Watch for fallout in equipment companies as solar crisis hits in 2010

NEW TRIPOLI, USA: Solar equipment companies will feel the impact of a looming solar industry crisis in 2010 according to the report: Opportunities in The Solar Market For Crystalline and Thin Film Solar Cells, published by The Information Network.

“In our release on September 3, we forecast that in 2010 the solar industry will exhibit capacity utilization of 25.7 percent, inventory will be stretched to 133 days, average selling prices could drop below $1 per watt in 2010 and $0.50 in 2011, and as many as 50 percent of the more than 200 solar manufacturers, mired in red ink with current selling prices above $2.00 per watt, may not survive,” noted Dr. Robert Castellano, President of The Information Network.

In addition to the failure and consolidation of the solar panel manufacturers, companies supplying equipment to manufacture panels will be severely impacted. Two things will happen. The obvious impact will be the loss of customers of equipment suppliers.

Solar manufacturers, in their exuberance to increase capacity from 17.6GW in 2009 to 24.2GW will initially purchase equipment only to have it sit idle in factories as inventory stretch to 133 days. As these companies close or consolidate, this equipment will then be sold on the secondary market, further exasperating revenue growth for equipment vendors.

Currently, the equipment companies are experiencing a slowdown because even though solar customers want to buy, financing is still tight. Going forward, the largest solar manufacturers will survive as a customer base. Chinese solar manufacturers, who prefer to purchase low-cost equipment from Taiwan, will also survive, as the Chinese government will subsidize their survival by stimulus packages, generous subsidies, free land, and cash for R&D.

Solar panel manufacturers that have reported losses just in the past few weeks include Energy Conversion Devices Inc, JA Solar, LDK Solar Co., ReneSola Ltd, Solar Power Inc., and Yingli Green Energy Holding Co. Ltd.

“Interestingly, five of the six companies are Chinese. They continue to increase inventory, lose money, and affect the entire solar panel industry. Perhaps, it is an attempt to become the worldwide leader in the solar market by eliminating the competition,” added Dr. Castellano.

In 2008, the top 10 equipment manufacturers of the $4 billion market were:

Table: Ranking of Top 10 Equipment ManufacturersSource: The Information Network, USA

Applied Materials and GT Solar are the only two U.S. manufacturers in the top 10.

Yingli Green Energy, SiC ally for exhausted cutting slurry recycling

BAODING, CHINA: Yingli Green Energy Holding Co. Ltd, one of the world's leading vertically integrated photovoltaic product manufacturers, and SiC Processing AG, one of world's leading service providers in the field of mechanical wet-cutting technologies for the wafer industry, have signed a Cooperation and Supply Agreement under which SiC will recycle exhausted cutting slurries for Yingli Green Energy.

Under the agreement, SiC Processing (Baoding), a wholly-owned subsidiary of SiC with an on-site facility located inside Yingli Green Energy's manufacturing facilities in Baoding, will expand its annual capacity for the recovery of exhausted cutting slurries from 15,000 tons to 30,000 tons by the third quarter of 2010, which will be used exclusively to recycle exhausted cutting slurries generated by Yingli Green Energy.

In addition, SiC Baoding will supply all of the recycled cutting slurries to Yingli Green Energy through the end of 2020. This cooperation with SiC is expected to further enhance the Company's cost advantages through the reduction of time and costs associated with recycling, packing and transportation, as well as further improve the Company's overall operating efficiency.

"We are delighted to announce the cooperation with SiC for the recovery of exhausted cutting slurries, which we believe will further enhance our position as a leading low-cost PV product manufacturer and environmentally friendly enterprise," commented Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy.

"As a renewable energy company, we are committed to powering the world with natural, sustainable and carbon-free electricity. Working toward that goal, I am very pleased that our efforts to develop more efficient and environmentally friendly manufacturing processes have provided us with both economic rewards and lowered environmental impact."

"Our co-operation with Yingli Green Energy started in 2007. The first phase of our facility in Baoding, which is our first on-side facility in China, has an annual capacity of 15,000 tons and will start trial operation on September 7, 2009," commented Yinzhi Han, General Manager of SiC Processing China.

