Solar Power

• Essentially, The solar sector’s been ambivalent over the first four months of 2009, jumping from layoffs and losses all the way to hugely promising milestones, further establishing the uncertainty of today’s market.  We’ve seen a few reputable clean tech investment surveys, we’ve seen startups go under, and even the largest solar deal in history go down, but what’s next for the industry?  Here’s all the important things that’ve happened over the last four months so you can better respond to that question.
• An overwhelming consistency in solar headlines have discussed sinking demand and lack of capital to be the leading contributors behind current stalls in solar industry growth.  Lux Research predicted over a year ago that supply would exceed demand in 2009, which is exactly what’s happening.  They expect 2009 capacity to reach 10.4 GW, while demand will be near half that at 5.3 GW, down from 5.5 GW in 2008, leaving behind mountains of polysilicon inventory.  The Cleantech Group found worldwide green tech VC investments dropped 41% to a total of $1 billion in first quarter 2009 compared to Q4 2008.  Solar did take home the largest chunk of that funding, with a total of $346 million.
• We’ve seen tons of lost jobs thus far, and the solar industry’s no exception.  SunPower, GE Solar, BP Solar, Optisolar, Ausra, and Heliovolt all announced layoffs.  OptiSolar, specifically, shut down operations selling all of its current and upcoming projects (1.85GW) to First Solar in  a $400 million all-stock deal.
• Market darling, First Solar’s had quite the Q1 themselves.  Their stock price was only down 9% in late February, looking quite nice against the S&P 500’s average of -18% and fellow companies Solarfun’s -43%, JA Solar’s -52%, and ESLR’s -63%.  First Solar also doubled their fourth quarter profits, but expects a “flat to slightly down” Q1 2009 due to 10-15% of the customers being at risk of defaulting on their contracts.  On the positive side of things, the company’s successfully achieved 1GW worth of thin-film solar module production as well as lowered manufacturing costs to 98 cents per watt, down from $1.08.  Most recently, FSLR blew people’s minds by tripling their Q1 profits when compared to the same quarter last year.  There is some skeptisim to the accuracy of the claim as the company’s apparently been using some new accounting techniques, boosting their income on paper rather than through actual sales.
• Brightsource, out of Oakland, signed a deal with Southern California Edison in early February, which locked down the largest solar deal in history.  The agreement includes 7 separate projects, for a total of 1.3GW.  Mark this down as cleantech-utility-pwn #2 for Brightsource, who’d already locked in a deal with PG&E for 900MW over five projects.  SunPower and Exelon announced last week that they’d be developing the largest urban solar power plant in the US, totalling 10MW and residing in Chicago’s south side.
• On the same utility note, PG&E plans on building out 500MW worth of projects within the next year, at a cost of around $1.4 billion.  They’re even seeking approval from state regulators for  200MW worth of solar panels in space, to be provided by Solaren.
• Then to add even more positive outlook to the pot, the Chinese government made an announcement in the last week of March that shot solar stocks upwards.  They expressed their interest in solar development by offering subsidies up as high as 60% of the cost of installation and boosting demand by 200 MW.  This bumped the Chinese Solar Stock Index up 27.1% with Suntech up 38%, Yingli Green up 35%, Solf up 20%, LDK up 33%, China Sunergy up 29%, and Canadian solar up 17%.  Yingli Green Energy even announced that a branch of Bank of China is going to extend $880 million in loans to the company.  Less than a week ago, China announced that they’d be accepting applications up until May 15th for solar projects beginning construction in 2009, slated to finish within 2 years.
• When it comes down to it, First Solar’s CEO Michael Ahearn was on point when he explained that “Looking out three to five years or beyond, the market outlook for solar power has never been better, but the short term outlook has never looked more difficult.”  As I said back in December, the companies that can make it out through 2009 will come out leaner and stronger, as the weaker one will fall off.
• In general, or atleast for 2009, I’m long on solar.  What are you thoughts?  Will we see growth through 2009, or will everything stay on pause?

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