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Energy Conversion Devices (ENER) Message Board

  • ener_question ener_question May 9, 2008 4:00 PM Flag

    Citi Sees Solar Cell Glut In 2009/Shakeout Coming

    Citigroup’s Timothy Arcuri this morning launched coverage of the solar sector, starting First Solar (FSLR) with a Buy rating, SunPower (SPWR) with a Hold and Evergreen Solar (ESLR) with a Sell.

    His broader position is that there’s a shakeout coming in the industry. He sees another few quarters of “benign pricing,” and then a decline of 20% in 2009 and even more in 2010. He sees risks to subsidy programs in Germany and Spain, and cautions that there will be a big ramp in solar supply starting in 2009, and worsening in 2010.

    In fact, Arcuri thinks we are headed for more than 60% over-supply of solar cells in 2009, with as much as 100% excess in 2010.

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    • His broader position is that there’s a shakeout coming in the industry. He sees another few quarters of “benign pricing,” and then a decline of 20% in 2009 and even more in 2010. He sees risks to subsidy programs in Germany and Spain, and cautions that there will be a big ramp in solar supply starting in 2009, and worsening in 2010.

      In fact, Arcuri thinks we are headed for more than 60% over-supply of solar cells in 2009, with as much as 100% excess in 2010.

    • His broader position is that there’s a shakeout coming in the industry. He sees another few quarters of “benign pricing,” and then a decline of 20% in 2009 and even more in 2010. He sees risks to subsidy programs in Germany and Spain, and cautions that there will be a big ramp in solar supply starting in 2009, and worsening in 2010.

      In fact, Arcuri thinks we are headed for more than 60% over-supply of solar cells in 2009, with as much as 100% excess in 2010.

    • His broader position is that there’s a shakeout coming in the industry. He sees another few quarters of “benign pricing,” and then a decline of 20% in 2009 and even more in 2010. He sees risks to subsidy programs in Germany and Spain, and cautions that there will be a big ramp in solar supply starting in 2009, and worsening in 2010.

      In fact, Arcuri thinks we are headed for more than 60% over-supply of solar cells in 2009, with as much as 100% excess in 2010.

    • His broader position is that there’s a shakeout coming in the industry. He sees another few quarters of “benign pricing,” and then a decline of 20% in 2009 and even more in 2010. He sees risks to subsidy programs in Germany and Spain, and cautions that there will be a big ramp in solar supply starting in 2009, and worsening in 2010.

      In fact, Arcuri thinks we are headed for more than 60% over-supply of solar cells in 2009, with as much as 100% excess in 2010.

      Maybe Citi was right.

    • So the Ardour agrees that ASP's for ENER to decrease by 10 percent to 11 percent next year:

      There are concerns that average selling prices (ASPs) may fall faster than expected, Ardour Capital analyst Adam Krop said, adding that he expects ASPs for the company to come down by 10 percent to 11 percent next year.

      The analyst sees ASPs for the other solar companies falling 15 percent to 20 percent due to foreign exchange issues. Energy Conversion has no real exposure to euro-denominated contracts as all of its contracts are denominated in the U.S. dollar, he said.

      http://www.reuters.com/article/marketsNews/idINBNG29454720081110?rpc=44

    • Solar cell ASP drop will not affect profitability, says E-ton

      Latest news
      Nuying Huang, Taipei; Esther Lam, DIGITIMES [Wednesday 10 September 2008]

      Despite that contract prices for its solar cells will decline by single digits in 2009, gross margin is not going to be affected, according Chi-Yao Tsai, general manager of E-ton Solar Tech.

      A 5-10% decline in solar cell average selling prices (ASPs) is expected in the contract market next year, said Tsai. The weakening price trend is driven by an affect on demand due to the expiration of the subsidy program in Spain in 2008, as well as customers' pursuit for lower cost, he explained. Given that polysilicon supply from M.Setek is set to pick up next year, the ASP decline will not affect profitability at E-ton, he noted.

      Tsai added that demand patterns from different customers vary. For some customers from the building-integrated photovoltaic (BIPV) segment, will see their profitability is less affected by government subsidy programs, meaning their reaction to solar cell pricing is relatively weak. Many customers from this segment have increased their bookings, Tsai noted.

