The Chinese Dominance of the Solar Industry in the last 2 years have seen numerous Western companies go bust . This has accelerated sharply in 2011 with companies like Evergreen Solar,Spectrawatt, Solar Millenium, Solon, Photowatt etc. either gone for good or in various stages of bankruptcy. Other US Solar Panel Manufacturers like First Solar, Sunpower have fired thousands and some are continuing with large losses. European Solar Companies are the worst off given their high cost structure and lack of differentiation. Solland Solar recently killed its solar module line while some like Schott have killed their solar wafer lines.

Solar Jobs have been cut in the tens of thousands this year by a number of European Solar Companies including marquee names such as REC, Q-Cells, Solarworld ,SMA Solar besides many of the smaller names. Some of the solar companies like Solon have completely shut down. 5000 solar companies have downed shutters in 2011 according to German association BSW. This is despite global solar demand in 2011 increasing by around 30-40% compared to 2010. The reason is that massive overcapacity has been created in China and other parts of Asia. Backed by cheap loans and massive subsidies, around 50 GW of solar panel capacity has been created . This has led to a crashing of solar panel prices by 60% which has decimated the higher cost companies in Europe.

In fact some of the biggest solar companies in the world like LDK and Sunpower would have been bankrupt as well but for the support of others. Solar Panel company  Solland Solar of Netherlands is shutting down its module operations firing 100 workers. This is after selling its solar cell operations. Expect other remaining European companies to shut down as well though Solarworld is hoping to bring an anti-dumping duty against Chinese solar panels in Europe as well.Note in the past European solar companies have tried various ruses such as shifting solar factories to Asia . However that option is not open to the smaller fry who have no option but to die .

Now a new wave of bankruptcies are on the way with Q-Cells likely facing a credit event as it needs to roll over convertibles which come due in February. Note Q-Cells has fallen a long way from being the biggest solar cell company in 2008. Miasole and Nanosolar were Private Equity backed CIGs darlings that were supposed to become the biggest thing following Firsst Solar . Now Nanosolar faceds executive exits while Miasole has fired large number of its workforce failing to find a big parent to support it. Note the smaller companies like Ascent Solar have found backers in Asia . Solar Technologies are seeing Darwin Survival of the Fittest with crystalline silicon solar panel technology beating out thin film solar and solar thermal technologies

Q-Cells SE (QCE), once the world’s largest maker of solar cells, fell to the lowest on record after a regional court said it can’t defer payment of a 202 million-euro ($263 million) corporate bond due next month.

Q-Cells fell 18 percent to 41 euro cents at the close in Frankfurt, the lowest since it started trading in 2005. The company, based in Thalheim, Germany, said holders of the 2012 bonds will receive partial payments in tranches as it seeks to restructure convertible bonds due in 2014 and 2015 in a debt-to- equity swap. It forecast operating losses through 2013.

Miasole Firings

According to a report published by greentechsolar, CIGS maker MiaSolé has let 10% of its workforce go, with most of the layoffs taking place in the engineering and equipment design divisions. The report claims that a company spokesperson verified the layoffs, but did not specify on the extent of the reduction in the workforce. The report from greentechsolar further stated that while, at one time, MiaSolé was producing 15,000 modules per week, various sources have specified that its production numbers have dropped significantly.

Solar Energy Stocks in 2011 had a very rough year with the 2 solar ETFs falling by more than 50% as the industry went into massive oversupply leading to crashing solar panel prices,revenue,profits,margins and everything else that you could think of .  Many of the industry stalwarts that had been around since the inception of the solar industry like Solon, Evergreen Solar bit the dust. Even the much hyped solar startups like Solyndra is bankrupt while others like Miasole,Nanosolar will share the same fate soon. Even now big companies like LDK and Sunpower are only running because of the government or parent company largess. The carnage would have been much greater if free market operated in the global solar industry . Instead the solar industry is a mish mash of free markets, government subsidies , feed in tariffs , irrational support etc. This makes investing in the industry really challenging even though the industry has grown by an astounding 200% in the last 2 years in terms of volume even though prices have come down by around 70%.

While below is a list of all the solar stocks ,most are dead investments as few solar companies will see 2013 given that the oversupply of polysilicon will stay here till 2012 as more and more companies get weeded out.

