pv magazine: What are your thoughts on the 2021 solar market?
Jack Gu, Senior Vice President of Sungrow: The 2021 solar market did not meet our expectations, with anticipated total annual installations of around 150 GW. I think the main causes were the coronavirus pandemic and supply chain issues, particularly the rise in polysilicon costs and integrated circuit chip shortages. The fast-growing electric vehicle (EV) market affected chip supply in many fields, including inverters. Overall, 2021 saw average growth with supply issues affecting installation numbers.
How did the supply chain challenges specifically affect Sungrow?
The supply chain challenges had two major negative effects on PV inverter manufacturing. One was the cost rise which was a big challenge for the industry. Luckily, Sungrow is a market leader for inverters, and we lead in technical innovations, which made our products competitive in the market. The other one is equipment shortages, especially for integrated circuit chips and IGBT modules, which directly impacted production. Again, Sungrow had the advantage of being well supplied by our vendors due to our order sizes and long-term partnerships. The company achieved significant growth in the 2021 inverter market.
When do you anticipate improvements in the chip supply situation?
I think the supply shortage will continue, very probably for the whole of 2022 and even in the year after. Considering that demand in the EV industry grew so fast and the capacity expansion of integrated circuit companies is much slower, we should not be optimistic about the situation.
How do you view the energy storage market? What strategy has Sungrow adopted here?
I think there is a misunderstanding that the storage inverter market is the only business of Sungrow. It is not; however, storage systems are big business for us. Our storage inverter, the PCS (Power Conversion System), is merely one component of a bigger system. Different from solar PV systems, where the inverter is decoupled from PV panels, the PCS component in our storage systems is coupled with other components like a Battery Management System (BMS) and an Energy Management System (EMS). Including the control center of the PCS, there are three brains in the storage system which must be well coordinated to maximize its total efficiency and protect its safety.
Thus, Sungrow provides the entire storage system for its customers rather than just the PCS inverter. We are very cautious in providing our PCS products alone unless we clearly understand the specifications of the battery to be matched. Overall, we have experienced high growth in sales of our storage systems since 2020 and have become the market leader globally, especially in the North America, EU, Middle East, and China markets.
What solar markets are key for Sungrow?
Sungrow occupies around 30% of every major overseas PV inverter market. Overall, around 70% of our sales revenue for PV inverters and storage systems comes from overseas markets while China comprises the remaining 30%. In terms of our businesses like wind power, EV, and hydrogen, China is the only market focus.
Which overseas markets will be key for you in 2022?
China will be one of the most important markets for us. Overseas, Europe, the Americas, and Australia will be key markets, although India and the Middle East, are also important.
What is Sungrow’s current production capacity?
By the end of 2021, Sungrow will have over 90GW of production capacity, and we have new capacities under construction.
What is the focus of Sungrow’s R&D?
Sungrow now has five business areas: wind power, solar PV, storage systems, EVs, and hydrogen. We have products and solutions, and of course R&D investment, in all these areas. In general, our inverter products are one of our fundamental focuses and we have invested a lot to increase not only their efficiency but also the efficiency of the system they work for. Furthermore, we have tried to improve the efficiency of the future operation and maintenance (O&M) of the systems. Meanwhile, with help of new technologies like AI and big data, our R&D team is working on better collaboration between inverters and storage systems.
How has Sungrow dealt with the company’s internationalization? Did you have any trouble establishing a global team?
Our primary goal is to satisfy our customers with the best quality products, and fast and good service. To achieve these goals, we have set up a qualified international team with local offices across the world. Communication with overseas colleagues in different backgrounds and different cultures is often different from that between our Chinese colleagues. We have adopted processes to improve the internal communication and coordination mechanism provided by world-class consulting firms, which has greatly improved our internal communication process and efficiency.
How do you see the solar PV market developing in 2022?
Like many people, I think 2022 will be a good year for solar PV. We expect that cumulative installations will be around 200GW globally. There is still uncertainty surrounding the supply of chips and IGBT modules which might be negative for installations. Especially in Q1 2022, the supply situation will remain tense. However, opportunities also lie ahead. For example, the electric power price in China might be adjusted to be more commercial and better reflect cost rises, in addition to encouraging energy conservation and emission reductions. If residential electricity prices, which have been lower than China’s average electricity price for a long time, are raised, the residential solar PV market will flourish.
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