1366 Technologies has got a $150 million DOE Loan Guarantee as the startup looks to raise $300 million to fund its solar wafer producing factory.Note the company is using an innovative technology which it says will be game changer in reducing the costs for making solar wafers.Note Solar Wafer Companies in China have managed to raise scale and reduce costs substantially in recent years winning marketshare from European companies like REC and Solarworld.The smaller companies like PV Crystalox are in deep trouble because of their high cost of operations and are trading at a fractional of their book value.Its a tough environment for solar companies especially if they are starting out as established solar panel companies like Evergreen Solar are facing potential bankruptcy.Evergreen Solar got millions of dollars in grants and loans from Massachusetts however the company has been forced to shut down its factory.Like 1366 Technologies Evergreen too uses a unique technology “String Ribbon” to producer solar wafers .However it has not been able to scale and reduce costs compared to the mainstream silicon solar wafer producers like LDK and GCL.

Renesola forecasts 10% GM

The Chinese overcapacity  has made even the top Chinese solar players run for cover, given the disastrous decline in prices across the solar supply chain. Renesola (NYSE:SOL) said that it foresess a 20% decline in solar panel and wafer prices in Q3 of 2016, as compared to the first half of this year. A large part of the decline has already happened with PV insights showing a price of just 43 cents/watt for solar panels and just 15 cents/watt for solar wafers.

Also read Solar Panel Prices in 2016 from now on depends mainly on Chinese demand trajectory.

Renesola thinks that it can make a gross margin of just 10% at these prices. The main factor behind this dramatic decline in prices has been the drying up of Chinese demand, after the cut in FIT in June. Prices have been falling since July and have not stopped falling. While Renesola expects some stability in September, there is no guarantee unless the capacity goes away in China. With the Chinese government pumping credit and debt into the economy, it looks unlikely that Tier 2 Chinese companies are going to close due to these distressed conditions. Global overcapacity in solar panels has persisted since 2012, due to the strange government controlled capitalism in China which does not allow companies to go bankrupt easily. The government has also been funneling money into the banking sector, which allows evergreening on debt and prevents the weaker companies from folding up due to a lack of funding. That is the reason why you see dead companies walking in the form of Yingli Energy.

solar farm

This sharp fall will result in additional difficulties for all companies and a number of them have already announced a halt to their capacity expansion plans, as companies hunker down to face another severe downturn. A gross margin of 10% implies a sharp negative net margin considering that operating expenses are itself 10% of revenues. The last downturn saw LDK and Suntech go technically bankrupt and this time another few large companies could go down.

Many companies are banking on project development to help them pass the downturn with Canadian Solar (NASDAQ:CSIQ) saying that it will sell more projects if it does not meet its revenue guidance, due to a slowdown in modules sales. Some like Hanwha Solar are not overtly concerned and have not reduced their shipment guidance, despite the severe slowdown. One of the things that will help companies is that demand will increase though with a lag. This will help reduce the overcapacity. However, it is to be noted that there are no large electricity markets which can absorb massive amounts of solar power. Unlike last time, there is no China, India and Japan which are relatively underpenetrated and can soak up 10-20 GW of solar power capacity this time.

China installed a gargantuan 20 GW during the first half, while Japan too wants to slow down given that solar power capacity already makes a large chunk of its power. India already has an ambitious 100 GW solar target and cannot take too much more.

Also read Solar Cell Price and Solar Panel Cost in India.

You’re all probably aware that conditions in the solar industry are challenging. Accordingly, we’re operating conservatively going into the second half of the year. Demand is slowing in most regions of the world pressuring sales growth and margins.

At this point in the quarter, we can see the slowdown quite clearly in China and other regions. Our strategy has always been to keep the company stable in tougher times and strive in good times. Again, we intend to be flexible and resilient as the industry cycles through a sluggish period in the next couple of quarters.

Source – Seeking Alpha Transcripts

New Solar Wafer Technology

The last 5-10 years have seen a dramatic decline in the costs of silicon solar panel, mainly due to the improvement in manufacturing processes and polysiliconincrease in scale. The cost drop has been so fast and so steep that it has made solar energy competitive with major fossil fuels, such as coal and gas in most parts of the world.

