Archive for September 2012

Clinton At Solar Power International: ‘You’re Going To Win This Battle’

by Jessica Lillian

 

 

Solar Power International (SPI) attendees were treated to a high-profile pep talk from none other than a former U.S. president on Thursday.

Weaving encouraging words, insider policy advice and a couple of allegorical Arkansas anecdotes into his keynote address, President Bill Clinton reassured the industry crowd that solar power can, indeed, flourish in the U.S.

“I love what you guys are doing,” Clinton told the audience, which filled the Orange County Convention Center’s large Valencia ballroom and spilled into two overflow viewing rooms. “This place is full of entrepreneurs.”

Unfortunately, he added, much of solar’s recent success – and, especially, the vital role that the federal government has played in bolstering the industry – has gone unnoticed or been misconstrued by Americans outside the industry.

“Most people don’t know that in spite of economic adversity, government support and venture capital have catapulted the U.S. to lead clean energy investment in 2011,” Clinton noted. “They don’t know how much public-private cooperation there is.”

Solar power’s perception gap – a challenge familiar to the industry – was a recurring theme in Clinton’s speech, as he cited statistics about job creation, solar project deployment totals and other industry growth metrics, with each fact preceded by “most don’t know that…”

For instance, Germany recently generated the equivalent of 20 nuclear power plants with PV, despite the country’s limited solar resource. Although opponents of Germany’s solar program have claimed that the government “threw money at solar and practically bankrupted the country,” hard numbers from apolitical sources have proven otherwise, he noted.

“Go read the Deutsche Bank study,” Clinton said, referring to an analysis that showed Germany has netted thousands of jobs from its solar initiative. “Not Greenpeace – Deutsche Bank.”

Similarly, here in the U.S., where incentives for solar power and other renewable energy have become an increasingly politicized issue, a study from the Baker Center (named for Republican Senator Howard H. Baker Jr.) found that government support given to renewables is perfectly in line with subsidies given to other industries, Clinton added.

“Americans don’t know that, but they need to know that,” he stressed.

No solar company has been used as heavily in the political and public case against supporting solar as failed thin-film manufacturer Solyndra – which, according to critics, was a symbol of corruption and wasted taxpayer money spent on an undeserving industry. Clinton offered some tough love for solar professionals who wanted to reshape the nefarious Solyndra story told to Americans.

“You can’t blame people for reacting to an isolated incident out of context if you don’t provide the context and the other side of the story,” he pointed out.

Clinton added that he saw Solyndra as a company with an innovative yet expensive technology that failed to reach volume and bring its costs down quickly enough to compete – especially once the Chinese government doled out billions to their domestic solar manufacturing industry.

“Since no one explained that to the American people, they can be forgiven for listening to the worst possible explanation,” he said. He urged solar companies and their partners to “get the basic positive facts out there” in order to counteract the negativity.

Anti-solar political attack ads laced with Solyndra references will fade after the November presidential election, but what about afterward? Solar Energy Industries Association (SEIA) President and CEO Rhone Resch told Clinton in a post-keynote Q&A session that SPI attendees were all eager to know the former president’s thoughts on the fate of the solar sector under either a Mitt Romney presidency or a second term under President Barack Obama.

The two candidates often offer more clues into their plans than voters may realize, Clinton said. “My advice is that you should assume they will do what they say and attempt to know what they say,” he suggested. “Politicians are much more honest with the voters than you think they are during campaigns.”

As for known specifics, Clinton added that Romney has said he would eliminate clean energy tax breaks, while Obama will likely seek to bring back the U.S. Department of the Treasury’s Section 1603 program, which expired last year.

Renewable energy incentives, however, have historically enjoyed bipartisan recognition of their economic benefits. For instance, Clinton noted that President George W. Bush provided tax credits to wind power companies while serving as governor of Texas, thus helping propel the state’s boom in wind energy development and create significant private investment.

“Around the world, no one makes energy policy without public-private cooperation,” Clinton stressed. Nongovernmental organizations may also begin to play a larger role, especially in developing nations. For instance, houses being built as part of a post-earthquake redevelopment effort in Haiti – home to extremely high electricity rates – must now be equipped with PV-ready roofs.

