Focusing on New PV ESS Integration Scenarios, Continuously Increasing Shipments in Overseas Markets, STAR Market PV Leader Creates Diversified Business Growth Curve

On the afternoon of May 13, the Shanghai Stock Exchange held the 2024 Collective Performance Briefing for Companies Listed on the Science and Technology Innovation Board. Several top-tier PV enterprises, including Trinasolar (688599.SH), Jinko Solar (688223.SH), Canadian Solar (688472.SH), Autowell (688516.SH), and Gaoce Co., Ltd. (688556.SH), participated to showcase the industry's ecosystem and development trends to investors.

Currently, the PV industry is still in a period of profound adjustment, with fluctuations in industry chain prices continuing and the overall profitability of the industry remaining under pressure. At the performance briefing, multiple enterprise leaders proposed countermeasures from aspects such as improving the efficiency of PV module products, increasing the proportion of exports to high-value overseas markets, and building new scenarios integrating PV and energy storage (PV ESS), aiming to steadily enhance the company's operational capabilities.

Regarding the progress of PV capacity exit the market, a concern for investors, Zhuang Yan, General Manager of Canadian Solar, stated that the current PV industry has entered a period of deep integration, with less competitive and outdated capacity expected to gradually exit the market. This will drive the optimization of the capacity structure, improve the supply-demand pattern, help the entire industry chain return to a sustainable operating state, and lay the foundation for the long-term healthy development of the PV industry.

Li Xiande, Chairman of Jinko Solar, believes that regardless of whether it is driven by AI or the demand for green electricity, the long-term demand for PV remains robust. Combined with the guidance of the industry's supply-side reform, this will support the orderly development of the industry. Some cross-industry PV enterprises are gradually exiting market competition, and the industry will gradually transition from losses to break-even and then to gradual profitability. Enterprises with advantages in scale, brand premium, leading technology, and cost control will be more competitive.

Multiple PV Leaders Strengthen Energy Storage Business

In the energy storage market landscape, traditional integrated PV module manufacturers are gradually becoming the main players. Gao Jifan, Chairman of Trinasolar, stated in response to investor questions that in 2024, the company will comprehensively lead the industry with a dual-core strategy of PV and energy storage, and transform and upgrade into a leader in comprehensive smart energy solutions integrating PV and energy storage. The company will build leading capabilities in integrated production, supply, and sales, continuously deepen its global service system, and achieve over 100% growth in energy storage installations in 2024, exceeding expectations.

According to him, the company's energy storage container and system sales have broken through six regional markets: China, Europe, Asia-Pacific, North America, the Middle East, Africa, and Latin America, with cumulative shipments exceeding 10 GWh. Domestically, the company has also completed GW-level deliveries. The CNNC Huineng Hainan 1 GW PV + 300 MWh energy storage project, the first project to commence construction among the third batch of large-scale bases in the country, has been successfully connected to the grid.

With the large-scale and high-proportion integration of new energy, the demand for flexible regulation resources in the power system is becoming increasingly urgent, which is also driving the rapid growth of China's new-type energy storage new installations. Trinasolar's energy storage system (ESS) business is expected to continue its strong momentum, with plans to achieve shipments of 8-10 GWh in ESS this year.

At an earnings conference, Zhuang Yan, the general manager of Canadian Solar, stated that the company's ESS business achieved sales of 6.5 GWh in 2024, up over 500% YoY. The company is currently a leading ESS system integrator in major overseas large-scale ESS markets, including North America, Europe, Australia, and Latin America.

As of December 31, 2024, Canadian Solar had a potential order backlog of 79 GWh for ESS systems, with orders on hand worth $3.2 billion under signed contracts, and a cumulative global delivery of over 10 GWh. In 2025, ESS shipments are projected to be 11-13 GWh, continuing the rapid growth from 2024.

Zhuang Yan mentioned that this year, the company will fully leverage the advantages of its secondary main business in ESS to ensure high-quality delivery of large-scale ESS projects. The current shipment guidance for ESS this year is 11-13 GWh, which will provide a guarantee for the company's profitability.

