By Anil Nain
President Obama is asking Congress to create a new Energy Security Trust to invest in research that "will protect American families from spikes in gas prices and allow us to run our cars and trucks on electricity or homegrown fuels," the White House reported late last week. The proposal would set aside $2 billion over a decade for research into electric vehicles, biofuels, fuel cells and natural gas. The trust would be funded within the overall FY 2014 budget.
According to the President - and as reported by Bloomberg - "The private sector on its own won't invest in this research because it's too expensive, it's too risky, they can't afford it […] so we've got to support it, and we'll all benefit from it."
Whether or not that is accurate is open for interpretation. According to data from Bloomberg New Energy Finance, overall clean energy investment fell 11% in 2012 to $268 billion, while Solar investment saw a 9% increase to $142.5 billion. And according to Solar Energy Initiatives, the top 20 commercial solar users in America have installed more than 1.2 million photovoltaic panels covering more than 544 acres of rooftops, with photovoltaic installations growing 76% over 2011.
Canadian Solar Inc. (CSIQ) last week announced results from Q4 and last year. The company's solar module shipments were up 16% over the previous fiscal year, although net revenue was down to $1.3 billion from $1.9 billion in 2011. The company exited the year with cash, cash equivalents and a restricted cash balance of $564.3 million, compared to $690.8 million as of September 30, 2012.
Operating cash flow was -$36.3 million in the fourth quarter of 2012, compared to -$57.6 million in the third quarter of 2012. The company's CEO remarked:
"Canadian Solar has fared better than most of our competitors. We have further increased our market share, and rapidly established our total solutions business with investments in the mid- and downstream segments. We have, at the same time, achieved one of the lowest production costs among our peers, and we also achieved a more evenly balanced geographic distribution."
Canadian Solar makes low-cost solar modules for sale to customers worldwide across the U.S., Germany, France, Spain, Italy, South Korea, Canada and China. Despite recent headwinds, the company's revenue has grown from a paltry $18.3 million in FY 2005 to the aforementioned $1.9 billion in 2011 and $1.3 billion in 2012.
Suntech Power Holding (STP) is a solar energy company that makes - until recently - photovoltaic products for use in utility applications. The company has been making news of late, as it has purportedly run out of cash, making it unable to fulfill a required $541 million bond payment due last Friday. The company disclosed in July 2012 that it had invested $690 million worth of German Bonds that may have been fraudulent, and just last week, the company closed its Goodyear, Arizona facility.
FuelCell (FCEL), meanwhile, also recently reported a gross loss of $2.3 million for Q1, 2013 compared to a gross profit of $2.1 million in the same quarter a year ago. For the full-year 2012 that ended October 31st, revenues were basically flat at $122.6 million compared to the previous year.
First Solar (FSLR), on the other side of the coin, recently announced record net sales of $1.1 billion for Q4 2012, an increase of $236 million from the third quarter of 2012 and $415 million from the fourth quarter of 2011. The company made $3.4 billion for the full year of 2012, and cash flows from operations were $328 million in the fourth quarter alone.
JA Solar Holdings (JASO) expects to post Q4 and full-year 2012 results next week. The company sells solar wafers primarily to solar module manufacturers in China, Europe and the U.S., who then integrate its products into components and systems. JA Solar is a little different than its average peer, in the fact that it borrows for capital expansion, rather than choosing to employ earnings dilutive issuances.
Overall, clean energy - including solar energy - remains a largely emerging industry. According to Ernst and Young's recently released "Renewable Energy Country Attractiveness Index," China takes the crown followed by Germany, the U.S., India and France. In Solar specifically, the U.S. ranked No. 1. Clearly, this industry is worth paying attention to, and like all investment strategies with market-beating potential, we'll bring you up-to-date information surrounding the companies mentioned here.