How Massive 1000 Megawatt Solar Energy Farms in Chinese Deserts will Boost 2012 Demand

16 Jan, 2012
China,Solar Panels

China add the most electricity capacity annually in the world at around 100 GW and its total electricity generation capacity is second only to the USA which it will surpass in the next few years. China is highly dependent on thermal power for its energy needs which is becoming scarce and expensive by the day. Not to speak of the big disadvantages of coal as a fuel which causes thousands of deaths each year. Solar Energy has now reached grid parity in many parts of the world thanks to the low cost cheap solar panels being made by Chinese solar panel producers. With many countries now thinking of putting an anti dumping duty on Chinese solar modules, the government is looking to boost domestic demand . Chinese solar panel Tier 1 players like LDK, Suntech, Trina and Yingli besides some others are the biggest beneficiaries of this new solar policy from China.

China is looking to set up massive 1000 MW solar energy farms in its desert regions of Qinghai, Mongolia ,Tibet and others .Some of these regions have the highest solar radiation in the world with over 2700 hours of sunshine. What this means is that solar power can be profitably be generated at 8c/ Kwh .Though higher than coal generate power , this price is constant for 30 years even as thermal, gas and other forms of fossil fuel will keep going up besides increasing carbon emissions. These massive 1000 MW farms can be now be built quickly as Chinese solar companies have massive capacity which can supply solar panels at a very cheap price of as low as 80c/ watt.

China raises Solar Energy Capacity Target to 50 GW from 20 GW in 2020

China’s Solar Panel Manufactures have enjoyed a massive boom phase though domestic solar electric capacity has failed to keep up.China has been rewriting its renewable energy plan  in the wake of the Fukushima Nuclear Energy Disaster in Japan.Note there has been a strong global backlash against nuclear energy around the world and 7 nuclear plants in Germany have been closed all but in name.Other countries like South Korea,Italy,Switzerland are rethinking of what do about their nuclear reactors giving the massive tail risks with nuclear generation.China had a target of only  20 GW of solar by 2020 has decided to raise the target by  150% to 50 GW according to the country’s leading energy planning authority NDRC.Note China installed more than 15 GW of Wind Energy in 2010 alone becoming the world’s largest Wind Energy Market by far.Solar Energy strongly lags Wind in China despite China having the biggest solar panel manufacturing industry in the world.Its Golden Sun and other Solar Subsidy programs have been small in absolute terms compared to its huge electricity capacity.Note Wind Power in China has reached a saturation level with almost 18 GW installed in 2010 ,with such a high level further growth looks quite difficult.

3 Signs of Trouble for Chinese Wind Energy

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.

Qinhai to build 1 GW solar power plant

The government of Hainan Tibetan autonomous prefecture and GSF Capital signed amemorandum on Sunday, planning to build a 1-GW solar power base in this underdeveloped prefecture and bring abundant electricity for the local people.
The country plans to build solar power plants mainly in Tibet, Inner Mongolia, Ningxia,Gansu, Qinghai, Xinjiang and Yunan.

Why Chinese Solar Market Exponential Growth in 2012 will help only Domestic Panel Producers

11 Jan, 2012
China,Solar Energy,Solar Panels

China’s solar market growth has hit the rocket phase in late 2011 with the announcement of the long awaited national Feed in Tariff . Many of the Chinese utilities have set up large solar farms utilizing the cheap solar panels produced by Chinese solar panel companies. Note Chinese solar companies are the dominant players in the world having almost killed the western solar industry in the last couple of years. With cheap costs and massive government support, China is almost ruling the solar industry globally . In the domestic Chinese market they have even a bigger advantage given the local home conditions and preference of domestic companies . Note China become home to the biggest wind turbine companies when China enacted the domestic content requirements in 2006. With the solar industry , the Chinese government does not need this law as its companies already possess massive advantages over the foreign competition.

Note the only large project in Ordos which was awarded to US solar company First Solar is gathering dust in the last couple of years. This project was opposed by major local panel makers like Trina, Yingli and others. With First Solar the cheapest solar panel producer in the world itself unable to compete in China, there is absolutely no hope for the competition. With expectation that Chian will become the largest solar market in 2012 , foreign solar companies can draw no succour.

