Competition
January 10, 2012
The Indian Desert State of Rajasthan in the West which borders Pakistan is planning to set up four gigawatt scale solar parks in 4 districts of Jodhpur, Jaisalmer, Bikaner and Barmer. Note under the first 2 phase of JNNSM , Rajasthan has got the lion's share of the solar farms being constructed. The reasons why Rajasthan has managed to corner 80% of the JNSSM solar projects is because
a) Solar Radiation is the highest in the country
b) Land is cheap and plentiful in the state with the government literally given them for free to solar developers. A huge plus in a country where land acquisition is a big industrial problem
c) Support from the government
January 10, 2012
The massive solar panel glut has not only caused Western solar companies to go bankrupt but has also caused mayhem in the Chinese solar panel industry.Many of the smaller companies have seen their utilization go down to 35% or lower with many of the others shutting down their production entirely.There are hundreds of small solar companies in China which started during the 2010 boom when global solar demand increased by more than 150% . However their small scale of operatoins and lack of brand power means that they are bearing the brunt. While the large Chinese solar panel producers have seen their utilization go down , most will survive given the support from Chinese Banks. For example LDK despite its more than $3 billion in debt and losses is still getting loans from Chinese Development Bank. But the smaller Chines OEM panel makers don't have the government sugar daddy behind them.
January 10, 2012
Philips and Siemens ,2 of the largest European conglomerates with big Green divisions as well have warned of Dire Macroeconomic problems in Europe.While the stock markets continue to go higher, both companies have cut/ warned profit forecasts on European economic headwinds. Siemens is the largest green company in the world while Philips is one of the biggest Lighting Companies .
January 9, 2012
Saving bankrupt solar companies has become the national pasttime of most governments it seems.Competition in the solar market has become so severe that solar comapnies 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.
January 9, 2012
Solar Renewable Energy Certificate (SREC) Prices in New Jersey have been falling at a sharp rate from a high of $600 to $225 as high returns from falling solar panel prices and other tax breaks.This has led to a massive growth in solar installations in the state making it the 2nd largest state by solar capacity.New Jersey installations have crossed 500 MW and made it a huge green job driver in the state.However this boom has made the market driven SREC prices fall quite sharply.Though not falling as sharply as Pennsylvania where SREC prices have become a joke ,they are still low and falling.
January 9, 2012
Solar Power in India is growing by leaps and bounds with the federal and state governments heavily promoting solar energy production.India is set to become a gigawatt market in 2012 with around 400 MW already installed by 2011.The ancillary industries around the main solar power market are set to grow at a rapid clip as well.One of the unlikely sectors in solar products in India is the growth of solar cables.Note solar power plants require a lot of wire and cabling to connect thousands of solar panels to each other and to solar inverters.Besides solar power plants also require interconnection with the power grid.While today most of the solar cable is imported from outside,there is potential for a solar cable manufacturer to build a domestic capacity as well given the rapid growth expected in solar power.
January 9, 2012
Coal Stealing and Pilferage by the Coal Mafia has always been done on a massive multi million dollar scale. In the coal rich states of Jharkhand, Bihar, West Bengal and Chattisgarh, Stealing of Coal is a major illegal industry. Everyone knows about it and nothing is done as most officials and politicians get a cut of the illegal gains. Corruption in India is institutionalized as governing bodies remain weak and powerless. Despite India's much touted growth story,all these needling problems have contributed towards the Indian GDP slowing down sharply. Unless governance is improved,its tough to see how India can achieve its potential.
January 7, 2012
Wind Turbines are generally considered safe and reliable though there have been cases of Blade Cracks and Falling.However the recent cases of Wind Turbine Explosions and 15 feet blades flying off have generally been not seen before.With 112 mph winds,the extreme stress cases of wind turbines were tested in UK recently.The gale like conditions led to some of these wind turbines failing.While a couple of wind turbines burst into fire some of them saw their 15 ft blades flying off.This is not to say that wind energy is dangerous,just that extreme nature conditions can lead to accidents for solar panels and wind turbines as well.
