Competition
March 8, 2011
Solar Energy in Japan has a long future dating back to 1994 when the government introduced capital subsidies to boost solar energy installations on rooftops.Till 2004,Japan was the largest solar market in the world after which it was overtaken by Germany.After 2004,the growth in the solar industry tapered off as the government reduced the subsidies for solar panels to almost zero.The huge domestic market gave rise to Japanese companies like Sharp,Mitsubishi,Kyocera,Panasonic-Sanyo become top solar panel producers in the world.However the low cost Chinese solar module producers have pushed back most of the Japanese companies.Since the last year,the Japanese government has again started giving generous solar subsidies and feed in tariff to boost the renewable energy production in the country which remains far off targets.This has led Japan to become the top non-European market after USA and the growth seems set to continue in the future as well.Japan has relatively low installations costs and is much nearer to grid parity.Also lack of wind energy makes solar energy more attractive as a renewable energy choice.While large scale solar installations in Japan are almsot absent,there remain large numbers of rooftop solar installations.
March 8, 2011
The US is the world's largest electricity producer and consumer with a total electricity capacity of around 1 Terawatt.The share of Solar Energy in the US Electricity Production is negligible compared to around 19% for Nuclear Energy and around 2-3% for Wind Energy.However Solar Energy in the US is set to grow at high double digits over the next 2 decades as the Costs of Solar Energy Decline with prices of other Energy Forms set to rise.In some states like Hawaii and California,solar energy prices are already at grid parity with retail electricity prices.Some states like New Jersey,Colorado,Arizona have seen sharp increases in solar energy adoption over the last 2-3 years boosted by state specific government policies and subsidies.With the US Federal 30% Cash Grant on System Costs and falling systems prices for solar systems,the growth in inevitable.The US Solar Market has seen the rise of a number of innovative and fast growing system integration and installers.Some companies have come up with innovative financial solutions to solve the high initial investment hurdles in solar systems through leasing and financing plans.Here are a list of Top US Installers/System Integrators.Note the list will keep expanding in the coming years as the size of the US Solar Energy Market Grows.
March 7, 2011
Some of the airplanes make a rickety bus in Indian cities seem better while the service staff can be highly rude.Note most of these jobs are secure for life giving very little incentive for the Air Indian employees to improve their performance.As a result you can expect the worst.While a number of PSUs in India have improved tremendously after public listing and liberalization,Air India has seemingly got worse.The company makes massive losses and has to be bailed out by the government.There is total lack of accountability in Air India and little impetus for reform.The government ministers want to keep the Air India to keep milking money.A new panel has now suggest that the government of India keep giving regular billions to keep the airline afloat as it flies to unprofitable routes.Another stupid reasoning because these routes can be easily be auctioned out to the lowest cost private airline.Why the government needs a state owned airline is beyond me as it can easily commandeer the aircraft of private airlines in times of war etc. like the US does.But then how will corrupt ministers make money.
March 7, 2011
Coal Demand in India is surging as the power companies set up thermal power plants at an astounding rate to triple the power capacity over the next decade.Soaring Coal Prices have already made the Global Electricity Prices shoot up and its probably going to increase more in the coming decade.China is the world's largest producer and consumer of coal accounting almost for the 50% of the world's output at 3 Billion Tons.India is far behind at 400 million tons but will fast catch up given the prodigious rate of power plant building that is happening.The Environment is probably going for a toss as India has allowed "No-Go" Forested Areas to be mined.This plus China and India are importing more and more coal from Australia,South Africa and the USA.The recent looking in Australia saw coal prices shoot up alarmingly.Coal India the world's largest coal producing company recently increased the coal price from its shockingly low price leading cement makers and utilities to raise prices more than 5-10%.While its strange for a green blog to recommend coal stocks,the opportunity does exist over the next 10 years till renewable energy comes to grid parity and policymakers don't come to their senses.Here is a list of coal stocks/companies in India .Note there are not many major private coal companies as in the early 1970s, all privately owned coal producing companies were nationalized under the Coal Mines (Nationalisation) Act.
March 7, 2011
Siemens derives almost 30-35% of its annual 20 Billion Euros in revenues from its Environmental Portfolio.The company is looking to spin out its LED Lighting OSRAM business in an IPO later this year.Siemens has a market capitalization of around $116 billion so doing a simplistic analysis the market cap of its Green Business would be around $35 billion dwarfing the market cap of First Solar or Vestas.