Solar energy is not only being installed due to its cheap price and rapid installation, but also majorly because of its green attributes and environment friendly nature. However, the solar panel manufacturing process has more or less remained the same with most of the cost decline coming due improvement of existing processes. Though technology has played a role in improving the efficiency of silicon solar cells that has not been the major factor behind the decline in prices of solar panels from $4/watt in 2008, to around 45 cents/watt now.

Now a new startup plans to radically change the manufacturing of solar panels through a new technique. The firm 1366 Technologies which has been around for a long time is now starting to make commercial shipments of its uniquely manufactured solar wafers. These solar wafers are the main raw materials for the production of solar cells, which are an intermediate step to the production of solar panels. Solar wafer is the biggest cost component of a solar cell and a cost decline in solar cells will lead to a further sharp cut in the cost of solar panels.

Read more bout 1366 Technologies’ disrupting technology here.

1366 Technologies is producing solar wafers by molding of solar wafers, rather than following the traditional process of production of polysilicon ingots and then slicing them into wafers. 1366 claims that this process reduces the amount of polysilicon usage in wafers by 50%, which will allow almost 25% of the cost of the wafers to be saved in terms of raw material costs. These wafers can also be used in existing production lines, which will make it easy to adopt this product by solar cell companies.

Another USA company Evergreen Solar had got a fair bit of success by making wafers differently, but the company required that its wafer should be used in its own solar cell and module making processes, which limited its adaptability. Like many of the other solar startups Evergreen also folded up, as it was unable to compete with the large scale of the Chinese major solar panel companies.

1366 Technologies is also making further R&D to reduce the size of the wafers, by planning a wafer with differential thickness in different areas of the solar wafers. This will reduce the incidence of breakage of the thin wafers, which is the main impediment behind the further improvement of solar wafers going forward. Solar wafers which are already at the 180-200 um thickness, are now facing trouble in reducing the thickness as thin wafers break more easily.

Green Investing

Choosing investments options that support your environmental concerns can be a challenge. Attempting to structure your portfolio around emerging green technologies has historically proven to be less profitable. Some of the prime examples in this regard could be the companies like Evergreen Solar Inc. and Coda Automotive that not only had strong investor support but also substantial government backing by way of low or no interest loans and tax incentives. If it is difficult to choose a winning stock with millions of government backing to support it, then simply choosing one based on its own financials would be somewhat difficult and impossible.

Another concern to the planet conscious investor is the fact very often the information you are looking at is based only on its holdings in it home country. A large corporation often has manufacturing plants scattered widely throughout the world. A primary reason for this is less regulatory requirement in some regions of the world than others. The fact a company has an award in the US or Europe for operations there says nothing about its stewardship in less monitored areas.

How to Balance between Profit making and Green Investing

As with any investing, your strategy must include areas you can expect to make reasonable profits in. If you cannot
accurately determine a company’s commitment to the environmental programs when choosing from the mainstream companies or newer/ start-up green technologies which need to be reserved for high risk capital only, then there are few choices left. One area that has shown growth is in the construction sector. While green technology companies have been hit or miss with far more misses, the growth of construction companies in the last 2 years has been impressive and choosing the ones that specialize in the field of construction implementing environmentally sound building practices can be as close to a sure bet as you can get. The difficulty in them is that most of them are privately held stocks, so investment opportunities are limited.

One area that you invest in with high profit expectations is in the Foreign Currency Exchange markets. Trading currencies you are simply facilitating global trade rather being forced to choose a particular stock to support. This is obviously speculative investment, but also gives the opportunity to earn high returns equally well in an up or down global economy. While considered a risk capital investment by most when trading on the Forex, it will still help diversify a limited portfolio.

To balance off the higher risk of your Forex and Green technology emerging stocks, look at government and municipal bonds being sold to fund environmentally progressive projects such as solar installation into public buildings and clean water or air initiatives. These will provide small, but relatively safe returns that still make clear where your values lie. You may also consider making your commitment known by the purchase of Renewable Energy Certificates to help sponsor and endorse clean energy initiatives.

