Updated: A significant chasm is emerging between six major PV manufacturers’ nameplate capacities and shipments, and the rest of the top-20 producers.
In PV module shipment guidance terms for 2015 the leading six companies all expect shipments above 3GW and even as high as 5GW.
To put this in perspective, only one company – Yingli Green – had shipments above 3GW in 2013, while that number increased to three (Trina Solar, Yingli Green and Canadian Solar) in 2014.
Underlying the scale of the chasm being created is that four (Trina Solar, Jinko Solar, Canadian Solar and JA Solar) of the six super-league manufacturers have shipment guidance figures of around 4GW or above for 2015.
Having shipment guidance of around 2GW in 2015 firmly places a company in the trailing pack, which is actually made up of only a few companies in the top-20 rankings. The rest have shipment guidance in the 1GW range.
However, even in the super league of 2015, the dynamics remain fluid.
The precarious financial position of Yingli Green not only puts the company at risk of future existence but its recent lowering of shipment guidance (the only company in the super league to do so to date) on the back of plummeting margins indicates a continued downward trajectory in the shipment rankings.
At the beginning of 2015, Yingli Green was highly likely to lose its number two ranking from 2014, falling to fourth ranked based on earlier shipment guidance. Even the recently revised guidance for the year, compared to actual shipments for the first half of 2015, show that the company is running around 150MW per quarter below the average run rate of 900MW required to meet its 3.6GW shipment target.
The fastest growing company in 2014 was JA Solar, however growth is slowing in 2015. JA Solar’s shipments in the first half of the year were 500MW below its needed first half-year run rate to meet the low end of shipment guidance.
JA Solar has guided third quarter shipments in line with its run rate and indicated strong demand build in the second half, prompting it to reiterate previous guidance of shipments reaching between 3.6GW to 4.0GW in 2015.
Hanwha Q CELLS also started the year below its required quarterly run rate, missing first half-year shipments by 439MW. However, the company retained full-year guidance of 3.2GW to 3.4GW and guided third-quarter shipments in line with its required quarterly run rate.
Canadian Solar also missed shipment guidance and quarterly run rate in the second quarter, while reiterating previous full-year shipment guidance. Total PV module shipments were 850MW, compared to guidance that had been in the range 950MW to 1,000MW.
However, Canadian Solar said it expected total module shipments in the third quarter of 2015 to be in the range of approximately 970MW to 1,020MW, in line with average quarterly run rates needed to meet guidance for the year.
Unlike JA Solar and Hanwha Q CELLS, this means that although Canadian Solar reiterated full-year shipment guidance it is unlikely to struggle to reach the low-end 4.0GW mark.
The two most notable companies in the super league based on shipment guidance are Trina Solar and JinkoSolar.
This is primarily due to recent second-quarter shipment guidance having been raised in contrast to the others.
Leading PV manufacturer Trina Solar increased guidance range from 4.4GW to 4.6GW to 4.9GW to 5.1GW, the first and only company to guide above 5.0GW.
Trina Solar also has the narrowest of shipment guidance range, compared to the others in the super league, suggesting a higher level of confidence in its guidance.
This has been supported by its ability to meet and exceed its aggressive quarterly run rate (1.1GW prior to revised guidance) in the first half of 2015. The company also said that shipments in the third quarter would be in the range of 1.45GW to 1.5GW.
Meeting the low end of full-year revised guidance, Trina Solar’s average quarterly run rate required has increased to 1.22GW. Clearly, bar a major setback in the fourth quarter of 2015, the company is comfortably approaching the 5.0GW guidance range and is in the strongest position to even exceed the high-end of guidance.
With regards to JinkoSolar, shipment guidance range was increased significantly from 3.3GW to 3.8GW to a range of 4.0GW to 4.5GW for 2015.
JinkoSolar is potentially catapulting itself from being ranked tenth in 2013 to fourth in 2014 to second in 2015.
Currently, JinkoSolar is vying to become the second largest company with Canadian Solar but has momentum on its side having comfortably met first half year run rates (825MW per quarter) and guiding third quarter shipments of 1.0GW to 1.1GW.
Therefore, JinkoSolar is expected to meet or exceed revised quarterly run rates of 1.0GW to meet the low-end of the revised guidance.
The only caution is that JinkoSolar’s revised guidance range remains the widest within the super league group and the company as a history of such wide ranges that last year included just meeting the low-end of the revised shipment figure.
Relying simply on shipment guidance to highlight the emergence of a super league would not accurately depict the changes underway nor fully account for the ongoing dynamic developments within the breakaway group of companies.
Technically, Trina Solar should not be able to meet the low-end (4.9GW) of its upward revised shipment guidance based on its in-house PV module capacity expansion plans in 2015.
The company plans to complete an 800MW module capacity expansion by year end, having added 400MW in the first half of the year, bringing nameplate module capacity to 4.8GW.
