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Mon, 17 Dec 2012 17:05:16 +0000

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Final answer: U.S. hits Chinese solar makers with tariffs

Ucilia Wang — Wed, 07 Nov 2012 19:06:46 +0000

The trade complaint against Chinese solar cell makers drew to an end on Wednesday when the U.S. International Trade Commission (ITC) sided with U.S. solar manufacturers, agreeing that yes, U.S. solar makers have indeed been harmed by Chinese competitors. It’s a decision that will keep in place tariffs on silicon solar cells coming out of China.

The ITC agreed in a 6-0 vote that Chinese solar producers have benefited from illegal subsidies from the Chinese government and sold products at below fair market value. The ITC’s findings corroborate with the decision by the U.S. Commerce Department in October. The two agencies have to agree on the allegations before the tariffs set by the commerce department last month officially take effect.

Whether slapping tariffs on imported Chinese solar cells will achieve the ultimate goal of the trade dispute – to even the playing field and foster healthy competition – remains to be seen. So far, the dire predictions about the impact of tariffs from both sides of the disputes haven’t taken hold even though the U.S. government began collecting tariffs –as a result of a preliminary decision by the commerce department – earlier this year. The government collected the tariffs retroactively. Those tariffs will be returned, though, because the ITC didn’t agree with that decision by the commerce department.

Though the tariffs are in place going forward, Chinese companies already have found ways to minimize their impact. They can sidestep the tariffs by using solar cells made in countries other than China and assemble those cells into panels in their factories in China. This approach raises the production cost but not as much as what paying the tariffs would entail. Major Chinese solar manufacturers include Suntech Power, Trina Solar, Yingli Green Energy and JA Solar.

The ITC decision drew to a close a contentious fight brought by a group of U.S. solar cell and panel makers led by SolarWorld, who filed the complaint in October 2011 as the global solar industry saw a rapid decline of solar panel prices because supply far exceeded demand. That glut, which began in early 2011, has contributed to the bankruptcies of dozens of solar cell and panel makers worldwide and stirred up strong resentment against Chinese solar manufacturers, who rose to dominate the world market in the past six years. Silicon solar panels are made up of rows of solar cells, and Chinese companies that make solar panels typically also produce their own solar cells.

Both Solyndra and Abound Solar cited the Chinese companies’ ability to lower prices quickly as a reason for their demise. Solyndra, which is still going through the bankruptcy proceedings, filed an anti-trust lawsuit against Chinese solar manufacturers last month and is seeking $1.5 billion in compensation.

The glut of solar panels has remained, the prices of solar panels are still falling, and the number of manufacturers that are leaving the business is still increasing. GTM Research has predicted that 180 solar panel makers worldwide will disappear by 2015.

The intense competition has triggered similar trade complaints against Chinese manufactures in Europe. The Chinese government, in turn, recently filed a complaint with the World Trade Organization over government subsidies received by European solar panel makers.

On the other hand, the falling prices for solar panels have been a boon for companies that buy and install solar panels. A group that formed to oppose the U.S. trade complaint includes not only Chinese solar manufactures but also project developers and residential solar service providers. Most of the solar power projects that are bidding for power sales agreement contracts with utilities propose to use solar panels instead of other types of solar technologies.

The intense competition, bankruptcy filings and the difficulties of making profits also have generated concerns about the quality of solar panels being made these days. At a conference last week, a Wells Fargo executive said he had been noticing a fair number of substandard solar panels because manufacturers were “cutting corners.”

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A debate emerges: are solar panels a commodity yet?

Ucilia Wang — Wed, 31 Oct 2012 20:55:14 +0000

Solar factories around the world are rolling out over a billion solar panels each year and the price of solar panels is at one of the lowest points in history. So naturally the term “commodity” is being used to describe them, meaning they’re now a product that can be mass-produced and are mostly undifferentiated. But is that description correct at this point in the solar life cycle and, if not, what does that mean for services that have been built on top of solar becoming a commodity (like banks investing in low-risk solar projects)?

“(Solar) modules are not a commodity. We have seen a lot of problems — but we have a lot of modules that perform great, too,” said Brian Matthay, vice president in Well Fargo’s environmental finance group, during a panel discussion at Greentech Media’s solar conference just south of San Francisco this week. “You need to negotiate tough warranties with module suppliers … especially in this environment where people are cutting corners.”

Matthay wasn’t alone at the conference in expressing concerns about solar panel quality and therefore the risk of investing in solar projects, especially since the term “commodity” can imply a standardization of quality. Many solar power plants are now under construction to help utilities meet their state mandates to sell more renewable energy, and those power plants are supposed to perform well for 20-25 years. However, since the solar market is so new, there are very few solar energy projects that have been around for decades.

