Canadian Solar hints at moves to add production assets, M+W/Schmid joint lands major deal to build integrated PV factory in Argentina
As the supply-demand equilibrium achieves a healthier balance across the PV industry, a nagging question centers on the topic of production capacity. It’s not just whether to add or not to add, but more about what kind of manufacturing assets to add when the time comes. Internal (both new lines and optimized/re-equipped existing lines), outsourcing, tolling, and leasing options are all on the proverbial table. Although few of the major players apart from SunPower have announced specifics about new capacity adds, there’s been a growing amount of hinting and posturing when the subject is raised. The latest to do the dance is Canadian Solar.
During the company’s quarterly conference call with analysts (accessed via the useful transcript posted at Seeking Alpha), Canadian Solar’s head honcho Sean Qu and CFO Mike Potter provided some granularity on the again-profitable firm’s current production situation as well as some vagueness about possible future moves.
Qu noted that the firm has boosted its Chinese moduling capacity from 2.1GW to “somewhere around 2.2 to 2.3GW,” thanks to production debottlenecking efforts. He also said its Canadian module plant has a 300MW nameplate, but it too will be optimized to reach 400MW or more, “without adding too much new equipment.” On the cell side, CanSolar’s internal capacity is 1.4GW+, with another 500MW or so bought from Taiwanese manufacturers. Apart from 200MW of internal capacity, the company buys its wafers from “strategic suppliers.” So when it comes to the company’s production status, as Qu put it, “we pretty much are running… flat out.” In other words, the company has become capacity constrained. (On the cost side, CanSolar touts a very competitive blended module cost of 53-55 cents per watt, with plans to drop down to 51 cents by year’s end.)
Given the demand the company sees ahead in 2014—both from increased module sales and captive needs for its EPC/systems business—Qu tangoed around the response to “the situation,” explaining how they are “looking at different options.” Careful to say that no “final decision” has been made, he mentioned the possibility of some “limited expansion of owned capacity,” OEM moves with certain partners, and the like. Since the company has pursued a more fab- or asset-lite manufacturing strategy—no polysilicon production in the House of Qu—his comments of needing to balance “capturing growth” and maintaining a “conservative” capital expenditure position are no surprise.
Apart from the existing manufacturing base, the PV production equipment suppliers are also banking on new business to help get back on their feet. One can find new factories built, being built, or about to be built in emerging regional markets such as Eastern Europe, Turkey, the Middle East, Africa, Southeast Asia, and Latin America. The latest example comes from Argentina, where a heavyweight combination of global design/EPC contractor M+W and general contractor/toolmaker Schmid has reached a deal with state energy company ESPE to construct a state-of-the-art vertically integrated (monocrystalline ingot-wafer-cell-module) factory to supply local and regional mining, agricultural, and other projects. The 13,000 square-meter facility, to be constructed in the state capital of San Juan, will enter production in mid-2015 with 70MW of capacity, with a second stage of development planned that would push the plant’s capabilities even farther upstream to include polysilicon manufacturing, according to the press releases.
Although Brazil, Chile and to a lesser extent Peru have received the most attention for their government initiatives and burgeoning PV project pipelines, Argentina must now be counted among those South American players showing off some moves on the solar energy pitch.