JA Photo voltaic has been promoted to AAA-Ranking standing for the primary time, becoming a member of LONGi Photo voltaic and Trina Photo voltaic on this unique bankability rankings, now recognised broadly throughout the PV sector as one of the correct and detailed rating programs on provide to PV module consumers when enterprise provider due diligence.
This text discusses the elements which have led to JA Photo voltaic assembly the doorway standards – each manufacturing and monetary well being – to qualify as AAA-Rated.
Additionally revealed for the primary time are the relative positions and rankings of the highest 60 PV module suppliers in the present day, that account for greater than 98% of all PV modules used globally. That is proven under as a Bankability Pyramid hierarchy, starting from AAA-Ranking on the high to C-Rated on the backside. The pyramid is taken instantly from the September 2022 launch of the PV ModuleTech Bankability Ratings report.
Lastly, I define a number of the key subjects set to be mentioned on the forthcoming PV ModuleTech EMEA convention in Malaga, Spain on 29-30 November 2022: a regional phase through which JA Photo voltaic is among the high module suppliers.
From Chinese language cell chief to world module powerhouse – the JA know-how story
Virtually 20 years in the past, JingAo got here on to the scene in China. Exterior China, the present model of JA Photo voltaic (and certainly JA Photo voltaic as a module producer) was not current. Nonetheless, the corporate was extremely thought to be one of many first actual movers within the Chinese language photo voltaic manufacturing sector to concentrate on cell manufacturing.
Actually, I keep in mind chatting to European R&D consultants about 15 years in the past at one of many PVSEC conferences in Europe and I saved referring to this firm referred to as ‘JA Photo voltaic’ and was being met by confused appears to be like. Half an hour later, they labored out I used to be speaking about JingAo!
At the moment, JingAo was establishing itself as a reputable cell manufacturing entity in China: one thing that had been reserved for early Japanese and European corporations (and SunPower) till then. (Taiwan cell makers had joined the combo by then, however R&D was not their forte by any means.)
JingAo and Suntech (the ‘outdated’ Suntech) had been the truth is the 2 main cell makers within the early days of China-Photo voltaic. Different family names in the present day (most notably Trina Photo voltaic, Canadian Photo voltaic and JinkoSolar) began out as module meeting corporations. LONGi Photo voltaic was but to be born.
Considerably seamlessly, JA Photo voltaic grow to be the ‘branded’ entity and the corporate added module capability, however targeted within the early days as an OEM provider, most notably offering Sharp with modules. Sharp (like different Japanese PV pioneers together with Kyocera and Sanyo) was adjusting to PV shifting to mainstream standing and was mapping out an existence that concerned outsourcing manufacturing (to China and Southeast Asia) and relying upon a model to win enterprise. For a short interval (about 2013), it gave the impression to be paying off, with Sharp being the main module provider yearly by quantity. Nonetheless, and to not sound like a damaged report, PV management is about in-house know-how and manufacturing, and Sharp’s plans had been quickly to see a fast decline in fortunes.
JA Photo voltaic then began to promote modules principally below its personal identify, and principally exterior China. That is most likely one of many key factors in JA’s historical past and occurred round about 2012-2013.
Then the ‘enjoyable’ begins! As a number one photo voltaic cell entity, and by advantage of being listed on a US inventory trade, JA Photo voltaic confirmed the worldwide sector what novel cell architectures had been on provide.
Listening to a quarterly investor name from JA Photo voltaic at the moment was nearly an training in cell know-how. Course of flows – in a number of pilot strains – had been mentioned and debated: WRACIUM (wrap-through), PERCIUM (no second guesses!), SECIUM (a selective emitter know-how based mostly on silicon nanoparticle inks produced by Innovalight in Sunnyvale, quickly to be purchased by DuPont). I’m certain there have been extra ‘IUM’s on the time, however to get this text completed in the present day I’m going to withstand trawling by way of the historical past of JA Photo voltaic’s PV cell structure nomenclature!