Back in the U.S., numerous forces are in solar’s favor – despite the aforementioned public-perception issues, Clinton said. For instance, California’s aggressive 33% renewable portfolio standard, falling PV module prices, a growing interest among utilities in large-scale plants, and the widespread availability of state-level tax credits will all help solar reach what Clinton believes is an inevitable tipping point.

“You’re going to win this battle,” Clinton assured the crowd. “The question is where and when and how.”

Photo provided with permission from SEIA and the Solar Electric Power Association.

Solar consolidation: Hit the reset button

By:  Charles W. Thurston

ndustry analysts were in agreement at the SPI 2012 conference, held on Thursday, that the solar industry is set for major consolidation over the next 1 year to 18 months. “The reset button needs to be hit; but tremendous value will be unlocked by it,” reckoned Arno Harris, CEO of Recurrent Energy.

General solar photovoltaic panels

The solar consolidation period is still not over.

One of a group of panelists considering the potential impact of mergers and acquisitions, Arno characterized the solar industry as being in a peculiar situation of “profitless prosperity” now, so the coming wave of consolidation “should be a welcome thing which we accept as part of the growing pains of an industry that will survive.”

The panelists suggested that while the upstream manufacturing portion of the industry – including photovoltaic module manufacturers – would be hardest hit, consolidation seemed to be just as inevitable downstream for projects and utilities. “It’s going to be a rough consolidation period and for PV panel makers it will be brutal, but at some point we will bottom out and then we will have something akin to Solar 2.0, as we did with Internet 2.0,” said Jesse Pichel, the principle of CleanTech LLC and moderator of the SPI discussion session, referring to the consolidation and subsequent strengthening of the Internet industry.

“I predict a politically-driven consolidation among (upstream) Chinese companies, with more diversified industrial companies acquiring upstream solar manufacturers,” said Angiolo Laviziano, a co-founder and board member of Mainstream Energy Corp.

Peter Xie, president of GCL-Poly Solar Energy Power System Integration, echoed that prediction, narrowing the likely group of solar acquirers in China to state-owned enterprises, which would have the balance sheet strength to restructure the acquired companies, as well as a mandate to save jobs. Such an outcome would not necessarily translate into a rash of new global solar players, however, since “the state-owned companies are behind in the move out of China and into the international markets,” he cautioned. In a more global context, Xie added, “I see a lot of technology companies in talks with larger companies now.”

A union of upstream components manufacturers and U.S. distributors also was noted as likely. “I see opportunistic acquisitions by upstream companies of distributors for more of a guaranteed customer base,” reckoned Laviziano.

The ranks of U.S. solar project developers, which Harris estimated at 700 today, will also see consolidation, he said. “It’s hard to go through all the paces of developing a project today if you only have 10 megawatts under your belt.” One potential set of acquirers for development companies may be financial institutions seeking to enter the market, suggested Laviziano.

Furthermore, within the residential and small commercial rooftop segment of the industry, consolidation is anticipated. “There could be some consolidation of the U.S. residential and commercial lease/PPA market where there is a complementary fit with another type of solar company,” stated Kennedy.

Downstream U.S. consolidation also was broadly predicted by the analysts. Several suggested utilities will be forced to enter the rooftop installation business as they find themselves increasingly competing with solar companies to power homes and big-box businesses. Indeed, Danny Kennedy, founder of Sungevity, said, “The question five years from now may be why solar companies aren’t buying utilities. The tail may yet wag the dog.”

On the other hand, there could be some dis-aggregation within the U.S. residential rooftop segment, said Lavisiano, stating, “There could be dis-aggregation in residential resulting from the door-to-door sales business model, wherein they sell aggressively and know what they can offer.”

The consolidation wave seems imminent, the analysts say, but first-half 2012 merger and acquisition statistics point to a moderate year for deals thus far. According to a recent report by Mercom Capital Group, “There were 14 M&A transactions in Q2 2012 amounting to $325 million with only six of the 14 disclosing transaction amounts. There were no blockbuster M&A deals this quarter. Instead, most were small strategic transactions with a number of them being acquisitions of business divisions for synergistic reasons.”

Mercom also noted that “in some cases, acquisitions were of ‘sick’ companies getting rid of non-strategic businesses and assets. The largest disclosed M&A transaction was the acquisition of Zhejiang Topoint Photovoltaic, a Chinese mono- and polycrystalline maker, for $276 million by Guangxi Beisheng Pharmaceutical in an asset restructuring plan.”

