pv magazine: You’ve been working with Trina for 15 years. You’ve certainly had a very long view of what’s gone on in the U.S. market. Can you tell me a little bit about what you’ve seen over this time and what you think the big picture is?
Zhu: The overall U.S. market – the way I’m looking at it is that it is very sustainable very strong and the economy is very good. Renewable energy does have a lot of support from all the different perspectives: from investors, from EPC, and the United States always focuses on the new technology and the most advanced technology also. The U.S. is the biggest tracker used for all the utility projects. It has very broad usage for the commercial or residential rooftops. So all of these actually make the U.S. market very strong, very sustainable.
For the U.S. market you have to stay in here, build up a long history and contacts in order to win this market. You don’t expect the same kind of thing could happen in other markets, even the Chinese market. So although the size of the Chinese market is bigger than the United States, sometimes the policy changes very drastically. And compared with the European market, there are a lot of a smaller countries, and each one has individual policies. It’s not like the United States, that has both the size and the stability and the sustainability.
pv magazine: So this is interesting, especially right now given that we have 25% tariffs under Section 201, and this escalating trade war with China. When you look at situations like the trade war do you see these as major problems for the U.S. market or just another road bump? How do you think these will be viewed in the longer picture?
Zhu: In the longer picture, there’s no doubt the U.S. and Chinese relationship will recover and will move on. It’s certainly a bumpy area right now. People are trying to figure it out; how we’d be able to keep possibly reducing the cost for the total system and help the solar to be broadly used in the U.S. market.
Trina deployed capacity outside China five years ago. So we supply U.S. orders from Thailand and Vietnam. That is all the preparation work that we are doing. Like I said; the United States is a long-term market. You have to keep on doing things a little bit here and a little bit there, in order to make the final result very sustainable – matching up with the U.S. market overall.
There’s no doubt that China has the biggest solar investment and the capacity also. But on the other hand the United States is very healthy on the renewable energy portfolio requirements/policies. It has very stable policies, very stable economies. I believe the market in the United States is one of the best in the world.
pv magazine: So to get to individual market segments: When you look at the residential market the commercial and industrial market and the big utility scale market for the large ground mounted plants, which of these to you and to Trina is most interesting the United States? And why?
Zhu: Currently we sell most of our product into the utility-scale market. Although we started the deployment on the distribution side and the residential market. Almost from the beginning, eight years ago, 10 years ago we began supplying the residential and the commercial side.
We work with distributors, most of the time as the major suppliers to them. Now with our solution business we’re gradually providing some system integration solutions to some of the commercial projects to help them to get the project easier to take off, lower the cost and raise the returns. The utility sector is still one of the major sectors and we are helping developers and investors to get the project settled down from year to year. Let them see the roadmaps of our technology like we mentioned before. We are not only focusing on modules as a single individual component. We are trying to put modules, trackers and inverters all together in order to contribute more to the industry.
pv magazine: So should we expect a distinct branded product from Trina the way that SunPower has its Equinox and its Oasis power plant solution? Should we expect something that’s a that’s branded like that that’s a distinct product?
Zhu: Yes, absolutely.
But we are not going to tapping to the EPC business mostly focusing on the procurement side of the EPC. U.S. EPC companies are very strong at the engineering design, at the construction resources. So we are going to partner with them but we are very good at the procurement side on the supply chain side; we have owned a tracker company since last year, as you know. And we own the module capacity, 2 gigawatt and still going up.
And so we have the chance to put all those things together and design as a whole package for the system instead of individual components because as you know the market situation sometimes is not exactly what you want when you try to buy things, to get the best from the market.
pv magazine: So is this the Trina Pro that you’re talking about.
Zhu: Yes, exactly. That’s the solution business we’re talking about. Trina Pro is one of the solution for the utility-sector projects and we do have commercial C&I teams currently working on the smaller system integration – also to help the commercial side. But Trina Pro is the major one.
pv magazine: So this is interesting because what I’ve been seeing in the industry is I’ve been seeing more of these complete solutions but also move away from EPC; for instance for solar just got out of EPC – even a lot of the developers are withdrawing from EPC. Do you see this trend as well and why do you think this is happening?
