GCL-Poly to be Canadian Solar’s partner in 600MW wafer plant as demand remains strong



Despite a swathe of competitors experiencing a significant fall in demand for modules in the first quarter, Canadian Solar would seem to have bucked the trend and guided robust sales in the second quarter resulting in sell-out shipments during its recent first quarter analyst call. In that call, Dr. Shawn Qu, Canadian Solar’s Chairman and Chief Executive Officer highlighted plans for a new 600MW solar wafer plant that would that would be run as a joint venture operation to reduce capital outlay.

The announcement that GCL-Poly is that partner in a wafer plant should not come as a surprise as GCL-Poly has been a key wafer supplier to Canadian Solar in the past. Under the terms of the agreement, GCL will contribute 90% of the registered equity, and Canadian Solar will contribute 10%, inline with Canadian Solar’s low CapEx policy.

The initial 600MW capacity facility was said to include further potential expansions to 1.2GW. The total capital expenditure for the first phase (600MW) of the project is approximately US$77 million, which is expected to be financed 33.3% through the registered capital and 66.7% through debt.

“This joint-venture will supplement our other wafer arrangements and make Canadian Solar fully prepared to compete at 2GW scale by early 2012,” commented Dr. Shawn Qu, Chairman and CEO of Canadian Solar. “In GCL, we gain a valued long-term partner, with essential large scale manufacturing expertise.  We expect this venture to help further lower our manufacturing costs from the first quarter of 2012 onwards, and further improve Canadian Solar's gross margins, with a minimal capital expenditure requirement. Importantly, by securing high-quality wafers we can support the increased demand levels for our high-quality solar module products which we are seeing from customers in solar markets worldwide. 

Canadian Solar has other capacity expansion plans that are ongoing. These include a 400MW module plant to be fully automated and a new solar cell plant to utilize its in-house developed ELPS technology using a metal-wrap-through (MWT) design. 

The new plant would take Canadian Solar’s internal cell capacity to 1.9 GW by early 2012, according to the executive.

Canadian Solar management had highlighted in the recent financial analyst conference call that its capacity expansion plans were being supported by strong sales, despite overall industry demand weakness in the first quarter.

Qu, had noted that he expected demand from Japan would return to more normal levels in the third quarter of 2011 having seen signs from customers that the Japanese market would become very robust and become a 2GW annual market, though the executive didn’t give timelines.

To emphasize the point, Qu explained that in March, 2011 its Japan-based operations were profitable and that by June, normal sales would have resumed with the expectation that it would double module sales to Japan in 2011.

Other markets that had proven robust in the first quarter and were now expected grow further this year, included Germany, Italy, France and the US. Perhaps for the first time, the executive also mentioned the UK as a country Canadian Solar expects sales to double in 2011.

The executive noted under questions about regional sales in the first quarter that in the first two months of the year sales to Italy had taken the lead, with many EPC large-scale projects under construction. However demand for modules in Germany since that time had taken over from Italy. Sales to Spain had also been strong, though Qu noted that these were mainly to Spanish EPC firms undertaking projects in France and Italy in particular.

Read Next

Subscribe to Newsletter

Most Read

Upcoming Events