March 7, 2011
Lovable Lingerie is an innerwear textile company that is coming out with a $20 million IPO.Unlike other totally junk issues which are totally hands of market operators,this one seems to have decent fundamentals and the valuation is not too expensive either.The company has managed to sell 6% pre-IPO to Sequioa Capital which is one of the blue blood PE firms in the country.However this should not be an endorsement given that a number of their investments have bombed in the recent mid cap and small cap carnage.Corporate governance and management issues in small companies in India is totally out of control so investing just based on pure fundamentals does not help.Also a number of other companies in the same sector in textiles remain at attractive valuations.That said the company does have good differentiation as it leverages on the fast growing Indian consumer growth story.The company sells Lingerie though top retail outlets like Lifestyle,Shopper's Stop in top Indian metros and has good brand recall.Here are the positives and negatives of the company based on its DRHP.
March 5, 2011
France has had a rocky relationship with solar energy.Unlike other European countries France gets a huge amount of electricity from renewable sources namely nuclear energy.Its electricity prices are one of the lowest and it even exports electricity to neighbors.So the driver for increasing solar electricity is quite low in France compared to others like Spain and Italy.However France has seen a massive boom in solar installations in 2010 making it the 7th largest market in the world.France installed over 720 MW of solar in 2010 and faces a massive backlog of applications.The government got overwhelmed and called a sudden stop to all applications.The French government stupidly blamed Chinese solar panels for the solar deluge when it was its faulty solar Feed in Tariff Policy which was too generous.
March 5, 2011
Note China's Solar Market is a highly competitive and protected one with outside solar companies hardly having any presence similar to Japan's market.First Solar which signed a massive gigawatt contract to build a plant in Ordos has seen only delays as Chinese solar manufacturers opposed the plant.First Solar is still trying to build the plant signing a new JV with one of China's 5 big utilities.eSolar another CSP company got a contract to build a plant with China but till date construction does not seem to have begun there also.The Chinese government seems mostly interested in high-tech technology (First Solar,eSolar) rather than run of the mill players.Even these technology companies have failed to make much headway.Remains to be seen whether SkyFuel Succeeds.
March 5, 2011
I have been consistently writing that Solar PV has leapfrogged far ahead of Solar Thermal Technology in the last couple of years.The entry of the low cost Chinese with huge scale and the fall in polysilicon costs have suddenly made the future survival of Solar Thermal Technology suspect.The Solar Thermal Advantages of energy storage is also overrated because it is cheaper to add energy storage to Solar PV as the following article shows.Note Solar PV has many other advantages of Solar Thermal anyway.The Rapidly Declining Costs of Solar PV in fact pose a massive threat to all other forms of Solar Technology including Thin Film which has recently seen a number of players gone bankrupt.The recent conversion of Solar Thermal Plants by Tessera,the losses being made by Solar Millenium due to delays are further evidence of the decline and possible obsolescence of Solar Thermal Technology.
March 4, 2011
The Indian Government’s launch of the ambitious Jawaharlal Nehru National Solar Mission(JNNSM) was done with much fanfare with a target of reaching 20 GW of Solar Capacity by 2022 under 3 phases from the 81 MW currently.While the government had the best intentions and had laid down a well defined 10 year plan with subsidy support for both Solar Thermal and Solar PV Technology,it has already run into problems.Due to high interest the government went in for bidding of projects which led to irrationally low bidding from unknown firms.This has put the entire exercise in question with the the biggest private utility saying JNNSM is a failure.Without extensions of deadlines it looks highly unlikely whether the 37 winners will actually put up the plants.
March 4, 2011
Solar Inverters are a crucial component of the overall solar system accounting for around 10% of the overall costs.Solar inverters connect the solar panels to the grid converting the DC to AC which is used by the grid.Solar inverters have become highly sophisticated with features like optimization and monitoring etc.The efficiency of solar inverters are a major factor in their purchase as well as the quality and reliability.Inverters comes in various sizes and can be as large as 1 MW for utility applications.Unlike Solar Panels,the Solar Inverter Market is much less crowded though competition is growing as the size of the market increases rapidly.The ~$2.1 billion market in 2009 with 7 GW of installations has increased by more than 130% to around $5 billion in 2010 as the solar panel demand globally increased to around 17 GW.Note Solar Inverter Companies have done much better as competition is much lower and the annual price declines in solar inverters has been much lower at around 10% compared to the 50% decline in solar panel in the last 2-3 years.Here is a list of the major solar power inverter companies
March 3, 2011
India is set to see a massive growth in solar energy in the next decade with the 81 MW of Solar Capacity expected to reach at least 20000 MW by 2022 if not more.India's JNNSM Policy and push for renewable energy by states like Gujarat,Maharashtra and Rajasthan should see massive investments in solar PV installation.While there are already solar cell and panel production,India lacks a strong base for manufacture of solar inverters which can cost upto 10% of the total cost of a solar project.