So what are the criteria for staying alive in 2012

a) Government Support in Some Form – Most of the Tier 1 Chinese Solar Companies will fall into this bracket. However given that there are so many you would have to look at the biggest like Suntech,  LDK, Yingli for survival in any case. LDK is a BANKRUPT COMPANY ,the only reason it continue to produce a solar panel is because of the Chinese government support

b) Low Cost – Though seems like an obvious idea, there are still companies existing which have high costs like Q-Cells, REC. You just can’t invest in them given that even low cost is a necessary though not sufficient condition to survive

c) Branding – Very necessary to get financing for solar projects as without a brand you are not bankable and will have to sell at a 10% discount in a market which is already selling at below cost

d) Efficiency and R&D Dollars – If you sell a low efficiency multicrystalline solar panel ,then you are toast given that the market is now only looking at higher efficiency stuff given that choice that buyers have. You also need to spend sufficient R&D dollars to get ahead of the competition in reducing costs and increasing efficiency. Smaller solar companies are at a disadvantage here.

f) Low Debt – Not Necessary if you are LDK and have a Sugar Daddy like the Chinese Development Bank but very important for every other solar company.Trina Solar shines in this respect ,Suntech does not.

I have only given hints and conditions of which solar stocks to buy in 2012 .For those who are saying this industry is not a good investment are wrong because a time will come when most of the weaker players are out and the winners will take all . Some companies which should see through these times without question are GCL Poly,Sunpower .What about the rest? Readers are invited to answer in the comments

 

SOLAR STOCKS BY SUPPLY CHAIN

Solar Polysilicon Stocks

  1. Hemlock (Private Company , JV between Dow and Shin-Etsu,one of the biggest polysilicon producers based in USA)
  2. Wacker ( WCH.DE) ( The company is the biggest European producer of polysilicon )
  3. OCI Chemicals (0100600.KS) ( This company is targetting to become the global No.1 producer of polysilicon,based in South Korea)
  4.  Tokuyama  This Japanese producer has been in the game for long but has been the slowest in expanding capacity
  5. Daqo New Energy (DQ) (Small poly producer based in China)
  6. Hoku Corporation (HOKU) ( Small poly producer based in USA)
  7. Timminco (TIMNF.PK) (Canadian company tried to make it big by Metallurgical Silicon,now a penny stock)

Solar  Wafers Stocks

  1. GCL Poly (3800.HK)( The biggest solar wafer producer in the world,trades in Hong Kong,makes polysilicon also)
  2. LDK Solar (LDK) ( The second biggest wafer producer,now a major solar panel seller as well,makes polysilicon also)
  3. Renesola (SOL) (One of the cheapest solar wafer manufacturers,makes polysilicon also)
  4. Renewable Energy Corporation (REC.OL)(Norwegian company producers poly,cells and modules in Singapore)
  5. Comtec Solar (0712.HK) ( A Small Wafer Producer in China which makes mostly monocrsytalline wafers)
  6. MEMC Electronics ( WFR) ( Company makes semiconductor wafers and is one the biggest US Solar EPC/Integrators)
  7. Woongjin Conway (016880.KS)( South Korean Wafer Producer in which Sunpower has a stake)
  8. Green Energy Technology (3519.TW) – This Taiwanese producer of solar wafers has left other domestic competitors behind in capacity increase
  9.  Sino American Silicon (SAS) is one of the oldest wafer producers in Taiwan and supplies to both semiconductor and solar industries)
  10. Wafer Works ( 6182.TWO) ( Taiwanese small producer )
  11. Danen Technolog (3686.TW)( New small producer of solar wafers)
  12. Nexolon  The company is based out of South Korea and is closely associated with the polysilicon giant OCI Chemcials
  13. SUMCO( Japanese producer of semiconductor wafers,produces some solar wafers as well)
  14. PV Cyrstalox Solar (OVCS.L)( Small German producer of solar wafers,survival in question)

