Trina Solar Ltd. (TSL:US), the third-biggest solar cell maker, is considering whether to buy project developers as seeks profits by shifting into the construction of power plants.
“I certainly see a huge shakeout” in the solar industry, Ben Hill, president of Trina Solar Europe, said yesterday by phone from the World Economic Forum in Davos, Switzerland. “Trina is always open and interested in opportunities. If there is anything that is advantageous to Trina, then we’d action that.”
Trina, based in Changzhou, China, in August detailed plans to develop solar farms using its own modules. It’s seeking to tap more diverse streams of revenue after a global glut of panels and slowing sales in Europe made manufacturing the technology unprofitable.
The company has reported five successive quarterly losses (TSL:US), and its net margin sank as low as minus 26.6 percent in the second quarter last year. Trina trails JA Solar Holdings Co. Ltd. (JASO:US) and Suntech Power Holdings Co. Ltd. (STP:US) in cell manufacturing, and all three Chinese companies are unprofitable.
On Jan. 15, Trina said it received approval from China’s Gansu province for a 50-megawatt solar farm. Chief Financial Officer Terry Wang said last week he expects profits to be generated from the business expansion after the second quarter. The move into developing power plants is a strategy also implemented by competitors including First Solar Inc. (FSLR:US), the largest U.S. solar company.
“I don’t think buying more module manufacturing capacity is interesting for Trina at the moment,” Hill said. “But there are other opportunities for us to expand our scope and we will certainly be looking at that.” When asked if that meant buying project developers, he replied, “That could be a possibility.”
Hill said Trina sees “a route to profitability” after undertaking a “large cost-cutting exercise.” Delayed payments from customers that the company had to write off last year are now being received, so the company is looking for a reversal in those write-offs this year, he said.
Trina may benefit from a shift in the global solar panel market away from Europe, with demand in countries like China, India and the U.S. compensating for a drop-off of installations in European markets such as Germany and Italy, Hill said.
“These other markets are picking up the slack, which is fantastic and a big change from Europe really being very dominant over the global market,” the executive said. “Now it’s becoming spread. So for an international company like Trina, it’s really good.”
Hill said it’s possible that China may exceed its target to install 10 gigawatts of solar power this year. He forecast 5 gigawatts of installations in Germany, down from 7,634 megawatts last year, when it was the biggest market. Globally, “we’re not expecting a significant dip in the market,” he said.
Bloomberg New Energy Finance predicts global installations of about 33.5 gigawatts in 2013, up from about 30 gigawatts in 2012. China, the U.S. and Japan are likely to be the biggest markets, according to the London-based analyst, with Germany and Italy dropping out of the top 3.
Because of a cap on subsidies in Italy, that market will be “challenged” this year, according to Hill. Even so, it’s close to grid parity, meaning it may be able survive without government aid, he said.
“There’s still some fat in the value chain which can come out so we can reach grid parity,” Hill said. “Our own projects team is examining possible grid parity project options. That’s ongoing, but I think the market will still shrink in 2013.”
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