The global vertical integration of the PV tracker industry is accelerating, as players seek to build organizations that can provide manufacturing and support in multiple markets simultaneously. These partnerships tend to connect intellectual property assets with global manufacturing capability and construction and engineering teams that have the financial wherewithal to pursue international markets. The trend also is driving product line expansion, as in the case of Nextracker’s offering of energy storage as an integrated part of its tracker design.
“The solar industry thrives on innovation, and tracker manufacturers are no exception. We’re increasingly seeing companies throughout the solar value chain sharpening their offerings to deploy more solar and investment,” comments Alex Hobson, Director of External Communications for the United States Solar Energy Industries Association (SEIA).
The most recent acquisition of a tracker company for geographic market expansion was the Valmont Industries acquisition of a majority share in Rome-based Convert Italia in August. The otherwise unspecified terms of the deal were secured through a cash infusion, according to Omaha, U.S. based Valmont.
Array Technologies, Nclave, Nextracker, Soltec, and Sun Action are among other examples of this trend, driven by reduced costs and the accelerated global adoption of tracker technology.
Nextracker sets the trend
Nextracker, in its 2015 merger with Flextronics, set the stage for several similar partnerships. Nextracker gained an infusion of $300 million, as well as manufacturing capabilities around the world.
“We attribute much of our success as the global market share leader in smart solar trackers to our global partnerships,” says Marco Garcia, Nextracker’s Chief Commercial Officer. In September, Flextronics announced plans to set up production in Mexico to produce Enphase microinverters, according a company announcemnt. Flex will begin to deliver Enphase devices produced in Mexico to the U.S. market starting in the second quarter of 2019.
At times, tracker companies are the driving partner in the integration process, and in other instances, they are the targets of larger companies. The strength of these unions will be key to which companies comprise the top five global players in a few years.
Valmont and Convert Italia
The partnership between Convert Italia and Valmont Industries was formed in large part to expand the footprint of the latter’s global business. “This partnership is an exciting advancement of our strategy to grow market adjacencies in our utility support structures business globally, including in North America, as the majority of Valmont’s existing utility customer base is here,” says Renee Campbell, Director of Investor Relations and Corporate Communications at Valmont.
“By combining Convert Italia’s patented tracker solution with our global manufacturing footprint to produce the structural components, and leveraging our supply-chain capabilities, we can now provide an integrated solar tracker solution to utility-scale customers around the world, not limited to any specific region,” Campbell says. “This partnership also positions us to uniquely supply every type of electric grid structure within the utility market. This is a rapidly-growing industry and we are excited to be partnering with the professional, knowledgeable team at Convert Italia,” she adds.
Convert, which identifies itself as the fourth-largest solar tracker company in the world, has production capacity close to 1.4 GW per year, including the newest single-axis design, the TRJ. Geographically, the company has a diverse footprint, with recent expansions including a new office in Buenos Aires. Elsewhere in Latin America, Convert has supplied its trackers to projects in Brazil and Chile.
Valmont earned nearly $859 million last year in utility support services, its fastest growing market segment at over 16% per year, including renewable generation projects. The company now earns 67% of its revenue in the Americas — including Mexico, Brazil, and Argentina, 23% in the Asia Pacific region, and 10% in Europe, the Middle East, and Africa (EMEA). The acquisition may increase Valmont’s EMEA revenues, given Convert’s long history in those markets, supported in part by the company’s South Africa office. Valmont’s policy is to make investments where there is a “clear path to returns exceeding cost of capital within three years,” according to an August investor presentation.
Array joins sPower
In May, Array Technologies (ATI) forged a deal with solar portfolio holder sPower, based in Salt Lake City, cited as “the largest private owner of operating solar assets in the United States,” establishing a partnership to do multiple gigawatts of business over the coming years. “The newly created partnership between Array Technologies and sPower is a testament to the strength and success of a matured U.S. solar market,” said Jeff Krantz, ATI Senior Vice President, at the deal’s announcement.
Similarly, Array made a deal with Shoals Technologies Group in 2017 to ensure that the provision of BOS components will be a seamless fit to their trackers. At the time, Dean Solon, Founder and CEO of Shoals says, “The synergy between our companies is unprecedented. We have no doubt that the collaborative effort of our teams will result in a solution that will offer efficiencies never before seen in the solar market.” Shoals has deployed its products on more than 25 GW of PV projects across North America, Europe, Asia, and Africa.