There has also been an emergence of new companies that finance solar panel projects — selling or leasing panels to consumers, or through crowd-sourcing — and these companies have been assuring their customers and investors that the panels will generate a certain return on the investment over time.

“Even within the same brand, there is a significant differentiation in quality, depending on whether they are from Malaysia, Thailand or China. There are differences in where the modules are built,” said Yuri Horwitz, CEO of Sol Systems, which brokers the sales of renewable energy credits for financing solar energy projects, at the Greentech Media event.

An oversupply of solar panels in the past two years is partly to blame for this worry about quality. Prices have plummeted as a result of a glut that began in early 2011. Dozens of solar manufacturers have shuttered factories of filed for bankruptcies. Maintaining good quality control can be challenging during these hard times.

Many solar panel makers have stepped up their publicity and sales efforts to try to set themselves apart. But with the falling prices -– and they are still dropping -– manufacturers might find their customers more interested in getting a good deal than hearing about technological advancements.

Meanwhile, many startups that have spent billions developing novel technologies have gone out of business or been sold for little money because they had a tough time raising enough money to build large-scale factories and compete on price.

“The number of discussions I’ve had with buyers in the last six months is it’s all about price. Price is the No. 1 thing for us,” said Jonathan Pickering, president of JA Solar’s business in Americas, at the Greentech Media conference. JA Solar makes cells and assemble them into panels.

“I’m worried about all the decisions that are made based on price. Surely when you are at a supermarket, you want to check the label, especially if you are going to eat this for the next 25 years. Is it organic? Does it have high quality?” Pickering said.

So what are some ways to cut the risk of using faulty solar equipment? The solar industry hasn’t yet come up with a good way to test the reliability of solar panels, Matthay said. So developing those tests would be helpful. Doing spot checks of a large shipment of panels for a project also will help, said Jenya Meydbray, CEO of PV Evolution Labs, which does safety and performance testing of solar panels.

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After Solyndra: analyzing the solar industry

Ucilia Wang — Fri, 03 Feb 2012 20:44:10 +0000

Solar companies worldwide will remember 2011 as a dark time in their history. The failing of Solyndra symbolizes that market volatility, and 2012 no doubt started with trepidation. But as we have mentioned before on GigaOM Pro, the industry has survived nonetheless. This report analyzes the current state and future concerns of the solar industry, with a particular focus on the photovoltaic industry and the U.S. market. From the silicon companies to inverter manufacturers to government venture money, here is what to expect as the industry marches toward its uncertain future. Additional companies mentioned in this report include First Solar, Intel, NRG Energy and SunEdison. For a full list of companies, and to read the full report, sign up for a free trial.

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Disappointing solar earnings across the board

Katie Fehrenbacher — Tue, 22 Nov 2011 16:47:30 +0000

Solar manufacturers continue to struggle in 2011 with weak third quarter earnings across the board, as the price of solar panels has dropped by 40 percent, and important European markets have cut subsidies. Solar companies Suntech, JA Solar, LDK Solar and Canadian Solar all issued disappointing earnings on Tuesday with mostly larger than anticipated losses for the quarter.

Suntech

Suntech reported third quarter 2011 revenues of $809.8 million, above investor estimates of $776.1 million, but unveiled a loss for the quarter of 64 cents a share, below estimates, for a loss of 26 cents. In addition, Suntech sees shipments for the fourth quarter of 2011 down by 20 percent. However, shares of Suntech rose on the company’s news that its business in Germany is picking up. Suntech is up 6.28 percent to $2.37.

JA Solar

JA Solar reported a third quarter loss of 376 million yuan ($59.1 million), or 2.28 yuan a share, compared with a profit of 513.7 million yuan ($59.7 million), or 3.14 yuan a share, for the same period a year earlier. JA Solar reported revenue of 2.47 billion yuan ($286.9 million) for the third quarter, down from 3.62 billion yuan ($420.5 million) a year earlier. JA Solar also cut its 2011 shipment estimate to 1.6 gigawatts from 1.8 gigawatts.

LDK Solar

LDK Solar reported a third quarter net loss of $114.5 million, or 87 cents an American depositary share, compared with net income of $93.4 million, or 72 cents, for the same quarter a year earlier. LDK had to write down $47.3 million on inventory due to a “significant drop in market price for wafers and modules” during the quarter. LDK reported revenues of $471.9 million, which was a drop from revenues of $675.6 million for the same period a year ago. LDK’s shares are down 1.77 percent to $2.78.

