Stable returns and untapped market potential driving renewed activity in solar tracker market

TrinaPro's integrated tracker technology. Image: Trina Solar.

PV trackers are easily overlooked by the market but the recent IPO of Arctech Solar, a leading Chinese PV tracker and tracking system company, and Trina Solar's move to turn Nclave into a wholly owned subsidiary, have attracted attention.

Today’s news that Array Technologies, a US-based manufacture of tracking solutions, is eyeing a US$100 million IPO, has only added to that.

An assessment of both leading players and new entrants, alongside wider market analysis, reveals that stable returns and a market that looks set to grow exponentially are driving activity in this field.

“In a system cost of 3.5-4 yuan/Watt, a fixed tracker is priced at 0.3 yuan/Watt resulting in a profit of 0.2 yuan/Watt; racking trackers are priced at around 0.6 yuan/Watt with the net profit of 0.05-0.06 yuan/Watt, equivalent to per W profit of other component,” analysts at Chinese brokerage Haitong DX analyst calculated. 

According to analysts, if the industry average price of 0.4 yuan/Watt is used alongside PV’s installed capacity of 200GW, the market value of the tracker industry is around US$80 billion, roughly equivalent to that of the solar inverter industry. 

Financial reports from Arctech Solar show gross profits per watt of the company’s fixed trackers and racking systems have enjoyed year-on-year growth for the past three years. The price per watt is more stable, which is rare in the PV industry, and also validates the potential for development in this area.

2017 2018 2019
Price per watt, yuan / watt 0.41 0.46 0.43
Racking tracker price 0.69 0.69 0.68
Fixed tracker price 0.32 0.34 0.30
Gross profit per watt, yuan/watt 0.07 0.09 0.10
Gross profit of racking tracker 0.13 0.16 0.18
Gross profit of fixed tracker 0.05 0.06 0.07
Net profit excluding extraordinary profit and loss/watt 0.01 0.02 0.03
Product price and gross profit of Arctech Solar 2017 – 2019

In H1 2020, Arctech Solar’s PV racking tracker revenues stood at 1.274 billion yuan (US$188 million). This good performance has attracted more attention from the capital market which holds that Arctech Solar promises broad market prospects given its high growth, high ROE, good cash flow and asset-light advantages.

Market Share of Global Mainstreaming Racking Tracker Producers, Sources: Wood Mackenzie: “Global Solar PV Tracker Market Shares and Shipment Trends, 2019” and “Global PV Tracker Market Share 2020”

According to GTM's 'Global PV Tracker Market Analysis 2019' report, last year’s top ranked tracker manufacturers were Nextracker and Array technologies, both of which are from the US. The market share of the top five producers is 68% while the top ten manufacturers account for 88% of the market, which is highly concentrated and presents a geographic concentration.

For example, the US, the world's largest racking tracker market, increased by 12.09 GW in 2019, up 225.72% from 2018, and NEXTracker is the largest supplier of racking trackers in the country. In the EMEA region, Spanish suppliers such as PV Hardware and Soltec dominate the market. 

Globally, in 2019, 35GW of racking trackers were installed, up 63% year-on-year, with a growth rate much faster than that of the wider PV industry. CPIA data shows that in 2019, tracking systems were used in around 16% of new solar installations in China, a market share which is expected to increase to 25% by 2025.

IHS Markit predicts that with tracking technology being used in about one-third of ground-installed projects, tracking systems put in place will exceed 150GW from 2019 to 2023.

However, a senior executive at Kingsun told PV Tech these projections were conservative, “The three-year trend of racking trackers from 2017-2019 shows that the proportion and penetration of racking tracker applications have exceeded expectations. We expect the market shares and annual shipments of racking trackers and fixed trackers to reverse by 2023.”

New market entrants and the established crowd

Perhaps seeing the potential for growth in this area, Trina Solar recently accelerated its expansion of racking trackers by completing the acquisition of the remaining 49% of Nclave Renewable S.L. last week, making it a wholly owned subsidiary of the company. Trina Solar acquired a 51% stake in Nclave in May 2018, and for this remaining stake acquisition, Trina Solar claims it is an important strategic move for the company, further strengthening its overall market competitiveness.

It is reported that the Nclave intelligent racking tracker is one of the core hardware products of Trina Solar's smart PV one-stop solution. Over the past year, Trina Solar has been the first in the industry to launch a compatible and highly reliable overall solution by laying out in advance the benefits of integrating large module trends alongside racking tracker changes. As a next step, it is expected to accelerate those synergies and optimise the integration of its high power module products with the Nclave PV racking tracker products.

In addition to Arctech Solar and Trina Solar, PV Tech also observed more tracker producers begin to be active in the market, such as ENF, Antai Solar and Kingsun, as well as emerging companies such as CZT.

According to CZT’s semi-annual report, the company recorded total revenues of RMB1.668 billion (US$246 million) in H1 2020, up 155.34% year-on-year, of which the tracker business was responsible for RMB816 million (US$120 million), accounting for almost half (48.97%) of total revenues, becoming the company’s largest contributor to total revenue. Previously its largest contributor was its connector business, which now accounts for 46.81%.

Interestingly, CZT had not specifically targeted the PV industry until mid-2019. It did not enter the tracker industry until it acquired Yue Qing Yihua New Energy in November 2019, which had previously primarily provided PV tracker OEM services for NEXTracker (currently Top 1 global racking tracker producer).

Just half a year later and profits have begun to soar.

In fact, over the past two years, many companies have taken aim at the broader market space and development potential of the tracker market. A lot of these new entries have however “showed up” at industry exhibitions and soon “disappeared”, meaning that established producers with solid technologies and product certifications still hold sway.

Photovoltaic intelligent tracking systems are gradually being recognised and used by power plant developers globally. A number of projects have proven that it can help to increase power generation, reduce installation and maintenance costs, and make for more profitable investments.

As the PV tracker market grows, WoodMac noted that prices for trackers are not expected to drop significantly in the future, which could prompt top suppliers to diversify into software and services to stay competitive. In this market, the producers that have established a brand identity undoubtedly have a significant first mover advantage.

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