U.S. tariffs on Yingli solar modules imported from China have driven prices up 8 percent to 10 percent, according to Managing Director Robert Petrina.
“The falling prices story has changed a lot in the last six months,” Petrina said. “The tariffs are one factor pushing them up. But there are multiple forces at play. Supply has come down to demand levels, and that is changing pricing dynamics in a way that is good for long-term stable growth. Prices have stopped falling and have begun to increase.”
Tariffs differ for Chinese module manufacturers, based on the degree to which each was found guilty of anti-competitive practices by the U.S. Commerce Department and the International Trade Commission. Yingli’s tariff is 29.18 percent. Trina Solar (TSL) and Canadian Solar (CSIQ), Yingli’s primary Chinese manufacturing competitors, face comparable tariffs.Yingli (YGE) is the world’s biggest crystalline silicon module manufacturer and it just hit the 1-gigawatt mark for module imports to its American subsidiary.
The other two big players in module manufacturing, according to Petrina, are First Solar (FSLR) and SunPower (SPWR). As U.S. manufacturers, they don’t face tariffs, and, as major project developers, their business models differ significantly from the Chinese companies.
“Canadian Solar has stated its intention to go into the downstream market,” Petrina said. Yingli, like Trina has not gone downstream. “We believe it is in our best interests to work with our customers collaboratively and not compete with them.”
To avoid the tariffs, Yingli has Taiwanese and Malaysian solar cells shipped to its factories in China. “We are compliant with the regulations. Modules assembled in China with non-Chinese cells are not tariffable,” Petrina said. “It is what all the other Chinese module manufacturers are doing.”
Like most Chinese manufacturers, Petrina said, Yingli has always sourced some cells externally, so “the change wasn’t that great.”
Source: GTM Research’s PV Technology and Cost Outlook, 2013-2017
According to Utilization of 3rd Party Cells in Yingli Solar PV Modules, the company’s bulletin to customers on its cell-sourcing practices, “Yingli Solar will purchase and utilize cells produced by other qualified manufacturers”:
- To increase supply-chain flexibility and mitigate risk, especially during periods of production expansion
- To create strategic partnerships and develop or advance new technologies
- To comply with international trade requirements
Yingli Solar purchases only multicrystalline solar cells from approved and qualified manufacturers, the bulletin added. “Yingli Solar PV modules assembled with 3rd party cells maintain the same electrical and mechanical characteristics,” it said. They are certified to the same international UL or IEC standards and, it promised, “Yingli Solar PV modules containing cells which are manufactured outside China will state the country of origin on the PV module label and packaging.”
Though Petrina would not name Yingli’s cell suppliers, he acknowledged that E-Ton, Motech, Gintech, and Neo Solar Power are among the leading companies in the Taiwan cell manufacturing market.
He also acknowledged the necessary price increase from the shift to all non-Chinese cells. “There is a delta of probably about 8 percent to 10 percent.”
“The vast majority of the 1-gigawatt, over 90 percent, is in North America,” Petrina said of the recently achieved milestone. “But the tariffs were a clear signal the rules have changed.” Yingli is now looking to markets in Latin America and the Caribbean. “I would not credit the tariffs as the driver. It is natural for us to expand and diversify our revenue streams.”
Yingli Americas is especially interested in Mexico, Brazil, Chile, Peru, and Ecuador, Petrina said. “The Caribbean is a market where solar is cost-competitive today,” he added. “It is just a matter of getting all the stakeholders at the table and getting them comfortable with solar.”
Solar growth sits on a “four-legged stool” of high power prices, a good solar resource, policy that supports deployment, and access to capital, Petrina said, and “it is possible to do without one.” Financing is emerging in Latin America, and “some exceptional companies” are where the big U.S. solar companies were in 2006-07, Petrina said.
He declined to name specific companies but agreed some of the important players are Mexico’s Iliosson, Energia Simple, Cryplant, and Solar Pro, and Brazil’s WEG Equipamentos Elétricos, Renova Energia, and OptPower.
Source: GTM Research’s Solar in Latin America and the Caribbean 2013