Trina Solar shines as demand shifts to the East
The Chinese company's cost competitiveness and location give it a significant advantage in the solar panel market.
The Chinese solar market is dominated by local players and many industry executives are confident that they will be able to increase shipments by 27% to 37% over last year. In addition to this, other emerging markets such as Saudi Arabia have also announced plans to draw investments into solar power.
The company's cost competitiveness and its location -- it's based in China -- give it a significant advantage in these markets. We have an $8 price estimate for Trina Solar, which is at a 25% premium to its current market price.
According to Bloomberg estimates, China will be the third-largest market for solar panels in 2012, behind Germany and Italy in capacity additions. However, with demand from Europe set to decline, China will emerge as the major destination for solar panels by 2013. Trina Solar's executives have said that they expect China to add as much as 5 GW of solar capacity in 2012, with sales being driven by falling costs and strong government support. Trina's advantage of selling panels in its home country should help it deliver growth in shipments in 2012, despite an expected decline in global panel demand. Over the past year, panel manufacturers have been hit by falling support for solar energy in European markets and tariffs of up to 250% on Chinese solar equipment in the U.S. market.
Experts also predict another significant opportunity for solar panel manufacturers in Japan. The country is set to initiate a new incentive program for solar energy in July and could install around 4.6 GW of capacity next year. Saudi Arabia recently announced a plan to seek investors for a $109 billion plan to develop clean energy. India is also another significant market for solar energy. Capturing sales from these emerging markets will be crucial for solar players to survive the industry shakeout.
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John Stumpf acknowledges that growth has been slow, but he says he's still optimistic.
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