Canadian Solar's financial reports show that the company's ESS system shipments reached 6.6 GWh in 2024, up over 500% YoY. Zhuang Yan stated at the earnings conference that technological advancements and economies of scale have significantly reduced the costs of PV and ESS systems, and product supply and costs are no longer limiting factors. With the increasing proportion of intermittent renewable energy generation, enhancing consumption capacity, optimizing power plant revenue models, and improving overall returns have become critical. The industrial value is shifting towards downstream applications, and the importance of ESS is becoming increasingly prominent.

The PV and ESS industries are facing new development opportunities, which also pose higher requirements for technological integration, project delivery, and long-term performance. Zhuang Yan believes that enterprises need to shift from "price competition" to "competition in comprehensive capabilities of technology + services + system solutions," which may reshape the competitive landscape of the industry.

Proactively Responding to the Impact of Tariff Changes

Recently, the "reciprocal tariff" dispute between China and the US has attracted market attention, with PV module companies typically having an export proportion exceeding 50%. According to Li Xiande, the company's latest high-efficiency TOPCon products are widely recognized by domestic and overseas customers for their high power and actual power generation, with robust current orders, achieving a premium of 0.5-1 ¢/W compared to non-upgraded products.

He stated that in response to changes in overseas trade policies, the company continues to improve its diversified global supply chain layout to ensure stable supply in high-premium markets and continuously expand into emerging markets with high growth rates. Additionally, due to the shortage of overseas cells, module prices in the US are expected to rise, which is expected to reasonably pass on tariff costs.

The US is a high-premium market, and leaders of multiple module companies have responded to their export plans to the US. Zhuang Yan stated that due to the existing US tariff policies on PV products, PV products were basically not directly exported from China to the US, but mainly from Southeast Asia and the US itself. Therefore, they were less affected by the reciprocal tariffs between China and the US. However, Southeast Asia would be impacted by the "anti-dumping and countervailing" (AD/CVD) duties, and the final ruling results would need to be awaited.

Gao Jifan stated that the company closely monitors the impact of tariffs on the industry and the company, and actively responds. As of now, the company has a sufficient inventory of cells and modules stored in the US, and its costs are expected not to be affected by the US's imposition of reciprocal tariffs. Additionally, there are some products in transit that are about to clear customs, coupled with other supply channels, which can meet the customer demand in the US market for the company's subsequent stages this year. This round of reciprocal tariffs may lead to a certain increase in product prices, which will have a positive impact on the profit margins of the cell and module inventory in the US.

In addition, Trinasolar's joint venture TOPCon cell and module factory in Indonesia (with a current annual capacity of 1GW) is not affected by the AD/CVD duties imposed by the four Southeast Asian countries. The Indonesian factory has a relative competitive advantage. Overall, the company believes that enterprises with stronger forward-looking strategic judgment and global operation capabilities can better cope with the US's imposition of reciprocal tariffs globally this time.

In terms of response, Zhuang Yan stated that the main measures include the following aspects: utilizing the current 90-day time window to leverage the existing capacity channels of the supply chain in Southeast Asia and other regions; accelerating the transfer of some manufacturing and procurement links to regions with relatively lower tariff costs to optimize the global capacity layout.

He also mentioned leveraging the first-mover and scale advantages of the company's local module, cell, and ESS capacities in the US to ensure and accelerate the stable production of factories located in the US and continue to provide localized delivery to customers; actively negotiating with major customers and suppliers to reasonably share tariff costs and ensure supply chain stability; preparing for possible future China-US negotiations and the return of tariffs to a relatively reasonable range; and striving to secure tariff exemptions or reductions for specific products through various channels.

Equipment manufacturers are also accelerating their plans to go global. Ge Zhiyong, Chairman of Autowell, stated that due to the overcapacity in the PV industry, the company's orders have declined. The company will actively expand overseas markets. At the same time, it will expand into the markets for semiconductor equipment and ESS equipment to hedge against the decline in orders in the PV industry.

He stated that currently, the production capacity of PV equipment manufacturing is mainly concentrated in mainland China, and exports to the US will inevitably be affected by tariff policies. To cope with policy risks, the company has made forward-looking arrangements. Its manufacturing base in Malaysia has been completed and the first equipment has been shipped. It is gradually increasing its capacity planning to meet future overseas export requirements.

It is reported that the capacity of Autowell's customers is still expanding slightly, primarily in overseas regions. The company anticipates that there will still be new project opportunities and equipment demand in overseas markets in 2025.