Solar Energy Handbook Barcap
Solar Energy Handbook Barcap
Solar Energy Handbook Barcap
Vishal Shah
1.212.526.4378 vishal.shah1@barcap.com BCI, New York
Analyst Certification
I, Vishal Shah, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.
We expect development of financing to remain the primary constraint during the second growth phase. Our base case forecast assumes $55 billion of financing in 2012 to support worldwide installations of more than 14 gigawatts at $4 per watt average system price. This compares with an estimated $40 billion of capital consumed by the industry in 2008 to install 6 gigawatts of solar capacity at $7 per watt average system price.
Barclays Capital does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Customers of Barclays Capital in the United States can receiv e independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at www.lehmanlive.com or can call 1-800-253-4626 to request a copy of this research. Investors should consider this report as only a single factor in making their investment decision.
Table of Contents Chapter 1: Investment Thesis ...........................................................................19 Chapter 2: Solar Background ..........................................................................59 Chapter 3: How to Screen Solar Stocks .............................................................69 Chapter 4: Solar PV Supply Chain Analysis ........................................................75 Chapter 5: Solar Equipment Market ................................................................101 Chapter 6: Solar Thermal Market ...................................................................115 Chapter 7: Key Solar PV Markets ...................................................................123 Chapter 8: Overview of U.S. Renewable Portfolio Standards ...............................175 Chapter 9: Solar Energy Project Development Process Overview ...........................201 Chapter 10: Solar Energy Basis ......................................................................215 Chapter 11: Glossary ...................................................................................233 Chapter 12: Performance Valuation & Financial Statistics ......................................239 Chapter 13: Earnings Models ........................................................................245 Chapter 14: Private Solar Companies ..............................................................289 Chapter 15: Company Descriptions .................................................................299 Chapter 16: Solar Energy 101 .......................................................................311 Table of Figures............................................................................................378
Executive Summary "We know the country that harnesses the power of clean, renewable energy will lead the 21st century" President Barack Obama (Presidential Address to Congress, 2/24/09) While the near-term outlook for the solar sector may be considered bleak, we believe longterm prospects have never been this encouraging. As global economies take action to mitigate climate change, we expect an era of fundamental reshaping of the global energy infrastructure to create a prominent role for the renewable energy sector. Renewable electricity represented 2.5% of worldwide electricity generation in 2008 and we believe it could represent more than 20% of worldwide electricity generation, as policies to promote renewable energy are implemented globally over the next 20 years. In this report, we provide insights into what we believe may turn out to be one of the brightest new renewable energy sectors to emerge in the coming years. Sola r Power has historically been viewed as an expensive source of alternative energy generation. However, we expect ongoing transformation of the industry supply chain to cut solar electricity prices by half in 2009. More importantly, as the United States and other countries create mechanisms for pricing the external costs of carbon dioxide emissions into the marketplace, we expect the cost differential between solar power and other conventional sources of energy to diminish in an increasing number of markets globally . Solar industry shipments have increased at a 40% compound annual growth rate over the last five years primarily due to attractive incentive programs in markets such as Japan, Germany, and Spain. In our opinion, we are about to enter what we call The second growth phase of the solar erawhere we expect demand for new solar installations to be generated from multiple markets. We see three key factors potentially driving demand during the second growth phase: 1) greater supply of lower priced solar panels; 2) new incentives in several emerging solar markets; and 3) potential resolution of permitting/financing bottlenecks that have impaired growth in several emerging solar markets so far. We expect the total subsidy pool for the solar industry to continue to grow as more countries provide a greater amount of incentives. During the second growth phase, we expect supply and availability of financing to drive demand. During the first growth phase, polysilicon prices in the spot market increased from $25 to $400 per kg and companies with relatively low reliance on spot market emerged as strong Wall Street's performers. We expect the following trends to potentially emerge as powerful differentiators between winners and losers during the second growth phase: 1) balance sheets; 2) capital intensity; 3) cost structure; and 4) geographic diversification. Given the early stage nature of this sector, we believe a lot of uncertainties remain about the execution capabilities of individual companies and government policies among all major markets. Having said that, we remain confident of the following: 1) growth will likely be significant; 2) volatility will likely be high as investor sentiment changes between investing in growth sectors (there are very few in this environment) and being concerned about valuation; and 3) market structure, business models, and strategies will likely change rapidly.
May 01, 2009 3
We recommend investors take a long-term portfolio approach and build positions over time in order to mitigate some of the execution, macro, and sentiment risks. Someday soon, green energy will no longer be an alternative; it will be the standard ahead. We mass-produced the car, and American manufacturing built the middle class. We sparked the IT revolution, and our high-tech industry fueled American prosperity for years. Today, being one step ahead means developing the green energy economy of the future before anybody else does. U.S Senator Tom Udall, (D-NM) (US Senate, 2/2/09) How to Read This Report This report is focused on long-term themes in the solar sector and is written with several audiences in mind. Our aim is to examine broader sector trends in the rapidly growing solar sector as opposed to picking stocks in the near term. This report is lengthy and certain sections of the report may not be of interest to all readers; consequently, we suggest the following: BeginnerVery little understanding of the solar and alternative energy sector. Read Chapters 1, 2 and 16 first in order to familiarize with industry basics, then read Chapters 3 to 15. IntermediateAlready familiar with what solar is and believe in the potential, but not sure how solar fits into the overall renewables investment framework. Read Chapters 1 through 15. ExpertAlready read several other solar primersread Chapters 1 and 8. Below, we provide brief thoughts on key topics of interest to investors. Grid Parity Given the sharp decline in oil and natural gas prices, we are often asked if solar is still a feasible alternative to conventional fossil fuels.
Figure 1: Relationship Between Solar System Price and Natural Gas Prices
6000 5000
4000 3000 2008 N atural Gas Price $5W system cost required to reach grid parity
2000 1000 0 1.6 2.0 2.4 2.8 3.2 3.6 4.0 Current Natural Gas Price $3/W system cost required to reach grid parity
4.4
4.7
5.1
5.5
5.9
6.3
6.6
7.0
7.4
7.8
8.2
8.5
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9.3
We believe the prospects for solar are still promising and our grid parity outlook has not deteriorated for the following reasons: 1) although we agree that average natural gas electricity prices are likely to decline by nearly 50% year over year in 2009 due to a decline in fuel costs, the price premium of solar electricity over natural gas electricity is likely to remain constant or even decrease somewhat if module prices decline to $2/W. More importantly, forecasts from Barclays Capital commodities and utilities teams suggest power prices are likely to increase during 201015, potentially leading to grid parity by 2012 in a scenario where no carbon tax is implemented in the U.S.; 2) if we assume a $15/MWhr carbon tax is implemented in the U.S. from 2011, we believe grid parity for California utilities is likely by 2011; and 3) we note that several utilities generally purchase renewable energy at a premium to conventional energy using the Market Price Referent (MPR) (which is typically $20/MWh premium to the natural gas generated electricity price) and by applying a Time of Delivery (TOD) multiplying factor. As shown in Figure 2, assuming PG&E purchases solar using TOD / MPR, solar has the potential to reach grid parity by 2010.
200
150
$/MWh
100 50 0 2006 2007 2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E
Pricing We forecast module prices to decline from $3.70/W in 2008 to $1.00/W in 2015. We forecast balance of system costs for large systems to decline to $0.80/W by 2015 from the current levels of $1.50/W. Finally, we expect balance of system costs for small systems to decline from $2.50/W in 2008 to $1.35/W in 2015. Figure 3: Solar Module and Balance of System Pricing Trend
4.50 4.00 3.50 3.00 2.50
$/ W
BOS Cost - Small Systems Module Price BOS Cost - Large Systems
2.00 1.50 1.00 0.50 0.00 2006 2007 2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E
We believe the best-in-class solar module companies have the capability to produce solar panels for $1.15/W, sell at $1.50/W, and make 25% gross margins in a $50/kg poly price scenario. We believe approximately 40% of the solar industry has the capability to produce and sell modules at $1.50/W today. The median cost producers, many of which are European players, generally have non-silicon costs of $2.00/W. We estimate the cost structure and profitability of some of these companies would be challenged if poly prices decline to $50/kg. We believe the Japanese companies typically have a relatively high cost structure and may not be able to sell products for $1.50/W. Assuming the median solar companies cut costs and reduce their poly input costs even further, we see downside risk to $2/W panel prices in 2009. Thin Film Versus Silicon In our opinion, silicon technology would continue to lead the growth wave for the following reasons: 1) capital intensity of thin film players ($2/W) is higher than that of silicon players ($0.50$1/W). We expect relatively low levels of vertical integration in the silicon space especially since upstream/midstream segments have more than adequate capacity to support near to medium term growth; and 2) new thin film technologies could find it difficult to scale and achieve bankability status. We believe companies such as Sharp that have strong balance sheets and have made significant technology advancements stand to potentially lead the thin film growth wave along with First Solar. For other start-ups particularly funded by equipment suppliers such as Applied Materials, success would depend to large extent on subsidy programs and manufacturing incentives of local governments. Where Will Growth Come From? During the first growth phase, markets such as Japan and Germany led most of the installation growth. Growth was largely within the small/medium size rooftop segment. Over the next three to five years, we see the potential for large commercial rooftops and ground mounted systems to achieve superior growth as the U.S. utilities become more aggressive with solar PV programs. In the near term until financing conditions improve, we expect growth to be limited to the small/medium size rooftop segment. In addition to the traditional markets such as Germany, Italy, and Spain, we expect Japan, China, U.S., Canada, and India to be the key swing markets with potential upside surprise in the 201012 timeframe. Growth Strategies During the first growth phase, the focus of most companies was to procure as much polysilicon supply as possible. During the second growth phase, we expect the focus of most companies to identify end markets for product deployment. To that extent, we expect execution strategies of companies to be defined by downstream acquisitions. Companies with larger contract wins should be able to scale their operations and increase market share. We expect more downstream M&A activity over the next three to five years as companies look to diversify geographically and establish new downstream channels.
We also see the potential for strategic alliances to emerge between large-scale solar power developers with strong financial backing and upstream polysilicon players with relatively strong balance sheets. We expect downstream players to lead the industry transformation as the power development market is localized as inherently more complex industry constraints have shifted from upstream to downstream. As cell/module players reach efficiency development limits, we expect scale to be the primary cost differentiator and consequently we expect the emergence of EMS type business models in the mid-stream segment. We acknowledge that it is early to identify obvious winners in the race toward market leadership. We expect a combination of business models to dominate the sector over the next three to five years as: 1) midstream players aggressively diversify downstream through power developer M&A; and 2) large-scale downstream companies (there are only a handful at present) strike alliances with upstream players. Long-Term Margin Outlook and Valuation Framework for the Sector Within the silicon value chain, we expect gross margins of the midstream players to improve in the near term as silicon costs decline faster than ASPs. For thin film companies, we expect margins to decline depending upon their ability to achieve cost reductions. We expect companies with downstream integration to better manage margins compared with companies without sufficient downstream integration. Although downstream vertical integration could potentially negatively impact margins, we believe by controlling the downstream channels, solar manufacturers with superior cost structure would be able to scale and also protect margin erosion. Unlike a unified P/E valuation approach used by many today, we expect two separate frameworks to emerge over the next three to five years: 1) for companies with EMS type business models, we expect investors to assign a relatively low P/E multiple; and 2) for companies with downstream integration (mostly the case for market leaders), we expect investors to assign a sum-of-parts valuation with EBITDA multiple for systems integration business and a growth P/E multiple for module segment. Ten Reasons Select Solar Stocks Could Participate in the Near-Term Market Rally 1) Street Estimates Fully Discounting Near-Term Weakness; Earnings Momentum Could Potentially Turn Positive As shown in Figures 4 and 5, Street 2009 estimates for select Chinese solar stocks have declined from peak levels of $23 per share in September 2008 (beginning of the solar meltdown) to $3.45 per share in March 2009. Although the decline in U.S.-based companies has not been this severe, we believe U.S.-based solar companies have also seen nearly a 45% reduction in EPS estimates during the corresponding period. We believe Street estimates are fully discounting the near-term weakness in fundamentals (or perhaps one to two quarters away from bottoming) and potentially have room for upside as a result of recently announced incentive programs in Japan, China, and several other markets. We believe we are about to enter a phase of positive earnings momentum once estimates are reset over the next one to two quarters. Some of the factors that could cause positive earnings momentum include: 1) upside to 2009 and 2010 pricing expectations;
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2) upside to 2009 margin expectations; and 3) upside to 2010 volume expectations (we discuss these three points in more detail in this report). Solar stocks have historically seen significant P/E multiple expansion during periods of positive earnings momentum. We believe a combination of positive earnings momentum and valuation multiple re-rating could potentially lead to meaningful upside catalysts for selective solar stocks. Figure 4: China versus U.S. Consensus EPS Estimates
$25.0
-44%
$20.0 $15.0 $10.0 $5.0 $0.0 1/1/2007 4/1/2007 7/1/2007 10/1/2007 1/1/2008 4/1/2008 7/1/2008 10/1/2008 1/1/2009 2009 US Companies 2009 Chinese Companies
-5 9% -60% -78% -80% -8 3% -84% -85 % -8 9% -90%
-49%
Note: Numbers are an aggregate of companies under coverage Source: Barclays Capital research, FactSet
2 5x
$1.50 $1.00
5x 2009 EPS x 3/200 9 2/200 9 1/200 9 12 /20 08 11 /20 08 10 /20 08 9/200 8 8/200 8 7/200 8 6/200 8 5/200 8 4/200 8 3/200 8 2/200 8 1/200 8 12 /20 07 11 /20 07 10 /20 07 9/200 7 8/200 7 7/200 7 6/200 7 5/200 7 4/200 7 3/200 7 2/200 7 1/200 7 12 /20 06 11 /20 06 10 /20 06
$0.50
2) New Incentives in China, Japan, and the U.S. Could Lead to Potential Demand Upside With the recent introduction of new incentives in China and Japan in addition to the U.S. incentives, we expect the 2010 demand outlook to improve significantly. We see upside potential to our and consensus 2010 demand estimates leading to a potentially more stable ASP environment compared with more than a 30% ASP decline baked into consensus estimates. We present three scenarios for the supply/demand outlook: 1. Bull case scenario where China, Japan, and the U.S. upside leads to relatively flat demand in 2009 (5.6 gigawatts) and nearly 65% growth in 2010 (9.2 gigawatts); 2. Base case scenario where demand declines by 25% in 2009 (4.5 gigawatts), demand increases by 55% in 2010 (6.8 gigawatts); and 3. Bear case scenario where demand declines by 40% in 2009 (3.5 gigawatts), and increases by 60% in 2010 (5.6 gigawatts). We assume that supply cuts continue in 1Q09 and 2Q09 such that supply decreases to 6.9 gigawatts in 2009 (versus current plans of approximately 7.5 to 8 gigawatts), and 8 gigawatts in 2010. We also assume that the tier 2/tier 3 supply is not consumed by the industry due to concerns over warranty. In this analysis, we assume that the top solar companies continue to gain market share led by bankability and cost structure. We assume the market share of leading solar companies increases from 55% in 1Q09 to 80% in 4Q10. Our analysis shown in Figure 7 suggests that the industry has the potential to reach supply/demand balance by 3Q09 in the bull case scenario (Japan installs 600 megawatts and 1 gigawatt in 2009 and 2010, respectively; China installs 200 megawatts and 500 megawatts in 2009 and 2010, respectively). We believe potential for supply/demand balance by 4Q09 exists in the base case scenario (Japan installs 330 megawatts and 570 megawatts in 2009 and 2010, China installs 60 megawatts and 100 megawatts in 2009 and 2010). Finally, we believe the industry could reach supply/demand balance in bear case scenario in 4Q10 if Japan/China demand does not pick up as expected in 2010 (Japan installs 270 megawatts and 500 megawatts in 2009 and 2010, China installs 40 megawatts and 80 megawatts in 2009 and 2010).
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Bull Demand
2,500
Supply-Dem and balance by Q309 in Bull S cenar io if Japan, China dem and picks up
2,000
B ase Demand
MW
1,500
Bear Demand
1,000
S cenar io analys is as sumes Japan, China and the U.S demand accelerates from 2H09 and also ass um es 1-2 m ore round of s upply c uts (in Q109/Q209) by all solar companies. B ull case assumes 600MW/1GW demand in J apan in 2009/10, 200MW/ 500MW demand in China in 2009/10. Base case ass um es 330MW/ 570MW demand in Japan in 2009/10, 60MW/100MW dem and in China in 2009/2010. Bear case assumes 270MW/500MW in Japan in 2009/10 40M W/80MW demand in China in 2009/10.
500
3Q09E
4Q09E
1Q10E
2Q10E
3Q10E
4Q10E
3) Low Poly Costs Could Aid Margins Poly prices for most companies have declined and we expect leading solar companies to take advantage of this environment and report strong margins. We do not forecast an uptick in poly prices anytime soon. In our view, consensus estimates (including our estimates) do not completely factor the $40/kg poly price scenario in 2010. As shown in Figure 8, our 2010 estimates are based on blended poly price assumption of $75 $100/kg. As discussed previously, our estimates are based on 30%40% year-over-year ASP declines and as such we believe consensus margins, which in many cases are comparable to our margins and are also based on similar blended poly price assumption. In a scenario where poly prices decline to $40/kg, we believe potential 10%20% gross margin upside exists for all these stocks.
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4) Estimates Appear Reflect the Worst Case Scenario for Pricing Our 2010 estimates are based on 30%40% ASP declines, a scenario that we believe accurately reflects the potential pricing backdrop in Japan/China/U.S. subsidy environment. We believe project IRRs in several markets have the potential to reach inflection point at 30%40% lower panel prices. We disagree with the argument that panel prices could continue to drop if financing conditions do not improve and elasticity does not kick in. In our opinion, volume, not pricing, would be impacted in such a scenario. Our pricing assumptions are also supported by the fact that non-silicon costs of several European manufacturers (that make up nearly 40% of worldwide capacity) are near $2/W. We do not foresee a scenario where panel prices decline below cash cost levels of European players. 5) Inventory Correction Underway Checks suggest module prices have stabilized over the past month or so suggesting that channel inventory may be reaching normalized levels. Checks with installers suggest that inventory levels have declined to reasonably low levels through a combination of reduced purchases, write-downs, and sell-through demand. We do not expect much product from 4Q081Q09 to remain in the channel uninstalled until 3Q09. We believe inventory levels at the end of 1Q were potentially around 900MW and could likely decline to a more normalized 400MW to 500MW levels by 3Q09. 6) Investor Capitulation Underway We also expect rotation out of the European stocks to the Chinese solar stocks. As shown in Figure 9, solar stocks have seen significant downward estimate revisions reflecting the fact that expectations may be approaching a bottom soon. As fundamentals start to improve, we expect to see an upward trend with respect to rolling EPS. We also expect investor rotation out of structurally challenged stocks (companies with high non-silicon cost structures) into market leaders in the U.S. and China.
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2.50
Ph ase 1
Phase 2
Pha se 3
40 30 20 10
2.00
Supp ly con stra ine d en viron ment, sta ble to ri sin g prici ng . EPS, valu ation m ultip le e xp an sion
Oversu ppl y. EPS red uctio n, val uatio n mul ti ple d estructio n
-1 0 Esti mates, Mul ti ple s b otto med ? Ove rsup ply con cern s. EPS gro wth, va lua ti on mu ltipl e comp ressi on -2 0 -3 0 -4 0 In vestor, Ma nag eme nt Cap itul ation -5 0 -6 0
Jan -06 Ap r -0 6 Jul 06 Oc t- 0 6 J an - 07 Ap r-0 7 J ul - 07 Oc t- 0 7 Jan -08 Ap r -0 8 Jul 08 Oc t -0 8 J an - 09 Ap r-0 9
1.00
0.50
0.00
7) Financing Conditions Set to Improve We continue to expect financing to be the biggest bottleneck for the industry in 2010; however, we believe a combination of 1) rising project IRRs (such that solar IRRs are greater than wind); 2) new sources of funds (pension, hedge funds); and 3) government injected capital (such as KfW, U.S. loan guarantee program) could likely lead to more stable financing conditions in 2010. 8) Exchange Rate From Headwind to Potential Tailwind Solar fundamentals are highly correlated to exchange rate fluctuations since most demand is generated in Europe and costs are either in U.S. dollars/RMB. In addition to tighter credit markets, appreciation of the U.S. dollar against the Euro acted as a significant headwind for solar industry fundamentals. Barclays Capital currency strategist David Woo expects the U.S. dollar to depreciate against the Euro and approach 1.45 by 4Q10. We expect potential U.S. dollar depreciation to act as potential tailwind for solar fundamentals in 2010. Our current forecasts are based on the assumption of a relatively constant exchange rate. Our FSLR forecasts assume that the foreign exchange rate declines from 1.37 in 1Q09 to 1.20 in 3Q09 and remains constant at 1.20 through all of 2010.
Net r evisions
1.50 N TM EPS
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1.50
FX Poten tial Tailwind FX Headwind Barclays FX Team Forecast Chin a Solar Mode l Assumptions
1.40 EUR/USD
1.30
1.00 Q108 Q208 Q308 Q40 8 Q1 09 Q209 Q309 Q409 Q110 Q210 Q310 Q41 0
9) Bear Thesis Appears Overblown A common investor concern we have heard is that solar panel prices could decline to cash cost levels. We disagree with this view. In our opinion, although margin pressure could persist as balance of power shifts downstream, we find it difficult to see a scenario where project investor returns increase from $3 per watt (assuming $10 per watt net present value of government incentives, $7 per watt system price) to $7 per watt (assuming $10 per watt incentives, $3 per watt system price). 10) Balance Sheet Risks Diminishing, Potential for Free Cash Generation in 2010 Within our coverage universe, Chinese solar stocks have a high net debt position and are likely most at risk. However, the recent introduction of a stimulus package in China demonstrates broad-based government support for the leading Chinese solar firms. Most companies have slowed down and/or halted capacity expansion plans and with declining poly prices and improving margins we believe the outlook for free cash generation in 2009 has improved. 2009 Outlook We believe near-term fundamentals continue to remain challenging. We expect 2009 industry shipments to decline 25% year over year for a number of reasons. 1. We believe 1Q installation activity was negatively impacted by severe weather conditions in Germany and other key European solar markets. First quarter shipments of the eight leading solar companies are expected to decline 13% year over year. We believe over 60% of 1Q shipments occurred in March and were mostly for installation
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activity in late April. Inverter manufacturer SMA also guided 1Q shipments to decline 30%35% year over year supporting our view of worse than normal 1Q seasonality. 2. Checks suggest credit conditions in the U.S. commercial segment continue to remain challenging. The number of tax equity financing firms has declined from nearly 10 in 2008 to only three to four in 2009. Most of these firms are supporting existing clients and even incremental relatively low risk projects are finding it difficult to achieve sufficient financing. In addition, our checks suggest that several projects are on hold until further clarity over DOE loan guarantee program and ITC cash grants becomes available. New project announcements from several leading U.S. commercial players such as SunPower have decreased significantly. 3. Declining new home construction activity and a deep recession are likely to impact residential installation activity in the U.S. and Germany. 4. Although German lending conditions for solar are somewhat better than rest of Europe, we believe KfW's renewables financing budget is flat compared with 2008 budget of EUR4 billion. Checks suggest KfW is allocating more funds to wind versus solar. Assuming wind/solar allocations are unchanged from 2008, higher equity portion (30% in 2009 versus 20% in 2008), 15% lower system pricing is likely to result in about 20%30% incremental shipments growth. Figure 11: System Pricing vs. Shipments Growth
2008 Total KfW Financing (Euros MM) Portion for Solar (50%) Portion for Wind (50%) Debt to Equity Ratio Total Funding for Solar Sys tem Cost per Watt Total Shipments 2009 Total KfW Financing (Euros MM) Portion for Solar (50%) Portion for Wind (50%) Debt to Equity Ratio Total Funding for Solar Sys tem Cost per Watt - 15% Decline YoY Total Shipments
Source: Barclays Capital estimates
5. We believe financing of large commercial/ground mounted projects (about 20% of market) in Germany is still very challenging as KfW funding is not readily available.
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Furthermore, even in this segment, we believe it is difficult for c-Si module players to compete effectively as incentives are significantly lower in 2009 (only First Solar can effectively compete in this segment). 6. We believe financing conditions in Italy/France still remain difficult. We expect these markets to grow, but we believe growth could be constrained by permitting issues as well. Finally, we believe the Japanese market may remain weak ahead of the implementation of new incentive program and the South Korean market could be impacted by over 40% depreciation of the Won against the U.S. dollar. What does all this mean? We believe the U.S. and German markets could end up being flat in 2009. In our view, growth in other emerging solar markets may not be sufficient to offset the expected Spanish market decline (over 2 gigawatts) in 2009. In terms of market segments, we forecast the residential segment (approximately 45% of shipments) to show some growth (500,000 households installing solar in 2009 versus 415,000 in 2008), commercial segment (approximately 30% of shipments) to decline by 25% and ground mounted segment (approximately 25% of shipments) to decline by 50%. Our view is that both wind and solar technologies would experience similar growth curves. Wind technology may have achieved its full potential in terms of cost reduction. We believe solar will get there over the next three years and has the potential to even surpass wind's cost structure if new disruptive low-cost technologies are commercialized. The promise of solar is in distributed generation especially in areas where transmission access is limited. Take the example of China. Installation costs in China can end up being less than $1 per watt (cheap labor, home grown inverters). Solar module prices can drop to $1 per watt if companies like YGE and STP can achieve scale and poly drops below $50 per kg. At $2 per watt system price in rural China, solar on roof-tops (distributed generation) would be cheaper than wind. We believe solar programs targeted for rural China/India would be a key focus for those governments. Figure 12: Global Wind vs. Solar Shipments
30GW
Wi nd Insta lled (MW ) Sola r Install ed (MW)
25GW 20GW 15GW 10GW 5GW GW 2001 2002 200 3 20 04 2 005 2006 200 7 20 08
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Figure 13: Global Solar Company Valuations (As of April 30, 2009)
C ompany Sol ar C ell Manufacturers C hina Sunergy Energy C onversion Devices ErSol E-Ton Ev ergreen Solar First Solar J A Solar Motech Q-C ell s SunPow er SunTech P ow er Ticker CS UN EN ER B0LGLV4 B06BMV ESLR FSLR JASO 660944 QC E-D E SPW RA STP Rating 2-EW 3-UW NR NR 2-EW 2-EW 1-OW NR 2-EW 2-EW 3-UW S ector R ating 1-Pos 1-Pos NR NR 1-Pos 1-Pos 1-Pos NR 2-Neu 1-Pos 1-Pos Local C urrency U SD U SD E UR TWD U SD U SD U SD TWD E UR U SD U SD Price 4/30/2009 3.04 18.38 104.00 95.60 2.43 187.29 3.51 93.00 16.23 27.38 14.93 Mean Median Pol ysili con M anufacturers LDK Sol ar MEMC R eneS ola Shin-Et su Chemical Sino-American Silicon Sumco Tokuyama Corporation Topc o Sc ientif ic OCI W ac ker Market Cap ($M) 120 784 1,434 279 393 15,442 547 699 1,719 2,344 2,535 2,390 784 Enterprise Value ($M) 195 701 1, 422 560 666 14,924 640 742 1, 751 2, 662 3, 653 2, 538 742 Price to Sales 2009E 2010E 0. 5 2. 3 2. 9 0. 6 1. 2 8. 1 0. 7 1. 1 0. 8 1. 7 1. 3 1. 9 1. 2 0.3 1.6 2.1 0.6 0.8 5.9 0.5 0.9 0.6 1.1 1.1 1.4 0.9 EV to Sales 2009E 2010E 0. 7 2. 0 2. 8 1. 1 2. 1 7. 9 0. 8 1. 2 0. 8 1. 9 1. 9 2. 1 1. 9 0. 5 1. 4 2. 1 1. 2 1. 4 5. 7 0. 6 1. 0 0. 6 1. 3 1. 6 1. 6 1. 3 Pri ce to Earnings 2009E 2010E NM 25.8 26.1 7.4 NM 28.6 23.8 14.9 14.0 23.0 30.2 21.5 23.8 10. 1 14. 2 18. 4 6. 6 7. 6 22. 0 9. 5 10. 7 7. 9 13. 1 16. 4 12. 4 10. 7 PEG 2009E NM 0.7 0.5 0.2 NM 0.6 1.2 1.4 0.6 0.8 1.1 0.8 0.7 2010E NM 0.4 0.4 0.2 0.3 0.4 0.5 1.0 0.4 0.4 0.6 0.5 0.4
8.00 16.20 3.47 4,760.00 79.10 1,436.00 584.00 25.35 225, 000.00 78.38 Mean Median
894 3,647 227 21,992 518 3,894 1,722 104 3,331 4,999 4,133 2,526
1, 899 2, 778 478 19,994 601 6, 089 2, 157 112 4, 259 5, 087 4, 346 2, 468
0. 7 3. 3 0. 4 1. 9 1. 7 1. 4 0. 5 0. 5 2. 2 1. 0 1. 4 1. 2
0.6 2.3 0.4 1.8 1.4 1.2 0.5 0.5 1.6 0.9 1.1 1.1
1. 5 2. 5 0. 8 1. 7 2. 0 2. 3 0. 7 0. 5 2. 8 1. 0 1. 6 1. 6
1. 2 1. 8 0. 8 1. 6 1. 6 1. 8 0. 6 0. 5 2. 0 0. 9 1. 3 1. 4
17.5 30.4 8.2 16.3 14.6 NM 28.6 10.6 11.0 17.3 17.2 16.3
0.9 1.8 0.3 1.6 5.9 NM 1.1 NM 0.1 1.2 1.6 1.1
0.4 0.7 0.3 1.4 4.7 NM 0.5 NM 0.1 0.8 1.1 0.6
Module Manufacturers aleo s olar C anadian Solar Solar-Fabrik Solarf un Solart ron Solon AG
E UR U SD E UR U SD TH B E UR
0. 2 0. 5 0. 2 0. 4 NM 0. 1 0. 3 0. 2
0. 3 0. 5 NM 4. 0 NM 0. 4 1. 3 0. 4
0. 2 0. 4 NM 3. 4 NM 0. 3 1. 1 0. 4
5. 4 13. 1 12. 5 0. 0 NM 5. 2 7. 2 5. 4
System I ntegrators C armanah Technologies C entros olar AG C onergy Solars trom Sunways
NR NR 2-EW NR NR
NR NR 2-Neu NR NR
C AD E UR E UR E UR E UR
42 53 197 28 34 71 42
33 148 NM 35 56 68 45
0. 6 0. 1 0. 2 0. 2 0. 1 0. 2 0. 2
0. 5 0. 3 NM 0. 2 0. 2 0. 3 0. 3
0. 4 0. 3 NM 0. 2 0. 1 0. 3 0. 2
7. 7 3. 1 37. 0 5. 9 2. 8 11. 3 5. 9
NM NM NM NM NM N/A N/A
Verti call y I ntegrated Manufacturers R EC Solar World Trina Solar Yingli Green Energy
2-Neu NR NR NR
N OK E UR U SD U SD
2. 3 2. 3 0. 5 1. 3 1. 6 1. 8
3. 0 2. 2 0. 9 5. 3 2. 8 2. 6
1. 9 1. 7 0. 8 4. 5 2. 2 1. 8
7. 6 13. 1 6. 6 6. 2 8. 4 7. 1
Sol ar E qui pment C omposi te GT Solar R ot h & Rau C entrot herm Oerlik on Spire BTU International Manz Automat ion Meyer Burger
U SD E UR E UR SW F U SD E UR E UR SW F
7.09 18.08 29.35 66.00 7.00 3.74 34.78 158.80 Mean Median
1. 4 1. 0 1. 1 0. 3 0. 7 0. 6 0. 7 1. 2 0. 9 0. 9
1. 4 0. 7 1. 0 NM 0. 7 0. 3 0. 3 1. 1 0. 8 0. 7
1. 1 0. 6 0. 9 NM NM 0. 2 0. 3 1. 0 0. 7 0. 7
17
18
19
The Long-Term Investment Case for Renewable Energy We believe new investments in the global renewable energy sector should accelerate due to several potential long-term secular growth drivers: 1) increasing energy demand particularly resulting from strong growth of emerging economies such as India and China; 2) depleting supply of traditional energy sources; 3) increasing trend toward using carbonneutral solutions to address the climate change problem; 4) improved renewable energy cost economics; and 5) geopolitical factors such as energy security creating a positive shift in the energy policy of major governments globally. Figure 14: Potential Renewable Energy Investment Drivers
SECULAR TREND CYCLICAL TREND
ENERGY DEMAND
ENERGY SUPPLY
ENERGY I MPACT
ENERGY ECONOMICS
ENERGY SECURITY
Strong/ Positive
Source: Barclays Capital research
1. Rising energy demand particularly from emerging economies such as India and China. Although we do not expect India and China to become large solar energy users anytime soon, we expect overall demand growth in those regions to cause upward pressure on overall energy demand. We also see significant potential for India and China to become large solar energy demand centers once solar achieves grid parity.