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When Will The Solar Markets Stabilize?

By Chaim Lubin & Martina Ecker

With the first eight months of 2012 completed, it is an ideal time to evaluate the current state of the solar market and consider what might come next in this turbulent industry. At the core of this is one essential question: When will the solar market stabilize?

It is already clear that 2012 will most likely be a strong year for solar installations, with latest estimates ranging at a global installation level somewhere between 26 GW and 35 GW and most analysts settling for the midpoint of about 31 GW. This means that 2012 will again show significant growth of almost 20% over 2011’s level of 26 GW.

This level of growth in the market is quite phenomenal given the lack – or removal – of incentives across many geographies. However, it can be attributed to the reduction in system costs driven mostly by module price declines.

These prices have been sliding since the beginning of the year and have lost another 12% to 15%, which fundamentally confirms the second rule in PV: that falling module prices facilitate demand creation.

During the Intersolar conference in Munich in mid-June, the lowest prices quoted were at 0.52 euros/W ($0.66), with the average price hovering somewhere above $0.75/W. There is a risk that prices will fall further as the pull-forward effect of demand in Germany – due to the feed-in-tariff change – abates and the U.S. market further destabilizes because of the anti-dumping duties.

Will consolidation help to stabilize prices? It is clear that at today’s pricing level, few – if any – manufacturers in the industry are making money. This trend is well illustrated by the first-quarter results of major solar players, which showed significant losses.

The argument is that current price levels do not enable industry players to earn a margin that allows them to cover their production cost. Industry participants will not be able to sustain ongoing losses, and consequently, less-efficient players should drop out of the market, helping to clear overcapacity.

Today, almost 60% of capacity comes out of China, and consequently, Chinese companies will determine the future shape of the industry. Currently, there are more than 1,000 solar players in China – of which at least 50% have shut down production or partially ended production.

This has already resulted in some consolidation, best illustrated by the increase in market share exhibited by tier-one players, such as Suntech Power, Yingli and Trina, from 25% in the fourth quarter of 2011 to more than 60% by the end of the first quarter of 2012. However, even these industry leaders share too much capacity amongst themselves to help stabilize prices.

The 10 largest solar companies globally held a combined production capacity of 20.9 GW at the end of 2011, which represents 85% of the total installed capacity of 24.7 GW. First Solar, the only U.S. player, will actively take about 500 MW out of the market after shutting down its German facility.

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Other players, such as Canadian Solar and Yingli, are unfazed by recent market developments and continue their expansion plans by adding 600 MW and 700 MW of new capacity, respectively. Hence, overall capacity of tier-one players is forecast to remain stable.

Chinese consolidation is likely to take much longer than expected, as provincial governments will be hesitant to let their local champions fall. However, some less-visible clearances of overcapacity are already taking place.

Industry research group Bloomberg New Energy Finance reckons that combining the various announcements and insolvencies that already took place might lead to about 20 GW off the market in the near future.

Manufacturing innovation
Can technology ease the pain? It is unclear whether current technological market developments will be sufficient to ease the pain in the solar sector. Despite the partial stabilization of prices and removal of some overcapacity from the market, current price levels do not allow companies to earn an adequate margin from cell and module manufacturing.

Most industry players are targeting a manufacturing cost of $0.75/Wp by the end of 2012. However, Canadian Solar is the major exception, claiming it can reach $0.60/Wp, down from $0.73 reported in the first quarter. If achieved, this would be a total reduction of 18%, half of which should come out of lower polysilicon/wafer input cost and the remainder from process and module redesign steps.

But even this significant cost reduction might not be sufficient, as prices most likely will continue to slide.

Consequently, the industry is focused on the question of whether there is sufficient innovation to bring production cost down further. Short-term cost reduction will come from incremental steps, such as tightly managing material input costs, further streamlining and automating processes, and small improvements to the manufacturing process (e.g., optimizing the amount of silver used in front- and back-contacting), rather than ground-breaking innovation.

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There is potential that thinner wafers might help, with a claim from SunPower that it would be able to reach approximately $0.60/Wp by the fourth quarter of next year from this methodology.

Similar steps are being taken by German manufacturer SolarWorld, which is planning to invest 50 million euros in the coming months for the combination of new equipment, technology upgrades and process improvements for its cell manufacturing sites in Germany and the U.S.

