Suntech Stumbles With Pluto

June 3, 2010

Suntech Power Holdings said Thursday it has run into difficulties making its high-efficiency Pluto solar cells, raising the possibility of a delay in this next-generation technology.

The Chinese solar giant said the problems arose in ramping manufacturing beyond its present monthly pace of 4 MW. As a result, the company said it decided to maintain this relatively modest production level – probably two factory lines – until it works out the technical kinks.

The move is a blow for Suntech as it begins to transition to this key technology and catch more efficient solar developers, particularly mass-market efficiency leader SunPower. It also could be a setback to Suntech’s hope of pushing Pluto beyond it present 19 percent average efficiency to a 20 target.

Like the distant planet, Suntech's Pluto remains a difficult target to reach

On a first quarter conference call with analysts, Suntech Chief Technology Officer Stuart Wenham described the hang-ups as “small glitches” common when transferring a new technology to large-scale module production.

“In the course of ramping Pluto production to levels well above the current 4 MW a month, we have identified process control challenges to module production,” Wenham said. He added: “We have gained a great deal of experience since we began producing commercial quantities of Pluto cells.”

Suntech says it remains pleased with the cell’s performance and claims nothing is wrong with the Pluto design. Yet Pluto’s average mono-crystalline cell efficiency remains at 19 percent, with the best yielding cells reaching 19.5 percent. Both are well above the market average of 17.5 percent, but the company first achieved 19 percent efficiency as far back as early 2009.

Suntech is “fully confident Pluto will become our core product and the industry benchmark for high-performance and cost-effective solar panels,” Wenham says.

The Pluto design is based on the PERL, or passivated emitter with rear locally diffused, technology developed at Australia’s University of New South Wales, where efficiencies of 25 percent have been achieved in the laboratory. It has low reflectivity to capture more sunlight and thinner metal lines to reduce shading.

While the technology remains promising, Suntech said in a difficult to interpret announcement that it recently began a new solar research initiative with the University of New South Wales and Silex Solar to improve the efficiency and cost of cells. The research received a $5 million grant from Australia. The company also kicked off a collaborative effort with Swinburne University of Technology on nanoplasmonic cells. Suntech describes both efforts as complementary to its work with Pluto.

Because of its high efficiency, Pluto commands a premium price in the market and customer demand appears to be high.  Yet production is far from the 450 MW Suntech plans for the middle of its fiscal year. When the problems are resolved, the company promises production will increase rapidly and engineers are reportedly convinced they can meet the target.

On the conference call, Suntech said a weak Euro contributed to a 14 percent fall in average product prices in its first quarter. The prospect of continued weakness led its shares down 3 percent.

Suntech does 68 percent of its business in Europe.


Solar Shakeout Will Hit This Year

May 17, 2010

Over production will wreck havoc on solar module makers in the next three years, with some firms forced to exit the market.

The amount of excess solar cell production capacity reached 5.2 GW in 2009, or about half of anticipated 2010 sales

This fallout is the result of many factors. Sinking demand due to last year’s recession pushed many manufacturers to sharply cut prices. The lower pricing hurt profits. At the same time, key cuts in feed-in tariffs (Spain last year and Germany, Italy, France and the Czech Republic this year) reined in growth expectations, with sales slowing again later this year.

But the gap between production and demand is the big challenge for the industry and one that will continue for three years or more as healthy companies add factories and weak ones find they can no longer fill theirs.

Johnanna Schmidtke, an analyst at Lux Research, estimates the excess capacity reached 5.2 GW at the end of 2009 – or the equivalent of roughly half of all 2010 sales.

This massive over supply will force second-tier producers to begin to idle factories late this year and eventually shut them down. Among the most vulnerable are Perfectenergy of China, Sunfilm of Germany, Solland of Holland and Malibu of the U.S., says Schmidtke.

Others will be forced to outsource manufacturing to cut costs. Candidates include SolarWorld, Q-Cells and Evergreen Solar, says Schmidtke.

Market leaders such as First Solar, Suntech and SunPower will likely ride through the tough times, but not without feeling cost and margin pressures.

Crystalline silicon and cadmium telluride thin film cells will likely dominate the market in two years, just as they do today. But prices will be lower. As to other thin film technologies (CIGS in particular) there will be fewer companies to vend them.


