Inverting the Norm
Founded in 1997, Sungrow Power Supply Co., Ltd has grown to become one of the world’s largest producers of photovoltaic inverters—which convert the DC generated by solar photovoltaic panels into usable AC—with over 182 gigawatts of capacity installed worldwide as of June 2021. Based in the eastern Chinese city of Hefei and with a market cap of just over RMB 220 billion ($34.57 billion), the company has gone from strength to strength, expanding beyond its initial inverter business and into energy storage solutions for multiple new energy formats. Sungrow’s continued investment in its world-leading research and development team has placed the company in a prime position to help China, and the world, move towards a future based on new energy.
This positioning has come into sharper focus with China’s recently announced dual goals of peaking carbon emissions by 2030 and becoming carbon neutral by 2060. The targets are ambitious but Sungrow’s chairman, Cao Renxian, believes they are achievable. In this interview he discusses global new energy needs, barriers to new energy adoption and expectations for Sungrow’s future business.
Q. Let us begin with a general question. Solar power is now very important in terms of energy production. What do you see as the future role of solar power in energy production globally? And to what extent is China in line with or different from global trends?
A. The threats of global warming and climate change are becoming increasingly serious and many countries around the world have been espousing a reduction in coal usage and embracing carbon neutrality commitments as solutions which has led to an acceleration in the pace of energy decarbonization. The recent United Nations Climate Conference (COP26) identified, for the first time, fossil fuel energy combustion as a major factor in global warming, which means that all countries need to strive to develop and use new energy sources free from fossil fuels, gradually reduce coal power generation and the use of fossil fuel vehicles, and accelerate the promotion of photovoltaic solar power as the representative of low-carbon energy.
In an increasing number of countries and regions, the cost of photovoltaic power generation has been falling and in many areas it now costs less than coal power—making it one of the most competitively priced sources of energy. In the context of global promotion of green development and China’s carbon goals, with the continuous innovation of photovoltaic power generation technology and the further decline of power generation costs, the installed capacity and consumption ratio of photovoltaic power will continue to grow rapidly, and in the next 20 years, photovoltaic power generation will replace coal power as the new mainstay of the global electricity market.
China is a major player in the photovoltaic industry and is a global leader in technology, manufacturing scale, application innovation, industry supply chain system construction, among other things. It has built the world’s largest clean energy system, and has maintained a number of firsts in “annual new installations” and “cumulative installations” for many years. In 2020, China installed 48.2GW of new photovoltaic power plants, ranking first in the world for the 8th consecutive year, the country has also been ranked first in the cumulative number of power plants for six straight years. Driven by the need for a global energy transition and China’s dual carbon goals, the Chinese photovoltaic industry will see continued fast and healthy sustainable development.
Q. As you have mentioned, China has instituted two new carbon goals. How do these targets impact Sungrow’s business?
A. China’s two new carbon goals are a major ecological strategy and will help the country to actively respond to global climate governance issues and promote the building of a global community of humanity with a shared future. At present, China is gradually building a new power system with new energy as the mainstay, which is an integral part of reaching the new carbon goals, and photovoltaic power has a great role to play.
As a new energy enterprise, Sungrow Power has actively responded to the national strategy and intends to achieve 100% renewable power by 2028 at the latest, accelerate green and sustainable development, achieve carbon neutrality, and help other enterprises accelerate carbon emission reduction and help push carbon neutrality through its own professional strengths.
In general, there are four paths to achieving carbon neutrality: the replacement of traditional fossil energy with new energy, the continuous improvement of electrification rates (including electric vehicles), the improvement of energy use efficiency, and the purchase of green electricity certifications. All these paths are closely related to the core business areas of Sungrow. We will continue to increase our investment in research & development, focus on these core businesses, continuously improve our market competitiveness and continue to make our own contribution to the realization of carbon neutrality.
Q. What do you see as the main barriers to more widespread adoption of renewable energy sources?
A. The main thing we need to see is more determination from governments to accelerate the replacement of fossil energy sources with new energy. In addition, there needs to be further reduction in the cost of renewable energy and an increase in the stability of renewable energy sources, making these sources more convenient for society to access. Solving these issues will allow for an increasingly wide use of renewable energy sources which will, in turn, help attain carbon targets.
Q. Balancing supply and demand with renewable energy sources can be difficult. What is Sungrow doing to help regulate the availability of energy from solar power?
A. To solve the problem of fluctuation and intermittent supply of renewable energy sources such as photovoltaic and wind power, and to improve the high adoption and large-scale application of renewable energy, Sungrow made a foray into the energy storage business as early as 2006. Relying on its massive technical accumulation in the field of power electronics, Sungrow has established a full ecosystem covering the entire energy storage industry. We provide core storage equipment for wind and solar energy sources and highly efficient and synergistic integrated solutions, applying them to scenarios such as auxiliary services for new energy grid connection, power frequency and peak regulation, responding well to demand-side requirements, microgrid and household use, among other things. The energy storage system solutions provided by Sungrow are among the best in the world in terms of performance and reliability.
Q. Technology plays an important role in the renewable energy industry. How would you describe the technology levels in China compared to the US and the West in this area?
A. China has been encouraging technical innovation within the renewable energy industry as well as helping develop its widespread application, and the country’s current level of development in low-carbon technologies such as photovoltaic, wind power, energy storage and electric vehicles is at the forefront of the world.
Q. What important innovations have Sungrow’s research and development team created for the world in renewable energy and what is the team working on right now?
A. For more than two decades, we have focused on the field of new energy power generation, continuously promoting the integration of industry technology innovation and continuous cost reduction. In the past decade, we have directly driven down the cost of photovoltaic electricity by about 90%. At the same time, we continue to lead the integration of wind, solar and energy storage technologies and increasing the application of innovations, solving the issues of fluctuating and intermittent renewable energy sources such as photovoltaic and wind power, promoting the increase and large-scale application of renewable energy sources, and strongly pushing the development of the global new energy industry and the transformation of local energy structures.
At present, we are mostly focusing on five development orientations: solar power, wind power, energy storage, electric vehicles and hydrogen energy, promoting collaborative innovation, and we are striving to improve the synergy between marketing and technology within each business sector in order to achieve rapid and sustainable development.
Q. What proportion of Sungrow’s business is outside of the China market and which regions are growing the fastest?
A. Sungrow has always adhered to a global development strategy and the proportion of overseas revenue has been steadily increasing in recent years. It accounted for nearly half of our revenue in the first three quarters of 2021, and our business in America, Europe, the Middle East and other regions is continuing to grow rapidly.
Q. What expectations do you have for Sungrow’s business over the next 5-10 years?
A. In the future, we will focus firmly on our main business of new energy, concentrating on the development of solar power, wind power, energy storage, electric vehicles and hydrogen energy, and hope to deeply integrate each of these businesses. We want to position ourselves as a technology powerhouse that insists on a great depth of technology and pursues technological leadership, promoting innovation and empowerment that is inspired by the world around us. We will make unremitting efforts to fulfill Sungrow’s mission of “Clean power for all,” and the grand vision of “being the global leader in clean energy conversion technology.” We aim to reach higher and higher and will continue to set ambitious business goals that will allow for rapid and sustainable development for the sake of fulfilling this grand vision.