China Solar Tariffs Round II, Yingli’s Smart JV
Doug Young The new year has just begun, and already we’re getting signals that 2014 will be full of new twists and surprises for the solar panel sector as it struggles to emerge from its downturn dating back nearly 3 years. A clash involving Chinese panel makers accused by western rivals of receiving unfair state support looks set to enter a new phase, based on an announcement of new action in the US by SolarWorld (Frankfurt: SWV, OTC: SRWRF), the German panel maker that has led the charge against the Chinese companies. Meantime, a separate new joint venture announcement...
New Suntech Rises From Ashes, Eyes UK
Doug Young Suntech. faces final sunset. Opportunities for me to write about former solar pioneer Suntech (OTC: STPFQ) are growing fewer with each passing day, as its life as an independent company nears an end with the imminent finalization of its bankruptcy liquidation. That said, a company announcement saying that a new Suntech has emerged after the yearlong bankruptcy storm seems like a good opportunity to write about this company one last time before it and its stock permanently disappear. The announcement features a photo of Suntech’s youthful looking...
SolarCity: The Amazon of Solar?
By Harris Roen SolarCity (NASD:SCTY) has become a sort of proxy for the future of solar in this country. This tremendously successful company is coming up on a one year anniversary of its IPO in December. Several developments at SolarCity warrant a closer look into this dynamic company trying to stay ahead of the curve in a growing, competitive solar installation environment. Despite skeptics, SolarCity’s stock is strong There was much skepticism among investors when SolarCity was preparing for its IPO in 2012. Solar stocks had been badly beaten up in recent...
Why I Believe in Thin Film
Analyzing Solar Stocks With False Assumptions Dana Blankenhorn When most people think of solar energy, they see flat panels on a roof. They don't think about thin film. They don't see it. This is one of the many advantages of CIGS and other thin film solar technologies. So what if its efficiency is half that of a panel? It conforms to the shape of the place where it lays. Thin film can also be productized in ways no panel can. It can be turned into something retailers can sell or bloggers will...
Time to Buy Solar Stocks
By Jeff Siegel Here's Deutsche Bank's latest comments on the state of the global solar market: “We see the sector transitioning from subsidized to sustainable markets in 2014.” That's a bold statement, and one that's sure to agitate solar haters. But that's not our concern. Our concern is simply when it will be safe to jump back into the solar game. According to analysts at Deutsche Bank, margins will rebound and profitability will return in the second half of this year. This is something we've been saying, too although I suspect it'll be more towards...
How China Came To Dominate Solar Manufacturing
by Paula Mints
The PV industry is global, and its pricing function has a cultural basis. Particularly as it is dominated by China, without an understanding of China and its market motivations, it is impossible to understand why PV manufacturers today, all rational actors, willingly accept 15% or lower manufacturing margins when margins for like industries are higher.
Examples from other industries include: Coal 40% to 50%, Iron and Steel 20%, Construction ~30%, Appliances 30%, Aluminum 20%, Industrial Machinery and Components 40%, Aerospace 40% and Agriculture 8%.
In the PV industry the average margin is 8%. Congratulations PV, you are on par with agriculture.
Aside from significant government...
Signs Of Trouble For Chinese Solar Stocks
Doug Young Regular readers will know I’m a bit bearish lately on the solar panel manufacturing sector, largely because I believe its recent rebound is being fueled as much by hype as real business after a prolonged downturn. A new report on some of the sector’s so called “growth engines”, coupled with a separate report on a dispute at one of the top surviving players, are adding fuel to my skepticism that the sector’s recent sharp rebound isn’t really happening. At the very least, the recent reports indicate the rebound isn’t nearly as strong as many are claiming,...
Solar Headwinds, Part II
Tom Konrad, CFA Prospective investors in solar manufacturers should consider the competitive forces that constrain the industry's long-term profitability. In the first part of this series, I showed how a competitive analysis of the corn ethanol industry in early 2007 illuminated the forces that soon caused ethanol company stock prices to collapse in late 2007. I also implied that the solar cell manufacturers, including industry leaders such as Sunpower (SPWRA) and First Solar (FSLR) are vulnerable to these forces and may not be able to maintain high returns on capital over the long term. I'm not...
