Solar Energy Continues to Shine

The first quarter has been a rough one for most solar companies. Aside from First Solar (FSLR) whose profits tripled, most solar companies reported decreases in their profits and some losses. But the last two reports (from Trina Solar and China Sunergy) paint the picture of a potential return to profitability in the second quarter. Solar companies to watch include; LDK Solar (LDK), Canadian Solar (CSIQ), First Solar, SunTech Power Holdings (STP), SolarWorld (SRWRF.PK), Sanyo Electric Co. Ltd (SANYY.PK), Panasonic (PC), Energy Conversion Devices (ENER), Yingli Green Energy (YGE), and Trina Solar (TSL).

Prices fell faster than costs

In the first quarter, the average selling price (ASP) of solar modules fell like a rock. Meanwhile, solar producer costs fell less quickly. For instance, China Sunergy reported its ASP fell 45% from $2.97 in the fourth quarter to $1.64 per watt! This price is 50% below their first quarter 2008 price. Sunergy took a loss of $8.8 million as its costs fell a slower ~37% pace. They estimate a return to profitability in the second quarter on lower costs (since most of their residual high-priced polysilicon has been cleared from inventory).

Sanyo has announced that it has broken its own record for energy conversion efficiency in practical size (100 cm² or more) crystalline silicon-type solar cells, achieving a efficiency of 23.0%—up from 22.3%—for its proprietary HIT (heterojunction with intrinsic thin layer) solar photovoltaic cells.

Sanyo reported the development is part of the effort to expand its solar business, based on its “Think GAIA” branding. The company also said the increase in the solar cell conversion efficiency this time is accompanied by advances that will lower the production cost of the photovoltaic systems and will reduce the use of raw materials such as silicon. The company’s HIT solar cell is composed of a single thin crystalline silicon wafer sandwiched by ultra-thin amorphous silicon layers

Lower Polysilicon Cost Allowing Profit at $2 per Watt

Polysilicon production has now more than caught up with demand. And major polysilicon producer, Michigan-based Hemlock Semiconductor, just announced yesterday the ahead-of-schedule completion of a plant to make an additional 8,500 tons of polysilicon per year (a more than 10% increase in its global supply). The spot price of polysilicon is reported to have fallen more than 60% from last year to as low as $65 per kilogram. Such a low polysilicon price brings silicon-based solar producers back into competition with thin-film players like First Solar moving forward.

Shipments likely to grow in second quarter

Many companies are not only predicting a return to profitability in the second quarter, but an increase in sales. For instance, Trina Solar expects to ship 23-33% more modules April-June (60-65 MW vs. 48.8 MW in the first quarter). Overall, 2009 may be a repeat of 2008 capacity growth levels ~6 GW, but revenue maybe significantly lower. As long as solar producers are successful at reducing manufacturing costs, the future remains bright for continued industry growth.

In general, companies active in lower-cost thin-film technologies will be better positioned to weather the price reductions, but those without differentiated technology will still be at risk.

The sector appears driven by aggressive capacity expansion and the increasing availability of polysilicon, the solar market will grow 48% annually through 2013, reaching 23 gigawatts [GW] from 4.9 GW in 2008. In addition, cuts to government subsidies and aggressive ramp schedules will push the market into oversupply in 2009, when 7.9 GW of modules will be installed.

In the Eurozone, the Spanish market will be limited by subsidy caps and the markets in France, Italy and Greece, will be slower to develop than expected. In Germany, which is the largest solar market today, years of strong investment in renewable energy such as solar and wind will push the market closer to the limits of grid infrastructure, which can only handle roughly 20% of intermittent renewable sources. As Germany approaches this cap in the next five years, growth will be limited to an average of 16% annually through 2013.

Disclosure: As of writing this article, the Author had no direct significant interests in the companies listed.

Comments

[Road Runner:]

Good report. thanks.

Jun 03 10:00 AM

[Davewmart:]

You said: 'In Germany, which is the largest solar market today, years of strong investment in renewable energy such as solar and wind will push the market closer to the limits of grid infrastructure, which can only handle roughly 20% of intermittent renewable sources.'
In fact the vast majority of the renewable power other than hydro in Germany is produced by wind, and the contribution of biogas is limited and solar negligible.
Since the intermittencies of these sources vary at different times, increasing solar would tend to moderate the flux, not exacerbate them.
See the German experiment to balance different sources here:
www.guardian.co.uk/com...
It should be noted thought that in practise the balancing was the result of burning biogas.
Solar output in Germany is neither here nor there from a practical perspective, as most of the energy is produced in the summer during the day when it is not needed - in the winter in Hamburg there is not much sunshine.
Just the same, although I am no fan of renewables where they are not suitable, having a variety of sources increases the stability, and increases the proportion of power that can be obtained by renewables.
Kansas would do a lot better than Bavaria in coordinating different sources, and they could use much more than 16%.

Jun 03 01:09 PM

[ECD Fan:]

I thought China Sunergy makes cells, not modules. Yingli , on the other hand, makes modules with acceptable quality. Their ASPs dropped from $4.11 in the March 2008 quarter to $2.71 in the March 2009 quarter. See
spreadsheets.google.co...

Comparing thin-film with crystalline on price per Watt is dangerous, as it ignores the higher balance-of-system costs associated with the lower-efficiency thin-film (which range from 6% for the a-Si guys to 11% for First Solar vs 15% and higher for the crystalline guys).

There is no way 7.8 GW of PV will be installed this year. The Spanish bubble-burst, the energy cost bubble-burst, and the credit "crunch" all took care of that. The industry better hope they are down just 20% vs last year (in GWs, as they they will be down more in dollar sales).

More details (mainly Unisolar specific) here:

ecdfan.blogspot.com/20...

Jun 03 03:14 PM

[Wisdom vs. ...:]

i do not know if 'intermittent' is a term of art, but this the issue i understand: NG (or other non-intermittent source like fuel cell, nuclear, etc) plants MUST be busy enough to be profitable; in other words, if the ratio of alternative energy production becomes too high, then NG plants will not run enough to pay for themselves. simple, if capital costs are x amount then production MUST be z amount, otherwise you begin losing any increased efficiencies (ie, economic utility) of the alternative energy. we will have the same problem here in the US and china

Jun 03 07:02 PM

[billp37:]

"Solar Energy Continues to Shine"

Perhaps.

fast neutron
Santa Fe, NM
January 12, 2009

From actual experience, wind farms produce 1.2 watts per square meter. Solar Thermal and Photovoltaic methods capture 5 to 6 watts per square meter. There is no economy of size in either technology. Dividing the watts you need by those values gives the land area in square meters needed to produce the juice. The numbers are astronomical

www.topix.net/forum/so...

Jun 03 09:13 PM

[SHASHIDHARA.BV:]

Definetly the module prices are coming down.But this trend is also making people to adopt wait & watch approach.

Jun 04 12:56 AM

[Road Runner:]

Davewmart, Very good in noting that balancing was achieved by using biogas, and not by solar and wind alone. This makes the study useless, in my opinion. It's obvious that biogas can be used to even out power production because it can be stored. It's no different than saying that a natural gas power plant can be used to balance power production.

Jun 04 02:20 PM

[frflyer:]

Ignore the spamming by billp37, same old nonsense


As far as intermittency that the grid can handle; what the author says about a 20% limit only applies to a non-smart grid and to one with no energy storage technology. Sweeping generalizations like his are misleading.

Jun 07 03:05 PM

[AA345:]

LDK is just broke out from the 11.50 level. Next form of resistance is around $15.

Jun 10 05:45 PM