PV Talk Exclusive: Rongfang Yin, vice president of Trina Solar Group

Rongfang Yin: “Several times before the Chinese government announced the latest changes to the policy it had raised issues with the industry. Last year, [2017] the Chinese market experienced the start of overheating as installations exceeded 53GW, according to government figures. Given the governments assumed messages, this was not sustainable numbers and so since Q1, 2018 the government messages proved true. The second issue was overheating on the supply side, especially from China and a lot of new manufacturing capacity came onto the market. These were not good signals reaching the government, especially downstream installation figures in Q1 and Q2, which were still beyond the target of the Chinese government. From my point of view, there was a real need to cool the market down rather than see more overheating and ensure the market could go in the right direction. This was why the government changed the policies and control the quota for solar this year.

Emphasis is still being placed on the ‘Top Runner’ technology installations and the rural ‘Poverty Alleviation’ programs in the second half of the year. But for the commercial, residential and the traditional utility-scale markets these have been cut due to the excesses.

However, the solar industry is waiting for new policies to support the residential market, according to Yin, although these are expected to come through and support residential installations sometime in the second half of 2018.” 

“Trina Solar was the first with high-efficiency double glass modules and has a very good position with bifacial modules as the first to enter the market. So from here we have built a strong position, which fits closely for leading selected companies to drive technology developments through the Top Runner program, which includes innovation on the engineering side and the design side to go to the market and provide the right conditions support this important market. 

“From Trina’s perspective we have been a long-term supplier outside of China, starting with Europe and now globally. This means that Trina has offices in around 40 countries and our business has expanded to more than 100 countries, in fact the exact number is 103 countries, so we are well balanced geographically. This is also the case with our manufacturing as we have kept production both in and outside China. We have always taken a long-term view over the regions we serve.
 
In 2017 we had around 60% of our revenue outside of China. No doubt there will be some impact on Trina in the China market, due to the curtailment of the utility-scale market for example. However, we can limit that impact, due to our overseas presence in key markets such as Europe, US and Japan and Australia we will keep a very strong position. Yet we are seeing growth in emerging markets as well such as Asia Pacific and Middle East. Importantly, we still expect to meet our yearly growth targets.

Other leading companies should also still do well overseas, due to good sales channels having been established like Trina in different markets and therefore have a similar level of impact from the change in policies in China. 

However, the smaller tier 2 and 3 companies in China, which rely entirely on the China market will be impacted the most. 

New emerging larger players in China that have grown in the last few years and now very active in the international market, these companies will take time to gain traction in those markets, so these companies will be impacted by the policy changes. Upstream suppliers reliant on predominantly the China market companies will also be impacted.” 

“The utility market remains important to Trina, we have launched the 'TrinaPro' product to offer best-in-class solutions that were designed for key overseas markets such as Australia then India, Europe and the US are the key markets planned. TrinaPro was designed as a global product. An important part of TrinaPro is the tracker system, which will support high-efficiency modules. 

That said the Top Runner program in China is designed to promote the best technologies, which gives TrinaPro a good chance to succeed in that market, which is unaffected by the policy changes.

Such project wins give us the ability to prove to EPC’s and project developers the value to them of using the TrinaPro solution such as greater yield, reliability, better LCOE and improved competiveness.” 

“There has been a lot of discussion within the industry on this and many expect PV installations to total around 30GW this year. In my opinion given the different markets including residential in my view we are looking at a 35GW to 37GW market.”

“We are seeing countries such as Ukraine, Pakistan, Uzbekistan and Egypt fit that profile with installations being very strong with a number of countries in the 800MW to 1GW range. But we are also seeing emerging markets, which take time to develop starting from zero and becoming 400MW to 600MW markets very quickly, once momentum builds after a slow start. 

Despite the China market declining this year there is a lot of growth elsewhere, including traditionally strong markets, such as Europe. This is good news for the PV industry. 
On a global basis, many people were expecting another year of strong growth, some were too optimistic of the Chinese market. At the beginning of the year we were thinking the market would be around 95GW in 2018, before the China policy changes.

Now with the overheating of the supply chain such as polysilicon and wafers, prices will be driven down, which will make some of the markets where project economics were doubtful, such price declines could let those projects go to market by the end of this year. This could create 3GW to 4GW of new demand alone this year, on top of our previous global market analysis. 

Overall, from my point of view this year, taking into account the expect decline in installation sin China from 53GW to 35GW to 37GW, but include the 3GW to 4GW of new demand from price declines, the global market could be in the region of 85GW to 88GW range, this year.”

“One thing I would like to clarify is that with or without the China policy changes, our forecast for this year’s prices was a decline. For example at the start of the [module] prices would be around US$0.36/W and were expected to decline to say US$0.33/W or US$0.32/W. This was expected due to cost reductions, technology etc… 

But people have tried to say that due to the China policy changes the prices would decline by so much. What will be interesting to watch is what will be the actual impact on prices, due only to the China policy change. From my perspective, I think the China policy change will make a 15% to 18% difference to pricing by year-end.
 
Another factor that will play-out is the increasing shift in adopting monocrystalline technology, which we have already seen the market share of mono products increase. Part to this is that mono grade polysilicon is only around 30% to 40% of production capacity at the moment and the Top Runner program is mainly mono. 