Solar Market Is Hot Even If Stocks Are Not

May 12, 2010

Solar sales continue to surge in advance of Germany’s cut in its feed-in tariff. But stocks did not follow suit, as if anticipating difficult times ahead.

Several of the industry’s largest manufacturers offered insight into their businesses this week – and the news was generally favorable. Sales rose sharply over the past three months, even if profits sometimes did not.

SunPower unveiled its Oasis solar power plant in a box, along with 64 percent quarterly sales growth

Among the companies with the strongest gains was SunPower of San Jose, where quarterly revenue rose 64 percent, helped by the company acquisition of SunRay. The company said Tuesday it wasn’t able to meet demand for its products. However, earnings fell short of expectations.

“We were sold out in the first quarter,” said CEO Tom Werner. “We remain sold out in the second quarter.”

SunPower was to be outdone. Chinese solar king Suntech Power Holdings surprised investors with a quarterly revenue forecast of close to $590 million, well ahead of the $542 million analysts expected. And JA Solar Holdings, another Chinese polysilicon cell maker, topped expectations for its first quarter, with sales up 17 percent. The company foresaw more upbeat times and raised its outlook for the year.

LDK Solar and ReneSola, both of China, and Q-Cells of Germany also unveiled impressive sales increases, with previously struggling ReneSola posting quarterly sales that almost doubled.

The wave of favorable reports suggests that Germany remains a strong buyer of solar equipment in anticipation of the July cuts. Sales also were strong in the United States, France and Italy.

SunPower’s Werner predicted panel prices would fall by as much as 20 percent this year, but that demand across the world would remain steady.

SunPower on Tuesday also announced its Oasis “power plant in a box,” a prepackaged solar module assembled into large solar farms. The modules will reduce plant costs up to 25 percent and simplify construction, said Werner. Oasis is expected in the market in early 2011.

Despite the upbeat sales figures, solar stocks turned in a dull performance on Tuesday. After rallying on Monday, when Suntecb and LDK released their financial reports, many drifted lower. SunPower shares fell 4 percent after its earnings were released.


Solar Arms Race Heating Up

March 19, 2010

Interest in the solar market is on the rise. But the industry is finding it difficult to know which solar technology will win in the long run: thin film or polysilicon.

Two days ago, manufacturing powerhouse GE placed a big bet on the business, promising to develop a line of low-cost cadmium telluride thin-film cells to rival those of solar leader First Solar.

Polysilicon has the efficiency title but GE wouldn't have chosen thin film without a good reason

Late Thursday, polysilicon maker SunPower fired back. It boasted of record efficiencies in its cells: 20 percent in the market now and 24 percent under development.

The arms race is off to a full sprint. The trade off is greater efficiency versus lower price. As long as polysilicon, or crystalline, cells keeps making efficiency gains, the price advantage of thin film can be kept at bay. But as the price of thin film falls, the pressures rise for crystalline efficiency gains.

SunPower CEO Tom Werner says he sees an increasingly competitive market. But he says he has no increase in shifting to thin film. There are several good reasons. For one, fewer polysilicon cells are required on a rooftop to generate the same amount of power.

SunPower is pushing hard on efficiency. Werner says the first 24-percent cells were made in the fourth quarter, besting the 20 percent efficient cells in production now. The company also has the key $1 a watt manufacturing target in its sights for 2014. Today’s cost is just under $2.

SunPower may have a technology lead over Chinese makers. But they, too, are pushing the efficiency dial. Suntech now produces at 19 percent with improvements under developmet. JA solar in February said 18.7 percent efficiency was in its labs.

Thin-film companies aren’t running scared. The race is on in earnest to produce the least expensive, most efficient cell, says GE. With that in mind and “after having completed an exhaustive survey of the PV landscape, we determined that thin films were the optimum path,” says GE’s Danielle Marfeld.


Chinese Solar Maker Suntech Shrugs Off Protectionist Worries, Sees Big Gains In US

March 4, 2010

Democratic Senators increase their sniping at the Obama Administration for shrugging aside recovery act “Buy American” provisions.

But that isn’t deterring China’s largest solar module maker. Suntech said it would charge ahead, tripling its U.S sales this year and expanding its market share 5 percentage points to 20 percent.

Chinese Solar Company Suntech sees US sales tripling this year despite mounting Buy American pressures

The all-out assault illustrates how important Suntech considers the profits from its American business at a time when Chinese contracts offer it little or no margin.

