Sumco – Latest Japanese Company retreating from Oversupplied Solar Industry (Exits PV Wafers Completely)

5 Feb, 2012
Japan,Solar Energy

Japanese Companies which were the leading solar companies in the early part of the century have steadily lost the top global rankings to Chinese companies. Now many of the top Japanese Solar Energy Companies are retreating from markets and manufacturing completely . Sharp which was the largest solar company in 2009 and 2010 has radically restructured its strategy but is still losing marketshare. Panasonic the second biggest solar company has closed down its Japanese factory. Other Japanese solar companies like Mitsubishi, Kyocera are also being forced to rethink solar panel manufacturing.

Note most of the higher cost producers in the solar industry are effectively bankrupt and are only being supported by government or big parents. Many Western companies have already closed or are on the verge of closing. Some of the bankrupt companies are not finding buyers of their equipment even at 10c/dollar. Massive overcapacity remains in the solar industry particularly in China which is not being taken out fast enough which will probably lead to another bad year for solar stocks in 2012.

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

Sumco which is the 2nd biggest producer of semiconductor wafers is closing down its solar wafer division after  reporting a massive loss in 2011. The company will close 2 of its solar wafer divisions and shed more than 1000 jobs. Many of the Western companies like REC, Schott have already closed their solar wafer divisions due to a 70% reduction in solar wafer price in 2011. Only big Solar Wafer Producers like GCL , Renesola can be expected to survive the biggest down cycle in the solar industry.

Citing ‘structural’ overcapacity, ‘significant price declines’ and a fall in demand of crystalline silicon wafers, Sumco has decided to completely exit the market. The company expects to incur charges of ¥5 billion, folding both wafer subsidiaries, Sumco Solar Corporation and Minimata Denshi, and noted that it would report a significant operating loss in its fiscal fourth quarter results. Sumco said that wafer prices had declined by 70% from January 2011.Sumco had guided that solar wafer segment losses in the fourth quarter would be -¥7.2 billion and full-year losses of -¥6 billion.

Appendix

Biggest Solar Wafer Companies

Solar Wafer Companies are mainly concentrated in Asia specifically China and Taiwan.Cheap labour,lower land and capital costs as well as presence of major customers has made China the No.1 Solar Wafer Producer in the world.Despite most of the polysilicon being produced in Europe and USA,China leads the way in wafer production.Note semiconductor wafers in contrast are mainly produced in the developed countries like Japan,USA and Germany.The  structural forces of the crystalline silicon industry is forcing vertical integration with cell producers making wafers and wafer production companies making cells.However there are a few companies which predominantly concentrate on supply solar wafers to solar cell manufacturers.Here is the list of the main solar wafer producers which have shown stunning growth in the last few years.

1) GCL Poly – This Chinese company has become one the biggest producers of polysilicon and wafers in 2010 from zero in 2008.Is expanding rapidly but not getting into production of solar cells and panels.The company is also on its way to becoming a Top 3 producer of polysilicon and is expanding by co-locating wafer plants near its customer factories.Has singed massive long term deals with most of the biggest solar panel producers in the world.

2) LDK Solar - This is the biggest producer of solar wafers that are used by crystalline solar panels but is losing its No.1 position to GCL Poly.Is expanding rapidly into other parts of the solar supply chain and could break into top 10 solar panel producer in the next couple of years.

Why Sharp is Abandoning Domestic Factories

Sharp which was the biggest solar company in 2010 in terms of revenues is being finally forced to move its production away from Japan to low cost countries in Asia.Note the relentless cut in prices of solar panels by Chinese solar panel companies has made life impossible for high cost panel companies in Europe and Japan.While US Companies like Sunpower and First Solar always had the majority of their production in low cost locales like Malaysia and Philipines,European solar firms had also started shifting their production overseas with Q-Cells moving to Malaysia and REC  to Singapore.The current glut in solar panels has let to massive bloodletting in the solar industry with some established companies like Evergreen,ENER on the verge of bankruptcy.The sharp cost improvements and increased supply of crystalline silicon solar panels is set about to bring radical changes in the solar industry after a massive boom in 2010.The Second Wave of Thin Film Technology Bankruptcies has already started and we can expect more of that soon.Most of the production bases in Europe should be shuttered as well as costs have become higher than the selling prices.PV Crystalox and REC are already in a lot of trouble,cutting production and forecasting losses in the second half of 2011.

 


Solar Tiles in Australia – Suppliers/ Distributors Wanted

4 Feb, 2012
Australia,Solar Energy

One of my readers wants to install solar tiles in Australia and would like suppliers.Please contact if you can do so

We are researching into the best BIPV solar tiles that are available here in Australia. We want to build our home this year we are planning to build a home with the help of a company who does kit homes and will design one for us like this

We would like to incorporate BIPV solar tiles or roofing when we build – so we are trying to find out a this point what products are now available in Australia and what our choices would be and the range of prices each would be in …just to give us a starting point as we begin to pull all the ideas together ?

We’d really appreciate any information you can send our way that would help us achieving this – the brand/type of BIVP we can use, the best inverter and battery you’d recommend – obviously it will depend on where we are and how much sun our roof will get – but we plan to make it as much as is possible as we’d like to be able create 100% of our power needs or if not at least 80 % . At present as a guide my household uses  approx 10.7 khw of power a day – so that will give you an idea of how many solar tiles we’d need perhaps …if the sun was at its optimum ? We hope to be building on a reasonably sunny block between Ferntree Gully and Belgrave on the high side near bushland …beginning in a couple of months or so

