Flummoxed by Solar Market Action?

These aren't heavyweight deals but with all the fuss about Spain (and if it's not Spain, it's Germany, and if it's not Germany it's the US, and if it's not US, they will find something), it's nice to see some deals with a brand name in Italy for both Suntech Power (STP) and Trina Solar (TSL). I had to hit refresh on my screen about 8x to make sure the quote was correct on the latter - I believe the last time it was up 5%+ might of been the Carter administration. Ok, I exaggerate.

• Chinese solar companies Trina Solar Ltd (TSL) and Suntech Power Holdings Co Ltd (STP) have signed separate supply agreements with a unit of Italy's biggest power company, Enel SpA , the companies said on Tuesday.
• Suntech said it would supply Enel.si with 30 megawatts of photovoltaic solar modules later this year and in 2009.
• Trina said it would supply the company with 17 MW of modules starting this year.
• Enel is a world leader in generating electricity from renewable sources. It plans to spend 7.4 billion euros on such investments by the end of 2012.

I continue to be flummoxed by the action in this sector - it simply seems like a group that requires the retail trader confidence to be high for the names to move; maybe institutions still do not believe in the story. It's coming; investors seeded $148 BILLION into solar, wind, and other renewables in 2007. In fact as I think about what the next bubble, pumped up with Uncle Ben's easy money policies, would be (we need one every 3-4 years to keep the mirage that is "economic health" in the US going), this looks like the perfect future target.

As for the U.S. - we are always reactive, not proactive, but once an emergency slaps us across the face and you get us riled up, we really do things right -U.S. Solar Market could Surpass Germany by 2011. Frankly we don't even need "America" - we just need California.

• “It’s got roughly half the population of Germany, twice the incident sunlight and about one-tenth the market of Germany [today],” Johnson said of California.

And probably most important, the smartest kids in the room are snapping up land quietly throughout the U.S. Southwest.

• Solar prospectors tend to be as secretive about their land as forty-niners were about the veins of gold they discovered. Most bids are placed by limited-liability corporations with opaque names that conceal their ownership. And no one has been as quick to move into the Mojave - or as tightlipped about it - as Solar Investments.
• That entity, it turns out, is Goldman Sachs’s solar subsidiary. The investment bank’s designs on the desert are a topic of intense interest and speculation. Goldman declined to comment.

Disclosure: Long Trina Solar, Solar Investments in fund; long Trina Solar in personal account

Comments

[briando:]

This solar move has started today and will continue for the next three weeks. We will see how long it lasts after earnings, and this quarter will really show who the winners will be for the rest of this year.

2008 Jul 29 05:10 PM

[Jack Yetiv:]

Yes, I agree with briando. It wasn't just TSL that moved nicely today--SOL and CSIQ both moved around 10% (or more) as well.

The whole sector has been beaten down far more than needed (but that's how the markets work--they overshoot to the upside and downside), and we have about 10 solars reporting in the next 3 weeks. The news this quarter will be very good to excellent, and I think the news going forward (guidance) will be at least good to very good, and excellent for some companies.

So I do expect some decent moves (30-50% from today's close) out of the solars, especially SOL, TSL and CSIQ.

Jack

2008 Jul 29 05:51 PM

[dicki31785:]

Dear Trader Mark,

Interesting view on California...but i wouldn't count on that yet....I am pretty cautious concerning your view considering in 2007 the US in total installed, depending on estimates, 150 MW....and to reach Germany, Cali would have to install 1,3 GW(2007 data).....Their is still huge steps to be done until 2011...But that California is ideal for solar power is undebatable...

Dear Jack...I Turned out to be pretty correct concerning Italy...I expect about 300 MW-400 MW out of them next year and 500-600 MW in 2010....Greece has a huge backlog for subsidies about 2 GW of PV projects applied for subsidies...So watch for that country in the next months...they need to just eliminate all those bureaucratic problems to get those things installed and you have another huge market with 300 MW annually....Though Greece's solar renewable targets are set quiet low as of now...but that will change as of next year...

It is quiet tough to see where we are going in 2009...But I have been working hard the last couple of days to get a good estimate for 2009(at least for Europe)...Still not through all the countries but it is looking nowhere as gloomy as expected...All this Spain hype is so grossly overdone IMO(As also the installed 1.1 GW for 2008...Maybe cumulative but certainly didn't install that much IMO but that is more of a guessing game at this point)...As I said I am not through but as of now I can imagine a growth rate of 20% just for EUROPE not the world...Ill let you know country by country what I expect in a couple of days if you are interested...With kind regards from Germany CW

Long ABX, AUY, CSIQ, ESLR, SSL, TSL

2008 Jul 30 04:27 AM

[dicki31785:]

I Actually have a preliminary version finished just with total MW installed in the EU (inc. Sui):

2007 1545.19 MW
2008 2190-2290 MW (41.0%-48.2% growth)
2009 2510-4000 MW (14.6%-82.6% growth)

2009 Their is certainly a lot of uncertainty as one can see by that huge low(2510) to high estimate(4000) difference of 1490 MW. The low number of 2510 is including the 300 MW scenario for Spain. And quiet the low Germany estimate of 1.3 GW of PV....And also very conservative estimates concerning France and Italy....Showing even with those estimates included their would still be growth in the EU zone of 14.6%...and then consider that worldwide subsidies will greatly expand and then you still have at a bare minimum growth rates of 20-25% and that is the worst case scenario....

So I feel pretty good about the sector at the moment actually...kept on buying CSIQ and TSL and diversified a little bit so I am pretty much strapped for cash in the short term...but I think solars may have found a bottom and if FSLR presents well after hours today....this could be a well deserved good week in the sector and maybe a start of a bull run if Spain announces something before their summer holiday....with kind regards CW

2008 Jul 30 08:44 AM

[RWICZ:]

I hope this time the world does not stop pursuing solar (& wind) energy even if oil drops to $20/bbl. I would like nothing more than to see Arabs eat their oil.

2008 Jul 30 01:10 PM