Zhu: A lot of investors and developers gradually start to be stronger and stronger so that they have the ability to do the preliminary design. Therefore a lot of equipment requirements can be settled down at the beginning stage of the project instead of the last stage of the procurement.
So back to the old times, it used to be EPC’s job to do all the designs and then buy the stuff at the end. But now people are seeing with the project to be more mature and more standardized, they are able to work with the supplier directly at the beginning to have a long term roadmap.
Because normally the design phase stars almost a year ahead of the final commissioning. So you have to know the technology one year down the road, what’s going to happen with the solar growth speed, these kind of factors have to be taking into account, when you bid the project and when you commit.
So Trina Pro is exactly for that purpose to group all the major components together, link them better, do the engineering for the compatibility issues and do the streamlining of the supply chain management so you don’t have to get the module first and then the racking arriving later to shorten your construction time.
The way we are looking at it it really helps EPC a lot also; To reduce their total EPC costs and maintain the same margin and make their work easier and less risky. So to help the project itself also.
pv magazine: This is interesting because it almost seems as the E&P are going over to the developer and EPCs are becoming more simply construction companies. Is that fair or is this something else?
Zhu: Well there’s still a lot of work that EPC Company has to do you know regarding the layout regarding the commissioning regarding the great design transformer column and all these kind of things we are trying to help from the hardware side of it.
Because a lot of time EPC company, traditionally EPC companies don’t control the supply chains. They don’t own the manufacturer. They don’t know the roadmaps down the way. They don’t know the cost trend, supply and demand situation. So by the time at the end, when they try to buy this stuff a lot of times it’s already too late.
This year is a good example. We are in an extreme shortage situation and a lot of people cannot find modules anymore. So that’s going to cost the project with a lot of risk and commission delays and put an extra cost into the project. So that’s why we are seeing these kind of costs between the major suppliers if they have a solution business together with the EPC.
Obviously we are not getting into the EPC business. It requires like you know a strong enduring force of very good construction resources – all of these kind of capabilities. It took a long time to build this also. So we are willing to work with EPC companies on the Trina Pro solutions.
pv magazine: So the ITC is stepping down after 2022, 2023 there is no more ITC or it remains at 10%. And what we’re seeing by the market forecasters is they’re expecting the U.S. market to dip after that, and Wood Mackenzie is predicting a very slow growth following this. They’re not the only market analyst which is suggesting the market will slow with the ITC at 10%. Do you see this same thing, or do you expect the market to grow more quickly? What do you see after the ITC expires?
Zhu: Well the U.S. market is a free market right now so it has a lot of healing powers. Even the policy has changed; as a matter of fact, you know as we look at the project cost that a major portion 25% is going to Section 201 tariffs. So right now the ITC is stepping down. At the same pace as the tariff. The tariff is dropping from 25%, 20%, 15% and eventually will be gone.
So that’s matching the pace of the ITC stepping down. So from the system cost point of view I don’t see a major drop. It’s going to be a major drop in matching up with the drop of the ITC. So the project returns will relatively stay the same.
On the other hand, from the demand side the renewable energy portfolio requirements are still dragging all of the investment, all the attention, all the technology towards expand the solar market. So I have strong confidence that this market will be one of the best and promising markets in the world.
pv magazine: With or without the ITC?
Zhu: With or without the ITC. Like I said; If people are interested they could extend the ITC or they could even come up with a new solution to help the project or help the market going faster.
Without the ITC we know the costs for solar came down more than 95% in the last 20 years. Right now is the way I’m looking at it, solar is cheaper than the traditional energy already, if we calculate all of the pollutions and environmental recovery cost. So energy demand is rising and solar will meet a bigger and bigger portion of demand. Right now the portion is still very small, so there is a lot of room to grow. With energy storage coming online later that will make that renewable energy even more robust and will help to fit the current requirements to meet energy demand.
Interview conducted by pv magazine U.S. Editor Christian Roselund