Canadian Solar

Canadian Solar reported strong revenues of $499.6 million, up 32.5 percent from a year ago. But the company lost way more than expected and reported a net loss of $43.9 million, or $1.02 a share, compared with a profit of $20.3 million for the year earlier, or 47 cents a share. Shares of Canadian Solar were up slightly by 2.73 percent to $2.26.

Image courtesy of WxMom.

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DuPont buys solar ink maker Innovalight

Ucilia Wang — Mon, 25 Jul 2011 15:46:50 +0000

DuPont announced on Monday that it has bought Innovalight, a Silicon Valley startup that makes silicon ink that solar-cell makers can use to improve the amount of electricity that the cells can squeeze out of sunlight. DuPont declined to disclose the purchase price.

By buying Innovalight, DuPont not only added a new material offering to its lineup, it also snagged customers that have licensed Innovalight’s technology. The silicon ink developer has signed up some of the biggest solar-cell makers in the world, including Yingli Green Energy, JA Solar and Motech. Innovalight works with its customers to figure out how to incorporate silicon ink into their production lines, and it sells the ink as well.

A few years ago Innovalight decided to change its business model and has now demonstrated that to be a wise decision. Innovalight once wanted to become solar-cell maker.

Founded in 2002, the company decided to forgo that ambition when the financial market crashed and demand for solar goods dived in late 2008 and first half of 2009. Startup companies were having a hard time lining up money to continue their product development and move into production. Innovalight’s CEO, Conrad Burke, told me at the time that Innovalight needed to steer away from the manufacturing business because it required too much capital.

Since then, the company has to seemed to have found success with the licensing model (and also selling the silicon ink). The U.S. Department of Energy has funded Innovalight’s research and development, including $3 million in 2009 and another $3.4 million earlier this year.

Innovalight targets silicon solar-cell makers who want to boost their solar cells’ efficiencies quickly without only relying on internal technology development that typically requires millions of dollars and years of development time. The rapid decline of the price of solar cells, which are assembled into panels, has prompted solar-cell makers to figure out ways to better compete not just in price but also performance in the last three years. Most of the solar panels sold today are made with silicon.

The prestigious R&D Magazine put Innovalight’s silicon ink technology, which was developed with the help of the National Renewable Energy Laboratory, on its annual top 100 list of innovations this year.

DuPont already is a big player in the solar market. It makes the films that protect solar cells from moisture and other environmental damage. The company said the solar market brought it over $1 billion in revenue last year.

Image courtesy of Innovalight

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China’s role in 2nd quarter greentech figures

Jeff St. John — Tue, 19 Jul 2011 13:00:30 +0000

While China remained the biggest investor in clean energy projects, its funding fell 11 percent to $12 billion from the first three months of the year, according to Angus McCrone, the chief editor at BNEF in London, who said this year is likely to be another promising one for clean energy investment — both for new capital and wider funding, such as refinancing and M&A. However, 2011 will “need to be a strong performer” and see a ramp up in small-scale clean energy projects if it is to exceed the $243 billion in total investment last year, he said.

What to make of the second quarter’s schizophrenic greentech activity? We saw near-record investment in utility-scale clean energy projects but falling valuations for clean energy stocks; big investments in solar thermal projects but struggling markets for solar photovoltaic systems; rising private equity green investment while green VC took a slide.

That’s a lot of conflicting information to work through, but there’s a common thread running through it all: China. The country that has provided the world’s key growth engine for clean energy and green technology over the past few years has begun to see some weakness, and that’s causing ripple effects through the global green economy. In my weekly update at GigaOM Pro (subscription required), I delve into some of the second-quarter figures and related news that point to a slide in China’s preeminence in big greentech investment, and what that may mean for the sector as a whole.

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A Tough Sell: SpectraWatt to Shut Down Solar Factory, Lay Offs

Ucilia Wang — Thu, 23 Dec 2010 01:03:10 +0000

The fate of silicon solar cell maker SpectraWatt has always been a point of curiosity for me, not the least because the startup company is making the same type of cells that its much larger competitors can make and most likely can do for much cheaper. And it turns out that SpectraWatt has indeed been struggling.

The New York-based company plans to lay off 117 workers and close its factory, reported the Poughkeepsie Journal on Wednesday. The company blames the harsh winter that plagues much of Europe now for a lack of demand for its solar cells. Europe, the world’s largest solar market, is buried in snow now, making it difficult to build any solar power projects. But that doesn’t tell the whole story.