Solar Cells Stocks

  1. JA Solar (JASO) ( The Biggest Solar Cell Producer in the World)
  2. Gintech (3514.TW) ( Biggest Solar Cell Supplier in Taiwan)
  3. Motech (6244.TW) ( Solar Cell Supplier in Taiwan with wafer and poly production as well)
  4. E-Ton (3452.TW) ( Survival is in question)
  5. Q-Cells (QCE.DE) The largest solar producer of cells in 2008 faced a horrendous 2009 running losses of as high as Euro 1 billion)
  6. Neo Solar (3576.TW)(Has been one of the fastest growing solar companies)
  7. Del Solar  ( Small Solar Cell Supplier)
  8. IndoSolar ( Small Solar Cell Supplier in India)
  9. Emcore (EMKR) ( Small Specialist suppliers of High Efficiency Multijunction Cells)

Solar Panels Stocks

  1. Suntech (STP) ( The biggest Chinese solar panel producer in the world)
  2. Trina Solar (TSL) ( The most valued Chinese solar panel supplier)
  3. Yingli Green Energy (YGE) ( Top 3 Chinese solar panel supplier)
  4. Jinko Solar (JKS)
  5. Canadian Solar (CSIQ) (Despite Canadian in the name is one of the biggest Chinese solar panel suppliers)
  6. Sunpower Corporation (SPWRA)( Makes the Most Efficiency Solar Panels,bought by French Giant Total)
  7. Hanwha Solar One (HSOL) ( Earlier known as Solarfun,bought by South Korean Conglomerate Hanwha)
  8. Sharp ( Biggest Japanese Solar Compan)
  9. Sanyo Panasonic( Sanyo plans to invest more than  70% of its total investment over the next  3 years in its renewable energy and energy storage segment)
  10. Kyocera(Kyocera is Japan’s second largest solar panel producing company)
  11. Mitsubishi( Mistubishi is another old time Japanese solar company which has a low profile solar module and system business)
  12. LG (It is selling solar modules in the South Korean and European markets and has 240 MW capacity)
  13. Samsung ( The company makes silicon solar cells and panels,will start making poly with MEMC)
  14. Hyundai ( The first South Korean company to move int solar panel production)
  15. Solarworld (SWV.DE)– Solarworld is the Biggest German producer of solar panels,the company is one of the few to still have operations in Europe and USA)
  16. Bosch (Automotive company,made expensive acquisitions,now moving production to Malaysia)
  17. Shanghai Chaori Solar Energy (Listed in China,integrated producer of solar panels)
  18.  AUO ( AUO has a  JV with SunPower’s to build 1.4 gigawatt third solar cell fabrication facility  in Malaysia)
  19. China Sunenergy(CSUN) (A Small China Solar Energy Cell and Panel Supplier)
  20. Arise Technologies (Canadian small suppliers of solar panels)
  21. BP (Outsources production of solar panels,sells under brandname )

Solar Integrators/Installers Stocks

  1. Toshiba ( Has  decided to become a big player in  the Solar EPC business
  2.  Mitsui (Mitsui,the giant Japanese tradings house bought Sunwize in 2006 to enter the solar system market in the US)
  3. Akeena/Westinghouse Solar (WEST) ( The first US Solar Installer to list on the US Stock Exchange)
  4.  Real Goods Solar (RSOL)- The second US Solar Installer to list on the Stock exchange
  5. Phoenix Solar (PS4.DE)(German installer with operations around the world)
  6. Conergy(Once the biggest solar installations company,now fallen on hard times)
  7. Juwi Solar (Another German installers,looking to expand internationally)
  8. Kerself (KRS.ME)(Small Italian Installer)
  9. Solaria Energie(Spanish installer )
  10. Solar-Fabrik (SFX.DE)(Small installer,which also makes solar panels and cells)
  11. Solon(SOO1.DE)(Another German solar panel and cell maker fallen on hard times)
  12. Sunways(SWW.DE)( German company making solar panels,cells and also doing EPC)
  13. POSCO (South Korean Steel Giant has started Solar EPC Operations)

Solar Inverters Stocks

  1. SMA Solar (S92.DE) The Big Daddy of the Solar Inverter Market with a   40% Marketshare of the Global Market
  2. Power-One (PWER)  The US power management company has shown the fastest growth in 2010
  3. Schieder Electric (This European Electrical Equipment Giant got into the solar inverter market by buying up Canadian Producer Xantrex.
  4. Advanced Energy( AEIS ) which is a US semiconductor company  is also a big manufacturer of solar inverters.
  5. Satcon (SATC) (Small USA based solar inverter supplier)
  6. Delta Electronics ( Taiwanese company bought Solon solar inverter division)
  7. ABB
  8. Sputnik Engineering (Swiss maker of solar inverters)

