A few key takeaways from October’s Solar Power International show in Los Angeles, courtesy of analysts Satya Kumar from Credit Suisse …
A few key takeaways from October’s Solar Power International show in Los Angeles, courtesy of analysts Satya Kumar from Credit Suisse and Deutsche Bank’s Peter Kim in observations filed during the show:
Module demand, pricing power
Module suppliers were “almost unanimous” in their confidence about 1H11 demand for solar modules, and also that module pricing will hold up well–assuming no “low-probability factors” such as hard caps in big markets like Germany and Italy, according to Kim. Costs are trending higher from polysilicon to wafers to cells, but should moderate by year’s end or early 2011, while offsetting price increases–bad news for companies who lack vertical integration, good for those who can take advantage of higher ASPs. Look for a stronger Euro “to be a meaningful contributor to pricing,” he wrote.
Spot prices for polysilicon have reached $80-$90/kg (vs. $70-$75/kg in September and $50-$55/kg in 2Q10) and chatter at the show suggested spot prices could increase to $100/kg for small volumes, observed Kumar. LDK said prices were up to $1.00-$1.10/W on the spot market, with “significant volumes” sold >$0.90/W. Most companies see cell prices in the $1.35-$1.40/W range, with LDK indicating up to $1.50/W for some transactions. Cell prices were the first to go up during this cycle, followed by wafers and polysilicon, Kumar noted–but it’s unclear whether cells also will lead the way back down.
Module prices of $1.80/$1.85/W during SPI are expected to increase through early 2011, and could push poly prices to $120/kg, helping upstream-focused suppliers, Kumar noted. Meanwhile, First Solar has been building customer goodwill thanks to its “very reasonable” prices; Kumar suggests the company has been locking in €1.00-€1.05/W pricing in 2011 for recent module contracts. He noted that German installers say €1.00-€1.20/W (ground-mount) and €1.20-€1.25/W (rooftop) are needed to keep their markets viable in 2011.
Upstream vendors of silicon wafers, cells, and panels may be bullish, but “downstream contacts so far are a bit more circumspect,” Kumar wrote, with distributors acknowledging tight near-term supply for panels, and hopes for pricing leverage for installers into 2011.
Spotlight on BOS, inverters
Balance-of-system (BOS) technologies, particularly inverters, continue to get a lot of attention. Long the main bottleneck for PV system installations, tight component supplies (most notably IGBTs) are easing, Kim reported, based on meetings with several inverter/microinverter vendors. Visibility into demand extends “well into 2011,” and cost reduction efforts from “the largest of the inverter suppliers” should lower costs and pricing long-term. Other takeaways from the inverter suppliers included pushing inverters beyond power conversion to being the center of power generation and control (reactive power, voltage and frequency stabilizer), as well as handling data–enhancements that sound “very similar to descriptions of smart grid, smart meter, and demand response capabilities,” Kim noted.
CIGS still rising
The emerging viability of CIGS took another step at SPI, with thin-film CIGS coming up “repeatedly” in discussions about module technologies and trends, and nods to recent news announcements from GE and Solar Frontier, TSMC’s CIGS investments, and Wal-Mart using CIGS modules. “Commercial proliferation of CIGS thin-film modules looks to be closer to being realized,” Deutsche Bank’s Kim wrote, though he acknowledged the need for “an extended trail period” before being considered “meaningful rivals” to CdTe and amorphous silicon (a-Si).
With financing more available today than a year ago (though still far from 2007 levels), the concept of “bankability” has gained steam–it’s not quite as visible a metric as module production costs or ASPs, but it’s key to any large-scale solar PV project, Deutsche Bank’s Kim noted. And it’s evolving to incorporate not just long-term viability but also to reflect a project’s (and its backers’) balance sheet strength and technology maturity. “We believe this could have significant implications to competitiveness, particularly in the event of over-supply state,” he wrote.
Italian demand is “shifting into overdrive” as 2010 closes and 2011 begins. Kumar cited a conversation with a major global polysilicon panel distributor that Italy made up a third of its 120MW panel volumes in 2010, and will account for almost two-thirds of its projected 2011 volumes (220MW out of total 360MW)–that’s double the supplier’s own 3× growth. That includes a 120MW purchase order for 2011 deliveries to Jinko Solar at €1.35/W ($1.89 at current exchange rates)–such volume and flat pricing suggests others probably feel the same about the Italian market for PV.
Project updates, utility capacity
Sluggish financing for larger commercial and utility systems has given residential systems a little more attention during the financial slump–but downstream players clearly are shifting their focus to larger systems. Some installers (SPG, Borrego, Westinghouse Solar/Akeena) have either given up that sector or consolidated to focus on those larger projects, noted Kumar. And larger project finances are recovering; he heard at SPI about $0.11-$0.12/kWh commercial PPA rates and 11%-14% unlevered equity IRRs. Module supply is tight in the US, but opinions differ as to when it will loosen up, from a few weeks all the way to 2H11.
One energy question may help utility-scale solar growth in California: environmental concerns about using sea water for cooling at existing coastal electricity generation facilities could drive closure of >1GW of capacities in California by 2020, and that will need to be made up by new generation capacities, Kumar noted.
Embrace positivity, but watch the negatives
While this year’s SPI was a boom of positivity, there were some key concerns as well. Expect those rising polysilicon prices to dent midstream cell and panel companies’ gross margins. And wafer/cell supplies are rising rapidly, possibly as much as 2GW/month, something to watch “at some point” in the next few quarters.
