Larget US Solar Installer Suncity gets Sued by Sunpower for Corporate Espionage

14 Feb, 2012
Solar EPC,Sunpower

Solarcity which is the largest US Solar Installer has got sued by Sunpower for stealing trade secrets. Note Sunpower which was recently bought by French Oil Giant Total is facing tough times. Sunpower which makes the most efficient solar panels in the world is facing tough competition from super cheap Chinese solar panels. In fact according to Total CEO the company would have been already bankrupt with Total support. Beside making solar panels, Sunpower is also one of the biggest solar integrators and developers. The company has been in the business of installing solar panels after it acquired solar system intstaller Powerlight.

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.

Solarcity has been the fastest growing solar installer in the USA rapidly expanding across the US geography entering new states. Now the company faces charges that former Sunpower employees stole confidential data and gave it to Solarcity.The lawsuit alleges top former officials like Tom Leyden, a Managing Director for the company’s East Operations  of  stealing highly confidential data from the company’s SalesForce database with information on the company’s major customers accounting for over $100 million in sales for 2011 .SunPower is holding five former employees criminally liable under California Penal Code § 502(c)

Silicon Valley-based solar panel giant SunPower sued five former employees and competitor SolarCity today, contending that shortly before they left SunPower, the employees connected USB drives to the company’s computer network, “and used them to steal tens-of-thousands of computer files” with confidential and non-confidential proprietary information.

In addition to civil damages and injunctive relief, SunPower also wants to hold the ex-employees criminally liable for violating a California lawprohibiting unauthorized computer data access and fraud.

List of Top US Solar Installers

1) SunEdison/MEMC – US Polysilicon and Wafer Producer MEMC bought Sunedison which was one of the largest solar installers in 2008.Now MEMC is strongly expanding the system installation business not only in the US but other parts of the world like India,Europe,Korea,Canada and other places.The company recently installed one of the biggest solar plants in the world in Rovigo,Italy

2) Sunpower – Sunpower is a vertically integrated solar energy company known more for its highest efficiency solar panels.The company bought Powerlight a few years ago to enter the solar systems market and has bolstered the business constantly to become a major global installer.Sunpower is present in all 3 segments of the solar sytems business namely a)residential b)commercial and c) utility. It is one of the largest US installers and has recently won a number of large utility contracts for building solar farms.

3) First Solar – First Solar is the largest producer of solar panels in the world using its properietary thin film technology.The company is also one of the biggest utility solar system developer in the world focusing mainly on the North American Market.The company has built and sold the world’s largest solar farms in Sarnia,Ontario.The company has beefed up its solar installation business by buying project development teams and pipelines from Ausra,OptiSolar Turner etc.

4) Sharp/Recurrent Energy – Sharp recently bought Recurrent Energy one of the large independent solar power developers and system integrator in the US.Sharp already had a big presence in the California market where it is now facing increasing competition from the low cost Chinese players like Trina Solar,Yingli etc.

5) REC Solar - The Norwegian based Solar Company REC has started it solar system in the US a year or two ago and has managed to win some contracts..It is targeting all the 3 segments and is present in the major solar states of the US like New Jersey and Californa.It claims to be the largest residential solar installer in California with 17 MW of installations in 2010.

6) Solarworld - Another European company like REC,Solarworld is mainly targeting the utility and big commercial market recently winning a 11.6 MW order from LADWP.The company has a big manufacturing facility in Oregon and has aggressive expansion plans in the US as its domestic German market slows down.

7) Mitsui/Sunwize - Mitsui,the giant Japanese tradings house bought Sunwize in 2006 to enter the solar system market in the US.Note Mitsui is not a big solar panel producer like Sharp,Panasonice and others.The company sells mainly in Oregon and Californai and targets all the 3 segments of the market

The Solar Financing/Leasing Companies

8 ) Sungevity - Sungevity is a California company targeting the residential market through a solar leasing plan.It extensively uses the Internet to design the system and has a JV with US Bank to provide financing to its customers.

9) SolarCity - SolarCity is a full-service solar provider for commercial and residential customers and does solar power system design, financing, installation and monitoring services from a single source.SolarCity is introduced  a new solar lease option, called SolarLease.It also has other options like PPA .The company’s footprint extends to Arizona, California, Colorado, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Texas and Washington D.C.

