The whole solar panel industry has been in a tailspin as the massive solar glut takes toll of the whole industry. The industry downturn which started in 2011 has not stopped as solar panel prices have crashed to new all time lows with European demand pull in ending and inventories building up. While many of the solar panel companies have gone bankrupt, many of the high cost industry dinosaurs continue to live surviving on the generosity of their home governments. Not only China, but also other countries like France, Italy, USA have perpetuated the oversupply and distorting of solar economics. However the Market has started asserting its power with the badly managed, over indebted solar companies showing greater distress and bigger losses.

While the better managed ones are increasing marketshare and showing resilience, the worst companies like LDK and Suntech are close to failure. The YTD stock performance has started to reflect the realities with some of the good companies like Renesola showing a massive out-performance compared to the worst ones like LDK (75% return of SOL long compared to LDK short). Canadian Solar has also been a notable out-performer as it has gained a massive amount of marketshare at the expense of other top solar panel manufacturers like Suntech.

The earlier article on GWI for selecting Solar Stocks in 2012 has been working well.

So what are the criteria for staying alive in 2012

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

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

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

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

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

The survivors of the solar consolidation will see the low cost, low debt players thrive and grow when the huge legacy capacities of the weaker players like LDK, Suntech are eventually taken out. Other big high cost players in Europe and Japan like Solarworld and Sharp are too showing signs of bankruptcy with their share prices flirting with new all time lows.

http://finance.yahoo.com/charts?s=CSIQ#symbol=csiq;range=ytd;compare=fslr+stp+ldk+sol;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined

Here is a complete list of solar stocks (note some like Q-Cells have gone bankrupt)

USA Stock Exchange

Chinese Companies

Canadian Solar Inc. CSIQ
China Sunergy Co., Ltd. (ADR) CSUN
JA Solar Holdings Co., Ltd. (ADR) JASO
Yingli Green Energy Hold. Co. Ltd. (ADR) YGE
LDK Solar Co., Ltd. LDK
Suntech Power Holdings Co., Ltd. (ADR) STP
Trina Solar Limited (ADR) TSL
ReneSola Ltd. (ADR) SOL
Hanwha Solarone Co Ltd HSOL
JinkoSolar Holding Co., Ltd. JKS
Daqo New Energy Corp. DQ

USA Solar Power Companies

MEMC Electronic Materials, Inc. WFR
Evergreen Solar, Inc. ESLR
First Solar, Inc. FSLR
Hoku Corporation HOKU
Akeena Solar, Inc. WEST
Ascent Solar Technologies, Inc. ASTI
Real Goods Solar, Inc. RSOL
Energy Conversion Devices, Inc. ENER
SunPower Corporation SPWRA
GT Solar International, Inc. SOLR
STR Holdings, Inc. STRI
Applied Materials AMAT
SatCon Technology Corporation SATC
Power-One PWER
Advanced Energy AEIS
Emcore EMKR

Solar ETFs

1. Guggenheim Solar TAN
2. Market Vectors Solar Energy KWT

Canadian Stock Exchange

5N Plus

European Stock Exchanges

Germany

1. Solarworld
2. Q-Cells
3. Centrosolar
4. Sunways
5. Colexon Energy
6. Solar-Fabrik
7. Wacker
8. Solon
9. Bosch
10. Phoenix Solar
11. Juwi Solar
12. Solaria Energie (Spain)
13. Kerself (Italy)
14. Renewable Energy Corporation (Norway)

Solar Inverters

SMA-Solar

Solar Equipment Stocks

1. Meyer Burger
2. Oerlikon
3. Roth&Rau
4. Centrotherm
5. Manz Automation

Asian Stock Exchange

Hong Kong

1. GCL Poly
2. Trony Solar
3. Singyes Solar
4. Comtec Solar

Taiwan

1. E-Ton
2. Gintech
3. Motech
4. Del Solar
5. Neo Solar

India

1. Moser Baer
2. IndoSolar
3. XL Power

South Korea

1. OCI Chemicals
2. Woongjin Conway

Japan

1. Sharp
2. Kyocera
3. Panasonic
4. Mitsubishi
5. Toshiba
6. Solar Frontier

Solarworld which is the biggest solar panel company from Germany lost marketshare to the Chinese companiees in 2011 . The company which has been at the forefront of leading anti-dumping charges against import of Chinese made solar modules into the USA, lost substantial amounts of money. Solarworld had earlier closed its panel making facility in California. The company sold lesser number of solar panels in 2011 compared to 2010 despite the global solar market increasing by 30-40% . With only around 800 MW of shipments , Solarworld has only 3-4% of the global marketshare compared to 10% for bigger Chinese rivals.

Note while Solarworld is fighting to keep alive, many other western solar producers have gone bankrupt while some of the others are on their way to do so .The prospects for most solar producers ex-China are looking worse and worse. Even the big pocketed Korean Solar Panel makers are also looking to reduce/exit the industry. Hyundai has put 2 solar plants in hibernation while Samsung has too reduced its solar ambitions.

