sirfisup

Chinese Lawmakers' New Renewable Energy Policy Will Benefit Solar Companies

What you failed to mention in your comparison of Yingli and STP is that STP has a huge advantage over YGE in the technological advancements it has already made with their Pluto Technology and is already working on 2nd and 3rd generation amorphous silicon solar cell advancements of which IMHO will position STP well ahead of YGE and matter of factly will leave them in the dust. STP is a much better positioned company regarding product diversification and is far better positioned to resume significant growth as they now are well positioned for larger scale utility projects. STP ownership made only one mistake and perhaps it will not be the impediment that most people think and that was to negotiate long term silicon contracts and when the economy went south had to write down their losses which were principally overinflated payments for raw materials. Fact is that STP did the smart thing and came up front and center unlike LDK which likes to decieve its stockholders as witnessed by their massive losses in 4th Q and very poor 1st Q forecast. STP also added to their cash position and is being conservative with Capex so that they will meet their debt obligations. Fact is that STP's diversification with BIPV thin film and increased cost efficiencies through Pluto will make it clearly the most cost efficient PV company in China and will ultimately be the lowest cost per watt producer of panels as solar cell efficiencies improve and raw materials remain at their current prices. When and if prices for raw materials inccrease which many people feel will happen with rebound in technology sector for silicon demand expected in 4th Q of 2009. Either way STP will benefit from new reduced raw material contract pricing for silicon and if silicon demand increases STP will be miles ahead from their competition because they have secured long term contracts while competitors will have to pay a premium for silicon when spot prices spike. Don't discount STP's ability to navigate through these troubled times and when the business climate should change I expect STP to be well positioned for the world adoption of solar as cost per watt continues to plunge and solar becomes more cost efficient than coal.

Could PV Go the Way of Toasters?

Innovation and improving cost efficiencies along with low labor costs are the driving engines for solor growth worlwide.

It is comical to think that STP is not investing a significant amount of R & D to further improve solar efficiencies and their management team is light years ahead of many other solar PV manufacturers.

Additionaly STP has a very diversified product mix and is more diversified IMHO of any large PV manufactuer.

The capex reduction in 2009 is nothing unusual considering the world recession and oversupply of panels however the 4th Q writedowns were more closely related to STP's polysilicon contracts which were higher than spot market prices.

STP has since renegotiated contracts with their main suppliers and will benefit considerably as the weaker hands in the Chinese PV business are either driven out of business or taken over by the larger players. IMHO it is more likely that the bigger Chinese solar players will not come to the aid of the smaller companies and will be the direct beneficieries as more and more companies will want to do business with established companies who can ensure thet prices and warranties will be enforced.

Its just a matter of when the solar industry will trend up again and most anaylysts see 2011 as the breakout year and we all could see some significant increases in world demand and should be near or close to grid parrity.

The analogy of toasters is bit far fetched and with silicon prices continuing to fall it is more likely that a company like STP with huge labor cost advantages will actually be selling their panels which are more cost effient and power efficient at lower costs than FSLR who for the moment are the market leaders in avg cost per watt but for how long they remain the leader is the bigger question. I wouldn't underestimate the power of the Chinese economy and unlike the US the Chinese need for renewables will far outpace the US demand and will surely benefit the Chinese solar manufacturers and a company like STP will have the most to gain when prices reach grid parrity.