Charles Pimentel
Chief Operating Officer and Senior Vice President
Solar Frontier Americas
View from the Top

Japanese Module Performance to Tackle Mexican Market

Wed, 02/24/2016 - 13:14

Q: How do you see Solar Frontier contributing to the development of the solar industry in Mexico?

A: Solar Frontier is a Japanese solar energy solution provider that manufactures state-of-the-art CIS solar modules. We differ from most of our competitors, as our modules offer a higher performance, specifically in the kind of environmental conditions present in Mexico. We do not compete on price but on quality, marketability, and most fiercely, on performance, including durability and reliability. We bring the highest performing module to the market which will consistently generate 5-10% more energy per kilowatt peak installed, thereby increasing revenues by the same amount. A phenomenon in the solar market, known as Light Induced Degradation (LID), negatively affects crystalline photovoltaic modules. Our modules are not affected by Potential Inducer Degradation (PID) because of the way they are built and due to how the cells are laid on the glass. Our modules are also pretty flexible and work with a wider range of inverters than most modules, such as floating ground and bipolar inverters. Our largest project in the US (83MW) is with SMA, but nearly every Tier 1 inverter will be compatible with our technology.

At the moment we are trying to figure out what role we will play in the Mexican arena. We can bring some of the advantages we have in other markets into Mexico, such as the backing of Japanese quasi-governmental banking and agencies, which can minimize the risk for investors at large. The role played by the Japan Bank for International Cooperation (JBIC) is very similar to the Export-Import Bank of the United States (Ex-Im Bank). In fact, the two have a working arrangement where if Ex-Im is working on a project in Mexico, it may handle matters for JBIC as well. The end result for our customers is less financing risk and the potential for a lower cost of capital.

Q: What is Solar Frontier’s opinion of the Mexican market, where most players compete on cost?

A: We do not try to be everything at the same time. We will not be able to compete on price. Our modules provide an added value of 5-10% more production over 20 years. When we are approached by developers, we ask them what 10% more energy production means to their project. In short, we can compete directly with crystalline anywhere in the world.

Our modules are smaller and the voltage involved is higher, which has an appreciable impact on the balance of system. However, that impact still fits well within the added headroom that our extra production can provide for investors.

Q: Could you tell us about Solar Frontier’s current position within the solar market, and what are your main concerns when coming to Mexico?

A: In late 2012, we finally reached profitability on a Probable Maximum Loss (PML) basis, not simply on a cash basis. That is all done within the context of having over 1GW installed. We will surpass 3GW installed this year, so we are a relative anomaly within the CIS manufacturer space. For the last two years, we have concentrated almost exclusively on Japanese domestic projects. Because of a very aggressive feed-in tariff from the Japanese government, our company made the conscious choice to focus the majority of our resources in Japan. We actually entered the US market in 2010, where we found ourselves competing with all our rivals, and we successfully contracted and shipped around 150MW within the first two years.

As for Mexico, our biggest concern in coming here is whether it will prove to be a sustainable enough market for us to invest in the long term. We like the way Mexico is trying to bring in solar energy through a very controlled, logical process. Mexico is trying to learn from the rest of the world’s mistakes. The government really does not want the country to be another market on the list of markets that skyrocketed only to fall shortly after implementation.

Q: What would be the perfect project for you in Mexico?

A: Solar Frontier’s ideal project in Mexico would be a utility-scale or large, ground-mount commercial project with a developer that is a long-term owner, as opposed to one that would flip the entire project to unknown investors and back away from it. It is well-known that commercial markets rise to the top before the large mega-projects do, so we expect to work on both rooftop projects and larger ones. If we can find a developer that is looking to carry out large rooftop projects in Mexico, we stand ready to support them from the design perspective with our technical expertise.