However, there remain plenty of module manufacturers in China that can accommodate tolling (OEM) due to underutilised capacity and if rumours are correct, Trina Solar is sourcing modules from Yingli Green to fill the 300MW shortfall.
Canadian Solar is also adding 800MW of PV module capacity in 2015, bringing module nameplate capacity to 3.8GW by year end.
Like Trina Solar, the company has to purchase between 200MW to 500MW of modules to meet shipment guidance.
Like its wide guidance range, JinkoSolar has historically been less transparent on its capacity expansion plans, whether they are larger than previously announced, pulled-back or simply announced after the fact.
However, in its second-quarter 2015 financial report, JinkoSolar said that it expected to reach 4.3GW of module nameplate capacity in the fourth quarter of the year, up from 3.2GW in the fourth quarter of 2014 and a 300MW addition to previously guided plans of reaching 4.0GW in 2015.
The company added 300MW of module capacity in the first quarter of 2015, a further 500MW in the second quarter and an additional 300MW in the fourth quarter of the year, bringing module expansions to 1.1GW.
It is less clear therefore what level of module purchases JinkoSolar may have to make to meet its guidance range. With the expected 4.0GW mark reached in the third quarter, module purchase requirements could top 500MW.
Unlike most of its rivals listed above, JA Solar has retained a balanced in-house nameplate capacity, whereby solar cell and module capacity have been equal. In comparison, while JinkoSolar adds both cell and module capacity, actual in-house cell production remains just over 50% of its in-house module capacity.
JA Solar is also adding 800MW of solar cell and module capacity in 2015, taking nameplate capacity from 2.8GW in 2014 to 3.6GW in 2015. Depending on its capacity expansion schedules, JA Solar could be expected to purchase anywhere between zero and over 500MW to meet either end of its shipment guidance range.
Hanhwa Q CELLS
One of the key reasons for including manufacturing capacity expansion data is that the dark horse of the premier league happens to be Hanwha Q CELLS.
Detailed production and capacity forecasts provided by the company indicate a finely matched balance between cell and module production in 2015 as well as incremental increases in utilisations rates to effectively a full utilisation (99%) in the fourth quarter of 2015.
As noted above, the company reiterated module shipment guidance at a tight distribution range of 3.2GW to 3.4GW. Module production has been guided at just over 3.2GW in 2015.
However, unlike the others in the super league the former Hanwha SolarOne had relatively low utilisation rates in 2014, suggesting in-house inventory could meet its high-end guidance without the company needing to purchase a potential 100MW to 300MW this year.
Yet the most interesting aspect about Hanwha Q CELLS is its capacity expansion target. Analysing PV Tech’s quarterly new capacity announcements since 2014, Hanwha Q CELLS has taken module nameplate capacity from 2.2GW (including Q CELLS) at the end of 2014 to 2.8GW at the end of the first quarter of 2015.
With recent announcements included, the company will end 2015 with 3.7GW of module and cell capacity, including 1.4GW of module and 1.6GW of cell production in South Korea and Malaysia that would not be affected by US anti-dumping duties.
Further capacity expansions of around 600MW are expected and could result in the company achieving a balanced production capacity of 4.3GW in the first half of 2016.
Yingli Green had 4.0GW of module nameplate capacity in 2014 but had no plans to add capacity in 2015.
Super league summary
Combining the shipments data and manufacturing capacity expansion plans it becomes clear that the top four companies with the highest module shipments guidance of 4GW and above are all guiding shipments to be ahead of module capacity in 2015.
This indicates that overcapacity still exists, primarily in China, enabling the leading companies to tap underutilised capacity. These four companies could also be tapping other module manufacturers to the tune of 1.5GW in 2015, not an insignificant amount.
The Hanwha Q CELLS merger, coupled to its aggressive capacity expansion plans compared to the other five companies, has put it firmly in the super league but it still has further expansions to make before moving up the ladder, barring the troubles at Yingli Green.
The remaining 14 PV manufacturers that make up the top 20 rankings list can only muster three companies with expected shipments above 2GW in 2015; the rest are expecting shipments around the 1GW level.
A significant chasm has opened up and a super league has been established. To those with ambitions to enter the super league the gap looks increasingly wide and would require significant capital expenditure to enable entry.
This would indicate that those with such ambitions would need to lead a real consolidation within the industry or succumb to a niche role.
Yingli Green has reported second financial results and at the same time significantly lowered shipment guidance for the full-year to be between 2.5GW to 2.8GW as it simply can not afford to ship over 1GW of modules previously planned due to its current cash liquidity position.
The company is attempting to retain production utilisation rates above 90% by undertaking tolling from rival companies and generate cash on an almost COD monthly basis.
The company said that module tolling would not be included in its shipment figures but as ‘other income’ on its balance sheet.
Technically, Yingli Green has ejected itself from super league membership by its actions and would be ranked around seventh largest PV manufacturer by shipments, come the end of the year, down from second in 2014.