"Yingli Green Energy's fast growing business provides an excellent basis for our new expansion plan, and we are excited to grow together with our customers."

Overview of Chinese solar power industry

Note: This is a regular series of relevant industry news from around China. Courtesy: China Briefing

Solar power
Chinese photovoltaic (PV) maker Trina Solar said earnings per average diluted share topped US$0.71 for the second quarter of fiscal 2009, thanks to a drop in polysilicon prices.

Over the first quarter, the company scaled back polysilicon costs by 30 percent on the back of lower purchase price, effective management of long-term contracts and prudent inventory management. In addition, it drove down non-silicon manufacturing costs for its multi-crystalline modules by around 6 percent to US$73 per watt.

Revenues rose by 13.5 percent to US$150 million from the previous quarter but dipped 26.5 percent from a year earlier, dragged by a lower module average selling price. Total shipments went up to 63.9 MW from 48.8 MW in the first quarter and 47.6 MW in the corresponding period of 2008.

The increase was fueled by robust demand in the company’s key European markets, easier customer access to PV system purchase funding and expanded government schemes to encourage clean energy development.

The higher revenue and the lower cost structure helped a rise in gross margin to 27.4 percent in the second quarter from 17.2 percent in the first quarter and 23.3 percent a year ago.

The company confirmed its 2009 PV module shipment guidance at a range of 350 MW–400 MW, expecting to ship between 90 MW and 110 MW in the third quarter. But it says its average selling price is headed for a 10-15 percent drop in the third quarter and a further 10-12 percent in the fourth. The decline should be offset by improvements in manufacturing costs by 15-20 percent in the fiscal 2009.

The construction of a 200 MW solar power plant was started in the Golmud Desert of Qinghai, western China, on Thursday. The investor, China Longyuan Power Group, a subsidiary of China Guodian, will invest RMB4 billion into the project. Some RMB400 million will be spent on the first phase of the power plant. The first phase will have an annual production capacity of 36 million kWh and will become operational in September 2010.

Following other major players in the electronic devices industry, Taiwan Semiconductor Manufacturing Co. has decided to invest US$50 million in solar power industry, Electronics Weekly reported. US-headquartered Applied Materials already earns half of its income from selling manufacturing equipment to solar-focused companies. In 2008, Intel established its solar power business SpectraWatt.

Chinese multicrystalline solar wafers maker LDK Solar said yesterday it has inked an agreement with Yancheng City, Jiangsu Province, under the terms of which LDK Solar will develop a number of PV power projects, including PV ground-power stations, and roof and building integration systems totalling up to 500 MW over the next five years.

Eager for a bulkier market share, Chinese solar heavyweight Suntech Power supplies solar PV panels in the United States below materials, assembly and shipping costs, founder and CEO Shi Zhengrong told the New York Times.

The move underpins a drive by Chinese manufacturers to gain a major foothold on the global green arena, where the United States is a major player. They have already driven down the price of solar panels by almost a half over the past year. Chinese producers will tap into generous government support to build assembly plants in the United States to skirt rules that would lock Chinese-made products out of stimulus monies.

The Obama administration has announced US$2.3 billion in tax credits to clean energy equipment manufacturers. Suntech is poised to take over from Germany’s Q-Cells as the world’s second largest PV cells supplier, breathing in the neck of U.S.-based First Solar. The Chinese company plans to construct a US assembly unit on a location due to be announced in a month or two. It is now scouting Phoenix, Arizona and Texas.

Despite his bold ambitions about the United States, Shi predicted earlier this month that the Chinese market will grow by a less-than-expected margin this year before government stimulus measures could give it a bounce.

Singapore-based semiconductor foundry United Microelectronics said it will establish a new business development center to focus on solar power and light-emitting diode projects.The company’s board approved on August 24 an injection of up to TWD1.5 billion in a new wholly-owned subsidiary, named UMC New Business Investment. The entity will be run by Wen Yang Chen, senior vice president of UMC.