In the past, more ground-breaking innovation was driven by joint collaborations of leading manufacturers and solar equipment players. However, given the current environment and difficult investment cycle equipment players are facing, it is doubtful that they will have the financial means to continue these joint research and development (R&D) efforts.

Financial results for the first six months of 2012 underscore the challenges the equipment players are currently facing. Applied Materials declared losses of $74 million for the first half of 2012, while centrotherm filed for insolvency and Meyer Burger Technology barely posted a profit.

For the bigger, more diversified players, like Applied Materials, there is a risk that they might pull out of solar altogether, as the sector’s current contribution to the company’s overall revenue has declined to less than 3%. Additionally, management may not view solar as worth the effort compared to its core activities in the semiconductor market and the myriad of other growth opportunities.

Among the pure-play PV dedicated equipment players, only Meyer Burger Technology remains, raising concerns of whether sufficient innovation will come from the equipment front.

Not everything is bleak in the manufacturing equipment segment. GT Solar announced that it has developed new technology for polysilicon manufacturing that should allow for production cost of less than $14/kg. With current polysilicon spot prices at about $20/kg, this could open up room for a significant price decline of silicon, while at the same time, restoring margins of polysilicon suppliers.

It is clear that there is no short-term fix for the market difficulties of 2012. Similar to previous years, 2012 will be a year where market demand outstrips initial estimates and all players are jostling to get their share of the pie.

The road ahead
Previous experience has shown that markets always grow when prices continue to drop – hence the fierce price competition among industry participants. This will only change when markets start building at a more sustainable pace and governments start putting long-term policies in place. This will allow for some clear visibility instead of recurring quick fixes, as best illustrated by the ongoing revision of the German feed-in-tariff system.

For 2013, it is expected that there will be a significant shift in end markets, as Germany is expected to drop down to 3.5 GW or less of installations, and other European markets are also likely to shrink. Industry analysts believe that China will eclipse Germany as the single biggest market in 2013.

It is yet unclear whether the U.S., Japan and India, as well as selected smaller markets in Latin America, will be able to fill in the demand gap. Although solar development in the U.S. market could hinge on the outcome of the presidential election and the fate of other energy resources, such as shale gas, most other markets have a tendency to prefer local industry players, thus presenting a risk of severe market distortion.

Ultimately, the maturity of the solar sector will be a long and drawn-out process. It will be a combination of a number of factors, including more long-term and cautious market development by governments, ongoing consolidation of the industry, with some players falling out, and continued innovation to lower manufacturing costs.

For industry participants, that will mean a paradigm shift from “it’s all about growth and getting market share” to developing a sustainable business with focus on cost and capacity, retaining a technological lead and developing a clear view on which markets to serve.

Chaim Lubin is vice president and a member of the electronics and renewable energy group at global investment bank Lincoln International. He can be contacted at clubin@lincolninternational.com. Martina Ecker is managing director and head of technology and renewables at Lincoln International. She can be contacted at m.ecker@lincolninternational.de.

Grid connected PV needs incentives to grow profitably Read more: http://www.pv-magazine.com/news/details/beitrag/grid-connected-pv-needs-incentives-to-grow-profitably_100008455/#ixzz26GqaznE3

By:  Becky Beetz

Without support, grid connected photovoltaics cannot grow profitably, states Navigant Research. Furthermore, while traditional energy sources are likely to continue to receive subsidies, it cannot be assumed photovoltaics will reach grid parity without them.

Photovoltaic planning is said to be difficult in such an unpredictable market.

Conergy AG

The importance of subsidies has been underlined in a new report –  Navigant Analysis of Worldwide Markets for Solar products and Five-Year Application Forecast 2011/2012 – issued by Navigant Research. The company says the compound annual growth rate of grid-connected photovoltaics between 2006 and 2011 of 69% was driven “entirely” by feed-in tariff programs.

However, since these are undergoing many changes, particularly in the German and Italian markets, photovoltaics has become a less profitable investment prospect and instable. As such, “strong growth going forward should not be assumed. Nor,” write authors Paula Mints and Jessica Donnell, “can the solar industry be considered mature, at which slower growth is normal.”

They go on to say that without incentives, grid connected photovoltaics cannot profitably grow. “Without support, and likely even with it, prices will be artificially low, and there will be little incentive,” they add.