Note governments are trying to save their domestic solar companies but it is not working out too well as of now .Saving bankrupt solar companies has become the national pastime of most governments it seems. Competition in the solar market has become so severe that solar companies are failing left and right. This has made the government come out to save them with bailouts which only make the oversupply situation in the solar panel industry worse. While China is the worst culprit supporting hundreds of failing solar companies through cheap loans which will be never paid back, other governments are not far behind.

Sunpower has been saved by Total which is somewhat of an exception as it a a Big private Oil Company.S olon the German solar module company which failed last month was earlier given a bailout by the German government last year. France has not learned the lesson of investing good money behind a lost cause.It is preparing to help Photowatt a subsidiary of the failing Canadian Company ATS. The solar module company is just not able to compete with super cheap Chinese solar panels.T he French government will help the company alongwith a private partner for which bidding has started.17 companies are bidding majority of which are Chinese solar companies.

Solar Bankruptcy

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

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

Solarworld Results

Total losses for 2011 were reported at €233 million, due partially to declining prices on the back of industry-wide module overcapacity and dumping, as well as cancellation of wafer supply contracts, according to the company.

SolarWorld reported sales of €1,066 million in 2011, down from €1,322 million in 2010. Shipments of wafers and modules reached 795MW in 2011, down from 819MW in the previous year.

While US Solar Installers are making Hay while the Chinese Solar Panel Companies flood the world with super cheap solar modules,Western solar manufacturers are being killed at an astounding rate.The second biggest thin film solar panel company in the US United Solar Ovonic has gone belly up.The company was fighting a losing batter as the more efficient crystalline solar panel prices went below its production cost.The company had tried to fight in a the niche of BIPV solar panel market but could not survive. After First Solar,Energy Conversion Devices seemed the mostly likely viable 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.

Energy Conversion Devices also cuts down US production and increases Manufacturing in Mexico

All US Solar Companies have majority of their  production being manufactured outside of the USA except for Energy Conversion Devices (ENER).Now ENER is also joining the rest of its peers as it cuts down jobs in the USA and increases production in Mexico.This should have come much earlier as ENER continues to lose loads of money due to its high cost operations.Note the other major companies like First Solar and Sunpower have almost 90-100% of their solar modules being made in Asia while Evergreen Solar has also recently outsourced production to China

The company has sold off its battery operations and has filed for Chapter 11 bankrutpcy.Other smaller thin film companies like Nanosolar,Miasole too look on their way out.Stion and Heliovolts have found foreign partners to survive which means that First Solar might be the only thin film solar company in the US to survive.The Chinese solar industry continues to bankrupt non-Chinese solar companies across the world.

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

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

Thin Film Solar

Solar Thin Film Technology has been growing rapidly despite falling costs of the mainstream Photovoltaic Crystalline Silicon Technology.While the current solar supply glut has resulted in some of the thin film solar film companies going out of business,big thin  film suppliers continue with their growth plan.Solar Thin Film Technology is supposed to be  the 2nd Generation successor to the mainstream Crystalline Silicon (c-Si) Technology which accounts for around 85% of world production.While a number of Weaker Hands in Thin Film have downed shutters,Thin Film Producers continue to grow and expand.The massive growth potential of Solar Energy makes it possible for both of these PV technologies to flourish.Thin Film Technology unlike c-Si has a number of variants.Amorphous Silicon (a-Si),Copper Indium Gallium Sulphide (CIGs) and Cadmium Tellurium (Cd-Te) are the 3 main types of Thin Film Technology.There are a number of manufacturers of all of these 3 types of Technology.CIGs Technology is said to have the most potential in improving efficiency and competing with c-Si,however Cd-Te is currently the top dog as the world’s biggest solar producer First Solar currently uses this technology.a-Si Technology is not that hot with low efficiencies however Oerlikon and Sharp are pushing ahead with developing this technology.

Bosch which is one of the biggest automotive component suppliers on the planet has made one mistake after the other in the solar panel market. Despite entering the solar panel market 4-5 years ago with billion dollar acquisitions it does not figure even in the top 20 global solar panel manufacturers. The massive solar panel price crash in 2011 has made most German solar companies either bankrupt or on the borderline. Bosch Solar Panels has been no exception as German solar panel costs are too high for the current prices. It had decided to expand in Malaysia to compete with the super low cost Chinese solar modules following in the footsteps of companies like Q-Cells and First Solar.

However it has now thankfully put its plan on hold of spending another 520 million euros on solar energy. The company has already wrote down $1 billion in solar after the valuations of Ersol and Aleo have crashed from the time it bought it. Note most Western solar companies are going bankrupt as they can’t compete with the 80c/watt solar panel prices. Stalwarts Q-Cells are defaulting on the debt payments while according to Total CEO, Sunpower would have been bankrupt if they had not bought it. Even the biggest US Solar Panel Company First Solar has been ravaged by the price war. Bosch has bravely said that it would continue to remain in the solar panel market while it makes more sense for them now to make an exit and concentrate on their core competencies. It can realistically never hope to get into the top 20 solar panel suppliers and stop spending good money after the bad.