The Alternative Energy Fallacy
John Petersen In 2009, the world produced some 13.2 billion metric tons of hydrocarbons, or about 4,200 pounds for every man, woman and child on the planet. Burning those hydrocarbons poured roughly 31.3 billion metric tons of CO2 into our atmosphere. The basic premise of alternative energy is that widespread deployments of wind turbines, solar panels and electric vehicles will slash hydrocarbon consumption, reduce CO2 emissions and give us a cleaner, greener and healthier planet. That premise, however, is fatally flawed because our planet cannot produce enough non-ferrous industrial metals to make a meaningful difference and the prices...
Sunpower’s Mating Call
SunPower Corporation (SPWR: Nasdaq) has sent out an unusual mating call. Like a bird with a newly built nest, the company is seeking a partner to help build out and operate SunPower’s production facility in Hillsboro, Oregon. The plant was acquired in late 2018, from SolarWorld Americas after the Trump administration slapped tariffs on solar panels imported to the U.S. Domestic production, even at higher local costs, could make sense when compared to such prohibitive import tariffs.
Uncomfortable Three-some
Some investors might see the tie-up as an uncomfortable three-some. Indeed, the solar panel tariffs came about when SolarWorld Americas and its compatriot Suniva filed an application...
Solar: Big Gets Bigger, Small Suffers
Doug Young A couple of new items from the battered solar sector hint that the situation may be improving for the largest companies, even as smaller players continue to struggle and face the very real danger of collapse. Of course I'd be remiss if I didn't point out that I've predicted a rebound for this embattled sector once or twice before based on optimistic company statements, and in each instance the rebound I was sensing never came. This time the difference could be that many smaller players have now closed or are tottering on the brink of insolvency,...
Bejing Should Oust Shi to Save Suntech
Doug Young New developments have come rapidly over the past week at Suntech (NYSE: STP), leaving the former solar superstar on the brink of collapse as its founder Shi Zhengrong blocks a potential government rescue. Shi’s exit is believed to be a main condition for the government bailout, and his refusal to leave could well result in the failure of a company that is otherwise an industry leader with strong potential. To prevent such a collapse, the government should take the unusual step of forcing Shi to go so that Suntech can begin a desperately needed reorganization....
China Levies Tariffs on US and South Korean Polysilicon
James Montgomery The Chinese Ministry of Commerce has formally decided to levy antidumping duties on imported solar-grade polysilicon from U.S. and Korean suppliers, turning up the heat yet again in the broader trade disputes simmering between several key markets for solar energy. The antidumping tariffs, which are said to be effective starting July 24, range from 54-57 percent targeting nine U.S. suppliers and from 2-49 percent for 11 South Korean suppliers. (Here's a roughly Googlized translation of the China MOC announcement.) Here's how the antidumping tariffs lay out: Not included in these polysilicon tariffs is any mention of European...
RGS Energy: Troubling Inconsistencies
Garvin Jabusch About three weeks ago, I posted a piece called "RGS Energy, Tempered, Opportunistic Growth," an optimistic bit of coverage on one of our holdings, (RGSE), that included an 18-month price target of $10.00 per share. Since then, several developments and pieces of information have come to light that have caused us to revise our assessment of the company. Thursday, July 3, a quiet half-market day, RGS Energy released a statement announcing plans to monetize its previously filed potential shelf offering; "RGS Energy (NASDAQ: RGSE) has entered into a definitive agreement to raise approximately $7.0 million in a...
The Solar Industry’s Supply Chain Problems
by Paula Mints
The solar industry has a supply chain problem – no, not just the current polysilicon and glass constraints. Solar wafer, ingot, cell, and module manufacturing are concentrated in China and South East Asia, leaving buyers outside these areas vulnerable to supply chain shocks.
Countries in this region have lower labor costs, lower energy costs, and higher incentives and subsidies for manufacturers. In China, manufacturing is supported (and controlled) by the central government.
Manufacturers in China, who have expanded into South East Asia, can make do with lower
margins than their counterparts in other countries. Manufacturers in South East Asia and China...
Book Review: Investment Opportunities for a Low Carbon World (Wind + Solar)
Charles Morand Tom and I recently received complimentary copies of a new book called "Investment Opportunities for a Low Carbon World", edited FTSE Group's Director of Responsible Investment Will Oulton*. The book is a compendium of articles by 31 different authors broken down into three main categories: (1) environmental and low-carbon technologies; (2) investment approaches, products and markets; and (3) regulation, incentives, investor and company case studies. While Tom will provide a comprehensive review of the book once he's finished reading it in its entirety, I will instead review a few selected chapters over...