March 2, 2011
While the major solar energy companies are expanding rapidly as the solar industry grew by almost 150% in 2010,a number of non-solar MNCs have gotten into this sector.The massive growth of solar industry which has been vastly underestimated by policymaker and analysts have not been hidden from these giant companies.While a number of these companies have been present since a long time,some are entering the growing solar energy field for the first time.Some like BP have lost the plot and become minor players despite being top companies a few years ago.Shell has totally left the solar energy field selling its plant to Motech.Asian conglomerates and semiconductor companies have been the most aggressive in entering this area.Chemical companies too have shown interest in building polysilicon plants which build on their core competence.Others have entered the Solar Thermal Energy Field which reinforces their traditional strengths in building power plants and EPC work.Here is list of the top non-solar companies entering the solar sector.
March 1, 2011
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.
February 28, 2011
Crystalline Solar Cell Suppliers are fast disappearing due to the changing dynamics of the global c-Si Solar Panel Industry.With vertical integration becoming imperative as margins and prices get squeezed,independent solar cell suppliers are having a tough time.Increasing raw material costs in terms of higher polysilicon and solar wafer prices and competition from numerous players has decreased the number of pure play solar cell suppliers.However a few of the top solar cell producers continue to grow and flourish though they are also entering into other segment of the PV solar supply chain.Most of the independent solar cell suppliers are from Taiwan and some from China.European solar cell producers have mostly disappeared due to the high cost base of the European factories.Note this list is mostly composed of solar cell producers who don't have big module making operations.You can find a list of the top solar energy companies most of which make solar cells as well.
February 28, 2011
South Korea is one of the biggest shipbuilders with major companies like Daewoo,Hyundai Heavy and Samsung.However its being beaten down by the low cost Chinese companies which are using cheaper capital and lower labor costs to press their advantage.South Korean Shipbuilders have been trying to diversify into offshore wind energy in order to safeguard their revenues.However they face tough competition in this renewable energy sector as well from incumbent wind turbine compaeis as well as Chinese WTG companies like Sinovel,Goldwind and others.Now the South Korean government is helping them with a 300 billion won research fund.This fund will be used to do R&D into building of "Green Ships" which are becoming the new growth segment.
February 21, 2011
China based GCL Poly is the biggest solar wafer producer in the world wresting the crown from LDK Solar in 2010.GCL Poly is now set to grow even bigger in 2011 raising its wafer capacity almost 85% making it No.1 by far.Note solar wafers are made up of polysilicon and used as raw materials for making solar cells which generate electricity from the sun.They are very similar to semiconductor wafers which are used to make the basic building blocks for electronics.GCL Poly has seen a massive rise from 2010 when it started to producer solar wafers.The company's strategy of setting up plants near its major customers have landed it major deals and lower the cost in the supply chain.
February 18, 2011
Solar Energy is the fastest growing renewable energy source in the world and has shown tremendous growth in the last 2-3 years.This has been driven by a more than 50% decline in Solar PV costs which continues to decline further.With further increase in energy prices,Solar Power is becoming closer and closer to retail electricity price.Not only is the price declining,solar power is clean energy a most valuable feature in these days of accelerating climate change.Solar Energy has already reached grid parity in places like Italy and Hawaii and will do so in more places in the coming 2-3 years.The industry is a dynamic one and the list of top solar companies can change quickly.Rapid Technology Change and Fast Declining Costs have pushed out most of the Top 10 companies of 5 years ago and brought in new ones mainly Chinese.Here is a list of the Top Solar Panel Producers in the World.
February 17, 2011
Geothermal Energy is the proverbial poor cousin to wind and solar energy.Only 10 GW of Geothermal Energy Capacity has been installed and the growth rate is a pathetic 3-4% compared to the over 50% CAGR seen for solar energy and around 30% for Wind Energy.Geothermal Energy produces electricity at a reasonable cost in mature locations and unlike Solar,Wind does not suffer from intermittency problems.However a number of problems dog geothermal energy development.Despite huge promise,Geothermal Energy faces a slow painful death and unless something dramatic happens will remain a niche renewable energy source.Canadian companies which are the leaders in consolidating the fragmented industry like Ram Power and Magma Power are facing huge problems.While Ram Power saw its CEO go,Magma is now looking at other renewable energy opportunities.