Bosch Acquisitions in Solar Energy

Bosch started out into the Solar Energy field by making a very expensive acquisition of a Tier 2 German solar company Ersol in 2008 for Euro 1.1 billion.Bosch paid a premium of 60% for buying out Ersol which was a manufacturer of wafers,cells and modules.The company paid a very price to buy Ersol which was a jack of all trades kind of solar company without any substantial competitive advantages.Bosch had set a target of Euro 750 million from renewable energy (don’t know whether they met it ).Bosch made a bad decision because at the current stock prices  it can buy almost the entire German solar panel manufacturing sector for Euro 1.1 billion.Its doubtful that Ersol would have survived the current solar panel downturn and was extremely lucky to get bought by Bosch for that price.The company also bought two other small German solar companies at expensive valuations Aleo Solar and Johanaa Solar (a thin film solar panel producer).It could have similarly bought these companies or even better companies at much cheaper prices.

Bosch  now moves to Malaysia as its European Factors are unviable (Billions go to Waste)

After sinking more than a billion euros into buying very expensive manufacturing facilities in Germany,Bosch has now decided to move to Malaysia.With European solar factories getting shutdown due to low cost competition from China,it was only a matter of time.Now Bosch has decided to invest Rmb 2.2 billion to set up new fully integrated photovoltaic manufacturing plant in Penang

Bosch Solar Panels Review

Bosch makes Solar Panels not only of the mainstream crystalline silicon type but also sells thin film solar panels which it acquired from Johanaa.Bosch Solar Panels are of good quality being made in German factories where quality control is good.However the cost and price factor is a problem as Bosch Solar Panels are much more expensive than the cheap solar panels being made by Chinese low cost panel manufacturers.This is the reason that Bosch is being forced to move to Malaysia as European solar panel manufacturing is facing huge headwinds.

Bosch says still committed to Penang solar panel plant

In order to achieve economies of scale in production costs, Bosch is currently evaluating the most technologically advantageous direction for the plant.

“We will therefore be adjusting the commencement of the construction to a later time in 2012,” Robert Bosch (South East Asia) Pte Ltd president and managing director Martin Hayes said.

Hayes, who is also managing director of Robert Bosch Sdn Bhd, also stressed that the Stuttgart-based company would push ahead with the internationalisation of solar cells despite the current difficult market conditions.

Bosch’s decision to hold off on the fully-integrated manufacturing plant, which would have served its Asean operations, comes after the firm missed profitability targets last year as special charges ate into earnings.

Franz Fehrenbach, chief executive of the Stuttgart-based company, said last month Bosch booked an earnings charge of around €1 billion (RM3.94 billion) in 2011 due to upfront costs for its push into the fields of electric mobility and renewable energy, as well as currency fluctuations.

Western Solar Bankruptcies

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

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

Japanese Conglomerates like Sharp, Panasonic, Mitsubishi used to be the undisputed kings of 1980s when they could do no wrong. These Japanese giants which were grown under the care of the Japanese government department METI have operations in hundreds of countries and revenues in the hundreds of billions. However for the past few years they have not been able to earn any decent profits. And last year in 2011 they have mounted massive losses. Panasonic is going to lose an astounding $10 billion this year while others like Sony, Sharp and other will do equally badly. While some factors are temporary like

a) High Yen

b) Thailand Floods where many Japanese corporations have big factories

c) Fukushima Earthquake

Other factors are more structural in nature

1) Korean and Chinese companies are eating the Japanese lunch with their faster innovation and low costs. They are proving to be more nimble than the massive Japanese companies which continue to lose  marketshare and revenues. Samsung and LG have captured the semiconductor and electronic industries with their better marketing and aggressive strategies.

2) Apple has become the dominant computer, phone player using tremendous innovation and leveraging low cost manufacturing in China.

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

In other places like solar energy and led , Chinese companies are using their super low costs to beat out the Japanese companies which were the biggest earlier. The Japanese zaibatsus are losing their mojo  and being slowly killed to insignificance. Unless they drastically change their act they will continue to decline . Sony is one such example of how the Japanese have lost their throne with the company making massive losses in the industry where it has one of the most famous brands Bravia

 Japan’s biggest makers of phones, televisions and chips say they’ll lose about $17 billion this year, about three-quarters of what Samsung Electronics Co. will spend on research to lengthen the lead over its competitors.

Sony Corp. more than doubled its annual loss forecast for the year ending March 31 as it announced a new chief executive officer, while Panasonic Corp. and Sharp Corp. predicted the worst losses in their histories. Their combined losses compare with the $22 billion that Samsung, Asia’s largest consumer- electronics company, said it will invest in capital expenditures.

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.