PV Tech interview with Atsuhiko Hirano, Solar Frontier

This is our first Intersolar exhibition having a booth in this exhibition after three years. In the last three years we have been absent from Intersolar for a couple of years, but the reason we came back this year to Intersolar was that we are now introducing a new business model into the market. In the past, we were manufacturing our modules and selling our modules in the European market, but now we are moving more to the downstream part of the business and also trying to integrate our proposition in a sort of solution mode rather than a single component of the system. And as you can see here, our value proposition is everything bundled around power. We have power modules, we have a power kit to offer to the residential customers, we also have a power saver for the commercial rooftop owners. And we believe that with our modules we can provide the highest value proposition to the customers, be it in the residential area, commercial area, or the utility areas, with the high power output and i.e. the high economic return for the users.

I think we're still very much interested in how the German market will continue to develop in the future. Yeah, we do have our ground in the German market, and I think the German market has remained to be one of the most environmentally conscious markets, so I'm sure the German market will continue to come back again. But other than the German market, we are interested in the UK market as the market is moving. And we are working with our business partners to enter into the UK market in the commercial rooftop sector and also in the utility sector. And it's a bit premature to make an official announcement, but I hope in the very short future I will be able to make some announcements in making our breakthrough into the UK market.

I must say we are busy in Japan. Yeah, we continue to have a lot of focus outside of Japan as well, but because of the very strong demand in Japan, we are having difficulty in allocating our product to the non-Japanese market. Right, and in the past we were selling the majority of our modules in non-Japanese markets, but last year I must confess that probably over 90% of our modules were sold in Japan, and there is still a big backlog in Japan. But thinking about the future, we definitely will be a global player, and that is our very strong ambition. Therefore, we will be putting in our efforts strategically to the market where we see future growth and sustainable business, and the EU market is one of those markets, and we believe that there will be a future growth and sustainability.

This is our fourth fab plant, yes. And it's now being constructed in the prefecture called Miyagi Prefecture, about 20 kilometers north of Sendai city. And we are now under construction of this new facility, and the new facility is planned to start its production at the end of first quarter 2015. The importance of this plant: the plant itself is not a large plant, right? The capacity is only 150 megawatts, but it has its strategic importance that we are testing the new production technology. And this production technology will reduce the capital expenditure of the plant and also the production cost. And we believe that with this new production technology, that should give us a very competitive production cost not only today but also for the coming years. And once this new production technology is tested and verified, that will be the blueprint technology that we can transplant to the other areas outside of Japan. And we do have a number of candidate locations that we are contemplating putting that new production technology once it's tested.

Yes. I've been talking about like in North Africa and all that kind of stuff. We are already quite active in making transactions in South Africa. Also we have done business in India, Southeast Asia, we have done business in Brazil. So we continue to keep our eyes open and we'll be trying to enter into those new emerging markets. But at the end, I think what we'll be looking at is really the balance between growth and also the sustainability. So to understand the market, we will need to firstly enter, but then once we have entered, we will need to assess how sustainable the market could be, and then depending on the sustainability, we may put out more resources to capture more of the marketplace.

I think the things that we have been proving to the world is that thin film continues to have a very strong potential in improving the efficiency and also the production cost. And with these two, I think it will be the market to decide to what extent they want to use thin film, but we are still having a very strong confidence that with this sufficient or large potential in both the efficiency improvement and cost reduction, that the thin film, especially our CIS, will be gaining more and more share in the marketplace. But in order to cope with that, we will need to add capacity, and therefore, coming back to the point, we will be testing this new production technology which will put us at the head of the competition in the production cost, and with that we will be adding capacity in the marketplaces where we see sustainable and good growth potential.