Trina Solar Expanding Into the US Market

Transcription

1 Trina Solar Expanding Into the US Market April 15, 2011

2 AGENDA The Context The Challenge Strategic Analysis Proposed SoluCon Expected outcome ImplementaCon plan Conclusion 2

3 THE CONTEXT: A DEVELOPING BUSINESS IN A SENSITIVE ENVIRONMENT Society Sustainability Impera>ve: Economic / Poli>cal: Early stage development of alterna>ve energy with state specific tax incen>ve systems Increasing awareness around sustainability SensiCve Social and PoliCcal Environment China / U.S. trade balance U.S. economy and job market Energy security increasing oil prices and uncertainty over nuclear power Industry Trina Industry Features: PV Modules: Future: Incuba>on stage government support necessary Overcapacity set for consolidacon Immense PotenCal + Overcapacity + Dependence on Government Support CommodiCzed components of PV systems Quick and substan>al price decreases in C Si Narrowing margins in the en>re value chain Grid parity has the potencal to change the game Chinese manufacturer with internaconal presence Bankability strong financial standing and track record VerCcally integrated Bankable, value Strong chain PosiCon Efficient produccon capabili>es Increasing market share in the U.S. 3

4 THE CHALLENGE: INCREASE SHARE OF U.S. REVENUES AND MAINTAIN GROWTH Move towards customer and create U.S. presence Leverage bankability in development projects Reinforce U.S. government relacons, brand and sales network 30% of Trina s revenues from the U.S. by end of year 2014 while maintaining an aggressive 20% CAGR at the group level 4

5 THE CHALLENGE: INCREASE SHARE OF U.S. REVENUES AND MAINTAIN GROWTH 5 30% of Trina s revenues from the U.S. by end of year 2014 while maintaining an aggressive 20% CAGR at the group level

6 STRATEGIC ANALYSIS Main Strategic Decisions QuanCtaCve Revenue, profit margin, investment QualitaCve Feasibility, OpportuniCes, US Gov t uptake, Risk 1 The strategic posiconing in the U.S. value chain? Engage in development? How? Assessment 2 Locate manufacturing in the US? What part of the manufacturing? Should Trina manufacture thin film instead of C Si? 6

7 STRATEGIC ANALYSIS: ACQUIRE US DEVELOPER WITH EXTENSIVE CONTACTS Decision DECISION #1 Decision DECISION #2 SoluCon SOLUTION Business As Usual Integrate Forward Into Development Build Up Own Development Business Acquire An Established Developer Pay million USD using combina>on of cash reserves and debt Secure developer with pipeline of target customers in the u>lity and non residen>al sectors Direct access to high quality, low cost Trina US manufactured modules Early mover compe>>ve advantage Capture more profit Larger revenue base Greater local presence Greater control over value chain and pipeline Leverage bankability PROS Immediate penetra>on of new customer projects Access to expanded local customer network (u>li>es, government contacts, etc.) RESULT 1: Fast access to project pipeline RESULT 2: More value to be captured CONS Investment need High investment need 7

8 STRATEGIC ANALYSIS: LOCATE MODULE ASSEMBLY IN THE U.S. Decision DECISION #1 Decision DECISION #2 SoluCon SOLUTION Business as usual Engage in manufacturing in the U.S. Greater local presence Posi>ve gov t uptake Local presence enables tax incencves Buy American compliant Decreased policcal risk PROS Manufacture whole module in U.S. Locate only module assembly in the U.S. Enter into thin film manufacturing in the U.S. Achieves benefits through smaller cost effect Leverage access to low cost high quality Trina PV cells Lower thin film costs don t compensate for lowering C Si prices 1. Import Trina PV cells (less fragile, more items per volume) from China 2. Acquire U.S. assembly plant by inves>ng million USD 3. Assemble modules in US, with higher manufacturing costs mi>gated by lower transporta>on ones 4. Preferably in the southwest (see below) RESULT: Local module assembly provides a social license to operate in the U.S. 8 Increases manufacturing costs Requires investment in the U.S. plant CONS Some (but mi>gated) cost effect Thin film technology could lead to some potencal new markets

9 THE SOLUTION: TRANSITION REVENUES FROM MANUFACTURER TO DEVELOPER China United States Shipping of cells instead of modules Produc>on in China Module Assembly COGS Sales Developer (PV system construc>on) PPAs Energy Customer Progressive revenue shih as development business grows Module sales revenues become COGS of development Significant overall growth from capturing more value CompeCCve advantage from combining development and produc>on outweighs the loss of current developer clients 9

10 EXPECTED OUTCOME US PV market forecasted to grow from 4 to 22.4 billion USD U>lity segment grows upward by 40% as grid parity approaches 10