Initially, the new company will complete the development of respective technologies and establish a preliminary scale of operations. While in the future, UMC New Business Investment is expected to become a part of UMC’s core business with high competitive advantages.

Taiwanese power supplies, consumer electronics and optoelectronic products maker Lite-On Technology has signed an agreement with the government of Yingtan city, Jiangxi Province, to carry out a thin solar film power generation project for agricultural greenhouses, Xinhua’s China Economic Information Service reported. Prior to this deal, the company had signed a contract with Jiangxi’s Shangrao city for the construction of a solar power generation systems for five agricultural greenhouses, with 20 KW of installed capacity each.

Chinese PV maker Yingli Green Energy Holding said yesterday it would supply up to five MW of PV modules to Czech commercial property developer CTP Invest. The companies have inked a letter of intent (LoI), which calls for PV modules deliveries in the fourth quarter of 2009. The solar equipment will be utilized in several grid-connected rooftop installations at CTP’s industrial parks and office centers in the Czech Republic.

Remon L. Vos, managing director of CTP, expects the binding contract based upon this LoI will be achieved in the following weeks.The Chinese company has already delivered over 10 MW PV modules to customers in the Czech Republic since the beginning of 2009, Liansheng Miao, CEO of Yingli Green Energy, noted.

China-based solar cell and module products maker Canadian Solar said on August 26 it had signed a Letter of Intent (LOI) with the Administration Committee of Baotou National Rare Earth Hi-Tech Industrial Development Zone under which Canadian Solar has obtained the rights to design, install, operate, and maintain a 500 MW solar power plant system.

Under the terms of the LOI, the solar power project will be located in CPT.The project is pending government approval.

Chinese power generation systems distributor A-Power Energy Generation Systems reported yesterday an unaudited net profit of US$6.3 million for the second quarter of 2009, slightly up from US$6.2 million booked a year earlier.

Diluted earnings per share were US$0.14, down from US$0.18 a year earlier, as in the second quarter of 2009, the weighted average number of shares on a fully diluted basis was 35.3 million while in the same period of 2008 it was 33.9 million.

The fast-growing manufacturer of wind turbines said its revenues in the three months ended June 30, fell to US$57.5 million from US$65.7 million last year. The decline was attributed to delays in some distributed power generation projects.

Gross margin in the period went up to 13.4 percent versus 12.1 percent in the second quarter of 2008, thanks to higher efficiency derived from cost-saving in labour as the A-Power undertook 30 MW-plus DG projects.

However, higher selling, general and administrative expenses dragged the earnings before interest and taxes to US$4.7 million, down from US$6 million in the same period in 2008.

Commenting on the quarterly financial results, the CEO of the company, Jinxiang Lu, said that during the period A-Power has built a foundation for prospective growth in the future. The company set up a joint venture with Jiangsu Miracle Logistics System Engineering to produce and sell wind turbine components in China. A-Power has also completed assembly of two units of the 2.7 MW wind turbines in Shenyang and purchased Shenyang Huaren’s technology for 1.5 MW wind turbines, along with its backlog to produce and sell 10 units of the 1.5 MW wind turbines.

Focused mainly on wind power, the company has also signed a memorandum of understanding to take over Japanese thin-film PV products developer Evatech Co.

Chinese thin-film technology developer Astronergy announced today that it had won a bid for the development of a two MW PV project.

The large-scale grid-connected PV system will be located at the Hangzhou Energy and Environment Industrial Park in the province of Zhejiang, eastern China. Its installation will be financed by China Energy Conservation Investment, a promoter of energy-saving, environmental protection technologies and projects.

Astronergy will cover the roof of the Green Science and Technology Hall in the industrial park with a combination of its crystalline silicon-based and thin-film PV modules. The hall will incorporate mainly building-integrated PV technologies.

Chinese photovoltaic panels maker Sky Global will invest EUR14.5 million in a plant in Mataporquera, southern Spain. Sky Global will open the plant in 2011 and will create 465 jobs. The company will also build a 9.9-MW photovoltaic park with 672 panels. Sky Global operates in Spain through its subsidiary Sky Global Solar.

