Can Latin America achieve new growth in China's PV companies?

Abstract Core reading sales account for 60% of the global market, and China is undoubtedly a big country in photovoltaic manufacturing. However, while domestic production capacity continues to increase, containment and crowding from the EU and the US are also heating up. In the face of competitive pressure, how can Chinese PV companies avoid &ldq...
Core reading

Sales account for 60% of the global share, and China is undoubtedly a big country in photovoltaic manufacturing. However, while domestic production capacity continues to increase, containment and crowding from the EU and the US are also heating up. In the face of competitive pressures, how can Chinese PV companies avoid “incremental gains”?

While focusing on developing the domestic market, the Latin American market has entered the sight of Chinese PV companies. According to a report by the US market research institute, the installed capacity of the Latin American PV market reached 625 MW in 2014, up 370% from 2013, and has become the fastest growing region in the world. For Chinese PV companies, Latin American market opportunities and challenges coexist.

Relying on good quality, Chinese enterprises win popularity and competitiveness

Due to the long sunshine hours, Latin America is known as one of the most suitable regions for photovoltaic development in the world. In Brazil, for example, the sunny days are more than 280 days a year. Despite this, due to the richness of traditional energy sources, “the emperor’s daughter did not marry”, the development of photovoltaics in Latin America was quite slow. However, the situation has changed in recent years.

In Chile, the price of electricity has doubled in the past seven years, and it is estimated that it will rise by 30% in the next seven years. In Brazil, due to the drought that has not been seen for more than 80 years, the reservoir is dry and it is difficult to supply 70% of the electricity and electricity. Large cities have stopped water and power cuts, and even have to go to neighboring Argentina to buy electricity to save.

“Because of rapid economic growth and continued growth in demand for electricity, many countries in Latin America have different levels of power shortages. The cost of solar photovoltaic power generation is very competitive with traditional energy sources, so many countries have begun to strongly support solar energy. Development.” Ying Li (2.03, -0.07, -3.33%) General Manager of Photovoltaic Power Investment Group said Hao Hao.

Photovoltaic power generation in Latin America has thus entered an accelerated period. According to a report by the US market research institute called "The Fourth Quarter of Latin America Photovoltaic Strategy 2014", the three countries with the fastest growth in photovoltaic installed capacity in Latin America in 2014 were Chile, Mexico and Brazil. Among them, Chile has more than three-quarters of the Latin American market, and the installed capacity in the fourth quarter alone has doubled the total installed capacity in Latin America in 2013. New installed capacity in Mexico and Brazil was 67 MW and 21 MW, respectively.

In the accelerated development of the photovoltaic market, it is not difficult to see the figure of Chinese companies:

In 2012, China's private PV company Tianhua Sunshine (11.4, -0.60, -5.00%) signed an agreement with Chilean companies to invest in a 300 MW solar photovoltaic power plant project, which is the first investment in new energy in China and Chile. In 2012, Yingli Photovoltaic Co., Ltd. harvested orders from Peru with a component supply of 40 MW; in 2014, Yingli sponsored the World Cup in Brazil, and the advertisement of “China Yingli·Photovoltaic Household” appeared at the World Cup Stadium, they also played for the World Cup. One of the stadiums, the Pernambuco Arena, provides solar-powered support to meet 30% of the electricity needs of the Pernambuco Arena, with an annual generating capacity of 1.5 million kWh, equivalent to 66,000 Brazilians' annual electricity consumption. ......

Under the influence of good quality and successful marketing, the visibility and competitiveness of Chinese enterprises in the photovoltaic market in Latin America have gradually increased. “Many companies have come to consult and we have successfully won large projects in North Africa.” Hao Hao said.

Sergio is the president of a solar energy project development company in Brazil. He participated in the bidding of the Brazilian government's photovoltaic project last year and won the bid for a 30 MW project. Next, he hopes to choose a Chinese company to cooperate, "Chinese companies are producing solar panels. The aspect is very competitive."

Competing with foreign companies on the same stage, it is necessary to fight hard on the iron.

Despite this, with some well-known photovoltaic companies in Europe and America, the presence of Chinese companies in the Latin American PV market needs to be strengthened. Statistics show that among the top ten solar developers in Latin America, the top one is an Italian company, and the second and third are from Italy and the United States. The top three companies have almost covered most of Chile's solar projects.

On October 31 last year, the Brazilian federal government held the first tender for a large-scale ground photovoltaic power station project, which is considered to be a milestone in the history of Brazilian PV development. On this day, the Brazilian National Electric Energy Agency (ANEEL) signed 31 photovoltaic projects totaling about 1 GW. The Brazilian government said that it will maintain the normalization of bidding for solar power projects in the future, and the total amount will reach 5-8 GW in the next five years. . However, among the 31 projects, 14 were taken by Spanish companies, 7 by Italian companies, and Chinese companies did not participate in bidding.

Why not participate in the bidding? One of the reasons for Chinese companies to be cautious about the Latin American PV market is PV prices. For example, the last Brazilian government auction winning bid price mentioned above, the final price is only 220 reais per MWh (1 US dollar is about 2.6 reais), plus the recent sharp depreciation of Brazilian currency, its price Even below the international average.

"Some Chinese companies have found that according to the current exchange rate, the electricity price per megawatt hour is less than 600 yuan, and the total electricity consumption is only 5 yuan per kWh, which is lower than the domestic electricity price level. The relevant photovoltaic equipment in Brazil depends on imports and construction. The cost will be much higher than that of China. In China and abroad, the return on investment of PV companies in Brazil is not high.” Cai Zong, general manager of Brazil’s Iridium Energy, said that considering that the Brazilian government has gradually liberalized the electricity price control mechanism, the future The electricity price of the auction will gradually increase, and the return on investment of photovoltaic power generation will continue to increase in the long run.

Financing is also a problem. For enterprises, the 6% low-interest loan provided by the Brazilian National Development Strategy Bank is very attractive. “But the premise of low-interest loans is that the components used in the project have reached a certain localization rate. The Brazilian National Development Strategy Bank has a very Detailed planning requires companies to promote localization year after year. For Chinese companies, it is not long-term to sell components, and they must be gradually localized." Li Tie, head of BYD Brazil, said.

In Li Tie's view, localized enterprises will more influence Chinese companies. “European and American companies are mostly focusing on the development and operation of photovoltaic projects. Banks require them to buy localized components, and they will ask their partners, that is, Equipment suppliers located downstream of the industrial chain set up factories in Brazil. Chinese companies mainly supply all kinds of equipment and solar panels required for solar cells, which are located in the downstream of the industrial chain. If they stay only here for a long time, they are not only expensive but also risky. There is no right to speak, so you should gradually enter the upstream of the industrial chain and participate in the operation of the project."

Aware of this, BYD and Yingli are considering transformation or local production. "We hope to change from a pure equipment supply to an overall solution provider, and the cooperation with European and American companies will become more and more close and more diversified." The current top four national grid [microblogging] Brazilian company in Brazil is also interested in entering the solar power market. Due to its successful experience in operating the grid, the company will become a strong competitor in the future.

According to a report by the US market research institute, the installed capacity of photovoltaics in Latin America will reach 2.1 GW in 2015. For Chinese companies, with the introduction of relevant preferential policies in Latin America and the gradual reduction of the cost of PV project construction, the challenging Latin American PV market will also have unlimited opportunities.

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