Meyer Burger Technology Ltd aims to transform itself from a supplier of production equipment to a technologically leading manufacturer of solar cells and modules. Capital increase targeting gross proceeds of CHF 165 million planned.
The Board of Directors of the Company proposes an ordinary capital increase to the shareholders at an Extraordinary General Meeting to be held on July 10, 2020. Within the framework of the capital increase, the Company expects to raise gross proceeds of CHF 165 million.
New strategic direction allows Meyer Burger to leverage full value of technological leadership
At the Annual General Meeting held on May 13, 2020, Meyer Burger announced that it was considering plans for establishing an own large-scale cell and module production in Germany. The reason for this fundamental change of direction is the realization that the Company has not been able to generate profits from its technological leadership in recent years. The Company has shaped the development of photovoltaics along the entire value chain and has set the industry's essential standards, such as the diamond wire saw technology, the PERC technology and precision measurement technology for solar modules. A large proportion of the solar modules produced world-wide today are based on technologies developed by Meyer Burger. By selling its production equipment, however, Meyer Burger relinquished control of its technology and largely left the realization of the added value creation to its customers.
Meyer Burger’s Board of Directors has decided that Meyer Burger, as a rule, will in the future manufacture production equipment for Heterojunction/SmartWire exclusively for its own use and aims to become a leading global producer of solar cells and modules. Consequently, the entire value chain will remain with Meyer Burger. The protection of the proprietary technology and the know-how can thus be strengthened, and future improvements of the production facilities will no longer be shared with third parties. The standard equipment and service business will be continued unchanged.
After careful considerations of the available strategic options, the Board of Directors of the Company has decided to pursue a business model focused on own production of cells and modules. Unfortunately, Meyer Burger was not able to agree a mutually beneficial co-operation with REC Group within the given time, as the conditions of the Memorandum of Understanding with REC Group (“MoU”) were eventually not met by REC Group to date. As a result, the Board of Directors of Meyer Burger has decided to no longer pursue this strategic option.
New business model with significant profit potential
"The change of our business strategy from equipment supplier to a vertically integrated cell and module manufacturer is the right and logical next step to secure an appropriate share of the value pool that our globally leading technology generates", explains Franz Richter, Chairman of the Board of Directors of Meyer Burger Technology Ltd.
With Heterojunction/SmartWire, Meyer Burger has developed next-generation photovoltaic technology and has made it ready for the market. The Heterojunction/SmartWire technology has higher conversion efficiency and higher energy yield than the current standard Mono-PERC and other heterojunction technologies currently available. The high performance of the modules at comparatively low production costs is expected to enable us to enter both the high-margin and disproportionately fast-growing segment of roof top systems and the more price-sensitive utility-scale segment. On this basis, the Board of Directors believes that the Company can achieve a unique position within the photovoltaic industry and can create substantial and sustainable added value for its shareholders through sizeable profit margins.
Meyer Burger delivered the proof of concept of heterojunction/SmartWire in mass production at the end of 2019 by successfully establishing a 600 MW production line for a client. The proceeds from the capital increase are expected to be used primarily to build up production capacities and the sales organization. Meyer Burger expects to save significant time and economic resources by acquiring existing production sites in Germany.
Meyer Burger intends to start production in the first half of 2021 and to expand it in consecutive steps in the following years. The Company has already secured several letters of intent from potential customers in Europe and the US to purchase a total over 2 GW of cells and modules per year. Initially, Meyer Burger envisages to produce PV modules primarily for the attractive segment of roof top systems. The Company is targeting an annual production capacity of 400MW during this phase. The Board of Directors expects that this production volume will already enable the newly positioned Meyer Burger Group to achieve an operating profit.
CEO Gunter Erfurt says: "The next technological step is comparable to the transition from 4G to 5G in mobile communications. Only Meyer Burger has brought the 5G technology of the PV industry to market maturity. We can be in the market with our products within just one year. Our manufacturing in Europe is competitive and offers a significant profit potential". In line with the expected demand for MBTN's high-quality products, Meyer Burger intends to increase annual capacity to 1.4 GW of cell and 0.8 GW of module production by the beginning of 2022 by raising a total of around CHF 180 million of debt in 2021/22. On this basis, Meyer Burger expects annual sales of CHF400 – CHF 450 million and an EBITDA margin of 25% - 30% within three years.
In the longer term, the Company aims to expand annual production capacity to at least 5 GW. Depending on market demand, additional module production facilities are planned in Europe and North America which shall be supplied from a central cell production. Meyer Burger then also expects to gradually increase its market share in the utility-scale segment.
Intellectual property to be better protected in the future
With the aim of capturing the value creation potential of this new technology and securing its own know-how, the Company plans to implement a “captive” business model in the future and will, as a rule, employ its leading technology exclusively for its own purposes. A total of over 45 patent families protect the heterojunction/SmartWire technology, the manufacturing processes, machines and products, as well as further technological steps that are already under development. By embarking on its own production, Meyer Burger expects to be in a better position to protect its intellectual property, as well as the know-how gained over many years of experience.
Fraunhofer study confirms efficiency advantage and a technological lead of at least three years
An expert opinion commissioned by Meyer Burger from the world-renowned Fraunhofer Institute for Solar Energy Systems (Fraunhofer ISE) confirms the global technological lead of at least three years and the market readiness of Meyer Burger's heterojunction/SmartWire technology. Recently, Fraunhofer ISE also confirmed a record efficiency of 25.4% for a heterojunction solar cell manufactured with the Company’s latest technology in May 2020. More information on the Fraunhofer study can be found here.
Solar industry at a turning point
Today, the PV market offers unique opportunities for Meyer Burger:
- The incumbent PERC photovoltaic technology is largely exhausted. With its heterojunction/SmartWire technology, Meyer Burger believes it currently possesses the most promising technology to drive the industry's next performance leap.
- The European and global market potential is considerable. In Germany, renewable energy to supply 65 percent of electricity by 2030, and Europe is to become climate neutral by 2050. In Germany alone, the government has set a photovoltaic expansion target of 98 GW until 2030. With its Energy Strategy 2050, Switzerland also intends to increase energy efficiency and promote renewable energy such as photovoltaics. Pursuant to the policy targets of the Federal Council, Switzerland's basic supply of electricity should in the future consist of electricity generated from 100% renewable energy sources as standard. Due to the limited available land area, especially in Western Europe, highly efficient PV technology is particularly important for achieving these goals.
- With the European Green Deal, the European climate targets and the requirement to boost the economies after the Covid-19 pandemic event, the current European industrial policy context is giving the solar industry a tailwind. Solar energy is the most cost-effective, environment-, and climate-friendly technology for generating electricity in many parts of the world and a significant factor for strategic autonomy in the energy sector. With local production, Europe can secure access to the leading technology for power generation of the future, build up a local value chain that is resilient against crises and exploit know-how generated in Europe.
“Affordable solar power for everyone” is the vision of the new Meyer Burger. The Company is determined to make a contribution to the climate-friendly reshaping of the European electricity production industry and will create up to 3,500 direct jobs in the medium term. Local production allows for optimal supply chain management, shorter transport routes and thus reduced CO2 emissions.
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