US, Chinese, and Taiwanese solar-cell makers gain ground

USA: Japan's suppliers of solar photovoltaic cells and panels, which dominated the industry for many years, slipped in the supplier rankings in 2008, according to a new 2009 report from IC Insights, Solar Energy: Growth Opportunities for the Semiconductor Industry.

The 2008 top 10 solar ranking contains two suppliers based in Japan, three in China, two in Taiwan, two in Germany, and one in the US (Fig. 1).Source: IC Insights

Sharp Corp. was the No. 1 PV device supplier in 2006 and for several years before that. In 2007, Germany's Q-Cells AG and China's Suntech Power Holdings Co. Ltd. overtook Sharp, according to IC Insights' figures.

In 2008, First Solar Inc., a US-based supplier of thin-film PV panels made with cadmium telluride, blew past both Sharp and Suntech, pushing Sharp down to No. 4 in the 2008 rankings, which are based on the peak-megawatt value of the PV devices produced and sold by each supplier.

The totals include PV cells, and in the thin-film case, PV panels. Cell-based panels are not included to avoid counting cells twice. First Solar's MW TF panel sales increased a stunning 144 percent in 2008, boosting it to the No. 2 position.

For its part, Sharp has stated extremely ambitious plans for expansion of its capacity to manufacture and sell silicon-based TF panels over the near term. If successful, Sharp could quickly make up for lost ground.

Sharp was not the only Japanese supplier whose position declined in the 2008 ranking. Kyocera Corp. slipped from the No. 5 spot in 2007 to No. 6 in 2008. Sanyo, which was No. 7 in the 2007 ranking, did not make IC Insights' top 10 ranking in 2008. Mitsubishi also dropped in the ranking.

Future PV device rankings are expected to show significant changes due to the small increments that separate many of the top players. The top four suppliers all achieved market shares (based on MW sales) between 8 percent and 9.5 percent.

A second tier of suppliers was formed by those ranked No. 5 through No. 10, all having between 4 percent and 5 percent market share, and with several additional suppliers close on their heels.

Changing rank within these tiers is statistically inevitable, and it is entirely possible for a supplier to move quickly from the second tier to the first, as First Solar demonstrated in 2008.

Other than First Solar, the risers in the top 10 list were exclusively suppliers based in China or Taiwan. Although China's Suntech slipped from No. 2 to No. 3 on MW growth below that of the total global industry, JA Solar Holdings Co. Ltd. rose from No. 10 to No. 7 in the ranking based on 109 percent growth in MW sales in 2008.

Yingli Green Energy Holding Co. Ltd. advanced from ninth place to eighth on the strength of 93 percent growth.

In Taiwan, Motech Industries Inc. swapped seats with Kyocera, moving from No. 6 to No. 5 thanks to a 67 percent increase in MW sales. But perhaps more impressive was the performance of Gintech Energy Corp., which equaled First Solar's growth of 144 percent in MW sales in 2008, pulling itself up from No. 12 to No. 8 in the ranking.

Gintech, like JA Solar, makes solar cells only; these two companies follow the business model of top-ranked Q-Cells, which has only recently started to diversify beyond pure-play PV cell manufacturing.

Other suppliers in the top 10 are involved in panel manufacturing, system installations, and other aspects of the solar value chain.

At the bottom of the list is No. 10 Solar World AG, a German company that holds the distinction of being the biggest manufacturer of PV cells in the US, thanks to the recent expansion of its plant in Hillsboro, Oregon.

A US-headquartered cell manufacturer, SunPower Corp., almost made it into the top 10 in 2008, but SunPower manufactures its cells in plants in the Philippines.

Yingli Green announces business developments in China

BAODING, CHINA: Yingli Green Energy Holding Co. Ltd, one of the world's leading vertically integrated photovoltaic product manufacturers, announced that it has signed an off-grid PV system sales agreement with the Shanxi subsidiary of China Mobile, and that it has been selected by Huawei Technologies Co. Ltd. to supply PV modules for its base stations.