Array also tapped a financial partner to facilitate global expansion. In 2016, Oaktree Capital Management, a private equity investor, initiated its investment in ATI, and today it is the largest equity stakeholder of the company. At the time, Brad Forth, an Oaktree senior advisor was appointed Executive Chair of Array. Ron Corio, the Founder and board member, said, “Teaming with Oaktree, a group which has broad relationships and experience in international markets, represents an exciting step forward in our journey as the preeminent provider of solar hardware solutions globally.”
Not surprisingly, Oaktree also made an investment in Shoals in 2016. “Partnering with Oaktree provides Shoals with the resources, expertise, and support to help drive further growth and success in the rapidly expanding international solar and energy storage markets,” says Solon at the time of the investment.
Array has supplied over 8 GW of trackers around the world, including its DuraTrack HZ single-axis system, which it identifies as “the most widely-deployed tracking system in the world.” While sales were primarily targeted to U.S. customers a few years ago, the company’s international sales are now about two thirds of total revenue and expanding rapidly.
Soltec retains equity control
Soltec too, has tapped private equity investors as strategic partners to help fuel its global growth. “This is an interesting yet sensitive topic for us at the moment,” says Colin Caufield, Soltec’s Vice President of U.S. Sales.
“Other tracker companies have taken outside investment and lost equity ownership of their companies, but we have done it and retained private control,” says another Soltec official.
Soltec has partnered with engineer Black & Veatch to test the field performance of various bifacial modules on its newest single-axis tracker, the SF7, at a dedicated test site in the U.S.
Soltec’s Spanish parent company has several strategic partners, including JinkoSolar Holding and Enel.
Nclave and Trina Solar
Trina Solar in May announced that it had closed the acquisition of Viana, Spain-based Nclave. This is the first time a Chinese solar company has acquired a solar tracker producer outside of its home market, the company stated.
The acquisition came on the heels of a March 2017 merger agreement between Grupo Clavijo and metal fabricator MFV Solar to form Nclave, with the financial support of Q-Growth Fund. The tie-up was enacted to yield “the world leader in the design, manufacture, and installation of structures and trackers for the solar photovoltaics market,” the companies say. MFV Solar, based in Liria, Spain, serves the solar industry in Europe, Latin America, and Asia. Q-Growth Fund is specialized in small and medium-scale lending in Spain.
“The merger with MFV Solar is a strategic step that strengthens our companies’ international standing in the structures and solar trackers sector. Furthermore, with the support of Q-Growth, we are taking a major step towards making the most advanced solar tracking technology available to developers, EPC contractors, and installers worldwide,” says Miguel Clavijo, CEO of parent company Grupo Clavijo, based in Viana, Navarra Province, at the announcement.
ArcelorMittal acquires Exosun
In January, steel giant ArcelorMittal announced that it would acquire France-based Exosun, in a deal with unspecified terms. Exosun will become part of the ArcelorMittal projects division that already has a global presence covering large projects in the energy and civil construction markets.
“ArcelorMittal is the ideal partner to capture market share in a sector experiencing strong growth and consolidation: Being backed by a strong industrial player is vital to becoming a leading global player,” said Frédéric Conchy, co-founder, President and Chair of Exosun, at the time of the announcement.
South Korea’s OCI invests in USA
South Korean polysilicon producer OCI was an early international investor in the U.S. tracker market, forming OCI Solar Power in San Antonio in 2012. OCI Solar Power made direct investments in module maker Mission Solar, while its holding company OCI Energy invested in tracker maker Sun Action.
OCI Energy is now the majority owner of Sun Action, which has sold over 1 GW of trackers, including a multi-site 400 MW dual-axis project in Texas. Parent company OCI operates 28 production facilities in eight countries, serving more than 100 countries, the company says.
Vertical integration, strengthened performance
The impact of this wave of vertical integration on tracker performance will be positive for quality, reliability, and cost, analysts suggest.
“There are certainly benefits to this approach, such as more streamlined/faster installation due to working with only one tracker, better O&M, and optimized system design,” says Cormac Gilligan, Research and Analysis Manager at IHS Markit. “Overall, this is a trend in a maturing PV market where tenders and a highly competitive landscape are driving all players to make small gains in order to be successful,” he says.
“The PV market is moving towards greater focus on LCOE analysis and quality/quantity of energy production over the lifetime of the asset (20 years+) rather than just the up-front cost of the PV components,” continues Gilligan.
“Forward-looking EPCs and developers may be more willing to work with these vertically integrated companies who can showcase compelling LCOE analysis from a standardized system approach across multiple geographies that can be replicated and backed up by real-life case studies,” he concludes.
Source PV Magazine