February 16, 2011
Acropetal Technologies is a bit different from the run of the mill junk IPOs coming out in Feb 2011.After a deluge of crap IPOs in 2010,2011 has not seen many of them as the markets have corrected by around 15%.However a recent rally has bought out the junk companies in association with their associated shady bankers and market operators.Omkar,Sudar,FCL are some of the totally crap IPOs which have happened or in the process of happening.Acropetal Technologies is an IT/ITES company plans to raise Rs 170-crore through its IPO on February 21. The company has fixed the price-band of its IPO at between Rs 88 and Rs 90 per equity share.The company will use Rs 55 crore for acquisitions and Rs 26 crores for a software office.The company seems better quality than the junk and may merit a look from investors though there are much better companies on offer at better prices in the secondary markets.Here are the positives and negatives of the IPO
February 16, 2011
Solar Panel Prices have decreased at a jaw dropping 50% in the last 2 years and will probably decrease 10-15% more in 2011.That is an astounding number given the increasing energy and electricity prices being faced around the globe.Though solar energy is costlier than other forms of energy,it starts on a low base.With 2010 solar growth pegged at more than 100% and 16 GW of solar panels installed,Solar Energy is starting to become more mainstream.Like Solar,the entry of Chinese players has decreased the cost of Wind Energy as well.Despite increasing input steel and copper prices,wind turbine prices have declined.Stiff competition amongst Chinese WTG companies has made the price of a Wind Turbine go as low as $600,000-700,000 in China.This has brought a depression in prices in other places in the world as well.
February 14, 2011
Moser Bear,the Indian Solar Company was one of the first customers for the now extinct Applied Materials a-Si SunFab Technology.The company had invested in a number of solar technologies quite early on,but has not managed to succeed in a single one much like the Abu Dhabi promoted Masdar.The Jack of all Trades strategy has come undone for both of these companies.While Chinese and some US companies have prospered despite stiff competition,most of the others have sunk.While most of AMAT customers have written off their investment in thin film equipment and factories,Moser Baer has not done so.But from its current action it seems to have given up at least in its thin film ambitions.Moser Bear has contracted for 25 MW of First Solar thin film modules.Note First Solar is the biggest thin film producer of solar panels and a direct competitor to Moser Baer.So it seems that Moser Baer has pretty much abandoned its thin film panels since if it itself does not use its own panels,don't think a 3rd party would do so.
February 10, 2011
India's Infrastructure Sector which was considered the ideal play on India's fast growing GDP and its huge infrastructure requirements long commanded nosebleed valuations.While realty stocks which are closely related to the infra ones had long collapsed after the GFC in 2008 ,the infrastructure stocks had retained their preeminence in the stock market rally.However end 2010 and 2011 has seen a vicious change in their fortunes.Stocks like IVRCL,IRB,Punj Lloyd,L&T,Gammon etc have seen their stock prices nosedive.The stocks have corrected far more than the broader market which has itself fallen more than 15% in 2011. The problems related to the infrastructure stocks are varied and they have converged for investors to totally lose confidence in this sector something akin to the realty sector.The list of the problems are
February 7, 2011
The European Solar Companies have found things going tough in 2009 as the solar market changed radically with the Lehman crisis.As the prices of the raw material Polysilicon crashed and Chinese competition increased,these companies started bleeding red ink in a prodigious manner.The high cost structure of these companies with factories in Europe stood naked against the competition.With high debt loads,there was a high change that these companies would go bankrupt.Most of them like Q-Cells,REC started to move manufacturing to Asia while Solarworld moved to Europe.Other smaller companies muddled through.However a spectacular 2010 growth in world solar demand has brought new life into these companies.With capacity constrained,even their higher prices could be absorbed by solar installers.These companies have reported much better 2010 results with Solarworld and REC leading the way.
February 7, 2011
The Chinese Penetrate the US Solar Utility Market – exclusive playground of First Solar and Sunpower
The US Solar Utility Market has been the preserve of the 2 largest US Solar Module Players Sunpower and First Solar.While other Solar Panel Makers have won small deals,these 2 companies have dominated the US Utility Market so far.Sunpower has been very successful in the commercial,municipal and utility segments winning a huge number of deals even as its residential dominance evaporated.The bigger Chinese solar producers like Trina,Yingli,Suntech had already taken over the residential market in California with their much cheaper prices.Now even the larger utility market is under threat from the low cost companies from Asia.Note upstream producers like LDK and GCL Poly are also targeting the system development market in US through acquisitions and alliances.The 250 MW Sempra Generation solar plant being built in Arizona will source Suntech modules and will be completed by 2013.This is a huge order win by Suntech which is the largest module producer in 2010 and could see other Chinese producers using this as a template to push out Sunpower and First Solar.