20
Figure 15: GDP Growth versus Per Capita Elec tricity Consumption
10% 9% 8% 7% GDP G rowth 6% 5% 4% 3% 2% 1% 0% 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 Per Capita Consum ption (kWh) Mex ico Brazil Russia OECD Europe Japan India South Korea Australia United St ates Canada China
2. Depleting energy supply, particularly traditional sources of energy such as coal, oil, and natural gas. Assuming the solar achieves grid parity in 2012, we see the potential for new solar supply to influence peak power generation demand. We see the potential for natural gas resources to be readily replaced by solar PV technologies and once appropriate low-cost storage solutions are developed, we see the potential for further solar penetration in coal-based electricity markets. Figure 16: Reserve Period (Number of Years) of Traditional Energy Resources
Years 250 US Coal Reserve Period 200
150
100 W orld Natural Gas Reserve Peri od 50 World Oil Reserve Period 0 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% Europe Natural Gas Reserve Period
21
3. Environmental impact such as climate change from the use of traditional fossil fuel generated sources of energy. It is widely understood that traditional sources of electricity generation such as coal are the greatest source of carbon emissions globally. We believe solar is the cleanest form of alternative energy solution and could be most effectively used by several countries to solve the carbon problem. Solar could potentially contribute to 21% of Italys CO 2 reduction goal by 2012. Solars forecast contribution to CO 2 reduction would be 14% in Greece, 12% in France, and 8% in Spain. Figure 17: Potential Solar Contribution to Carbon Emissions Reduction By 2012E
21% 14%
G reece
I taly
22
T h e Nether lan ds 2 .4 % T he Slo vak Rep ubl ic Unite d Ki ngd om Pol an d 6.7% 1.3% 7 .2 %
Irel an d 3 .1 % Bulg ari a Ita ly G er ma ny G ree ce Spai n F ran ce L ithu ani a Ro ma ni a Slo veni a Esto ni a Den ma rk Po rtuga l Austri a F inl an d La tvi a Swe de n
4. Decreasing solar energy costs and increasing fossil fuel generated energy costs leads to improved economics for solar energy sector. We expect grid parity, or the point at which solar electricity is competitive with fossil fuel generated electricity, to be achieved by the 201012 time frame. In fact, solar is already competitive in several regions of the world with high solar insolation and relatively high fossil fuel electricity costs.
23
1.9%
1.8%
1.7%
Estimates
1.6%
1.5%
1.4%
1.3%
1.2%
1.1%
1.0% 196 0
1964
1 968
19 72
197 6
1980
1984
198 8
1992
1996
2 000
20 04
200 8
2012
5. Geopolitical factors such as energy security creating a positive shift in the energy policies of all major governments globally. Countries with government solar incentives have one thing in common: high net energy imports as a percentage of energy use. We expect an increasing number of countries to look at solar energy as costs of solar modules decline and as prevailing high oil prices result in a greater focus on energy independence. America has just 3% of the world's natural gas reserves, but we consume 25% of the world's supply. That increasingly means sending American dollars to Russia and Iran, two countries that sit on more than 43% of the world's gas reserves and two countries that have shown their willingness to use energy as an instrument of coercion. U.S Senator Tom Udall, (D-NM) (US Senate, 2/2/09) Figure 20: Electricity-Genera ting Assets in Key Solar Markets
Co untry
Germ any Japan US Fr ance S pain P or tugal Italy Greec e Irel and South K or ea
In addition to the long-term growth drivers, we believe the following near-term trends could also positively influence clean energy demand growth:
24
Lower interest rate environment potentially creating a favorable capital cost outlook for several technologies such as solar thermal (approximately 80% of cost of solar thermal projects is capital cost). Figure 21: Interes t Rate Environment Acts As a Tailwind for Solar Fundamentals
21% High Interest Rate Environment 18% Cost of capital and expected rate of return often represent the largest cost component of solar electricity costs. Lower interest r ate environment plays an impor tant role in overall solar electr icity cost r eduction
15%
12%
3%
0% Jan-71
Jan-74
Jan-77
Jan-80
Jan-83
Jan- 86
Jan- 89
Jan-92
Jan-95
Jan-98
Jan-01
Jan-04
Jan- 07
Interest Rates
Source: FactSet
Job creation potential in a weak global economic outlook. As shown in Figure 22, job creation potential of solar is the highest among electricity generation technologies. Figure 22: Job Creation Potential of Various Electricity Genera tion Technologies
40
30
20
10
C oal
Na tura l Gas
Nucl ear
Tidal
Wind
Geothe rmal
Solar PV
Source: INEEL, BC Sustainable Energy Association, Renewable Energy Policy Project, Barclays Capital research
25
Some individuals say the solar boom was a result of high oil prices. As a different perspective, we highlight the following two points: Government policies in Germany, Spain, and Japanthe three primary drivers of solar energy todaywere put in place when oil prices were near $30/bbl. Figure 25: Oil Price and Government Incentives
Date of initial solar incentives Japan Germany Jan-94 Jan-04 Oil Price ($/bbl) $14.50 $33.00
Price Outlook
Spain
Aug-05
$66.00
Strong
W eak
Solar sector has no fundamental correlation to oil prices. Electricity price increases are not just a function of high oil prices. There are several other variables that influence electricity prices. For instance, aging transmission capacity, higher capital expenditures for coal, natural gas plants and increasing lead times are just a few variables. As we discuss in detail in this report, we believe solar electricity has the potential to be competitive with fossil fuel-generated electricity even if oil prices reach $30/bbl.
26
Bottom Line: We believe that wind and ethanol represented the first wave of investments to address the changing macro energy trends. In our opinion, we are currently in the second wave of investments in the global clean energy sector. We believe solar today is where wind was five years ago. We expect the third wave of investments to be characterized by second generation solar PV technology, solar thermal and storage technologies. We see a number of potential new solutions by 2011. Finally, we expect the fourth wave of solar investments to be influenced by solar applications such as electric cars. Just as killer apps such as email and the Internet accelerated growth of the technology sector, we believe the pervasiveness of solar technology will drive several new applications once solar reaches grid parity. Figure 26: Solar Energy Investment Potential Growth Drivers
Revenue
2001
2006
2010
2014
Time
27
Three Phases of Solar Investing We believe the solar industry is currently transitioning from the first growth phase where demand was driven by two to three major markets such as Germany, Japan, and Spain to the second growth phase, where demand could potentially be driven by multiple markets. We expect grid parity to be achieved in several key markets by 201012, which could potentially mark the beginning of the third growth phase for the solar sector. Forecasting Solar Demand Demand forecasting has been the biggest challenge for almost all growth sectors. Solar is no different. Figure 27 shows oil forecasting trends and Figure 28 shows the U.S. mobile subscribers forecasting trends. The difference between actual demand and forecasts was surprising in both these cases. We believe solar energy demand forecasts are also likely to be wrong. The forecasting errors for solar demand will be of even greater magnitude in our view, as development depends on subsidy, oil price, and financing development. Figure 27: Oil Forecasting Trends
50 F orecast F orecast
Actual
Act ual
45
40 5 Year F orecast Error Forecast 30 Actual F orecast 25 Forecast 20 Act ual Act ual 1985 Act ual 1990 1995 2000 Forecast Actual 10 Year F orecast Error
35
Forecast
15
Source: Vinod Khosla, Khosla Ventures, May 2008; Barclays Capital research
???
Source: Vinod Khosla, Khosla Ventures, May 2008; M cKinsey Quarterly , June 2008, Barclays Capital research. Note McKinsey solar estimates are for Photovoltaic base case scenario only. Aggressive growth scenario predicts tota l solar installed capacity of 400GW by 2020.
So how do we forecast demand? Our demand forecasting framework is based on two primary growth drivers for solar: development of government subsidies and development of
28
financing. We believe that, as long as these two growth drivers are intact, the solar market (the entire value chain) in dollar terms should grow at a robust pace. In our view, as long as solar is not at grid parityi.e., as long as solar demand is driven by government subsidiesinvestors should focus on volumes times price, not just on volumes or on price. The upper limit to market growth is likely to be defined by government subsidies: as long as government subsidies grow, solar market size should grow. If volumes increase rapidly, prices should decrease in a similar proportion, such that the overall market size is the same. We believe that, once solar achieves grid parity, the solar market is likely to be driven by the pure economics of supply/demand and is likely to have one less growth driver (no government subsidies).
We believe solar market growth in a subsidy-driven environment is likely to be driven primarily by execution and development of financing.
We expect solar market growth to be determined by how quickly or slowly the solar value chain takes advantage of government subsidies. In our view, solar market growth would be faster if the subsidies are spent in fewer years and it would be slower if the subsidies are spent in more years. For instance, if a 1W solar system costs $9 and the government incentives are approximately $13/W, the net profit to the customer is approximately $4/W. Although the $13 government incentive is provided over a period of 20 or 25 years, the solar ecosystem receives $7$9/W up front. We believe solar market growth is likely to depend on how quickly these solar incentives provided by the government are transferred to the solar value chain through the customer. Figure 29: Solar Subsidies Should Provide Significant Catalyst for Solar Demand
Profits Accumulated Over 20-25 Years
=
Upfront Purchase of $7-9/W by Customer
In general, during the next five years, we expect the following factors to affect solar industry shipments: Supply of silicon and solar cells. We expect the supply of solar cells to increase rapidly, as a result of an increase in production from new and existing silicon players, as well as successful commercialization by new thin-film solar manufacturers. Government support in the form of improved levels of subsidies in existing and new markets. Although we believe Germany will remain an important market for solar energy demand, we expect increased support from new governments in the form of more attractive solar subsidies to drive demand.
May 01, 2009 29
Favorable solar system ASP trends. We expect solar ASPs to decline approximately 50% in 2009 and another 30% in 2010, which should improve the economics of promoting solar for several prospective new governments. Moreover, we expect the development of a solar ecosystem in the form of better customer awareness, greater availability of solar modules, and the reduction of installation costs to drive additional solar demand. Development of local fossil fuelgenerated electricity rates. As the cost of oil, natural gas, and coal-based electricity increases from 2010, we expect the gap between the solar electricity price and fossil-fuel-generated electricity price to narrow. Development of interest rates and other financial instruments driving solar demand. Last, we believe the low interest rate environment should result in favorable economics for project developers, leading to strong demand. Figure 30: Potential Solar Demand Drivers
Silicon/Solar Supply
Solar AS Ps
Government Subsidies
30
US G er many G ermany
US
Italy
Japan
Italy France
Spain South Kor ea Japan Canada Australia Belgium Netherlands Portugal Netherlands Austria Cyprus Israel Belgium Austria
Germany
Aus tralia
Spain
Canada Spain
Portugal
Japan
P hase 1 S ubsidiz ed Demand
Cy pr us Switz erland
Growth Phase 1: Demand from Small Number of Markets We define growth phase 1 for the solar sector as the period for the solar industry through 2008 when demand was generated only from two to three major markets such as Germany, Japan, and Spain. We believe the key factors determining growth during this phase were polysilicon or solar supply and development of subsidies. Due to the relatively small overall impact of subsidies on overall electricity bills during growth phase 1, we saw very little push back from governments. During phase 1 of industry growth, we believe the German government committed to spend an estimated $1.5 billion per year of net subsidies over 20 years and the Spanish government committed to spend an estimated $600 million per year of net subsidies over 25 years. The period through 2008 was mainly a seeding stage for emerging solar markets as during this period the emerging markets added a cumulative 3,450MW of solar shipments and represented 26% of installations in 2007. We believe an estimated $103 billion of market cap was created during phase 1 of solar industry growth. Poly prices increased from $25 to $400 per kg during the first growth phase and companies with relatively low reliance on spot poly emerged as Wall Street's top performers. Figure 33: Effect of Incentives in Major Markets on PV Shipments
6000
Spain 5000
4000 Japan, Germany and Spain were the primary industry growth drivers. Solar industry installed base grew from less than 1GW in 1990 to over 10GW by 2008
Megawatts
Germany
3000
2000
Japan 1000
0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
32
Figure 34: Market Cap Crea tion by Solar Companies in Growth Phase 1 (Ending August 2008)
Company First Solar Meyer Burger Manz Automation Akeena Solar Rene sola JA Solar Ascent Solar Roth & Rau SunPower Evergreen Sino-American SolarW orld L DK Timminco DC Chemical Q-cells REC Solon ECD ErSol Trina Solar Suntech MEMC CSI Wacker Spire Motech Sumco Topco Scientific BTU Internat ional Carman ah Tokuyam a Corp Solar-Fabrik Oerlikon Yingli Shin-Etsu Ch emical Sunways E-Ton aleo Solar Solarfun Conergy Solarstrom Centrosolar China Sun ergy Solartron GT Solar Total Beginning Market Cap (M ) $1,388 115 63 $21 79 $658 $29 64 $1,077 $12 NT$1 ,129 76 $2,699 C$ 42 159 ,274 1, 403 kr 2 8,635 30 $132 412 $392 $2,117 $808 $409 3, 518 $21 NT$15, 176 391,950 NT$2 ,135 $39 C$ 20 93,830 62 3, 968 $1,688 1, 854,563 67 NT$24, 304 137 $600 428 43 185 $421 1,963 $2,376 $61,029 Market Cap (8/10/08) $20,5 98 889 576 $110 408 $2,24 9 $142 333 $5,92 9 $1,01 8 NT$40,119 4,083 $4,71 0 C$ 1,959 7,219,212 4,672 kr 73,935 662 $2,61 5 1,081 $672 $4,97 2 $10,6 84 $714 6,167 $114 NT$40,025 622,00 8 NT$7,029 $111 C$ 45 203,28 7 107 6,618 $1,81 4 2,791,8 42 80 NT$24,548 129 $566 346 21 117 $328 5 52 $1,72 5 $164,22 2 Years 1.7 1.7 1.9 1.9 2.0 1.6 2.1 2.3 2.7 7.8 7.2 8.3 1.2 8.6 8.6 2.9 2.3 8.3 8.6 2.9 1.6 2.7 8.6 1.9 2.3 8.4 5.2 2.7 7.9 8.4 8.6 8.6 6.1 8.4 1.2 8.6 7.5 2.4 2.1 1.6 3.4 8.3 2.9 1.2 3.4 0.1 Market Value Creation (M) $19,210 773 513 $89 329 $1,592 $113 270 $4,852 $1,006 NT$38,990 4,007 $2,011 C$ 1,917 7,059,938 3,269 kr 45,300 631 $2,482 670 $280 $2,855 $9,876 $305 2,648 $93 NT$24,849 230,058 NT$4,894 $72 C$ 25 109,457 45 2,650 $125 937,279 13 NT$244 ( 8) -$34 ( 82) ( 22) ( 68) -$93 -1, 411 -$651 $103,193 % change in Market Ca p 1384% 670% 821% 420% 417% 242% 390% 424% 451% 8313% 3454% 5276% 74% 4582% 4433% 233% 158% 2090% 1878% 163% 71% 135% 1222% 75% 75% 449% 164% 59% 229% 184% 129% 117% 72% 67% 7% 51% 19% 1% -6% -6% -19% -50% -37% -22% -72% -27% Maket Cap CAGR 374% 228% 224% 133% 126% 115% 115% 108% 87% 77% 65% 61% 59% 56% 56% 52% 52% 45% 41% 40% 39% 38% 35% 35% 27% 22% 20% 18% 16% 13% 10% 9% 9% 6% 6% 5% 2% 0% -3% -4% -6% -8% -15% -18% -31% -99% -
33
Growth Phase 2: Subsidized Demand from Multiple Markets We Expect the Second Growth Phase for the Solar Sector to Begin in 2010 During the second growth phase, we expect demand from several markets to pick up the slack of demand in Spain. We see three potential main drivers resulting in strong growth in several emerging solar markets during the second growth phase: 1. Greater supply of lower priced solar panels. Our view is that as more supply becomes available and as project returns exceed certain thresholds, new downstream channels would develop to take advantage of the incentives. We are currently forecasting below $2 per watt prices in 2010 and at these price levels, we expect IRRs to increase substantially in emerging solar markets. In our view, investing in solar is equivalent to investing in a government bond. We believe the government incentives in the form of feed-in tariffs act as an annuity stream for project investors, similar to interest earned on a government bond. Consequently, we expect project investors to add leverage and increase returns.
34
18. 1%
17.2% 17.4% 12.3% 12.0% 9. 4% 8. 5% 9. 1% 9.4% 6.4% 4. 0% 3. 2% 4.2% 4.3% 4. 4% 2.2% Belgium P ort ugal Czech Republic S wi tzerland A ust rali a Bond Yi el ds Spain I taly South Korea Greece I srael 4.0% 4.6% 5. 4% 4. 8% 5.6% 12.4% 13. 7%
3.7%
Germany
France
20.2%
19.6% 15.6%
19. 2%
9.8%
10. 7% 9. 4%
6.9%
6.4%
3 .2%
4 .0 %
4 .2 %
4.6%
Ge rmany
Bel giu m
P ortuga l
Australi a
S pai n
Ital y
Sou th Korea
Bond Yi el ds
Note: The implied time period varies based on the countrys Feed in Tariff policy. Source: Bloomberg, Barclays Capital research
35
2011
2 8.7 %
2010
21 .3%
2009
15 .8%
2008
12 .1%
2007
10. 4%
2006 10%
15%
20%
25%
30%
35%
40%
2. New incentive programs from 200809. We expect new incentive programs announced in several markets in 200809 to act as potential major catalysts for demand from 2010. Global awareness of solar energy is increasing and we see that translate into attractive feed-in tariff in several markets over the next few years. For perspective, Spain emerged as the fastest growing market when a new law was passed in 2007. We believe Italy, U.S., Japan, China, India, South Korea, Greece, and Canada have the potential to emerge as large markets with new incentive program announcements made in 200809. Figure 38: New Incentives Announced in 2008
Country Australia South Korea India Greece Israel UAE China Canada Japan France
Source: Country Reports, Barclays Capita l research
20
15
10
36
43
23 17 11 10 13 20 20 20
26 21 14 7
0 Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan
Jan
F eb
M arch
A pril
May
June
July
A ug
S ept
Oct
Nov
Dec
J n '09 a
1,588
238
25 10
4 Cz ech Republic
2 J apan
47 South Korea
28 Japan
11 Greec e
3 Cz ec h Republic
US
Germ any
Spain
It al y
South Korea
Greec e
Franc e
Belgium
3. Potential resolution of permitting and financing bottlenecks. In general, solar energy project time ranges from nine months to three years. Factors that cause time difference include 1) maturity of solar energy marketsboth permitting and financing durations vary significantly among solar markets; 2) type of land required to build solar energy projects; and 3) type of financing required. We believe the permitting and financing requirements in several markets could become less stringent and more supportive of demand growth from 2010. How Large Is the Potential Solar Opportunity in the Second Growth Phase? We estimate $200 billion of government spending on gross subsidies in the second growth phase. Our calculations are based on a what we believe is a conservative
May 01, 2009 37
scenario, where we assume that governments take note of the increasing subsidy burden and enforce annual cap on installations. We use this scenario to calculate the minimum growth of installations during phase 2 of solar industry growth. Our scenario analysis does not take into consideration potential upside from solar programs in new markets and possibility of no annual caps in several solar markets. Recall, our demand forecasting framework: subsidy equals customer profit plus solar industry revenue. We assume that $50 billion of the $200 billion incentives constitute profits for end customers and $150 billion constitute solar industry revenue. In addition to the subsidized markets, we see at least 5 gigawatts of utility scale market opportunity during the second growth phase. We see most of the demand coming from U.S. utilities with some initial traction from European utilities as well. Figure 44: Net Present Value of Subsidies in Select Solar Markets ($/W)
$1 2
$1 0
$8
$6
$4
$2
$0
Netherlands Canada A ustria India Portugal Belgium S w itze and rl Czech Republic A ustrali a Germany S pai n Ialy t Gr eece Israel S outh Kor ea France
Key assumptions in our subsidy-driven demand forecasting are as follows: We assume governments provide subsidies in three stages. We assume that in stage 1 most of the countries such as Greece, Italy, and South Korea meet the caps put in place by their governments for solar installations. We assume that these governments then put in place an annual cap in each of these markets from stage 2 (2011 in many cases) in order to reduce their subsidy burden and stabilize the growth in the sector. We calculate the cap for these markets by considering the examples of Germany and Spain and using the metric Solar subsidy as a percentage of GDP. This metric is calculated by using the net present value of subsidies for 2009 installations in Germany and Spain and comparing this metric with the current GDP of Germany and Spain. We assume Germany's solar subsidy as a percentage of GDP to represent the bull case scenario, Spain's solar subsidy to represent the bear case scenario and take the average of these to represent the base case scenario.
38
Using this metric we arrive at the base case, bear case and bull case estimates for the caps put into place by the various governments in stage 2. For smaller markets such as Austria, Australia, Switzerland, Belgium, and Netherlands we consider our shipments estimates as the base case; 20% downside to those numbers as the bear case and a 20% upside as the bull case. For stage 3, we assume that governments increase installation caps by 15% year over year. We further assume that governments reduce feed-in tariffs in these markets by 15% in stage 3 after a 15% reduction in stage 2. In our opinion, the solar industry would likely reach grid parity by the end of the second growth phase and as such this could potentially represent the maximum amount of subsidy burden for the government. Figure 45: Insta llations Used In Calculating Growth Phase 2 Subsidies
9,000
8,000
S tep 3
7,000
6,000
M e ga a tts w
5,000
S tep 2
4,000
3,000
2,000
S tep 1
1,000
0 S tep 1 Germ any Italy Fran ce Fr ance S tep 2 S outh K orea Spain n i Ida Canada Step 3 Oth er
5,000
10,000
Me ga wa tts
20,00 0
25,000
G er man y
Po rt ug al
Fra nc e
Subsi dy ($ M)
39
How Much Would Subsidies Really Cost? In the previous section, we estimated the gross subsidy burden for all governments during the second growth phase to be $200 billion. Although this number seems very large, we believe a more appropriate number for the government to consider should be net subsidy burden which takes into consideration factors such as local fossil fuel generated electricity costs among other things. We estimate the net cost burden of solar subsidies assuming $0.10/kWh of traditional fuel costs to be $125 billion during the second growth phase. Figure 47: Net Present Value of Gross and Net Subsidies
Ca na da
Neth er lan ds
In dia
Aus tria
Gr eec e
B elgiu m
Sp ain
Sw itze rla nd
Sou th Ko re a
Cze ch R ep ub ic l
Fr anc e
Au st ra ia l
Italy
Isr ae l
Gr os s Su bs idy ( $M)
In our opinion, a $125 billion cost burden is not that large especially after taking into consideration that it would be shared by more than 12 different countries. As shown in Figure 48, the net solar subsidies as percentage of GDP are significantly less than health care and education spending in all of these countries. Note that the Figure compares total subsidy cost over three to five years to GDP whereas health care/education spending estimates are for one year only. The bottom line is that we believe the net subsidy burden is insignificant for governments to potentially scale back solar programs. In our view, solars job creation potential and the promise of producing electricity at lower prices than natural gas once grid parity is achieved should lead to continued government support during the second growth phase.
40
Figure 48: Comparison of Net Subsidy Burden to Health Care and Education Spending
14% 12% 10% 8% 6% 4% 2% 0% Germany Italy France So Korea uth Sp n ai Greece Indi a Canada Po rtugal Israel Au stral ia Czech R epubli c Sw tzerl and i Be gium l Net sub sidy % GDP Heal thca re spe ndin g % GDP Education spe nding % GDP
Ne t subsidy % GDP ca lcula ted using total subsidy amount ove r growth phase 2. N ote, subsidy is a lloca ted ove r 20-25 years and real spe nding pe r annum is likely to be 1/20th of the estimate d amount.
Below we present some details on subsidy burden in Germany. Germany Subsidy Scenario Analysis According to the German Electricity Association, the share of renewable energy (not just solar, includes wind, biofuels, etc.) in electricity prices is only approximately 4% or EUR0.80/kWh. In Germany, the monthly extra costs per consumer due to the premium tariff for solar electricity are currently EUR0.20. Other sources of taxes such as concession fee, electricity tax, value-added tax add up to approximately 36% of German electricity bill. More specifically, the costs to the electricity consumer resulting from the differential costs of electricity covered by the Renewable Energy Sources Act were estimated to be EUR5.5 billion in 2007 whereas the potential economic benefits of the Renewable Energy Sources Act were estimated to be EUR12.0 billion. In addition, the EUR5.5 billion includes all renewable energy types (wind, solar, biofuels, geothermal, etc.). Solar-generated electricity was estimated to be less than 2% of overall renewable electricity in 2007 and based on those estimates, we believe the proportion of government expenditure on solar was less than 20% of EUR5.5 billion (or less than EUR1,100 million).
41
Analyzing Potential Impact for Every 1GW Increase in Shipments We believe every 1GW increase in solar shipments could result in approximately EUR200 million of incremental annual incentives in Germany. Our analysis assumes that 1GW of shipments generate 1.1 billion kWh of electricity and our calculation for the potential impact from incentives takes into account the differential costs of solar electricity. We believe the present value of cash flows over the 20 year period is EUR3.0 billion, assuming solar panel efficiencies decline at 2.5% per annum and assuming a discount rate of 5%. Another way to look at is to understand the potential impact of 1GW increase in shipments on the German electricity bill. We believe the impact of every 1GW increase in shipments on the German electricity bill is about EUR0.05/kWh. Figure 50: Potential Increase in German Elec tricity Bills for Every 1GW Increase in PV Shipments (2009E)
PV Shipments (GW) PV Utilization (Hours) PV Electricity Generation (billion, kWh) Feed-in tariff (/kWh) Replaced fossil fuel costs (/kWh) Differential costs (/kWh) Incremental funds (, Million) German Electricity Output (Billion, kWh) Incremental Impact (/kWh)
Source: Barclays Capital estimates
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Figure 51: 2009 German Incentive Program: Net Present Value A nalysis for 1GW Shipments
2 009 E 200 9 In centives (ce nts/kWh) Sola r El ectricity (GWh/yr) In cremen ta l fu nds (Eur M) 36 .8 1 095 29 3 2 019 E 200 9 In centives (ce nts/kWh) Sola r El ectricity (GWh/yr) In cremen ta l fu nds (Eur M) Net Presen t Val ue of In cremen ta l Fu nds (EUR Mil lio ns) 36 .8 85 0 22 8 20 10E 36.8 10 68 286 20 20E 36.8 829 222 $3,02 4 201 1E 3 6.8 1041 2 79 202 1E 3 6.8 8 08 2 17 20 12E 36 .8 10 15 272 20 22E 36 .8 788 211 201 3E 36.8 9 90 2 65 202 3E 36.8 7 68 2 06 2 014 E 36 .8 96 5 25 9 2 024 E 36 .8 74 9 20 1 20 15E 36.8 941 252 20 25E 36.8 730 196 2 016 E 3 6.8 91 7 24 6 2 026 E 3 6.8 71 2 19 1 20 17E 36.8 894 240 20 27E 36.8 694 186 201 8E 3 6.8 9 72 2 34 202 8E 3 6.8 6 77 1 81
Scenario Analysis for German Electricity Bills We have outlined a few scenarios for solar incentives in Germany, where solar could potentially become a larger-than-expected proportion of overall electricity generation in 2009. In each of these scenarios, we have evaluated the impact of incentives on an electricity bill of a German consumer. In the base case scenario, we assume that solar electricity represents about 1.4% of German electricity generation with 2.4GW of annual shipments in 2009 and EUR0.39/kWh impact on German electricity bill. In the bull case scenario, we expect 9.0 billion kWh of solar electricity generated representing about 1.6% of German electricity market and resulting in EUR0.45/kWh impact on the German electricity bill. In the bear case scenario, we assume solar represents 1.1% of electricity generation with 1.2GW of annual shipments in 2009 and EUR0.33/kWh impact on German electricity bill. Figure 52: 2009 Solar Electricity Scenarios (Germany)
2009 Solar El ectricity Scenarios (Germany) Solar elec. (Billion kW h) Overall elec. (Billio n kW h) Solar % of overall e lec. Solar Shipments (M W) Potential Incentives (, MM) Cumulativ e Solar Subsidies in Ele c. Bill (/kWh)
Source: Barclays Capital research
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Growth Phase 3: Solar Investments Post Grid Parity We expect the third growth phase for the solar industry to be characterized by the period from when solar achieves grid parity or the point at which solar electricity price matches fossil fuel generated electricity price. Figure 53: Solar System Price versus Natural Gas Price
6000 5000
4000 3000 2008 N atural Gas Price $5W system cost required to reach grid parity
2000 1000 0 1.6 2.0 2.4 2.8 3.2 3.6 4.0 Current Natural Gas Price $3/W system cost required to reach grid parity
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Given the sharp decline in oil and natural gas prices, we are often asked if solar is still a feasible alternative to conventional fossil fuels. We believe the prospects for solar are still promising and our grid parity outlook has not deteriorated for the following reasons: 1) although we agree that average natural gas electricity prices are likely to decline by nearly 50% year over year in 2009 due to a decline in fuel costs, price premium of solar electricity over natural gas electricity is likely to remain constant or even decrease somewhat if module prices decline to $2/W. More importantly, forecasts from Barclays Capital commodities and utilities teams suggest, power prices are likely to increase during 201015 timeframe, potentially leading to grid parity by 2012 in a scenario where no carbon tax is implemented in the U.S.; 2) if we assume a $15/MWhr carbon tax is implemented in the U.S. from 2011, we believe grid parity for California utilities is likely by 2011; and 3) we note that several utilities generally purchase renewable energy at a premium to conventional energy using the Market Price Referent (MPR) (which is typically $20/MWh premium to the natural gas generated electricity price) and by applying a Time of Delivery (TOD) multiplying factor. As shown in Figure 54, assuming PG&E purchases solar using TOD / MPR, solar has the potential to reach grid parity by 2010.
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$/MWh
1 00 50 0 2 006 2007 20 08 2 009E 201 0E 20 11E 2 012E 201 3E 20 14E 2 015E
We see two different grid parity price points: 1) grid parity at the utility level; and 2) grid parity at the residential level. In general, the two grid parity price points are likely to be differentutility price point is likely to be lower than residential price point. We expect residential markets to have a much higher solar energy price point due to elimination of transmission and distribution costs. Grid Parity at Utility Level Several countries generate the bulk of electricity from natural gas and coal. We expect grid parity at the utility level to be reached in the 201012 time frame depending on the development of fossil fuel generated electricity prices. The common belief is that solar energy is not competitive without government subsidies and would never be used by utilities for large-scale electricity generation. In fact, we believe that solar electricity is already competitive with peak power generation capacity in a number of regions. Base-load power generation capacity meets approximately 65% of global electricity demand. Because baseload generators, which are mostly coal-based generators, run at 100% utilization, baseload electricity costs are very low. Solar is unlikely to compete with base-load generation capacity anytime soon. However, utilities must provide the more expensive intermediate load power using part-time natural gas generators. Approximately 30% of global electricity supply is estimated to be met by intermediate-load generators during the daylight hours, when solar economics are the best. Solar PV in the sunnier locations of Europe, where sunlight totals more than 1,800 hours a year, is already competitive with intermediate and peak load power requirements. In the United States, several utilities have announced deployment of large scale solar panels from 2010.