On the incentives front, successful passing of California’s Prop.23 would slow utilities’ renewable energy programs “by a few years,” Kumar said. German subsidies are also in flux, though “we are not assuming an adverse outcome,” he added. While 1Q11 shows strength, it’s still not a lock; “some installers and [distributors] are holding out,” and note that German seasonal demand will weaken starting in December. – J.M.
Showa Shell unit Solar Frontier and IBM aim to codevelop 14%-15% efficient CZTS cells that cost 10% less to make than CIS cells.
First Solar says it will build two new module factories, in the US and Vietnam, to nearly double production capacity to >2.7GW in 2012.
DuPont Kabushiki Kaisha and Fujipream are touting a new thin c-Si glass-glass PV module that is reportedly 25% lighter in weight vs. traditional c-Si modules.
First Solar’s 50MW “Silver State North” project in Ivanpah is the first-ever solar project approved on public lands in Nevada, with plans to construct up to 350MW on the site.
1366 Technologies has added a $20M financing round.
Suntech and Calisolar have signed an LOI for a solar Si plant in Ontario.
MEMC has hired Deutsche Bank analyst Steve O’Rourke to steer its strategy, bizdev, and investment activities.
SunEdison has received $60M in project finance backing from JPMorgan.
Execs from Enel and STMicroelectronics have officially taken the helm at solar JV 3Sun.
Solarfun has finalized a $78M infusion from Hanwha Chemical.
XsunX says its CIGS thin-film solar cells have achieved 14% efficiency.
First Solar has doubled its credit facility to $600M.
Deutsche Energie-Agentur warns of “a catastrophe” for Germany’s grid if surging solar power capacity, on top of other energy sources, continues for only three more years.
Yingli is expanding manufacturing capacity by 700MW.
Iosil Energy is building a pilot poly-Si plant in Ohio.
Sharp will supply thin-film panels for SunEdison’s 18.5MW “Sky Norfolk” project in Ontario.
Hunan Gongchuang has ordered a 40MW Micromorph turnkey line from Oerlikon.
China’s Jinko and Germany’s Saint-Gobain have inked a 54MW module supply pact.
First Solar is urging customers to return underperforming panels produced from 2008-2009; replacement costs for ~30MW of modules is expected to cost $23M.
Foxconn and Yingli reportedly will build a $2.8B silicon plant in China.
Rowland and Arkema have launched high-performance PVDF films for PV front-sheets.
Among First Solar’s 2011 demand visibility: Seven customers totaling 380MW, mostly in Europe.
China’s Hareon Solar reportedly plans a new wafer plant in Hefei.
Despite a decline in 3Q10 (largely blamed on solar pullbacks), venture capital investments across four regions are still ahead of a year ago, according to the Cleantech Group.
Six countries–Japan, the US, Germany, Korea, France, and the UK–dominate clean energy patents, a UN-backed study finds.
SolarEdge has landed $25M funding to push its power harvesting technology.
Inverter supplier Power-One has acquired Fat Spaniel.
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PV installs poised for 2011 growth–but whither Germany?
Global PV installations are on pace for nearly 50% growth in 2011 to 20GW, though that’s a far cry from the nearly 100% surge seen in 2010, according to new data from iSuppli. Blame uneasy uncertainties over subsidies and FiTs, anticipated softening of end-user demand in 1Q11, and resulting weak prices–which in turn will spur demand in 2Q11, and then a price rebound in 2H11.
|Germany PV registrations by installation type. (Source: IMS Research)|
No surprise that Germany will account for half the total installations in 2011 (9.5GW), by iSuppli’s count, even with speculation of a coming PV installation cap. Germany’s PV installations grew 327% to 4.8GW for this year through August–3GW of that in 2Q10 alone, according to IMS Research–with demand across the spectrum, for small (≤100kW) commercial systems (280%), residential installs (140%), and large (≥500kW) commercial systems (500%).
Global PV systems installation by region. *Asia includes China, Japan, Korea; North America includes Ontario and USA; Europe includes Belgium, Bulgaria, Czech Republic, France, Greece, Italy, Spain, and the UK. (Source: iSuppli)
But there is real uncertainty in Germany’s 2011 PV prospects. Demand will likely still be brisk given the inevitability of a large FiT cut in 2012, writes Ash Sharma, IMS’ PV research director. Only a single cut is planned for the end of 2011, however, so look for the market to cool off near-term, just as production capacity surges–creating overcapacity that will in turn lead to big price declines through the supply chain, which will delay purchases and dent sales and profits, he warns.
Stefan de Haan, iSuppli’s senior analyst for photovoltaic materials and systems, thinks the German government “will not dare to cut down PV subsidies” and risk further alienating public opinion, having already pushed through an unpopular extension for nuclear power plants. “A severe action such as an installation cap on solar technology conceivably could cause a mutiny among regional German politicians who count PV companies as electoral constituencies, in the process drawing loud protestations from the industry, where precious jobs are at stake,” he says. And Germany’s solar industry has significant political pull–unlike, say, in France, which managed to push through an ad hoc action imposing PV caps, he notes. With polls suggesting overwhelming (80%) voter support for renewable energy generation, strong support for and growth of Germany’s PV industry should remain unchanged, he thinks. – J.M.More Photovoltaics World Issue Articles
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