Renesola - Chinese Solar Panel/Silicon Recycling

krsg,

Thanks, I have seen the the SOLA slide showing their planned capacity increase. Very impressive - capacity increasing 5 times by 2009 over 2006 levels!



We have to await JT's return and his detailed analysis over Christams but I think JT probably has included the planned capacity increase, but on a pretty conservative basis in his tentative forecast of EPS 100 pence for 2008.

This is what JT said

"Also, they are planning a further 100mw for 2008. So if I assume half that for the year, we should produce roughly 190 % of 2007 at 316mw.

Now if I ignore the indications of management that they are going for higher yields still and assume a depletion of earnings ratio's instead, just for safety. Even if I slashed earnings pro rata ratios by say 20 %, we would still make EPS of 100p for 2008 and you can bet your bottom Dollar if things are still going well in 2007 it won't be just a 100mw uplift for 2008."

I agree with JT that there will not be just a 100 MW capacity increase in 2008. If you look again at your chart all the anticipated increase in 2008 and 2009 is for Multicrystaline wafers.

However, I believe that the strongest demand amongst SOLA's customers is for Monocrystaline wafers and that SOLA will announce in 2007 significant capacity increases for Mono wafers.

Although Mono wafers are more expensive (and I believe more profitable for SOLA), cells made from them are more efficient at energy conversion than those on Multi wafers, so work out more cost effective for SOLA's customers and their end customers.

It costs much the same to make cells from Mono and Multi wafers but less per MW for Monos. Mono cells also have lower panel assembly and installation costs per MW than cells made from Multi wafers. Mono installations also take up less space so will produce a lot more electricity for any given space.

Sunpower have the highest conversion rates for any commercially available cells (their latest Mono based cells have 22% efficency conversion) which has given them a huge competitive advantage over their competitors. This has allowed them to take a lot of market share from their competitors in California - the only place where detailed statisitics are available showing sales of different types of cells.

The highest efficiency obtained from Multi based cells is 15%, so most cell manufacturers are going down the Mono based cells route, trying to catch up with Sunpower. Suntech, for example, produce 18% from their most efficient Mono cells and are working with the University of NSW to increase this.

Thin filmed PV cells offer the possibility of cheaper costs, but there are two major problems. Firstly, their energy conversion rates a very low 5% to 9% - with Nanotechnology claiming to have achieved industry best 12% in their lab - but whether they can achieve this in actual production remains to be seen. The other major concern is longevity or durability. Their efficiency lifetime is unknown and as far as I know all thin filmed cells have shown efficiency declines with time, whereas PV's made from polysilicon is well proven, with more than 40 years track record with little or no loss of energy efficency.

The most efficient cells produced so far are, I believe, are by Boeing with 42%. However, when you delve into this, it transpires that these are multi layered cells (i.e. a sandwich of three levels of electrical contacts inside the semi-conductor material) and to reach reach 42% efficiency they had to use a light source over 240 times the strength of the Sun! So these have no commercial application.

Presently, thin filmed based cells have less than 9% of the market. On the face of it, although much less efficienct than conventional polysilicon wafer based PV cells, thin filmed cells are much cheaper to produce. However they need much more space and have higher assembly and installation costs than polysilicon based systems.

I heard a very interesting Sunpower CC with analysts where the respective merits of conventional polysilicon and thin film installations were discussed. The crucial problem for thin filmed is that it requires 2 to 4 times the space and so is not suitable for in-town installations on or around residential, office or factories, because they cannot even meet the demand for those buildings.

IMO the way the market will develop is that high efficiency polysilicon based systems (especially based on Monocrystaline wafers) will take the urban domestic, commercial and industrial market, while thin filmed systems will be confined to large out of town solar power stations (initially many experimental.

Sunpower have a road map to reach, by 2012, the Holy Grail of grid cost parity, at which time they will not require subsidies and the entire $1 trillion a year generating market opens up. Others will follow.

So the demand for SOLA's products will accelerate in the future. SOLA enjoys huge competitive and first mover advantages and are tying up long term commitments with an increasing number of the large PV cell customer manufactorers, taking their scrap and converting into the much sought after wafers.