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Figure 55: Levelized Cost of Energy (LCOE)Combined Cycle Gas Plants versus Solar
Installed capacity Constr uction cost Plant life Load factor Pr oduction Expected ROCE Required investment Required return Return EUR per MWh Fixed Costs Fixed O&M USD per MWh produced CO2 Costs CO2 Conver sion rate Total emissions % of pass through Pr ice per ton Tot. Cost USD per MWh produced Fuel Costs Fuel Price Heat Rate USD per MWh produced Total Generation Cost Distribution & Transmission Permanent Cost Total Electricity Cost Units MW $ / MW Yrs % GW h $M % $M $ / MW h $ / MW $ / MW h Tons / MWh Metr ic Tons % $ / tn $M $ / MW h $ / MM BTU BTU / MW h $ / MW h $ / MW h $ / MW h $ / MW h $ / MW h CCGT - Now 100 1005 40 40 350 100.5 7 7.0 20.1 2.5 7.2 0.40 140 100% 37.5 5.3 15.0 3.5 10,500 36.8 79.0 25.5 15.0 119.5 CCGT @ 25%100 1005 40 40 350 100.5 7 7.0 20.1 2.5 7.2 0.40 140 100% 37.5 5.3 15.0 2.6 10,500 27.6 69.8 25.5 15.0 110.3 CCG T @ 25%+ 100 1005 40 40 350 100.5 7 7.0 20.1 2.5 7.2 0.40 140 100% 37.5 5.3 15.0 4.4 10,500 45.9 88.2 25.5 15.0 128.7 Solar TF - '08 100 4050 25 35 307 405 7 28.4 92.5 16.2 52.8 Solar c Si - '08 Solar c Si- '09 100 100 8000 5600 25 25 35 35 307 307 800 7 56.0 182.6 32.0 104.4 560 7 39.2 127.9 22.4 73.1 Solar c Si - '10 100 3920 25 35 307 392 7 27.4 89.5 15.7 51.1
0.0
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The bottom line is that we see an increasing number of utilities using solar to generate renewable electricity.
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Figure 56: Levelized Cost of Electricity Using Various Technologies (Total Electricity Cost)
In sta ll ed cap acity Con stru ction co st Plan t l ife Loa d fa ctor Produ cti on Expecte d ROCE Req uire d inve stm ent Req uire d return Return USD per MWh Fixe d Costs Fi xed O&M USD per MWh produc ed CO 2 Costs CO 2 Con versio n rate To ta l emi ssion s % of pass throu gh Price pe r to n To t. Cos t USD per MWh produc ed Fuel Costs Fu el Pric e Hea t Ra te USD per MWh produc ed Total Ge ne ration C os t Distribution & Tra ns mission Perm anent Cost Total Ele ctricity Cost U nits MW $ / MW Y rs % GWh $M % $M $ / MWh $ / MW $ / MWh To ns / MWh Me tri c Ton s % $ / tn $M $ / MWh $ / MM BTU BTU / MWh $ / MWh $ / MWh $ / MWh $ / MWh $ / MWh CC GT 100 10 05 40 40 350 10 0.5 7 7 .0 20.1 2 .5 7 .2 0.40 140 10 0% 37.5 5 .3 15.0 3 .5 1 0,500 36.8 79.0 25.5 15.0 11 9.5 C oa l 100 27 00 40 70 613 270 7 18 .9 30 .8 6.8 11 .0 0.80 491 10 0% 37 .5 18 .4 30 .0 3.8 11,50 0 43 .1 1 15.0 25 .5 15 .0 1 55.5 Clea n Coal 1 00 45 00 40 70 6 13 4 50 7 31.5 51.4 11.3 18.3 0.00 0 100 % 37.5 0 .0 0 .0 3 .8 1 3,500 50.6 12 0.3 25.5 15.0 16 0.8 Nuc le ar 1 00 510 0 60 85 7 45 5 10 7 3 5.7 4 7.9 1 2.8 1 7.1 0 .0 0 0 1 00% 3 7.5 0.0 0.0 Wind - On 10 0 2 400 20 30 26 3 24 0 7 16 .8 63 .9 12 .0 45 .7 Wind - Off 100 40 50 20 40 350 405 7 28 .4 80 .9 20 .3 57 .8 Solar c -Si - '0 9 Solar TF - '09 1 00 10 0 560 0 4 050 25 25 35 35 3 07 30 7 5 60 7 3 9.2 127 .9 2 2.4 7 3.1 40 5 7 28 .4 92 .5 16 .2 52 .8
0.0
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Another way to think about grid parity is to consider the residential markets. As demonstrated in Figure 57, grid electricity prices in some of the key solar markets are much more than the average grid electricity prices of $0.05$0.10 per kilowatt hour. According to the EIAs August 2008 update, average household electricity prices in markets such as Germany were greater than $0.25 per kilowatt hour in 2007. Furthermore, according to the report, electricity prices increased at a CAGR of 7%14% in the past five years in Spain, Italy, and Germany. We believe if electricity prices continue to increase at an historical CAGR in the next five years, solar could potentially become competitive well before 2012. In Figure 58, we show that based on current grid electricity prices, solar could achieve grid parity in some of the high-sun-intensity regions of these markets at prices less than $6 per watt. We expect solar system prices to reach these levels potentially before 2012.
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Figure 57: Household Electricity Price Trend and Projections In Key Solar Markets
18 % 16 % 14 % Electricity Pri ces C AGR ('01 - '06))
Netherlands C zec h Republic
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Greece
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USA
S witz erland
$0.10
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Size of electricity market in TWh/year System Price Forecast 2009: $5.00 per watt 2010: $4.00 per watt 2011: $3.50 per watt 2012: $3.00 per watt 2015: $2.00 per watt 2020: $1.50 per watt
Sweden 0.2
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Grid parity in the U.S.: We examine grid parity price points assuming commercial solar projects offer 8% to 10% IRRs in the U.S. With a debt/equity ratio of 40%:60%, 7% interest rate, and 30% ITC, we believe solar has the potential to reach grid parity in a number of states over the next three to five years. Grid parity timeframe in various states: We expect commercial projects to generate competitive returns in 2009 (8%10% IRRs assuming ITC, no state incentives) in TX, NJ, NY, DC, and HI. Taking CA state incentives into consideration, we expect commercial solar returns to be the highest in CA in 2009. Without state incentives, we expect four more states to generate competitive commercial project returns in 2010.
Connect icut $0.20 New York New Jersey Alaska Massachuset ts Delaware Pennsylvania M ichigan Wisconsin Ohio M ai ne M aryland G eorgia Illinois Nort h Carol ina I daho Nort h Dakota Nebraska Utah K ansas A rizona F lori da Oklahom a Colorado NM Cali fornia Nevada Texas
$7.0/W
$0.10
System Price F orecast 2007 : $6.50 2008 : $6.00 2009 : $5.00 2010 : $4.00 2011 : $3.50 2012 : $3.00 per per per per per per watt watt watt watt watt watt
$2.0/W $1 .5/W
$0.00 1000
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Screening Potential Long-Term Winners So which companies do we believe stand to win in the long run? The common view is that solar is a commodity with relatively low barriers to entry. Our view is that barriers to entry are low for high cost/low efficiency panelsit is relatively easy to make an undifferentiated product for the incentive markets where IRRs are still very attractive. We expect two long-term trends to potentially influence solar industry development. First, we see innovation leading to increased technology and therefore cost differentiation. Second, we see competitive dynamics and changing industry landscape leading to increased cost differentiation. Anyone who thinks that solar companies are relatively undifferentiated should, in our opinion, think about Applied Materials and First Solar. How many successful thin film companies besides First Solar have we seen so far? Why is the world not producing solar cells in volume production for unsubsidized markets when the semiconductor industry has figured out a way to mass produce 45nm products? Why is everyone skeptical of Applied Materials ability to lower costs and improve efficiency? The bottom line is that efficiency improvement requires major breakthroughs. Not everyone can or will get there. The companies that can successfully reduce costs and improve efficiency stand to dominate the solar sector, in our view. Simply put, we believe the winning formula for success would be a combination of SunPower's high efficiency technology and First Solar's low cost structure. Now let's think about a scenario where First Solar executes to its 12% efficiency target and SunPower reduces costs by 50%. We continue to see room for both silicon and thin film technologies and, at this point, we see First Solar as being the lowest-cost thin film solution. In the silicon space where there is only gradual efficiency improvement, we believe market share will play an important role in cost differentiation. In addition to economies of scale, we see the ability to access low-cost silicon being influenced by market share. For instance, until recently, the bargaining power has been with the silicon suppliers. Over time, as new entrants from China bring additional silicon supply on-stream, we see a shift in the bargaining power in the solar value chain. In our view, the capital intensity of poly suppliers is highest among all industry participants. Consequently, we see a greater need for poly suppliers and their solar partners to access capital markets for new capex or for pre-payments. We believe solar companies with scale and a strong balance sheet are likely to receive more favorable terms from their suppliers compared to smaller tier 2 solar players.
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NOW
Downstream Downs tream Midstream
FUTURE
Downstream Downs tream
NOW
Midstream
Strong customer
FUTURE
Although we are not saying it is easy to make silicon, we believe the barriers to entry in silicon business are decreasing. Over time we expect the knowledge pool of silicon industry to increase. Until the emergence of the solar industry, the silicon industry was a fairly concentrated industry with manufacturing only in about five locations. As more companies learn to make silicon, we see decreasing barriers to entry in the silicon industry. On the other hand, we believe barriers to entry in the mid-stream segment are likely to increase. First, we believe access to low-cost supply will be the primary challenge. Second, downstream players are likely to require greater reward for taking the same risk in an uncertain supply/demand environment. Module manufacturers provide 20- to 25-year warranties and financial stability would likely be the key focus for several large downstream installers.
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Increasing Efficiency
If our industry outlook proves to be correct, we see two long-term trends shaping the siliconbased solar sector: 1) we see a profitability shift from upstream to midstream; 2) within midstream, we see a wide range of marginscompanies with scale should enjoy aboveaverage margins and tier 2 companies should have weak margins due to high poly cost and lower ASPs. Figure 63: Solar Market Share versus Margins
Increasing market share Increasing market share
Upstream
Midstream
Down stream
Lo
Hi
Differential margins
Lo
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Our focus would be on companies that are well positioned to increase scalewe believe that companies that can scale rapidly without sufficient need for growth capital are likely to emerge as long-term winners. Although we like vertically integrated companies, we believe companies focused on the capital intensive polysilicon manufacturing segment may be unable to scale rapidly enough compared with companies focused on cell and module manufacturing. In the long run when companies start generating free cash flow, we see the potential opportunity for fully vertically integrated companies to emerge as long-term winners. Figure 64: Solar Industry Competitive Analysis
JA Solar Yingli Suntech
Long-Term Industry Profitability Outlook In our opinion, solar industry profits should continue to increase as the industry revenue pool increases and as overall costs decline due to technology improvements and economies of scale. We expect a redistribution of profits from upstream to midstream and downstream. Within the midstream segment, we expect profits per installed capacity to decrease in the long run such that the industry leaders achieve return in excess of cost of capital. In other words, although overall industry profitability should improve, increased competition in a grid parity and abundant silicon supply scenario should result in declining overall profitability. However, we expect costs to decline faster than ASPs, enabling gross margin expansion for some leading solar cell/module manufacturers. We believe the following factors should result in gross margin expansion for midstream players in the intermediate term: 1) a more than 50% decline in polysilicon and raw material costs; 2) lower silicon consumption per cell because of greater silicon efficiency by
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cell manufacturers; 3) about 2% improvement in cell efficiencies, resulting in about 600 basis points of gross margin expansion on constant ASPs; and 4) production efficiencies driven by economies of scale and improved manufacturing methods. Return on Invested Capital Analysis We believe as the solar industry profits move toward the normalized $1/W profits, only the tier 1 silicon-based solar companies with economies of scale (and First Solar) are likely to generate returns greater than cost of capital. We believe the current industry profits are still well above the normalized industry profits of $1/W. Figure 65: Normalized Industry Profits Pool
$/W Input Cost Processing Polysilicon $0.32 NA Wafers $0.40 $0.28 Cells $0.80 $0.19 Modules $1.10 $0.28 Insatllers $1.45 $1.95 Total Normalized Industry Profits ($/W) Price $0.40 $0.80 $1.10 $1.45 $4.00 Profits $0.08 $0.12 $0.11 $0.07 $0.60 $0.98 Gross Margin 20% 15% 10% 5% 15%
Note: Normalized Profits model assume poly price of $40/kg and 8g/W silicon consumption Source: Barclays Capital research
We calculate the ROIC of cell and module manufacturer in two scenarios: 1) large economies of scale (mostly the case for tier 1 solar companies); and 2) relatively small size operations (tier 2, tier 3 sola r companies). For tier 1integrated module manufacturers, we expect the normalized ROIC to decrease from over 40% currently to about 8%, roughly equal to the cost of capital. Assuming no difference in gross margins and higher operating expenses, net working capital requirements, we believe ROIC of tier 2 module manufacturers is likely to decrease to roughly (1%) in the long term. Similarly, we believe ROIC of tier 1 cell manufacturers is likely to decrease to about 16% from over 50% currently whereas ROIC of tier 2 cell manufacturers is likely to decrease to about 4% in the long term.
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Figure 66: ROIC Integ rated Module Manufacturer Current versus Normalized
Integrated Module Mfg. Module ASP ($/W) Module Cost ($/W) Gross Profit ($/W) Opex ($/W) Operating Profit ($/W) Taxes ($/W) Return ($/W) Invested Capital Net Work ing Capital ($/W) Net Operating Fixed Assets ($/W) Operating Invested Capital ($/W) ROIC
Source: Barclays Capital research
Figure 67: ROIC Integ rated Cell Manufacturer Current vs. Normalized
Integrated Cell Mfg. Cell ASP ($/W) Cell Cost ($/W) Gross Profit ($/W) Opex ($/W) Operating Profit ($/W) Taxes ($/W) Return ($/W) Invested Capital Net Work ing Capital ($/W) Net Operating Fixed Assets ($/W) Operating Invested Capital ($/W) ROIC
Source: Barclays Capital research
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Module ASP ($/W) Module Cost ($/W ) Gross Profit ($/W) Opex ($/W ) Operating Profit ($/W ) Taxes ($/W) Return ($/W) Invested Capital Net Working Capital ($/W) Net Operating Fixed Assets ($/W ) Operating Invested Capital ($/W) ROIC
Source: Barclays Capital research
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Cash Is King in Solar In our view, access to capital is likely to emerge as the most important differentiating factor for solar companies. Most silicon-based solar companies raise capital for two purposes silicon pre-payments and capex. As shown in Figure 69, the silicon-based solar players have raised $10.1 billion of capital so far, of which 46% has been dedicated toward polysilicon prepayments and the remainder for capex investments. We believe companies with access to capital should be better positioned to enter into strategic partnerships and/or make equity investments in return for low cost reliable supply. Figure 69: Prepayments and Capex Breakdown
CSUN C SIQ SO LF T SL SO L ENER YGE SPWR ESLR JASO F SLR STP $0 $20 0 $ 400 $6 00 Cap ex ($ M) $80 0 $1 ,0 00 $1 ,2 00 $ 1,400 $ 1,600 $1 ,8 00
What if the solar industry used fully depreciated equipment? Unlike the semiconductor industry, which is driven by Moores Law, the solar industry does not require any changes to manufacturing equipment sets over intermediate periods. Most of the technological improvements within the solar industry occur at the cell level (in the form of improved conversion efficiency) and these changes do not necessarily require a change in the equipment sets. Consequently, we assume the solar industry can continue to use fully depreciated equipment to make solar products without really changing the manufacturing economics. Although new technologies such as improved automation, lower breakage rate are likely to be developed and used, we believe these technologies that reduce silicon consumption may not necessarily have the same competitive advantage to warrant high capex investments in a low cost environment.
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DRAM versus SolarShrinking Revenue Pool versus Rising Revenue Pool The solar industry is often compared with the DRAM industrycommon comparisons include 1) commodity nature of both DRAM and solar industry, 2) relatively low technology barriers to entry, 3) low-cost manufacturing as the key differentiating factor among companies. We believe the solar industry is different from DRAM for the following reasons: 1. Solar industry revenue pool is growing whereas DRAM industry revenue pool is shrinking. 2. Fixed costs for DRAM manufacturers are high whereas fixed costs for solar companies are low. 3. DRAM industry has no pricing floor, solar industry has pricing floor. 4. Capital intensity of DRAM industry is twice that of solar industry. 5. No Moores Law within solar industrywhere is the need for replacement capex every few years? Within Solar Industry Value Chain, Polysilicon Industry Perhaps Represents the Closest to the DRAM Industry In our view, there is a high level of similarity between the polysilicon industry and the DRAM industry as both industries are characterized by high capital intensity levels. We believe due to the relatively high fixed cost structure, polysilicon manufacturers are likely to continue to run factories at nearly full utilization rates as long as the polysilicon price is greater than marginal cost. We believe this competitive dynamic is likely to result in significant polysilicon price declines, just as we have observed in the DRAM industry in the prior cycles.
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Robust Secular Growth Story Over the past decade, the photovoltaic (PV) solar industry has emerged from being a niche cottage industry to a commercially viable stand-alone industry, primarily due to the efforts and programs of governments of Germany and Japan. Worldwide solar PV installations have grown at a 32% annual rate from about 80MW in 1995 to approximately 5.9GW in 2008. During the corresponding period, solar PV module prices have declined from roughly $11 per watt to about $4 per watt. In our view, solar PV demand is highly elastic and if the pace of cost reductions continues, making the prospects of achieving grid parity brighter in some regions, we expect solar PV demand growth (in the form of new installations) to accelerate further. Although the solar PV would be insignificant compared with the more than $1 trillion global electricity market today, our top-down scenario analysis suggests that the potential upside to our 2012 forecast would be a factor of 2x 3x if the industry cost reductions accelerate. Solar Contributes Less Than 1% of Global Electricity Generation Despite the robust secular growth over the last decade, solar PV electricity accounted for only about 0.1% of the global electricity generated in 2008. Figure 70: Global Electricity Genera tion Mix
Nucl ear, 15%
N uc le ar, 1 9%
Coa l, 4 0% Hydroe lec tric, 16 .00 %
R enewa bles 18 %
Coal, 50 %
Sola r & Wind, 0 .40 % B iopowe r, 1 .40 %
Re new able s 8. 7%
Na tural Ga s, 19 %
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Germany 27%
US 7% Germany 38%
Spain 45%
ROE 9%
Spain 20%
ROW 9%
Japan 4%
USA 6%
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Solar Demand Outlook What drives solar demand? In our view, solar demand is driven by favorable economics resulting from two equally important factors: 1) government incentives; and 2) continued cost reductions. Government Incentives Should Continue to Grow, in Our View
Government incentives in Germany, Spain, and the United States should be the main growth drivers.
We believe Government incentives are still the primary demand driver for solar energy as the unsubsidized cost of solar electricity is significantly greater than the cost of fossil fuel electricity. We believe the role of incentives is to make current solar photovoltaic (PV) costs competitive with fossil electricity costs in order to achieve economies of scale necessary to drive down solar PV costs. The incentives typically take the form of preferential feed-in tariffs/net metering (where the utilities buy PV electricity from the producer at a certain guaranteed rate), investment subsidies (where the government refunds part of system installa tion costs), ta x rebates, and R&D support. Below, we highlight some of the common incentive programs: Feed-in Tariffs. Utilities pay customers a guaranteed rate typically for 2025 years for the amount of solar electricity generated by the solar power system. Tax Credits. End user/installer does not pay sales tax on purchase of solar systems. Capital Cost Rebates. End user/installer receives a cash rebate on the initial solar panel system cost. Net Metering. End user is charged only for the net amount of energy used from the utility grid. Net metering is calculated as energy used from the grid less energy generated from a solar system. The most commonly used incentives include preferential feed-in tariffs and net metering (by which the utilities buy PV electricity from the producer at a certain guaranteed rate). In markets such as the U.S., investment subsidies (where the government refunds part of system installation costs), tax rebates, and R&D support are common.
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ion ct du Re st Co
Hi gh
De m an d
Continued Cost Reductions The price of solar electricity has been declining over timein 1976 it was about $2.00 per kilowatt-hour, and today it is $0.15 to $0.40 per kilowatt-hour. But this is still far too high to make solar energy broadly viable. Since the costs of solar electricity are currently high, demand is mainly driven by government incentives in a few countries (which we discuss in greater detail in the next few sections) that are aimed at generating economies of scale. As the industry drives down costs over the next three to five years, we expect an increasing number of governments to look at solar as a potentially attractive source of renewable electricity. Consequently, we believe continued cost reduction is likely to be one of the most significant growth drivers for the industry over the next three to five years. Figure 75: Costs of Various Sources of Energy
So lar 1 5 .0 40 .0
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The price of solar electricity is largely dependent upon location. For instance, solar electricity in Spain costs $0.26/kWh whereas in Germany it costs $0.36/kWh.
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Germany
1900
2200
Two main factors are driving the high cost of solar electricity: 1) low rates of efficiency of solar cells; and 2) the high cost of the substrate material being used. As we explain in detail in the next few sections of the report, the solar PV supply chain is focused on improving the cost of solar electricity by increasing watt/m2 (or cell efficiency) and decreasing cost/m2 (manufacturing costs). Figure 77: Key Cost Per Watt Reduction Drivers
COST/ SQ. MTR REDUCTION Economies of Scale Competition Wafer Price Reduction Wafer Thickness Reduction Automation Next Generation Technologies
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Main Types of Solar PV Technologies There are two main types of solar PV technologies: crystalline silicon and thin film silicon. Each of these technologies has distinct advantages and disadvantages. Crystalline Silicon About 90% of solar cells manufactured today are crystalline silicon-based solar cells. These cells use silicon wafers as the raw material, much like those used in semiconductor manufacturing. There are two main types of crystalline silicon cells: mono-crystalline and multi-crystalline. Mono-crysta lline cells are more efficient in the conversion of sunlight into electricity; however, their manufacturing cost is higher. Multi-crystalline cells are lower in cost to manufa cture, but they are less efficient than mono-crysta lline cells. The advantage of crystalline silicon cells is high conversion efficiency (about 14%21%) and proven high volume manufacturing processes. Thin Film Thin film technology is a relatively new next generation solar PV technology that has the potential to grow faster than conventional solar technology. Thin film solar panels are manufactured by depositing a layer of semiconductor/non-semiconductor material on glass or other flexible substrate. Thin film solar panels represent less than 10% of solar PV cells manufactured today; however, they are likely to grow rapidly to represent almost 20% of solar cells over the next three to five years. The main advantage in the thin film approach is the elimination of the use of expensive polysilicon; however, the disadvantage is lower conversion efficiency (6% to 11%) and lack of proven manufacturing technology. Figure 78: Module and Cell EfficienciesCrystalline versus Thin Film Solar Technologies
Technology Thin Film Amorphous Cadmium Silicon (a-Si) Telluride (CdTe) 6-7% 8-10% Crystalline Wafer Based CIS a-Si/m-Si Monocrystalline 16-17% 10-11% 8% 13-15% 15 sq. mtr 11 sq mtr . 10 sq. mtr 12 sq. mtr app. 7 sq. mtr Multicrystalline 14-15% 12-14% app. 8 sq mtr
Cell Efficiency at STC* Module Efficiency Area needed per kWp** (f or modules)
Source: EPIA
*: Standard Testing Co nditions 25 deg. C, light intensity of 1,000W/sq. m tr, air mass=1.5 ** kWp=kilowatt peak, solar products are rated by the power they generate at S tandard Testing Conditions
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Dish-Stirling STE Anticipated Cos t of Full-Scale A pplic ation B iomass gasification Wave Concentrating P V
Silicon PV
Nano-s tr uctured PV
Time
Amorphous Silicon - U nisolar - Shar p - K aneka C admium Tellur ide - Fir st Solar
Strong/ Positive
Source: Company Reports, Barclays Capital research
Weak/ Negative
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Thin Film TechnologyCIGS CIGS or copper indium gallium de-selenide appears to be the most promising technology in terms of efficiency and cost improvement. However, large scale volume production has been challenging due to the complexity involved in the layering and mixing of the different CIGS components to make cells. There are currently four techniques for the deposition of CIGS material onto a cell: Electroplating: An electrically charged cell is dipped in a CIGS solution which is of the opposite charge. The advantage of this process is that this is a proven process technology on industrial scale for other applications. However, this process can result in very uneven deposition (causing lower efficiency and higher material loss). Nano-particle printing: Ink solution with nano-particles of CIGS composites is printed using ink-jet printer like technology onto the cell. Although the process seems very easy, formulating and constantly maintaining the right ink mix can be very expensive and is often the most challenging step. Nano-particle printing could result in very uneven deposition of CIGS materials and results in lower efficiency. Thermal evaporation: In this process, base materials are vaporized and gradually deposited onto the cell substrate. This is the most common process used for lab level CIGS cell manufacturing. Uniform deposition is difficult for larger substrates making scaling a challenge. Sputtering: In our view, this is the most technically challenging process after nano-particle printing as it involves high temperatures and a vacuum environment. We believe sputtering has the potential to achieve the highest throughput and lowest material loss of all the processes. Figure 81: CIGS Technology Matrix
Process Technology Control / Process F lexibility High Vol Mf g Technology High Throughput No Hazardous Waste Uniformity Batch / Continuous
SPUTTERING
Continuous
ELECTROPLATING
Batch
NANO-PARTICLE PRINTING
Batch
THERMAL EXPLORATIO N
Batc h
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Thin Film TechnologyAmorphous Silicon Layers of amorphous silicon are deposited as light-absorbing materials on rigid or flexible substrates instead of traditional crystalline silicon layers. The main advantage of this technology is that amorphous silicon absorbs solar radiation 40 times more efficiently than traditional crystalline silicon and, consequently, only a 1-micron thick layer needs to be deposited as compared with about 200-micron thick layers in the case of crystalline silicon. The main disadvantage with this technology is that module efficiencies are typically between 6% and 8%, well below the 14%16% levels of crystalline silicon. In the early 1970s, scientists found a use for a-Si in PV technology by controlling the conditions under which it is deposited and carefully modifying its composition. The material has long been popular in small consumer devices with low power requirements, such as wristwatches and calculators. Now, a better understanding of certain unique a-Si characteristics make it appealing for solar electric systems and today is the leading thin-film PV material. It can also be produced at lower temperatures and deposited on inexpensive substrates such as plastic, glass, and metal. Employing a-Si thin-film does present some challenges. Instability is arguably the biggest obstacle. The mechanism of degradation, known as the Staebler-Wronski effect, causes conversion efficiency to decrease considerably during initial exposure to sunlight. Although output gradually stabilizes, losses of 20% can occur before this happens. Multi-junction designs can help to lessen this effect, as can capital equipment reduction, a faster rate of material deposition, and better module packaging to make the material less susceptible to glass breakage or moisture ingress in outdoor environments. Current layers in the amorphous silicon market include Energy Conversion Devices, Sharp, United Solar Systems, ersol Thin-Film, Schott Solar, and a growing number of others. Thin Film TechnologiesCadmium Telluride CdTe is a stable and inert semiconductor made from cadmium and telluride which are byproducts of mining and the production of metals such as zinc and copper. CdTe is a direct bandgap semiconductor and is thus able to more efficiently convert solar energy into electricity than indirect bandgap semiconductors. Thus, while it uses about 1% of the semiconductor material used generally, it is able to provide comparable efficiency levels. CdTe cells are also less affected than traditional silicon based cells, by cell temperature increases. Elemental Cadmium and certain of its compounds are considered hazardous and regulated but the risks of exposure from CdTe are not considered as serious as those from elemental Cadmium. These can also be mitigated by the encapsulation of the modules. CdTe has been recognized by the National Renewable Energy Laboratory to have the potential for achieving the lowest production costs among thin film technologies.
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Solar Stocks Are Volatile and Tend to Trade More on Sentiment than on Fundamentals We believe the following eight metrics (in order of importance) are likely to play a key role in determining relative fundamental performance of solar companies: 1) balance sheet; 2) cost structure; 3) control of downstream channels; 4) product differentiation; 5) technology roadmap; 6) poly advantage; 7) scalability; and 8) financial metrics.
We prefer companies with strong access to capital.
Balance Sheet (20%): We base our balance sheet rating on available cash position, potential to fund near term capacity expansion plans, debt/equity ratios, convertible debt (if any) repayment schedule, and our forecasts for free cash flow. We believe over the next 12 to 18 months, bala nce sheet strength could potentially emerge as the most powerful differentiator for companies as customers/financial institutions seek to minimize warranty risks. In our opinion, First Solar and MEMC have relatively strong balance sheets followed by SunPower, Energy Conversion Devices, JA Solar, and Trina Solar. Cost Structure (20%): In our opinion, levelized cost of energy (LCOE) (which is dependent on both overall cost structure (module cost/W) and balance of systems cost requirements) is likely to be important in determining relative fundamental performance of solar companies. For our cost structure analysis, we use non-silicon costs as the basis for our screening methodology. To that extent, First Solar, Yingli, and JA Solar screen as top companies in our coverage universe. Control of Downstream Channels (15%): We believe companies with strong access to downstream channels in key growth markets such as the U.S., Germany and Italy are likely to see relatively strong shipments growth. In our opinion, SunPower has relatively strong control of downstream channels, followed by First Solar.
LCOE and Balance of Systems costs are important in determining relative fundamental performance.
Product Differentiation (10%) Companies with differentiated products (low cost, high efficiency, BIPV) are likely to experience relatively strong fundamentals in our view. In our opinion, First Solar, SunPower, MEMC, and Energy Conversion Devices have differentiated product offerings followed by China Sunergy. Technology Roadmap (10%): Companies that have well-defined technology roadmap to improve conversion efficiencies/costs are likely to show relative fundamental outperformance, in our view. We base our ratings by examining R&D expenses and historical track record on technology roadmap execution. In our opinion, First Solar, SunPower, MEMC and China Sunergy screen favorably on this metric. Poly Advantage (10%): As spot poly prices continue to decline, we expect companies with high exposure to the spot market to outperform thin film companies. Yingli, Trina Solar, and China Sunergy screen favorably on this metric. Scalability (10%): We believe scalable business models are important to gain market share and reduce costs through economies of scale. In our opinion, JA Solar and China Sunergy have the most scalable business models followed by First Solar and SunPower. Financial Metrics (5%) We use operating margins, ROE, and ROIC to rate companies. First Solar and MEMC screen as companies with top financial metrics.
We prefer companies with high exposure to the spot poly market. We believe scalable business models are important to gain market share.
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Cost Structur e
Downstr eam
Differentiation
Technology Roadmap
Pol y Advantage
Financial M etrics
Overall Screen
Strong
Weak
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Balance Sheet Cost structure Downstream Differentiation Tec hnology roadmap Poly advantage Scalability Financial metric s Overall screen
Balance Sheet Cost structure Downstream Differentiation Tec hnology roadmap Poly advantage Scalability Financial metric s Overall screen
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Government subsidies in key solar markets: Solar PV demand is highly elastic and is currently largely dependent on government incentives in key solar markets such as Germany, Japan, Spain, U.S., and Italy. Government subsidies are important as the cost of unsubsidized solar electricity is still two to five times higher than conventional electricity and greater volumes or economies of scale are necessary to lower the cost of solar electricity. Any reduction in government subsidies is likely to cause a big impact on adoption of solar PV technology. Overall competitiveness of solar energy versus other alternative energy sources such as wind, geothermal: We believe solar PV energy holds the promise of being the most widely used form of distributed renewable energy source over the next few years; however, it may likely face significant competition from other renewable sources such as wind, geothermal, and solar thermal energy if cost reduction efforts in other renewable sources gain momentum. For instance, electricity generated from la rge-scale wind energy fa rms today costs between $0.03 and $0.06/kWh, making wind energy a more attractive option for large-scale industrial/utility electricity generation.