SpectraWatt has been trying to build a business during a difficult time. The company was an Intel spinoff based in Oregon, (a $50 million round in 2008), and other investors included Cogentrix Energy, PCG Clean Energy and Technology Fund, and Solon. But SpectraWatt tried to raise money for its first factory around the time when the financial market collapsed in 2008.

In early 2009, it announced a plan to move to New York to take advantage of some generous tax and other state and local incentives, which it said it would use to build a factory with an initial annual production capacity of 60 megawatts. In March this year, SpectraWatt said it had closed $41.4 million in convertible debt and began production. As those of you who understand solar manufacturing know, the start of production isn’t the same as running a manufacturing line at full speed. There is a lag time of typically 6-9 months during which the manufacturer has to troubleshoot technical problems with the new production equipment.

Besides the task of getting the production lines up and running smoothly, SpectraWatt also has to line up customers. The company hasn’t announced any, though that doesn’t mean it has none. But the startup is entering the market at a time when many other silicon solar cell makers, such as Trina Solar and JA Solar, already have hundreds of megawatts of factories. That type of manufacturing muscle can drive down costs significantly. And those are just the companies that make silicon cells. SpectraWatt also has to compete with companies that use different semiconductor materials but are still pursuing the same distributors and project developers like everyone else.

Market research firms do expect growth to slow down in 2011, but that is in comparison to the boom in 2010. Global demand for solar cells and panels grew 196 percent to hit 10.6 GW in the first 9 months of this year, according to Solarbuzz. The market research firm said the full year 2010 market will likely reach 16.3 GW. The market won’t grow as fast next year because of declines in government incentives in European countries such as Germany, France and Czech Republic. Solarbuzz is forecasting a 25 percent growth in the global market in 2011, and it expects market growth to come from mostly United States, Canada, Italy, China and India.

The president of the local chamber of commerce told the Poughkeepsie Journal that SpectraWatt’s factory closure is likely caused by a loss of a major customer. We’ve emailed SpectraWatt for comment about its future plans.

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Image courtesy of SpectraWatt.

Ditch Solar Manufacturing, Look to Software, Services

Ucilia Wang — Wed, 13 Oct 2010 15:03:30 +0000

Where can solar startups find opportunities when their playground is increasingly dominated by giants from other industries? That’s a question that some Silicon Valley solar company executives and investors have pondered for some time now, and manufacturing no longer seems a profitable pursuits for many.

Consider this: The biggest news announced around Solar Power International in Los Angeles this week has come from the likes of General Electric and LG. GE has been vocal about its interest in the solar market, and on Tuesday, it outlined precisely when it can offer products and services and what they will be. It plans to start rolling out cadmium-telluride solar panels via Colorado-based PrimeStar Solar (GE is its biggest investor) in 2011, and it’s now offering copper-indium-gallium-selenide (CIGS) panels from Solar Frontier of Japan. Don’t forget GE is also selling inverters and its project engineering expertise.

LG also announced Tuesday that it’s coming to America to sell its several lines of silicon-based solar panels. It plans to invest $820 million in research and manufacturing over the next five years to generate billions of dollars in revenue during the same period. Meanwhile, Hyundai Heavy Industries, the big shipbuilder in Korea, said Monday it would build a 400-megawatt CIGS solar cell factory in its homeland with a French partner, Compagnie de Saint-Gobain, through a joint venture called Hyundai Avancis.

The encroachment of the conglomerates, combined with the rapid growth of the Chinese solar companies in recent years, has made venture capitalists and Silicon Valley startups rethink their strategies. In manufacturing, there really isn’t much room for new comers who dream of building massive factories. The days of new Nanosolars and Miasoles emerging in 2010 are over. Private investors aren’t so willing to part with their money, and too many manufactures are vying for government subsidies.

Damoder Reddy, co-founder and CEO of venture-backed Solexant, said investors are “extremely shy” about investing in solar manufacturers, particularly since many of their solar investments haven’t paid off. Reddy is still on a march to build his first full-scale factory. Solexant, which prints nanocrystal form of cadmium-telluride compound on metal foil and then sandwiches the cells in glass, is planning a $40 million, 100-megawatt factory in Oregon.

Contract manufacturing and intellectual property licensing will increasingly become an important part of the business models for Silicon Valley technology developers, just as they did for semiconductor startups in the last 20 years. Some solar startups already are moving in that direction. Stion, while building its own factory, also has signed a deal with Taiwan Semiconductor Manufacturing Co. to make its CIGS panels. (TSMC rose to prominence because chip startups could no longer afford to build their own factories.) Innovalight ditched its solar cell manufacturing plan and began selling silicon ink that can boost power generation of solar panels made by the likes of JA Solar and Yingli Green Energy.