January 7, 2012
Reliance has a massive balance sheet which is has used strategically to acquire 4G spectrum (Infotel) and content.The company had revolutionized the telecom space through the Monsoon Hungama campaign when it had provided super cheap telecom mobile plan with handsets. It could do the same in the Internet space through providing super cheap Talbelts like Aakash with super cheap broadband plans on 4G. It already has content to provide its subscribers.Note broadband companies in India provide poor service at high rates, so Reliance can takeover the broadband space in India easily if it executes right.
January 7, 2012
The German Solar Energy Market is biggest in the world and has installed the largest number of solar panels for the last few years.2012 promises to be no different with Germany again set to the biggest solar market for solar panel manufacturers though Italy would give good competition.The German Solar Subsidy program has been the best in the world unlike the start and stop feed in tariff programs of Spain,Czech,UK,Australia and other places.A stable step in cut of feed in tariffs has helped solar energy prices coming down by more than 50% in the last few years though demand has only increased.
January 6, 2012
US Solar Projects including the 1000 MW Blythe Solar Project is now available for solar developers,installers at fire sale prices.The Insolvency Administrator is looking to sell parts and the whole of the solar project business of Solar Millennium and its US subsidiary Solar Trust of America.Note before filing of bankruptcy,the solar project developer had around 2000 MW of solar projects in the pipeline.
January 6, 2012
LDK Solar is one of the most insolvent companies in the world right now with billions of dollars in debt,a battered balance sheet,continuing losses and dodgy accounting.However LDK has acquired a German company Sunways and continues to build new solar power plants as the Chinese state owned banks continue to fund it with cheap money without any consideration about losing their investments.LDK has become the poster boy of the Solarworld complaint against Chinese solar panel producers as it continues to run and thrive despite being insolvent.The Chinese government is hurting itself and its other solar companies like Trina,Yingle which are more competitive by continuing to support and increase the global glut of cheap solar panels.These solar panels are being clearly sold at below cost as most of the companies would be bankrupt without these absurd loans which make no free market sense
January 5, 2012
Chinese Wind Turbine Companies have unleashed a global price war in which Western producers are unable to compete.While Solar Panel producers in the West are dying like flies,Western WTG Makers too face survival questions.Vestas which is the world's biggest turbine company in terms of installations announced another revenue shortfall for the nth time in the last couple of years.The company has already restructed ,reduce workforce etc etc.However the price competition from the Asian companies is too severe and too sustained for Vestas to surive too long.Like First Solar,Vestas seems a likely candidate for takeover by one of the big industrial conglomerates.It has become too tough for a renewable energy company in the West to survive on their own.
January 5, 2012
Satcon the US solar inverter producer has been 0ne of the worst hit solar inverter manufacturers and has seen massive reduction in revenues and profits.With the solar industry in massive oversupply,the photovoltaic inverter market has also seen a big hit.While the bigger solar inverter producers like SMA Solar and Power-One too have seen job reductions and revenue hits,Satcon has been worse hit due to its small scale.The company has now decided to slash 35% of its workforce consisting of 140 solar jobs due to the ongoing solar crisis.Note other solar companies in the USA such as Solyndra,Spectrawatt have completely closed down while the smaller ones are on the verge of closing as well.
January 5, 2012
China has announced a new solar subsidy for BIPV systems of 9 Yuan per Watt ($1.4/watt) and CNY 7/watt for PV systems for home.Note China has already become a top 5 market in the world in 2011 after announcing a $1.15/kwh Feed in Tariff for utility scale solar power instalations.This new subsidy by the Chinese ministry of finance should boost the home and commercial segment.Note China had recently raised the target of solar energy to 15 GW by 2015 from 10 GW as solar energy has grown amazingly fast in the recent past.
January 5, 2012
Pakistan is a energy deficit country like most other South Asian countries with inadequate investment in the electricity sector and the distribution infrastructure.The cause of the energy crisis in the country is due to massive corruption and misgovernance , a theme which will be familiar to citizens of India as well.Pakistan has been looking at investments from the Chinese power companies in the hydro and wind sectors to boost electricity generation.However these investments take time and some may never come to fruition.However Pakistanis are now turning towards cheap Chinese solar panels to beat the high electricity tariffs and dependence on expensive diesel generators and UPS systems.