Execution risks associated with cost/watt reduction efforts: We believe continued cost per watt reduction of solar PV electricity is the key to enabling robust market growth. Although most solar manufacturers have been able to improve cell efficiency levels for small volume applications, successful transition to high volume manufacturing at improved efficiency rates remains the key risk factor. Additional risks include successful execution of manufacturing cost roadmap such as improving equipment throughput, driving economies of scale. Next-generation technology risks: The mainstream solar cell manufacturing technology today is based on crystalline silicon and there is extensive development work on next generation technologies that consume significantly less silicon, thereby reducing overall solar cell cost. Such technologies include thin film, ribbon technology, spherical silicon among others. Successful development of any of these alternative technologies could potentially result in significantly lower demand for crystalline silicon based manufacturers. Slower-than-expected demand growth due to lack of solar ecosystem development in potential demand regions: Solar module costs represent only about 60% of overall solar system costs with the remainder of costs comprised mainly of balance of systems such as installation, inverters, and storage. In addition to solar module cost reductions and government incentives, we believe availability of well-trained system installers and cost reduction of the balance of system components is equally important for the development of the solar market. Global economic slowdown and tighter credit markets: Solar PV market is very much dependent on global economic conditions and the availability of relatively affordable financing. A continuation of a global economic slowdown and general tightening of credit markets could significantly impact demand.
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Successful development of alternative technologies could result in significa ntly lower demand for c-Si solar cells.
Availability of trained installers and balance of system cost reduction is important for solar market development.
Housing market slowdown and tightening of credit markets could significantly impact demand.
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The Case for Solar Grid Parity by 2012 Our analysis shows that fully installed solar systems selling at $4 per watt have the potential to compete cost effectively with peak electricity rates in several regions. Furthermore, our analysis shows that at these grid parity cost points, the available market for solar electricity increases by a factor of 2x3x. In our view, the fully installed system cost of $4.00$4.50 per watt can be achieved if we assume that over the next three to five years, the cost per watt of the various components in the value chain declines as shown in Figure 84. In general, the potential for solar to achieve grid parity in a particular region will depend upon 1) the prevailing grid electricity prices; 2) the amount of solar radiation per square meter; and 3) the balance of system costs in that region. Figure 84: Solar Value Chain Cost and ASP Assumptions
2008 POLY $0.70/watt (C ontract) $3 .0 0/w att (spot) $ 0.30/watt WAFER $2.10/watt CELL $ 2.90/watt MODULE $3.70 /wa tt SYSTEM $7.00/watt
Price
Cost
$ 0.30/watt
$2.40/watt
$0 .3 0/w att
$3 .3 0/w att
$2.40 /wa tt
$6.10/wa tt
2010 POLY $0.35/watt (C ontract) $0 .4 5/w att (spot) $ 0.20/watt WAFER $0.90/watt CELL $ 1.40/watt MODULE $1.75 /wa tt SYSTEM $4.00/watt
Price
Cost
$ 0.20/watt
$1.10/watt
$0 .2 0/w att
$1 .6 0/w att
$1.75 /wa tt
$3.50/wa tt
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M o du le
System
Se kisui C hem ic al C oner gy Phoenix Sonnenstr om AG S AG Solar strom E-Ton Motec h JA Solar S inonar Ginte ch N eo Solar Q-Ce lls
Nu mb er o f C ompan ie s (5-10) T e chn olog y: Siemens (Tric hlorosila ne) F luidised Bed Reactor Upgra ded Metal lurgical Silico n Vapor to Liqui d De position
N umbe r of Comp anies (~ 50) T e chn olog y: Monocrystalline Multicrystal line Strin g Ri bbon
N umbe r of Comp anies (~ 100) T ec hn olog y: Crystalline T hin-Fi lm - C IGS - C dTe - a-Si
Nu mbe r o f C ompan ie s (>5 ,000) Te ch nolo gy: R elative ly Low Di fferenti atio n
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Polysilicon Suppliers Polysilicon Prices and Grid Parity Assuming an average polysilicon content of 9g/watt and average polysilicon contract price of $80/kg, we estimate that polysilicon today accounts for roughly $0.72/watt. At about $2/watt module prices, solar cells would be competitive to grid electricity and for that to happen we believe polysilicon costs need to decline from $0.72/watt today to $0.24/watt. As shown in Figure 86, this could be possible by lower polysilicon prices driven by competition and cost reduction efforts as well as by the use of thinner wafers. Figure 86: Polysilicon Cost Per Watt Projection (200712E)
$9 0 $8 0 $7 0 $6 0 $5 0 $4 0 $3 0 $2 0 $1 0 $0 20 07 2 008 2 009 E 2 01 0E 2 01 1E 2 01 2E
$70 $0.70 10g /w 9g /w 8 g/w $ 0.48 $ 40 7g/w 6.5g /w $0.2 8 $0.26 $0.2 4 6g/w $40 $0 .72 $ 60 $8 0
There are two types of polysilicon available: 1) EG (electronic grade) polysilicon, which is a high purity, more expensive silicon generally used in the manufacture of semiconductors; and 2) SG (solar grade) polysilicon, which is generally a somewhat lower quality, lower cost option. Prior to the robust demand growth in the solar industry, SG polysilicon was often seen as a by-product of recycled (out-of-spec) EG polysilicon, as major polysilicon manufacturers focused on the higher value added (and hence higher price) EG polysilicon. However, over the past few years, strong demand within the solar PV industry has resulted in robust pricing trends within the SG polysilicon market and created incentives for a number of China-based companies to enter the market. Polysilicon manufacturing is currently concentrated among eight major manufacturers that have the capability to produce both EG and SG polysilicon in large volumes. We estimate the total polysilicon supply in 2008 was approximately 54,250MT, of which approximately 26,214MT of silicon was consumed by the semiconductor industry and 28,036 MT of high-purity silicon was available for the solar industry.
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The solar industry consumed approximately 50,500MT of silicon in 2008 assuming 5.5GW of shipments, 2% cell to module efficiency loss and 9.0g/W of silicon consumption. Figure 88: Solar Polysilicon Breakdown, 2008
We estimate that the incumbent poly manufacturers supplied 26,000MT to the semiconductor industry and 10,800MT to the solar industry. In order to calculate the spot market size, we assume that all of the semiconductor demand was previously contracted. Furthermore, we assume that 55% of the solar polysilicon was previously contracted, and the remaining was sold to the spot market. This means that approximately 26,000MT of semiconductor poly and 15,400MT of solar poly was previously contracted. This leaves 12,600MT of poly sold in the spot market. This represents roughly 23% of all polysilicon sold was on the spot market.
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30% 20%
22%
10%
10% 0%
0 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
New Entr ants Poly Supply New entrants as % of overal l supply inc.
80
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 26,700 26,700
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 28,900 28,900
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 31,360 31,360
0 1,500 0 0 100 500 2,100 0 0 300 700 0 1,000 300 200 0 0 0 0 0 2,500 0 0 3,000 360 500 500 0 4,360 4,600 46,850 51,210
5,000 5,000 500 0 200 700 11,400 0 1,500 300 1,000 2,000 1,500 500 1,250 500 700 300 500 500 10,550 4,000 6,000 5,000 1,000 500 500 0 17,000 21,950 79,250 96,250
7,500 7,500 2,000 700 750 800 19,250 2,000 3,300 300 3,000 2,000 6,000 1,000 2,000 500 2,200 300 600 450 23,650 7,500 14,400 7,000 2,000 2,500 1,500 1,000 35,900 42,900 117,350 153,250
10,000 13,200 2,000 500 950 500 27,150 6,000 3,300 350 3,300 6,000 6,000 1,000 1,500 500 3,000 300 600 450 32,300 10,000 16,000 10,000 5,000 3,500 3,500 2,000 50,000 59,450 160,500 210,500
12,500 15,000 1,000 0 1,100 0 29,600 6,000 3,300 350 3,300 6,000 6,000 1,000 1,500 500 3,000 300 600 450 32,300 12,500 18,000 15,000 8,000 4,500 4,500 5,000 67,500 61,900 187,750 255,250
15,000 17,000 0 0 1,250 0 33,250 6,000 3,300 350 3,300 6,000 6,000 1,000 1,500 500 3,000 300 600 450 32,300 15,000 21,000 18,000 8,000 7,500 8,500 8,000 86,000 65,550 203,200 289,200
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0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 25,740 25,740
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 26,825 26,825
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 29,125 29,125
0 750 0 0 50 250 1,050 0 0 250 500 0 500 150 100 0 0 0 0 0 1,500 0 0 250 150 500 250 0 1,150 2,550 37,769 38,919
2,125 4,680 0 0 150 600 7,555 0 750 300 510 100 2,000 400 725 250 0 150 250 250 5,685 200 1,100 500 200 500 500 0 3,000 37% 13,240 56,083 59,083
5,313 5,313 300 100 404 900 12,329 500 1,440 300 1,000 2,000 4,500 700 1,625 500 800 300 600 450 14,715 1,000 2,500 1,500 500 1,500 1,000 200 8,200 27,044 83,034 91,234
7,438 10,350 2,000 600 850 650 21,888 4,000 3,300 325 3,150 4,000 6,000 1,000 1,750 500 2,600 300 600 450 27,975 2,000 5,000 2,500 1,000 3,000 2,000 500 16,000 31% 49,863 122,425 138,425
9,563 14,100 1,500 250 1,025 250 26,688 6,000 3,300 350 3,300 6,000 6,000 1,000 1,500 500 3,000 300 600 450 32,300 2,500 7,000 3,000 1,500 4,000 3,000 750 21,750 32% 58,988 152,945 174,695
11,688 16,000 500 0 1,175 0 29,363 6,000 3,300 350 3,300 6,000 6,000 1,000 1,500 500 3,000 300 600 450 32,300 3,500 9,500 4,000 2,000 6,000 4,000 1,000 30,000 32% 61,663 170,725 200,725
There are a number of ways to manufacture solar-grade polysiliconthe most common process is the trichlorosilane-based Siemens process. A large number of solar manufacturers currently use this process to produce SG silicon. However, some other low-cost production methods such as fluidized bed technology, vapor-to-liquid technology and metallurgical silicon have been tested recently. Siemens Process: The Siemens process utilizes trichlorosilane (or silane) gas as a starting material and converts it to polysilicon through chemical vapor deposition (CVD) process. This is the oldest and most common process used in polysilicon manufacturing. The advantages of using this process are proven reliability and durability. The main disadvantages include high time and energy requirements. Fluidized Bed Reactor Process: In this process, small seed particles are introduced and a silane/hydrogen mixture is then fed into a fluidized bed reactor. The silane decomposes around the seed particles increasing their average size to around 1,000
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microns. The main advantages of FBR process include lower operating temperature, higher throughput, lower energy consumption and consistent product quality. Metallurgical Silicon: Metallurgical silicon is less pure than silicon and consequently although it is cheaper than traditional polysilicon, it was not used in the manufacture of polysilicon based solar cells. Recently, Elkem and Q-Cells signed a long-term agreement which suggests a potentially wider scale usage of Metallurgical silicon. QCells plans to use the Metallurgical silicon along with a new process in the manufacture of solar cells. Other Methods: Tokuyama is working on a vapor to liquid deposition (VLD) method for manufacture of solar grade silicon. Other methods in pilot production include tube deposition technology, direct reduction, and purification technology. Figure 92: Barclays Capital Polysilicon Demand Model
2005 2006 2007 2008 2009E 2010E 2011E 2012E
New PV Installation (MW) Inventory Requirement (MW) Total PV Module Shipments (MW) Efficiency Loss Total PV Cell Shipments (MW) Thin Film Supply (MW) Polysilicon Consumed (ton/MW) Total Solar Po ly Reqd (MT ) Po ly deman d from Semis (MT) Total p oly d em an d (MT) Po ly supp ly (MT) - excluding scrap/UMG
1,460 150 1,610 2.0% 1,789 50 10.5 18,258 25,323 43,582 29,125
1,808 200 2,008 2.0% 2,231 75 10.0 21,561 26,023 47,584 33,201
2,677 350 3,027 2.0% 3,363 300 9.5 29,099 26,446 55,546 37,769
5,950 425 6,375 2.0% 7,083 500 9.0 59,248 26,214 85,462 56,083
4,454 500 4,954 2.0% 5,504 1,700 8.5 32,337 20,799 53,136 83,034
6,837 400 7,237 1.5% 7,824 2,200 8.0 44,994 27,406 72,399 122,425
10,109 450 10,559 1.5% 11,415 3,500 8.0 63,320 29,657 92,977 152,945
14,151 500 14,651 1.5% 15,839 4,500 8.0 90,712 30,218 120,929 170,725
Polysilicon Demand Polysilicon usage per Watt: Silicon substrates typically account for almost 50% of the cost of solar panels and in instances where polysilicon is sourced from the spot market, silicon substrates account for almost 70% of the cost of solar panels. The three primary techniques adopted to reduce the cost of silicon substrates are: 1) reduce the cost of silicon crystal; 2) reduce kerf loss during silicon wafer formation; and 3) enable the use of thinner wafers. Silicon Crystal Cost Reduction: Silicon crystal formation is the first step in making the wafers that are ultimately converted into solar PV cells. To improve the economics of silicon crystal production, the industry has developed technologies that are capable of increasing the size and throughput of silicon ingots. For instance, a private company called Solaicx has a proprietary crystal growing technology that is capable of producing ingots about five times faster than conventional technologies.
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Kerf Loss (Silicon Waste) Reduction: The next step once the silicon ingots are formed is to convert these ingots into bricks that are ultimately cut into wafers. During the brick formation process, a significant amount of silicon is wasted and is this known in the industry as Kerf Loss (roughly 11kg of silicon is lost out of a total size of about 260kg during the brick formation step). New brick cutting technologies that have the potential to significantly reduce the kerf loss are under development. Thinner Wafers: During the final step of wafer formation, the bricks are cut into wafers. The thinner the wafer, the less the polysilicon usage. The current industry standard thickness is about 200 microns and the industry roadmap is to reduce the thickness to about 120 microns over the next three to five years by using new wafer cutting techniques/equipment. Usage of thinner wafers is the most effective way of lowering production costs, without sacrificing cell efficiencies. For instance, a reduction of wafer thickness from 200 microns to 120 microns is estimated to result in a 12.5% reduction in the required number of grams of silicon per watt. Solar Cell Efficiency Ratings: We assume average cell efficiencies will increase from 16.5% in 2008 to 18.5% by 2012. Most of the solar cell manufacturers have announced plans to improve cell efficiencies over the next three to five years and are currently in the process of transferring the lab based higher efficiency cells into volume production, which could ultimately result in improved cost performance. Furthermore, solar module efficiencies are about two percentage points lower than cell efficiencies due to: 1) efficiency loss resulting from cell packaging and module frames; 2) efficiency loss resulting from glass absorption; and 3) resistive loss resulting from conductive ribbon used as an interconnect between cells and modules. The industry is working on incorporating the use of multilayer interconnect ribbons of aluminum and copper that could potentially improve module efficiencies.
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Polysilicon Supply/Demand We believe one of the key swing factors for the polysilicon industry supply/demand is likely to be semiconductor industry demand and upgraded metallurgical silicon adoption. Figure 93: Polysilicon Demand Drivers Semiconductor Industry
2005 200 6 2007 20 08 2009 E 2010 E 2 011E 20 12E
Millions of Waf ers 2 inches 3 inches 100mm 125mm 150mm 200mm 300mm Total Wafers Millions of Square Inches 2 inches 3 inches 100mm 125mm 150mm 200mm 300mm Total MS I Metric Tons Polysilicon 2 inches 3 inches 100mm 125mm 150mm 200mm 300mm Total Poly Demand
0.0 0.0 48.7 228.2 1067.8 2238.8 4382.4 7,966 Gram Per S q. Inch 2.7 2.9 3.1 3.2 3.5 3.8 3.9
Worldwide P olysilicon Demand % Change Year-over-Year 2003 Semis Solar Cells Total Worldwide P olysilicon Demand as a % of Tot al 2003 Semis Solar Cells Total 71% 29% 100% 2004 62% 38% 100% 2005 58% 42% 100% 2006 55% 45% 100% 2007 48% 52% 100% 2008 31% 69% 100% 2009E 39% 61% 100% 2010E 38% 62% 100% 2011E 32% 68% 100% 2012E 25% 75% 100% 2004 22% 78% 38% 2005 8% 28% 15% 2006 3% 18% 9% 2007 2% 35% 17% 2008 -1% 104% 54% 2009E -21% -45% -38% 2010E 32% 39% 36% 2011E 8% 41% 28% 2012E 2% 43% 30%
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350,000
300,000
250,000
200,000
150,000
100,000
50,000
0 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
Polysilicon Spot and Contract Pricing Polysilicon prices are driven mainly by supply/demand balance, and as lead times to bring a new polysilicon production facility are around two years, we expect the supply tightness to continue into 2009. In 2008, spot prices for polysilicon were as high as $400/kg, higher than the $250$300/kg price in 2007, and well above the 2003 levels of $25/kg. Figure 96: Polysilicon Spot and Contract Pricing Trends
$600
Spot Pr ices
$ 500
Contract Prices
$500
$27 5
$200
$75 $45
$50
$65
$85
20 05
2006
2007
2 008E
200 9E
2010E
2 011E
201 2E
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Upgraded Metallurgical Silicon (Solar Grade Silicon) Currently, the solar industry uses polysilicon or semiconductor grade silicon which is extremely pure of the magnitude of 99.99999%. Solar applications do not require such high purity levels to function effectively. Removal of the major impurities in metallurgical silicon makes it effective to use for solar applications. This is referred to as upgraded metallurgical silicon (UMG). UMG is generally 99.9%99.999% pure. Most of the impurities from metallurgical silicon, such as iron, aluminum, calcium, titanium, magnesium and carbon, are removed by directional solidification although additional actions are required to remove boron and phosphorous impurities. Metallurgical Grade Silicon Metallurgical grade silicon is also called silicon metal. It is 98%98.5% pure silicon. It is usually produced in electric arc furnaces from quartz. Quartz and carbon materials are inserted into an electric furnace heated to high temperatures in the range of 19000 2100 C. The carbothermic reduction of the silica (quartz) results in molten silicon which collects at the bottom of the furnace from where it is removed periodically. The main impurities in the liquid crude silicon are iron (0.2%1.0%), aluminum (0.4%0.7%), calcium (0.2%0.6%), titanium (0.02%0.1%), and carbon (0.1%0.15%). The liquid crude is treated with oxidative gases in order to oxidize impurities like aluminum and calcium. The liquid silicon is then separated mechanically from the slag formed.
0
Refining of Metallurgical Silicon to Produce UMG The first step for refining the metallurgical silicon is to heat it in a molten state under vacuum in order to remove the vola tile elements. This reduces the phosphorous concentration as well as other volatile impurities such as magnesium. Impurities such as iron, magnesium, phosphorous and boron are removed through the formation of volatile molecular species by having them react with externally added agents containing oxygen, hydrogen, and chlorine. The agents are introduced either in the form of solid powders added to the metallurgical silicon prior to the melting or as reactive gases added to the molten silicon. Further refining requires oxidation of the impurities to form species which are removed as slag or as vapor. Boron and phosphorous are removed using oxidation. A synthetic slag can also be added for further refining. The slag is then removed to leave high purity solar grade silicon.
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Melting
Slag
Refining
Directional Solidification
Cost Differential Between Polysilicon and UMG The costs of producing polysilicon are much higher than the cost of producing upgraded metallurgical silicon. The major reasons for this cost differential are: Polysilicon plants are extremely capital intensive, requiring investments of up to $100 per kilogram. Conventional polysilicon methods also create a large amount of toxic substances which need to be effectively recycled. The recycling process is also extremely capital intensive. UMG capital costs are considerably lower, with Timminco investing less than $50 million to build a 3,600MT capacity plant. Polysilicon production is also energy intensive and could require 100kWh135kWh per kg making electricity one of the largest input costs during production. UMG production on the other hand only requires a fraction of this electricity. Timminco uses 2kWh per kg to produce its products.
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Polysilicon is created by refining metallurgical-grade silicon. The process leads to the wastage of 75%80% of the silicon as by-products which cannot be used, leading to an increase in the price of the end product, polysilicon. The increase in the prices of raw materials required for production has also raised production costs for polysilicon more than it has affected UMG producers. Long-term successful development of the metallurgical silicon market would depend on the following four factors, in our view: 1. Capacity ramps of UMG suppliers. 2. Technology adoption by downstream installers. We see downstream installers readily adopting this technology as long as module manufacturers provide them the requisite warranty. Furthermore, we see the installers readily accept UMG products as long as the financial institutions provide them the relevant financing. 3. Quality improvement by UMG suppliers. Reliability issues should continue to restrain the quality conscious solar manufacturers from adopting UMG. According to UMG companies, lifetime testing results are inconclusive and tests conducted so far have resulted in scrapping of reasonable material. The poly suppliers, on the other hand, believe that based on the lifetime test results, degradation/reliability concerns are likely to potentially increase instead of solve the industry problem. 4. Polysilicon price development. We think the potential adoption of UMG is likely to ultimately depend upon poly prices. Our preliminary analysis suggests that UMG becomes less attractive as poly prices decline to below $200/kg We assume that UMG increases processing costs (i.e., poly to module conversion costs) in the following ways: Poly to ingots. The most significant issue with UMG processing is dealing with waste. Casting yields are significantly lower (around 60% after recycling compared with regular silicon casting yield of 85%). We believe these lower yields result in an increase in silicon costs of approximately $15/kg. In other words, if 1,000 grams of silicon produced 100W of modules (assuming 850 grams of silicon were used to produce 100W of modules), using UMG, 1,000 grams would yield only 600 grams of silicon and result in 70W of modules. Silicon consumption would increase from 10g/W to 14g/W. If the UMG silicon price was $60/kg, it would increase by $24/kg. Wafers to cells. Usage of UMG increases breakage rate from less than 5% for regular silicon to almost 15%. Cells to modules. Cell to module processing cost for UMG modules is $0.02 to $0.03/W higher than regular silicon modules.
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$2 .50
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Mono-Crystalline Versus Multi-Crystalline Wafer Technology In general, multi-crystalline wafers offer several compelling advantages over monocrystalline wafers. First, the processing cost of multi-crystalline wafers is generally lower than that of mono-crystalline wafers. Second the size of multi-crystalline wafers is larger than that of mono-crystalline (156mm x 156mm vs. 125mm x 125mm) which means multi-crystalline wafers can produce higher wattage cells (3.6W compared to 2.4W for mono). Finally, multi-crystalline wafers can be manufactured by using lower cost scrap and metallurgical grade silicon increasing the potential to lower manufacturing costs. Some of the disadvantages of multi-crystalline silicon technology include lower conversion efficiency compared to mono-crystalline technology, limited multi-crystalline technology equipment suppliers (GT Solar and ALD), and long lead times for multi-crystalline equipment versus relatively short lead times for mono technology.
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Solar Cell Manufacturers We Prefer Companies with Cost/Watt Advantage, Clear Efficiency Improvement Roadmap, and Secure Low Cost Polysilicon Supply Given our conservative outlook on pricing and polysilicon input costs, we believe companies that have a cost-per-watt advantage are likely to better withstand the competitive market dynamics and likely emerge as market share leaders in 2009. As such we prefer companies that we believe have the potential to lower manufacturing costs and a strong R&D effort to improve conversion efficiencies. Silicon Solar Cell Manufacturing Process There are typically five major steps in the production of silicon solar cell, namely: 1. Etching and Polishing. Etching removes an unusable layer on the silicon wafer after the wire-sawing process. The polishing steps removed the particles on the wafer surface. 2. Cleaning. The polished wafer is then cleaned with DI water to remove all impurities on the surface. 3. Diffusion. The silicon wafer produced is usually p-typed. As explained in an earlier section, solar cell needs an n-type layer in order to create an electric field inside the cell. An n-type dopant is usually deposited on the surface of p-type substrate through a heat diffusion process, creating a p-n junction between the p-type and n-type layer. 4. Anti-reflective coating. To avoid any energy losses by reflection; an anti-reflective coating is applied on the surface of the silicon wafer. The major chemical used in this process is either silicon nitride or titanium dioxide. The layering is conducted through a socalled plasma enhanced chemical vapor deposition (PECVD) process. 5. Screen Printing. A grid-like metal contact made up of fine-fingers is screen printed onto the front surface through the use of silver paste. The rear side of the wafer is also formed by screen printing a metal paste, typically aluminum. The metal contacts on the surface and rear side then act as electrodes of the solar cell, which can then be interconnected for further assembly into a solar module.
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Polysilicon
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Figure 101: Barclays Capital Global Solar Installed Capacity Model (MWp)
Europe BP S olar Q-Cel ls Sol arworld REC Ersol Isofoton Schott Sol ar Sol land Sol ar Other Total Europe Solar % Change Y/Y Japan Sharp Kyocera Mitsubishi Sanyo Other Total Japan Solar % Change Y/Y US SunPower Fi rst Solar Evergreen Sol ar EverQ Nanosolar Mias ole Energy Conversion Devices Other Total US Solar % Change Y/Y China Suntech Power JA Solar Yingli Green Energy Chi na S unergy Canadian Sol ar Sol arfun Tri na Solar Other Total China Solar % Change Y/Y Taiwan E-Ton Motech Green E nergy Tech Total Taiwan Solar % Change Y/Y Other Regions Worldwide Solar Capacity % Change Y/Y 40 170 40 15 15 25 0 0 0 305 90 292 90 35 60 70 50 10 0 697 129% 450 150 130 100 17 847 66% 50 25 14 0 0 0 20 10 119 261% 150 0 0 0 0 0 0 0 150 400% 70 100 0 170 113% 0 1,983 107% 200 420 140 45 60 90 60 30 10 1,055 51% 600 240 230 160 20 1,250 48% 108 75 14 30 0 0 32 20 279 134% 270 30 50 30 0 50 50 0 480 220% 100 240 0 340 100% 20 3,424 73% 250 645 185 55 120 130 80 40 20 1,525 45% 650 280 260 240 34 1,464 17% 174 309 15 100 5 10 118 25 756 171% 540 210 200 80 100 240 150 0 1520 217% 200 240 0 440 29% 50 5,755 68% 360 950 250 80 180 170 163 170 50 2,373 56% 710 330 315 300 50 1,705 16% 414 622 40 180 25 20 178 45 1,524 102% 1,000 600 400 320 270 360 350 30 3,330 119% 320 560 30 910 107% 80 9,922 72% 440 1,100 450 100 280 210 223 170 100 3,073 29% 710 400 375 400 70 1,955 15% 574 1,293 160 250 40 40 300 60 2,717 78% 1,000 800 600 400 270 400 450 20 3,940 18% 440 560 30 1,030 13% 120 12,835 29% 500 1,575 450 150 280 250 300 200 100 3,805 24% 1,710 475 570 475 90 3,320 70% 814 1,738 160 250 50 50 300 60 3,422 26% 1,000 1,000 900 400 500 500 550 100 4,950 26% 500 600 30 1,130 10% 180 16,807 31% 450 1,700 450 250 500 350 350 200 200 4,450 17% 2,000 500 800 600 120 4,020 21% 1000 3,426 200 600 480 100 450 130 6,386 87% 1,400 1,200 1,200 450 550 800 650 140 6,390 29% 600 600 50 1,250 11% 240 22,736 35% 350 1,700 600 250 800 500 400 200 200 5,000 12% 2,500 700 1,200 800 150 5,350 33% 1200 4,816 200 900 480 200 600 170 8,566 34% 1,800 1,400 1,500 500 700 1,000 750 170 7,820 22% 700 700 70 1,470 18% 310 28,516 25%
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Fragmented Market Due to Low Barriers to Entry The solar module market is fragmented with low barriers to entry and relatively low valueadded technology. As a result, there are more than 400 module makers worldwide serving the key solar PV markets. We believe that over time the number of standalone module manufacturers will decline as most of the companies aim to move up the value chain into the higher-margin cell manufacturing business.
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Canadian So lar 3% Sun Po wer 4% So lo n 5% B P So la r 5% M it subish i Electric 5% So larwo rld 5% Yin gli Gree n Energy 6% San yo 6%
Sharp 14%
Kyo cera 8%
First So lar 8%
Vertical Integration Is Key to Increasing Profitability, in Our View In general, the margins of module manufacturers are about 300 to 500 basis points lower than that of cell manufacturers. Consequently, we expect an increasing number of module manufacturers to move into the cell business over time as the polysilicon bottleneck eases and barriers to entry in the cell business decline. Overall, we expect margins in both the cell and module business to decline going forward; however, we believe that the difference between cell and module margins will decrease as more cell capacity becomes available. Due to the relatively commoditized nature of the module manufacturing business, we expect vertically integrated companies to generate higher margins and consequently trade at a premium to the stand-alone module manufacturers.
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System Integrators We Expect System Integrators with Strong End Market Presence to Benefit from Low Cell/Module Pricing The system integration companies operate at the very end of the value chain and are generally involved in setting up the solar systems at the end user, which include several tasks such as site preparation, systems design and analysis, financial analysis, and maintenance. We believe regional trends will continue to dominate the systems integration market and will likely remain the biggest factor influencing solar market development in certain regions, particularly as cell and module prices decline. As barriers to entry in the systems installation market remain relatively low, we expect companies with strong regional expertise and established relationships to emerge as potential winners. We Expect System Integrator Margins to Increase as Potential Bottleneck Arises in 2010 As cell and module prices decline over time, we expect systems integration costs to become a larger proportion of the overall systems costs. In our view, lowering balance of systems costs would remain the biggest challenge in the industry as many of the components have very little potential for any significant cost reduction. As a result of high cell/module pricing and relatively low entry barriers, systems integrators generate the lowest margins in the value chain. However, as cell/module prices decline over time and as demand in certain markets such as the U.S. increases significantly, we expect the bargaining power to shift toward system integrators that have the scale and the relationships with key end customers. Solar System Components There are three major elements of a solar PV system: solar modules; inverter; and battery (optional). Solar modules are the basic building blocks of a solar PV system. Any number of modules can be interconnected for providing the required electrical outp ut. Since the electricity produced by PV modules is in DC (direct current), it has to be converted into AC (alternate current) through the use of an inverter before connection to the AC power grid is possible. Depending on the users energy consumption requirement, a battery may be necessary to store the sola r electricity produced during the daytime. This is particularly the case if the system is off-grid. If the PV system is connected to the power grid, excess electricity produced during the daytime can be sold to the grid and brought back in the evening. A battery is usually required only for off-grid solar PV system. PV modules normally can be used for 20 to 30 years, but inverters and batteries have to be replaced every five to 10 years. The PV module is still the major cost component of a PV system, representing over 60% of the total system cost in general. Solar PV systems are less expensive in Germany as it represented the largest market in 2005 (53% of global PV installation in 2005) which enjoyed economies of scale in terms of lower module input price and system integration
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costs. It should also be noted that low-priced thin film modules in Germany, particularly in large ground-mounted projects, have also played their part. Inverters Solar PV cells produce and store direct current (DC) that flows in a single direction. In contrast, alternating current (AC) reverses its course at regular intervals. Utilities provide AC electricity, the type required to run most household appliances and electronic devices. A system inverters role is to convert the supplied DC into the desired AC. While a small amount of energy is lost through the process, this conversion allows PV electricity to be sold back to the utility or used for everyday applications such as personal appliances, computers, or lights. Inverters are available in two different classes: sine wave and modified sine wave. Sine wave inverters supply utility-grade power and are required for grid-tied systems. Those that are grid-tied are called synchronous inverters. The output of modified sine wave inverters is not as clean, but they are less expensive and can usually function fine in many standalone applications. Batteries Batteries collect and store energy produced during periods when there is no sunshine, an essential component for off-grid or emergency backup systems. Several batteries linked together form a bank, enclosed by the battery box for security and ventilation purposes. A battery banks size depends on the electric load, duration of required reserve power, and availably of a backup power source. Solar electric systems use two types of batteries: leadacid and gel cell. Lead-acid batteries are less expensive but require more frequent maintenance. Sealed gel cell batteries require almost no maintenance but are bigger in size and can cost twice as much.