But some of the important emerging markets such as the Middle East and India remain focused on the polycrystalline products. This means pricing differences from a technology and country perspective will continue. Overall LCOE requirements will see [module] product selection differences and these can be 1.5 cents to 2 cents difference. 

From another perspective, a lot of projects planned in the last few years and now getting built had been developed with the intention of selecting polycrystalline modules and price declines in polycrystalline mean will reinforce those decisions. But in the future it is mono but this year and next year poly module demand or market share will not decline so fast. 

I also think the market is different from back in 2012 as then there were only a few major markets but now we have a truly global market and PV manufacturers are more adept a balancing supply and demand. We are already seeing this happening in the polysilicon and wafer sectors that are reducing capacity utilisation rates and let me say that the overall global solar market demand is still there.” 

“For the EV car we see a lot of support as more manufacturers offer electric vehicles around the world. The EV charging systems are being deployed. The best combination though will be PV and the EV market. Both the residential and commercial sectors will be a good combination, especially solar carports for example as smart energy systems. This will all take time but this will become a very important part of the PV business in the future, especially with energy storage. 

Although there is a lot of focus on the EV car market trends, countries such as India may be driven more by electric motorcycles and bicycles for example. This may play-out in rural areas first where the electric grid is limited but PV and storage can fill that gap and be the best solution.” 

“Trina is a company with small in-house wafer capacity but we are driving high-efficiency for both mono and poly technologies and importantly our aim is shift and invest in new technologies at the right time and then make the capital expenditure decisions on capacity expansions. We have always had the R&D capabilities to invest in new technologies such as IBC (Interdigitated Back Contact) with cell efficiencies at 25.4%. 

At the moment we are upgrading our production to ‘Black Silicon’ for polycrystalline products, while a percentage of production transitions to mono PERC (Passivated Emitter Rear Cell) as well as other technologies such as bifacial, half-cut cells, multi-busbar etc… that is expected to continue to drive our cell and module efficiencies. 

As with mono PERC capacity, a percentage will be bifacial, and mono PERC will be at its highest efficiency when matching up with trackers. The TrinaPro solution is best designed with mono PERC as it integrates mono PERC, trackers and inverters, which can help maximize the efficiency of each components in an all-in-one smart energy solution. So this is a key technical go to market strategy. Increasingly, through the second-half of 2018 and in 2019, much of a mono cell production will be mono PERC bifacial going to the market.” 

“Our understanding is that different companies will have different roadmaps in respect to mono and poly. For Trina we are more excited about bring next generation technology to market, economically. For me with respect to bifacial, what is the bottleneck(s) for bifacial today to overcome and bring the technology to market? 

These are mainly bottlenecks to do with financial models on calculating yield from the backside of the module. Trina has some very good modelling in this respect and this should help bring the technology to market and would be learnt quickly by others. The LCOE calculation aspects on using bifacial modules still need to be improved but interest and demand for mono-PERC in general is growing. 

That said, mono-PERC bifacial module market should be good next year and onwards as the financial models get better for the rear-side energy yield. TrinaPro being highly flexible and customisable will be able to provide the right solutions to bifacial projects given the location for a project that would benefit from the technology.” 

“Trina Solar has over 25% capacity deployed outside of China, which enables us to supply Europe and US. However, we have been looking for new locations some in emerging markets as the strategy has not been market share gains through capacity expansions but based on market needs and longer-term company targets. Such decisions on manufacturing are not being influence by the likes of [US] Section 201 or European MIP (Minimum Import Price) trade practices. Our global market presence is really the key to any manufacturing plans as well as technology and downstream plans such as with TrinaPro.”

“In respect to say Turkey, we have manufacturing partners there under OEM agreements based on our strict selective procedure, to support our customers in the local Turkey market. In the US we had already undertaking the detailed research to help decide if it was economically feasible to undertake local manufacturing there before the Section 201 case but our research indicated this would not work economically. 

That said we are always looking at these type of opportunities such as in India and Middle East currently but we are not going to the execution stage of these right now. Such manufacturing decisions have to be for the long-term, compared to just downstream PV projects. Then the manufacturing can be run very well over the long-term. Just module assembly on its own is fairly simple to do but isn’t necessarily a long-term strategy and can only take 6-months to establish a 1.5GW factory with low capex. 

Europe could become an interesting market for us in the future with market growth and our technology such as IBC, which could make manufacturing feasible. We have around 40MW of IBC production capacity at the moment in China, serving niche global markets requiring high-efficiency cells.”

“Although we have delisted, of course we still have regular international third party financial audits and happy to say we are very healthy and strong financial position. In 2017, compared to 2016 our debt ratio has declined more than 7%. 

We also compare favourably with the top 5 stock listed PV manufacturers in respect to gross margins according to the third party audits. Also our revenues also increased in 2017 from 2016 in the 15% range. Our product shipments were above 9GW in 2017, up from around 6GW in 2016.

Of course we can share our financial figures with key customers and clearly we have proven our financial strength after leaving the stock market. 

In general terms Trina Solar has had good results in the first half of 2018, with sustainable financial figures and our market position remains in the top three, without chasing market share gains. Our goal is lead in all the key financial indexes such as margins, debt ratios and cash flow for example and we are clearly going in that direction.”