Protected to say, JA Photo voltaic was completely cell know-how targeted and manner forward of the curve on the time: extra so than every other cell producer in Japan, Germany or Taiwan, and to not point out any of the opposite Chinese language corporations at the moment. China Sunergy made some noises. And Suntech did far more than that.
Whereas JA Photo voltaic was selling the ‘IUM-revolution’, Suntech was pushing the Pluto know-how. Pluto was on the absolute slicing fringe of cell manufacturing. Laser doping of phosphorous spray to kind selective emitter photo voltaic cells, as a stellar UNSW-inspired next-generation model of one of many first real-time superior cell applied sciences implement in mass manufacturing – the Saturn laser-grooved buried contacts, developed by (then) BP-Photo voltaic in Tres Cantos, simply exterior Madrid, following a technology-transfer initiative that was industry-leading in so many respects. Two of my first manufacturing facility visits to the PV world again then had been to Tres Cantos and Wuxi (the place Suntech had its HQ and was constructing out Pluto mass manufacturing strains); what an thrilling time that was.
Returning to JA Photo voltaic now: the corporate upstream-integrated to creating ingots and wafers and by 2014 was actually a technology-driven ingot-to-module based mostly world PV module provider drive to be reckoned with.
By this time, there have been different Chinese language corporations that had completed the identical ingot-to-module in-house capability expansions (most notably JinkoSolar, Canadian Photo voltaic and Trina Photo voltaic). Nonetheless, JA Photo voltaic was considerably forward of the sport now – perhaps by fortune, or perhaps having belief in know-how successful out in the long run. I’ve written extensively in regards to the significance of beginning as a cell-technology entity and including capability upstream and downstream after. The subsequent key resolution was to wager early on mono.
Virtually everybody globally (all different Chinese language producers, lots of these in Japan that had been nonetheless making cells, the European pioneers of Q-CELLS and REC Photo voltaic, and the Taiwanese me-too workhorses of the sector) had been proud of the proposition that p-type multi was providing each rooftop and ground-mount alternatives: at the moment, JA Photo voltaic was pushing module provide with a a lot higher mono-based proportion.
The timing of this is able to become pivotal. Aforementioned LONGi Photo voltaic was beginning to change the casting: pulling ingot needle. Firms betting on mono now discovered themselves in the correct place on the proper time, and no extra so than JA Photo voltaic.
The remainder of the world backtracked to make the multi-to-mono swap, after which work out the right way to make PERC cells. PERC enabled bifacial and in brief, we’ve got the PV {industry} in 2022.
Making revenue helps
From a know-how management perspective, JA Photo voltaic has most likely been one of the vital producers within the PV {industry} over the past 20 years. Nonetheless, so had been Suntech (the unique model), China Sunergy, SunPower and Sanyo.
In fact, it goes with out saying that working a worthwhile enterprise with good liquidity (cashflow) and low ranges of long-term debt is a should to maintain market-leading standing within the PV {industry}. Monetary well being all the time comes first, forward of know-how management or module cargo volumes.
Till 2018, JA Photo voltaic was listed on NASDAQ, like most Chinese language module suppliers that needed to place themselves as world organisations. Additionally listed within the US on the time had been lots of the above-mentioned Chinese language corporations (Trina, Jinko, Canadian, Suntech, Sunergy) and others corresponding to ReneSola and Yingli Inexperienced.
By the tip of 2022, all it will have modified, with US-listed China illustration being confined to the challenge arms of the ‘new’ ReneSola and the ‘new’ Canadian Photo voltaic: corporations that aren’t making or promoting PV modules, having spun out their legacy manufacturing companies both to China inventory exchanges or to personal buyers.
About 5 years in the past, it began to grow to be obvious that US listings weren’t benefiting long-term aspirations. Share value (market cap) was manner out of synch given the businesses’ turnover and complete belongings; and elevating money was a lot tougher than being a Chinese language firm buying and selling in China.
