The Manufacturing Capacity Of Solar Modules Matters In 2014

by: Joseph Zhu


The PV market will grow higher than 30% in 2014.

The leading PV manufacturers' capacities are somewhat short of the demand.

Most of leading Chinese PV manufacturers are expanding capacities in cost effective ways.

The capacity expansion will be the key success factor for top tier PV makers to gain market share in 2014.

The solar photovoltaic (PV) manufacturing capacity was once a burden that brought about the supply glut of the whole PV industry and bankruptcy of many PV makers, which resulted from the first surge of PV equipment capital expenditure during 2008 to 2011. Under the circumstance that the distorted supply capacity was twice more than that of market needs in 2012, most of the second or third tier PV module manufacturing facilities were idle and leading PV makers put capital expenditure budgets on hold. It was not until the second half of 2013 when the PV market saw recovery due to the PV industry consolidation undergone and market growth backed by China, Japan, U.S and other emerging markets. Top tier PV manufacturers felt the tight of supply and module backlogs were piling up. Thus, capacity expansion plans come into sight from some leading PV manufacturers and the second wave of PV capacity expansion is approaching. Though the capacity expansion is interconnected within the whole PV value chain, this article will mainly review some top tier manufacturers' existing module capacity by the end of 2013 and their expansion plans, which may imply the possible market share gains of these PV makers in 2014.

Ways of expansion

After the PV market turbulence years ago, manufacturers have several ways to expand their capacities by:

  1. OEM (Original Equipment Manufacturer)/outsourcing, like Yingli Green Energy (NYSE:YGE), ReneSola (NYSE:SOL);
  2. Acquisition/joint venture, like Trina Solar (NYSE:TSL), Jinko Solar (NASDAQ:JASO);
  3. Setting up new in-house facilities, like SunPower (NASDAQ:SPWR).

Of course, any combinations of above are possible options for the manufacturers. Metrics such as timing, investment cost, volume scalability, product quality control, etc., should be taken into consideration while choosing expansion strategies as compared in the following table.


Investment cost




Acquisition/Joint venture



New in-house



Click to enlarge

It is complicated to uniformly appraise volume scalability and product quality control, which need investigating into specific cases.

Top Chinese manufacturers are expanding capacities by taking the advantages of the PV industrial consolidation as a lot of inactive quality assets from the second or third tier ones are awaiting for being turned into effective capacity. The cost to acquire the zombie module manufacturing assets in China is usually as low as 10 - 30% of new equipments, depending on the automation level of string soldering, lamination and framing.

The capacities of some leading PV manufacturers

The following table gathers some leading PV manufacturers' capacity data and the expected expansion this year.

Module Makers

Capacity at the end of 2013 (GW)

Capacity estimated at the end of 2014 (GW)***

% Change

Yingli Green Energy*




Trina Solar




Canadian Solar (NASDAQ:CSIQ)




Jinko Solar


3 - 3.5


ReneSola *




Hanwha SolarOne (HSOL)




JA Solar




SunPower **




Click to enlarge

* Including outsourcing

**SunPower's module capacity is constrained by its cell (NASDAQ:FAB) capacity in Philippines (Fab 2) and a joint venture with AUO (Fab 3) in Malaysia.

***Estimation based latest earnings call and my best guess.


Yingli has an official name-plate module production capacity of 2.45 GW at its four production facilities located in Baoding, Hengshui, Haikou and Tianjin in China, which could ship around 3GW per year with 130% utilization rate. Yingli has got another 1 GW toll manufacturing facility. Therefore, Yingli has a total 4 GW of PV module production capacity. As of Q3 2013, Yingli has no plan to expand lines for 2014 and will keep increasing the utilization rate for upside of demand. It is no doubt that Yingli will be able to find OEM partners in China for extra capacity if the market demand surpasses Yingli's supply capability.


Trina possesses 2.4 GW module manufacturing capacity at the end of 2012 in Changzhou, China, and has marginal expansion during 2013 to 2.8GW through increased efficiency. On November 29 of 2013, Trina announced to acquire PV module manufacturing assets by establishing a joint venture with a local Chinese tier 2 module maker, aiming to increase an extra capacity of 500 MW within the next 12 months. Trina Solar will hold a 51 percent stake in the joint venture and manage the daily operation of the facility. The existing equipment will be upgraded by the combined US$45 million investment from both parties of the joint venture, which is really cost effective to Trina. Just as Mr. Jifan Gao, chairman and CEO of Trina Solar, said,

"The Joint Venture will enable us to quickly and efficiently increase production capacity in a cost-effective manner. This move demonstrates Trina Solar's strategic approach to expanding capacity through acquisitions as opposed to organic growth, which we believe will help ensure the industry's existing capacity is being used productively…"

Trina would likely review the continuous expansion opportunities to cope with the changes in overall market demand.