January 4, 2012
South Korean Conglomerates LG,Samsung,Hyundai and Hanwha have made massive investments in solar energy production in the last couple of years.Encoraged by the Korean government to become a force in the Green Energy area in the future,Korean giant chaebols have invested in almost all areas of cleantech like Electric Vehicles,Wind Energy,Solar Energy,Energy Storage etc.While Western companies fall like flies in the face of the Chinese onslaught of super low pricing,Koreans are holding their own and want to take fight into the Chinese camp.
January 4, 2012
Adani Power,which is a leading Indian electricity company and part of the Adani Group is set to invest big money in the solar power in India.The company plans to set up 140 MW of energy capacity according to news reports with an investment of $600 million.Given the current costs of solar equipment and solar panels ,the price tag looks high at almost $3.5 million/MW when the current prices are more like $2 million/MW for large power plants in low cost locations like India.
January 4, 2012
JNNSM Phase 2 recieved almsot 8 times the bids with 2500 MW worth of bids out of which around 350 MW was selected for providing Feed in Tarifffs with the average tariff of Rs 8.77 or 17.5c/Kwh .Note India's execution record has not been great with only 400 MW solar capacity reached in 2011 against a target of more than 1000 MW.However weaker and unknown players have gone out of this business and the winners this time look more likely to construct these solar power plants.No doubt a massive glut of solar panels in the world with prices as low as 80-90c/watt helping .Compare that to prices of solar panels which were more than $2/watt last time.
January 4, 2012
Telecom Companies in India are in general an unscrupolous lot with the 2G Scam showing the whole telecom industry of India in a Bad Light.While a number of top executives of telecom companies spent time in jail,it seems that these companies have learned nothing.They continue to find loopholes to take both their customers and government for a ride.Indian Broadband and Telecom companies have made defrauding customers an art by illegally adding value added services and charging for them.They also burn millions of dollars in subsidized diesel to power their telecom towers since there is no restriction on that.Now these comapnies have been caught again in another manipulation trick in 3G services.
January 4, 2012
Smaller Polysilicon producers with small sizes and higher costs are going bust almost everyday.With poly prices falling below $30/kg even bigger producers with inefficient plants like MEMC have been forced to curtain capacity.The smaller poly producers with 2000-3000 tons capacity have virtually no future.With poly expansion still taking place by big producers even in an oversupplied market the small fish are having the capitulate.
January 3, 2012
Chinese Solar Panel Producers have become a famous target of an anti dumping petition brought on by Solarworld and other companies.Though US Solar Installers have opposed the move as it will increase the solar panel prices in US,ITC has gone ahead with the investigation.Though the charges of subsidies and efficiency can be debated,the fact remains that US Solar Panel Producers can't compete with Chinese Solar Panles.Massive industrial overcapacity in China has made the prices of products very cheap and made it difficult for Western producers to compete in most areas such as Chemical,Renewable Energy,Textiles etc.The Chinese win because of their low interest rates,cheap labor,free land,massive government support.
January 3, 2012
Solar Power in India has been growing at a rapid clip due to a number of favorable factors
1) Big Energy Deficit
2) Lots of Sulight
3) Falling prices of Solar Panels
4) Favorable government subsidies.
Indian Solar Power Capacity in 2012
Many of the small firms have been weeded out and the developers and banks have got some experience in this new solar industry.Expect 2012 to be much better and expect at leas a doubling of the solar power capacity as both phase 1 and phase 2 winners in JNNSM complete projects.Rajasthan,Gujarat and Karnataka state subsidies should also see some projects being complted
Solar Power Capacity in India in 2012 should be around 1 GW which is not bad and will make it one of the top 10 Solar Markets in the world.
January 2, 2012
Note Chinese companies too would have shut down but the state owned Chinese banks are keeping them alive with loans at ridiculous interest rates.LDK which is buying Sunways is almost insolvent as well with its convertibles trading at less than 50c on the dollar in Singapore.It has more than n$3 billion in debt compared to its market cap of around $600 million.It faces massive losses in the coming qtrs and can't serve the interest payments much less expand.The strong support of the Chinese government for its green companies is keeping them alive.Chinese solar panels have become super cheap due to companies selling at below cost and massive scale.Note all the cheap solar panel brands in the world are Chinese with the exception of First Solar and some Asians.