Here is a list of the main Solar Shingle Manufacturers

  1. Energy Conversion Devices (Uni Solar) – After First Solar,Energy Conversion Devices is the second largest US company in Thin Film Technology.After a few quarters of profits in 2008,the company went into the red as its flexible a-Si modules failed to cut costs as fast as others.It has been shutting factories in the US and shifting to low cost locations.Still one of the biggest independent Thin Film Producers.Seems more likely that it will be bought out then survive independently.The company sells solar shingles mainly in Italy and France.The reason is that those countries give higher subsidy for BIPV applications under which solar shingles made by Uni Solar qualify. PowerShingle is the brand under which Uni Solar sells its solar shingles.
  2.  Dow Chemicals – This Chemicals Conglomerate has started producing it properietary Solar Shingles recently.While the company first showcased its DOW™ POWERHOUSE™ SOLAR SHINGLE in 2009,these solar tiles will be available commercially only this year.Note Dow uses the same thin film technology Copper Indium Gallium Selenide (CIGS) used by UniSolar.The company has delayed the introduction of the solar shingles technology despite developing them as far back as 2009.The company was supposed to start a factory in Brazil.The company claims that the installed cost of Solar Shingles will be lower than solar panels (though its difficult to think that it will be possible with solar panel prices crashing to as low as $1/watt nowadays).It is not know what the Dow Solar Shingles cost will be
  3. Atlantis Energy Systems was founded in 2002 .They manufacture custom solar BIPV Systems (Building Integrated PhotoVoltaic). They  produces solar BIPV glass and solar PVSunSlate Roof Tiles in the USA.
  4. Sunpower (Total) – Sunpower is a vertically integrated solar energy company known more for its highest efficiency solar panels.Sunpower is present in all 3 segments of the solar sytems business namely a)residential b)commercial and c) utility.
    Sunpower makes the highest efficiency, building integrated SunTiles. The SunTile brand blends into flat and S-Tile roofs to convert sunlight into clean energy. SunTiles are all-black and  built to withstand 110 mph wind-driven rain.
  5. Sharp the Japanese Zaibatsu known more for its Electronics Products is also the world’s No 1 Company in terms Solar Module Revenues.Despite its leadership in c-Si Technology,it has shifted focus to a-Si thin film due to higher costs.Sharp has started shipping a-Si modules from its 1 GW capacity plant in Sakai. It also sells solar shingles in the form os 64 watt  solar panels .The Sharp ND62RU1F is a group of solar shingles all arranged together.It is not really a solar shingle since it does not integrate into the roof but its light since its made of  thin film silicon technology and easy to install.

Another Brutal Year for Solar and Wind Stocks in Offing Despite Growing Demand

1 Feb, 2012
Solar Energy,Wind Energy

Solar and Wind Stocks have been massacred in 2011 mainly due to the following reasons

1) Chinese oversupply which is outcome of its massive industrial overcapacity and investment. This has decimated wind and solar companies in the West while also leading to margins and profits collapsing

China’s rise in solar manufacturing has been nothing short of spectacular.From less than 5% of world marketshare it has gone to more than 50% in the current quarter.Some of its companies like Trina and Yingli are the lowest cost producers of solar modules in the world today.The Europeans like Solarworld and Q-Cells which were dominant until 2 years ago have been swept aside with Q-Cells bleeding red ink . Even in wind energy , China’s growth over the last 2-3 years has been awesome with more than 100% CAGR . It has helped in growing wind turbine manufacturers through domestic content requirements.Now that these companies have sufficient technology and are able to leverage their low cost advantages , China has removed the restrictions in Jan 2010 to attack other markets. Vestas the leading European turbine manufacturer like the solar makers has fallen into the red. The only way for these companies to survive is to move their manufacturing to Asia . Ultimately the technology will also follow ( Applied Materials has also move its R&D to Shanghai). Just like the semi and electronics industry,Europe will start looking like a marginal player in the global alternative energy industry. Despite strong domestic  demand and policy support , the European industry has been outsmarted and outplayed by  the Chinese

2) Commoditazation of Technology and Erosion of Entry Barriers

3) Massive and Irrational Subsidies by Asian countries to support  Green Industry

Despite both Wind and Solar capacity growing strongly in 2011 the stocks have been punished.

2012 has a good chance to be another bad year for these stocks because

a) Wind Power in China has reached a plateau installing almost 50% of the global wind turbine installations

China Wind Power Market has become the biggest in the world with more than 18 GW of capacity installed in one single year, Note China has managed to double its capacity each year since 2005 and at the end of 2010 Wind Capacity totalled 44 GW which makes China the biggest Wind Power country in the world overtaking the USA.China has now got 7 of the Top 15 Global Wind Turbine Manufacturers and 2 of the Top 3 WTG Companies.China’s Massive Demand for Energy has made power plants mushroom in the country where more than 70% of the electricity is met by Coal.Wind Energy still forms only a small part of the power mix at less than 7% of the total power capacity and serves only a fraction of the Kwh of electricity given the lower load factor of Wind Power.Note Wind Power has grown in China as its Advantages as a Clean Source of Energy far outweigh its Cons.However the rapid demand growth has made a top inevitable as a country can only install that many megawatts in a year.

The 2 Biggest Signs of Trouble for the Chinese Wind Power Industry have been seen in the last couple of days.

1) Sinovel has canceled shipments of Electrical Control Systems (ECS) for its Wind Turbines from American Superconductor due to high inventory levels and refused past payments as well.With the biggest Manufacturer of Wind Turbines reporting inventory problems,the situation of the rest can’t be that good

2) The Chinese National Energy Bureau was considering tighter procedures that would include requiring local governments to get the written approval before going ahead with wind projects with installed capacity of less than 50 MW.Earlier it used to be more than 50 MW

3) Hundreds of Wind Turbines have not been connected to the Power Grid due to lack of capacity or transmission lines.China emphasises on investment without factoring in returns is one cause of these orphan wind turbines.

b) Solar Energy Growth may slowdown as well after a blistering 35% growth in 2011 as European countries slow / kill subsidies under the Debt Crisis.

c) Industries have too many players many of which are small and uncompetitive. Though a lot of solar companies have become bankrupt, there still exist too many.