Yingli Green Energy has signed an off-grid PV system sales agreement with the Shanxi subsidiary of China Mobile, China's largest mobile telecom operator, which expects to build a video monitoring system for forest fire prevention in Shanxi Province.

Under this agreement, Yingli will supply the video monitoring system with 269 off-grid PV system units, totaling 0.47 MW. The Shanxi Forestry Bureau and the Shanxi subsidiary of China Mobile will be joint constructors for the video monitoring system, which is expected to cover 11 cities and 113 counties in Shanxi Province.

Additionally, Yingli Green Energy has been selected by Huawei, a leader in providing next generation telecommunications network solutions for operators around the world, to supply PV modules for its base stations in the second half of 2009.

"We are very pleased to continue to enhance our business relationships with China Mobile and Huawei," commented Liansheng Miao, chairman and CEO of Yingli Green Energy. "As one of the first solar companies in China, we established business relationships with China Mobile in 2003 and with Huawei in 2004. These recent wins further demonstrate our solid position as a qualified PV module and system supplier in China. Driven by the launch of the new PV application incentive policy and the increased focus on environmental protection in China, we expect to benefit from a strong period of growth in the Chinese PV industry."

Miao continued: "The industry has experienced increased market demand for a variety of reasons, including the easing of the seasonality in Europe, considerable progress in clean energy incentive policy legislation in the United States and China, and a visible change of industry sentiment boosted by the successful Intersolar Conference hosted in Munich, Germany, last month."

"We have experienced a substantial increase in demand since the start of the year and expect to see at least a 70% increase in shipments in the second quarter over our shipments in the first quarter. In addition, our competitive cost structure, combined with lower prices of polysilicon in the spot market and under our long-term polysilicon supply contracts, gives us confidence in our ability to achieve the previously stated second quarter gross margin target, which is in the estimated range of 18% to 20%," Miao concluded.

Yingli Green Energy, Energy Research Centre, Amtech to develop next-generation high efficiency solar cells

BAODING, CHINA & TEMPE, USA: Yingli Green Energy Holding Co. Ltd, one of the world’s leading vertically integrated photovoltaic product manufacturers, the Energy Research Centre of the Netherlands (ECN), a leading solar research center in Europe, and Amtech Systems Inc., a global supplier of production and automation systems and related supplies for the manufacture of solar cells, today announced a three-party research collaboration agreement to develop next generation high efficiency solar cells.

The joint project under the agreement endeavors to develop and implement high efficiency N-type silicon solar cells, named PANDA, at Yingli Green Energy’s pilot production line in Baoding, China.

The high efficiency cells will utilize the cell design of ECN, the solar diffusion technology and dry PSG removal expertise of Tempress Systems Inc., Amtech’s solar subsidiary, and Yingli Green Energy’s leading cell process technology. The construction of the pilot production line does not require significant capital expense, as it only makes moderate changes on the current production lines.

“Yingli Green Energy always strives to be at the forefront of the latest technological developments in the PV industry,” said Liansheng Miao, Chairman and CEO of Yingli Green Energy. “To that end, we are very pleased to be entering into a cooperation that combines our strong commercialization capabilities with the strengths of a global research institution and a leading equipment supplier. We look forward to playing a crucial role in the introduction of the next generation of high efficiency solar cells. PANDA aims at significantly raising the efficiency of crystalline silicon solar cells and at commercializing the new technology quickly on our production lines.”

“We are very happy that ECN’s technology for N-type crystalline silicon solar cells is going to be industrialized in cooperation with these ambitious partners with a long operating history in the PV industry,” said Ton Hoff, Chairman of the Board of ECN.

J.S. Whang, President and CEO of Amtech, commented: “We are excited about this joint agreement with leaders in the industry and its potential to contribute to significant improvements in solar cell efficiency and bring solar energy closer to achieving grid parity. PANDA is true validation for our Tempress’ in-depth diffusion expertise and our capability for supplying reliable diffusion and automation equipment to the solar industry.”