 

Indian Renewable Energy Stocks – Bubble Bursting or Investor Panic

26 Jan, 2012
Energy,Orient Green Power,Renewable Energy,Solar Energy,Suzlon,Wind Energy

Quick quiz. What is common to Suzlon, Moser Baer, Indo Solar, Websol Energy systems and Orient Green Power? All these stocks had successful runs on the stock market and hyped as the next game changers in wind energy, semi conductors, solar power and hydel/geo thermal power. Valuations were more on growth stories than through an hard nosed DCF spreadsheet. But now, they trade at record lows(like other stocks but what is different is the pressing fundamental concerns in each case). Is this a bubble finally bursting, or are investors panicking?

  1. Suzlon cherishes an ambitious vision of being the technology leader in the wind sector, and among the top three wind companies in all the key markets of the world. It expects that by 2015, total worldwide installation of wind energy would cross 442 GW which is almost 2.3 times of the current installation. This will cover about 7.5% of the global electricity supply by then, as opposed to just 4% now. But the solar bubble collapse in Spain, France and Germany(where subsidies were almost withdrawn) has put concerns on the very business model of solar(preferential feed in tariffs at peak hours(morning/noon)), as mentioned by First Solar in its 10K filing. So with gradual withdrawal of subsidies to wind energy generators, will Suzlon be able to regain pricing power for its equipment? Even in India, the most recent round of wind energy purchase tenders, saw bidders discount the CERC approved tariffs of Rs 17.91 by nearly 30%-35%, indicating that new players are willing to slash prices to gain market share. This would impact supplier pricing as well.
  2. Moser Baer, Indo Solar and Websol Energy systems, wanted to capitalize on the boom in demand for solar photovoltaic cells. Indo Solar wanted to take benefit of the 25% capital subsidy scheme for project capex over Rs 1,000 crores( as per the Special Incentive Package scheme announced by the Ministry of Communications and Information Technology, Government of India). But the global over supply(especially from China) backed by costs increases in key raw materials, led to EBITDA margin compressions, and short of domestic protectionism, I do not see a bright future for these stocks. While they are all trying vertical integration, entering into adjacent industries etc, the core business model is facing challenges due to global supply scenario, and price driven market.
  3. Orient Green Power is a slightly different proposition though. In 1H’12(Sep11 half year) alone, it added 80MW of wind energy, and had 300MW generation capacity(250MW wind+50MW biomass) in operation. However, with 250MW capacity wholly in Tamil Nadu and that State Electricity Board being in financial distress, investors seem to have discounted the stock which trades at P/BV of 0.5, despite its aggressive growth plans to reach 550MW capacity by Jun’12! At market cap of Rs 610 crores(with debt of Rs 190crores), the company had an EV of Rs 800 crores(assuming the Rs 170 crores of cash offset the current liabilities of Rs 195 crores, as the loans and advances of Rs 808 crores would presumably not be liquid), which would imply an EV of Rs 2.67 crores/MW, nearly half the estimated Rs 5.3cr/MW replacement cost of that capacity.

So have the factors affecting thermal power stocks(bankruptcy like status of SEBs, increased fuel costs, project execution delays) rubbed off disproportionately on these stocks as investors blindly herd together to sell power stocks? Or is it that the favourable economics may change? For export oriented equipment manufacturers like Suzon, the subsidy withdrawal story may play out, but for domestic generators, the national solar mission and other such plans would seem to give a secure price floor and assured market to sell the generated power.  These stocks are worth tracking though, as a hedge against the general power sector decline.

The paragraphs below features previous GWI takes on the above Green Stocks and is not part of Anand’s article

You can read about the GWI List of Green Companies in India

Previous GWI take on whether Suzlon is a falling Knife

Suzlon History

Suzlon,the Indian Wind Turbine making company 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 wanted to leverage Repower’s technological expertise to enhance its own product offering.Like other Indian companies with global ambitions like Hindalco,Tata Steel and Tata Motors,it took on a lot of debt to buy these companies at the peak of the global economic cycle.The GFC resulted in a twin whammy for Suzlon.On one hand its end markets collapsed as project financing disappeared and on the other hand its huge debt burden became unsustainable.The company has failed to recover from the GFC as competition in the Wind Turbine industry has increased with the rise of Chinese players like Sinovel,Goldwind and A-Power.With the 2 biggest markets of USA and China dominated by domestic players,Suzlon has become a shadow of its former self.While other Indian companies have recovered strongly with the Global Economy,Suzlon continues to lose huge amounts of money.Its recent 2Q10 results were quite bad resulting in the share shedding 6% to Rs 50.This is almost 90% below its peak price in the heady days of 2008 .So is Suzlon a Fallen Angel which could turnaround to become a multibagger or a Falling Knife luring investors into further losses.Here are the pros and cons of the argument.