Trina Photo voltaic was the primary to make the transfer from US to China-listing, again in 2016. Nonetheless, it took Trina three and a half years to relist in Shanghai and never surprisingly overlapped with a interval in Trina’s previous that noticed market-share losses and decreased capex spend.
JA Photo voltaic delisted within the US on the finish of 2017, however took lower than two years to be listed in China. This was completed by a ‘back-door’ itemizing: buying an organization already listed in China (a heavy lifting engineering agency referred to as Qinhuangdao Tianye Tonglian Heavy Business Co.). The timing of this was excellent for JA Photo voltaic and the large uptick in capex (throughout the entire worth chain, from ingot to module) was seemingly a direct results of this tactic.
On the finish of 2017 (whereas nonetheless listed within the US), JA Photo voltaic’s market-to-book (M/B) worth (an accounting ratio that provides a sign of how the market perceives the worth of inventory) was extraordinarily low, and the variant of this (valuation time period in an Altman-Z stack) was nearly the bottom contributor to the corporate’s total monetary well being. The graph under exhibits JA Photo voltaic’s M/B ratio between 2015 and 2022 (year-end precise and forecast). The change between US listed and China listed is staggering.
Benchmarking JA Photo voltaic throughout the PV ModuleTech Bankability Scores evaluation
Now let’s stroll by way of the most recent evaluation from the PV ModuleTech Bankability Ratings report (Q3’22) that was launched this month (September 2022).
First up, right here is the brand new pyramid that exhibits the highest 60 PV module suppliers within the {industry} in the present day.
Inside every PV ModuleTech Bankability Ratings report launch, corporations are absolutely analysed, mentioned and benchmarked, revealing the relative strengths of every from a producing (value-chain manufacturing, world module cargo profile, capex, R&D spending and so forth.) and monetary (cash-flow, debt, valuation, profitability, turnover) perspective.
Nonetheless, probably the most attention-grabbing benchmarking is when the highest A-Group-rated suppliers are in contrast. For 2022, we set the benchmarking based mostly on suppliers that had maintained A-Group standing (AAA, AA or A-Rated) for a trailing three-quarter interval. For 2022, this confined this ‘premium’ benchmarking train to LONGi Photo voltaic, Trina Photo voltaic, JA Photo voltaic, JinkoSolar, First Photo voltaic and Canadian Photo voltaic.
How these six module suppliers rank throughout the handfuls of metrics used to create the ultimate rankings hierarchy is probably probably the most worthwhile benchmarking throughout the total PV {industry} in the present day.
Let’s look now at JA Photo voltaic’s ‘scorecard’ on this regard.
The next determine is priceless. Every quarter, we present a lot of these scorecards for every of the highest six A-Grouping in our Bankability Pyramid. The graphs throughout the determine present how an organization is performing throughout a variety of producing and monetary metrics, relative to the opposite 5 corporations on this elite peer group class. As a snapshot in time (every quarter) it’s unbelievably helpful because it reveals the areas that every firm is robust and weak throughout the {industry}, relative to the precise corporations that compete throughout the sector. Bars to the correct of the y-axis (in blue) present efficiency above the weighted common from the top-six corporations collectively: bars to the left (in purple) present underperformance. In brief, it’s a strengths and weaknesses graphic.
Nonetheless, it’s much more worthwhile when taking a look at how these graphs have developed over time. Usually, enterprise choices (from an operational perspective, capex funding standpoint, know-how decision-making and world gross sales/advertising and marketing initiatives) take a couple of years to indicate outcomes. Subsequently, trying on the relative modifications over a three-to-five-year interval reveal how profitable an organization has been towards its principal competitors and actually sector particular.
That is a kind of instances when an image is value a thousand phrases. In essence, this can be a report card on how JA has carried out throughout the PV {industry} over the previous 4 years.