First Solar’s Showpiece 2000 MW Solar Plant in Inner Mongolia gets Stalled by Chinese Protectionism

.This was hyped by the Chinese and USA media as the dawn of a new cooperation with the world’s two biggest economies in the Green Energy area.However,its already August 2010 and there is no sign of any activity.Washington Post has reported that the Inner Mongolian Government has having second thoughts about the building of the plant.Note China is already being acknowledged as the CleanTech Leader by US companies with even world class companies like Honda scouting China for Battery Technology.China’s low cost solar panel producers like Yingli,Trina and Suntech have captured a huge amount of global marketshare from the US and European companies.Some of these companies have lobbied the Ordos government to put the huge project on tender rather than just awarding it to First Solar.Note First Solar has not managed to get a FIT deal from the Chinese despite numerous attempts.China’s Solar Projects generally see Cutthroat Competition with negative investor returns

Will China Dominate Global Wind like it is dominating Solar ; Europeans bleed while Chinese capture marketshare

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.

China raises Solar Energy Capacity Target to 50 GW from 20 GW in 2020

China’s Solar Panel Manufactures have enjoyed a massive boom phase though domestic solar electric capacity has failed to keep up.China has been rewriting its renewable energy plan  in the wake of the Fukushima Nuclear Energy Disaster in Japan.Note there has been a strongglobal backlash against nuclear energy around the world and 7 nuclear plants in Germany have been closed all but in name.Other countries like South Korea,Italy,Switzerland are rethinking of what do about their nuclear reactors giving the massive tail risks with nuclear generation.China had a target of only  20 GW of solar by 2020 has decided to raise the target by  150% to 50 GW according to the country’s leading energy planning authority NDRC.Note China installed more than 15 GW of Wind Energy in 2010 alone becoming the world’s largest Wind Energy Market by far.Solar Energy strongly lags Wind in China despite China having the biggest solar panel manufacturing industry in the world.Its Golden Sun and other Solar Subsidy programs have been small in absolute terms compared to its huge electricity capacity.Note Wind Power in China has reached a saturation level with almost 18 GW installed in 2010 ,with such a high level further growth looks quite difficult.

Chinese Solar Manufacturers Utilization Dives ,Smaller Panel Companies Shut Down Entirely

10 Jan, 2012
China,Solar Panels

The massive solar panel glut has not only caused Western solar companies to go bankrupt but has also caused mayhem in the Chinese solar panel industry.Many of the smaller companies have seen their utilization go down to 35% or lower with many of the others shutting down their production entirely.There are hundreds of small solar companies in China which started during the 2010 boom when global solar demand increased by more than 150% . However their small scale of operatoins and lack of brand power means that they are bearing the brunt. While the large Chinese solar panel producers have seen their utilization go down , most will survive given the support from Chinese Banks. For example LDK despite its more than $3 billion in debt and losses is still getting loans from Chinese Development Bank. But the smaller Chines OEM panel makers don’t have the government sugar daddy behind them.

According to research firm IHS many of these firms have seen their utilization reach 35% in Q411 and it is expected that they will see worse times in the first quarter of 2012 when the solar demand is seasonally weak.Many of these smaller companies depend on orders from the larger Tier 1 Chinese solar companies which are now themselves having overcapacity. Like wind and LED industries , expect a big consolidation with the smaller fry getting beaten out of the market

Chinese Solar Panel Manufacturers

There are many Chinese Solar Panel Manufacturers as the costs of setting up a Solar Panel Plant is quite low at around $5 million for a basic solar module line.However there are only a few big Solar Panel Companies which have capacities running into hundreds of Megawatts per year.There are also a number of big State Owned (SOE) Chinese conglomerates that are entering the Solar Panel Industry.Here  is a list of the Best Chinese manufacturers of Solar Panels