Solar Encapsulants

STRI Holdings ( STRI) ( The biggest suppliers of encapsulants used in solar panels in the world,based in USA)

Solar Material Suppliers

  1. 5N PLUS Inc. (VPN.TO) ( Supplier of Cadmium Tellerium which First Solar uses to make Thin Film Solar Panels)
  2. Giga Solar ( Taiwane supplier of metallic paste used in Cell Production)

Thin Film Solar Panel Stocks

  1. Saint Gobain  ( Sells CIGS panel in JV with Hyundai)
  2. TSMC  ( Sells CIGs Panels in association with Stion
  3. Solar Frontier – Solar Frontier is a subsidiary of Showa Shell Sekiyu and is listed on the Japanese Stock Exchange
  4. Ascent Solar (ASTI)  This US Based Company has a long history of making Thin Film Panels on Flexible Substances
  5.  Energy Conversion Devices (ENER) After First Solar,Energy Conversion Devices seemed the mostly likely viable company in Thin Film Technology
  6. Honda ( Small CIGs Panel Sellers)
  7. General Electric(GE) ( The company is not only a big Solar Developer but also going to sell Cd-Te Panels)
  8. Trony Solar (2468.HK)) (Trony Solar is the largest Solar Thin Film Producer in China)
  9. Kaneka (Japanese company producing amorphous silicon solar panels)
  10. Chint ( Producers Thin Film Solar Panels under Astroenergy Name)

Solar Equipment Stocks

  1. GT Advanced Technologies (GTAT) ( US based supplier of polysilicon and wafer equipment to Chinese companies)
  2. Applied Materials (AMAT) ( The biggest semicap company is also the No.1 solar equipment seller in the world)
  3. Meyer Burger (MBTN.SW) ( Swiss company recently bought Roth &Rau)
  4. Centrotherm (CTN.DE) ( One of the top 3 solar equipment sellers based in German)
  5. Manz Automation (M5Z.DE)( Another small German company
  6. Oerlikon  (Swiss company makes solar equipment for producing amorphous solar thin film panels)

 

Solar Jobs have been cut in the tens of thousands this year by a number of European Solar Companies including marquee names such as REC, Q-Cells, Solarworld ,SMA Solar besides many of the smaller names. Some of the solar companies like Solon have completely shut down. 5000 solar companies have downed shutters in 2011 according to German association BSW. This is despite global solar demand in 2011 increasing by around 30-40% compared to 2010. The reason is that massive overcapacity has been created in China and other parts of Asia. Backed by cheap loans and massive subsidies, around 50 GW of solar panel capacity has been created . This has led to a crashing of solar panel prices by 60% which has decimated the higher cost companies in Europe.

In fact some of the biggest solar companies in the world like LDK and Sunpower would have been bankrupt as well but for the support of others. Solar Panel company  Solland Solar of Netherlands is shutting down its module operations firing 100 workers. This is after selling its solar cell operations. Expect other remaining European companies to shut down as well though Solarworld is hoping to bring an anti-dumping duty against Chinese solar panels in Europe as well.Note in the past European solar companies have tried various ruses such as shifting solar factories to Asia . However that option is not open to the smaller fry who have no option but to die .

Schott Solar fires 290 workers

The number of solar factories closing in Europe has increased tremendously in the 2nd half of 2012 despite a record surge in Germany which would have raised 2011 solar growth to 25%. However the relentless price pressure from Chinese solar panel companies has decimated the solar companies in the West. While there have been a number of famous cases of bankruptcy like Solyndra and Solon, there have been bigger solar factory closedowns. REC has closed down more than 1 GW of wafer capacity while a pure play Spanish solar wafer factory also closed down recently . British solar wafer maker PV Crystalox is also near the verge of failure. Solar Wafer prices have fallen by almost 60% in the last 1 year with the prices much below the cost of production in Europe. It seems unlikely that any solar wafer maker will remain alive in Europe by 2013.

