How do companies gain market share without getting swallowed up in a price war?

Electronics and smart grid technology could provide an escape valve, according to Shawn Qu, CEO and founder of Canadian Solar. The company has entered into a joint venture with an unnamed California company to create components -- microinverters? silicon maximizers? -- that will optimize the power output from Canadian modules and boost module-level control and monitoring.

Qu says he’s also thinking, longer term, about how to better incorporate batteries and microgrid software into its products. The DC nature of solar panels, combined with microgrids and batteries, could even lead to a surge of interest in DC power.  

“You will see more and more need for storage,” he said in a recent interview. “We might see the war of currents fought by Edison and Tesla come to pass again. The grid structure and the power structure is going to change,” Qu continued.

Four or five years ago, Canadian was a somewhat obscure vendor. Now, it is becoming tough to avoid. In 2010, the firm's shipments will amount to 760 to 800 megawatts, more than double the 325.5 MW shipped in 2009. (2010 earnings come out March 10. Canadian will also speak on gigawatt-scale manufacturing on March 14 at the Solar Summit taking place in Palm Springs.)

 Module manufacturing capacity will rise from 1.3GW to 2GW, this year while cell capacity will grow from 800 MW to 1.3 GW. It also has 400 MW of wafer capacity.

“We have the largest solar module plant in North American right now,” he said. “In the past four to five years, we have almost doubled every year.”

Canadian now ranks sixth worldwide in solar panel delivery and has a 5 percent to 6 percent share of the global market, according to internal estimates. The next goal is to crack the top five and achieve a global market share of over 10 percent, said Qu. Bankability, or a willingness among large lenders to see Canadian as a legitimate supplier, is no longer an issue.

The challenge, like in the PC industry, is trying to grow while making a profit. Canadian is profitable, but sometimes its margins can lag competitors. Revenue in the third quarter came to $377.2 million, with $20.3 million in net income.

To maintain that balance, Canadian will rely in some part on R&D. The company, for instance, has created an enhanced selective emitter (ESE), similar to the silicon ink created by Innovalight that can boost module efficiency. ESE effectively turns a 230-watt panel into a 240-watt to 245-watt device.

Canadian, he added, has managed to increase efficiency by about a percentage point a year.

Another lab project revolves around technology to reduce light-induced degradation.

At the same time, Canadian is trying to expand its global footprint. It sells into the main markets -- Germany, Italy, the U.S. -- and provides both modules and engineering services/development services in Canada, China and Japan. The United Kingdom and Australia are also now part of the company's portfolio.

“But over the next three to five years, the U.S. market will get most of our attention,” he said. “It goes without saying that the U.S. will be our largest market.”

Despite global deficits and economic headwinds, solar will continue to grow, he added. In Japan, solar power costs are around 20 cents per kilowatt, while the levelized cost of retail electricity goes for around 30 cents. Over the next three years, the price of solar may meet the 15 to 20 cent per kilowatt-hour retail price in parts of California, he predicted.

"Germany will probably reach total solar installations of around 30 gigawatts by the end of 2011 and the peak power demand is 65 gigawatts,” he said. “The long-term trend is that the cost of conventional energy is going to go up. You are going to face a volatile energy market for 20 to 30 years. Consumption is going to go up. Meanwhile, the cost of renewable energy is going to go down.”

Tags: bankability, canada, canadian solar, china, crystalline silicon, enphase, first solar, germany, italy, microinverters, pv, solar, solar module, solar power, spain