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Charge controllers A charge controller directs the energy flow, and prolongs the battery life of a system. Its role is essentially voltage regulating, or preventing the battery from overcharging, which can be detrimental to system performance. California System Integrator Market The California Solar Initiative, also known as "Million Solar Roofs Program, "is a 10-year, $2.2 billion incentives program aiming to add 3,000MW new solar electricity by 2017. Since the program's inception, it has received nearly 20,000 applications (including all active applications), encompassing nearly 350MW of solar insta llations. During this time, approximately 660 companies participated in the installation of solar systems in California. In the non-residential segment, SunPower is currently the largest installer on a per MW basis with 17% market share followed by SunEdison and Chevron Energy Solutions. In the residential segment, Solarcity is currently the largest installer on a per MW basis with 13% market share followed by REC Solar and Akeena Solar. Figure 104: Active Residential Installers (MW Basis)
SolarCity 13% REC Solar, Inc. 8% Akeena Solar, Inc. 6% Borrego Solar Systems Inc. 3% Other 70%
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Chevron 9%
Other 58%
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The Solar Equipment Market Solar EquipmentNo Moore's Law Here Semiconductor equipment industry growth over the past 20 years was defined by Moore's Lawas the semiconductor companies continued to drive down line widths to continuously improve performance of semiconductor devices, investments in new manufacturing equipment followed, which triggered the boom and bust cycles as well as significant growth of the semiconductor equipment industry. Unlike semiconductor industry, we do not expect any Moore's Law in the solar industry. We expect solar equipment sector growth to be defined by unit volumes. We estimate the solar industry could spend approximately $18 billion on equipment capex (not including land and building capex) over the next four years to add approximately 20GW of capacity. As shown in Figures 106 and 107, we expect the silicon based equipment market to increase from $2.5 billion in 2009 to $5.5 billion in 2012. As shown in Figures 108 and 109, the revenue generated over the depreciated life of a solar fab is substantially greater than the revenue generated over the depreciated life of a semiconductor fab. Similarly, we believe the profits generated over the life of a solar fab more than cover the profits generated over the life of semiconductor fab.
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Figure 109: Crysta lline Cell Capacity Utilization (MW versus % utilization)
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Solar Equipment Market Landscape The solar cell equipment market is fragmented and, in most cases, dominated by regional players. Figure 110: Thin Film Equipment Landscape
Company Thin Film Equipment Plasma enhanced chemical vapor depos ition equipment, equipment for depositing various silicon-based layers, CVD equipment for depositing various transparent conducting oxides (TCOs), PVD systems for depositing metals. CVD equipment for depositing T CO films, PVD equipment for depos iting metals, equipment for depos iting special c oatings. CVD equipment for depositing T CO films, CVD equipment for depositing back contacts, Laser patterning equipment. PECVD systems used on production line, PECVD systems use one substrate at a time, PVD equipment for single substrate. Modular process systems capacble of PECVD (for depositing silic on based materials), or PVD systems for depositing metals.
Applied Materials
Leyvold Optics
Oerlik on Solar
Ulvac
Von Ardenne
Source: Company data
Most of the thin film equipment companies compete directly against each other in the areas of silicon and metal deposition equipment. The general trend is to have the ability to produce (or partner with others to produce) integrated turnkey solar panel production lines. This means many of the tools for an entire facility might come from one vendor, or one group of affiliated vendors. Figure 111: Crysta lline Silicon Equipment Landscape
Company Applied Materials Baccini Centrotherm Crystalline Silicon Equipment Sputtering equipment for silic on nitride and anti-reflec tive coatings Solar cell s creen printing lines to deposit thick film conductive paste Diffusion, oxidation, firing and drying furnaces, depos ition equipment, environmental abatement equipment W afer manufacturing furnaces , turnk ey solar c ell and module production lines, wet etching systems, c ustomer furnaces and test equipment Automation equipment for solar panel production, including substrate handling systems, equipm ent for drawing and cutting silicon tubes, automated loading and unloading equipment for crystalline s ilicon photovoltaic c ell plants. PECVD equipment for silicon nitride and anti-reflec tive c oating, plas ma etching equipment and plasma proces sing systems for R&D Solar cell testing and sorting equipment, solar panel module m anufacturing and test equipment
GT Solar
Manz Automation
Spire
Source: Company data
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Module, 15%
Ri nsin g is th e proce ss duri ng wh ich ul tra soni c cl ean ing i s p erforme d on sil icon w afers, fo llo wed b y ch emica l tre atmen t of th e water surfac e, wh ich red uces the ce lls refle cti on of sunl igh t an d imp roves sun lig ht a bsorp ti on ca paci ty
Dif fusion
Di ffus ion is the p rocess du ring w hich ce rtain im puri ti es are in tro duce d into the si lico n wafer throu gh a therm al pro cess to e nab le the forma ti on of an el ectric fiel d within the PV ce ll
Et ching
Etchin g is th e proce ss th at i s a ppl ied o n th e bord er of th e wafers to preve nt d irect ele ctri cal sh orting b etwee n th e fro nt a nd the ba ck of e ach PV cell
Secondary R insing
Seco nda ry R insi ng is the pro cess du ring w hich the w afer surface i s ch emica lly cle ane d to re move the si lico n dio xide tha t may ha ve fo rmed o n the surfac e of the w ater in ord er to i mpro ve th e cell 's c apa city to abso rb lig ht
PEC VD
PECVD i s the p roces s w hich p rodu ces sili con ni tri de film o n th e wafer' s su rfa ce in the fron t, whi ch impro ves th e PV c ell' s ca paci ty to abso rb sun lig ht
Screen P rinting
Throu gh the scre en pri nting p rocess , ne gative a nd po sitive metal co ntacts, o r e lectrod es, a re prin te d on the fron t an d back su rfa ces of th e PV cel l.
Firing
Sil icon a nd metal e lectro des are co nne cte d th roug h an e lectrod e fi ring p ricess in a conve yo r b elt fu rna ce at h igh temp eratu re
PV cell s a re te ste d to d etermi ne thei r e lectrica l perfo rmance a nd so rte d base d on thei r co nvers ion ra te
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Multiple PV cells are interconnected based on the desir ed electrical configur ations through welding.
Lam ination
The interconnected cells ar e then laid out and laminated in a vacuum thr ough a heating pr ocess. Thr ough lamination, PV modules are sealed in weather pr oof packages that can withstand high levels of ultraviolet readiation and moistur e
Framing
Testing
The approximate breakdown of equipment spending among the various equipment categories is as follows: Figure 115: Crysta lline Cell Equipment Market Breakdown
Wafer Handling, 25% Anti-reflecting Coating , 25%
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Silicon Crystal Growth There are three dominant equipment categories for crystallizing molten silicon feedstock. At this step of the PV value chain, ingot structure can be either multi or mono-crysta lline. Directional Solidification Systems (DSS). Multi-crystalline ingots are cast by solidifying smelt inside a DSS furnace. Controlled cooling ensures that this happens in a single direction. Czochralski Systems (CZ). The CZ process is employed by solar companies to commercially produce mono-crystalline ingots, using sophisticated pullers and rigorous process controls. Although its use reduces manufacturing flexibility, the process enhances a solar cells quality and power output. Float Zone Systems (FZ). Mono-crystalline silicon ingots can also be grown directly from a polysilicon rod using the FZ process, which eliminates the need for crucibles. The high cost of such rods largely deters its use on an industrial scale. Market Players Aside from the multi-crystalline silicon companies that make their equipment in-house or hold exclusive products, such as Norways REC, the most widely utilized furnace across the entire PV industry is still provided by GT Solar. More recently, European and Japanese manufacturers have begun offering similar systems in the DSS market. Notable challengers include Ferrptec Corp., PVA Tepla AG, and Frances ECM. Unlike DSS, the CZ segment is currently dominated by Chinese manufacturers, with Jinyungtong Corp. claiming to hold a 50% market share in its domestic market. If this is true, the company is far outpacing the big western names. As for the FZ systems, there are currently only two manufacturers worldwide: Germanys Steremat Elektrowrme GmbH and PVA Tepla Danmark. Figure 116: DSS Furnace and Silicon Ingot
Source: GT Solar
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Ingot and Wafer Sawing Band Saws. Band saws, with diamond-coated bands, have traditionally been used for precision slicing of multi and mono-crystalline ingots into bricks. A major disadvantage is relatively higher kerf loss. Wire Saws. There has been growing demand for ingot slicing wire saws, a threat to conventional band saws, because they consist of many parallel wires that perform at a faster rate. Slurry-based wire saws are always used to then process ingots into thin wafers for the construction of solar cells. Market Players Although global wafer manufacturers are expanding production at record rates, there remains a small handful of sawing equipment suppliers. It is difficult to estimate their market shares as most are disinclined to provide sales numbers. HCT Shaping Systems, now acquired by Applied Materials, is likely still the largest. Switzerlands Meyer Burger AG is a leader in the band saw market. In FY2007, its market share rose to 86% from 74% the previous year. Nippei Toyama Corp. is believed to have gained considerable market share in both Japan and China. Wafer Cleaning There are many cleaning methods, including acid rinse baths and texturing processes, to ensure that the silicon wafers are free of contaminants, and that damage caused by wire saws is removed, as they undergo the fabrication process. In the U.S., Applied Materials entered the wet clean market with their innovative Oasis system several years ago. There are also currently many Chinese and German wafer cleaning equipment manufacturers. Diffusion In-line Furnace. Either a metal conveyor belt or ceramic rollers is used to transport wafers through a high temperature profile for the in-line diffusion of phosphorous dopant into silicon wafers on their way to assembly into solar cells. Tube Furnace. These diffusion furnaces have an outer tubular structure, and may be preferable for start-ups that want flexible cell process development. Market Players It is difficult to determine market share for diffusion furnace manufacturers because sales numbers are rarely disclosed. The cheapest tube furnace is manufactured by Sevenstar Huachuang in China, while the most expensive tube furnace is offered by Semco Engineering in France. Other market players include Koyo in Japan, Tempress in Holland, SVCS in Czech Republic, and MRL in the U.S. Inline furnace makers include American companies SierraTherm, Despatch and BTU, as well as Germany-based Centrotherm. Etching In wafer fabrication, etching is employed to separate front and back surface contacts along the edge, in what is known as edge isolation.
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Wet Etching. Wet etching for solar cell production is possible through the reaction between a liquid chemical and a solid substrate. It is often the fastest and most costeffective way to remove material from the wafer. Dry Etching. Polysilicon plasma etching is believed to have many advantages over wet etching. It may finally enable solar cell manufacturers to bridge the gap between diffusion and deposition processes, resulting in thinner wafers and a reduction in breakage losses. Other dry etching processes, including saw damage removal, surface texturing, and PSG removal, are also becoming more popular as water and chemical waste disposal costs, as well as the demand for integrated in-line solutions for value chain equipment, increases. Anti-Reflective Coating The basic semiconductor material, silicon, can reflect more than 30% of the sunlight it is exposed to. To improve a solar cells conversion efficiency, cell coating equipment serves to achieve surface passivation using silicon nitride (SiN). In March 2008, Q-Cells and Singulus Technologies announced the development of a superior coating system, both in quality and cost value, using the familiar vacuum coating process. In general, there are many different coating equipment providers throughout the U.S. and Europe. Screen Printers PV screen printing is the standard technique for metallization of solar cells in industrial fabrication, metallization being the application of contact metals on the front and back side of the solar cell. Market Players Manufacturers with high-accuracy screen printing platforms include Italys Baccini, which was acquired by Applied Materials in January 2008, and Japans DEK, which introduced a new printer model with better throughput and advanced automated features in March 2008. Other printer providers include Affiliated Manufacturers and Unichem Industries in the U.S., and Essemtec AG in Switzerland. Testers & Sorters To achieve optimal cell efficiency, it is essential for the module to be comprised of cells with simila r electrical characteristics. Therefore, at the end of the PV production line, the cells are evaluated, under simulated sunlight, on a range of parametersfor instance, efficiency level. They are then divided into batches with similar characteristics, with each batch holding the cells required to make a module. This is the role of cell testers and sorters. There are many solar cell tester and sorter equipment manufacturers on the market, including Spire Corp. and GT Solar in the United States. Tabbers & Stringers A single solar cell generates relatively low electric output. Tabber/stringer machines are used to interconnect these cells to form modules or panels, using tiny strips of metal called stringers in a soldering process. The stringers conduct the electricity produced by the cells.
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Tabber/stringer machine makers include GT Solar and Spire Solar in the U.S., P. Energy in Italy, NCP in Japan, and SunWare GmbH in Germany. Figure 117: Tabber/Stringer
Source: GT Solar
Module Laminators Panel laminators encapsulate solar modules with controlled heat and pressure to form a homogeneous, environmentally stable structure. This production step ensures that the cell strings are protected from weathering for many years. For now, EVA is the dominant material used in encapsulation foils. EVA resin is manufactured by various chemical companies, such as DuPont or Kaneka Corp. Market Players Two German companies, Meier Vakuumtechnik GmbH and newcomer Robert Brkle GmbH, are expected to summon in the next generation of encapsulation equipment. Meier, Germanys largest PV laminator provider, has been advertising this concept since 2003. Other major laminator manufacturers include Boostsolar, Hindivac, NPC, P. Energy, SpireNisshinbo, and 3S Swiss Solar Systems. Panel Simulators Simulators are essential for determining the electrical output, and other parameters, of modules. There are three categories, distinguished by the technology used to generate light: Steady State. Used primarily by testing institutions and R&D labs, this simulator is characterized by a constant light source, allowing for slow and accurate currentvoltage (IV curve) measurements, as well as the study of light soaking effects. Single Pulse. This simulator measures VI curves by emitting a short pulse of light that lasts several milliseconds. It consumes much less energy than steady-state, but can result in more flawed measurements.
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Multi Flash. This simulator emits a sequence of very short flashes, each lasting less than a millisecond. During each flash, only one discrete data point is measured, not the complete IV curve. This is considered the least accurate method. Market Players Steady-state system manufacturers like Solaronix are gaining market share due to the large number of start-up thin-film companies that require light soaking tests. Single-pulse remains the dominant design, and may increase in numbers with growth in solar concentrator modules. Berger Lichttechnik GmbH is a leader in this space. Multi-flash solar simulators, on the other hand, are becoming obsolete.
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Thin Film Cell Equipment Market Breakdown Figure 118: Thin Film Cell Equipment Market Breakdown
Coaters , 17%
Meta li a tion z
T est
La mina te
M odule Bu ssing
TCO Machines The front contact of most thin film silicon solar cells is a transparent conductive oxide (TCO) layer. The optical qualities of the materials used affect the required thickness of the silicon absorber layer, as it facilitates the absorption of the required amount of irradiation. The amount of the layer depends on the substrate used. In a glass substrate the TCO layer has to remain chemically stable during plasma deposition along with showing electrical and optical properties. In opaque substrates, the TCO layer is on top and light enters the cell from the semiconductor layer.
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Most companies use chemical vapor deposition (CVD) to deposit the materials on the substrate. Chemical vapor deposition uses vapor phase chemical reaction to deposit thin film on a substrate. This deposition is done using the TCO machines. The other popular method is the use of physical vapor deposition (PVD), this deposits thin films by condensing vaporized material onto the substrate. Modifications to the CVD technology include the use of plasma enhanced chemical vapor deposition (PECVD) and atmospheric pressure chemical vapor deposition (APCVD). The major suppliers of CVD based TCO machines include Applied Materials, Leybold Optics and Oerlikon Solar. Applied Materials, Ulvac and Von Ardenne also produce PECVD-based TCO machines. Coaters Solar cells are coated with an antireflective to reduce the amount of reflection of light of its surface. This is done to reduce the portion of light reflected of the cells surface and ensure that more of the light gets absorbed. Coaters are also used to apply antireflective such that it admits only the useful wavelengths while reflecting the rest. This is done in order to reduce the heating up of the solar modules. Leybold Optics provides equipment for special coatings for thin film cells. Laser Scribing Laser scribing is used to isolate individual solar cells. These isolated cells are then interconnected through laser welding to form the solar panels. The conducting and semiconducting layers on the modules are also removed using the lasers. Laser scribing is also used on the metal back contact layers on glass substrate. It is possible to fabricate entire modules using laser scribing. Laser scribing is seen as one of the key processes as it enables the production of highvolume next-generation thin-film devices. Scribe lines are of the order of tens of microns in width compared to cell widths of less then 10mm. Despite this, it is essential to reduce this further in order to maximize conversion efficiencies. It is also essential to maintain smooth edges in the scribes, without recast debris as conversion efficiencies are affected by micro cracks in the cells. Oerlikon Solar provides laser patterning equipment. Back-end Equipment for Testing Cells This is one of the most crucial steps in the production process. The solar cells and modules produced need to be tested to ensure that they will be able to work under not only normal but also extreme conditions. Cells need to be tested for impurities on the surface as surface contamination can affect the level of light absorbed, leading to reduced conversion efficiencies for the cells and modules. The cells also need to be temperature tested to ensure that they do not degrade under slightly elevated temperatures. Solar simulators have now started to be used for testing cells to ensure consistency in the level of conversion efficiencies and to check their degradation over time and in effect the life of the cells. The cells should also undergo testing to check for leakage.
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114
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Solar Thermal Background This source of energy is based on the fact that the sun heats up water contained in a dark vessel. Thus, the energy is harvested from the heat directly from the sun. Domestic water heating is the most common use of the solar thermal technology worldwide. Solar thermal technologies can also provide solar energy for other applications such as space heating in residential and commercial buildings and solar assisted cooling. Solar thermal is currently one of the most cost effective sources of renewable energy. The technology has further scope as potential for further economies of scale is substantial due to the moderate penetration levels even in its large markets. The US Energy Information Agency characterizes solar thermal collectors as low, medium or high temperature. The low and medium collectors are used to heat water for domestic and other basic uses. High temperature collectors are used for electric power generation through concentrating the incident sunlight using mirrors or lenses. This is called concentrated solar power (CSP). Solar thermal power plants follow the concept of CSP and use sunlight to produce steam, which is then used to generate electricity. As the heat can be stored, these plants are unique because they can generate power when it is needed, day or night in any weather. Solar thermal plants are large utility-scale projects that generate enough power to serve tens of thousands of homes. Their power is usually sold to public utilities, which then sell it to its customers. Solar thermal technology requires the following four main elements: concentrator; receiver; storage; and power conversion. The three most common solar thermal technologies are: parabolic trough; central receiver; and parabolic dish. Parabolic trough systems use trough-shaped mirror reflectors to concentrate sunlight on to receiver tubes through which a thermal transfer fluid (typically oil) is heated to roughly 400oC and then used to produce superheated steam. They represent the most mature solar thermal power technology, with 354 MWe of plants connected to the Southern California grid since the 1980s and more than 2 million square meters of parabolic trough collectors. These plants supply an annual 800 million kWh at a generation cost of about $0.14$0.17/kWh. Further advances are now being made in the technology, with utility- scale projects planned in Spain, Nevada (USA), Morocco, Algeria, Italy, Greece, Israel, Egypt, India, Iran, South Africa and Mexico. Electricity from trough plants is thus expected to fall to $0.07-$0.08/kWh in the medium term. Combined with gas-fired combined cycle plantsso-called ISCC (Integrated Solar Combined Cycle) systemspower generation costs are expected to be in the order of $0.06-$0.07/kWh in the medium term and $0.05/kWh in the long term.
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Par abolic Mir ror Heat Collec ting Element Dir ect Normal Ra diation
D rive Motor
Central receiver: A power tower system uses a large field of mirrors, called heliostats, to concentrate sunlight onto the top point of a tower. There a receiver sits, and the molten salt that is inside it is heated. This heat is then used to produce electricity through a conventional steam generator, or it is stored for days before conversion. Following completion of the first 10 MWe PS-10 demonstration tower plants, currently under construction in Spain, and with further scaling up to 3050 MW capacity, solar tower developers are confident that grid connected tower power plants can be built up to a capacity of 200 MWe solar-only units with power generation costs then comparable to those of parabolic troughs. Use of thermal storage will also increase flexibility. Although central receiver plants are considered to be further away from commercialization than parabolic trough systems, solar towers have good long-term prospects for high conversion efficiencies. Projects are under construction in Spain and under preparation in South Africa. In the future, we expect central receiver plant projects should benefit from similar cost reductions to those expected from parabolic trough plants. The anticipated evolution of total electricity costs is that they will drop to $0.07/kWh in the medium term and to $0.05/kWh in the long term.
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Parabolic dish systems are comparatively small units which use a dish-shaped reflector to concentrate sunlight, with superheated fluid being used to generate power in a small engine at the focal point of the reflector. A dish/engine system is an electric generator that burns sunlight instead of gas or coal. The large dish-shaped surface collects and concentrates the suns direct heat into a cavity receiver, which transfers the energy to fluid within a heat engine/generator. The heat causes the fluid to expand against a piston or turbine, producing mechanical power, which is then used to run a generator that makes electricity output possible. Their potential lies primarily in decentralized power supply and remote, standalone power systems. Projects are currently planned in the United States, Australia, and Europe. In terms of electricity costs, an attainable near-term goal is a figure of less than $0.15-$0.20/kWh, depending on the solar resource. Current trends show that two broad pathways have opened up for large-scale delivery of electricity using solar thermal power. One is the ISCC-type hybrid operation of solar collection and heat transfer combined with a conventional power plant. The other is solar-only operation, with increasing use of a storage medium such as molten salt. This enables solar energy collected during the day to be stored then dispatched when demand requires.
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Receiver Concentrator
Advantages The primary advantage of solar thermal technology is that it offers heat storage capability unlike photovoltaic technology, solar energy collected during the day can also be stored in liquid or solid medium such as molten salts, concrete, ceramic or phase changing salt mixtures. Solar heat can be extracted from the storage medium at night, thereby maintaining continuous turbine operation. The second advantage is that solar thermal plants can be designed for solar only or for hybrid operation, where a fossil fuel can be used in case of lower radiation intensity to secure reliable peak-load supply. Finally, the costs of solar thermal electricity are lower than that of photovoltaic technology and further cost reductions are likely. Solar thermal generation costs in California range between $0.14 and $0.17/kWh today and are expected to decline to between $0.07$0.08/kWh in the future. Limitations Solar thermal technology requires direct sunlight and as a result, power plants are usually cited in regions with high direct solar radiation. Technological Advancements The glass mirrors used have gone to flat from curved and are thus less expensive. Steam can now be produced directly from solar energy by attaching solar boilers to the solar thermal panels.
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The steam is also at a much higher temperature and is thus more effective and efficient in producing electricity. Mirrors reflecting sunlight move in two dimensions instead of one thereby absorbing sunlight more effectively. Major Solar Thermal Projects Brightsource Energy and Pacific Gas & Electric are building one of the largest solar thermal plants in the Mojave Desert in the United States. The 500MW concentrated solar power plant is expected to start operations in 2011. Stirling energy is also building a 500MW plant in the Mojave Desert in collaboration with San Diego Gas & Electric. The plant which will use parabolic dishes is also expected to begin operations in 2011. The Mojave Desert is also home to the over 500MW plant being built by Solel in collaboration with Pacific Gas & Electric and the over 300MW plant being built by Florida Power & Light and Southern California Edison. The 11MW plant in Seville, Spain is currently one of the largest solar thermal plants and is expected to increase in size to 300MW by 2013. Other major projects include Solar Partners 400MW plant in California, the 280MW plant being built by Abengoa in Arizona, and a 250MW plant being planned by Israel in the Negev Desert. Florida Power & Light has a 300MW plant in Florida, and a 250MW plant in the Mojave Desert, USA. Both these plants are scheduled to start operations in 2011 and help Florida reach its target of 20% energy through wind and solar. Major Demand Centers The solar thermal market is dominated by China, Europe, Japan, and India. China is by far the largest market but is almost entirely driven by solar water heaters which have flourished without any government incentives. A major reason for the popularity of solar water systems in China is because of their low capital cost, which is nearly a fourth of the cost in Europe. The total installed capacity in China is estimated to have been more than 50GWth in 2007 with over 30 million households expected to have a solar water heater. Despite this, China continues to have significant scope to grow due to its low penetration levels. The European Solar Thermal market grew by 9% in 2007, reaching 1.9GW of new capacity with total capacity reaching 15.4 GW. Germany continued to be the largest market in Europe but growth shrank 37% in 2007 to 658MW of new capacity. The other major markets in Europe were Austria with 197MW and Spain with 183MW of new capacity. Europes per capita capacity was 3.8kW per 1,000 people in 2007 bringing its total solar thermal capacity in operation to 30.7kW per 1,000 people. Cyprus continued to have the highest installations per 1,000 people in 2007 at 32kW followed by Austria (23.7kW) and Greece (17.7kW).
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France, 9%
Greece, 10%
Concentrating solar power systems are applied in centralized power productions. They convert the suns energy into heat first, then mechanical power, and finally electricity using conventional generators. Although CSP produced energy currently costs more than other renewable resources like wind, production using this method can be much more closely aligned with periods of peak demand. Solar intermittency problems are alleviated with thermal storage or hybridization with natural gas. The year 2007 was pivotal for solar CSP development with 65 MW of parabolic-trough systems brought on line in the U.S. Further growth is highly dependent upon the duration and parameters of the Investment Tax Credit. We believe CSP is an especially attractive renewable energy option for large-scale power generation in the Southwest, where 15 of the 20 fastest-growing metro areas in the U.S. are located. The abundance of sunshine in these areas provide flexibility in building solar plants close to existing or planned transmission lines, making it easier to dispatch the generated power when it is needed. Technical and Market Challenges The CSP technologies described above primarily face capital cost reduction challenges. Performance improvement is desired for system components like concentrators and solar receivers. More relia bility is needed to reduce hig h operation and maintenance expenses. Volume production can also help to bring down outlays through standardization of engineering, materials procurement, and manufacturing. The scaling-up of plant and project sizes, for greater dispatch of power, is anticipated. Several other factors can intervene with cost goals, even if technical targets are met. These include: developers real cost of capital; ROI required by investors; difficulty of getting construction approval; cost of commodity materials; and currency exchange rates. Although the DOE has identified power towers as the lowest-cost CSP technology, they have been absent from the countrys solar R&D portfolio for the last five years. The Solar Program
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stopped funding this area due to non-existing activity in U.S. power towers, and instead focused resources on the other two CSP categories where large projects were in the works. CSP systems require direct sunlight. While the Southwest holds adequate resources, the limitations of transmission capacity restrict the amount of power that can be exported to other regions of the country. Also, while energy from the sun is deemed free fuel, the cost of conversion equipment is high but necessary for the commercial production of electricity. Taxation of solar energy equipment as real property further increases the cost of using this particular renewable energy source. At present, the number of installed systems in the U.S. is relatively low. Until 2006, no commercial solar thermal electric systems had seen installation since 1991. Two parabolictrough systems were completed last year. No commercial dish-engine or power tower system has ever been built in the states, although two years ago an 11 MW tower began operation in Spain, where three more power towers are under construction.
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Germany
Government support has propelled Germany into the biggest solar market.
With 6,000 MW of cumulated capacity, Germany remains the largest market for solar PV systems. Mainly in the form of feed-in tariffs, government incentives have favored strong market growth and sustained the development of the photovoltaic industry that currently generates 0.8% of the countrys electricity. The governments goal is to generate about 27% and 45% of electricity from renewable sources by 2020 and 2030, respectively, from about 13% currently. The German governments support for solar industry started in 1999, when it sponsored a 100,000-rooftop program that offered EUR0.50/kWh of feed-in tariff on solar PV electricity for 20 years, in addition to low-interest financing. This program resulted in a tenfold increase in solar installed capacity. The tariff program was revised in 2004, further stimulating the market with annual solar installations tripling to 540MW in 2004 from 170MW in 2003. In addition, Germany introduced new incentives for large-scale solar hot-water installations, with low interest loans and 30% capital cost subsidies, for systems greater than 40 square miles.
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FIT are granted for 20 years If the growth of the PV market (new installations) in a year is stronger or weaker than the defined growth corridor, the degression in the foll owi ng year will increase or decrease a percentage point respectivel y. Degression A bove: +1% Below: -1% 2009 1500 100 2010 1700 1100 2011 1900 1200
Tax Credits
Further Support Programs Investment costs for commercial systems (incl. Planning and installation) can be depreciated over a 20 year period and other costs can be considered as operations cost Commercial systems are VAT exempted (VAT is at 19% in Germany) In exceptional cases for some commercial systems which operate closely to producing or manufacturing facilities 12,527,5 % of invest ment can be claimed as t ax credit KFW P rogram Solarstrom Erzeugen (No. 140) f or private investors: Up to 100% invest, max 50. 000, up t o 10 years with 1-2 years free of redemption or up t o 20 years with up to 3 years free of redemption at nominal int erest rates of 4,15-4,45% depending on duration, except investors under direct supervision of local authorities
KFW ERP-Umwelt- und Energiesparprogramm for commercial investors: 50% for SME s, other companies up to 35% of Beneficial max. 500.000 invest (in old f ederal stat es) alt ernatively 1 Mio. Invest (in new f ederal stat es), duration 10 years with 2 Credi t Terms years free of redemption (in old federal states) alternatively 15 years with 5 years free of redemption , nominal int erest rates between 4-7% (depending on location, duration and credit risk evaluation) KFW Umweltprogramm for commercial investors: 75% of invest of max 10 mio. per I nstallation 96% net payment, up to 20 years duration, with up to 3 years free of redemption, nominal interest rates between 4-7, 72% Investment Grant Some regional programs exist
3000
10. 0%
8.0% 150
1500
100
6.0%
4.0% 50
2.0%
0.0%
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Nuclear, 8%
5.0%
4.0%
3.0%
2.0%
0.0% 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
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Spain With among the highest solar insolation in Europe and favorable legal and fiscal incentives, Spain was the fastest-growing sizable solar PV market in 2008. The Spanish government incentives are fixed for the first 25 years of operation and decrease 20% thereafter. Figure 129: Spain Incentive Program
Power Plan Limit Size Type 1 - Rooftop Type 1 - Cap F eed in Tariffs Type II - Gro und Mo unted To tal Cap 10MW 0.32 /kWh < 20 kW > 20 kW 2MW Tariff 2009 0.34 /kWh 0.32 /kWh Cap 2009 27 MW 240 MW 267 MW 233 MW (133+100) 500 C ap 2010 30 MW 265 MW 295 MW 207 MW (133+60) 502 Cap 2011 33 MW 292 MW 325 MW 162 MW 488
Tariffs and caps are adjusted quarterly according to demand in previous quarter: If at least 75% of the cap for the previous quarter is reached, rates decrease by a maximum of 2.5%, and the cap is increased by the same amount. Conversely, if less than 50% of the cap is reached, rates increase and caps decrease by the same amount. If between 50 and 75% of the caps are reached, incentive levels and caps remain the same. The annual digression rate is capped at 10%. Annual caps adjust in inverse proportion to digression (e. g. If rates decrease by 8%, caps will increase by 8%). Law 35/2006 establishes a tax rebate of 6% (2008), 4% (2009), 2% (2010) from the annual benefits of the PV system.
