vitamin_j

Five Top Solar Power Stocks

I would strongly second aquaculture. This article is full of flat-out wrong information.

Evergreen Solar, for example, is not a thin-film solar company. They have a "string ribbon" technology for working w silicon, but it has nothing to do w thin film deposition, nothing at all.

China is definitely not the world's second biggest market - I don't know where that comes from. Spain was probably number two last year - since the Spanish subsidy change, no one knows who's number two this year. It could be the US. But it's not China. They're just getting started with their market.

Also, anyone who knows anything about installations would mention the role an inverter plays, rather than a "control system." (Why not just say "thingamajig"?)

The conversion efficiencies described are way off too. First Solar's thin film panels regularly convert 10% today. Commercially sold silicon panels today are more like 14-15%. Top lab-tested panels are at least in the high 20s, perhaps even more. These numbers make a difference.

The list goes on...

Solyndra Chief Scientist Markus Beck Defects to First Solar

Note typo "arleady" in 2nd to last line.

Analyst: First Solar Reaches Grid-Parity Milestone

I agree with above two comments. While it is in the interest of individual companies and investors in those companies to claim their own measures of "grid parity," it is in the interest of the solar industry in general to come up with a uniform, accepted standard for describing total cost of a solar kwh and comparing that to the cost of grid power in a given region.

Three Things Obama Will Do to Advance Alternative Energy

I want to see an initiative to put solar on government buildings as much as the next guy, but I think it's premature to say it's "clear" such an initiative will occur. I for one have heard nothing definite on solar from Obama. The only energy "source" he has mentioned as a specific initiative in his transition is efficiency, specifically in schools. If he's made an actual statement that he's going to do something involving solar, I'd appreciate a reference. Otherwise, nothing is "clear" when politics are involved.

"Companies who have domestic production should benefit, including FSLR, STP SPWR, ENER." - Factual error. STP does not have domestic US production (if that's what the vague phrase "domestic production" meant). They have a US sales office, and now a US based installation venture, but no production. They've talked about building a US factory, but haven't yet bc of the credit crisis.

"Wind energy has been proven cheaper than solar and has achieved grid parity to some extent." - This shows a lack of understanding of what "grid parity" means. In California, Hawaii, Italy, and other markets, the annualized cost (over 20-25 years) of installing solar on a large home and the cost of buying grid power at current rates is equivalent. Tiered rates and peak power make a big difference. In places like Alabama, where electricity retails for 7c/kwh, solar's a long way off.

So to compare wind and solar in terms of an abstract "grid parity" is really not meaningful.

With Thin Film, U.S. Might Take the Lead in Solar Market

I would like to hear more discussion of these products in terms of "balance of system" costs. Greentech Media has put out good articles on this recently.

While I don't consider it an "either/or" proposition, I'm still skeptical about thin film because of its low efficiencies. If, in a rough comparison, you need two thin film panels for every one crystalline silicon panel, that's twice as many mounts, and twice as much space used per installation. Those two factors add to costs and limit thin film's advantage.

I'm interested to see how some of the new non-panel technologies look - Nanosolar claims to offer a skin you can just unroll on a rooftop, for example. They also claim higher efficiencies. Then again, they are famous for claims, not yet famous for results.

Suntech Power: Now a Takeover Target

That 50% thing appeared on the STP chat board last week and may have come from an article in China with potentially questionable translation. Anyone who wants to appear credible on solar can't just throw out such a figure without better citation or explanation. It's like saying, "Yes, and their plans for cheap cold fusion should also help them grow revenue." Huh?

Of course, this author doesn't seem very credible. Anyone who says

"As the top two solar companies, Suntech Power (STP) and First Solar (FSLR) dominate the European and U.S. markets respectively."

not only hasn't done their homework, they haven't even cracked the book. First Solar has sold almost exclusively in Europe, almost exclusively in Germany, and is just now moving into the US. Suntech is a similar story, though they also have some Asian sales. I'll take my information from someone who actually follows the companies, listens to cc's, thank you.

Finally, I would question whether anyone could just acquire Suntech without some intervention from the Chinese government. My sense is that they wouldn't just let their flagship solar company be sold off to the Japanese or the Americans without raising some barriers - similar to when the Chinese wanted to buy that oil company of ours.

Four Reasons to Expect a Solar Boom

Look, I own STP and think the company's real good. However, your assertion

"Companies like First Solar and Suntech Power are self-funded companies that have been making money all the time, and these two companies have sufficient funds to expand their businesses."

is not true. Suntech has been partially funding its Capex through debt issues, most recently this past March. First Solar does indeed fund its expansion entirely through free cash flow. This makes it almost singular among solars. Suntech is one of the best of the silicon-based companies, and unlike most goes in and out of positive free cash flow. Also unlike most other Chinese solars, it is sitting on quite a money pile at the moment, which should give investors greater confidence for near-term headwinds. However, to imply that it funds itself solely through retained earnings like First Solar is misleading.

Solar Stocks Are Now Attractive Again

This author doesn't seem to understand that FSLR, STP, and LDK are very different businesses within the solar industry. Factors that will lead one to succeed may not do so for the other.

A stock screener can tell me who has a low forward P/E and other various pretty numbers. If I'm going to decide on a company's value, I better understand their business and what variables will affect it in the future. This writer doesn't help much there.