Canadian Solar

Canadian Solar has 2.4 GW of total annual solar module manufacturing capacity, of which 330 MW is located in Ontario, Canada with the balance located in China as of the end of 2012. By adding extra 200MW at its facility in Canada, Canadian Solar module capacity reaches to 2.6GW at the end of 2013. The capacity expansion plan is to have a total module production of 3GW in 2014. As Canadian Solar adopted joint venture or outsourcing strategy for its wafer and cell capacity expansion before, it would likely not build new in-house module facilities. This could be also verified by its capital expenditure budget of USD12 to 15 million for module capacity expansion for 2014 in its latest earnings call.

Jinko Solar

To address growing demand, Jinko announced to take over distressed assets of Zhejiang Topoint, a second tier Chinese PV manufacturer in January 2014, which include 500 MW of production capacity for silicon wafers, 500 MW for PV cells, and 100 MW for PV modules. Thus, Jinko has enhanced its module capacity from 2GW at the end of 2013 to 2.1GW in Q1 2014. Given Jinko's shipment forecast of 2.3 -2.5GW module plus 0.4GW projects in 2014, Jinko will continue to look for the zombie assets in China for capacity expansion by cost as low as 10 - 30% of new equipments. Jinko targets module capacity at the range of 3.0 - 3.5 GW to meet the market demand.


ReneSola has an in-house module manufacturing capacity of 1.2GW as of the end of 2013. ReneSola takes OEM strategy for module business expansion to serve its target market while minimizing capital expenditures. In addition, the OEM strategy enables ReneSola to avoid the constraints of solar trade troubles like volume limits and anti-dumping tariffs in European market. By the end of 2013, the total OEM capacity of ReneSola reaches 950MW worldwide such as in Poland, Turkey, South Africa, India, Malaysia and Korea. Recently, ReneSola announced "Made in Japan" OEM module production plan, of which the capacity is about 80MW. It is obvious that ReneSola will continue to expand OEM capacity wherever the market demand shows up.

Hanwha SolarOne

Hanwha SolarOne has 1.5 GW of annual PV module production capacity at the end of 2013 in China. Years ago, Hanwha SolarOne entered into an investment letter of intent with local government that it would build cell and module production facilities of an annual production capacity of 2 GW. So far, no expansion plan has been updated. By taking consideration of the synergies with Hanwha Q CELLS which owns 1GW of module capacity under the same mother group, Hanwha SolarOne probably will not spend too much capital expenses for further expansion and small increment of module capacity by improving throughput is likely to occur.

JA Solar

JA Solar was a specialized cell manufacturer before 2010 and stretched to module business afterward. It has a total of 1.8GW module capacity in China, of which 1.3GW is located in Shanghai and 0.5GW in Anhui province. A joint venture of module manufacturing facility in South Africa has been established and production is scheduled to begin in Q2 of 2014 with an initial annualized 150MW capacity which could be scaled up to 600 MW. JA Solar is cautious of capacity expansion and its plan has been disclosed yet. It is reasonable for JA Solar to increase its capacity of module in line with that of cell, i.e., 2.5GW.


Using its own solar cells, SunPower manufactures modules at the assembly facilities located in the Philippines, Mexico and France and also uses third-party contract manufacturers in California and China. SunPower decided to increase cell capacity in Q4 last year, which seems a little bit late but better than never. An additional 350MW cell facility (Fab4) will be set up in Philippines with close proximity to its Fab2. The first silicon will be available in early 2015 and the full ramp-up by the end of 2015. Therefore it is tough for SunPower to handle the fast-growing demand as only less than 10% capacity increase to around 1.3GW is possible by throughput improvement in 2014.


With the PV market growth rate higher than 30% in 2014, the effective module production capacities of leading PV manufacturers are somewhat short of the demand. Instead of spending capital expenditures for new equipments, most of leading Chinese PV manufacturers are taking advantages of the PV industry consolidation undergone to acquire quality zombie assets for capacity expansion. Though I do not completely agree to Solarbuzz's recent report that the PV market is supply-driven in 2014, I believe that the leading PV manufacturers' capacities could be easily absorbed and the capacity will be the key success factor for top tier PV makers to gain market share in 2014 and keep further sustainable growth in the years ahead.

Disclosure: I am long TSL, SOL, HSOL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.