Tax Incentives
1200 900 600 300 0 2007 2008 2009E 2010E 2011E 2012E
40
0. 0%
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2 .5%
Nuclear, 18%
2 .0%
1 .5%
1 .0%
0 .5%
0 .0% 20 02 2 003 20 04 2 005 200 6 2 007 200 8 20 09E 2 010E 20 11E 2 012 E
C onventional
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United States The federal investment tax credit (ITC) was extended in October 2008 for eight years. The bill removed the $2,000 cap for residential installations, and allows public utilities to take advantage of the federal incentives. Furthermore, the new proposal eliminates the public utility exemption to the ITC and allows the credits to be taken against the alternative minimum tax (AMT). In February 2009, Congress passed an economic stimulus package that included support for solar installations. The stimulus provided incentives for the production of green technologies in the United States, as well as providing a 30% grant to install renewable energy systems such as solar. In addition to the support at the federal level, the states and municipal governments provide rebates for PV system purchases and have a feed-in tariff system established in states such as Washington. Net metering is available in 42 states across the country. Most of these states offer statewide net metering for all utility types. In addition, some 26 states have already implemented renewable portfolio standards in a market-driven approach to ensure a minimum and growing percentage of electricity to be sourced from renewables. These include Nevada (20% by 2015), New Jersey (22.5% by 2021), and Colorado (20% by 2020). There is a provision for solar in the renewables policy, with Nevada planning 1% solar by 2015, New Jersey planning 2.12% by 2021, and Colorado 0.8% by 2020. The bottom line is that we believe statewide solar programs are likely to make the U.S. one of the fastest-growing markets over the next three to five years. Figure 134: U.S. Market Annual Solar PV Ins tallations (MW)
140 120 100 80 60 40
27 39 18 22 15 13 4 4 3 3 3 4 2 3 1 2 1 1 97 1 16 2007 200 8
20 0
rn ia
rs ey
aw ai
ct i cu
on
ts
ad
ad
Yo r
se t
al if o
ol or
N ev
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on ne
Ne
M as
sa c
O re
A r iz
Je
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go
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104,392,528* 490,795,218 205,960,167 53,756,522 7,182,179* 81,467* 11,960,090 197,795,429 89,007,047 30,196,422 252,759,444 79,574,968 70,259,509 348,007,286 65,130,407 46,536,608 66,303,400 27,632,793 1,418,258,950 322,801,400 867,839,634 435,900,727 8,175,579 350,862,367 2,076,777,949 130,525,091
15% 20% 20% 23% 20% 11% 20% 25% 105 MW 30% 9.5% 4% 25% 15% 20% 25% 22.5% 20% 25% 12.5% 25% 18% 16% 5,580 MW 15% 10%
2025 2010 2020 2020 2019 2022 2020 2025 2022 2009 2025 2015 2015 2025 2021 2020 2013 2021 2025 2020 2019 2015 2020 2015
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ME : 30% by 2000
10% by 2017 - new RE
M T: 15% by 2015
SD: 10% by 2015
NY: 24% by 2013 NJ: 22.5% by 2021 PA: 18% by 2020 M D: 9.5% in 2022 *DE: 20% by 2019 DC: 11% by 2022
*VA: 12% b y 2022
CO: 20% by 2020 (I OUs) *10% by 2020 (co-ops & large muni s)
TX: 5,880 MW by 2015 HI: 20% by 2020 Minimum solar or custo mer-sited RE requirement * Increased credit for solar o r custo mer-sited RE PA: 8 % Tier I / 10 % Tier II (includes non-renewables)
Sta te RPS Sta te Go al So la r water hea ting e ligible
Source: DSIRE
* * 25 * 2,000 *
100 * 40
VT: 250
1 00
25/100
* 20 *
1,000 1,000
* * 25/2,000
* 500
100
30
no limit
40 10 *
15
* *
25 20/100
varies 80,000
100 * 25/300
* 50
10/100 25/100
100
(KIUC: 50)
FL: 2,000*
S ta te-wid e net metering for certain u tili ty types only (e .g., in vestor-owned utilities) c ertain utili investor-owned N et metering o ff ered voluntarily by one or more ind ividual utilities ffered volun tarily
(Note: Numbers indicate individual sys tem s iz e limit in kilowatts. Some states limits vary by c ustomer type and/or technology)
Source: DSIRE
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132
20
15
0.8 % 0.6 %
0. 3%
0. 3%
0. 2%
0. 1%
0. 1%
Petroleum, 40%
0. 0% 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
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Japan The Japanese governments target is to increase solar installed capacity to 4.8GW by 2010 from less than 2GW in 2008, representing more than 140% growth. High grid electricity rates as a result of lack of domestic energy resources (Japan imports 75%80% of energy) and directed government incentives have historically resulted in strong growth of solar installations in Japan. Government support for solar PV has been in the form of subsidies. Recently the Japanese government announced a plan to reinstate its solar subsidy program. The current plan is for utilities to purchase surplus electricity at 50/kWh (about $0.50)/kWh. The plan is expected to be introduced by 2010 at the latest. Figure 144: Annual Solar Installa tions (MW)
900
2. 5%
600
25 20
2. 0%
1. 5%
300
15 10 5
1. 0%
0. 5%
0 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
0. 0%
2.0%
Hydro, 7%
1.5%
1.0%
Thermal, 71%
0.5%
0.0% 2002 2003 2004 2005 2006 2 007 2008 2009E 2010E 2011E 2012E
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South Korea
Government targets 1.3GW of PV capacity by 2011.
South Koreas government has set a target of 5% energy generation from renewables (compared with approximately 1% in 2007) and 1.3GW of PV installed capacity by 2011 (cumulative installed capacity was less than 100MW in 2008). South Korea has a feed-in tariff of EUR0.40/kWh for less than 30KW systems all the way up to EUR0.30/kWh for systems greater than 3MW. In addition, new public buildings larger than 3,000m are required to spend 5% of the total budget on installation of renewable facility. The government also provides support to the PV industry through joint R&D projects coordinated by the Korean Development Organization (KPVDO) since 2004. Figure 148: South Korean Feed-In Tariff Program
Period 15 Years 20 Years <30 kW 30- 200kW 200kW 1MW 1MW - 3 MW > 3MW
0.4/kWh 0.39/kWh 0.37/kWh 0.35/kWh 0.3/kWh 0.37/kWh 0.35/kWh 0.34/kWh 0.32/kWh 0.27/kWh
1500
80 70 60 Solar as % of R enewables
1000
500
30 20 10
3.0% 2.0% 1.0% 0.0% 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
135
3. 0%
2. 5%
2. 0%
1. 5%
Nuclear, 37%
1. 0%
0. 5%
Thermal, 62%
0. 0% 2 00 2 20 03 2 00 4 200 5 20 06 200 7 20 08 20 09E 20 10 E 201 1E 2 012 E
Hydro, 1%
Source: EIA, Barclays Capital estimates Source: EIA, Barclays Capital estimates
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France
Government offers attractive feed-in tariff scheme with a special bonus for BIPV installations and a n income tax credit for private individuals.
The primary incentive mechanism in France is in the form of a feed-in tariff for a duration of 20 years, with the annual tariff increase pegged to inflation. France is making a renewed effort to increase the renewable share of the countrys total energy consumption from 10.3% in 2005 to 20% by 2020. The European Union has further increased this target to 23% by 2020. The government plans to increase the installed capacity for PV power to 3,000 MW by 2020. In addition, 5 million solar thermal units are to be installed in buildings by 2020, with 80% of these in homes. France benefits from very favorable solar irradiation conditions, especially in the south and in overseas territories. With what we believe is an attractive feed-in tariff scheme, combined with a special bonus for building integrated PV (BIPV) installations and an income tax credit for private individuals, the French government paved the way to rapid growth in PV installations. The current feed-in ta riff program favors BIPV systems. The majority of the large-scale installations take place in overseas territories and the south of France (where average insolation is greater than it is in the rest of the country). In addition to the feed-in tariffs, the small private system market receives a 50% income tax credit, which at times represents approximately 50% of the solar module investments (excluding labor costs). France recently increased subsidies for commercial buildings to EUR0.45/kWh. A EUR0.55/kWh subsidy is still provided for Building Integrated throughout France. Figure 153: South Korean Feed-In Tariff Program
Continental F rance Granting Perio d Roof Top an d G roun d Mo unted Feed in T ariff BIPV Commercia l Cap Other In fo rmatio n Ben eficia l Credit Terms 0.55 /kW h 0.45 /kW h Installed peak capacity x 1500 full load hoursT hereafter 0.05 /kWh Tariff annually revised on inflation 20 Years 0.30 /kW h
The government does subsidize green loans through financial institutions. The exact terms of the green loans vary pe r insti tution but interest rates fa ll between 3 and 5% over 5-10 years (20 in some ca ses). Private tax reduction of 50% on material costs at mai n residence, max 8.000 for si ngles and 16.000 for coupl es, val id until end of 2012. System si ze < 3 kWp (if > 3 kWp, not cu mulative with FIT). Reduced VAT (5.5%) on material and installation cost. Accommodation is more than 2-year and system size < 3 kW p.
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25
20
15 0 .4 % 10 0 .3 % 0 .2 % 5 0 .1 % 0 0 .0 % 200 2 2 00 3 20 04 20 05 20 06 2 00 7 20 08 2 00 9E 2 01 0E 20 11 E 20 12E
0 .4 %
0 .3 %
0 .2 %
0 .1 %
Nuclear, 77%
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Italy
Italys goal is to reach 3GW of installed capacity by the end of 2016.
The Italian governments goal is to reach 3GW of solar PV installed capacity by the end of 2016. The primary incentive program is what we believe to be an attractive feed-in tariff, which is inspired by the German model, and projects receive fixed remuneration for the first 20 years. The tariffs are declining 2% every year for new applications. This new program, which was implemented in February 2007, is aimed to provide tariffs until a cap of 1.2GW is reached. The government has simplified the process of accessing the grid by the introduction of the new program in February 2007. Some of the measures taken are as follows: 1) All partially/fully integrated systems and installations below 20KW are no longer subject to environmental impact assessment and authorization process; 2) Developers are no longer required to wait for long periods to receive accession rights from the Gas and Electric Authority. We believe large IPP projects and medium-large commercial systems offer strong potential in the near term.
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Cap
The maximum cumulative power supportable is 1200 MW. However, the plants that will enter into force no later than 14 months - for private owners - and 24 months - for public owners - after the reaching of the cap they will benefit from both the tariffs and the premium. Bonuses, not cumulative, equal to a 5% premium are provided in these cases: - the electricity producer if he/she uses at least 70% of the electricity generated, - public schools and public health c enters; - Installations integrated to building substituting asbestos roofs ; - Municipalities with less than 5.000 inhabitants. Increase in the energy efficiency: If the consumption of energy of the building is reduced by at least 10% , an increase in the incentive tariff is awarded in a percentage equal to half of the percentage of electricity saved, but not exceeding 30% of the standard tariff.
2% degression of 2008 tariffs starting from 2009, and so on for the forthcoming years. The target set by the government is 3.000 MW by 2016. FIT payment duration fix for 20 years
Further Suppor t Program s Net Metering: (Alternative to the sell of electricity and cumulative with FIT) Tax Credits Net-metering does not provide for direct payments. Is based on a balance of the value of the electricity produced, consumed and not consumed but fed into the grid. This can lead to a surplus on behalf of the system operator that will be holder of a credit, that is refundable, in terms of electricity, within 1 year. Reduction of VAT from 20% to 10% Reduction in property tax that amounts to less than 4 per mille Owner of plants producing renewable electricity may decide to sell it; Three options are available:
Sell of the Electricity (Alternative to net-metering and Indirect Sell: Convention with the GSE (Italian Authority in charge of the Photovoltaic incentives system). cumulative with FIT) Direct Sell - Sell it to the "electric stock exchange" or to a wholesaler
Other Information
From January 2009 the net metering system will change significantly. The big change consists in the payment of the obtained credits by the GSE. The pric e that will be applied will be an average of the values of the national prices per area (prezzi zonali orari).
140
1800
80
1200
60
600
30 20
3.0% 2.0% 1.0% 0.0% 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
10 0
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0% 2002 2003 200 4 200 5 2006 2007 2008 2009E 2010E 2011E 2012E
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Greece
Natural conditions make Greece an ideal market but the government must take measures to aid solar installations.
The European Union wants Greece to increase its share of renewables in energy from 6.9% in 2005 to 18% in 2020. The government introduced a RES (Renewable Energy Sources) law in June 2006 which offered a special tariff for PV energy and set the basic permitting procedures. Under the new feed-in tariff law, the government had set a target of 840MW of solar PV installations by 2020, with 640MW of these installations on the mainland and 200MW on the islands. On January 15, Greece passed an amendment to the tariff, eliminating the 840MW cap that was originally included in the law. There is currently no cap associated with the feed in tariff. Under the current feed-in tariff program, which is guaranteed for 20 years, new tariffs are adjusted annually based on retail price increases and inflation. In addition, PV systems for commercial applications are eligible for a state grant, accounting for 20% to 40% of installed cost depending on the size and region of the investing company. Lastly, small enterprises are eligible for a subsidy that covers four units of the interest contracted to finance PV installations. Small domestic applications receive a 20% tax deduction capped at EUR700 per system in addition to the feed-in tariff.
Income t ax reduction by 20% of the installation costs, max 700,- on-grid as well as off -grid systems Interest rate support of 4% for credits of 10, 000 350,000, durat ion unt il end of 2008 20-40% of syst em cos ts depending on region and type of company FIT payment duration fix for 10 years, ext ension of furt her 10 years possible inst allations of max. 150 kWp on own ground do not require an operating license. The new proposal which was submit ted to the parliament in November, fores ees new Feed-in Tariff which will be guaranteed f or 20 years and the degress ion rat e will be f ixed and known for 5 years.
Other Informati on
142
500
70
60
10
Thermal 92%
200 2
20 03
20 04
2 00 5
20 06
2 00 7
2 008
2 009 E
20 10 E
201 1E
20 12 E
143
China
China plans to install 450MW of solar capacity by 2010 and 1.8GW by 2020.
The Chinese government plans to increase the development of renewable energy to curb its reliance on oil and gas. The share of non-hydro renewables is planned at 1% of total power generation by 2010 and 3% by 2020. China wants to increase its installed capacity of renewable energies to 60GW by 2010. This would include 450MW of solar energy generating capacity. The government has set a target of 1.8GW cumulative installed capacity of solar by 2020. China has also set national goals for solar hot water, with a target of 150 million square miles by 2010 and 300 million square miles by 2020. China passed the Renewable Energy Law in January 2006, which made State Councils responsible for the development of the renewables industry. Under the law, renewable power generation projects are required to obtain administrative permits to proceed and are required to follow an open tendering process for this permit should there be more than one applicant. The law guarantees connection to the grid and purchase of all output at a preapproved price. Grid operators pass on the additional cost of using renewables to the end users. The Chinese government recently introduced 25RMB/W incentive for BIPV roof-top projects in China. Although there is no formal cap, we expect the government to allocate small budget to test the PV market development and follow-up with additional incentives from 2010. Several provincial governments have also expressed interest in promoting solar. The Jiangsu province for instance has announced additional incentives for solar projects with a cap of 240MW.
200
100
0.1 0.0
144
0.0 %
0.0 %
0.0 %
0.0 %
Thermal, 81%
0.0 % 2002 200 3 2004 2005 20 06 2007 2008 2009 E 2010E 2 011E 201 2E
145
India
Steps taken by the central and state governments in 2008 should provide a tailwind to the Indian solar industry.
The Indian government plans to subsidize the running of solar power plants to develop a renewable energy infrastructure. The main incentive announced in January 2008 is to provide financial assistance amounting to Rs12 (US$0.30)/kWh for solar PV and Rs10 (US$0.25)/kWh for solar thermal power fed to the electricity grid. The government will allow a maximum capacity of 10MW in each of the countrys states and a maximum of 5MW per developer under this initiative. The Indian government estimates that the private sector will invest about Rs10 billion (US$253.7 million) in solar plants, which could apply for aid under the initiative during the five years to 2012. The government seeks to increase its renewable capacity to 35GW in 2012 from 11GW currently. The state of West Bengal has set a target to generate 500MW from renewable sources by 2015 for commercial purposes; 50MW of this is expected to be generated from solar power. The state of Punjab plans to offer 100MW of solar PV power projects.
400 300 200 100 0 2007 2008 2009E 2010E 2011E 2012E
0. 7
0. 5 0. 4 0. 3 0. 2
1 .5%
1 .0%
0 .5% 0. 1 0. 0 20 02 20 03 200 4 200 5 200 6 200 7 2008 2009 E 2 010 E 2 011E 20 12E 0 .0%
146
0 .4%
0 .3%
0 .2%
0 .1%
Thermal, 82%
147
Australia Australia currently generates about 8% of its electricity from renewable sources, almost completely through hydropower. The new government has currently set a goal for renewable sources to generate 20% of the countrys energy needs by 2020. Currently, the different states have their own renewable energy targets. As part of its climate change strategy introduced in 2004, Australia set up a Solar Cities Program. The Australian government created a Photovoltaic Rebate Program (PVRP) in 2000 through which cash rebates were provided for the installation of grid-connected or standalone PV systems. The program was extended by five years in May 2007, with an allocation of A$150 million. The rebate for solar panels is A$8 per watt, up to a maximum of A$8,000. The government has decided to test the rebate and limit it only to households earning less than A$100,000. It has also decided to put a cap on the rebate payout to 6,000 households. State governments have also taken steps to promote solar through feedin tariffs. Figure 176: Australia Capital Territory Estimated Financial Return (AUD)
Sy stem Size Estim ated pu rchase price aft er rebate a nd RECs Annual inco me from electricity generated Approximate return on investment (ROI) annually Total net return in today's do llars af ter p ay off on initial investmen t
Source: Energymatters.com.au
Source: Australian Office of the Renewable Energy Regulator, Barclays Capital research
148
Austria Renewable energy sources produced 64.9% of Austrias electricity consumption in 2006, with hydropower having the largest share (57.4% of the total). The new Austrian government plans to increase the share of renewables in electricity production to 80% in 2010 and to 85% by 2020. To achieve this goal, it has amended the countrys 2003 Eco-electricity Law, which provided feed-in tariffs between EUR0.47 and EUR0.60/kWh over a guaranteed 13 years. The original PV capacity cap of 15MW was also eliminated. The amendment set a target of 10% electricity generation from new renewables by 2010 and an annual budget of EUR17 million. Eight percent of this funding, or EUR1.36 million, is allocated to solar PV, and there are plans to expand the overall budget share for ecoelectricity, excluding large hydropower, to 15% by 2015. Funding volume for renewable energy systems is to be increased to EUR21 million annually, while the share for PV is to be increased to 12%. The new feed-in tariffs became effective on October 1, 2006. PV tariffs between EUR0.30 and EUR0.46/kWh are to be paid over 10 years, with 75% paid in the eleventh year further reduced by 50% in the twelfth year. The PV segment is funded through a surcharge on each kWh for electricity dealers and end-customers (flat rate for each metering point) and a share of 50% by the states. Together, the PV Austria organization and the Ministry for Environment have created an additional 10,000 roofs program that became effective in April 2008, on top of the amended Eco-electricity Law. Subsidies to private investors of EUR2.7/W or EUR2.8/W are available for rooftop installations and EUR3.5/W is available for faade installations, both applicable to systems of up to 5 kW. Figure 179: Annual Solar Installa tions (MW) Figure 180: Elec tricity Market Breakdown
149
Canada The Canadian market was mainly driven by off-grid customers until 2006. The PV industry underwent a significant change after the state of Ottawa launched a Standard Offer Program in 2006. The program has no overall cap, but there is a 10MW cap on an individual project size. Solar and other renewable sources such as wind, biomass, and hydro are eligible under the program. The state has also set a target of installing 100,000 solar roofs through the Go Solar program. The program extended the retail sales tax rebate on solar equipment to January 1, 2010. The SOC program has mostly generated demand for large projects, while there have only been a small amount of residential and small commercial installations. The application process and the following procedures are said to be overly complex. In March, Ontario proposed a Feed-in-Tariff for Various forms of renewable energy production, including onshore and offshore wind, hydroelectric, solar, biogas, biomass, and landfill gas. For rooftop solar installations less than 10KW, system owners will receive CAD 0.802/kWh. The incentives decrease as the installation size increases, maxing out at CAD 0.539/kWh for rooftop systems greater than 500KW. The feed in tariff for ground mounted installations less than 10MW is CAD 0.443/kWh. Figure 181: Ontario Proposed Feed-in-Tariff
Inst allation Type Feed in Tarif f <10kW Rooftop 80.2 10kW - 100kW Rooftop 71.3 100kW- 500kW Rooftop 63.5 >500kW Rooftop 53.9 <10MW Ground Mounted 44.3
Source: PowerAuthority.on. ca
400 300 200 100 0 2007 2008 2009E 2010E 2011E 2012E
Thermal, 24%
150
Israel Israel has one of the highest solar insolations worldwide, ranging from 1,700kWh to 2,200kWh. PV installations in Israel are dominated by remote homes, agriculture, and exterior lighting. As the country has almost universal access to grid-electricity, which is relatively cheap and dependable, little grid-connected PV was reported before 2006. In August 2006, Israel initiated a feed-in tariff for solar technologies, and the cost analysis of solar thermal plants was the basis for the tariffs. The tariffs were established for two sizes, a tariff of 87.6 agorot ($0.242)/kWh was paid for installations between 100kW and 20MW and a tariff of 70.25 agorot ($0.194)/kWh was paid for installations of more than 20MW. These tariffs are paid for 20 years and are updated annually. Producers are allowed to sell electricity directly to a private customer or to the Israel Electricity Corporation. At the end of 2007, Israel was estimated to have only 1.7MW of PV capacity with only 60kW connected to the grid. The Public Utilities Association introduced a tariff structure of 2.04 ILS ($0.564)/kWh for installations up to 15kW for residential installers and up to 50kW for commercial installers, and these tariffs will be provided for 20 years. From 2010, a 4% reduction in tariffs would occur every year. This structure is expected to be funded by a surcharge of about 0.5%/kWh on electricity bills. A cap of 50MW or seven years, whichever comes first, is put in place for the program. Figure 184: Annual Solar Installa tions (MW)
40 30 20 10 0 2007 2008 2009E 2010E 2011E 2012E
Thermal, 100%
151
Portugal Among the EU countries, Portugal has historically had one of the highest dependencies on oil-generated electricity. Hydropower contributes 15%30% of total electricity generation. A National Energy Strategy for renewable energy was initiated in 2006, introducing plans for resources such as biomass and solar hot water. The country now plans to expand its share of electricity generated from renewables to 39% by 2010. Wind power, as the main focus, is projected to reach installed capacity of 3,750MW by that time. Portugal has had a feed-in tariff system in place since 2005, with varying incentives for the different clean technology forms. There is a 150MW cap for solar PV capacity by 2010, and two ways for system operators to access funding. The first option is to become an Independent Power Producer in a licensing process administered by the DGGE. IPPs receive EUR0.445/kWh for systems below 5kW and EUR0.315/kWh for systems above 5kW. They are either subsidized for 15 years or for total production of 21GWh/MW (for larger systems). The second option consumers have is to sell half of the electricity they generate to the utilities, which are required to buy 50% at slightly below 100% of the feedin tariff for 10 years. This latter option is usually not as financially attractive as the IPP option, and thus far has not been widely used. In general, constrained DGGE licensing and prevailing bureaucracy has kept the process long and difficult to navigate. As a result, Portugals renewables market has not seen highly substantial growth, even with the attractive tariffs. An amendment to the law was set in late 2007. The government will provide a feed-in tariff of EUR0.65/kWh for systems of up to 3.68kW for a maximum of five years. An annual installation volume cap of 10MW exists; after it is reached, the tariff will be reduced by 5%. The approval procedure is expected to be simplified as well. Figure 186: Portuguese Solar Incentives
Law: DL 363/2007 Feed in Tariff Cap <= 3.68 kWp 12MW After this period, for more 10 complete years, the tariff will be reduced by 5% for each 10MW connected until that date. 0.65 /kWh
Payment Fix
All the installations must have, at least, 2m of solar thermal installed to get the FIT. The law 312/2001 that es tablished the previous FIT was s uspended in January 2005. Law Other Information 363/2007 only allow to get licenses for systems up to 5,75KW. By the way s ys tems with power higher than 3,68 kWp and up to 5,75kWp will be paid with the tariff equal to the domestic house owner's buying price (0,11 kWh) and wont benefit from the FIT. VAT Reduction Beneficial Credit Terms Reduction of VAT from 21% to 12% 100% reduction on interest rates. Started on 2007 and ends on 2013. Applicable only to SMEs to a maximum of 75 000 per project loan for 5 years and 2 years for c apital " carncia". Support level equals to 35% of the total investment. Start year 2007End year 2013 Applicable only to SMEs to a maximum of 250 000 per project. (Portaria 1463/2007)
152
40
20
153
Switzerland In 2005, 57% of Switzerlands electricity was generated by hydropower and 38% by nuclear power. Renewable energy sources were not sufficiently funded until parliament amended the countrys Energy Law the following year. PV-specific programs had been funded largely by many of the cantons and local communities. Beginning in 2006, the Swiss Federal Council opened discussion on the amendment regarding feed-in tariffs for renewable technologies. The new law came into effect on January 1, 2009. The incentive structure for PV installations is shown below. The feed-in tariff is expected to last for 25 years from the time system operation begins, and then decline by 8% annually applicable to all new insta lla tions in the respective year. The aforementioned cap is dependent on the electricity surcharge billed to end-customers. Figure 189: Switzerland Solar Incentives
Power <10 Ground Based < 30 < 100 > 100 <10 Rooftop < 30 < 100 > 100 Feed In Ta riff Integrated (BIPV) <10 < 30 < 100 > 100 16 Mio CHF Cap This cap will be raised to 32 Mio, as soon as the average price of fe d-in solar electricity of new installations will be lower than abo ut 0.62 CHF Tariff for 25 years. Other Information Tariff Digression rate for new plants of 8% from 2010. Swiss Franc (01/09/2008): 1franc= 0.62
Source: EPIA, Barclays Capital research
Tari ff Swiss Franc (ct/kWh) 2008 0.65 (40.2) 0.54 (33.4) 0.51 (31.6) 0.49 (30.3) 0.75 (46.4) 0.65 (40.2) 0.62 (38.4) 0.60 (37.1) 0.90 (55.7) 0.75 (46.4) 0.67 (41.2) 0.62 (38.4)
154
Conventional Thermal, 4%
Nuclear, 88%
Source: Solarbuzz, Barclays Capital estimates Source: Eurostat, Barclays Capital research
155
The Netherlands Electricity in the Netherlands is generated mainly from gas and coal. The government has announced plans to invest EUR800 million in the coming years on renewable energy and energy efficiency. The Dutch solar PV industry has been declining ever since its highest point of 20MW in 2003. At the time, there was extremely favorable support under subsidy schemes such as the Energy Premium Incentive. The simultaneous ending of the EPR and the utility subsidies framework resulted in a dramatic drop in PV investments. The introduction of a EUR0.33/kWh solar PV feed-in tariff came on January 30, 2008, and became effective in April. It will be paid over 15 years for solar electric systems between 0.6 and 3kW. A EUR0.234/kWh, tariff for net-metering will be accompanying it. Figure 192: Annual Solar Installa tions (MW) Figure 193: Elec tricity Market Breakdown
Nuclear, 4% Solar, wind, etc, 4%
15
156
United Kingdom Seventy-six percent of electricity in the United Kingdom is generated from conventional sources and 16% is generated from nuclear. Renewable energy comprises 4% of total generation, with hydropower having a 1.2% share. With low incentives, the United Kingdoms PV market has had only modest activity. The government, however, has set a target of 10% electricity from renewable sources by 2010 and an ambitious 20% by 2020. Although the focus is largely on new nuclear capacity, we believe there will be a more consistent commitment to focus on other clean technologies. To achieve these goals, the government plans to reform the Renewables Obligation and reduce grid-access barriers. Figure 194: UK Solar Incentive Program
1 ROC is delivered for each MWh of green (e.g. PV) electricity produced. The generated electricity can be self-consumed or fed into the grid. The R OCs can be sold to energy suppliers according the quota obligation(increasing each year) they need to fulfill. Average price of ROC is between 35 and 50 . Reduced VAT: 5%
Tax Credits
Investment Grants
Low Carbon Buildings Programme (Phase I and II) Residential: 2,000/kW; 2,500 max. or 50% of project cost, whichever is lower. Public sector buildings and non-profits: 50% of total project cost s; 1.0 million max, 0,5-50 kWp
157
Other European Regions Belgium On the national level in Belgium, solar electricity producers that are taxpayers are refunded 50% of investment costs of up to EUR3 per watt. Net-metering reduces electricity bills by the amount of produced PV electricity at the normal retail price of EUR0.15/kWh. On the regional level, Flanders green certificates place a EUR0.45/kWh value on solar electricity for 20 years from the date of installation. Net-metering compensation is available as well. The Ecology Premium program still exists to provide commercial PV investors grants that recover a portion of costs. Subsidies are also offered by some municipalities. Figure 195:Belgium Solar Incentives
Brussels Duration Up to 20 m2 (B) Up to 5 kWp (W) No Si ze Limitation (F) Green Certificates Next 40m2 (B) Next 5 kWp (W) No Si ze Limitation All further m2 (B) 10-250 kWp(W) No Si ze Limitation All Further kWp (W) Pri vate Households 50% of investment (max 3/Wp) 0.15 /kWh 20% of investment (max 3500) 20%/10% of additional costs f or SME/ larger companies, max 1.5 Mio until resources are used up, currently 25 Mio. ) 0. 15 - 0.32 /kWh 0.15 - 0.36 /kWh 0. 15 - 0.50 /kWh 0.32 - 0.45 /kWh 0.45 / kWh 0. 15 - 0.65 /kWh 0.45 - 0.63 /kWh 10 Years Wallonia 15 Years Flanders 20 Years
Investment Grants
Companies
Public bui ldings and non commercial entities Tax Credi ts Net Metering
Source: EPIA, Barclays Capital research
30% of invest ment for public and non commercial entities Privat e: Tax Reduction of 40% of Invest ment, max 3440 / residence (2008) Companies: 13.5% of inst allation cost deductible from profit t ax Possible for Installations <= 10kW
158
25
Bulgaria Bulgaria has a 25-year feed-in tariff for solar installations. For systems less than 5kWp, the government will pay approximately EUR0.40/kWh. This number falls to EUR0.37/kWh for systems greater than 5kWp. There is no cap on installations, but the maximum system size is 10MW for all systems installed after March 31, 2009. For systems installed before this date there is no limit on system size. Figure 198: Bulgaria Feed in Tariff
<= 5 kWp Feed in Tariff 0,782 BGN/kW h (~ 0,40 /kWh) Duration > 5 KwP 0,718 BGN/kWh (~0,37 /kW h) 25 Years
Other Information
The tariff is regulate every y ear (by 31st M arch) based on the following: The FIT rate is derived from a portion of 80% of the average elec tricity price in the previous year. A variable sur charge is added that cannot be les s than 95% of the previous years level. That means the PV FIT c ould also inc reas e as electricity prices have ris en s harply in Bulgaria in the past years. 10 MW Plant (Any Size for plants installed before March 31st, 2009) None
FIT Legal duration until end of 2010 Beneficial Credit Terms Up to 20% of the project inves tm ent from the Bulgarian E ner gy Efficiency and Renewable Energy Credit Line (B EERECL)
Cyprus The PV market is still very young in Cyprus, but the countrys strong radiation profile provides solid conditions for solar. Ninety percent of private households already have solar hot water systems. In 2007, the grid-linked market reached 1MW. The incentive structure in Cyprus distinguishes between on-grid systems for homes and enterprises not engaged in economic activities, systems for companies, and off-grid systems. Households can either receive a grant of 55% of total system cost up to EUR64,927, with the option to
159
sell generated electricity to the Electricity Authority of Cyprus (EAC) at EUR0.205/kWh in tariffs, or else receive remuneration at an increased tariff of EUR0.383/kWh. Companies are not eligible for PV grants, but can sell generated electricity at EUR0.333/kWh in tariffs. Stand-alone systems receive a grant of 55% of costs. Figure 199: Annual Solar Installa tions (MW)
50 40 30 20 10 0 2007 2008 2009E 2010E 2011E 2012E
Thermal, 100%
Czech Republic There are two incentive options for system operators, the first being a 20 year feed-in of EUR0.52/kWh. A green bonus system is also available, where electricity is sold directly to customers or dealers and the grid operator adds a green bonus. The bonus system provides incentives of EUR0.48/kWh. The remuneration lasts 20 years and is adjusted to electricity prices annually. Figure 201: Czech Republic Solar Incentives
Fixed FIT Fe ed in Tariff and/ or Green Premium Tax Credi ts 0,512/kWh (13,460 CZK/MW h) Green Bonus 0,481 / kW h (12, 650 CZK/MWh)
Income is exem pt from taxes (Act No. 5 86/1992, on I ncom e Ta x) Operators m ay receive subsidies unde r the European Structural Funds or the natio nal progra mme. State Environmental Fund. The national programm e con sists of several su b-programm es, im plem ented by the Ministry of Environm ent which allows fo r the p romotion of all technologies use d in t he generation of rene wable ele ctricity. In 2007, o nly PV systems whose capacity d id not exceed 5 kW p were promot ed.
