Tag Archives: Trina

Hangzhou First PV Material puts incumbent encapsulant suppliers under pressure

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Hangzhou First PV Material produces ethylene vinyl acetate (EVA) films and flouropolymer back sheets and is located in Hangzhou, Zhejiang province, China. Hangzhou First PV Material has more than 500 employees and sales revenue of $67 million. According to the Hangzhou First PV Material’s prospectus, before 2008, STR Solar, Mitsui Chemicals, Bridgestone, and Solutia (Etimex) were the dominant companies producing EVA film – taking 60% of the global market share. Hangzhou First PV Material exceeded Bridgestone and Solutia, and became one of the top three suppliers in 2008. In 2010, the company claimed 25% of the EVA market share; its primary customers are Suntech, Yingli Green Energy, Trina, and Jinko Solar, some of the largest module manufacturers in the world. The company experienced a net profit growth rate of 252.34%, 346%, and 10.76% in 2009, 2010, and 2011 respectively, according to the company’s annual report. This decelerating profit growth, reaching $94 million in 2011, is due to slower growth in the broader solar market, according to the company. Hangzhou First PV Material priced their EVA film at an average of $2.41/m2 in 2011, including a 37.26% gross profit margin (GM).This price is between $0.4/m2 and $1/m2 cheaper than EVA made in Europe or the U.S. (see the report “Module Cost Structure Update: Path to Profitability” — client registration required). Although market conditions are less than ideal for the greater solar industry, the tight-lipped Hangzhou First PV Material has been able to swim against the current. The company hopes to issue approximately 58.1 million shares on the Shanghai Stock Exchange to raise $179 million to ramp an EVA film production line with an annual output of 180 million m2, a backsheet production line with annual output of 2 million m2, and a PV material research center.

Historically, module manufacturers have chosen encapsulants based on the lowest cost, rather than performance, as long as modules pass IEC and UL certification tests; as a result, EVA has dominated the encapsulant market. Still, silicones, thermoplastics, and polyolefin encapsulants continue to compete with EVA. Dow Chemical started production of its ENLIGHT polyolefin encapsulant (client registration required) in Thailand in August aiming to replace EVA. Similarly, Wacker Chemie has rolled out a silicone-based thermoplastic film that claims better transparency and faster lamination times at a similar price to incumbent EVA suppliers (i.e., $3/m2 to 3.50/m2). While encapsulant suppliers with alternatives to EVA claim better performance and/or faster lamination times, success will ultimately come down to cost and how easy it is for module manufacturers to transition from EVA to the new encapsulant. Polyolefins have potential to be less expensive than EVA and Wacker’s silicone-based film can increase efficiency – which can reduce the overall cost-per-watt of the module – but capacity needs to ramp up in locations near module manufacturers to compete with players like Hangzhou First PV Material.

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Solar Module Prices Drop 36% in 2011

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After analyzing quarterly numbers from Yingli, Trina, Canadian Solar, and Suntech, we have determined that module prices declined 36% over the course of 2011. The average selling price (ASP) in Q1 of 2011 was $1.76/W. By Q4 2011, the ASP was $1.11/W for these tier 1 manufacturers. The ASP over the entire year of 2011 was $1.44/W.

The precipitous fall in module prices was caused primarily by declining polysilicon costs. In March 2011, the polysilicon spot price was around $80/kg, which fell below $27/kg in December. The polysilicon spot price rebounded to $29/kg in February 2012, but fell back below $27/kg in late March 2012. At the same time, the intense competition caused by a global oversupply of PV modules has eaten away margins for manufacturers, further reducing prices.

The margins are so low that, even if polysilicon prices continue to drop, we expect module prices will stay between $0.90/W and $1.00/W over the next few years as manufacturers restore margins. Make sure to note that these prices are for tier-one, crystalline silicon manufacturers, not smaller, less reputable manufacturers nor thin-film manufacturers who will sell at lower prices.

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Italy’s solar market reaches 3 GW in 2010 amid growing uncertainty

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Following months of questions about the exact size of the Italian solar market, the Gestore Servizi Energetici (GSE), Italy’s grid interconnect agency released official installation numbers through March 2011: In total, the country has a little over 4.18 GW of cumulative solar installations. Yet, despite the official announcement, uncertainties remain.

Not surprisingly, planned reductions to Italy’s feed-in-tariff (FIT) led installations to soar to nearly 1 GW in December, bringing the total for 2010 to 2.33 GW. In February, announcements from the GSE and a flurry of news from installers and other research firms suggested that number reached 6 GW based on the number of applications received. But, given that 713 MW had been connected to the grid between January 1 and March 30 by the GSE’s count, much uncertainty remains about whether the missing 3 GW of applications were ever actually installed.

As of this writing, all eyes are on The Fourth Conto Energia and what reductions or caps it will introduce to the FIT policy at the end of April. An FIT reduction is certain, but the exact percentage remains to be seen. Reuters reported in mid-April morning that the current draft decree pegged it at an immediate 25% cut, with another 8% planned for January 2012.

A bigger concern is that the GSE will introduce a cap on new installations, which would dramatically hurt the solar market. Reuters further reported it could actually fall below 2010 numbers, at 1.55 GE to 1.8 GW for 2011 and 2.8 GW for 2012. Further, the article suggests the cap will be based on volume, and not total subsidy burden. That means price decreases will not enable higher installation figures.

The greatest concern to the growth of the Italian solar market, however, has been wild announcements of installations that are supposedly in the ground but not yet grid connected. If these 3 GW of phantom systems actually exist, the Italian market may have already exceeded the 2011 cap – effectively closing the market in 2011.

Due to these remaining uncertainties, we are hearing that module players and project developers are already rerouting inventories and supply to the U.S. as the short window between now and the June decree makes it unlikely they will be able to install systems before any possible cap. From our previous conversations, the module vendors with the most exposure to the Italian market include First Solar, Uni-Solar, SunPower, and the major Chinese players like Trina, Yingli and Suntech Power. In general, Italy’s scenario signifies the globe’s most severe case of reductions by a bankrupt government, but we expect to see more of the same elsewhere in the near future.

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