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As China and US markets stumble, Canadian Solar CEO sees resurgence in EU

SNL Image

A solar farm in Germany, where the end of trade penalties on Chinese solar panels has created hopes of a market comeback.
Source: Associated Press

Squeezed by an abrupt downturn in China, by far the world's biggest solar power market, and 30% import tariffs on foreign-made photovoltaics in the U.S., the second-largest global solar market, Canadian Solar Inc. is looking for a resurgence in a former solar powerhouse: the European Union.

"We see a blow-away success in Europe. I am very sure about it," CEO Xiaohua "Shawn" Qu said in a recent interview. Headquartered in Ontario, Canada, with manufacturing mainly in China, Canadian Solar is one of the world's largest solar panel makers.

The European solar market shriveled to less than 10% of Canadian Solar's revenues in 2017 from more than 50% in 2012. Qu's renewed optimism stems largely from the European Commission's move in September to lift anti-dumping and anti-subsidy import penalties for Chinese solar panels.

Qu cited two other promising developments: the European Union's new target of reaching at least 32% renewable energy by 2030, and ongoing cost reductions for solar electric systems in the EU. "These three factors will make the European market grow and I think Europe will be surprised how much it will grow," Qu said.

Overall, the International Energy Agency sees the Europe overtaking the U.S. in terms of renewable energy additions through 2023.

Cheaper abroad

A recent report from the U.S. Department of Energy's Lawrence Berkeley National Laboratory estimated the installed price of home solar electric systems in Germany at less than half the price of residential solar in the United States, while small commercial systems in Germany are nearly one-third as expensive as their U.S. counterparts. Small-scale solar systems in Spain, the U.K. and France are also considerably discounted compared to projects in the U.S.

"There is additional cost in the U.S. due to all these tariffs and production inefficiency," Qu said. He estimated that U.S. customers pay an additional 15 to 17 cents per watt for solar systems based on the 30% import duties imposed by President Donald Trump in January. "It also makes our manufacturing system complicated," he said. "We can do it but it is not an efficient solution."

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While a few Chinese solar module makers are establishing U.S. manufacturing outposts to avoid the tariffs, Qu is not yet sold on the idea. "We are actively looking to do this," he said, citing an ongoing feasibility study. "My opinion is that for module manufacturing, even cell manufacturing, the labor cost is high."

Qu expects the U.S. market to stagnate in 2018 and 2019. Though several solar analysts recently agreed that the U.S. market will remain relatively strong until 2023, through the phaseout of key federal tax incentives, their estimates for the following years ranged from crippling bust to renewed boom.

In China, meanwhile, the government in May slashed solar subsidies and is considering additional cuts, according to Reuters. China was Canadian Solar's largest market in 2017, accounting for 57% of its revenues, compared with 33% generated in the Americas. The turmoil caused Canadian Solar to miss its revenue guidance in the second quarter and reduce its forecast for 2018.

In order to offset tariffs in the U.S., subsidy cuts in China and make the most of new opportunities in Europe, Qu said, the company is looking to advanced technology. In September, the company launched an improved version of its bifacial solar panels, which generate up to 30% additional electricity on the module's rear face and reduce the levelized cost of energy for projects using the panels.

"We think this is a product for every country," the CEO said. "As long as there is reflected light or diffused light to the backside then bifacial makes sense." Canadian Solar, which has deployed about 200 MW of the technology so far, can produce "several gigawatts per year already," he added.