Orient Green Power IPO Analysis

Orient Green Power Ltd (OGPL) is India’s Largest Green Utility and is one of the areas that is a good way to invest in India’s Green Energy Sector.The company is owned by the Shriram Group and a couple of PE Players will issue around Rs 900 crores (~$180mm) which will result in a market cap of $450mm.OGPL is a relatively new company setting up and acquiring most of its 200 MW capacity in the last year which comprised of 152 MW of Wind Energy and the rest is Biomass Energy.The company plans to increase this capacity 4 fold to around 1000 MW in the next couple of years with Power Plants in  India,Europe and Sri Lanka.The centerpiece of this expansion will be a 300 MW Wind Energy Plant in Tamil Nadu for which $10 million has been already been spent.The company’s past profits and cash flow have been negative which is not exactly a concern given that most of the capacity was set up in the last year or so.I like the company’s growth plans and the sector in which it operates.India suffers from a huge power deficit and Renewable Energy is being heavily promoted through Government Subsides and Renewable Energy Mandates by the CERC.Trading of Renewable Energy Certificates (RECs) should start in a year or so giving additional revenue streams to Green Energy Producers.Here are the pros and cons of the issue

 

(The author Anandh Sundar is from the IIM Ahmedabad 2010-12 batch, and a ranker in CA/CS/CWA exams. He blogs at http://financeandcapitalmarkets.blogspot.com/, and http://specialsituationsindia.blogspot.com/  and has a keen interest in investing)

Goldwind Wins 13 Wind Contracts in America as Chinese Extend Global Leadership, More Trouble for Vestas, GE

16 Jan, 2012
China,Goldwind,Wind Energy

Xinjiang Goldwind Science and Technology Co (Goldwind) is the 2nd biggest Chinese wind turbine producer and amongst the top 5 wind turbine companies in the world. Goldwind stock has been punished alongwith other Chinese wind turbine stocks as a fierce price war in the Chinese market has led to nosediving margins and revenues. There is massive overcapacity in the Chinese wind market as there are around 100 odd producers of wind turbines with 7 out of the 15 top global wind turbine makers. Chinese Government policies have been changed to weed out the smaller inefficient wind turbine makers, however the competition still remains quite high just like the Solar Panel Industry.

Other global heavywieghts like Vestas, Gamesa ,Suzlon are facing bankruptcy concerns as the 20-30% cheaper Chinese wind turbines take a big toll. Goldwind has been trying to expand internationally by doing an IPO to raise funds and has invested heavily in the North American market like USA which is the second largest wind market in the world. Its investments has paid off as it has managed to bag 13 wind farm projects and get marquee  customers like Enel Green Power. The prospect of western wind turbine producers remains bleak given the Chinese expansion in Europe and USA.

Chinese Wind Energy Dominance

The Chinese have not only captured most of the top rankings of the biggest solar panel producers in the world,they have extended their lead into Wind Energy as well.7 of the top 15 positions in Global Wind Turbine Producers are Chinese according to a new ranking.Sinovel and Goldwind have become the No.2 and No.4 rankers in the world with more than 10% global marketshare each.Dongfang is the other top Chinese wind power company with a 7% marketshare.United Power is at 10.Other top Chinese wind energy companies are Mingyang,Sewind and XEMC China.

Goldwind IPO Story

China has massively increased its wind installations to become the world’s second biggest market in 2009 . It has also managed to cultivate its local home grown industry to join the ranks of top 10 world turbine makers. Foreign dominance of China’s wind market has completely disappeared as the share had declined to 5%. Now Chinese wind equipment makers are spreading their wings outside their overcrowded home market with APower planning a massive wind farm in Texas.Both Sinovel and Goldwind which are the two largest wind equipment producers are planning IPOs to raise more capital and increase their visibility. Goldwind which was planning a HK listing since January has got regulatory approval to raise $1.5 billion in Hong Kong making it one of the biggest green offerings in the world this year .