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

APPENDIX

Wind Energy Stocks

1) Vestas – Vestas the largest Wind Turbine Company in the World has been facing one setback after another.The Danish Company which used to be a Green Investor Favorite till a couple of years can’t seem to find a buyer these days.Stiff competition from China,Slowdown in Wind Energy Farms in the West and now  Wind Blade Problems have formed a perfect storm for this company.

2) General Electric (USA) - General Electric is looking to Invest Heavily in the new Age Green Industry like other Industrial Giants like Siemens,ABB etc.General Electric or GE as it is popularly known is one of the biggest players in the Green Industry globally.It generated $18 billion in Ecomagination revenues in 2009 with $1.5 Billion in Investment.General Electric like other industrial conglomerates like Siemens,Areva and others are in fact low risk plays in the Green Investing sector.GE is strong across most of the Green Sectors today particularly in the area of Smart Grid and Energy Efficiency.GE has a 40-50% marketshare of the US market which is the 2nd largest in the world.Due to its vertical integration,it has one of the highest margins in the industry and remains a formidable player with its acquisition Enron’s Wind Turbine arm proving to be a masterstroke.

3) Gamesa (Spain) - Gamesa the Spanish Wind Turbine Producer and Wind Farm Operator has faced the worst year of its history in 2010.Like Vestas and Suzlon,2010 has been a cruel year for the Wind Industry in the Western Markets and the WTG Players dependent on those markets.Gamesa is one of the worst performing Wind Energy Stocks in 2010.Gamesa is looking to restructure its operations and concentrating on the offshore wind market by focusing on higher megawatt turbines.Gamesa is leading a massive Spanish Research Effort to develop a colossal 15 MW Turbine meant for the fast growing offshore wind sector.But this is a long term plan with 2020 set as the target for the complete development of this new Turbine.Meanwhile Gamesa has become the target of takeover speculation by one of the bigger Chinese Wind Turbine players like Sinovel,Goldwind etc.Gamesa has seen its revenue fall by 28% and profits by  71% with Operating Margins of 4-5%.Things don’t look too good for 2011 either though Orders have started ticking up

4) Suzlon Energy is the biggest Indian Wind Energy Company by far with 4-5 Gigawatts of WTG Capacity per year.However Suzlon has languished in red ink since the beginning of the Global Financial Crisis in 2008.The company started by Tulsi Tanti in 1995 was a shining example of Asian CleanTech with a 10% global marketshare and ranking amongst the top 5 Wind Turbine Makers .Suzlon buoyed by its success had bought controlling equity stakes in Turbine Gears producer Hansen Transmission and European Wind Turbine producer Repower.Suzlon seems to be recovering with increase in orders particularly at its German subsidiary RePower,however a huge debt burden poses problems.

5) Siemens – The largest Green Company in the world,Siemens has a strong presence in the Wind Turbine Segment.The company is strong in Europe and is now expanding to emerging markets like Asia.Given its huge technological strengths in electrical equipment,power transmission and large project construction,Siemens is looking for a dominant role in the growing offshore wind market as well.

6) Goldwind - The Wind Energy Market in China has witnessed the growth of almost 90 companies with little differentiation competing fiercely on prices.This has led to low to zero margins for most of these companies.Goldwind has managed to rise above the competition by becoming the single largest Chinese player and looks to takeover the No.1 position in the world in the next few years.By taking bold risks and with the support of the government,Goldwind has become a threat to the established Wind Turbine Order

7) Sinovel – The 2nd largest Chinese Wind Power Company managed to do a successful IPO in Hong Kong last year despite long delays.The company is looking to expand in the foreign markets particularly the US market and has gotten a local management to help it penetrate the newer market.

8) Dongfang Electric - Dongfang Electric Corporation,China’s largest power equipment producer  is also the 3rd biggest Wind Turbine Producer in China as well .The company has managed to grow impressively like the rest of the Chinese and is looking to expand in foreign markets as well.Recently  bagged a 276 MW $203 million WTG supply contract with Abhijeet Group.

9) Ming Yang Power- Ming Yang is the only significant non-state owned Chinese Wind Energy Company with a 2009 marketshare of around 4%.The Company has a very short history installing its first Wind Turbine just 2 years ago and has seen an exponential growth riding on the incredible Wind Industry Growth in China.

10) Mitsubishi Heavy Industries , the massive Japanese Conglomerate is looking to overseas market for growing its Wind Energy Division.Mitsubishi like other Japanese companies are looking towards Green Industry for growth.Japan already possesses solid strengths in this area with its traditional focus on resource efficiency.While companies like Panansonic and Toyota looks towards Electric Vehicles and Batteries,Sharp and Kyocera towards Wind Energy,Mitsubishi is focusing its energy on the Wind Sector.

11) Enercon – Enercon is a privately listed German company which has almost 22 GW of Wind Turbine Installations in the world.Enercon was the first company to build a gearless Wind Turbine which is one of the biggest innovation in the Wind Energy Industry in recent times.

12) Nordex - Nordex is another German company in the Wind Turbine Industry which was the first one to build a 1 MW Turbine.The company has  not managed to grow fast as the other German companies like Enercon,RePower and Siemens.

13) United Technologies Corporation (UTC) - This US Giant Technology Conglomerate is still a small player in the World Wind Power Market.However it has increased its footprint by acquiring struggling independent US Wind Power company Clipper.

Solar Energy Stocks

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 )

GE View

General Electric Co. expects increased competition and a reduction in subsidies by cash-strapped governments to lead to more companies exiting the wind and solar power businesses, but the industrial behemoth still sees growing long-term demand.”There’s going to be a lot of casualties in the wind and solar businesses, there already are in solar,” John Krenicki, who leads GE’s energy division, told Reuters in an interview on Monday.