The Chinese have captured the global solar panel manufacturing industry by investing billions of dollars in building almostSolar Panels 40-50 GW of capacity even when the global demand is about 30 GW. Their low cost manufacturing has bankrupted erstwhile solar panel leaders such as Q-Cells, which have been bought for pennies to the dollar by Chinese giants as Hanergy. Major US solar panel makers such as Evergreen Solar, United Solar Ovonics have also gone under as they are unable to match the super low costs of Chinese solar panels. The US government imposed moderate CVD and AD duties on Chinese imports of solar panels last year. Europe also started an investigation into solar panel imports into Europe.

Will Europe loose the battle with China

However, Chinese pressure has made Europe buckle as major countries such as Germany were not willing to offend China which is one of the biggest export markets for German companies. After imposing a preliminary duty of 11.8%, both sides started negotiating. The Chinese took a very hard-line position. They have showed the stick by imposing 50% plus duties on imports of polysilicon from the USA. They did not impose big duties on poly imports from European poly factories of Wacker. The two sides have now finally signed an agreement in which China will be allowed to export 7 GW of solar panels at a minimum price of 56 eurocents/watt. This is a victory for China as European demand will be around 10-12 GW this year. The European companies will find it difficult to match the minimum price set, which means that the Chinese companies will be able to meet their full quota.

I think Europe has taken a prudent position, as most of the European solar manufacturing is shut down anyway. If they had not given China an opening, it would have unnecessarily started a mini-green trade war between these 2 trade blocs. Chinese solar panels would have been substituted by Korean/Taiwanese/Indian solar panels. This would not have helped the European cause anyway. The European solar industry also benefits from cheap Chinese solar panels which helps in lowering the overall installation cost of solar systems. I don’t think that the German and Italian solar booms would have been possible without the massive influx of super cheap solar panels from China. Solar panel prices have gone down from $4/watt in 2009 to around 60c/watt currently and this has been mainly due to massive investment by the Chinese companies which has substantially lowered the costs.

Solar Wafers are traditionally manufactured by growing polysilicon crystals in specialized furnaces. These crystals are then sawed to make thin slices of purified polysilicon which is then acted upon by various chemical processes to convert them into solar cells. There have been a number of companies in the past that have tried to find an alternative cheap way to make these solar wafers. The companies have tried to cut down the crystal growing and wafering processes by directly converting the polysilicon or silence gas into wafers.

Read on GWI about Global Solar Thin Film Companies.

Evergreen Solar was the first successful company to use a different “ribbon” approach to make solar wafers. The company enjoyed sharp growth and saw its stock price soar in 2008. However, the company could not compete with the low costs of traditional wafer companies. Also its wafers were not compatible with most of the cell making equipment used by most cell and module makers. The company also used to make cells and panels itself and did not license the technology. The company is now bankrupt unable to compete with the larger players. Evergreen Solar planned to shutter US factories to open a solar plant in Wuhan, China with Chinese government support. Evergreen Solar literally cried for government support without getting any.

Crystal Solar is another company that is now coming up with a thin wafer process and is backed by NREL. The company hopes to cut the module cost by half as it starts production in 2014.

I have seen a number of past cases where start-ups have bragged about totally changing the industry and then going bankrupt. Solyndra, Nanosolar, Sulfurcell, Energy Conversion Devices and the list goes on and on. It will be interesting to watch whether Crystal succeeds or joins the huge graveyard of solar start-ups.

PV-Tech

US-based ultra-thin silicon wafer start-up Crystal Solar is planning to complete pilot production of its ‘Epi Thin-Silicon’ technology this year with volume production targeted sometime in 2014.The company claimed its technology would result in overall PV module production costs being reduced by approximately 50%. Dow Corning had also previously announced that it would work with Crystal Solar to jointly develop new products for building-integrated PV applications, using its ‘direct gas to wafer’ process for ultra-thin wafers.