Chinese Green Companies Price Wars

Chinese Green Companies are being forced to look at overseas market for Profits as their Domestic Market is being ravaged by fierce price wars.Wind,Solar and even Smart Grid Companies in China compete mainly on price as technology is not the strong point for these companies.Lots of these small companies are promoted through provincial government bodies with massive capital and other subsidies.With excess capacity and little technology,there is little incentive for consolidation in the Green Industry with the attrition the only way out.Even the bigger players like Goldwind, Suntech and Jinpan are facing huge pressure from these low margin,low cost small companies in China.The fierce competition in the domestic market has forced these companies to look at foreign market to generate revenues and profits.While the solar companies have succeeded in this endeavor capturing a massive 50% global marketshare,Wind and Smart Grid companies are still struggling to expand outside their home market of China.

Wind Companies looking to Foreign Markets to Avoid Domestic Competition

Like Solar,China’s Wind Sector has seen a massive boom with China installing a huge 13 GW of Wind Capacity in 2009 which is 1/3rd of the global demand.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.Even bigger companies like Goldwind and Sinovel which rank amongst the top 10 global wind turbine suppliers are feeling the heat.The 2008 GFC only exacerbated this trend with even more price cuts.The wind farm operators in China like Longyuan,Huangeng have been the major beneficiaries of these price war

Why Solar Inverter Top Dog SMA Solar is Losing Marketshare, Facing Uncertain 2012

16 Jan, 2012
SMA,Solar Inverters

SMA Solar ,the biggest German Solar Energy company is now losing marketshare to the new solar inverter manufacturers in USA and China. Note SMA Solar held a dominating 40% solar inverter global marketshare in 2010 compared to the solar panel manufacturers none of which has managed more than a 10% marketshare . SMA Solar however is now feeling the heat of the competition as solar energy prices continue to go down steadily. The pressure on the solar inverter companies has been increasing as solar inverter prices as a percentage of the total solar system cost has risen from 5% to almost 10% now as solar panel prices have come down much more rapidly.

Chinese solar inverter makers are also selling photovoltaic inverters at almost 30-40% discount over the Western producers. Though the quality of the Chinese made inverters is lower they are slowly improving it and the price differential is quite huge . Also with the Chinese solar domestic market set to become one of the world’s biggest in2012, the Chinese solar inverter companies will capture a massive chunk of global marketshare given that foreign companies have a tough time in competing in China.

New entrants into the solar inverter market like Solectria are expanding capacity and workforce as they capture business in the 30% growing solar inverter market .Solectria Renewables LLC is a US based solar inverter company that was founded in 2005 in Massachusetts by a group of MIT engineers.The company has expanded quickly to 1 GW of grid tied pv inverter capacity in USA alone and is looking to set up smaller solar inverter factories in China and India which are looking to be the next high growth solar markets.Solectria Renewables specializes in large sized grid tie solar inverters ranging from 1.8 kilowatts to 500 kilowatt sizes.

Read Review on SMA Solar Inverters.

SMA  Solar is the world’s biggest supplier and manufacturer of solar inverters with 40% marketshare of the world market of solar inverters.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.The company has been one of the few solar companies in the globe abe to maintain their margins despite a massive gut of solar panels which have brought down solar panel prices below cash costs.Over 3.5 GW of SMA solar inverters are installed globally and the company employs thousands of people Globally.SMA Solar is now facing still competition from Chinese companies who have a dominant presence in the growing domestic market of China and also from competitors like Power-One,Satcon and others who have entered the hugely profitable and growing market of solar inverters.Besides these pure play solar inverter companies,industrial giants like Schneider Electric (Xantrex solar inverters),GE Solar Inverters,ABB and Siemens too are biting at SMA’s heels.SMA Solar is facing competition from the growing presence of solar micro inverters led by companies such as Enphase which threaten to reduce the market for the normal solar inverters

SMA losing marketshare

The company claimed that it maintained a global market share of 35% in 2011, the same as the share in 2010. However, when reporting 2010 results the PV inverter supplier claimed a global market share of between 39% and 45% and 40% share was claimed in 2009.According to IMS Research, SMA is still the largest supplier of PV inverters in the world but its market share is claimed to be closer to 30%. The disparities occur, according to IMS, because SMA underestimates global demand levels.As a result, management said that it would at this time be providing a sales and earnings forecast for 2012.

