Yang: The Chinese market is going to be a dominant market. It will have a least 5GW and may even reach as much as 6 or 7GW. A tremendous growth perspective in comparison to last year with an installed capacity of 2.8GW. Already, within the Golden Sun Program, 1.7GW have been allocated and an additional 3GW accounts for applications to the western FIT. In the domestic market the Chint Group is already well positioned based on its long history, high brand awareness and its connections throughout China, especially with the government and financial institutions. That sounds as if you are quite comfortable with your market position right now. But how will you tackle the challenging market situation that lies ahead? Will you let us look behind the scenes? Dr. Yang: We focus on the downstream segments as it supports our manufacturing operation. When market development and manufacturing go hand in hand, synergies can be exploited. The demand side must be in balance. For Chint Solar Astronergy this means 1 to 1.2 GW this year. About 40-50% will be accounted for by our own project business which is a solid baseline. The remainder is distributed through our partners, including OEM business and other sales channels. Why are Chinese manufacturers seemingly more successful than others, at least in the current situation? Dr. Yang: Chinese solar suppliers have a strong manufacturing capability and can drive the costs down. This has been critical for the diffusion process of solar systems. Furthermore, China has developed a very thorough and capable supply chain for the solar industry. The scale is such that the supply chain is very competitive and that brings down the entire cost of the systems. This is our cutting edge. Compared to other Chinese manufacturers: How does Chint Solar differentiate from these companies? Dr. Yang: We are part of the electric-industrial conglomerate, which provides tremendous synergies in the system area, strong financing capabilities, strong government relations and we have very strong technical capabilities in terms of manufacturing. Just on the module side we are in the leading position in terms of manufacturing costs and quality control. Compared to the Chinese industry average, we are probably 5 to 10 per cent lower in manufacturing costs. Chint Solar with its brand Astronergy was founded as the solar arm of Chint Group five years ago. The group is a large electrical equipment manufacturer and electrical system integrator and thus, covers all aspects of electrical applications from low voltage to high voltage distribution and transmission equipment. Since 1984 it has been serving the electrical power industry as well as residential electrical equipment. The worldwide number 3 low voltage component manufacturer is serving 80 countries worldwide. The solar business plays an important role for the Chint Group shifting its focus from traditional power to new energy business.

3 In the near future Chint Solar Astronergy wants to be the world s leading system supplier and a new energy company. That includes the development of a strong portfolio of investments, owning and operating solar generation plans. Mr. Yuan: In a nutshell, solar completes our portfolio, by which we are able to offer a complete solution including power generation, transmission, distribution and application. With its other divisions, delivering meters or power cables Chint Solar Astronergy provides total renewable energy solutions. Our expertise in the electrical field and our good relationships and deep understanding of power and utility companies is unique. Currently Chint Solar Astronergy operates a 75 MW amorphous silicon thin film and 800 MW crystalline production facilities. With the drastic price drops of crystalline products, thin film however loses its competitive edge. How can thin film compete? Dr. Yang: We started thin film development in late 2008, going back to the deep knowledge and experience of the team, with this technology and against the background of crystalline silicon having been very expensive due to the shortage of polysilicon (Editor s note: Dr. Yang himself, built the world s first 10 MW commercial thin film plant for BP Solar in the mid-90 s). The observed decline in the cost of polysilicon, especially in 2011, could hardly be anticipated back then. Thin film made a lot of sense, but we entered in a rather conservative way with a 30MW Oerlikon line. Chint Solar Astronergy Booth, EuPD Research 2012 In 2009, the production with expected efficiencies could be started within a year, achieving over 9% efficiency from the beginning. Today, we operate with 10% efficiency. Following an aggressive roadmap bringing efficiencies up and costs down, Chint Solar Astronergy achieved a production cost level of 75 USD Cents 3 months ago. With our thin film technology, we focus on larger power plants in specialized regions, such as the southern US with a recently completed 6.2MW plant in Tucson, Arizona, or Thailand. This technology

4 results in a higher yield especially in hotter climates and the Sunbelt areas due its low temperature coefficient. But it is also aesthetically more pleasing and suitable for BIPV. That is why we have been engaged in BIPV applications in China since 2009 and will continue to focus on this niche application. Given the current market situation however, further expansion plans, originally to 275 MW in 2012, have been postponed. What about future price points? Where do you see the thin film technology in the near future? Dr. Yang: 10% more power generation in the hot areas equals a system advantage of 2.5 USD/W, which means 25cent efficiency penalty compared to crystalline. The total costs for thin film needs to be below 55 cent in order to be competitive. This has to be achieved within the next two years as crystalline can be anticipated to go down to 60 cent or below in the same timeframe. R&D effort focuses on the development of new applications, explore further potential and additional values to specific markets and niches. While Europe has seen severe cutbacks in FITs, which markets have Chint Solar Astronergy been focusing on? Mr. Yuan: Apart from China, we have focused particularly on the US, as well as the Japanese and European solar markets, but we have also invested heavily in South East Asian markets such as India and Thailand and in emerging markets like South Africa. What are your thoughts on project business, especially in a market like China? Mr. Yuan: We understand that project business and downstream will be the key, so we built our first 10 MW project in China in 2009 without a FIT in place. It takes real vision and commitment to do that and to build on downstream expertise. Today, Chint Solar Astronergy ranks number 6 in China in terms of connection and number 5 of all state-owned utilities. In terms of grid connection, Chint Solar Astronergy is number 1 out of all solar companies in China in The company has been expanding the downstream expertise aggressively on a larger scale with strong, experienced partners with complementary strengths such as MEMC / Sun Edison since Together we are jointly developing projects in emerging markets like South East Asia and South Africa. Chint Solar Astronergy offers integrated solar systems, what is the advantage of these systems? Mr. Yuan: We have built complete systems, manufactured by Chint Solar Astronergy in South East Asia already, e.g. in Thailand and India. Our partnering EPC companies appreciate the fact that all components come from one company. There is no argument if a system does not work. There is no pointing the finger from one component manufacturer to another. They are our systems and our responsibility. Furthermore the service is better and costs lower. And that does not only refer to manufacturing in China but also the scale, long-term experience and know-how coming from the Chint Group, resulting in very competitive system solutions with approximately 10% lower cost. This is particularly important for the solar industry. Cutting costs and exploiting synergies throughout different divisions is the key. With all components coming from one group, the overall system performance can be optimized and brings huge advantages to our customers. The warranty and services individually adapted to local requirements and guaranteed through a dedicated local team enable our EPC partners to optimize their activities. Nowadays, this is often required by many large EPC players. Conducted by Ms. Daniela Schreiber, Executive Vice President USA

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