LONGi Solar Hits a Roadblock in the US-Can it overcome the Challenges?
| Case Code: BSTR674 Case Length: 10 Pages Period: 2000-2023 Pub Date: 2024 Teaching Note: Available |
Price: Rs.400 Organization : LONGi Green Energy Technology Co., Ltd. Industry : Energy Countries : United States Themes: International Trade, Trade Agreements, International Business,Global Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Longi Solar’s Clean Energy Solutions
LONGi’s clean energy solutions comprised Utility-Scale, Commercial & Industrial, Residential solar power plants, and Hydrogen energy. The four solutions assisted in de-carbonization and green business, and promoted eco-friendly neighborhoods. The PV plants were set up on mountainous terrains and flat terrains, in deserts and also on water. The hybrid solar plants combined wind power, solar power, and hydro power into an integrated eco-friendly source of green power. The company provided solutions to the industrial sector through which the industries were able to achieve their de-carbonization goals. It also offered solutions to the construction industry for green buildings and green energy with its solar roofs for commercial and residential buildings..
longi’s global expansion
In 2022, LONGi entered into a commercial agreement with a Mexico based solar company ‘Solarever’ to give an impetus to solar innovation in Mexico. The commercial agreement enabled ‘Solarever’ to distribute LONGi’s solar energy solutions in countries of Latin America and Mexico. LONGi would provide ‘Solarever’ with technology innovation and improve its manufacturing process, thus strengthening the ‘Solarever’ brand in Mexico. Simon Zhao, President..
China-Based Competitors for Longi in the US
A report by Climate Energy Finance stated that most of the competitors to LONGi were China-based solar companies such as Tianjin Zhonguan, GCL-Poly, JA Solar, Guangdong Gaojing, Wuxi Shangji, and JinkoSolar. The top six polysilicon producers, the top 10 solar module manufacturers, and the top seven solar wafers manufacturers in the world were Chinese companies. Analysts opined that competition was intense with all the companies indulging in price wars. The reduction in the price of the raw material silicon also contributed to the intense price competition in solar modules and solar wafers..
US-Based Competitors of Longi in the US
The other notable solar companies apart from the Chinese companies were First Solar, the leading company in United States; Hanwa Q Cells from South Korea, ENEL Green Power from Italy, and Meyer Burger from Germany. The other US based companies were SunPower Corp, GreenBrilliance, Global Solar Energy, Inc., Trina Solar, Suniva Inc., and NextEra Energy, Inc..
Challenges in the US Market
In June 2022, US had already implemented the Uyghur Forced Labor Prevention Act (UFLPA), according to which it was mandatory for importers to prove that forced labor was not used in the production of solar modules and wafers. The trade issues between the US and China were also likely to affect the growth and prospects of solar manufacturers and suppliers based in China...
Other Challenges
The invasion of Ukraine by Russia in early 2022 had all the countries focusing more on energy security and self-reliance in energy requirements. It also placed increased importance on de-carbonization. The increased demand for solar modules placed increased emphasis on the solar module supply chain. China was the leading supplier of solar modules across the world and the International Energy Agency (IEA) estimated that 80 percent of the world’s share of solar modules was provided by China. Along with solar modules, China was also the world’s leading supplier of solar wafers with a 90 percent market share. Most of the countries were contemplating the imposition of import restrictions on the solar modules and wafers in order to protect the domestic industry..
Road Ahead
In the future, LONGi had huge plans to go in for capacity expansion with an investment of US$ 6.65 billion for a 50 GW solar cell and 100 GW wafer manufacturing plant in Shaanxi province, China. The factories were expected to be completed by the year 2025, and had the potential to generate 15,000 jobs. By the end of 2023, the company planned to achieve an annual production capacity of 190 GW for monocrystalline silicon wafers and 110 GW for monocrystalline cells..
Exhibits
Exhibit I:Various Awards Won by LONGi Solar
Exhibit II: Revenues of LONGi from 2020 to 2022 (in US$ Billion)
Exhibit III: PV Solutions Provided by LONGi
Exhibit IV: Details of the Global Expansion of LONGi Solar
Exhibit V: China-based Competitors of LONGi in the US
Exhibit VI: US-based Competitors of LONGi in the US
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