11 EXPECTED OUTCOME UClity ResidenCal Main Segment of Focus: U>lity (8.5% market share) Both Residen>al & U>lity start aber developer acquisi>on in

12 EXPECTED OUTCOME DIY Non residencal DIY through internet sales and Non Residen>al through installers, outsourced network starts to earn market share in

13 EXPECTED OUTCOME Module sales to external developers progressively transferred to Trina development business 13

14 EXPECTED OUTCOME Trina development revenues by segment based on target market share 14

15 EXPECTED OUTCOME Trina reaches 1.1 Billion USD by 2014, capturing an overall 4.9% of market share 15

16 MARKETING & BRANDING: UNIQUE APPROACH FOR EACH CUSTOMER SEGMENT Customer Target U>li>es Non Residen>al Residen>al ONE TRINA Marke>ng Approach Varies By Customer Need Development Development Outsourced Installers Revenue Drivers & MarkeCng Approach System Prod System Prod Module Prod Module Prod Cell Prod U>lize acquired developer s contacts to network across industry and drive expanded development contracts Enhance focus on government relaconships Cell Prod Leverage uclity segment contacts and brand image to launch a solid base of non residen>al customers Promote Trina via select sponsorships at high profile sports events System Prod Module Prod Cell Prod Apply targeted online marke>ng including rich and social media to promote Trina s brand of highly efficient, cost saving modules Partner with professional services stores to educate local contractors 16 Do It Yourself Internet Channel Sell modules direct to consumer via Trina Direct website, providing cost savings calculator, updates on government incen>ves and customized architectural friendly op>ons

17 CHALLENGES: TRINA S RESPONSE TO GOVERNMENT AND ENVIRONMENT HURDLES NavigaCng US State and Federal Government UncertainCes Leverage Trina s Commercial Success to Aid in Environmental Impact State to State Variability Lack of US DomesCc Energy Policy Refine and support State level Renewable Porlolio Standards (RPS) adop>on Champion current administra>on s clean energy policies; demand as plamorm for 2012 eleccons Trina 1.2GW worldwide manufacturing capacity represents an overall offset of 2,496,600 metric tons of CO 2 emissions 2010 module produc>on equates to offsekng the annual household CO 2 emissions of more than 95,000 US households With a 20% CAGR growth up to 2014 the accumulated offset would be equivalent to more than 13 million metric tons of CO 2 17 No InternaConal Consensus Based Policy Leverage Trina s US/ China mutually beneficial rela>onship to establish base for Durban 2011 Conference

18 IMPLEMENTATION PLAN: RECOMMENDED FOCUS THROUGH Acquisi>on of a development company Acquisi>on of a module manufacturer company Founda>ons for the installers outsourced network Launch of the DIY PV module through the internet channel 2012 Focus on the uclity development projects of the pipeline Leverage the uclity development image to launch the nonresiden>al business Expand the DIY business and the residen>al one 2013 Consolidate brand; development company fully merged into Trina s corporate structure 2014 Completely wrap up sales of solar modules to other developers Push on the u>lity segment to reach 8.5% market share 18

19 CONCLUSION: WITH CAREFULLY MANAGED GROWTH, TRINA SHOWS MASSIVE POTENTIAL CONTEXT Sensi>ve poli>cal environment Massive industry poten>al Trina in bankable posi>on SOLUTION Acquire developer Acquire module assembly plant Shib revenues MARKETING Strong One Trina brand Four unique segment approaches Trina direct website GOVERNMENT Enhance RPS s Influence domes>c & Interna>onal policy ENVIRONMENT 2010 Trina module produc>on offsets CO2 emissions of more than 95,000 US households OUTCOME 1.1 Billion USD In Revenues 4.9% US Market Share 19

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21 Appendix

22 RISKS: ISSUES, IMPLICATIONS & ACTIONS Global Recession ConservaCve US Government Oversupply Upstream Manufacturing Increased need for liquidity Poten>al for withdrawal of exis>ng policies Ar>ficial demand increase Decreased appe>te for renewable energy R&D Price vola>lity Introduces market vola>lity Interna>onal diversifica>on and long term contracts Adjust US short term expecta>ons; focus on R&D for grid parity Control of produc>on and focus on Development business Rivalry with Clean Energy and other Renewables Capital Intensive Developer AcquisiCon Risks Stakeholder confusion towards alterna>ve energy industry Contracts cancelled for lack of funding can result in overpayment for developer 1GW pipeline developer scarcity and compe>>on Diluted public and government uptake of energy emission reduc>ons Payback period perceived as too long M&A legal complica>ons 22 Marke>ng focus on educa>ng stakeholders on efficiency capacity in Solar Evaluate poten>al smaller developer acquisi>ons PBP reduc>on through innova>on Evaluate poten>al smaller developer acquisi>ons or JV