Wind Industry Oversupply , Sinovel Profits to Halve in 2012

Sinovel Wind Group Co., China’s biggest wind-turbine maker, expects its 2011 earnings to fall by more than 50 percent as heightened competition at home and abroad dragged down prices.

Rivalry within the market depressed prices, trimming revenue and profit margins, the Beijing-based company said yesterday in a statement. “Cyclical fluctuations” in the world economy also delayed some projects, curbing income, it said.

“It’s difficult for these guys to drive costs down at the same pace as revenue, so margins are getting squeezed,” Aaron Chew, an analyst with Maxim Group LLC in New York, said by telephone. Sinovel may still fare better than European counterparts such as Vestas because of lower labor expenses and more advantageous government subsidies in China, he said.

Lower Support

Vestas has cut sales forecasts twice since October after Asian competitors grabbed market share and U.S. and European governments reined in support for renewable power to curb budget deficits.

A tighter government approval process for projects in China has intensified competition further, spurring domestic companies to study expansion elsewhere. “We do not expect growth in wind installations in China in 2012 to 2014,” so growth abroad would allow the main Chinese players to boost sales, McLoughlin said.

Bad Journalism on German Solar Subsidies Analysis – Why Media persistently gets it wrong

1 Feb, 2012
Solar Energy

I continue to be surprised by bad and shallow analysis of renewable energy subsidies done by media. Most of it is due to bad research and lack of investigative and unbiased journalism. Writers with little or no background in energy or cleantech sensationalize an issue taking a report from some biased thinktank. Here is one example from a website called ironically Reason.com which you can read here http://reason.com/blog/2012/01/31/black-hole-sun-germany-spends-100-billio

What the writer is saying that Germany is spending massive amounts of subsidies to get little amount of power. What he has missed

1) He is not comparing the subsidies for solar with that of fossil fuels. Does he know that Fossil Fuel Subsidies globally amount to $550 billion a year which is many times more than that given to Solar, Wind and others.Even a developed country like Norway gives 5 times more subsidies to fossil fuels than renewable energy

Norway has been hailed as the toughest cutter of Greenhouse Gas Emissions amongst the developed countries promising to cut Carbon Emissions by  30-40% by 2020 from the 1990 Levels.Compared to this USA has promised a measly  17% cut from 2005 levels and the EU  only 20% by 2020 from 1990 levels.Norway’s cost of cutting emissions is also quite huge $200 a tons of Carbon Dioxide.Norway has also promised to cut Carbon Emissions internally rather than buying cheap carbon credits from abroad using its massive sovereign fund.Note the Cap and Trade Kyoto Protocol has been criticized for being ineffectual in curbing Global Warming.However a NGO reveal today that Norway’s spending on Fossil Fuel Subsidies is $1.4 Billion annually which is 5 times more than on its Subsidy for Greener Forms of Energy.Note $550 Billion is spent worldwide on subsidizing Fossil Fuel Energy which is multiples of that spend on Renewable Energy.Norway is a major Oil Producer and its Huge Sovereign Fund of  $450 Billion has been built mainly through Oil Revenues.Therefore the massive subsidies on Oil is not surprising though incompatible with its commitment towards Climate Change.

2) He says that 18 billion euros is the cost of solar energy over 20 years . He conveniently forgets/ does not know the basic concept of time value of money.

3) He does not consider the costs on health,pollution,mining deaths and other social costs of fossil fuel electricity. He forgets to mention the BP Oil Spill and Fukushima Disaster.

4) He says it is cheaper to do energy efficiency than solar energy , a fact that is well know but will energy efficiency alone solve our global warming problems. Nobody doubts the fact that energy efficiency is cheaper but you need renewable energy as well

Mainstream media is woefully inadequate in presenting the problems that we are faced with particularly in a topic as complex as climate change. Taking a report and presenting it without a balanced opinion makes it worse.

Germans are happy paying 10-15% extra for electricity  Green and Clean Energy which would make a Better World. Most of the other developed countries like USA,Canada have shown only shocking apathy towards global warming . Which is better , it does not take a rocket scientist to figure it out. Germany has alone brought solar energy prices near grid parity due to its strong and pragmatic support to green energy  .Though the FIT policy is not perfect it is much better than policies implemented elsewhere.

Read more on Pros and Cons of Renewable Energy here

How, Why and When Guide to Set up your own Solar Energy Business

31 Jan, 2012
Solar Energy

I receive a lot of inquiries regarding how to enter the solar industry . Note the Solar Business is one of the fastest growing industries in the world right now clocking over 50% yearly growth since 2000. In 2010 the solar panels sold globally grew by 150%  and another 30-40% in 2011. The fast falling prices of solar panels and the falling costs of solar electricity means that it will continue to grow at rapid rates in the future.

So how does an entrepreneur get into the solar business. Note there are already lots of people who have made their fortunes in the solar industry . Some of their are solar developers while others are solar manufacturers while others are involved in supplying materials to the solar industry.

Main avenues of getting into the solar industry

1) Manufacturing of solar panels,cells, wafers in  a factory and selling them

2) Manufacturing other system parts of a solar system such as solar cables, solar inverters, solar glass, encapsulants, racking systems etc.

3) Solar Development that is setting up a solar power plant by financing it and selling the plant or the electricity

4) Solar Installation – This involves installing a solar system on a house or a commercial establishment. This involves wiring, putting up the panels ,procurement etc

5) Solar Distribution – The solar industry works in the traditional way where manufactuers sell to wholesalers who in turn sell to retailer.

Which Part should you get Into

Manufacturing of Solar Panels and Components is not possible as the industry is heavily oversupplied by Chinese players. Unless you have a tremendous innovation, forget manufacturing as big companies have taken this segment over. The age of startups in solar manufacturing is over. There are possibilities of getting into associated into solar ancillaries like making racking systems but I would not be on it.

