Photo courtesy of Solarplaza
In the meeting of the European Photovoltaic Industry Association (EPIA) in Valencia on the 4th September 2008, The Association unanimously agreed that photovoltaic energy could provide 12% of European electricity demand by 2020. The Current economic downturn causes reducing budget on new PV installation plan. The Plan of solar tax credits cut are also expected will give more pressure to Solar Industry in the future.
Spain as the world's biggest market in 2008 has reduced its support for solar energy. Feed-in tariffs will be cut by 30% in 2009 and, even more significantly, only 500 MWp of new installed PV power will be eligible for this feed-in tariff. This could lead to a decrease in volume for the Spanish market of more than 60%.
While The US Federal alternative-energy investment tax credits will expire on December 31, 2008. After the expiration date, the Solar Industry will face higher cost on panel installation except the Government extends the tax credits.
In the 3rd China International New Energy Summit was held in Beijing on Nov. 27 2008, Suntech Power (STP) CEO Shi Zhengrong told that the company is expecting 0% gross margin in Q4, compared to 21.6% gross margin in Q3. The gross margin drop is mainly due to the dramatic drop of PV module ASP and the weakening Euro. It is reported that nearly half of the company’s factory has been shut down due to weakening demand.
Here are some analyst's outlooks for Solar Industry in the coming years, via Tech Trader Daily of Barron’s:
- Gordon Johnson, solar analyst at Hapoalim Securities, asserted in a research note today that the Street is under-estimating the size of the 2008 solar marker in Spain. He thinks there will be 2.1 GW of solar installations in Spain this year, well beyond the 1.1 GW he previously estimated.
He contends that many projects have been rushed ahead of next year’s 500 MW cap on subsidized solar installation in Spain for next year. As a result, he thinks Spain will actually surpass Germany and be the largest solar market for all of this year. But here’s the thing: as a result, he thinks that there will be much more inventory flooding into the world market next year than the Street is expecting, severely pressuring solar industry pricing.
Johnson thinks that solar demand growth will plunge from 61% this year to -2.5% next year. Johnson argues that “the entire solar value chain will be negatively affected by the pending massive decline in the world’s largest solar consuming market” - Spain - in 2009. - Jesse Pichel, an analyst at Piper Jaffray, has a much more upbeat view of the group. In a research note yesterday, he noted that the Obama Administration may seek to stimulate demand in the U.S. by making improvements to the current investment tax credit program, including replacing tax credits with cash refunds, increasing the tax credit percentage for a two year period, providing financing and encouraging solar installations on government buildings.
- Nomura Research analyst Shailesh Jaitly earlier this week picked up coverage of the solar sector with a bearish stance on the group. Jaitly launched on five companies, setting a Buy rating on Suntech (STP), Neutral ratings on Canadian Solar (CSIQ), E-Ton and Motech, and a Reduce rating on Trina Solar (TSL). Jaitly forecasts that demand is Europe, which is now 77% of the market is “expected to contract severely,” pushing down solar module pricing 19% sequentially in Q4 and another 13% in Q1.
Nomura expects a 50% fall in ASPs from now through the end of 2010, reaching grid parity. Jaitly also notes that the slowdown in the semiconductor industry is resulting in a flood of polysilicon into the solar sector, further pressuring prices. Not least, the Nomura analyst thinks there is a risk that polysilicon prices could fall towards the marginal cost of production, which at older plants Jaitly says is $30-$40/kg, a fraction of the current price. - Macquarie Reseach analyst Kelly Dougherty yesterday repeated a long-term bullish stance on the solar sector, but nevertheless chopped price targets and estimates for First Solar (FSLR), Sunpower (SPWRA), Energy Conversion Devices (ENER) and Evergreen Solar (ESLR). New targets for:
- FSLR, $160, from $220.
- SPWRA, $50, from $70.
- ENER, $40, from $63.
- ESLR, $2.50, from $3.50.
“The near-term outlook for the solar sector surely isn’t pretty. Activity has all but ceased for some companies in select markets and pricing is falling precipitously for many,” Dougherty writes. “This is due to the impact of a massive credit crunch coupled with expectations for a significant price decline next year as tip over into a module over-supply situation. Those projects that are going forward are being done at higher funding costs by financiers that have become increasingly discerning, especially when it comes to the technology and the modules being used.” And the slide of the Euro, Dougherty adds, “is exacerbating the issue.” Doughtery says the fundamentals of solar remain strong long term, and suggests investors “really assess the longer-term solar landscape and invest in those companies that are best positioned to weather what’s likely to be some pretty choppy waters over the next few quarters.”
ETFs/Stocks :
Claymore/MAC Global Solar Index ETF TANRelated Posts :
First Solar, Inc. FSLR
JA Solar Holdings Co., Ltd. JASO
Evergreen Solar, Inc. ESLR
Canadian Solar Inc. CSIQ
SunPower Corporation SPWRA
SunPower Corporation SPWRB
Energy Conversion Devices ENER
Trina Solar TSL
Suntech Power STP
China Sunergy Co., Ltd. (ADR) CSUN
LDK Solar Co., Ltd. LDK
ReneSola Ltd. (ADR) SOL
Solarfun Power Hldgs Co., Ltd. SOLF
Yingli Green Energy Hold. Co. YGE
Sources :
- Seeking Alpha: Expect Continued Drops in Solar, November 28, 2008
- Renewable Energy Focus: PV industry ups its 2012 projection, September 5, 2008
- Solar Feeds: Second wave of major new Chinese module manufacturers coming in 2009, October 31, 2008
- The Arizona Republic: Demand for solar panels exceeds supply, November 28, 2008
- Tech Trader Daily of Barron's: Solar: Can U.S. Upside Trump European Slowdown?, November 26, 2008
This is generally never true. Before buying or selling any asset you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.
You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.
No comments:
Post a Comment