      Citing bookings at a recent photovoltaic (PV) show in Spain, Tsai reiterated that demand will be consistently strong in 2009. Bookings from mid- to long-term contracts have already surpassed 300MWp, which is higher than E-ton's planned output of 240-300MWp in 2009.

      Commenting on progress on amorphous silicon (a-Si) thin-film solar cell development, Tsai said the strong bookings as seen in 2008 indicate a bullish market in 2009. Despite that some industry players have argued that the thin-film solar market will only reach two billion watts in 2010, Tsai noted that expansion among many players is measured in terms of billion watts.

      While some industry players are concerned about production barriers on a-Si thin-film solar cells, Tsai cited First Solar's success as an example that smooth a-Si thin-film solar cell production is achievable.

    • "we are headed for more than 60% over-supply of solar cells in 2009, with as much as 100% excess in 2010."

      Not only this but the solar companies that will save the planet are not the low efficiency, high cost ones like ECD that are concentrating on commercial buildings, but clearly the great promise of solar is in companies that are focusing on large scale solar projects and that are combining other technologies like the use of mirrors. So maybe someone here can explain why all the fuss about a company like ENER that has limited potential with its current solar technology. Oh please let's not even get into the miniscule few cents a share in profits after 40 years of trying.

    • He doesn't get it; or didn't do his homework. His research clearly didn't take into effect $150 or $200 oil; the coming emergence of electric cars; the price stability of solar; the continous rise in coal and natural gas prices as these energy sources are tapped to replace oil where possible; the cheap relative cost in developing countries where a power grid infrastructure hasn't been developed; the demand by tenants for commercial property owners to provide "green" buildings; the emerging demand by businesses to reduce their use of natural gas, etc..

      We are just seeing the tip of the iceberg. The demand for alternative energy is just starting to ramp up and the only 2 readily available viable types are solar and wind. We are going to see demand increase like we never imagined. The recent huge spike in oil, even if it comes down, has shocked the world, because if it showed the risk of using this limited energy resource. The day we thought would come years down the road is here now.

      Solar companies are sold out for their 2008 production and are selling their 2009 production. We will not see parity between supply and demand for years; not quarters; regardless of solar type. Mr. Arcuri didn't foresee the change in demand for solar that $125 oil and the prediction of $200 oil has made. He is certainly entitled to his opinion, but he wouldn't be the first CITI analyst who was wrong.

      • 1 Reply to tomc368
      • tomc368,

        << Mr. Arcuri didn't foresee the change in demand for solar that $125 oil and the prediction of $200 oil has made. >>

        I've seen the high price of oil associated with increased demand for wind or solar several times. I don't really think the two are closely related. Most of our electricity is generated from coal. Relatively little is from oil.

        We definitely want more electric power from clean, renewable sources. Distributed generation or point-of-use generation are also attractive.

        So I agree that solar's future looks bright... but I don't think it's closely related to the high price of oil.

        Regards,
        Snoz

    • Obviously Mr Timothy of Citigroup has decided that thin film (FSLR and ENER) is ramping sooner than people expected, and thus squeezing out the c-Si guys. FSLR and ENER can maintain positive margins while the c-Si guys all swing to losses and start to go out of business. That's what he means by a "shakeout". The only ones left standing will be thin film.

      bring it on

      • 1 Reply to bumblebugabee
      • bumblebugabee,

        << The only ones left standing will be thin film. >>

        Maybe. But FSLR's thin film products are different than Uni-Solar's thin film products. FSLR is going after the ground-mount utility type installations. ENER is going after the BIPV market.

        Different markets, different products... even though both are thin film. These are the differences and distinctions the analysts are failing to make.

        Regards,
        Snoz

    • ENER's 2009 is allready sold with a big chunk of it take or pay contracts. 2010 also on its way to being sold out. BIPV is fastest growing segment of solar. Demand escalating faster than supply. With increased efficiences, and carbon cap and trade or REC trading becoming more mature, and populus sick of oil wars tipping point is fast approaching. CITI has indeed missed the paradigm shift and the large upside to come.

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