  1. 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.Suntech makes one of the best quality Solar Panels in China.
  2. 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.Yingli Green Energy has been sponsoring Football in Europe and has started a new line of high efficiency “Panda” Solar Panels.Yingli is the second biggest producer of Solar Panels in China
  3. 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 managed to acquire a substantial  global marketshare.The prices the solar panels being sold are around $340 per 200 watt module.Trina Solar.Like Yingli and Suntech,Trina Solar Panels are one the best quality in China
  4. 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.The company was earlier known as Solarfun.
  5. 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.Canadian Solar is the 5th biggest producer of Solar Panels in China.
  6. 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.LDK Solar is building a huge solar panel and cell production facility.It sells Solar Panels mostly to other Solar Panel Companies.
  7. 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.Like LDK Solar,Renesola sells most of its Solar Panels under an OEM Contract
  8. Jinko Solar – Jinko Solar has shown the fastest growth rates in the Chinese Solar Panel Industry.The company is expanding again to become one of the Top 5 Solar Panel Producers in China.Jinko Solar like Trina and Yingli is vertically integrated and has one of the lowest cost solar panel production process.
  9. Trony Solar - Trony Solar is the largest Solar Thin Film Producer in China and uses a-Si Technology to producer Solar Panels used mostly in Off-Grid Applications.The company uses its own custom made equipment and manages to get decent margins for its products.The company recently listed on the HK Stock Exchange.

Why Germany could join USA, India in Anti Dumping Duty on Chinese Solar Panels Imports

9 Jan, 2012
Germany,Solar Energy,Solar Panels

Solar Trade Wars are becoming the norm in the globe these days with the major one between USA and China.The instigator is the German solar company Solarworld which helped started the ITC Case in the USA. India too is thinking of putting some kind of import duty to protect its domestic solar panel producers which are dropping like flies. Chinese solar panel producers have swamped the world with super cheap solar modules. though a part of their low prices can be explained by competitive advantage, another part is due to  the labor, capital subsidy given by the Chinese government. It would not take  a rocket scientist to say that some of the biggest Chinese solar companies are insolvent and would be dead within a month without Chinese state loans.

Germany might start an a dumping duty on Chinese solar panels due to the following reasons

1) Germany has just got too much solar energy right now with an explosion of solar panel installations in December.It has to slow down the solar panel installation which despite 50% cut in Feed in Tariffs is still making new records.Germany Solar Energy Market is the Biggestin the world by far with more than 20 GW

The influx of cheap solar panels from China has let the December 2012 explode to almost 2-3 GW according to the German solar association BSW. The high rates of return of over 10% due to super cheap Chinese solar panels at 80-90c/watt has been the major reason for the explosion in demand which could be the biggest month in Germany ever. While German Solar Market has remained robust as ever,the German solar panel producers like Solon, Sunways have been vanquished with a number of major solar companies failing and getting acquired. The Asian solar companies have been the major beneficiaries of this demand growth in Germany and Europe.

The massive rise in demand will imply that according to the EEG ,t here will be a 15% cut in July 2012 after a 15% cut in January 2011. This would bring the solar FIT prices quite low and provide a restraint to the galloping German solar energy installations which is reaching more than 25 GW .

2) German solar panel companies are going bankrupt (5000 in 2011) and solar jobs are disappearing

3) Chinese solar manufacturers are gaining the most from the German Demand.They are starting to acquire German solar companies on the cheap effectively taking over the German solar industry.

LDK has managed to spend 22 million Euros despite burning hundred of millions of dollars in cash because it has got the Chinese government trillions backing it.So while Western companies burn and crash,the big crony Chinese companies can expand and acquire.

Most of the German solar manufacturing industry is finished and it is unlikely that except a couple of them like SM Solar or Wacker will live to see 2013.Q-Cells too should go bankrupt or get consolidated .Note despite European companies shifting factories to Asia ,they just can’t compete.Some of the smaller module makers with 20 MW plants have seen huge losses with the equipment not selling for 10 cents on the dollar

Solarworld Planning China Anti-Dumping Case in Europe, CEO Says

Solarworld seeks to join forces with European peers to take its case to the European Commission’s competition agency after Chinese panels were allegedly dumped in recent months on German markets at below-market costs, Asbeck said today.A year-end solar-panel installation rush in Germany, which added a record 3 gigawatts in December according to the grid regulator, was sparked in part by “massive” panel inventory from Chinese manufacturers installed in large-scale solar plants at “dumping prices,” Asbeck said in a phone interview.