Solar Installation is possibly the best business for a small entrepreneur to get into as large companies don’t derive the benefits of scale, capital and technology too much in this part of the solar supply chain. In fact the largest number of solar companies exist in the solar integration and solar installation part of the supply chain.

Solar Distribution is also a good business if you already have infrastructure and working capital to invest into. Solar Panels as a product is going to be as common as a TV or a Refrigerator in the future. In fact some of the major conglomerates like Samsung and LG are already making silicon solar panels and selling them . So are companies like GE . You can be a wholesaler and make good money on a growing segment.

Feel free to give your suggestions and feedback. I have included some of my prev article snippets which might help.

APPENDIX

HOW TO SET UP A SOLAR PLANT IN 10 STEPS

1) Site Identification - Identifying a Suitable Site for Building the Solar Plant.Note the Area should not be heavily forested and have easy access to the Roads and the Power Grid.

 2) Preliminary Financial Analysis - Preliminary Financial Feasibility with inputs like the Land Costs,Solar Insolation,Interconnection possibility with the Power Grid Operator

3) Land Leasing or Buying - After Step 2 has passed,then begins the Acquisition of the Land through Lease or Ownership.

4) Basic Engineering Design/Technology Selection – An Engineering Layout is prepared along with the Selection of the Technology and Vendors of Solar Equipment

5)Permitting – Various Permitting Procedures need to be followed in this Step.This is specific to an Area and can be quite cumbersome.For eg. in the USA the permitting involves very heavy costs forming almost 15-20% of the cost of a Solar Project.

6) Power Purchase Agreement – A Power Purchase Agreement (PPA) needs to be signed with the Power Utility who will buy the Electricity

7) Selection of EPC – A System Integrator or a Solar EPC Contractor is selected.In case an EPC Contractor is selected then Solar Panels ,Mounting and Inverters needs to be purchased if the Contract is not a Turnkey One

8) Financing of the Solar Project needs to be done.Note Solar Power Plants require a high initial investment with very low O&M costs.In general 60-80% of the Project is Debt Financed.

9) Testing and Connection to Grid - After the Solar Plants is built,Testing of the Plant has to be done before it is connected to the Power Grid

10) Ongoing O&M – A Solar Plant has a life  of between 25-30 years and requires minimal maintenance and monitoring.Solar Inverters have to be replace after 10-15 years.In case a Solar Module fails,it needs to be replaced as well as it degrades the performance of other Solar Panels.

 

1) Solar Panels

What are the Different Types of Solar Panels

Size

Solar Panels come in all sorts of sizes,colours and power.Solar Panels of 20-40 Watts are typically used for applications like a Solar Lamp,Lantern and products using small amounts of power.For Putting Solar Panels on the Roof for Generation of Electricity,sizes vary from 150 Watts to 300 Watts.

Type and Color

There are also 2 different types of Crystalline Silicon Panels – a) Monocrystalline b) Multicrystalline Panels.In general Monocrystalline Panels give higher amounts of power and cost more.Solar Panels generally come in blue color though black color can also be found.

Thin Film Panels

 Thin Film Panels are generally used for Building Integrated Photovoltaic (BIPV) applications where the Panels are integrated as a part of the Building Structure.This is in not prevalent in India as of now but will become quite pervasive in the future.

Solar Panel Efficiency Technology and Range

Solar Panel Efficiency can be as low as 7% for amorphous silicon technology to as high as 18% for mono-crystalline silicon technology.Note some of the solar panels used in spacecraft have cells which have conversion factors ranging as high as 40% but those are niche applications.Solar Panels made by First Solar using the Cadmium Tellurium Technology are in the range of 11-12% while the CIGs technology which is being used to make solar panels by a number of companies like Miasole,Solyndra,TSMC and other have the range between 10-13% currently.Note Solar Panel Efficiencies are constantly increasing for all technologies each year.

Solar Panel System Costs

Solar Panels Costs

Solar Panels cost for the cheapest solar panel manufacturers in around 80c-100c/watt and they retail for around $2/watt of residential customers.Note for utility large scale buyers of solar panel buyers,the cost is much lower.Solar Panels Costs have trended down quite in the last 3-4 years except in 2010 when they went up as solar panel demand increased by more than 150% .Solar Panel Costs are the biggest component of a Solar System Cost.The costs for Solar Panels  are lower for Thin Film Solar Panel for example First Solar Panels are much lower in cost but have lower Solar Panel Efficiency .Solar Panels in general cost between40-60% of the total system costs

Solar Inverter Costs

Solar Inverters cost around 50c/watt for small buyers of solar systems but can cost lower for large kilowatt inverter sizes and for scale buyers.Solar Inverters are a crucial component of a solar system and make up around 10% of the solar system costs.Here is a list of major solar inverter brands

Solar Installation Costs

These are the costs paid to the installers/electricians to connect solar panel systems and the balance of systems (BOS) to the grid or the customer installation.Solar Installations costs can vary between 10-20% of the total costs

Balance of Systems (BOS)

Balance of System components are the solar mounting systems,wires,cabling etc which are needed to mount the solar panels at the right inclination to generate the maximum energy while wire and cabling is needed to connect the solar panels to the inverter and each other.Note BOS can form between 15-20% of the Solar System.Again note the percentage of costs are an indicator and can vary substantially depending on the technology used,region etc.

Permitting,Inspection,Regulation,Other  Costs

Most Solar Panel Installations get a government subsidy in most parts of the world and involve a lot of paperwork,regulation,inspection etc.These can vary substantially depending on where the solar panel installation takes place.In USA the red tape involved is quite cumbersome and can form upto 30-40% of the total costs in the worst cases.In Germany which is the world leader in solar energy,the process is very smooth and can be done at 5% of the total system costs.

