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Analyzing Trina Solar’s Business Strategy

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Jun. 22 2016, Updated 3:04 p.m. ET

Capacity expansion

Trina Solar’s (TSL) Manufacturing segment produces ingots, wafers, solar (TAN) cells, and PV (photovoltaic) modules. The company derives the majority of its revenue from its manufacturing segment, and its future success largely depends on upon the ability to expand its manufacturing capacity and output.

According to the company’s filings, Trina Solar’s Modules, solar cells, wafers, and ingots annualized manufacturing capacity stood at 5.6 GW (gigawatts), 4.3 GW, 1.8 GW, and 2.3 GW, respectively, at the end of 1Q16. By the end of 4Q16, the company aims to expand its existing modules and solar cells annualized manufacturing capacity to 6.0 GW and 5.0 GW, respectively. However, Trina Solar’s wafers and ingots manufacturing capacity are expected to remain at their existing levels.

Trina Solar expects to fill the gap between PV cell, wafer, and ingot manufacturing capacity through sourcing from its strategic partners and other toll manufacturers. This could help the company to achieve important cost advantages in certain markets.

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Vertical integration

As a part of its business strategy, Trina Solar plans to expand into selected solar power project markets that are a natural extension of its vertically integrated business model. According to company filings, these expansion plans may include investments in project companies and joint ventures and forming strategic alliances with third parties to balance system technologies, engineering, procurement, and construction services, and related financing needs.

The company also aims to use toll manufacturers to optimize its cost performance in the longer run. Trina Solar competes with Canadian Solar (CSIQ), First Solar (FSLR), SunEdison (SUNEQ), and SunPower (SPWR) in solar power projects business.

Trina Solar’s module efficiency

Trina Solar continues to invest in R&D (research and development) to develop highly efficient, low cost, and reliable solar modules. Any increase in module conversion efficiency will decrease the cost of raw materials used in module manufacturing. On November 9, 2015, Trina Solar announced a new efficiency record of 21.25% for its multi-crystalline Silicon solar cell.

In the next part of this series, we’ll discuss Trina Solar’s downstream project pipeline.

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