Four Democratic Senators took aim at Obama’s Energy Department on Thursday for awarding stimulus money and loan guarantees to wind farms that have bought or intend to buy wind turbines from cut-rate Chinese and foreign producers. They single out one West Texas farm in particular, where $450 million is slated for a project using Chinese-made turbines.

Suntech hasn’t flinched. The company still does the majority of its business in Europe, and especially in Germany, the largest solar market in the world. But fourth-quarter shipments to North America were up 60 percent and sales for 2009 were doubled those of 2008. Suntech expects its U.S. business to triple this year, even as the U.S. solar market doubles in size.

This will increase its market share to 20 percent from 15 percent in 2009. The company’s first U.S. plant in Arizona will begin operations in third quarter.

According to company officials, relatively stable worldwide solar panel selling prices will help profits companywide. Average selling prices declined only 3 percent in the fourth quarter, compared with much sharper declines earlier in the year.

But this stable pricing in the U.S. and Europe is in sharp contrast to China. Though the Asian country is pushing hard to expand solar farms, profitability remains low, says Suntech CEO Zhengrong Shi.

The company has initiatives underway to reduce clots, and no doubt China sales will contribute to earnings growth in the future, Shi said on a Thursday conference call.

In the meantime, sales in Europe and the United States will have to carry the company. That is unless government “Buy American” provisions change the landscape.


Expect More Solar Mergers This Year

March 3, 2010

Solar energy is not the easiest of businesses. Profit margins are thin as over production continues to push solar cell prices lower.

"A lot of companies aren't going to be around anymore," says K Scott Son, director of finance at Suntech America

Meanwhile, banks remain reluctant to finance big projects, unconvinced they will produce power cheaper than coal and natural gas plants.

Sure, demand has recovered modestly since the depths of last year’s recession. But not enough to head off a period of consolidation with stronger companies swallowing up weaker ones to capture market share and improve the bottom line.

“A lot of companies aren’t going to be around anymore,” predicted K. Scott Son, director of finance at Suntech America, at last week’s Cleantech Forum. “It’s only a matter of time before there is consolidation.”

The pairing has already begun. Last month, U.S. SunPower said it would acquire SunRay Renewable Energy, the Italian solar plant developer, and late last year, Siemens agreed to buy solar thermal company Solel from Israel. MEMC has also put money on the table. It scooped up solar farm developer Sun Edison.

Companies can pick up additional margin by expanding vertically, says Ullas Naik of Globespan Capital Partners

More deals will follow. It makes sense for companies to “vertically integrate,” in other words, expand from manufacturing solar cells to building solar plants, says Ullas Naik, managing director at Globespan Capital Partners. They can pick up additional margin.

They also will create larger companies more likely to qualify for bank financing. Banks are less likely to lend to a project if they fear the solar panel supplier won’t  be in business 25 years from now to stand behind a product warranty.

Suntech is one company looking to expand into “distribution,” says Son. “It’s a way of ensuring our panels will be used.”

It’s also a way of bringing stability to a fragmented industry where big suppliers see attractive prospects for growth.


First Solar To Be World’s Largest Solar Producer In 2009

September 8, 2009

Over production, slowing demand and price declines have hemorrhaged the businesses of most solar cell producers this year.

But the pain hasn’t been spread evenly. Companies such as Suntech, Sharp Electronics and Q-cells have seen commanding market positions whittle.

Big dog First Solar has not. The company is poised to finish the year as the largest manufacturer of solar cells with 12.8 percent of the market, up from 7.5 percent last year, says iSuppli.

Its major competitors (listed above) will see their market shares decline, the research firm says.

First Solar has several advantages going for it. Its thin-film technology gives it low production costs and enables it to under cut the price of crystalline cells.

“With its capability to produce cells at a cost of 89 cents per watt in the second quarter, First Solar is generating stable operating margins, while its competitors are struggling to stay profitable,” iSuppli Senior Director Henning Wicht said in a research rerport.

The company also has maintained low inventories so that it is selling what it produces rather than stock piling it and has built established sales operations in Europe.

ISuppli estimates First Solar will manufacture 1,100 megawatts of solar cells this year, more than double last year’s total.

Second place Suntech will end the year with 6.9 percent market share, projects iSuppli.


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