Canadian Solar gets aggressive on cell capacity expansions

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Despite cell capacity expansions the imballance with module capacity remains unchanged in 2016.

The second largest ‘Silicon Module Super League’ (SMSL) member Canadian Solar is finally getting serious about rebalancing its solar cell to module in-house capacity as well as dedicating a significant amount cell capacity to monocrystalline PERC (Passivated Emitter Rear Cell) technology. 

Last November, Canadian Solar announced a major expansion of solar cell capacity after falling to below 50% of in-house module assembly capacity. The driver was to reduce manufacturing costs as OEM prices were on the rise for multicrystalline cells as wafer ASPs increased on tight supply, while monocrystalline wafer and cell prices had been falling on overcapacity issues. The company was highly dependent on multi c-Si than mono. 

From a recap perspective, Canadian Solar announced last year that it would increase in-house wafer production from 400MW to 1GW by mid-2016, while solar cell capacity would be expanded from 2.5GW currently to 3.4GW by the end of 2016, a 900MW increase. 

However, the biggest capacity increase would have been PV module production which would be expanded from 4.33GW at the end of 2015, to 5.63GW by the end of 2016, a 1.3GW increase. 

Canadian Solar specifically noted that its wafer manufacturing capacity at its plant in Luoyang, Henan Province, is expected to reach 1.0GW by June of 2016, while its cell manufacturing capacity at its plant in Suzhou, Jiangsu Province, is expected to reach 2.0GW by the end of 2015. Cell manufacturing capacity at its Funning plant in Jiangsu Province is expected to reach 1.0GW by July of 2016.

However, new manufacturing plants were also announced that included 300MW in Vietnam, 30MW in Indonesia, 300MW in Brazil and 400MW in Southeast Asia of module assembly capacity.

Canadian Solar also said that a new 400MW cell manufacturing plant, to be located in Southeast Asia, was expected to be commissioned in the second half of 2016. 

The capital expenditure budget for all of the capacity expansions planned included an estimated US$104.0 million to be spent in the second half of 2015 and a further US$297.0 million allocated to the expansions in 2016, according to the company. 

Updated capacity expansions

Fast forward one quarter and Canadian Solar has made further tweaks to the plans. 

Overall, the company expects module assembly capacity to reach 4.63GW by the end of June, 2016 and 5.7GW by year-end, compared to previous guidance of 5.63GW, a 1,370MW increase. 

On the solar cell side, overall capacity increased 200MW to 2,700MW in the fourth quarter of 2015 and would remain unchanged at 2.7GW through to the end of June, 2016, but capacity would reach 3.9GW at year-end, compared to previous guidance of 3.4GW by the end of 2016. Total cell capacity expansions since Q3 2015 through end of 2016 are targeted at 1.4GW. 

Digging deeper, the subtle changes include its new solar cell plant in South East Asia would be ramped to 700MW beginning in the third quarter of 2016, compared to 400MW previously announced. 

The new module assembly plant in South East Asia would also ramp higher in 2016. The company noted that the new plant would ramp to 500MW, rather than the previously planned 400MW. 

In the updated full-year results earnings call, Canadian Solar management emphasised that the cell capacity and cell technology developments were the main driver for the company in 2016, rather than outright module capacity expansions. The reality is that the imbalance between the two remains basically at the same levels as in 2015. However, 2017 ramp rates for cells would help alleviate outsourcing some wafers, a lot of cells and some modules.

Little was made clear about the new module assembly plant plans outside China. The as yet located cell and module facilities somewhere in South East Asia to boost cell and module capacity from the third quarter of 2016 onwards suggests the location has yet been determined, probably due to inward investment deals with sveral country agencies in the region still ongoing.

Technology & R&D update

Although the company had highlighted a number of solar cell technology developments planned in its manufacturing roadmap at its May, 2015 Analyst Day, its almost a year since the company provided some updates. 

Key was the plan to ramp mono PERC cell production at one line in China, with several more lines in China ramping n 2016. Canadian Solar’s mono PERC cell efficiencies are expected to be above 20% and the modules would target the Japanese residential market and niche markets in China being promoted by the government to push higher conversion efficiencies of cells and modules overall. 

The company reiterated that N-type mono bi-facial cells and modules would also enter trial production as planned in 2016 as well as ramping its ONYX I (Black Silicon) cells with four busbars. 

The emphasis on bringing some of its cell R&D developments to production is definitely a new shift for Canadian Solar, which has been focused on subtle module enhancing efficiencies in recent years and has had been one of the lowest ranked spenders on R&D by PV Tech’s annual R&D spending report for some years. 

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