Canadian Solar halts solar cell developments, increases module assembly strategies in action to impending overcapacity

Nov 19, 2021 04:25 PM ET
  • Canadian Solar has actually warned of solar cell overcapacity next year, pounding the breaks by itself cell manufacturing expansion strategies while accelerating on its module assembly roadmap.
Canadian Solar halts solar cell developments, increases module assembly strategies in action to impending overcapacity
Image: Canadian Solar

Coverage its Q3 2021 results the other day, Canadian Solar president Shawn Qu said the firm's manufacturing division was to reply to a forecasted overcapacity of solar cells following year, while Yan Zhuang, president at CSI Solar, would certainly restrict investment in certain areas of the manufacturing chain to "stay clear of falling under the overcapacity trap".

In an updated capacity development plan given the other day, Canadian Solar claimed it anticipated to finish the year with around 13.9 GW of solar cell production capacity, up from the 13.3 GW of cell capability it ended up Q3 on. Nevertheless this number is currently not anticipated to rise whatsoever next year.

Also, CSI anticipates to end up the year with 11.5 GW of solar wafering capacity, a figure it additionally currently anticipates to complete 2022 on.

The division had, nevertheless, increase its module assembly capability strategies as well as anticipated to add almost 10GW of module assembly in between the end of Q3 2021 and also completion of 2022, taking its general module setting up capability to 32GW by the end of next year. Simply over 8GW of module setting up ability is anticipated to be included next year.

At the same time, CSI additionally anticipates to nearly double is solar ingot ability following year, taking it from a forecasted ability of 5.4 GW at the end of 2021 to around 10.1 GW by the end of next year.

Canadian Solar had currently rectified its capacity expansions once this year, as covered by PV Tech Premium in August.

Qu did recommend to experts that the business's Capex spending plan would remain broadly in line with this year's regardless of the changed strategies, yet stressed last Capex degrees had not yet been firmly set.

Cautions of overcapacity will certainly act as yet an additional headwind for solar makers to contend with, having actually spent the past year battling consistent cost increases and logistics obstacles.

Qu informed analysts yesterday the functional setting "stays tough", with a mix of greater rates, logistics traffic jams and also power curtailment problems in China influencing its procedures this year. While power curtailment is currently easing in China, prices have increased once more since September, Canadian Solar said, motivating a more "hostile" perspective to module price boosts.

In Q3, Canadian Solar delivered 3.9 GW of modules-- up 22% year-on-year as well as 6% sequentially-- in line with assistance. Its revenue of US$ 1.23 billion was additionally in accordance with support, nevertheless its gross margin of 18.6% outperformed the leading end of assistance (16%), showing the rate enhances passed onto consumers during the quarter.

While higher module ordinary asking price (ASPs) recorded by the company assisted balance out falling profits from Canadian Solar's projects service, operating expenses increased by 11.4% sequentially to US$ 176 million on the back of high shipping prices.

Canadian Solar's production department reported income of US$ 1.149 billion, down 2.8% sequentially, nonetheless the department's gross and also running margins both raised on Q2's numbers, reaching 15.1% and 2.6% respectively.

Qu stated the business had actually snubbed inexpensive orders in order to protect its margins, which the CEO claimed was reflected in business's Q4 advice.

"We believe the adverse macro conditions of greater product expenses and also global logistics bottlenecks are short-lived. As we anticipate next year, our emphasis is on boosting Canadian Solar's long-lasting position as well as competitiveness, and also our strategy is to more increase our solar module market share, buy modern technology and also upstream capability, while taking advantage of overcapacity in the wafer and cell production levels," he said.

Canadian Solar expects Q4 deliveries to be in the series of 3.7 GW-- 3.9 GW, with revenues of US$ 1.5-- 1.6 billion. Its gross margin is anticipated to be in between 14-- 16%.