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Shawn Qu, CEO, Canadian Solar Inc.

Shawn Qu runs one of the ten largest solar panel makers in the world, Kitchener, Ont.-based Canadian Solar Inc., with annual revenue of about $1.2-billion (U.S.). Yet he is almost unknown in Canadian business circles, mainly because the bulk of the company's manufacturing operations are in China and its customers in more than 30 countries.

That's about to change, however, as Canadian Solar gears up to open a large solar-panel manufacturing plant in Guelph, Ont., that will employ 500 workers by mid-2011. The new plant was partly spurred by Ontario's new Green Energy Act, which pays high prices for solar-generated power if some of the equipment is made in the province.

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Mr. Qu's Canadian roots run deep. While born in China, he earned graduate degrees from two Canadian universities, worked for the research arm of Ontario Hydro (now Ontario Power Generation), and ran the international solar business of Cambridge, Ont.-based ATS Automation Tooling Systems Inc. before setting up his own company.

Was it Ontario's Green Energy Act incentives that prompted you to build a factory in the province?

We always had a plan to increase our Ontario-based work force. Even without this new incentive we were probably going to increase our R&D and product development. I'm a Canadian and I was educated in Canada, and when Canadian Solar first started we received funding from [Ottawa]which was instrumental in our early days, so I see a responsibility to contribute something back to the local economy.

But the Green Energy Act was a triggering factor that led us to make this decision much faster. Local content rules are very valuable and good policy. Let's face the reality - renewable energy requires tax dollars to support it, so it should benefit the local economy. We'd like to see similar programs in other provinces.

You had support from the federal government even before you created Canadian Solar, didn't you?

When I was the program manager for ATS's climate-change initiatives, we had a CIDA (Canadian International Development Agency) program that looked into how to transfer technology to help China use solar for rural electrification. These were very small systems which provided power for two light bulbs and a radio [but]that was all villagers in Tibet needed at that time. It was a very interesting project which gave me a chance to visit those remote areas. It made me think about how I could do more in solar, which was such a small industry at that time.

How did Canadian Solar get started?

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In 2001 I decided to spin off my own company [after working at ATS] I registered it in Canada, but then I started to look at where to do the design and where to do the manufacturing. To do something very quick, and meet the cost targets, China became the best choice.

What was your first product?

It was a small solar charger for Volkswagen's Mexican operations. They produced cars and shipped them worldwide, but the cars stayed on a ship or in a parking lot for up to two or three months before they got sold. A lot of car batteries drained [so]they needed a small charger to maintain the battery. I was still very much an engineer at that time so I submitted my design and my samples, and my product became the only one accepted by Volkswagen.

How did you end up as one of the world's biggest solar panel manufacturers?

In early 2004 the German government started to implement its solar feed-in-tariff programs and we became one of the first major suppliers to their rooftop solar program. That put us on a rapidly growing path. This year we are going to deliver around 800 megawatts [of panels] That will put us in the rank of the top ten solar producers in the world.

Many companies can't survive that kind of growth. How do you manage rapid expansion?

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The key point is to remained focused. We focus on solar; it is the only thing we do. We are integrated, making solar ingots, solar wafers, solar cells, solar modules and solar systems. I see this as a long, sustaining business, rather than [a way to make]quick money, so I don't get frustrated by temporary setbacks. I work hard but keep myself calm.

How can your new Canadian facility compete on costs with your Chinese factories?

At this moment manufacturing in Canada is more expensive than in China because of high wages [in Canada]and economies of scale [in China] [China also has]a solar manufacturing ecosystem - the suppliers surround us, cutting down the costs. But we are addressing those issues. In the Canadian plant we are going fully automated to cut down costs. And with the Ontario content requirements associated with the Green Energy Act, we are starting to see lots of suppliers setting up shop.

Will rising Chinese manufacturing costs also help redress the imbalance?

China's living standard is going up … so salaries are going to go up very fast. I have already seen my key engineers' and managers' salary levels going up five- or ten-fold in the past ten years. That's good for the people and I support it … but it also means that the landscape is going to tip. My general manager in the Guelph plant told me they want to prove they can beat the Chinese factory in costs after two or three years, and I gave them the thumbs-up.

What should Ottawa be doing to encourage the renewable energy industry?

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I'd like to see a more progressive policy from the federal government. It used to have [programs]that helped develop renewable energy technology in Canada. Canadian Solar itself is a proof of that success - it was partially because of those policies that we now have a Canadian-based top-ten solar manufacturing company in the world.

What specific programs would help?

We can learn from other countries. The United States had the federal tax credit for renewables that provided a 30-per-cent tax break. That proved to be the cornerstone for U.S. renewable-energy policy. [Carbon taxes or cap-and-trade systems]are valuable instruments, and an alternative. I'd call for the federal government to sit down with industry and analyze all these options and come up with a consistent and well-thought-out policy.

A new report suggests that solar power will be cost-competitive with other forms of power in Canada by 2025. Is that optimistic?

I think it will happen before 2025. In California, solar is already competitive with peak-hour retail electricity prices. In Japan the government only has to give a 10-per-cent initial installation subsidy. In Germany the feed-in-tariff for ground-mounted solar will be around 21 euro cents (per kilowatt-hour) starting Jan. 1, which is already in the same range as retail electricity costs. So solar is very quickly getting cost competitive.

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