Asia's Solar Industry Warms Up

It is obvious that Asia's PV market is heating up not only in China, but also in Japan. According to Japan's Kyodo News agency report, Sanyo Electric (SANYY.PK), Sharp (SHCAY.PK), Mitsubishi Electric and another 24 solar cell manufacturers in Japan reported second-quarter sales of solar cells in Japan rose 82.5 percent year over year to 830MW, a record high. The new-to-power Democratic Party has decided to implement a new policy for the power companies to buy up the electricity generated by home solar power generation systems. It is reportedly believed that the new government has pledged to speed up the green revolution along with China, and solar energy will be one of the industries promoted under the new administration.

Under the new initiative passed by the Chinese congress, China has set a goal of 20GW in solar energy by 2020. Many companies have signed mega contracts with local governments, with sizes ranging from 100MW to 600MW. On Tuesday, China granted a solar farm contract to First Solar (FSLR), and the company has agreed to built a 2GW solar farm in Inner Mongolia by 2019. The latest winner is China's Solarfun (SOLF), which signed a 600MW contract to build a farm that is adjacent to First Solar's 2GW farm. China has set Inner Mongolia as the solar energy base for providing electricity to the entire nation. It is expected that Solarfun (SOLF) and some other Chinese solar names will get more contracts down the road. Companies such as Renesola (SOL), JA Solar (JASO), Yingli Green (YGE) and Suntech Power (STP) are gaining ground in the Chinese solar market. Goldman Sachs has put Renesola in the conviction buy list due to its improving business model and the potential. The following is the listed of companies who recently signed mega contracts:

• Solarfun (SOLF, $280M): 600MW, Inner Mongolia
• ReneSola (SOL, $310M): 650MW, Jiangsu
• Yingli (YGE, $1.5B): 600MW, Multiple locations
• Suntech (STP, $2.6B): 1.8GW, Multiple locations
• Canadian Solar (CSIQ, $600M): 500MW, Inner Mongolia
• LDK (LDK, $1.1B): 500MW, Jiangsu
• First Solar (FSLR, $12B): 2GW, Inner Mongolia

With many solar farms planned by the Chinese government, the blame of oversupply of polysilicon seems overdone, and we may see wafer prices pick up sooner than later when these solar projects kick off in the near future. The Chinese government seems to have decided to promote solar energy instead of wind energy.

Disclosure: Author is long FSLR, SOL.

Comments

[jerrydd:]

2 GWts/yr is not that much. Only 1 coal plant worth.

They would be far smarter building home, small business size solar CSP's that can store heat for 24/7 use and heating as a bonus, cutting much coal use for that. CSP would cut 2-3x's the coal use as PV does.

In China a 5hp/3kw electric, 9kw heat CSP could be built, sold for under $3k, far less the 3k. of PV ever will and PV doesn't include the heat bonus.

Sep 10 09:16 AM

[jerrydd:]

Home wind in China doesn't need subsidizing as they are selling it at $.5k/kw now. It's sold for $1k/kw here in the US.

Sep 10 09:19 AM

[Davewmart:]

Where natural gas is in adequate supply, it can greatly help to integrate renewables into the grid, as in practise that is what is used to counter intermittency.
In this respect this German initiative is important:
www.greencarcongress.c...
Using the natural gas in the home means that you don't have to waste the excess heat when you generate electricity.
There are two other approaches to this issue, both more suitable for individuals seeking to provide heat and electricity for their own home more efficiently, where they can get natural gas
They are fuel cells:
www.cfcl.com.au/BlueGen/
And a Sterling Cycle engine:
www.whispergen.com/
Both would be a very efficient way of getting power in the States, especially in conjunction with tow other great ideas, solar thermal panels, which make sense almost everywhere, unlike expensive solar PV, and CO2 air source heat pumps, which can now operate down to very low temperatures:
www.jarn.co.jp/News/20...

China has massive numbers of solar thermal panels installed.

Sep 10 09:49 AM

[Ming-Wei/Ming:]

For un-bias news, PRnewswire stand out. It does used emotional or colored words report news and facts. In the business world, a lot of news media put emotional wording to report news and fact. This practice does intend manipulating! When First solar had good news, every media reported with enthusiasm. When Chinese solar had good news, they pretend it is not exist. When LDK Solar Completes First Polysilicon Production Run at 15,000 MT Polysilicon Plant, no other media but PRnewswire ever noticed. For an investor, the importance of this means LDK will reduce their silicon cost and return to profitability.

Sep 10 11:09 AM

[jimp:]

Jerrydd & others,

Do you like EMKR for CSPs?

Thanks

Sep 10 12:44 PM

[ldker:]

Ming/Wei, what is the deal with the rumor that LDK is producing Poly at $25 KG? look at link:

www.jlmpacificepoch.co...

the above link is by a news company that is often referred to by Briefing.com. Could it be a misquote? If it is true it wld be huge for LDK.

Sep 10 02:46 PM

[Road Runner:]

You want me to pay for news? How do I know I am going to get my money's worth. I'm willing to pay for Wall Street Journal online, but PRnewswire? Who are they?


