Dan Shugar

Shug Speaks

NEXTracker Presents at US ITC on Section 201 alongside SEIA

August 15, 2017

From Left to Right: Jim Lamon (DEPCOM), Ed Fenster (SunRun), Dan Shugar (NEXTracker), Craig Corneliuus (NRG), Tom Werner (SunPower), Matt Nicely (SEIA Attorney).

Friends, I had the honor of presenting at the US ITC on the Section 201 hearing on behalf of the Solar Energy Industry Association (SEIA) alongside Jim Lamon (CEO of DEPCOM), Ed Fenster (Founder & CEO of SunRun) and Craig Cornelious (CEO of NRG Renewables), Tom Werner (CEO of SunPower) and Matt Nicely (SEIA Attorney). The first Section 201 hearing in 13 years, the session ran from 9:30 AM to 8:00 PM. Other organizations presenting included Bloomberg New Energy Finance (BNEF), CA Solar Systems, ECS, Rutgers, Silfab, Heliene, Borrego Solar, REC, Giga Watt, and the Canadian, Korean, Mexican industries.

ITC Chair Schimidtlein complimented our team for our preparation, cohesiveness and content. I’d like to extend a big thank you to Abby Hopper, SEIA staff, and the legal team for a job well done! Wherever this thing lands, we “left it all on (or in) the Court, so to speak.

Shug View: SolarWorld had two bites at the apple previously for trade relief, with decisions to their favor on AD/CVD (and Suniva probably didn’t join previously as they were just processing cells in US). Enough is enough! These companies didn’t scale and didn’t do what was required to succeed. The solar industry at large doesn’t appreciate their pursuit of 201, which has created industry dissent, impacted US jobs, and wasted millions of dollars in legal proceedings. Thank you for the opportunity to present to the Commission.

Testimony follows.
You can also find my testimony here.

My name is Dan Shugar and I am CEO of NEXTracker, Inc. I founded our company in 2013, and 2 years ago we were acquired by Flex, a $25B global technology manufacturer. I run NEXTracker today as an independent subsidiary of Flex.

NEXTracker designs and manufactures advanced mounting structures called trackers that enable solar panels to follow the sun during the day, increasing energy production. We are headquartered in Fremont, CA, and manufacture and serve customers on five continents. We have created many hundreds of US jobs at our company and supported thousands of new U.S. jobs at our manufacturing sub-suppliers and customers over last few years. Our top markets are the United States, India, Mexico, Brazil, and Australia. NEXTracker is the global and US volume leader based on shipments. Today, we have nine GW delivered (as of August 2017), the equivalent capacity of 38 coal power plants units. In addition to trackers, we provide solar panels for selected clients.

I have been in the solar industry since 1988 and have served in executive roles at solar panel producers, utilities and component manufacturers. The key driver for this industry is innovation — and innovation has improved solar cells, modules, structures and all aspects of our industry. Innovation has enabled solar to be the lowest cost source of power in much of America’s sunbelt and one of the top sources of new electricity. In NEXTracker’s case, innovation to harvest the sun more efficiently and deliver better returns on investment to the owners of power plants enabled us to grow to global leader. 

I would like to share some perspectives on SolarWorld and grid parity. I have known SolarWorld and its founder/CEO Mr. Frank Asbeck for over 20 years. SolarWorld started as an installer of solar products in Germany. About 2005, they began manufacturing crystalline solar panels in Germany, and later in the US. At that time, the German grid heavily subsidized solar energy, paying about 45 cents per kWh. That is over 10 times today’s rate for solar of 3-4 cents per kWh. SolarWorld’s value peaked in 2006, when their stock price hit at 265 Euros per share on the Frankfurt exchange. From SolarWorld’s peak in 2006, the solar industry began rapidly transitioning, from a heavily subsidized market in overcast Germany, to more competitive markets where systems are located to sunny areas, and the economics of solar directly compete with traditional power like coal. This transition required ferocious innovation and cost reduction, and SolarWorld couldn’t keep up, and by 2012, they were trading at 1 euro/share on the Frankfurt exchange. As mentioned earlier today, SolarWorld had a judgement of over $700M from Hemlock Semiconductor hanging over them, which may have impacted their ability to perform. 

Two years ago, NEXTracker was looking for a domestic supplier partner to enable rapid delivery of our utility applications. To enable rapid delivery, we were looking for a domestic suppler partner. SolarWorld had heavily promoted the capabilities of their Hillsboro Oregon factory to us. We decided to take them at their word and give SolarWorld a chance to become a significant business partner with a major order. It turned out to be a poor decision.

On September 15, 2015, we awarded SolarWorld a $32M Purchase Order for 156,000 solar panels over the coming year. The order specified 72-cell solar panels, which for technical reasons are needed for most utility applications. SolarWorld accepted the order but then had a range of problems fulfilling it, starting with deliveries that were late by 6 weeks or more. When the panels finally came, we discovered from the labels that they were actually made in Thailand, not Oregon. Additionally, non-conformance with technical specifications required us to modify the panels in a third-party warehouse. The large magnitude of operational problems SolarWorld had in fulfilling the 72 cell panel deliveries ultimately led NEXTracker to cancel the balance of the Purchase Order, after less than 10% of the panels had been delivered. SolarWorld recognized their failings and accepted the cancellation with no penalty, after crediting us for the cost of bringing their panels within specification.  After this fiasco, we disqualified SolarWorld from our vendor list. This is not a picture of a company poised to succeed in the marketplace if granted still another trade remedy.

In closing, please understand that NEXTracker is one of the many solar industry businesses that are looking to the Commission to recognize the very special circumstances of this industry – an industry where long-term trends reflect decades of hard work and innovation to drive down costs, expand demand, and enable affordable, reliable solar systems to lower the cost of power for millions of Americans. We respectfully urge the Commission to reject the Petition, which is causing great uncertainty and damage to the US industry.

Participate in some industry-wide discussion on Section 201 in my LinkedIn article here.

Dan Shugar