Solar Panel Sizing and Calculator

Calculating how many Solar Panels you need is quite tricky as it depends on the Solar Panels Efficiency,Design of the Solar Array,the place where you live etc.

1) Solar Panels Efficiency – Some Solar Panels are more efficient.For example Solar Panels made by Sunpower and Sanyo are the most efficient which means they require less area.For space constrained homes,they are the best bet but they cost more per watt hour of electricity generated.Click on the heading of this paragraph to understand more about Efficiency.

2) Sun Light or Solar Insolation – This measures the amount of sun light that your solar panel installation recieves.Typical Solar Insolation is  around 1000-1500 watt hour per year.This means that if you install 1 watt of solar panels you will get 1-1.5 units of electricity per year.You should first calculate how much electricity you require per year.If you require around 7200 units a year you would need to install a 5 kilowatt or 5000 watts solar array.You can find out the solar insolation you receive from free websites like a) www.nrel.gov/rredc/pvwatt if you live in the USA and b)re.jrc.ec.europa.eu/pvgis/countries/countries-europe.htm if you live in Europe.These websites also give you information about the solar insolation/radiation you live

3) Design of the Solar Array – This is very important in ensuring that you get the most power out of your solar panels.The design of the solar array should always be done by a good solar installer.Note this is a fragmented industry but you can find more about the big solar installers in the USA here.You should ensure basic stuff such that there is no shading of your solar panels,the roof does not leak,the materials used are good.Also having a good solar inverter is important.Nowadays you can get individual solar microinverters for each solar panel as well.Note almost 1-520% of the power generated by your solar panels is wasted in converting from DC to AC.

Solar Panel and Cell Dimensions

A Typical Solar cell of 0.5V and 3 Amperes has a dimension of 60mm x 30mm x 2.8mm (LxWxD) .Solar Cells in Bulk can be bought these days at very cheap prices of 70c/watt.Monocrystalline Solar Cells cost more at 85c/watt while its impossible to buy Thin Film Solar Cells.A Typical Solar cell of 0.5V and 8 Amperes has a dimension of 60mm x 60mm x 2.8mm (LxWxD)

A Solar Panel of 200-250 Watt normally has dimensions 65 inches x 4o inches  x 1.80 inches and weight of around 40-50  LBS or 20-25 kgs.Note Solar Panels made from Thin Film have much bigger sizes because of lower efficiency,however their thickness is lower and weight is also a bit lower than similar dimension polysilicon solar panel

2) SOLAR INVERTERS

Solar Inverter Costs and Prices

Solar Inverter Companies have much higher margins than the normal Solar Panel Companies as their costs are much lower than their prices.Solar Inverters have a cost beween 10-25c/watt while the wholesale selling Price can range between 30-40c/watt.However with the entry of Asian manufacturers,the margins and the prices of Solar Inverters are expected to come down rapidly.The current glut in the Solar Inverter Market indicates that prices may come down soon.

Main Solar Inverter Companies

SMA Solar – The Big Daddy of the Solar Inverter Market with a   40% Marketshare of the Global Market.This Germany company has become the most valued solar company in Germany beating out the old stalwarts like Q-Cells  and Solarworld.SMA Solar has managed to maintain its marketshare and grow as fast  with the global solar demand unlike some of its competitors.SMA Solar faces tough times ahead as the growing inverter industry attracts numerous competitors and it remains to be seen whether it can avoid the fate of Q-Cells.

2) Power-One - The US power management company has shown the fastest growth in 2010 and has increased its marketshare to around 13% to become the No.2 global player.Power-One is mainly concentrated in Europe and is now expanding to Asia and its home market of USA.

3) Kaco New Energy – Like SMA,this is also a German company though privately held.It too benefited from the strong growth in German solar market in 2009 and 2010 to become a large players.It is has not grown as fast as SMA but is still a big players

Solar Inverters vs Microinverters

Pros of Microinverters compared to String Inverters

  1. Reliability and Longer Life  – Micoinverters are more Reliable as the failure of a single piece affects only that solar panel and not the whole solar array of solar panels in case of Solar Inverters.Also the Mean Life of Solar Inverters are much more than the life of the Solar Panels compared to the 5-10 year life of String Inverters which have to be replaced.
  2. Productivity – Microinverters claim to have 5-25% more power production from solar panels as they manage to maximixe the power production from each solar panel (MPTT) compared to string inverters which MPTT the whole solar array.Microinverters give more accuracy  If a single panel is operating at a different point, a string inverter can only see the overall change, and will move the MPPT point to match. Shading of as little as 9% of the entire surface array of a PV system can, in some circumstances, lead to a system-wide power loss of as much as 54%
  3. Ease of Installation – Installing Solar Panels with Microinverters is easier and faster and leads to lower costs compared to Solar Inverters though there is still some dispute on this.
  4. Flexibility – Another benefit of the distributed microinverter design is the potential for installations to be expanded over time. An initial set of solar modules can be installed and additional modules added as needs and budgets grow without requiring the replacement of a large centralized inverter.
  5. Reduction in Lifecycle Costs - Installers are no longer limited by string design, marginal designs, co-planarity, and matched modules. Microinverters  reduce wiring time, and remove the need for DC switching points.
  6. Space and Heat of String Inverters – String Inverters occupy more space (though not a big problem) and generate a lot of heat which has to be cooled by used fans.
  7. Higher Power Inverters have to be used - Because of the limited range of power rated inverters availabe,solar panels have to generally use power inverters of greater size for eg. 800 W of Solar Panels will have to use 1 KW solar inverters wasting the 200 W

Disadvantages of Microinverters compared to String Inverters

1) Cost - Traditional Inverters cost between 35-50c/watt depending on the size,technology,brand etc. while microinverters typciall cost between 75-90c/watt again depending on brand,market etc.This is the biggest disadvantage of microinverter compared to solar inverters

2) Placement of Microinverters – Microinverters are place on the rack below the solar modules.This is said to cause problems as it is placed on the hottest part of the solar system and could lead to problems in case of high insolation areas

3) Not useful in utility solar power plants - Solar Power Plants of more than 1 MW in size have not used microinverters as microinverters are more useful in power plants of smaller size where maximum power is needed and where there are problems of shading,debris etc.Also monitoring of small power plants is difficult.