Q-Cells move to Malaysia

Solar Factories in US and Europe have been closing at a rapid clip over the last 2 years as Solar Panel Prices have come crashing down.Earlier the higher cost factories were able to survive due to non-existent Asian players and benign competitions.But with the rise of the Asian Solar Companies,the European and US Companies have faced very tough times.Q-Cells closed most of its German Solar Cell Manufacturing Lines even as it ramps up a factory in Malaysia.While there have been isolated cases of module factories being opening in Germany,Most of the Major Manufacturers like REC and Q-Cells are moving lock,stock and barrel to Asia.REC is already stepping up production at its 1 GW integrated solar plant in Singapore while Q-Cells manufacturing is also migrating to Malaysia.

Note this is not restricted to Europe.Japanese solar factories are being closed and shifted to Asia. USA Solar Jobs are also being moved to Mexico and other places.

Sharp which has managed till now to survive with its high costs in Japan factories too is now facing the pressure.Japanese market is highly protectionist with majority of the demand going to  Japanese zaibatsus.The Japanese government is helping Solar Companies with subsidies/diplomacy to sell Japanese solar panels in Asia and Africa.Sharp now is being forced to move off the islands of  Japan as the high cost of labor and currency makes it uncompetitive in the fiercely cutthroat solar panel global market.Sharp has a giant thin film silicon factory in Sakai and cell/module operations spread out in Japan.It will now manufacture more of its cells/modules overseas to cut down on the cost which are much higher than the Chinese.Note while Sharp is still a long way in suffering the fate of the likes of Evergreen Solar,there is no doubt that it is under huge pressure.Read my earlier post on Sharp’s position in the solar industry

Solar Insolvency Protection is a new financial product that is going to be introduced by Munich Re the giant German reinsurer. Note Munich Re has been at the forefront of introducing insurance products for solar energy. It was one of the first companies to provide an insurance against the 25 year solar warranty which is generally given by solar companies for their solar modules.It has introduced it for LDK Solar Panels before moving onto other companies as well.

Now the threat of insolvencies has increased, Munich Re has got a new financial instrument for these bankruptcy times. Note a number of solar companies have gone bankrupt , Evergreen Solar , Solyndra and Solon among the famous ones. With prices low and margins  non existent , many other small solar companies are expected to go under in the next year or so. Despite a surge in German solar demand in December, things are still pretty bad with solar panel prices near 80c/watt and most companies bathed in red ink. Some of the biggest solar companies like LDK are effectively insolvent as well without the Chinese government support.

Munich Re has played the renewable energy game quite well. It has also invested its long term money into green energy projects which give good returns with very little risk as the returns are implicitly backed by the governments.Munich Re is also a member of the Desterec project which aims to build gigawatts of solar farms in the Sahara.

LDK and Sunpower would have been bankrupt

LDK Solar is one of the most insolvent companies in the world right now with billions of dollars in debt,a battered balance sheet,continuing losses and dodgy accounting.However LDK has acquired a German company Sunways and continues to build new solar power plants as the Chinese state owned banks continue to fund it with cheap money without any consideration about losing their investments.LDK has become the poster boy of the Solarworld complaint against Chinese solar panel producers as it continues to run and thrive despite being insolvent.The Chinese government is hurting itself and its other solar companies like Trina,Yingli which are more competitive by continuing to support and increase the global glut of cheap solar panels.These solar panels are being clearly sold at below cost as most of the companies would be bankrupt without these absurd loans which make no free market sense

Sunpower another of the biggest solar companies in the world too is surviving due to its big parent Total.Note the CEO of Total was candid enough to say that Sunpower would be facing Chapter 11 without its support.Total just increased stake in Sunpower as the company continues to make losses.Sunpower has a high cost structure which in these times means you are dead

Munich Re New

Munich Re said it is offering to insure solar park operators against the risk of their suppliers going bankrupt, saying such cover will make it easier to obtain bank loans to finance major projects.Munich Re said it developed the new insurance product jointly with Deutsche Bank, and sold it for the first time to the operator of a solar park project in southern Italy, jointly financed by Deutsche Bank and Rabobank.