There are such a lot of features of the above determine that may very well be dissected, analysed and mentioned. Let me deal with a couple of which might be of particular discover.
The valuation metric is a direct affirmation of the dialogue earlier than on this article, and the way this has moved a lot because of the delisting/relisting course of.
Working effectivity (working margin based mostly) has additionally improved greater than the corporate’s opponents, partially from the deal with actual in-house element use for modules (own-made ingots, wafers, cells and modules for probably the most half).
Nonetheless, once we take a look at regional ‘presence’ (market-share relative to friends), we see an enormous uptick in European market share. That is vital. For years, module suppliers from China (and South Korea to a lesser extent) have gravitated to the US market as being the final word ‘badge of honour’ in having sturdy abroad cargo volumes. Nonetheless, fast-track to 2022, and the US is about 10% of worldwide module provide (and filled with administrative purple tape). So, we’ve got to place issues in perspective. Europe is by far a higher litmus take a look at of abroad power in the present day and module suppliers which have targeted on this market are undoubtedly those to concentrate to proper now.
The converse to that is India and right here JA Photo voltaic is net-negative over the previous 4 years relative to its friends. Nonetheless, market share in India is a double-edged sword: good for offloading product; much less good for making income. So ideally, minimising shipments to India is definitely an excellent factor if you’re a worldwide participant as of late and may decide and select end-markets as you see match.
On the backside of the determine above are the general manufacturing and monetary rating comparisons, with these being the elements that feed into the ultimate bankability rating within the pyramid. This exhibits a slight uptick in manufacturing and total bankability comparisons, and (mixed with the monetary place in the present day) that is finally behind JA Photo voltaic’s last nudge from AA-Rated up to now to AAA-Rated in the present day.
However what about traceability and ESG within the local weather of module provider RFQs?
All the pieces above is essential to rating PV module suppliers, however presently there may be one other problem taking form globally: module provider traceability and ESG/sustainability openness. I exploit the phrase openness as that is most likely the time period that sums up the biggest considerations from the module-buying sector proper now.
Visibility into present and future module BOM sourcing is very large, and this single matter most likely accounts for the overwhelming majority of discussions I’ve each week with module consumers globally: weighted closely within the final 18 months to US buyers/builders however now seeing the identical considerations being raised by European consumers and ‘accountable’ corporates that know their world deployment plans merely must be accountable to their firm homeowners and shareholders going ahead.
For years, the PV {industry} was completely happy to purchase product from wherever, together with China within the early days of the sector’s development and extra not too long ago out of Southeast Asia (specifically Malaysia, Vietnam and Thailand) into the US; and with none urgent want to trace again element sourcing and the way a lot of the module product (cells, wafer, ingots, polysilicon, and nearly again to sand) was being made by the module vendor or the place the truth is it got here from.
In 2022, the company world was compelled to get a conscience, and in the present day institutional funding is bankrolling the sector. Pushed by US/China import necessities – and now applied to an extent throughout EU nations – we’ve got a model new problem at play; this has totally modified the phrases underpinning module provider RFQs and due diligence processes by high-volume contract consumers of modules.
The {industry} is now in a state of confusion. Each week, I’ve a few dozen chats with builders and buyers which might be desperately in search of a path ahead in resolving this downside.
Personally, I feel all of it comes again to who makes what and the place: not merely polysilicon (or additional again within the value-chain), however which module suppliers are in ‘management’ of polysilicon, ingot, wafer, cell and module manufacturing by advantage of getting in-house capability and the place on this planet that is positioned. For instance, if the corporate solely assembles third-party cells into modules, one has to get actual about whether or not this firm (and particularly in the event that they make only a few hundred megawatts a 12 months) has any management over the place the polysilicon is being made.
For years, I believed this mattered from a ‘high quality’ perspective. Now it’s being manifested by means of traceability. As such, there’s a gaping gap within the PV {industry} in the present day to know this.