3) Top Solar Companies

1) First Solar – the US based Cadmium Tellurium (Cd-Te) is the lowest cost panel producer in the world today if you don’t include any penalty for low efficiency.Even if you penalize the Cd-Te Technology for its lower efficiency vis-a-vis the higher efficiency crystalline technology,First Solar is clearly the leader with a core cost of 74c/watt.The company has a roadmap of  reducing the cost to 52c/watt by 2014 and given its track record it seems quite achievable.

2) Sharp – Sharp,the Japanese Electronics Giant was the largest solar company in the world by revenues in 2009,however it risks losing its top 5 place in 2011 as Chinese companies ramp up capacity at a much higher rate.Sharp has been shielded from the fierce competition in the solar panel market as the domestic Japanese market has also grown sharply.Japan is a tough market for foreign companies to crack like other sectors and that has allowed Sharp to prosper despite much higher costs and lower margins.However,Sharp has not been able to grow fast enough in 2010 with major Chinese companies seeing upwards of 100% growth

3) Suntech – Suntech was  the world’s biggest producer of solar panels in 2010 and was one the first companies to set up operations in China.Its example was followed by a host of other Chinese companies.Suntech has been slow to expand compared to the fast growing small companies in China and has lost marketshare to them.It has started to vertically integrate in order to meet the low cost challenge from Trina and Yingli

4) Yingli Green Energy - Yingli Green Energy is one of the oldest Chinese companies and is completely integrated from polysilicon.The company has been expanding rapidly and has one of the lowest cost structures in the industry.

5) Trina Solar - Trina Solar is one of the lowest cost manufacturers of Solar Panels in the World right now and also sells it at a very low price.This is the reason that the company in a span of few short years has manged to acquire a 10% global marketshare.The prices the solar panels being sold are around $340 per 200 watt module.

6) JA Solar - JA Solar unlike the others mainly produces solar cells instead of solar modules.The company is one of the lowest cost producer of solar cells in the industry and has recently expanded into producing modules as well.The company has shown the fastest growth in 2010 and looks to be a world leader in the future.

7) Motech - This Taiwan producer of Solar Cells was one of the biggest in 2007 but has gone down the ranks.TSMC bought a stake in this company after it faltered post the Lehman crisis.The company seems to be recovering ,however it has seen newer rivals like Neo Solar,Del Solar and Gintech expand more rapidly.

8)Gintech - It is the biggest solar cell producer in Taiwan and has shown amazing growth since its inception.Gintech like JA Solar producers mostly solar cells.

9) Hanwha Solar One - The Company which was recently acquired by South Korean Chemicals Giant Hanwha also makes one of the cheapest panels and sells it a very low price.The quality is also quite good and with strong parentage behind it,the solar panels made by the company.Again like Trina Solar,it has very low cost Chinese manufacturing capacity.

10) Canadian Solar – The Company sells a wide variety of solar panels unlike other producers.The Solar Panel Selling Price is also quite cheap.The Company is headquartered in Canada with factories in China and Ontario.

11) Sunpower - Sunpower produces the highest efficiency crystalline solar panels in the world.This is a US company like First Solar and has a strong system installation business as well.A offspring of Cypress Semiconductor,it faced tough times due to its higher costs.However seems to be on a recovery path.Failed to expand as rapidly as the Asians in 2010.

12) Renewable Energy Corporation – It is Norwegian manufacturer of mainly polysilicon and wafers.It suffered like other Europeans from the declines in solar panel prices.Has moved manufacturing to Singapore to lower its cost.Fell down the rankings due to tough competition.However is completely integrated.

13) Solarworld – Biggest German producer of solar panels,the company is one of the few to still have operations in Europe and USA.The company has been battered by low cost competition .

14) Panasonic/Sanyo – Sanyo is the producer of high efficiency solar panels and like Sharp sells mostly in Japan and USA.With buyout by Panasonic is looking to sell integrated energy  efficiency/energy storage/solar energy home solution.

15) LDK Solar - This is the biggest producer of solar wafers that are used by crystalline solar panels.Is expanding rapidly into other parts of the solar supply chain and could break into top 10 solar panel producer in the next couple of years.

16) Renesola – Very similar to LDK Solar in operations and structure.It is expanding into other parts of the supply chain.This Chinese producer is a very low cost producer of wafers.

17) GCL Poly – Has become one of the biggest producers of polysilicon and wafers in 2010 from zero in 2008.Is expanding rapidly but not getting into production of solar cells and panels.

4) Advantages of Solar Power

Solar Energy is the only form of Energy whose costs are continuously declining compared to other forms of Energy.This is one of the biggest advantages of Solar Power over other renewable and non-renewable forms of energy.Solar Energy costs have declined by over 50% in the last 2-3 years even as Coal,Oil,Gas and other Energy costs have gone up.While Wind Energy costs have declined in  the last year the overall trend is increasing as the costs of copper and steel go up.This is one of the main reasons why solar energy demand has gone up by 150% in 2010.With solar costs going down by another 10% each year over the next few years,expect Solar Energy to grow at a further fast rate in the future as well after growing at 50% CAGR over the last decade.Here are some of the advantages of Solar Energy over other non-renewable energy forms

1) Environment Friendly – Solar Energy does not lead to any major mining activity,does not lead to significant GHG emissions,does not lead to health hazards like thermal power

 2) Declining Costs - Solar Costs are declining at a rapid pace and are rapidly approaching grid parity in most parts of the world.The use of semiconductor techniques ensures that the costs should continue to decline in the future as well

3)No Fuel and Low Maintainance - Solar Energy does not require any fuel like Wind Energy and the Operation and Maintainance Costs are extremely low.This is a huge advantage in these days when gas and oil disruptions are causing energy insecurity.Libya,Russia are all examples

4) No Pollution and Deaths- Solar Energy does not lead to pollution disasters like the BP Oil Spill and Coal Deaths which are directly related to Dirty Energy Productionl.

