The largest solar panel manufacturer in the world

The Path to Drawdown: PV Solar Manufacturing

To solve climate change and remain below 1.5ºC of global warming, the globe needs to switch from generating power from fossil fuels to using 100% emissions-free sources.

The largest source of this clean energy is the sun (barring advances in nuclear fusion). Photovoltaic or PV solar panels (the kind you see on rooftops) have emerged as the predominant way of capturing the sun's energy and converting it into electricity.

The industry has been growing fast and, as of 2020, solar panels are now the cheapest source of electricity in most places on earth.

Solar produces ~2% of global electricity today. According to Project Drawdown, to be on a path to remain under 1.5ºC of warming, rooftop and utility-scale solar will need to be generating a combined ~40% of global electricity by 2050.

To get there, the PV solar industry is going to need to continue to massively scale over the few next decades:

720 TWh: of solar electricity generated in 2019
28,200 TWh: needed by 2050
CAGR of 12.56% from 2019 - 2050

Another analysis from the IEA predicts that in order to reach a 100% clean electricity grid by 2050, annual solar panel manufacturing capacity will need to scale from 110 GWs in 2019 to 500 GWs in 2030.

About

Canadian Solar (stock ticker: CSIQ) is one of the largest solar panel manufacturers in the world. Based in Canada and with plants around the world, Canadian Solar is expanding into solar and battery storage development in addition to its increasing manufacturing capacity.

CSIQ's Role in Drawdown

In 2020, CSIQ produced and shipped 13 GW of solar panels, or 11.8% of global production. Assuming they retain a similar market share, this would mean they will need to producing ~59 GW of solar panels annually by 2030.

Such growth would necessitate a 16.36% annual increase in production capacity. Given that they grew their capacity 29% annually from 2013-2020 and they already have set a 2021 target of 18-20 GWs of production, we are eager to see CSIQ hit and surpass this 2030 goal.

CSIQ: What We Like

Not only is CSIQ focused on scaling a critical component of reaching a 100% clean electricity grid, but they are working do to in an increasingly sustainable fashion.

67% reduction in CO2 emissions per solar panel from 2010-2020
48% of the energy used in making their panels came from self-generated solar in 2019
29% of water they use is cleaned and reused again in their plants
12.69% of their input materials were recycled in 2019

CSIQ: What We Want to See Improve

Set Clear Goals

Unlike other companies in the space, Canadian Solar has not set clear decarbonization goals for their manufacturing process or their supply chain. This makes it challenging for investors like us to hold them accountable for their sustainability commitments. For example, 100% clean electricity in their manufacturing process by 2028.

Clean the Supply Chain

While we applaud that Canadian Solar tracks the sustainability metrics of its supply chain, we would like to see them use their significant purchasing power to push their suppliers to commit and reach zero emissions, as well as other sustainability metrics. Such transparency would enable us as investors to hold them accountable.

Design for Reuse

We applaud CSIQ's reuse of some materials in their manufacturing process and we push them to go much faster. A circular solar economy is possible. We push their executives to image a manufacturing process where the majority of inputs come from old panels. Such a process could insulate them from supply chain shocks and potentially boost their gross margins.