Manufacturers that are already producing lighter-weight solar panels that can carpet flat roofs without racks or be built into roofs and other construction materials can still gain a first-move advantage, mainly because it’s a space that many larger manufacturers don’t want to invest in right now. State incentives that encourage adding solar to new homes help to promote these building-integrated photovoltaic (BIPV) products, which don’t stand out nearly as much as conventional solar electric system erected on the rooftops. Success in this field will depend largely on the interest of builders and roofing and other building material companies.

A change in California’s solar incentive program earlier this year allowed builders to bring in a partner who can finance and own solar electric systems on new homes, and that opened up new opportunities for BIPV offerings, said Tom Harvey, director of sales and marketing for SunRun, which has financed solar shingle installations in a new Southern California community built by Toll Brothers. SunRun charges homeowners a monthly fee for using the solar electricity.

The builders “are more concerned about aesthetics. Price isn’t as important as ensuring that their homes look a certain way,” Harvey said.

SunRun also offers an example of the opportunities that haven’t been fully explored. Solar, unlike the chip industry, sells not just goods but also services. Companies like SolarCity are expanding their services to include energy auditing and installation of solar water heaters and other equipment to make homes and businesses use energy more efficiently. Hybrid systems that can generate solar electricity and thermal energy to heat and cool buildings also seem promising.

Valuable services will require innovative software for everything from engineering and installing to monitoring and maintaining solar electric systems. There’s room for companies that can develop good software to help consumers and businesses manage their solar electric systems and overall, monthly energy consumption and expenditures. Some companies developing home energy monitoring gadgets and software are already eyeing this opportunity, but the market is too new to have created clear winners.

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Solar in 2010: Better or Worse?

Kevin Kelleher — Tue, 15 Dec 2009 05:16:18 +0000

Is the solar industry heading into a recovery in 2010? Or will the oversupply of solar modules that helped make 2009 such a challenging year for most solar companies drag on another year? As the new year approaches, the outlook seems as unclear as ever.

On Monday, the bull camp won over a few more converts. JA Solar raised its guidance for the fourth quarter of 2009, expecting solar shipments to exceed 210 megawatts, compared with its previous estimate of shipments between 170 megawatts and 200 megawatts, thanks to “robust orders” from new and existing customers.

For all of 2010, JA said shipments would increase more than 60 percent to between 750 megawatts and 800 megawatts. JA Solar’s stock, which rose 16 percent during market hours (before the announcement), was up another 6 percent in after hours trading to $5.64.

Also boarding the bullish bandwagon is institutional investor Hugh Simon, who co-manages the Dreyfus Greater China Investment Fund (which has gained 118 percent this year). Simon told Bloomberg News that continued stimulus spending by the Chinese government on clean energy would push up Chinese solar stocks such as Suntech Power.

Chinese solar makers, supported by stimulus spending, have been winners in the brutal game of slashing solar costs. Suntech’s stock is up 49 percent so far in 2009, while Yingli Green Energy is up 152 percent and Trina Solar has risen 439 percent.

And last week, Shawn Kravetz, whose firm Esplanade Capital manages a solar-focused fund, said many mainstream investors don’t understand the solar sector and aren’t aware that many companies are profitable. In an interview with Reuters, Kravetz called solar “a meaningful market that can grow ten or 100-fold with companies trading at single digits.”

Experienced solar investors who have endured the past year of module overproduction, scarce credit, slack demand and plunging prices might be skeptical. After all, before the prices of solar stocks plunged, many were surging irrationally as the road to solar riches proved longer and rockier than expected.

So with big investors feeling bullish and companies like JA Solar ramping up production, does that mean the good times are back? Maybe not. If demand among cautious consumers, credit-hungry consumers and deficit-burdened governments doesn’t match increased production, the solar glut could continue.

Paul Lemming, an analyst at Soleil Securities, estimates that the amount of polysilicon for sale will increase by 70 percent as companies add new capacity. But he doesn’t see supply and demand coming into balance before 2011, meaning prices could fall even further. Polysilicon prices on the spot market have fallen to around $55 per kilogram, and Lemming sees them falling to around $35 per kilogram.

In short, the outlook for solar remains as volatile and uncertain as ever. A stronger economy could spur the demand for solar goods. But the solar industry is proving to be a highly cyclical one, where progress comes in fits and starts, and there could be more hard times before solar finally delivers on its mainstream promise.

Image courtesy of NREL.

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