Solar Power, the Chinese Way (another thing China is way ahead on...)

Solar Power, the Chinese Way

After Suntech Power built a promising business, China vows to outpace every solar market under the sun.

December 26, 2005 Print Issue

Suntech Power focuses on traditional mono- and polycrystalline cells, modules, and systems and, as dull as that may sound, it makes money. Open for business in 2002, Suntech is part of a $12-billion solar industry that brokerage CSLA Asia-Pacific Markets says will treble by 2010. Based in Wuxi in coastal Jiangsu near Shanghai, Suntech started trading on the New York Stock Exchange on December 14 as the biggest tech IPO of 2005, jumping 41 percent in its first day. It was trading recently at $26.68, up from an offering price of $15 (See Suntech IPO Jumps 41%).



Before the offering, the company targeted a market cap of $1.59 billion to $1.92 billion. But Suntech is now worth about $3.86 billion. Moreover, it is poised to grab market share in China, the world’s fastest-growing large economy and soon to be the world’s biggest energy consumer. The company makes low-cost, quality solar cells for offshore customers like SolarWorld, IBC Solar, and Conergy. Germany was Suntech’s biggest customer in 2004 with sales of $61.5 million, though China should soon displace it.


“Everyone says the Chinese market is going to beat Japan and Germany in five years, and won’t have any trouble at all beating the U.S. market,” says Paul Maycock, president of Williamsburg, Virginia-based consultancy PV Energy Systems.

What’s remarkable about Suntech is how it has managed to change the arithmetic of the business. As silicon prices moved up from $24 to about $40 per kilogram between 2003 and today, it managed to increase margins from 19.4 to 33.1 percent. Suntech attributes this to implementing better process technologies. Its prospectus cites one that enables it to use thinner-than-usual silicon wafers; it also mentions how Suntech secured 10-year wafer supply agreements from suppliers in Germany and China, quite a feat in a silicon shortage.

<snip>

http://redherring.com/Article.aspx?a=15061&hed=Solar%20Power,%20the%20Chinese%20Way§or=Profiles&subsector=Companies

in solar. What we could have done in those 30 years had the gov't back alternative energy instead of invading countries for oil. What we could have done if we cared enough to change our habits and not be greedy. What we could have done instead of watching reality TV. I guess the baton has been passed to China.

(via the "October Surprise" strategy) so that alternative energy -- and the alternative democracy it would necessarily foster -- was stillborn in America...

<snip>

Suntech claims its cells are 15.5 to 16.5 percent efficient—the percentage of solar energy converted into electricity. The industry average is 15 percent, according to Rhone Resch, president of the Washington, D.C.-based Solar Energy Industry Association. Suntech is piloting a new line yielding 18 percent, and is targeting 20 percent by 2008.

<snip>

The signs are pointing sunward. China’s photovoltaic (PV) market reached 12 gigawatts of capacity last year, according to the Chinese government, and San Francisco-based consultancy Solarbuzz predicts solar electricity in China will grow from 60 megawatts in 2004 to 400 megawatts in 2010 and 10,000 megawatts by 2020.

<snip>

“It has absorbed all the silicon manufacturing in the world, and all the PV companies are having a boom year,” he adds. “Because of this boom, the price of solar PV companies has skyrocketed. Anyone who’s not quoted wants to be quoted to build up capacity, because you can sell anything you can make right now.”
 
Polycrystalline silicon is the key component in most solar PV cells. Electronics-grade silicon is slightly purer than solar-grade and can also be used for solar cells. An oversupply of silicon after the dot-com bust sent prices as low as $9 per kilo in 2000. But the price for solar-grade silicon rose to about $32 per kilo last year and has traded at an average of $40 so far this year. A number of companies, including U.S. players SunPower and Evergreen Solar, say they are already sold out for next year, unless they get more silicon.

<end>

These guys are going to eat everyone's lunch...

But perhaps at a smaller amount over 7 years than what Suntech negotiated. I like Evergreen's polycrystalline tech better, although their cells run at about 12 percent efficiency, with future plans for 15. It would be interesting to compare their prices per watt, although it's hard since they're all marking up their stuff in response to the huge demand.

I'm confused about their statement "12 gigawatts". In the very next sentence they say 60 megawatts for 2004, and 400 megawatts in 4 years. Where does this 12 gigawatts come from?

The first statement was from the Chinese government, the second was a projection from Solarbuzz .

"Global" PV production capacity (i.e., the EU, Japan, the US, et al.) is currently ~1.6 GW per year. If the Chinese claim is true, they have much more PV production capacity up their sleeves than people previously believed.

on edit: or someone missed a typo lol...

hmmmmmm....

...I don't know if it's process or mounting but they upped the wattage on their panels (same geometry) from 115 to 120. One thing I haven't been able to figure about Evergreen is the extent of their manufacturing. I know they've got that string ribbon line going into a factory in Germany, but haven't seen details of where else they are producing and at what volumes -- and when the scale on that tech is going to reach the point where they can undercut the rest of the market.

I don't know what their Massachussetts plant does. If their EverQ plant can't undercut the competition at that volume, then I'd say they have some 'splaining to do. In theory, this tight-silicon supply environment should be all to their advantage, since they use something like 1/2 the silicon as other manufacturing methods.