Game Changer in Solar Energy: PG&E Inks Deal

I hate to use the C word among this august group of commentators, but does anyone here see this announcement, as Cramer surely would (from his recent talking seizure caught on video), as an indication that only utility-scale projects will realize the cost efficiencies necessary to make solar economically sensible? That such projects will keep the residential/small commercial market a boutique business?

I hate to bring Cramer into this - he is an obnoxious and damaging noisemaker. However, it is true that residential installation is a tough tough business. As an Akeena shareholder (please, castigate me), I watch any potential profits they make devoured by the ballooning costs of selling and marketing. Where one customer, a utility, buys enough capacity to power 240,000 homes, if you're going by the residential model, you'd have to make 240,000 separate sales to accomplish the same thing. That's partially a simplification, but it does make me wonder.

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

I dunno, alpha. Suntech experienced about double the demand for what it could supply this year, and has already sold into next year. That doesn't mean that oversupply couldn't happen, but it doesn't seem like the most pressing problem. Also, new markets are opening up, as the other commenters indicate; electricity prices will be rising, not falling. And falling silicon prices will ease margin pressure from lower panel ASPs - in '09 lower silicon prices will probably increase margins, falling more than ASPs.

Perhaps you might also elaborate on which companies you think will win, if in fact some are destined for the scrap heap via a panel price war, and why. Finally, if your top secret numbers are so great, make a few million and live in style off them, but don't blog the sky is falling and then not back it up with any meat.

Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues

I'd like to hear the blogger's thoughts on Suntech and their strategy. I am a Suntech bull. To add to Jack's comments, they are another company that has reported signing supply agreements with prepayments in the low single digits, and they indicate that these long-term supply contracts will give them 20% lower (than 2007 costs) silicon costs for I believe 800 MW of product in '09. See their recent presentation at InterSolar for the exact details - I'm working from memory.

If you believe long-term, diversified silicon sourcing (they call it "virtual integration" compared to vertical integration) is the way to go, I would think Suntech would be your silicon PV company of choice. They were cash-flow positive before they did their convertible offering in March - a move that solars like Trina and CSIQ are just now making - and have locked up plenty of supply since then. This would give them a major advantage over those players that still need to sign deals to secure a part of their '09 product. Suntech has done this and they still have plenty of money in the bank.

Possible downsides include the fact that refining silicon is very complicated. If MEMC can have a plant shutdown, then any of the newer startups are almost bound to have this occur. Also, I could envision a scenario - though it seems unlikely - where silicon prices decline so much that Suntech finds itself locked into higher rates than it could find on the spot market. Again, such a scenario seems remote.

As Intel Joins the Solar Sector, Is There Room for Everyone?

Mark, you mention how SpectraWatt will be positioned in the solar value chain, in direct competition with JA Solar (and Q-Cells, which I don't think you mention), while serving the "module makers."

Why not go one step further and say that, if SpectraWatt can successfully apply Intel manufacturing advantages, at least some significant benefits will go downstream to those module makers, and, one assumes, to system integrators/installers like Akeena? How fair an assumption do you think that is?

As Intel Joins the Solar Sector, Is There Room for Everyone?

I have a big picture question for Jack and Mark:

Isn't "grid parity" for solar a bit of a paradox, since as companies get closer and closer to achieving it (Suntech's CEO actually threw out a cost/watt, I think around $2, at InterSolar de), global demand will increase on an exponential curve (STP CEO also indicated that China was waiting for this point to really get into solar), keeping prices higher than "grid parity"?

Put another way, will the supply chain, even expanding as it is, be able to absorb an exponential increase in demand? Will it do this smoothly or do you think there will be a series of hiccups (like the 2002-2007 spike) that will swing prices around violently?

Which Solar Stocks Will Continue To Shine?

I think STP is currently a great company at a good but not great price. The others are OK companies at great prices. With a horizon of more than a year (outside Yetiv's range I think, to be fair to him), I'd rather own the great company. From this extended POV, I find it quizzical that Yetiv's playing a value game in a growth sector, putting it all on forward P/E as he does, and all for 3-4 month swing trades. Of course, it seems to work, so I can't begrudge him that. More good fortune to you, sir.

However, I would add to Yetiv's risks that, by following his method and ignoring industry forces and qualitative factors for a company, if unforeseen circumstances soured on your 3-4 month gain, you'll either have to unload at a loss or hold a second-tier solar through an industry shakeout that first tiers like Suntech are going to win.

First Solar's Future: Bright or Dim?

Agreed that FSLR is pricey, with a lot "baked in."

But what's with the discussion on solar ROI? You do mention different conditions in different states, but otherwise I have to say you've got some pretty shoddy assumptions. Ever hear of net metering? Peak rates? Subsidies are part of the picture right now, sure, but aren't the only way a system pays you back. What about the life of the system, given that most panels have a 25 year warranty, and that panels made 40 + years ago are still working fine today? Are you assuming that power rates remain fixed? Do you see any value in solar as a hedge against power rate changes? What are the chances solar system owners would get carbon credits they could sell to coal companies under a cap-and-trade system, given that all three presidential candidates support some version of such a system?

Yes, solar might still be impractically expensive in Texas and much of the country, but there are other US markets (California) where it is prudent economic decision today, and still further markets where it will soon be one.