Canadian Solar Concall Highlights Global Concerns for Large Solar Manufacturers

Highlights :

  • Nasdaq listed Canadian Solar has expressed worries of a coming overcapacity in solar supply chains.
  • The firm has renegotiated many agreements with buyers in the wake of spike in costs.

Canadian Solar Inc.’s CEO, Shawn Qu speaking at an analyst concall after its Q3 numbers expressed confidence in the growth of solar market as a result of ‘real action, globally in the sector’. The firm saw its manufacturing division recover well after Q2, even as its projects division lagged. On revenues of $1.23 billion, the firm showed a profit of $35.2 million for the quarter.

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While sharing its Q3, 2021 results, Shawn Qu said highlighted the 34% year over year growth in revenue with growth margin which was well ahead of guidance. Qu said, “This has been our strongest net profit performance. We have developed an ability to navigate in an extremely challenging market, with continuing our focus on innovations, and R&D.” The firm had declared higher topline in Q2, with a lower net profit of $11 million.

In this quarter, the company has seen 3.9 GW of module shipment, and delivered its largest battery storage project , the 1.4-gigawatt hour Crimson Project located in Riverside County, California. The project also supported margins in the storage division, which delivered $140 million in revenue in Q3.

Besides the Crimson project in California, Canadian Solar has 2.9 GW hours battery storage projects under process.

The company is also looking at expansion on battery storage projects in Latin America among other parts of the world. On its manufacturing plans, the firms projects another 10GW of module assembly between the end of Q3 2021 and the end of 2022, taking its overall module assembly capacity to 32GW by the end of next year. it has projected  8GW of module assembly capacity after that.

Meanwhile, CSI also expects to almost double is solar ingot capacity next year, taking it from a projected capacity of 5.4GW at the end of 2021 to around 10.1GW by the end of next year.

However, the firm has cut back on plans to expand its cell manufacturing and wafer capacity, choosing to pause plans and keep them at 13.9 GW and 11.5 GW respectively by the end of the year.

The firm flagged transportation costs as an example of the inflation solar exporters face. Transportation, which accounted for approximately 50% of selling and distribution expenses till 2020, now accounts for 80 % of selling and distribution costs, claims the firm.

Looking at the long-term growth perspective, Qu sees the solar storage stronger than before. Solar PVs cumulative installed capacity is expected to cross 1 terawatt next year and will reach 3.2 terawatt by 2030. On the battery and storage cumulative installed capacity, Canadian Solar will cross 100 GW hours by next year and expects to cross one terawatt hours by 2030.

The company is also excited about the EU market, as it feels that after many years, price of carbon and curtailing of investments in fossil fuel has seen considerable changes. For the first time, the cost of carbon decreased by 60 euros per tonne. This Qu said is six times less of what it was in 2018.

The firm has successfully passed on higher prices to customers in Q3, as reflected in its higher margins. Guiding for a 14-16% gross margin for the full year, the firm has projected for shipments of 3.7 GW to 3.9 GW in Q4 of 2021.

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