Since this text is basically about JA Photo voltaic’s rise to AAA-Ranking standing, let’s use JA Photo voltaic for example. Actually, JA Photo voltaic is one among solely two-three main world module suppliers in the present day to have a producing technique that goes some method to reassuring module consumers.
The story right here is considerably complicated. Greater than a decade in the past, JA Photo voltaic was one among many corporations that dedicated to long-term polysilicon provide when there was a significant undersupply available in the market – at in regards to the time when PV overtook semi in needing poly. Two key polysilicon suppliers that had been calling the photographs then had been Wacker and Hemlock. Every of those uncooked materials suppliers locked in corporations to long-term contracts.
When the Chinese language sector (most notably then led by GCL-Poly) constructed up vital polysilicon capability in China, polysilicon pricing fell by about an order of magnitude to round US$30/kg. Firms that had been locked into legacy pricing contracts had been then in a determined scenario. Some went to the courts and cited drive majeure. Some settled by means of cancellation-based one-off funds. Others retained the unique order dedication volumes however below totally different pricing phrases.
JA Photo voltaic selected the considerably reconciliation method (with Hemlock) and this ‘compelled’ JA Photo voltaic to make the choice to find ingot/wafer capability in Vietnam with the intention to justify polysilicon to be equipped from Hemlock (i.e. avoiding China duties on US-made poly). Though not an element within the decision-making then, it now appears considerably filled with knowledge and forward-looking!
World module suppliers which have non-Chinese language ingot/wafer and cell/module in-house (and by default BOM authenticated) manufacturing – and the place the polysilicon comes from one among Wacker, Hemlock or OCI (Malaysia-based former Tokuyama crops) – are traceability/ESG pioneers to an extent.
Immediately, three main module suppliers are on this elite grouping: First Photo voltaic (by advantage of differentiated US initiated know-how selection), JA Photo voltaic (as reviewed above) and JinkoSolar. Within the coming days, we’ll talk about a brand new rating methodology for globally diversified module suppliers which might be finest positioned to deal with the brand new local weather of supply-chain scrutiny that’s on the coronary heart of provider due diligence throughout downstream segments of the PV {industry}.
At present, this problem is considerably regional. Beginning with the U.S., now impacting EU shopping for choices, and shortly to affect on world sectors the place module consumers are acutely aware of inside audits and senior administration scrutiny.
This now leads me into the ultimate a part of this text, and the position that the PV ModuleTech occasions are taking part in in bringing these points centre-stage.
PV ModuleTech strikes to Malaga, Spain to deal with EMEA module provide points
Earlier than the pandemic, the PV ModuleTech conferences had taken place yearly in Malaysia, as a impartial venue for the worldwide module-buying group. As soon as we returned to staging in-person occasions this 12 months, the PV {industry} regarded very totally different to 2019, each in scale and from a regional module choice due diligence perspective.
We determined that extra targeted regional occasions higher suited the PV ModuleTech conferences and we held a US-specific chapter of the occasion in June 2022 in Napa, California. This allowed the subjects to be aligned with the problems extra vital to US builders and buyers, specifically shopping for modules made exterior the US, throughout Southeast Asia and Europe.
Many of those US-specific module-buying themes at the moment are impacting on European-based module consumers, both for initiatives to be accomplished in Europe (and the Center East) or for modules purchased by European headquarters after which deployed in initiatives wherever globally.
That is on the coronary heart of the forthcoming PV ModuleTech EMEA occasion, going down in Malaga, Spain on 29-30 November 2022. The agenda, subjects, audio system and attendees will probably be addressing how European (and Center East) based mostly module consumers can acquire visibility on suppliers, their product availability over the following few years, the module efficiency and applied sciences on provide, and – most crucially – the right way to get visibility on module element manufacturing homeland and traceability.
To register curiosity in participating in PV ModuleTech EMEA in Malaga, please observe the hyperlinks on the occasion homepage here.