Indian Solar Module Producers want Protection from Cheap Panel Imports as Most down Shutters

9 Jan, 2012
Energy,Solar Energy,Solar Panels

Indian Solar Panel Companies are asking for protection from cheap imports from China and other countries. Note the prices of solar panels have fallen by 60% in 2011 due to a number of reasons such as cheap raw material polysilicon prices,high competition between major module manufacturers, dropping processing costs. The biggest reason for the solar panel price crash has been the support of the Chinese and other Asian government to their respective domestic solar industries.

It is a fact that many of the major solar module companies would be bankrupt right now without government support. LDK is the prime example of a zombie company flourishing on the back of Chinese government support. Indian solar panel makers have got some protection with the federal subsidy policy JNNSM mandating that cell and modules be made in India.However thin film solar panel technlogy is exempt which means that they are not fully protected.Besides state government solar polices don’t protect them at all. The consequence has been that most of the solar panel companies are running at 0 to 20% utilization as orders dry up.

Note there is precedence of protecting the solar panel makers by

1) Ontario,Canada

2) Japan ( which follows a  implicit policy)

3) USA which is set to introduce dumping duties on Chinese solar panels

4) China itself which for a number of years had domestic content requirements on Wind Energy

Ontario,Canada  has a 60% “local content” requirement for renewable energy installed in the province. This is illegal according to WTO but unless someone challenges it in the body nothing will come out of it

China from 2004 to 2010 had a “70% local content” requirement.Now that their wind turbine makers are making major inroads into foreign markets ( read A-Power Systems) , they revised the law in Jan 2010 . No doubt as it has become redundant .

USA which has not done anything major to mitigate climate change , now wants to put a local content requirement on renewable energy. This was pushed because a large amount of cash grant going to a large wind power project promoted by a Chinese consortium.

Note India has got USA already protesting against solar panel restrictions of imports and this should ratched up the voices of both the pro and con camps.

USA has opposed India’s Local Content Requirements for the Federal Solar Energy JNNSM program. Note according to the JNNSM rules,solar panels will have to be produced in India for the first year and solar cells will also have to produced from the second year. There is also a proposal that the local content requirements may be extended beyond 2013 and will also include solar inverters. US administration is opposed to these rules as it will lead to export hurdles for its solar companies Sunpower and First Solar. India installers and developers have also opposed the move as it will lead to lesser choice amongst suppliers and probably higher costs.

Read about Solar Power in India to get more backrgound

Domestic Solar Cell/Module Producers

  • Moser Baer – This is primarily a Solar Panel Production Company which has recently made a big bet to get into the Power Production Space as well.Moser Baer Projects Private in which the Blackstone Group made a $300 million bet  has plans of a 20:80 mix of Green and Dirty Power.
  • Tata Power / Tata BP Solar - The biggest private utility in India has big plans for Clean Energy as well.Its subsidiary Tata BP Solar is one of the biggest producers of solar panels and cells in the country.The company has huge plans in wind,solar and geothermal energy.It has also invested in a geothermal energy project in Indonesia..
  • Solar Semiconductor - A Producer of Solar Power Modules and Cells. It has some operations in Solar Installation as well.
  • The following  companies are similar to Solar Semiconductor in having a small capacity to produce silicon based solar cells or solar panels or both.
  • IndoSolar
  • Topsun Solar
  • Titan Energy
  • PLG Power
  • Maharishi Solar
  • Kotak Urja
  • Photon Energy Systems
  • Lanco Solar – A major private utility in India.Has bagged a JNNSM bid to build a big solar thermal plant.Also getting into production of poly,wafers,cell and modules based on c0Si Technology.

This is a very complex issue and given the current circumstances,I have changed my stance to allow some protection of the domestic solar industry given the kind of crazy support being given to major solar module manufacturers by foreign governments.

What do you think?

LDK and Sunpower would have been in Chapter 11 without China and Total Support

6 Jan, 2012
Solar Energy,Solar Panels

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

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

Read a review of Sunpower Solar Panels

Total buying of Sunpwer

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

Total CEO Says SunPower Would Be Bankrupt Without Backing

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

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