LDK has managed to spend 22 million Euros despite burning hundred of millions of dollars in cash because it has got the Chinese government trillions backing it.So while Western companies burn and crash,the big crony Chinese companies can expand and acquire.
Most of the German solar manufacturing industry is finished and it is unlikely that except a couple of them like SM Solar or Wacker will live to see 2013.Q-Cells too should go bankrupt or get consolidated .Note despite European companies shifting factories to Asia ,they just can't compete.Some of the smaller module makers with 20 MW plants have seen huge losses with the equipment not selling for 10 cents on the dollar
January 2, 2012
Ladakh,one of the most beautiful hilly regions lying near the Chinese border has one of the highest potentials in generating solar power in India.Note under JNNSM,India is targeting more than 20 GW in the next 10 years and already large solar farms are coming in the desert areas of Rajasthan and Gujarat.However,Indian policy has mostly neglected the less inhabited region of Ladakh.Most of the policy initiatives have been low key in nature and mostly to provide the region with off grid solar power,solar cookers and solar lights.What has been missed is to build massive solar panel farms and connecting them with a transmission line to the power hungry states of the North.Just like Himachal Pradesh has become a masssive hydro power exporting state,Ladakh can do the same trick with solar power.
Solar Panel prices have fallen by 50% in 2011 and now solar energy can be profitably be generate at Rs 7/kwh.While this is more expensive than coal at Rs 4/kwh,the thing to be remembered is that this power value is constant for 25 years and it has no coal disadvantages which kills thousands each year.Also it increases Indias 'energy security and reduce imports of expensive coal.It also will provide more employment and generate economic value internally beside supporting the Indian construction and EPC companies.
January 2, 2012
The Chinese solar panel producers too are facing tough times with many companies running at low utilizations and almost everybody running losses.Some companies with huge debt burdens like LDK are running because of government largesse as they are effectively insolvent for all purposes.Expect more bankrutpcies in the coming year .It will take a very foolish or a very brave company to expand solar capacity this year.
Only USA Solar Installers are having a good time with below cost solar panels availabe increasing the returns and leading to massive increased.It looks like 2012 will be a good year for US solar installers who are expanding rapidly to take advantage of the falling solar module prices.Even Buffett is going all into solar development space acquiring billion dollar project in a classical case of vulture investing.
December 7, 2011
Investing Money in India right now is a very confusing matter given the large number of choices and the lack of attractiveness of different assets due to different reasons.There are hundreds of voices seemingly intelligent but who are selling their own books.If you turn on the finance new channels they will keep saying buy stocks for the long term as if a normal investor can make money by buying stocks for the short term.Gold proponents will say that it has been a great investment over the last several years and with the US,European systemic shocks it will remain so.However the rapid uptrend in gold prices has made it a somewhat risky investment.Investing in Gold is also not easy given the wide array of choices like Gold ETFs,physical or futures.So lets see each asset class with its pros and cons
November 4, 2011
The Bees lineup of ETFs was started by Benchmark Asset Management Company which was a unique Indian AMC in the sense that it focused on ETFs at a time when the major Indian AMCs did not care a hoot.However ETFs in India are starting to catch on rapidly as Indian mutual funds under perform despite their very high expense ratios.Recognizing this trend of growing AUM of ETFs,Goldman Sachs acquired the still small Benchmark.With effect from 14th July 2011, both Benchmark Asset Management Company Private Limited and Benchmark Trustee Company Private Limited became a part of the Goldman Sachs group. Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. It was founded in 1869 & is one of the oldest and largest investment banking firms.
November 1, 2011
The Axis Gold ETF started in 2010 under the NSE Symbol AXISGOLD.The Scheme endeavors to generate returns that are in line with the performance of gold, subject to Tracking Errors. The corpus of the Scheme isinvested in Gold Bullion of fineness - 995 parts per 1,000 (99.5%) or higher. Further, the Scheme may also invest in gold related instruments (including derivatives related to gold) as per SEBI guidelines.