Solar Frontier has enjoyed considerable success in the booming Japanese market with the company booking healthy profits and manufacturing fabs running at close to full utilization. The next challenge for the company is to develop its international business, which has taken somewhat of a backseat as Japan boomed.
The acquisition of the Gestamp Solar U.S. pipeline appears to be recognition of this and is a major move for the firm. As a part of the pipeline acquisition deal, the Gestamp U.S. team will join Solar Frontiers U.S. subsidiary.
While Solar Frontier has shipped more than 1 GW of modules to international markets, since the Japanese market took off it has been overwhelmingly focused on its domestic market. IHS analysis concludes that in 2014 Solar Frontier shipped over 90% of its modules to the Japanese market. Todays news is a big step in the other direction.
The U.S. downstream expansion is part of Solar Frontiers growth strategy to accelerate our business in key global markets through 2015 and beyond, said CEO Atsuhiko Hirano, in a statement announcing the move. The company has achieved world-class production costs and delivered exceptional product performance in Japan, a country recognized globally for demanding the highest quality in solar.
Gestamp, which is a truly global PV project developer, indicated that Solar Frontiers financial strength and quality product portfolio factored into its decision to sell its pipeline.
We believe that vertical integration is a major advantage in future development in the U.S. market, said Gestamp Solar CEO Jorge Barredo Lopez. Gestamp has developed around 600 MW of PV projects globally.
Looking towards vertical integration within the U.S., Solar Frontier has carried out a feasibility study into manufacturing in the U.S. It has investigated New York state as a potential location. In January, Solar Frontier announced that it had shipped 2.4 MW of modules to the State University of New York.
While the Gestamp U.S. pipeline acquisition may strengthen the case for Solar Frontier to establish manufacturing in the U.S., the company will likely look to execute on its ambitious cost reduction goals at its latest 150 MW Tohoku fab before making such a decision. The facility is described by the company as somewhat of a pilot fab for manufacturing expansions overseas. Solar Frontier targets manufacturing cost reductions of around one-third at its new facility. pv magazine understands that the production tooling is in place at the Tohoku fab with the first modules to begin rolling off the lines within weeks.
Solar Frontier itself is not new to project development, having played a leading role in its domestic market often partnering with companies with little experience of PV. However, the addition of the Gestamp U.S. team will considerably strengthen its project development capability and presence in the U.S., central American and Latin American markets.
This enables our team to build a more sustainable presence for Solar Frontier in the Americas and will certainly galvanize our existing and future relationships with our partners, suppliers, and end customers, said Solar Frontier Americas Charles Pimentel.