In addition to affecting margins and causing bankruptcies, Mints and Donnell say decreasing photovoltaic prices have led to both low quality products and system designs. Without continued support, they underline the fact that cost cutting operations will continue, in areas like installation. “Cutting costs in this regard will lead to substandard installations along with mind-share damage to a young industry that can ill afford it,” they state.

They continue, “Some manufacturers have chosen to truncate the pilot scale phase and have rushed technology into commercial deployment before it is ready. Unlike software, which is always in beta, a solar system should not work out its bugs in the field.”

Regarding grid parity, the authors say the solar industry has “ignored the realities of technology development” including R&D, pilot production and repetition. “The assumption has been that solar will reach grid parity without subsidies with conventional energy sources. As conventional energy will likely continue to receive subsidies this cannot be reasonably considered fair competition.”

Planning is also said to be difficult in such an unpredictable market, “with little transparency and much obfuscation.” With photovoltaic module supply continuing to outstrip demand, and sustained high inventories it is very difficult to obtain an accurate market picture, say Mints and Donnell. To ensure growth, they believe financing mechanisms are needed.

In addition to analyzing the global photovoltaic market, Navigant also provided growth forecasts for the installation of photovoltaics (in MWs) – taking into account the amount of shipped and installed modules in a calendar year – based on 3 scenarios: reduced incentives (RI); conservative (cons.); and accelerated (acc.). See the table below for an overview.

Region 2012 2013 2014
Cons. Acc. RI Cons. Acc. RI Con. Acc.
North America 2,943.4 3,467 3,337.7 3,374.4 5,058.2 3,572.7 4,689.7 7,170.9
Latin America 98.1 126.1 206.5 334.9 447.7 178.6 750.3 843.6
Asia-Pacific-Oceania 7,009.1 9,581.6 6,754 10,020.3 11,705.4 6,516.7 9,642.1 10,993.3
Europe 14,122.3 17,681.8 8,111.9 11,385 23,802 7,256.5 11,046.1 21,866.3
Africa & Middle East 355.7 661.9 319.1 644 1,138.1 339.1 670 1,307.6
Total world 24,528.4 31,518.4 18,770 25,759 42,151.3 17,863.7 26,798.1 42,181.7

JinkoSolar Selected to Power First Ever Off-grid Utility Scale PV System in South Africa

JinkoSolar, a leading global solar power product manufacturer, will work with EPC partner Solea Renewables to deliver a Limpopo province chrome mine with the first ever off-grid utility scale photovoltaic system in South Africa. The 1 megawatt plant will produce approximately 1.8 GWh of electricity per year and will effectively reduce the mine’s daytime diesel dependency for the next 20 to 30 years.

This groundbreaking project is in line with South Africa’s national plans to increase power supplies from independent producers. It also dovetails with South Africa’s stated objective to increase the percentage of renewable energy among the country’s total power mix. The fully integrated turnkey PV system designed, engineered and constructed by Solea Renewables will use 4,170 high efficiency polycrystalline PV panels supplied by JinkoSolar.

 

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Smart Coatings and Photovoltaics 2012

“While the global demand for South African coal, platinum, palladium and chromium increases, mines and other industrial consumers face power supply constraints due to capacity challenges at Eskom. The turnkey delivery of our PV plants will not only benefit end-users, but it will in turn help reduce the ever present and increasing energy demand Eskom faces,” said Vusi Mhlanzi, Director of Solea Renewables, “We chose JinkoSolar panels for its superior performance and reliability, as seen in utility-scale installations across Asia, Europe, and Americas.”

JinkoSolar solar panels have already been utilized in off-grid PV systems to offer mining and other industrial companies with a cost effective grid independent complement to traditional diesel generators. ” As the plant is expected to be completed by late October, 2012,  the electricity generated by JinkoSolar quality solar panels will definitely reduce the mine’s daytime diesel consumption while securing our client’s with a natural long-term hedge against all rising costs of power,” explains Mhlanzi.

“We have great expectations for South Africa. The region’s booming population, strong economic growth and abundant sunlight represent an exciting opportunity for solar and for JinkoSolar.” said Kangping Chen, Chief Executive Officer of JinkoSolar, “we look forward to working with Solea Renewables, an experienced EPC partner on this momentous project.”

Source : JinkoSolar