January 13, 2011
USA recently signed a Military Law which obliges the US Defense Forces to buy Solar Panels which are made in the USA.This "Buy American" proposal directly contradicts US actions and policy which advocates free trade in Green Energy.The US Steelworkers Trade Union recently filed a petition with the US Administration against subsidies being given to the Green Industry by China.US government officials also spoke against the "domestic content" requirements of the Indian Solar Subsidy Policy JNNSM.However when it comes to their own solar panel procurement,the US government has foolishly forced its military forces to buy USA made panels.Not that this will help in boosting the US industry too much,as a number of foreign solar panel producers like Solarworld,Suntech already have module making factories in the United States.Also it remains doubtful about how many solar panels the US Military will buy in the coming years.It will remain a fraction of the global solar demand.Instead of supporting US Solar companies like Evergreen Solar,Energy Conversion Devices which are fighting to survive,the administration has given billion dollar loans to a Spanish Solar Thermal Producer.
January 12, 2011
Sunpower has been the dog of the solar market in 2010 as competitive pressures from low cost Chinese companies have made investors question the long term sustainability of the company.But Sunpower has managed to survive with some smart deals like the manufacturing JV with AUO and focusing on the solar project development.Sunpower makes the world's most efficient solar crystalline panels but comes at a much higher cost.This has led to erosion of its marketshare as cutthroat Asian companies have ruthlessly cuts prices and costs of solar panels.Sunpower has lost its dominant position in the US residential market with major Chinese companies like Trina,Suntech,Yingli and Canadian Solar winning large chunks.However Sunpower management has been a trier all along with its management constantly looking for ways to survive and proper .It has also started using less efficient solar panels for its projects as part of its strategy to compete.
January 12, 2011
Asset Financing for utility grade projects accounted for $128 billion while a substantial amount was also raised for Green IPOs notably Enel Green Power,Goldwind,Datang,Longyuan etc.The figure does not include M&A figures not that there were any big bang acquisitions though a number of M&A activities took place in the Smart Grid space.Government individually ramped up the subsidies for Green Industries despite a failure to arrive at a meaningful global agreement to reduce carbon emissions in the Copenhagen Meet.Most of the investments tool place as countries increasingly jockey for the top spot in the emerging Green Industry.Conglomerates like Samsung,GE,Mitsubishi,Siemens have made Green Industry the focus of their management focus and investment leading to the astounding 39% growth.Note Green Advocates have said that $500 billion in annual investments will be required by 2020 to restrict carbon emissions to a tolerable level.
January 12, 2011
China using its massive foreign exchange horde to buy commodity assets around the world is an old story by now.It is now also getting into the act in the Green Energy area as China's state owned chemical group Blue Star has bought Norwegian environment chemical company Elkem from the Orkla conglomerate.Elkem is one of the largest silicon metal producers in the world and makes a solar grade polysilicon through a specialized low cost process.Orkla which is also the 40% owner of one of the world's largest silane and polysilicon producers Renewable Energy Corporation (REC) had been looking out for some time to sell Elkem.China has not been a big producer of polysilicon which is the main raw material for producing silicon based semiconductors and silcion based solar panels.The massive demand for polycrstalline modules has resulted in it being the main demand driver for polysilicon.
December 21, 2010
France recently halted its solar subsidy program for 3 months for solar installations under 3 kw as it was deluged with a large number of applications.Solar Feed in Tariffs are quite generous for certain type of solar panel installations like BIPV and greenhouses.This combined with rapidly falling solar panel prices primarly due to low cost Chinese manufacturing has made the business extremely lucrative.Note France is not the first country to see a massive flood of solar applications.Spain,Czech,Germany,Australia have faced problems with solar feed in tariff programs mainly because of poor design by slow moving bureaucrats.However most of these countries have never blamed cheap Chinese panel imports for their badly designed programs.Germany which is the undisputed solar market leader did for a while raise the Chinese bogey but it was for a short while.Anyone with a little understanding of the solar industry would know that almost 50% of the value is created in installation which is all done locally.Also most of the polysilicon raw material is made in the West as also most of the equipment used in producing panels in China.