ECO-ENERGY program me of th e Op erational Programme Enterprise and Innovation s. I t gives entreprene urs the oppo rtunity to apply for investme nt grant s or low-interest loan s fo r projects in the field of renewable energy within. This program me is funded by th e ERDF (European Regiona l Developme nt Fund ). Operational Programme Environm ent. It allocates investment grants from the Cohesion Fund t o projects in t he field o f renewa ble en ergy. The am ount of prices for elect ricity from renewable sources and gree n bonuses are yearly determined by the Energy Regulatory office. The purchase prices are adjuste d related to inflation.
Other Information
The FIT is granted for 20 years. Values at December 16: 1.00 CZK=0 .0380595 EUR 1.00 EUR=26.2 620 CZK
160
50
Nuclear, 30%
161
NM
35
900%
110
45%
428
45%
2,460
100%
300
70%
360
50%
432
30%
518
y/y (%)
Franc e
40%
7
214%
11
289%
16
475%
33
-88%
98
20%
196
20%
392
20%
785
y/y (%)
Greec e
43%
1
56%
1
50%
12
100%
30
200%
44
100%
87
100%
200
100%
460
y/y (%)
Czec h Republi c
-3%
0
20%
0
900%
4
150%
7
45%
42
100%
55
130%
71
130%
92
y/y (%)
Aus tri a
NM
3
NM
2
NM
3
100%
6
500%
19
30%
24
30%
32
30%
41
y/y (%)
Por tugal
-29%
0
-47%
0
56%
12
150%
18
200%
27
30%
35
30%
46
30%
59
y/y (%)
Swi tzerl and
-20%
4
-100%
3
NM
3
50%
6
50%
7
30%
9
30%
12
30%
15
y/y (%)
The Nether lands
90%
2
-35%
2
15%
1
100%
2
15%
10
30%
13
30%
17
30%
22
y/y (%)
Bel gium
-53%
0
-12%
0
-33%
2
100%
4
400%
12
30%
16
30%
20
30%
26
y/y (%)
Cyprus
NM
0
NM
0
NM
1
100%
2
200%
12
30%
18
30%
27
30%
41
y/y (%)
Rest of Eur ope
NM
40
NM
74
NM
107
100%
202
500%
124
50%
148
50%
178
50%
213
y/y (%)
US
-9%
105
85%
140
45%
220
131%
360
-50%
360
20%
1,080
20%
2,052
20%
3,488
y/y (%)
Canada
25%
3
33%
4
57%
4
64%
9
0%
53
200%
158
90%
238
70%
356
y/y (%)
China
33%
15
36%
20
16%
24
100%
29
500%
58
200%
104
50%
166
50%
232
y/y (%)
South K or ea
200%
5
33%
21
20%
42
20%
280
100%
392
80%
588
60%
1,088
40%
1,414
y/y (%)
Indi a
100%
16
324%
12
100%
17
560%
31
40%
63
50%
119
85%
226
30%
384
y/y (%)
Aus trali a
23%
8
-25%
10
45%
16
80%
20
100%
40
90%
56
90%
72
70%
88
y/y (%)
Isr ael
24%
0
17%
0
65%
0
25%
0
100%
9
40%
14
29%
21
22%
32
y/y (%)
Others
-75%
101
200%
107
0%
164
50%
121
2000%
75
50%
98
50%
127
50%
165
6% 1,808 24%
162
6,000 4,000 2,000 0 2005 2006 2007 2008 2009E 2010E 2011E y/y (%) 2012E
163
83 5%
278
105%
448
221%
994
53%
1,831
15%
2, 791
38%
4, 119
40%
5,979
2%
7,876
20%
10,153
20%
12, 885
20%
16,163
43%
0.27
61%
0.43
122%
0. 88
84%
1.58
52%
2.42
48%
3.57
45%
5.18
32%
6.82
29%
8.79
27%
11.15
25%
13. 99
43%
50
61%
51
103%
61
79%
62
52%
74
48%
81
45%
89
32%
98
29%
108
27%
119
25%
131
14% 0. 5%
116
2% 0. 8%
122
19% 1.5%
121
2% 2. 5%
120
19% 3.3%
123
10% 4.4%
125
10% 5.8%
128
10% 6. 9%
130
10% 8.1%
133
10% 9.4%
136
10% 10.7%
138
2%
536 329 23 157 28
5%
563 355 19 157 32
-1%
577 357 21 159 40
0%
579 362 19 155 43
2%
592 359 21 159 53
2%
604 366 21 162 54
2%
616 374 22 165 55
2%
628
2%
641
2%
654
2%
667
5% 0.08% 9.11%
2% 0.15% 10.56%
2% 0. 41% 12.49%
2% 0. 59% 13.47%
2% 0.84% 14.53%
2% 1. 37% 16.90%
2% 1. 71% 18.22%
1,250 16% 3. 0
-8%
$0. 50 $0. 00 $0. 50 $0. 00 $0.48 $0.47 $0. 46 $0. 47 0% $0. 50 $0. 14 10% $0. 50 $0. 18 29% $0.01 $0.20 13% ($0.01) $0. 21 7% $0.43 $0.49 4% ($0.06) $0.22 $0.30 $0.57 17% ($0.28) $0.22 $0.27 $0.54
-16%
$0. 23 $0. 49
-20%
$0.18 $0.46
-12%
$0.16 $0.43
-15%
$0. 14 $0. 40
-7%
($0.26) $0.22
-9%
($0.26) $0. 23
-7%
($0.27) $0.23
-7%
($0. 27) $0.24
-7%
($0.26) $0. 24
2%
2%
2%
2%
2%
2%
2%
$44, 000
$44, 000
$42,000
$40, 000
$38,000
$26,000
$23,920
$20, 093
$16,074
$14,145
$12, 024
0.0% NA
0.0% NA
3.9% NA
4.1% NA
4. 5% NA
7. 7% 13
7. 9% 13
8.5% 12
9. 9% 10
10.6% 9
11. 6% 9
357, 868
357, 868
357,868
357, 868
357,868
357,868
357,868
357, 868
357,868
357,868
357, 868
1.3 0. 000%
2. 2 0. 001%
4. 4 0.001%
7. 9 0. 002%
12. 1 0.003%
17. 8 0.005%
25. 9 0. 007%
34. 1 0. 010%
43. 9 0.012%
55.8 0.016%
70.0 0. 020%
42 25 17
85 51 34
82. 2
82.3
82.4
82. 4
82.5
82. 6
82. 6
82. 7
82. 8
82.8
82.9
0.08%
3.4 39. 1
0.08%
5. 4 39.1
0.08%
12.1 39.1
0.08%
22. 2 39. 2
0. 08%
33.8 39.2
0. 08%
49. 9 39. 2
0.08%
72. 4 39. 3
0.08%
95. 2 39. 3
0. 08%
122.7 39. 3
0. 08%
155. 6 39.4
0.08%
195.0 39.4
0.08%
3.6 4.0
0.08%
5. 7 4. 0
0.08%
12.7 4.0
0.08%
23. 4 4. 0
0. 08%
35.6 4.0
0. 08%
52. 5 4.0
0.08%
76. 1 4.0
0.08%
97. 8 4.0
0. 08%
123.8 4.0
0. 08%
154. 9 4.0
0.08%
192.2 4. 0
0.09%
0.14% 21
0.32% 68
0.58% 105
0. 89% 120
1. 31% 166
1.90% 232
2.45% 213
3. 09% 255
3. 87% 306
4.81% 368
164
NM
5
200%
20
67%
45
40%
80
214%
190
289%
618
475%
3,078
-88%
3,378
20%
3, 738
20%
4, 170
20%
4, 688
NM
0. 00
300%
0.00
125%
0.08
78%
0.14
138%
0.34
225%
1. 10
398%
5.47
10%
6. 01
11%
6.65
12%
7.41
12%
8.33
NM
34
NM
55
NM
50
78%
43
138%
55
225%
63
398%
73
10%
84
11%
94
12%
103
12%
114
-30% 0.0%
51
62% 0. 0%
58
-10% 0.2%
66
-14% 0.3%
67
30% 0. 6%
68
15% 1.7%
70
15% 7. 5%
71
15% 7.2%
72
12% 7.1%
74
10% 7.2%
75
10% 7.3%
77
4%
229 135 23 60 12
15%
245 131 41 59 15
15%
260 150 31 60 18
1%
270 173 19 55 23
2%
283 171 25 57 30
2%
289 174 26 58 30
2%
295 178 26 59 31
2%
301
2%
307
2%
313
2%
319
3% 0. 00% 14.99%
6% 0. 03% 19.11%
4% 0. 05% 15.73%
2% 0. 38% 21.94%
2% 2. 00% 27.89%
2% 2. 17% 30.63%
2% 2. 37% 33.03%
2% 2. 61% 35.62%
1,950 16% 6. 0
0%
$0.32 $0.00
0%
$0. 32 $0. 00
-5%
$0.31 $0.47
-5%
$0.29 $0.47 0% ($0.18) $0.15 1%
-5%
$0. 28 $0. 49 4% ($0.21) $0. 17 7%
-32%
$0.19 $0.57 17% ($0. 38) $0.17
-8%
$0. 18 $0. 57
-16%
$0.15 $0.43
-20%
$0.12 $0.43
-12%
$0.10 $0.39
-15%
$0.09 $0.35
0%
($0.40) $0. 17
-25%
($0. 28) $0.18
0%
($0.31) $0.18
-10%
($0.28) $0.18
-10%
($0.26) $0.19
$0.32 $0.11 5%
2%
2%
2%
2%
2%
2%
$33,000
$44, 000
$42,000
$40,000
$38, 000
$26,000
$23, 920
$20,093
$16,074
$14,145
$12,024
0. 0% NA
0.0% NA
6. 1% 16
6. 4% 16
7. 1% 14
12. 1% 8
13.1% 8
11.7% 9
14.6% 7
15.0% 7
15.8% 6
504,782
504, 782
504,782
504,782
504, 782
504,782
504, 782
504,782
504,782
504,782
504,782
0.0 0.000%
0. 0 0. 000%
0.3 0.000%
0.5 0.000%
1.1 0. 000%
3. 5 0.001%
17. 5 0. 003%
19.2 0.004%
21. 3 0.004%
23. 8 0.005%
26. 7 0.005%
0 1 4
0 3 12
1 5 20
1 7 27
2 22 86
9 86 334
49 492 1,919
90 30 180
108 36 216
130 43 259
156 52 311
39.3
39.7
40. 2
40. 6
41. 1
41.6
42. 0
42.5
43. 0
43. 5
43. 9
1. 12%
0.1 14.3
1.12%
0. 5 14.5
1. 12%
1.1 14. 7
1. 12%
2.0 14. 8
1.12%
4.6 15. 0
1. 12%
14.9 15.2
1.12%
73. 2 15. 3
1. 12%
79.5 15.5
1. 12%
87. 0 15. 7
1. 12%
96. 0 15. 9
1. 12%
106.7 16. 0
1. 12%
0.0 3.0
1.12%
0. 0 4. 0
1. 12%
0.1 4.0
1. 12%
0.1 4.0
1.12%
0.3 4.0
1. 12%
0.8 4.0
1.12%
4. 0 4. 0
1. 12%
9.8 4.0
1. 12%
16. 6 4.0
1. 12%
24. 5 4.0
1. 12%
34. 0 4.0
0. 00%
0.00% 0
0. 00% 0
0. 00% 0
0.01% 1
0. 02% 2
0.10% 12
0. 24% 22
0. 41% 27
0. 61% 32
0. 85% 38
165
NM
0
NM
0
NM
0
NM
6
900%
66
45%
153
45%
393
100%
873
70%
1, 689
50%
2,913
30%
4,504
NM
0.00
NM
0.00
NM
0. 00
NM
0.00
1000%
0.09
132%
0.21
157%
0.54
122%
1.19
93%
2.30
72%
3. 97
55%
6.14
NM
49
NM
45
NM
52
NM
47
NM
51
132%
56
157%
62
122%
68
93%
75
72%
82
55%
90
-11% 0. 0%
69
-8% 0. 0%
70
16% 0.0%
71
-9% 0. 0%
77
7% 0.2%
79
10% 0.4%
80
10% 0.9%
82
10% 1. 8%
84
10% 3.1%
85
10% 4.8%
87
10% 6. 8%
89
1%
263 214 39 0 10
1%
268 223 33 0 12
3%
278 225 39 0 13
8%
279 231 33 0 14
2%
292 241 36 0 15
2%
297 245 36 0 15
2%
303 250 37 0 16
2%
309
2%
316
2%
322
2%
328
3% 0.00% 18.88%
5% 0. 03% 17.47%
2% 0. 07% 18.84%
2% 0.18% 20.31%
2% 0. 73% 23.62%
2% 1. 23% 25.48%
1,650 16% 3. 0
0%
$0. 38 $0. 00
0%
$0. 38 $0. 00
-5%
$0.36 $0.00
-5%
$0. 35 $0. 00
-5%
$0.33 $0.00
-32%
$0.23 $0.67
-8%
$0.21 $0.65
-16%
$0. 17 $0. 64
-20%
$0.14 $0.63
-12%
$0.12 $0.62
-15%
$0. 10 $0. 60
-2%
$0. 38 $0. 16 5% $0. 38 $0. 19 19% $0.36 $0.19 3% $0. 35 $0. 20 4% $0.33 $0.20 ($0.44) $0.21 ($0.45) $0.21
-2%
($0.47) $0. 21
-2%
($0.49) $0.22
-2%
($0. 49) $0.22
-2%
($0.50) $0. 23
2%
2%
2%
2%
2%
2%
2%
$33, 000
$33, 000
$31,500
$30, 000
$28,500
$19,500
$17,940
$15, 070
$12,056
$10,609
$9,018
0.0% NA
0.0% NA
0.0% NA
0.0% NA
0. 0% NA
11.9% 8
12.6% 8
14.7% 7
18.1% 6
20.1% 5
23. 2% 4
301, 245
301, 245
301,245
301, 245
301,245
301,245
301,245
301, 245
301,245
301,245
301, 245
0.0 0. 000%
0. 0 0. 000%
0. 0 0.000%
0. 0 0. 000%
0.3 0.000%
0.8 0.000%
2.0 0. 001%
4.5 0. 001%
8.7 0.003%
15.0 0.005%
23.3 0. 008%
0 0 0
0 0 0
0 0 0
4 1 1
42 9 9
61 13 13
168 36 36
264 72 144
57. 0
57.1
57.2
57. 2
57.3
57. 4
57. 4
57. 5
57. 6
57.7
57.7
0.13%
0.0 22. 9
0.13%
0. 0 22.9
0.13%
0.0 22.9
0.13%
0. 1 23. 0
0. 13%
1.2 23.0
0. 13%
2.7 23. 0
0.13%
6.8 23. 1
0.13%
15. 2 23. 1
0. 13%
29. 3 23. 1
0. 13%
50.5 23.1
0.13%
78.0 23.2
0.13%
0.0 3.0
0.13%
0. 0 3. 0
0.13%
0.0 3.0
0.13%
0. 2 3. 0
0. 13%
2.0 3.0
0. 13%
4.7 3.0
0.13%
11. 9 3.0
0.13%
23. 3 3.0
0. 13%
42. 7 3.0
0. 13%
71.8 3.0
0.13%
109.4 3. 0
0.00%
0.00% 0
0.00% 0
0.01% 1
0. 07% 14
0. 16% 20
0.40% 56
0.78% 88
1. 42% 149
2. 39% 224
3.65% 291
166
3 27%
17
2003 4
2004 5
2005 7
2006 11
2007 16
2008 33
2009E 98
2010E 196
2011E 392
2012E 785
18%
21
26%
26
43%
33
56%
44
50%
60
100%
93
200%
191
100%
387
100%
780
100%
1,564
24%
0.01
23%
0.01
23%
0. 01
27%
0.02
33%
0.03
37%
0.03
54%
0.05
106%
0.11
103%
0.22
101%
0. 45
101%
0.90
24%
65
23%
64
23%
65
27%
57
33%
63
37%
69
54%
76
106%
83
103%
92
101%
101
101%
111
-17% 0. 0%
112
-2% 0. 0%
112
2% 0.0%
112
-12% 0. 0%
113
9% 0.0%
115
10% 0.1%
117
10% 0.1%
120
10% 0. 1%
122
10% 0.2%
124
10% 0.4%
127
10% 0. 8%
129
0%
528 48 60 415 5
0%
535 52 59 419 6
0%
542 51 59 426 6
1%
544 57 51 429 6
2%
542 52 55 428 7
2%
553 53 56 436 8
2%
564 54 57 445 8
2%
576
2%
587
2%
599
2%
611
1% 0.00% 12.00%
0% 0. 00% 11.54%
2% 0. 01% 12.45%
2% 0.01% 13.42%
2% 0. 04% 15.61%
2% 0. 07% 16.83%
1,250 16% 3. 0
-8%
$0. 50 $0. 00 $0. 50 $0. 00 $0.48 $0.00 $0. 46 $0. 00 $0.43 $0.66 $0.30 $0.77 17% ($0.47) $0.15 $0.27 $0.75
-16%
$0. 23 $0. 74
-20%
$0.18 $0.72
-12%
$0.16 $0.71
-15%
$0. 14 $0. 70
-2%
($0.48) $0.15
-2%
($0.51) $0. 15
-2%
($0.54) $0.16
-2%
($0. 55) $0.16
-2%
($0.56) $0. 16
$0. 50 $0. 11
$0. 50 $0. 13
$0.48 $0.14
$0. 46 $0. 14
($0.23) $0.14
2% I NVESTM ENT RETURN PARAM ETERS T otal I nvestment I RR (%) Payb ack Peri od (Years) L AND AREA PARAMETERS Solar El ectri city Land Availab le (sq. km) Area (sq. km)/kWh Requi red % Lan d Covered with Sol ar SOLAR INSTALLATIONS BREAKDOWN Resid enti al y/y (%) C&I Roofto p y/y (%) Util ity Scal e/Grou nd-Mou nted y/y (%) PER CAPI TA PARAMETERS Popul ation (mi ll ion ) y/y (%) Solar El ectri city Per Capita (W/ person) # Ho usehol ds (mil lio n) y/y (%) Average Solar Capacity Per 1000 Househol ds (kW) Average Solar In stal lation Requi red Per Househol ds (kW) % Househo ld Penetration # Incremental Ho usehold s I nstal li ng Sol ar ('000)
2%
2%
2%
2%
2%
$33, 000
$33, 000
$31,500
$30, 000
$28,500
$19,500
$17,940
$15, 070
$12,056
$10,609
$9,018
0.0% NA
0.0% NA
0.0% NA
0.0% NA
6. 1% 16
10.4% 10
11.0% 9
12.9% 8
15.8% 6
17.6% 6
20. 3% 5
543, 965
543, 965
543,965
543, 965
543,965
543,965
543,965
543, 965
543,965
543,965
543, 965
0.0 0. 000%
0. 1 0. 000%
0. 1 0.000%
0. 1 0. 000%
0.1 0.000%
0.2 0.000%
0.3 0. 000%
0.5 0. 000%
1.1 0.000%
2.2 0.000%
4. 5 0. 001%
1 1 2
1 1 2
1 2 3
2 2 4
3 3 6
5 5 9
10 10 18
29 31 54
59 62 108
59. 4
59.7
59.9
60. 2
60.4
60. 6
60. 9
61. 1
61. 4
61.6
61.9
0.41%
0.3 24. 5
0.41%
0. 4 24.6
0.41%
0.4 24.7
0.41%
0. 5 24. 8
0. 41%
0.7 24.9
0. 41%
1.0 25. 0
0.41%
1.5 25. 1
0.41%
3.1 25. 2
0. 41%
6.3 25. 3
0. 41%
12.6 25.4
0.41%
25.3 25.5
0.41%
0.2 3.0
0.41%
0. 3 3. 0
0.41%
0.3 3.0
0.41%
0. 4 3. 0
0. 41%
0.5 3.0
0. 41%
0.7 3.0
0.41%
1.1 3.0
0.41%
2.3 3.0
0. 41%
4.6 3.0
0. 41%
9.2 3.0
0.41%
18.4 3. 0
0.01%
0.01% 0
0.01% 0
0.01% 1
0. 02% 1
0. 02% 2
0.04% 3
0.08% 10
0. 15% 20
0. 31% 39
0.61% 78
167
0 -10%
2
2003 0
2004 1
2005 1
2006 1
2007 12
2008 30
2009E 44
2010E 87
2011E 200
2012E 460
-10%
2
186%
3
-3%
4
20%
6
900%
18
150%
48
45%
91
100%
178
130%
378
130%
838
-1%
0.00
18%
0.01
44%
0. 01
30%
0.01
27%
0.01
215%
0.04
171%
0.12
91%
0.23
96%
0.45
112%
0. 95
122%
2.10
-1%
4
18%
6
44%
6
30%
6
27%
7
215%
8
171%
9
91%
10
96%
11
112%
12
122%
13
22% 0. 1%
10
64% 0. 1%
11
0% 0.1%
11
7% 0. 2%
12
17% 0.2%
12
10% 0.5%
12
10% 1.3%
12
10% 2. 3%
13
10% 4.1%
13
10% 7.9%
13
10% 15.9%
13
1%
51 47 3 0 1
6%
55 49 5 0 1
5%
56 50 5 0 1
3%
56 50 5 0 1
2%
55 48 6 0 2
2%
57 49 6 0 2
2%
58 50 6 0 2
2%
59
2%
60
2%
61
2%
62
2% 0.01% 7.10%
2% 0.02% 10.70%
2% 0. 08% 14.53%
2% 0.21% 15.67%
2% 0. 74% 18.22%
2% 1. 55% 19.65%
1,500 16% 3. 0
-8%
$0. 42 $0. 00 $0. 42 $0. 00 $0.40 $0.00 $0. 38 $0. 00 $0.36 $0.54 $0.25 $0.63 17% ($0.38) $0.12 $0.23 $0.64
-16%
$0. 19 $0. 66
-20%
$0.15 $0.67
-12%
$0.13 $0.68
-15%
$0. 11 $0. 70
2%
($0.41) $0.12
2%
($0.46) $0. 12
2%
($0.52) $0.12
2%
($0. 55) $0.13
2%
($0.58) $0. 13
$0. 42 $0. 08
$0. 42 $0. 10
$0.40 $0.11
$0. 38 $0. 11
($0.18) $0.11
2%
2%
2%
2%
2%
2%
2%
$33, 000
$33, 000
$31,500
$30, 000
$28,500
$19,500
$17,940
$15, 070
$12,056
$10,609
$9,018
0.0% NA
0.0% NA
0.0% NA
0.0% NA
6. 0% 17
10.2% 10
11.3% 9
13.7% 7
17.5% 6
20.2% 5
24. 3% 4
131, 957
131, 957
131,957
131, 957
131,957
131,957
131,957
131, 957
131,957
131,957
131, 957
0.0 0. 000%
0. 0 0. 000%
0. 0 0.000%
0. 0 0. 000%
0.1 0.000%
0.2 0.000%
0.5 0. 000%
0.9 0. 001%
1.9 0.001%
3.9 0.003%
8. 7 0. 007%
0 0 0
0 0 0
0 1 0
0 1 0
0 1 0
3 8 1
8 20 3
11 28 4
22 57 9
50 130 20
115 299 46
10. 9
10.9
10.9
11. 0
11.0
11. 0
11. 1
11. 1
11. 1
11.1
11.2
0.26%
0.2 3.8
0.26%
0. 2 3. 8
0.26%
0.3 3.8
0.26%
0. 4 3. 8
0. 26%
0.5 3.8
0. 26%
1.6 3.8
0.26%
4.3 3.8
0.26%
8.2 3.8
0. 26%
16. 0 3.8
0. 26%
33.9 3.8
0.26%
75.0 3. 9
0.26%
0.1 3.0
0.26%
0. 2 3. 0
0.26%
0.2 3.0
0.26%
0. 3 3. 0
0. 26%
0.4 3.0
0. 26%
1.2 3.0
0.26%
3.1 3.0
0.26%
5.9 3.0
0. 26%
11. 6 3.0
0. 26%
24.6 3.0
0.26%
54.3 3. 0
0.00%
0.01% 0
0.01% 0
0.01% 0
0. 01% 0
0. 04% 1
0.10% 2
0.20% 4
0. 39% 7
0. 82% 17
1.81% 38
168
161 32%
378
35%
596
17%
852
14%
1,144
0%
1, 436
-21%
1,666
0%
1,896
45%
2,230
70%
2, 796
30%
3,533
15%
4, 381
74%
0.51
58%
0.80
43%
1.07
34%
1.36
26%
1. 71
16%
1. 98
14%
2. 25
18%
2.65
25%
3.32
26%
4. 20
24%
5.21
74%
102
58%
115
33%
115
27%
101
26%
106
16%
117
14%
129
18%
142
25%
156
26%
171
24%
188
0% 0.5%
237
13% 0.7%
241
0% 0.9%
244
-13% 1.3%
248
6% 1.6%
253
10% 1.7%
258
10% 1.8%
263
10% 1.9%
268
10% 2.1%
274
10% 2.5%
279
10% 2.8%
285
1%
999 617 82 280 21
2%
987 643 94 228 21
1%
1, 015 631 93 268 22
2%
1,025 646 77 278 23
2%
1, 007 612 87 289 20
2%
1,027 624 89 295 20
2%
1,048 637 90 301 20
2%
1,069
2%
1, 090
2%
1,112
2%
1, 134
2% 0.05% 10.22%
3% 0.11% 11.37%
1% 0.13% 9.83%
2% 0.19% 11.39%
2% 0.22% 12.28%
2% 0.25% 13.24%
2% 0.30% 14.28%
2% 0.38% 15.40%
2% 0.46% 16.61%
1,500 16% 8. 0
1,500 16% 5. 0
1,500 16% 3. 5
-5%
$0.36 $0.00
-5%
$0.34 $0.00
-6%
$0.32 $0.00
-6%
$0. 30 $0. 00
-6%
$0.29 $0.00
-13%
$0.25 $0.00
-8%
$0.23 $0.00
-16%
$0. 19 $0. 00
-20%
$0.15 $0.00
-12%
$0. 13 $0. 00
-15%
$0.11 $0.00
0%
$0.36 $0.17 -7% $0.34 $0.19 7% $0.32 $0.20 5% $0. 30 $0. 19 -4% $0.29 $0.19 $0.25 $0.20 $0.23 $0.20
0%
$0. 19 $0. 20
0%
$0.15 $0.21
0%
$0. 13 $0. 21
0%
$0.11 $0.22
2%
2%
2%
2%
2%
2%
2%
$28,500
$27,000
$25,500
$24, 000
$22,500
$19,500
$17,940
$15, 070
$12,056
$10, 609
$9,018
0.0% NA
0.0% NA
0.0% NA
0.0% NA
0.0% NA
0.0% NA
0.0% NA
0.0% NA
0.0% NA
0.0% NA
0.0% NA
377,727
377,727
377,727
377, 727
377,727
377,727
377,727
377, 727
377,727
377, 727
377,727
2.1 0.001%
3.3 0.001%
4.5 0.001%
5.7 0.001%
7.1 0.002%
8.3 0.002%
9.4 0.002%
11.0 0.003%
13.8 0.004%
17.5 0.005%
21.7 0.006%
129 8 24
174 11 33
205 13 38
234 15 44
234 15 44
184 12 35
184 12 35
267 17 50
454 28 85
590 37 111
678 42 127
126.9
127.2
127.4
127.6
127. 8
128. 0
128. 2
128.5
128.7
128.9
129. 1
0.17%
3.0 48. 2
0.17%
4.7 48. 3
0.17%
6.7 48. 3
0.17%
9. 0 48.4
0.17%
11.2 48.5
0.17%
13.0 48.6
0.17%
14.8 48.7
0.17%
17.4 48.7
0.17%
21. 7 48. 8
0.17%
27.4 48.9
0.17%
33. 9 49. 0
0.17%
6.3 3.0
0.17%
9.9 3.0
0.17%
14. 1 3.0
0.17%
18.9 3. 0
0.17%
23.7 3.0
0.17%
27.4 3.0
0.17%
31.2 3.0
0.17%
36.6 3. 0
0.17%
45. 8 3.0
0.17%
57.8 3. 0
0.17%
71. 5 3.0
0.21%
0.33% 58
0.47% 68
0.63% 77
0.79% 77
0.91% 61
1.04% 61
1.22% 88
1.53% 150
1.93% 195
2.38% 224
169
-25%
5
0%
6
317%
9
100%
14
324%
35
100%
77
560%
357
40%
749
50%
1, 337
85%
2,425
30%
3,839
13%
0.00
11%
0.00
42%
0. 00
59%
0.00
157%
0.01
122%
0.01
363%
0.06
110%
0.12
78%
0.21
81%
0. 38
58%
0.61
13%
4
11%
5
42%
5
59%
4
157%
4
122%
4
363%
5
110%
5
78%
6
81%
6
58%
7
-11% 0. 0%
54
29% 0. 0%
57
-8% 0.0%
58
-14% 0. 1%
62
-5% 0.1%
63
10% 0.3%
65
10% 1.2%
66
10% 2. 3%
67
10% 3.7%
69
10% 6.1%
70
10% 8. 8%
71
5%
312 195 3 113 1
4%
324 196 5 123 0
3%
346 217 4 124 0
7%
366 223 4 139 0
2%
383 238 3 141 1
2%
390 242 3 144 1
2%
398 247 4 147 1
2%
406
2%
414
2%
423
2%
431
4% 0.00% 1.58%
7% 0.00% 1.36%
6% 0.00% 1.11%
5% 0. 00% 1. 01%
2% 0. 00% 1. 09%
2% 0.01% 1.17%
2% 0.03% 1.27%
2% 0. 05% 1. 37%
2% 0. 09% 1. 47%
2% 0.14% 1.59%
1,850 16% 3. 0
0%
$0. 34 $0. 00
0%
$0. 34 $0. 00
-5%
$0.32 $0.58
-5%
$0. 31 $0. 58 0% ($0.28) $0. 09
-5%
$0.29 $0.61 4% ($0.32) $0.10
-32%
$0.20 $0.71 16% ($0.51) $0.10
-8%
$0.18 $0.71
-16%
$0. 16 $0. 68
-20%
$0.12 $0.65
-12%
$0.11 $0.63
-15%
$0. 09 $0. 60
0%
($0.52) $0.10
-4%
($0.52) $0. 10
-4%
($0.53) $0.11
-4%
($0. 52) $0.11
-4%
($0.51) $0. 11
$0. 34 $0. 07
$0. 34 $0. 07
2%
2%
2%
2%
2%
2%
$33, 000
$33, 000
$31,500
$30, 000
$28,500
$19,500
$17,940
$15, 070
$12,056
$10,609
$9,018
0.0% NA
0.0% NA
7.2% 14
7.6% 13
8. 3% 12
14.1% 7
15.3% 7
17.5% 6
21.0% 5
22.9% 4
25. 9% 4
99,274
99,274
99, 274
99,274
99,274
99,274
99,274
99,274
99,274
99, 274
99,274
0.0 0. 000%
0. 0 0. 000%
0. 0 0.000%
0. 0 0. 000%
0.0 0.000%
0.0 0.000%
0.2 0. 000%
0.4 0. 000%
0.7 0.001%
1.3 0.001%
2. 0 0. 002%
0 0 0
0 0 0
1 0 1
2 1 2
8 3 10
17 6 19
112 42 126
157 59 176
235 88 265
47. 2
47.4
47.6
47. 8
48.0
48. 2
48. 4
48. 6
48. 8
49.0
49.2
0.40%
0.1 16. 7
0.40%
0. 1 16.8
0.40%
0.2 16.9
0.40%
0. 3 16. 9
0. 40%
0.7 17.0
0. 40%
1.6 17. 1
0.40%
7.4 17. 1
0.40%
15. 4 17. 2
0. 40%
27. 4 17. 3
0. 40%
49.5 17.3
0.40%
78.1 17.4
0.40%
0.1 3.0
0.40%
0. 1 3. 0
0.40%
0.2 3.0
0.40%
0. 3 3. 0
0. 40%
0.8 3.0
0. 40%
1.8 3.0
0.40%
8.3 3.0
0.40%
17. 4 3.0
0. 40%
31. 0 3.0
0. 40%
55.9 3.0
0.40%
88.2 3. 0
0.00%
0.00% 0
0.01% 0
0.01% 1
0. 03% 3
0. 06% 6
0.28% 37
0.58% 52
1. 03% 78
1. 86% 144
2.94% 187
170
57 54%
169
16%
235
27%
319
25%
424
33%
564
57%
784
64%
1,144
0%
1,504
200%
2, 584
90%
4,636
70%
8,124
51%
0.55
39%
0.53
36%
0. 58
33%
0.55
33%
0.73
39%
1.02
46%
1.48
31%
1.95
72%
3.35
79%
6. 02
75%
10. 54
2%
357
-4%
369
8%
366
-4%
370
33%
399
39%
439
46%
482
31%
531
72%
584
79%
642
75%
706
19% 0. 2%
885
3% 0. 1%
928
-1% 0.2%
942
1% 0. 1%
957
8% 0.2%
976
10% 0.2%
995
10% 0.3%
1,015
10% 0. 4%
1,036
10% 0.6%
1, 056
10% 0.9%
1,077
10% 1. 5%
1,099
7%
3,867 2,730 264 780 93
5%
3,892 2,759 276 764 94
2%
3,979 2,825 268 789 97
2%
4,062 2,910 270 782 100
2%
4, 060 2, 874 288 787 110
2%
4, 141 2, 931 294 803 113
2%
4,224 2,990 300 819 115
2%
4,308
2%
4, 395
2%
4,482
2%
4,572
3% 0.01% 9.23%
1% 0.01% 9.49%
2% 0.01% 9.19%
2% 0.01% 9.11%
0% 0. 02% 9. 82%
2% 0. 02% 10.59%
2% 0.04% 11.42%
2% 0. 08% 13.28%
2% 0. 13% 14.32%
2,000 16% 3. 0
-8%
$0. 31 $0. 08 $0. 31 $0. 09 $0.30 $0.09 $0. 29 $0. 10 $0.27 $0.10 $0.19 $0.11 $0.17 $0.11
-16%
$0. 14 $0. 11
-20%
$0.11 $0.11
-12%
$0.10 $0.11
-15%
$0. 09 $0. 12
2%
2%
2%
2%
2%
2%
$55, 000
$55, 000
$52,500
$50, 000
$47,500
$32,500
$29,900
$25, 116
$20,093
$17,682
$15, 029
0.0% NA
0.0% NA
0.0% NA
0.0% NA
0. 0% NA
0. 0% NA
0. 0% NA
0.0% NA
0. 0% NA
0.0% NA
0.0% NA
9,372,610
9, 372, 610
9, 372,610
9,372,610
9,372,610
9,372,610
9,372,610
9,372,610
9,372,610
9,372,610
9,372, 610
1.7 0. 000%
1. 7 0. 000%
1. 8 0.000%
1. 7 0. 000%
2.3 0.000%
3.2 0.000%
4.6 0. 000%
6.1 0. 000%
10. 5 0.000%
18.8 0.000%
33.0 0. 000%
9 43 6
10 50 7
13 63 8
16 79 11
21 105 14
33 165 22
54 270 36
108 180 72
285.8
288.5
291.3
294.1
297. 0
299.9
302.8
305.7
308.7
311. 7
314.7
0.97%
0.6 106.0
0.97%
0. 8 107.1
0.97%
1.1 108.1
0.97%
1. 4 109.1
0. 97%
1.9 110. 2
0. 97%
2.6 111.3
0.97%
3.8 112.3
0.97%
4.9 113.4
0. 97%
8.4 114.5
0. 97%
14.9 115. 6
0.97%
25.8 116.8
0.97%
0.5 5.0
0.97%
0. 6 5. 0
0.97%
0.7 5.0
0.97%
0. 8 5. 0
0. 97%
1.0 5.0
0. 97%
1.3 5.0
0.97%
1.8 5.0
0.97%
2.7 5.0
0. 97%
5.5 5.0
0. 97%
10.8 5.0
0.97%
19.6 5. 0
0.01%
0.01% 2
0.01% 2
0.02% 3
0. 02% 4
0. 03% 6
0.04% 11
0.05% 21
0. 11% 64
0. 22% 122
0.39% 207
171
NM
0
NM
0
NM
5
200%
20
33%
40
20%
64
20%
93
100%
150
80%
254
60%
420
40%
652
NM
0.00
NM
0.01
NM
0. 02
300%
0.02
100%
0.05
60%
0.08
45%
0.11
62%
0.18
69%
0.30
65%
0. 49
55%
0.77
NM
274
NM
281
30%
330
29%
399
100%
439
60%
483
45%
532
62%
585
69%
643
65%
707
55%
778
5% 0. 0%
339
2% 0. 0%
357
18% 0.0%
391
21% 0. 0%
442
10% 0.0%
451
10% 0.0%
460
10% 0.0%
469
10% 0. 0%
479
10% 0.0%
488
10% 0.1%
498
10% 0. 1%
508
6%
1,570 1,271 272 25 2
5%
1,807 1,484 279 42 2
10%
2,080 1,702 328 48 2
13%
2,372 1,922 397 50 2
2%
2, 419 1, 961 405 51 2
2%
2, 468 2, 000 413 52 2
2%
2,517 2,040 421 53 3
2%
2,567
2%
2, 619
2%
2,671
2%
2,724
2% 0. 00% 18.16%
2% 0. 00% 19.58%
2% 0.00% 21.12%
2% 0. 01% 24.56%
2% 0. 02% 26.49%
1,450 16% 3. 0
-8%
$0. 43 $0. 07 $0. 43 $0. 07 $0.41 $0.07 $0. 39 $0. 07 $0.37 $0.07 $0.26 $0.07 $0.24 $0.07
-16%
$0. 20 $0. 07
-20%
$0.16 $0.07
-12%
$0.14 $0.08
-15%
$0. 12 $0. 08
2%
2%
2%
2%
2%
$33, 000
$33, 000
$31,500
$30, 000
$28,500
$19,500
$17,940
$15, 070
$12,056
$10,609
$9,018
0.0% NA
0.0% NA
0.0% NA
0.0% NA
0. 0% NA
0. 0% NA
0. 0% NA
0.0% NA
0. 0% NA
0.0% NA
0.0% NA
9,560,900
9, 560, 900
9, 560,900
9,560,900
9,560,900
9,560,900
9,560,900
9,560,900
9,560,900
9,560,900
9,560, 900
0.0 0. 000%
0. 1 0. 000%
0. 1 0.000%
0. 1 0. 000%
0.2 0.000%
0.3 0.000%
0.5 0. 000%
0.8 0. 000%
1.3 0.000%
2.1 0.000%
3. 3 0. 000%
0 0 0
0 0 0
0 1 4
1 2 12
1 3 16
1 4 19
1 4 23
3 9 46
5 16 83
8 25 133
12 35 186
1,279.7
1,288.0
1,296.4
1,304.8
1, 313. 3
1, 321.8
1,330.4
1,339.1
1, 347.8
1,356.5
1,365.4
0.65%
0.0 368.4
0.65%
0. 0 370.8
0.65%
0.0 373.2
0.65%
0. 0 375.7
0. 65%
0.0 378. 1
0. 65%
0.0 380.6
0.65%
0.1 383.0
0.65%
0.1 385.5
0. 65%
0.2 388.0
0. 65%
0.3 390. 5
0.65%
0. 5 393.1
0.65%
0.0 3.0
0.65%
0. 0 3. 0
0.65%
0.0 3.0
0.65%
0. 0 3. 0
0. 65%
0.0 3.0
0. 65%
0.0 3.0
0.65%
0.0 3.0
0.65%
0.0 3.0
0. 65%
0.0 3.0
0. 65%
0.1 3.0
0.65%
0. 1 3. 0
0.00%
0.00% 0
0.00% 0
0.00% 0
0. 00% 0
0. 00% 0
0.00% 0
0.00% 1
0. 00% 2
0. 00% 3
0.00% 4
172
NM
0
NM
11
18%
24
23%
40
-25%
52
45%
69
80%
101
100%
163
90%
282
90%
509
70%
893
NM
NM
0.14
118%
0. 16
67%
0.18
30%
0.24
33%
0.31
45%
0.46
62%
0.74
73%
1.28
80%
2. 30
76%
4.04
NM
68
NM
80
13%
90
14%
107
30%
117
33%
129
45%
142
62%
156
73%
172
80%
189
76%
208
-12% 0. 0%
122
18% 0. 2%
126
13% 0.2%
131
19% 0. 2%
138
10% 0.2%
140
10% 0.2%
143
10% 0.3%
146
10% 0. 5%
149
10% 0.7%
152
10% 1.2%
155
10% 1. 9%
158
9%
565 480 63 18 4
3%
601 504 75 16 5
4%
632 527 84 15 6
5%
662 539 99 16 8
2%
675 550 101 16 8
2%
688 561 103 16 8
2%
702 572 105 17 8
2%
716
2%
731
2%
745
2%
760
5% 0.03% 14.24%
2% 0. 03% 17.39%
2% 0. 05% 18.75%
2% 0.06% 20.22%
2% 0. 18% 23.52%
2% 0. 31% 25.36%
1,500 16% 3. 0
-8%
$0. 42 $0. 00 $0. 42 $0. 00 $0.40 $0.00 $0. 38 $0. 00 $0.36 $0.00 $0.25 $0.00 $0.23 $0.30
-16%
$0. 19 $0. 30
-20%
$0.15 $0.30
-12%
$0.13 $0.30
-15%
$0. 11 $0. 30
0%
$0. 42 $0. 04 $0. 42 $0. 04 $0.40 $0.04 $0. 38 $0. 04 $0.36 $0.04 $0.25 $0.04 ($0.07) $0.04
0%
($0.11) $0. 05
0%
($0.15) $0.05
0%
($0. 17) $0.05
0%
($0.19) $0. 05
2%
2%
2%
2%
2%
2%
2%
2%
2%
$22, 000
$22, 000
$21,000
$20, 000
$19,000
$13,000
$11,960
$10, 046
$8,037
$7, 073
$6,012
0.0% NA
0.0% NA
0.0% NA
0.0% NA
0. 0% NA
0. 0% NA
5. 3% 19
6.3% 16
7. 8% 13
8.9% 11
10. 5% 10
3,287,263
3, 287, 263
3, 287,263
3,287,263
3,287,263
3,287,263
3,287,263
3,287,263
3,287,263
3,287,263
3,287, 263
0.0 0. 000%
0. 6 0. 000%
0. 7 0.000%
0. 8 0. 000%
1.0 0.000%
1.3 0.000%
1.9 0. 000%
3.1 0. 000%
5.3 0.000%
9.6 0.000%
16.9 0. 001%
0 0 0
1 9 1
1 11 1
1 14 2
1 10 1
1 15 2
2 27 3
3 53 6
6 101 12
11 192 23
19 327 38
1,016.7
1,032.4
1,048.4
1,064.7
1, 081. 2
1, 098.0
1,115.0
1,132.3
1, 149.8
1,167.6
1,185.7
1.55%
0.0 190.8
1.55%
