Mr. Zhang, you recently held the global kick-off for your new back-contact based panel Hi-Mo 9 with a record silicon solar cell efficiency of 27.3% in Madrid. What is the role of the European PV market for Longi?
Europe is the key market for Longi. And it's about 20% to 24% of our solar module sales. This makes it the second largest market after China. However, the European region is not only crucial for sales volume, but also acts as a catalyst for innovation within our company. European customers are mature and often demand high efficiency and high quality modules.
What other factors make Europe attractive?
The EU Commission's commitment to energy transition and carbon pricing provides us with a robust framework for these PV technologies. In addition, Europe is home to several major global energy companies, providing us with significant opportunities for partnerships, also globally. These aspects encourage us to introduce our advanced technology and products such as the new high-efficiency Hi-Mo 9 solar module in Europe.
What are your top 5 markets in Europe?
The most important European market, especially for utility-scale solar applications, is Spain, followed by Germany. We also have a strong presence in Italy, as well as Poland and some other Eastern European countries. France is also catching up. But we are also present in other key markets such as Sweden.
Aren't the long approval times and requirements for larger solar projects in Europe an obstacle to your business compared to other solar markets such as the Middle East?
I do not see this as a big problem because it is a feature of the region. The customer structure and the market are different in Europe compared to other regions such as the Middle East, mainly because of the size of the territory. So, of course, the average size of a ground-mounted solar project in Europe will be much smaller than in the Middle East. But we have an organization called CC3 that will provide a comprehensive service to our key customers to ensure that all commercial obligations can be fulfilled to their satisfaction and that they get a good return from their solar projects, regardless of size.
What exactly does CC3 customer service entail?
CC3 stands for the triangle. One is the customer relationship, of course the sales aspect. The second is solution responsibility. We support the whole technical and product team of our customers, giving them the full know-how of what value Longi modules can bring to them. The third angle is fulfillment. This refers to customer satisfaction in terms of delivery and our contractual obligations. This includes quality assurance, factory inspections, shipping, installation support such as training or troubleshooting, and more. We have also opened new offices throughout Europe to be closer to our customers.
Many suppliers are increasingly focusing on integrated photovoltaic solutions from a single source for system design, power generation and conversion, storage, Power2Heat, e-mobility, energy management and monitoring. How does Longi position itself against the competition?
We are a vertically integrated company. Our products are solar modules, but we also manufacture cells, wafers and ingots. We have been the largest wafer supplier in the world for nine years. But in addition to modules, we are also very focused on electrolyzers for green hydrogen. We are already the world's largest supplier of electrolyzers and we believe that there will be a growing demand for hydrogen solutions from wind and solar. But of course we are also open to see what other solutions and value we can bring to the energy transition in the future.
Do you already have green hydrogen projects in Europe?
We are getting more and more requests from our customers, mainly utilities, regarding green hydrogen. I believe that in a very short time we will see the deployment of electrolyzers in European countries like Spain.
Let's take a look at a current regulatory issue that is also being discussed in connection with the promotion of European PV production, Europe's dependence on imports from China in the solar sector, and greenwashing. How are you dealing with the new EU Corporate Sustainability Due Diligence Directive (CSDDD) in relation to your supply chains and the EU forced labor regulation?
Longi is always at the forefront of addressing these types of regulatory requirements, especially in the utility scale segment where we are a top supplier. So we have an advanced system for both sustainability and traceability within our supply chain, which is critical for compliance with the new regulations. Our proactive approach ensures compliance ahead of local implementation. This is particularly important as the energy companies and financial institutions involved in these projects are quite risk-averse. We have already had many of our ESG achievements recognized by various independent third parties.
Last June, you announced that you were considering setting up a production facility in Europe and would make a decision by the end of the year. What has become of this?
We continue to carefully evaluate the feasibility of establishing a manufacturing facility in Europe. The recent approval of the EU's Net Zero Industry Act is a significant development, but specific implementation by individual member states remains to be seen. For an investment of this magnitude, it is critical that we have a crystal clear understanding of the regulatory landscape, including the conditions and procedures for accessing potential incentives. At this point, we are still gathering the necessary clarity and will move forward when we do.
Could Germany be an option for you as a production location?
There are a lot of factors to consider, such as incentives, the local labor supply chain or logistics. Germany is definitely on the potential list for this factory. But we are looking at it in the medium and long term.
What is your assessment of the sharp drop in prices and overcapacity in PV production in China? How is Longi affected?
In fact, we saw a huge price fluctuation for PV modules, especially in 2023, which had a profound impact on a global scale. This was mainly due to the drop in polysilicon price and temporary overcapacity. The rapid expansion of the industry has been fueled by substantial capital investment. More manufacturing capacity has been added in the last 18 months than in the previous 18 years or even longer. So the PV industry is currently navigating a complex competitive landscape, both domestically and internationally.
How are you dealing with this situation?
One of the measures we are taking is to further optimize and automate our production processes in order to further reduce our costs.
How is the competitive situation affecting your investments and financing?
We have a very low debt ratio and a strong cash flow, so we are financially healthy. Financial health and technical innovation are very important. We invest more than five percent of our annual revenue in R&D and employ several thousand scientists and experts in our R&D centers in China.
Your new 660-watt Hi-Mo 9 solar modules are based on Hybrid Passivated Back Contact (HPBC) solar cell technology. How promising do you think the silicon-based BC technology is and do you have other module variants in the pipeline?
We have been gradually developing BC technology for the past 7 years. We believe it is the most promising technology for solar modules, primarily because it helps to further reduce the levelized cost of energy (LCOE), even in harsh environments. Our Hi-Mo 9 PV module is primarily designed for use in large utility-scale projects. But BC technology is a platform technology and we expect more and new products to come to cover different markets.
When will the new Hi-Mo 9 be available?
I expect delivery at the end of Q3 or Q4 this year.
Thanks a lot Mr. Zhang.
The interview was conducted in Madrid by Hans-Christoph Neidlein