On Sep 10 11:09 AM Ming-Wei/Ming wrote:
> For un-bias news, PRnewswire stand out. It does used emotional or
> colored words report news and facts. In the business world, a lot
> of news media put emotional wording to report news and fact. This
> practice does intend manipulating! When First solar had good news,
> every media reported with enthusiasm. When Chinese solar had good
> news, they pretend it is not exist. When LDK Solar Completes First
> Polysilicon Production Run at 15,000 MT Polysilicon Plant, no other
> media but PRnewswire ever noticed. For an investor, the importance
> of this means LDK will reduce their silicon cost and return to profitability.

Sep 10 06:01 PM

[wind4me:]

dude, how did your '''I missed APWR story work out for ya"????

Also, the FSLR was an """MOU""" and not a contract, quite a difference between an MOU and a contract as U reported but U also missed APWR so why do I even read your dribble???

Sep 10 06:22 PM

[boisterousbob:]

Really? LDK are able to make polysilicon at $1/kg but at spot price on the open market it is under $.50/kg.

LDK will be able to control their costs if polysilicon recovers notably in price, but they have to wait for that to happen before they can hope to gain any efficiencies from their own planty


On Sep 10 11:09 AM Ming-Wei/Ming wrote:

> For un-bias news, PRnewswire stand out. It does used emotional or
> colored words report news and facts. In the business world, a lot
> of news media put emotional wording to report news and fact. This
> practice does intend manipulating! When First solar had good news,
> every media reported with enthusiasm. When Chinese solar had good
> news, they pretend it is not exist. When LDK Solar Completes First
> Polysilicon Production Run at 15,000 MT Polysilicon Plant, no other
> media but PRnewswire ever noticed. For an investor, the importance
> of this means LDK will reduce their silicon cost and return to profitability.

Sep 10 09:04 PM

[boisterousbob:]

Sorry I meant $100 and $50. If polysilicon prices don't recover LDK will be left with a $250billion white elephant. If you are investing watch out carefully for the rate at which they are diluting their shares to pay for this....

LDK is heading down the value chain into the lower margin areas while it's competitors are heading up the value chain more aggressively into higher margin system level work.

For what it's worth (maybe not much :) TSL is much stronger IMHO.


On Sep 10 09:04 PM boisterousbob wrote:

> Really? LDK are able to make polysilicon at $1/kg but at spot price
> on the open market it is under $.50/kg.
>
> LDK will be able to control their costs if polysilicon recovers notably
> in price, but they have to wait for that to happen before they can
> hope to gain any efficiencies from their own planty

Sep 10 09:08 PM

[boisterousbob:]

Wow that is interesting. It's not what he said on the last Q conference call...


On Sep 10 02:46 PM ldker wrote:

> Ming/Wei, what is the deal with the rumor that LDK is producing Poly
> at $25 KG? look at link:
>
> www.jlmpacificepoch.co...
>
> the above link is by a news company that is often referred to by
> Briefing.com. Could it be a misquote? If it is true it wld be huge
> for LDK.

Sep 10 09:10 PM

[boisterousbob:]

Sorry for multiple posts. This is so curiuous.

He says their poly costs are below $25/KG, but he doesn't say they are making it themselves!

BTW they haven't depreciated any of the capex on that plant yet...

:)


On Sep 10 09:10 PM boisterousbob wrote:

> Wow that is interesting. It's not what he said on the last Q conference
> call...

Sep 10 09:14 PM

[ldker:]

Read:

"LDK's silicon costs are below $25 per kilogram at present and will drop below $20 in the near future..."

That seems pretty clear to me.

Still I want verification and I am shocked no one has followed up on this.

Sep 11 07:32 AM

[KBEMN:]

I think the $25/kg is the production cost, not including capital depreciation of ~$60/kg (20% of ~$1.6 B = $320M for 5000 MT = 5M kg), or total cost of production of ~$80/kg, same guidance for initial production given in past CCs.

Sep 11 10:39 AM

[ldker:]

Still we need some DD out there to exactly what the end cost is if $25 kg is just the production cost. It seems to me reading the last CC trasnscript, they are hell bent on get production cost optimized. They say in the CC they feel they could get production cost to the low $30's/KG. Well, at $25/KG or lower they have. So, again, what is the final end cost of 15,000 MT?

It appears to be lower than the $80KG by as much as $10 KG.

Current spot price for Poly = 62.50 KG

LDK Poly Price with 15,000 MT Train= ??????

Sep 11 12:45 PM

[Ming-Wei/Ming:]

If LDK's polisilicon cost at $25/kg, spot price over $60/kg, it will reduce LDK's polisicon cost by year end. Unfortunately, short interests increase to 21,116,900 (21 million), 19% of total shares or about 60% of float? Suppose the controlling owner, CEO Peng, will not sell his shares. They must bet that LDK can only produce polisicon at $80/kg, like they did at their smaller plant while market at $60/kg and falling. Polysicon price should fall, is'nt it?

Sep 13 01:06 AM