Increase Portfolio, Growth in Distributed GenerationBy Cas Biekmann | Mon, 02/08/2021 - 10:15
Q: What are the main factors that have allowed Huawei to increase its sales over the last five years?
A: Huawei has followed the same strategy almost from the very beginning, focusing on string inverter technology. This has allowed us to position ourselves well within this technological framework. Over time, our strategy has proven to be the right one: string inverters have demonstrated to have more advantages than central inverters for large projects. Economies of scale have made our product even more competitive regarding price, which eroded the one advantage central inverters still had. Now, there are many more users who can attest to our technology’s value. As a result, our market share has grown where we have already supplied over 1.5 GW. As a manufacturer, shifting your business is not easy. We have 10 GW production capacity every month. To achieve this, the production process had to be fine-tuned down to the details. A competitor could have an equally great design like us but would find it close to impossible to implement that in a product line from scratch because you need to already operate in high volumes to fine-tune it. A strict focus has worked well for Huawei. This mindset has led us to become leaders in string inverter technology globally.
Another factor that has contributed to our success is that we keep our promises. This is how you keep your customers happy, by delivering the benefits you promised them. Once customers use our technology and see that it works, they will continue to do business with us. We also have a strong after-sales team in Mexico, as well as in other regions, which helps clients make use of their warranty and ensures a satisfying experience.
Q: What were the main challenges Huawei had to overcome last year?
A: The main challenge has been that the market available in Mexico decreased. There are two main markets: the distributed generation (DG) market, which has largely stayed the same, and the utility-scale market, where we have a good position. However, because of speculation of regulatory changes and legal disputes in the sector, this market hasn’t been performing well because investors do not have the confidence to invest in 20-plus-year projects for the moment. Although we connected around 700MW in Mexico last year, these connections came from projects contracted before March 2020. It has been a stand-still year for utility scale, with companies looking to invest elsewhere. Unfortunately, the lack of private investment has not been replaced by government investment. We hope to see this could be improved in 2021 and the near future.
Q: How is Huawei looking to expand in the area of DG and what are the opportunities for growth?
A: We have been increasing our portfolio for this market. Originally, we only had 480v AC solutions for utility-scale projects but we are expanding with new products, such as residential inverters, which we started delivering in 4Q20. We will also introduce a 220v inverter for small, commercial installations in 1Q21. In 2Q21, we will offer products for storage aimed at the C&I segment, as we already offer these in the residential sector. In the second half of the year, we will begin to offer utility-scale storage. So, we are increasing our portfolio, as well as the scope of projects in which Huawei can be used. This follows the same philosophy of quality, technology, AI and value that the company stands for.
Our residential-focused lithium energy storage system is targeting premium market. It will provide much more security, reliability and savings. In general, this type of solution is considered a new market. In Baja California Sur, for example, interconnection permits have been halted because its isolated system cannot support so many users. Solar is, therefore, interesting because people can interconnect but also manage their own energy supply. For C&I scenario, solar solutions offer great potential though we hope to see the market being regulated better. There is a lack of energy available and solar is a cost-effective and reliable option.
Q: How does Huawei invest in its R&D and what are some solutions it provides?
A: We invest more than 10% of our annual sales back to R&D, $19.3 billion in 2019. Some of the main innovations we have been working on include AI. AI provides protection for small users and facilitates O&M by enabling preventative maintenance, as well as finding problems in current and voltage. We are also working to enhance the power electronics factor inside our equipment, aiming to achieve the ideal, lower short circuit ratio. Some competitors do not specify their characteristics in this regard, even though these are important factors toward quality of energy and eventually grid stability. Power plants even get disconnected if they are not stable enough, so developing this area has been important for Huawei.
Q: What will define the company’s strategy in 2021?
A: We need to grow further in the DG market as well as maintain our leading position regarding utility-scale projects, which means we need to participate in the few projects that are planned to take place. For the DG market, we need to successfully introduce our new products and maintain our standing to position ourselves for 2022.
Huawei is a leading global provider of information and communications technology (ICT) infrastructure and smart devices. Founded in 1987, it has more than 194,000 employees, and operates in more than 170 countries and regions, serving more than three billion people around the world.