Another European Solar Wafer Manufacturing Location (Jena) closes under Chinese Price War – 290 Germans loses Green Jobs

12 Jan, 2012
Schott Solar,Solar Energy

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.

Schott Solar 

The German Glass Maker is a big component supplier to the CSP industry but does not provide a turnkey solution.Schott is also involved in the Solar PV Technology area producing both crystalline silicon panels as well as thin film panels.It recently established a JV with Chinese company Hareon and plans to build 700 MW of solar panel capacity in emerging markets around the world.It has won a contract to supply 20 MW of thin film modules to Indian Solar Company Premier Solar with 10 MW of supply in 2010 and 10 MW in 2011

China based GCL Poly is the biggest solar wafer producer in the world wresting the crown from LDK Solar in 2010.GCL Poly is now set to grow even bigger in 2011 raising its wafer capacity almost 85% making it No.1 by far.GCL Poly has seen a massive rise from 2010 when it started to producer solar wafers.The company’s strategy of setting up plants near its major customers have landed it major deals and lower the cost in the supply chain.

Note earlier also European solar module companies had move to Asia to escape the price pressure from the Chinese pressure. The massive growth of GCL in poly and wafer has killed not only Western solar companies but also some Asian ones as well.Severe wafer price declines that have already impacted SolarWorld and other European manufacturer’s production operations have led to SCHOTT Solar announcing the closure of its mutlicrystalline wafer operations in Jena, Germany impacting 290 workers.

European Solar Factories Move to Asia

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.

Top Solar Wafer Companies

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.

3) Renesola – Very similar to LDK Solar in operations and structure,this Chinese company is the lowest cost producer of solar wafer producer in the world.It is expanding into other parts of the supply chain.

4) Renewable Energy Corporation (REC) – This Norwegian Producer was the largest solar wafer producer till a few years ago when it lost its leadership to the Chinese.It is now expanding in Singapore to reduce its high cost and integrating vertically.

5) Solarworld - Solarworld is the 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 .

Green Giants Siemens,Philips warn of Dire Macro European Problems ,cut Profit Forecasts

10 Jan, 2012
Europe,Siemens

Philips and Siemens ,2  of the largest European conglomerates with big Green divisions as well have warned of Dire Macroeconomic problems in Europe.While the stock markets continue to go higher, both companies have cut/ warned profit forecasts on European economic headwinds. Siemens is the largest green company in the world while Philips is one of the biggest LED Lighting Companies . Philips  warned that it expects sales to slow to a  mid single-digit growth from a year ago due to broader economic problems in Europe. We have taken measures to address our inventory situation in the lighting business, which also had an impact on earnings for the quarter said CEO Frans van Houten.

Siemens the Green Giant

Siemens is the world’s biggest Green Company reporting 28 Billion Euros from its Environmental Portfolio.This diversified Industrials German Conglomerate generates revenues from a diverse number of Green Sectors.While some of its Green Revenues may not be strictly Green as it includes revenues from high efficiency turbines and generators which are used for fossil fuel energy,nevertheless Siemens is the biggest Green Company.Siemens has a dominating presence in Renewable Energy (Leading Position in Offshore Wind),Lighting (OSRAM),Green Building Solutions,Energy Transmission and Distribution.The Company derives  30-35% of its revenues from its Environment Portfolio spread across its 3 Divisions.Siemens has done a remarkable turnaround in the last few years and its recent dividend increase strategy makes it an attractive mega cap stock.The Company is increasing its dividend yield by almost 60% t 2.7 Euros per share or 3% Dividend Yield making the stock an attractive one.Its focus on emerging markets like India and China should yield decent growth even as the developed markets slowdown.It has a massive technological advantages in Energy and Industrial Sectors which are not easy to replicate.

Siemens Warning

German industrial giant Siemens AG indicated that its full-year earnings targets may be in danger as the fragility of the global economy chokes investment by its customers.Siemens, whose products span gas turbines, streetcars and pregnancy tests, has repeatedly stated it is facing a number of macroeconomic challenges including the European debt crisis,

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