5) Almost Unlimited Potential – Solar Energy Potential is almost infinite compared to the limited and peak features of other forms of  energy like Wind,Geothermal,Oil,Gas and others.Only Nuclear Energy has potential similar to Solar Energy

6) Size Advantages - Solar Installations can be installed in various sizes with as little as 200 Watts and as big as a 1000 MW.This is not possible for other energy forms which require a minimum large size such as Coal,Nuclear etc.

7) Quick Installation - Solar Energy can be installed very quickly.Small residential installations can be installed in as low as 3 days.This is much faster compared to other  energy sources

8 )  Grid Independent – Solar Energy finds the most use in non-grid areas where it can be installed with batteries for energy storage.It is a much cheaper form of energy for non-grid applications than other forms.It is giving competition to Diesel Gensets being used.

Solar Energy will see massive growth in the future which has led to most of the MNC conglomerates getting  into this sector.TSMC,GE,Siemens,Areva,Toshiba,AUO,Honda are some of the companies making large investments into solar energy.

5) Why Solar Energy Future Growth will be much faster than everybody thinks

Why Solar Energy is Being Underestimated

I am surprised by the extent that solar energy growth is being underestimated by analysts and policymakers.Solar Demand has exceeded forecasts by a wide margin in the last 3 years.Despite doomsday scenarios Solar Energy grew by almost 40% in 2009 and should grow by more than 100% in 2010.While this is on a low base,you have to factor in that solar energy is still being subsidized.Think of the growth possibility when solar energy costs decline another 50%.While all countries have underestimate the penetration of Solar Energy,I am taking the example of India which had been praised for its  ambitious plan of generating 22 GW by 2022 .I think solar energy will easily be 3-4x of that capacity by that time as India has a huge potential  in solar energy.Bloomberg one of the most respected analysts in the Green Space has forecast 4.2% of US Energy Demand from Solar by 2020.This again is too low in my view.Once Solar Energy reaches low enough costs,then energy demand as a whole will expand just at the advent of LED lighting will expand the whole lighting market.The Potential of Solar Energy is not restricted to the Global Electircy Demand,it is much higher because it will expand that Capacity.

Solar Energy Corporation of India to Supervise Indian Federal Solar Program

31 Jan, 2012
Energy,Solar Energy

Solar Power in India has taken off under the ambitious JNNSM government subsidy scheme with almost 400 MW of Solar Capacity installed in 2011 . With various states like Gujarat, Karnataka coming up with aggressive solar subsidy schemes on their own as well, solar power capacity in India should surge by around 1 GW in 2012. This has made India one of the fastest growing solar markets in the globe right now.

India’s JNNSM scheme was managed by MNRE which is the Central Ministry for Renewable Power and NVVN which is the state owned utility’s NPTC trading arm . However note NTPC is a listed company and is getting into the production of solar power as well. So to have a regulator which is also a participant makes little sense. With the first phase of JNNSM to be complete next year, the scheme is being overhauled. The Indian government is going to turn over the supervision of its 20 GW by 2022 Solar Power scheme to a new entirty called Solar Energy Corporation of India.

JNNSM part 2 will start in 2013 and it will need more funding as it proposes to build 4-7 GW of capacity. The funding agency IREDA does not have the resources to finance such a big outgo which could easily see more than $5 billion in funding requirements. Note a number of international financial institutions like Exim Bank , ADB and KFW are already involved in funding solar energy in India.

JNNSM

he Indian Government’s launch of the ambitious Jawaharlal Nehru National Solar Mission(JNNSM) was done with much fanfare with a target of reaching 20 GW of Solar Capacity by 2022 under 3 phases from the 81 MW currently.While the government had the best intentions and had laid down a well defined 10 year plan with subsidy support for both Solar Thermal and Solar PV Technology,it has already run into problems.Due to high interest the government went in for bidding of projects which led to irrationally low bidding from unknown firms.This has put the entire exercise in question with the the biggest private utility saying JNNSM is a failure.Without extensions of deadlines it looks highly unlikely whether the 37 winners will actually put up the plants.

JNNSM is divided into 3 phases with the ultimate goal of reaching grid parity with coal by 2030.I don’t know where they came with the 2030 figure as I think solar should reach grid parity much earlier and should be below coal cost much  before

1)Phase I (up to 2012/2013) – remaining period of 11th five yr plan & first yr of 12th yr plan Target of 1100 MW
2) Phase II (2013-2017) – remaining 4 yrs of 12th five yr plan Target of 3000-10000 MW
3) Phase III (2017-2022) – 13th five yr plan 20000 GW overall

Funding of the JNNSM will be done by

1) Renewable Energy Credits (REC) – State Electricity Regulatory Commissions (SERC) to fix a minimum
percentage of energy purchase from renewable sources of energy

2) NTPC’s Trading Arm NTPC Vidyut Vyapar Nigam Ltd ) is chosen as the nodal agency for entering into a Power Purchase Agreement (PPA) with solar power  developers.NTPC will mix expensive solar power with cheaper coal power .

3) Incentives

  • Zero import duty on capital equipment, raw materials and excise duty
    exemption
  • Low interest rate loans, priority sector lending
  • Coal tax
  • Budgetary Support for MNRE though 2011 Budget has not given anything
  • UNFCCC Funds – Again not certain as no international agreement ( another pipe dream)

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