LDK Solar is one of the most insolvent companies in the world right now with billions of dollars in debt,a battered balance sheet,continuing losses and dodgy accounting.However LDK has acquired a German company Sunways and continues to build new solar power plants as the Chinese state owned banks continue to fund it with cheap money without any consideration about losing their investments.LDK has become the poster boy of the Solarworld complaint against Chinese solar panel producers as it continues to run and thrive despite being insolvent.The Chinese government is hurting itself and its other solar companies like Trina,Yingli which are more competitive by continuing to support and increase the global glut of cheap solar panels.These solar panels are being clearly sold at below cost as most of the companies would be bankrupt without these absurd loans which make no free market sense

Sunpower another of the biggest solar companies in the world too is surviving due to its big parent Total.Note the CEO of Total was candid enough to say that Sunpower would be facing Chapter 11 without its support.Total just increased stake in Sunpower as the company continues to make losses.Sunpower has a high cost structure which in these times means you are dead .Even the most cost efficient companies in the West like First Solar faces survival questions.Sunpower with its high cost and high efficiency solar panels would have been dead by now.Note Sunpower too has a bad balance sheet,contorted accounting (already faced a scandal).In fact there are similarities between Sunpower and LDK.

Read a review of Sunpower Solar Panels

Total buying of Sunpwer

Total the French Oil and Gas Giant has agreed to acquire 60% of the 2nd largest US Solar Energy Company Sunpower of $1.38 billion besides providing it another billion dollars in easy credit for its system business.Note M&A in the Solar Energy Industry has picked up with Korean Chaebol buying up Solarfun and recently Meyer Burger buying Roth & Rau to create the 2nd largest solar equipment producer in the world.Note competition in the solar energy industry has become fierce with the entry of a number of top MNC conglomerates besides a number of thin film startups.Coupled with the decline in European solar subsidies,the situation of high cost solar panel companies has become extremely difficult.Evergreen Solar a small US producer of  solar panels using ribbon technology is facing a cash crunch as its sales have plummeted.Other US and European companies too face difficult times after a stellar 2010 saved many a solar company from bankruptcy.

Total CEO Says SunPower Would Be Bankrupt Without Backing

Total SA (FP) Chief Executive Officer Christophe de Margerie said SunPower Corp. would be bankrupt without the French oil company’s backing.Speaking at an investment conference in Paris, de Margerie said Total will “turn around” SunPower.

GlobalWatt a USA Solar Panel Manufacturer has bailed out of going ahead with building a solar panel plant in Michigan with  a $177 million investment.Note even the Best Solar Panel Manufacturers are facing a torrid time with some established comapnies like Solon,Evergreen Solar going bankrupt.Almost 5000 solar comapnies in Germany have gone bust this year according to BSW.Given the massive glut of solar panel capacity it is not surprising that Globalwatt has abandoned its plans of adding to more global capacity of solar panels.

Calif. company cancels $177M Saginaw solar plant

A California-based solar power company is canceling plans to build a $177 million solar panel factory in Michigan, the chief executive said. When the project was announced in 2009, San Jose-based GlobalWatt Inc. said it would create 500 jobs. At that time, Saginaw was one of two communities in the running for the project.
But GlobalWatt chief executive Sanjeev Chitre said the Saginaw project is now on hold, because of a struggling economy and overseas markets.

The Chinese solar  panel producers too are facing tough times with many companies running at low utilizations and almost everybody running losses.Some companies with huge debt burdens like LDK are running because of government largesse as they are effectively insolvent for all purposes.Expect more bankrutpcies in the coming year .It will take a very foolish or a very brave company to expand solar capacity this year.

Only USA Solar Installers are having a good time with below cost solar panels availabe increasing the returns and leading to massive increased.It looks like 2012 will be a good year for US solar installers who are expanding rapidly to take advantage of the falling solar module prices.Even Buffett is going all into solar development space  acquiring billion dollar project in a classical case of vulture investing.

MidAmerican Energy Holdings Co., Warren Buffett‘s energy company, said Friday it will add to its nascent position in renewable power by investing in a second solar farm.MidAmerican will buy a 49% share of a $1.8 billion solar-power plant owned by NRG Energy Inc. that U.S. solar-panel maker First Solar Inc. is building in the Arizona desert. Terms of the deal weren’t disclosed.

First Solar and NRG obtained a $967 million government loan guarantee for the 290-megawatt project, called Agua Caliente, which the companies have said could generate enough electricity for about 56,000 homes.Earlier this month, MidAmerican, which is controlled by Buffett investment arm Berkshire Hathaway Inc., said it agreed to buy a $2 billion California solar farm from First Solar, putting the Iowa-based owner of utilities, wind farms and conventional power plants in the solar-power business for the first time.