TSMC Cost Targets Would be Incredulous coming from any other Company

TSMC has said that it would look to become amongst the top 5 suppliers in the world in the next 5 years and looks at a Cost per Watt of only 19c/watt in the next 3 years which would be further reduced to 14c/watt.This is much lower than the current costs for the Solar Leader First Solar which is at around 75c/watt.This target if achieved would make solar energy the cheapest form of energy and would definitely make TSMC No.1.Note First Solar is planning a cost target of 52c/watt in the next few years.TSMC is planning to start production in Q211 with 200 MW of production planned for 2012.

BYD has fallen almost 35% this year heavily underperforming the market as sales growth has slowed substantially.After a 140% growth in Auto Sales last year,this year the sales growth will go down to 30% as the company has reduced sales target to 600,000 from 800,000 earlier.Chinese auto sales have fallen and BYD has been specially affected with its workhorse F3 Model declining in popularity.The company delivered a good first half with $100 million in 2Q profits.However the company is still quite expensive at $15 Billion Market Cap which would give it a P/E of around 38x.Also the company’s strategy to enter solar energy does not make sense.However BYD is a good story for the future.China has made a new Green Policy to create National Champions in the EV and Battery Industry.BYD is a perfect candidate with its strengths in both areas.While its execution in the EV sector is yet to give results,it is already planning into the future getting into the Grid Storage Sectors.I would not put money presently but would wait for a better entry point in the future.

While Solar Energy is a new kid on the block,Wind Energy has been growing very strongly in the past Decade.Italy was rethinking its Renewable Energy Certificate (REC) Scheme to remove price guarantees but at the last minute it changed its mind.Wind is being installed at a rate of 1 GW per year in the last few years.The Italian Mafia has latched onto this lucrative business muscling their way in.The Sicilian Mafia is said to own a large portion of the country Wind Farm Assets and the $1.9 Billion Seizure of assets from a high flying businessman is proof of this.43 Companies mainly operating in the Solar and Wind Segments were seized by the state in one of the biggest swoops against Organized Crime.Wind Turbines involve acquisition of land,local permits and subsidy grants which require a lot of organization and local clout.The Sicilian Mafia is uniquely place to control and organize the setting up of Wind Farms.With a government guaranteed return of Euro 18c/KwH,the Wind Subsidy in Italy is one of the highest in the world.Compare this to the Rest of the World where Wind Subsidies get around $0.10/KwH.Note Criminals have not only been involved in Italy,but there are also reports of nefarious activity in Renewable Energy in Bulgaria,Spain,Canary Islands etc.

Czech is a Poster Boy of how not to implement a Feed in Tariff Scheme.While other countries like Spain,Greece have also faced Solar Booms,the Czech Bubble compared to the size of its Economy has been spectacular.The removal of Tax Benefits will further lower the returns for Green Investors which should probably eliminate the make the Czech Renewable Market next year.

India’s most industrialized and fast growing states like Gujarat,Tamil Nadu,Maharashtra have been the most aggressive in Green Energy as well.Gujarat has attracted huge interest in Solar Energy through strong support by the government.Tamil Nadu and Maharashtra account for almost 70% of India’s 8-9 GW Wind Energy capacity.However economically backward states like Orissa,Bihar,Uttar Pradesh remain laggards in this respect as well.Orissa seems a classic case where the general economic lethargy extends to the Renewable Energy Sector as well.

The Desertec Initiative is the Biggest Green Energy Project ever conceived with a vast scale and an ambitious vision.However Desertec falls short on many parameters which are described above for it to ever reach fruition.While small scale versions of this Concept can be implemented like that by Solar Millennium in Egypt,the massive energy framework conceived by Desertec is not feasible.The Huge Subsidies and High Costs make it uneconomical despite its Clean Energy Promise.