0. 0 193.8
1.55%
0.0 196.8
1.55%
0. 0 199.8
1. 55%
0.0 202. 9
1. 55%
0.1 206.0
1.55%
0.1 209.2
1.55%
0.1 212.5
1. 55%
0.2 215.8
1. 55%
0.4 219. 1
1.55%
0. 8 222.5
1.55%
0.0 2.0
1.55%
0. 0 2. 0
1.55%
0.0 2.0
1.55%
0. 0 2. 0
1. 55%
0.0 2.0
1. 55%
0.0 2.0
1.55%
0.0 2.0
1.55%
0.0 2.0
1. 55%
0.1 2.0
1. 55%
0.1 2.0
1.55%
0. 2 2. 0
0.00%
0.00% 0
0.00% 0
0.00% 0
0. 00% 0
0. 00% 0
0.00% 1
0.00% 2
0. 00% 3
0. 01% 6
0.01% 9
173
174
175
U.S. Renewable Portfolio Standards The Renewable Portfolio Standards (RPS) require retail electricity suppliers to procure a minimum amount of eligible renewable energy. The Renewable Portfolio Standards encourages competition among developers to meet targets in a least cost manner. RPS have been in existence at the state level since the 1990s. Currently 28 states and Washington, DC have RPS in place. Three states passed Mandatory RPS laws in 2008, Missouri, Michigan and Ohio. In addition, five states have non binding goals North Dakota, South Dakota, Utah, Virginia, and Vermont. Policies are backed by various compliance enforcement mechanisms, including the trading of renewable energy certificates (RECs). Figure 216: Mandatory and Non Binding Renewable Energy Goals
WA: 15% by 2020 MN: 25% by 2025 Xcel: 30% by 2020 WI: 10% by 2015 ME: 40% by 2017 VT: 20% by 2017 NY: 24% by 2013 NH: 23. 8% by 2025 MA: 4% by 2009 +1%/yr RI: 16% by 2019 CT: 23% by 2020 DE: 20% by 2019 DC: 11% by 2022 MD: 20% by 2022 V A: 12% by 2022
ND: 10% by 2015 OR: 25% by 2025 (large utilities) 5-10% by 2025 (smaller utilities) NV: 20% by 2015 UT: 20% by 2025 CA: 20% by 2010 CO: 20% by 2020 (IOUs) 10% by 2020 (co-ops and munis) SD: 10% by 2015
TX : 5,880 MW by 2015
Note: Michigan and Missouri has since passed a mandatory RPS law
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State AZ CA
Description
Arizona Corporate Commission Decision No. 69127 requires 15 percent of electricity sales to be renewable by 2025, with interim goals increasing annually. A specific percentage of the target must be from distributed generation. Multiple credits may be given for solar generation and in-State manufactured systems. Public Utilities Code Sections 399.11-399.20 mandate that 20 percent of electricity sales must be renewable by 2010. There are also goals for the longer term. Renewable projects with above-market costs will be funded by supplemental energy payments from a fund, possibly limiting renewable generation to less than the 20-percent requirement. House Bill 1281 sets the renewable target for investor-owned utilities at 20 percent by 2020. There is a 10-percent requirement in the same year for cooperatives and municipals. Moreover, 2 percent of total sales must be from solar power. In-State generation receives a 25-percent credit premium. Public Act 07-242 mandates a 27-percent renewable sales requirement by 2020, including a 4-percent mandate from higher efficiency or CHP systems. Of the overall total, 3 percent may be met by waste-to-energy facilities and conventional biomass. Senate Bill 19 determined the RPS to be 20 percent of sales by 2019. There is a separate requirement for solar generation (2 percent of the total), and compliance failure results in higher penalty payments. Solar technologies receive triple credits, and offshore wind receives 3.5 times the credit amount. Senate Bill 3185 sets the renewable mandate at 20 percent by 2020. All existing renewable facilities are eligible to meet the target, which has two interim milestones. Public Act 095-0481 created an agency responsible for overseeing the mandate of 25-percent renewable sales by 2025. There are escalating annual targets. and 75 percent of the requirements must be generated from wind. The plan also includes a cap on the incremental costs added from renewable penetration. An RPS mandating 105 megawatts of renewable energy capacity has already been exceeded. In 2007, Public Law 403 added to the States RPS requirements. Originally, a mandate of 30 percent renewable generation by 2000 was set to be lower than current generation. The new law requires a 10-percent increase in renewable capacity by 2017, and that level must be maintained in subsequent years. The years leading up to 2017 also have new capacity milestones. House Bill 375 revised the RPS to contain a 20-percent target by 2022, including a 2-percent solar target. Penalty payments for Tier 1 compliance shortfalls were also raised to 4 cents per kilowatthour under the same legislation. The RPS has a goal of a 4-percent renewable share of total sales by 2009, with subsequent 1-percent annual increases to 2014. The State also has necessary payments for compliance shortfalls. Public Act 295 established an RPS that will require 10 percent renewable generation by 2015. Bonus credits are given to solar energy. Senate Bill 4 created a 30-percent renewable requirement by 2020 for Xcel, the States largest supplier, and a 25percent requirement by 2025 for others. Also specified was the creation of a State cap-and-trade program that will assist the programs implementation. Proposition C, approved by voters, mandates a 2-percent renewable energy requirement in 2011, which will increase incrementally to 15 percent of generation by 2021. Bonus credits are given to renewable generation within the State.
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State MT NV
Description
House Bill 681 expanded the RPS provisions to all suppliers. Initially the law covered only public utilities. A 15percent share of sales must be renewable by 2015. The State operates a REC market. The State has an escalating renewable target, established in 1997 and revised in 2005, that reaches 20 percent of total electricity sales by 2015. Up to one-quarter may be met through efficiency measures. There is also a minimum requirement for PV systems, which receive bonus credits. House Bill 873 legislated that 23.8 percent of electricity sales must be renewable by 2025, and 16.3 percent of total sales must be from renewable facilities that begin operation after 2006. Compliance penalties vary by generation type. In 2006, the RPS was revised to increase renewable energy targets. The current level for renewable generation is 22.5 percent of sales by 2021, with interim targets. There are different requirements for different technologies, including a 2-percent solar mandate. Senate Bill 418 directs investor-owned utilities to have 20 percent of their sales from renewable generation by 2020. The renewable portfolio must consist of diversified technologies, with wind and solar each accounting for 20 percent of the target. There is a separate standard of 10 percent by 2020 for cooperatives. The Public Service Commission issued RPS rules in 2005 that call for an increase in renewable electricity sales to 24 percent of the total by 2013, from the current level of 19 percent. The program is administered and funded by the State. Senate Bill 3 created an RPS of 12.5 percent by 2021 for investor-owned utilities. There is also a 10-percent requirement by 2018 for cooperatives and municipals. Through 2018, 25 percent of the target may be met through efficiency standards, increasing to 40 percent in later years. Senate Bill 221 requires 25 percent of electricity to be produced from alternative energy resources by 2025, including low-carbon and renewable technologies. One-half of the target must come from renewable sources. M i i l d ti t In June 2007, Senate Bill 838 required renewable targets of 25 percent by 2025 for large utilities and 5 to 10 percent by 2025 for smaller utilities. Any source of renewable electricity on line after 1995 is considered eligible. Compliance penalty caps have not yet been determined. The Alternative Energy Portfolio Standard has an18-percent requirement by 2020. Most of the qualifying generation must be renewable, but there is also a provision that allows certain coal resources to receive credits. The program requires that 16 percent of total sales be renewable by 2020. The interim program targets escalate more rapidly in later years. If the target is not met, a generator must pay an alternative compliance penalty. Senate Bill 20 strengthened the State RPS by mandating 5,880 megawatts of renewable capacity by 2015. There is also a target of 500 megawatts of renewable capacity other than wind. Voters approved Initiative 937, which specifies that 15 percent of sales from the States largest generators must come from renewable sources by 2020. There is an administrative penalty of 5 cents per kilowatthour for noncompliance. Generation from any facility that came on line after 1999 is eligible. Senate Bill 459 strengthened the State RPS with a requirement that, by 2015, each utilitys renewable share of total generation must be at least 6 percentage points above the renewable share from 2001 to 2003. There is also a non-binding goal.
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Source: EIA
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Resea rch
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Dish-Stirling STE Biomass gasification Anticipated Cost of Full-Scale Application Wave Concentrating PV
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Additions in RPS States by Clean Technology Type Of the more than 8,900 MW of new non-hydro renewable energy capacity that come on line in RPS states from 19982007, roughly 93% has come from wind power alone. Although renewable resource diversity has so far been limited, it is expected to increase. Figure 221:Annual Capacity Additions
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Capacity Required to Meet State RPS Policies It is estimated that 71 GW of cumulative new capacity will be needed to fully meet policies by 2025. This is the equivalent of 5.5% of projected 2025 electricity generation, or 18% of projected electricity demand growth. This includes 14GW of required capacity by 2010 and 34GW by 2015. The largest markets in terms of capacity growth requirements are California, Illinois, Ohio, Minnesota, Texas, New Jersey, and Arizona. Each of these states require over 3,000MW of new capacity. In terms of additions as a percentage of expected retail sales in 2025, Minnesota, Oregon, Massachusetts, Connecticut, New Jersey, New Hampshire, New Mexico, and Delaware each require more than 15% of statewide load. Figure 223: New Renewable Capacity needed by 2025 (Nameplate MW)
California Illinois Ohio Minnesota Te xa s New Jerse y Arizona Maryla nd Pennsylva nia Wa shingto n Ma ssachuset ts Orego n Co lo rado Ne w Yo rk No rth Carolina Conne cticut W isconsin N ew M exico Nevada Delawa re New Hampshire M ontana Ma ine Rhode Isla nd Haw aii I owa D.C .
0 2,000 4,000 6,000 8,000 10,000
Figure 224: New Renewable Generation Needed by 2025 as a Percent of Projected Statewide Retails Sales
Minnesota Orego n M assachuset ts Conne cticut New Jerse y New Hampshire New Mexico Delaw are Rhode Isla nd Illinois Ma ryland Nevada Ohio California Wa shingto n Co lo rado Arizona M ontana Ma ine Pennsylva nia W isconsin Ne w Yo rk Haw aii Texa s No rth Carolina Iowa D.C .
0% 5% 10% 15% 20% 25% 30%
2020 Different Renewable Mix Across Regions The Southwest region of the U.S. is expected to produce the most renewable energy as a percentage of regional electric generation. Wind power is facing increasing competition in California (WSCC/CNV) from solar and geothermal. States expected to have most electricity generated from wind include Texas, Minnesota, and New Mexico. The impact of the RPS is expected to be greater in sta tes located in the Midwest and the West.
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To tal MW (right axis) 5,000 Capacity Additions (Nameplate MW) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0
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State RPS Policies Continue to Differ Widely The individual state policies are tailored to satisfy individual state objectives. Variations exist in terms of renewable energy resource purchase targets and timeframes, eligibility of various clean technologies, compliance flexibility, and types of enforcement applied. Tiered targets or set-asides are often used to support preferred resources, instead of the least cost option. Eligibility rules for geographic location and electricity delivery are used to stimulate new resource development in particular regions. Other state by state variations include allowance of unbundled RECs, whether and what types of cost caps exist, and the role of state funding mechanisms. Federal RPS Proposal In February 2009, Senators Tom and Mark Udall introduced legislation calling for a Federal Renewable Electricity Standard that would require utilities to generate 25% of their electricity from wind, solar and other renewable energy sources by 2025. The bill would require utilities to initially provide 6% of their electricity from renewable resources by 2012, and increase that level to 25% by 2025. While this legislation is still being debated in congress, industry and political experts are optimistic that it will be eventually be enacted into law.
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Unbundled RECs and Electronic Tracking Systems Renewable Energy Credits are now widely used as the preferred means of demonstrating RPS compliance. There are multiple state and regional markets, and contracting practices vary greatly among them. The separate market of unbundled RECs are easier to trade but do not protect local generation. Most states have opted to allow use of unbundled RECs. States are increasingly using electronic certificate tracking systems to issue, record, track, and retire RECs.
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Compliance Outcome Thus Far In 2006, the weighted average compliance level was 94% (nine states had over 95% compliance). It has become evident that a number of states struggled to meet their targets including Arizona, Massachusetts, Minnesota, Nevada, and New York. Some of the reasons for this include insufficient funding, difficult project development climates, targets not met on schedule, and changing regula tory treatment of RECs. In addition, sta tes with specific solar requirements also had mixed success. In the case of states that do not meet their target, alternative compliance payments (ACPs) are required instead. These payments are recycled to support renewable energy through other means. In 2006, $18.2 million was paid in the form of ACPs. In addition to ACPs, some states have compliance waivers and opportunities to make up purchase shortfalls in later years. Only in Connecticut in 2006 and Texas in 2003 and 2005 had there been examples of explicit enforcement actions. A key barrier to achieving these RPS ta rgets is adequate transmission lines. California does not believe it will be able to reach the states 20% RPS by 2010 due to insufficient transmission. In addition, Nevada power has expressed a need for new transmission lines, while New Hampshire has enacted legislation requiring the Public Utilities Commission to conduct a study on expanding transmission. At this point Texas, Colorado, California, and Minnesota have plans to rebuild their transmission. In addition, seven states have formed transmission infrastructure authorities to issue revenue bonds for new transmission.
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Differential Support for Solar Energy in State RPS Policies Currently set asides are used to support central and distributed solar energy in 13 of the 28 states and Washington DC. In 2007, new solar or distributed generation set asides were created in Delaware, New Hampshire, New Mexico, North Carolina, and the already established set aside in Colorado was expanded. In 2008, Massachusetts and Ohio created solar set asides. From 200007, 102MW of grid connected PV capacity was added in states with setasides. This represents 22% of all grid PV installations in the country over this period, as well as 75% of all grid PV installations outside of California, the largest U.S. market. Of states with set asides, only Arizona, Nevada, and New Jersey have four or more years of operational experience. Figure 231: States with Solar or DG Set Asides
WA: 2x multip lier fo r DG NH: 0.3 % solar ele ctr ic by 2014 NY: 0.1542% customer -s ited DG by 2013 NV: 1% so lar by 2015 2.4x multipl ier for central PV 2.45x mul tipl ier for d istributed PV MA: % TBD for DG NJ: 2.12% s olar electric b y 202 1 PA: 0 .5% PV by 2020 OH: 0.5% solar elec tr ic by 2024 MD: 2% so lar electric b y 2022 AZ : 4.5% c ustomer -sited DG by 2025 (hal f from reside ntia l) CO: 0.8% so lar electric by 2020 (half from customer-site d proje cts) 1.25x multipli er for in -state projects 3x mul tipl ier for co-ops and muni s for solar insta lled before July 2015 NM: 4 % solar electric by 2020, 0.6% DG by 2 015 DE: 2.0 05% so lar electric by 20 3x multiplier for solar instal led before 2015
DC: 0.386% so lar electric b y 2021 1.1x multipl ier for sola r 2007-09 NC: 0.2% s olar b y 20 18
Photovoltaics
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Solar Capacity Required to Meet Existing Set Asides A cumulative 560 MW of solar capacity is required by these policies by 2010. This number will grow to 2,450MW by 2015, 5,870 MW by 2020, and 7,550MW by 2025. In order for these targets to be met, there must be an average of 100MW/year in solar capacity additions from 200810, followed by 300MW/year from 2011 to 2014 and 600 MW/year from 201521. Figure 233: Timeline of Annual and Cumulative Solar Additions
8,000 900 AZ
7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Ann ual Capaci ty (ri ght axis) Cum ulative Capacity (l eft axis)
NJ MD OH PA NM NC MO DE NV CO DC NH NY
States with the Highest Capacity Potential The largest set aside driven solar markets in terms of required capacity are Arizona, New Jersey, Maryland, Pennsylvania, and Ohio. In the next several years, significant growth will also be required in New Mexico, Nevada, Colorado, and Pennsylvania. Solar Generation as a proportion of expected 2025 statewide load, may be as high was 3.1% in New Mexico, and 2% or more in Arizona, Maryland, and New Jersey, assuming full compliance is achieved.
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Arizona Colorado Delaware Maryland Nevad a New Hampshire New Jersey New Mexico New York North Carolina Ohio Pennsylvania Washington D.C. Total
2010 Capacity
110 MW 29 MW 0.5 MW 14 MW 76 MW 4 MW 210 MW 64 MW 10 MW 5 MW 14 MW 25 MW 0.5 MW 5 60 MW
2025 Capacity
1,60 0 MW 160 MW 190 MW 1,50 0 MW 180 MW 35 MW 1,60 0 MW 420 MW 15 MW 280 MW 820 MW 690 MW 54 MW 7,550 MW
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Figure 235: Projecting the Future Market Impacts of Existing State Solar Set Asides (Assuming Full Compliance with Existing RPS Standards)
1800 1600 1400 1200 1000 800 600 400 200 0 NC NM PA OH MD NJ AZ 2010 2015 2020 2025
Current Necessity for Solar Set Asides Traditional RPS policies with no differential support for solar are unlikely to provide meaningful increases in solar electric generation, particularly customer-sited PV, due to the cost and solicitation barriers stemming from their small individual size. States that only have credit multipliers for solar, but no share requirements, have not yet seen significant solar additions. This reflects the fact that credit multipliers have not been large enough to spur heightened interest. California may be one of the only exceptions where meaningful solar activity is occurring without specified solar set-asides. There, utilities have already signed contracts with 4+GW of solar thermal electric capacity as of February 2009. In conclusion, for an RPS to substantially benefit solar, especially PV, a solar share requirement or set-aside appears necessary, or else multipliers must be set at higher levels, with an overt action to remove contracting barriers for small, customer-sited projects.
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U.S. State RPS Developments Figure 237: New Renewable Capacity Needed by 2025 (Nameplate MW)
Californi a I ll inoi s M innesota Texas New Jersey Ari zon a P enn sylvani a Washington Oregon Connecti cut Nevad a 0 2000 4000 6000 8000 10000 12000
Arizona Date Enacted: 11/14/2006 Effective Date: 6/15/2007 Renewables requirement: 15% by 2025 Set-asides, tiers, minimums: By 2012, 30% of requirement (about 2,000 MW) must be derived from distributed generation, half of which must come from residential projects. Highest potential/focus: PV and solar water heating. Several 250+ MW solar thermal electric power plants are expected to be built by 2013. One, by Abengoa of Spain, is currently going through the approval process and has a target operation date in 2011. Challenges: Funding is the biggest challenge as solar projects are the focus. Also, unlike surrounding states, Arizona has mostly class 3 and 4 wind resources, which is not promising for wind energy generation. However, some utilities are already buying wind generated electricity from New Mexico. Land and Radiation: The distributed requirement ensures that most of the residential and small commercial solar systems will be installed on rooftops. Much of Arizona is federal, tribal, state, or county land, but there is plenty to meet RPS in the southwestern
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region of the state, near Yuma. There, solar radiation is most intense and is the best in the country. California Date enacted: 2002 (amended 2003, 2006) Effective Date: 1/1/2003 Renewables requirement: increase renewable retail by at least 1% per year to reach 20% by 2010 Set-asides, tiers, minimums: None Highest potential/focus: The majority of 2010 RPS generation will likely come from geothermal and wind energy, but solar energy will see a large percentage increase in the coming years. California led the country in installed wind capacity until 2006. Wind continues to be poised for more near-term capacity growth than any other resource. A planned build-out of transmission in the Tehachapi region is expected to give access to 4,500 MW of new wind capacity between 2008 and 2013. Challenges: Californias very early RPS deadline coincides with cost escalation. Wind turbine manufacturers are scrambling to ramp up their capacity, but are getting hit with high steel prices, creating delays as long as 18 months for delivery of turbines. Constrained transmission and distribution infrastructure continues to be a problem as well. The California Solar Initiative, also known as Million Solar Roofs, is a 10-year, $2.2 billion incentives program aiming to add 3,000 MW of new solar electricity by 2017. Connecticut Date enacted: 06/04/2007 Effective Date: 10/01/2007 Renewables requirement: 27% by 2020 (20% Class I resources, 3% Class II, 4% Class III) Set-asides, tiers, minimums: Minimum % each year from Class I renewables. Highest potential/focus: Wind energy in Connecticut has the most potential. Studies indicate that the state has good biomass and vast low-temperature geothermal heat pump potential as well. Challenges: Inconsistencies and variations in states policies, changing statutory requirements by CT legislature, acceptance of higher prices by the public, and avoiding double counting of attributes. Also, some sub-regions such as southwest
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Connecticut are severely threatened with supply deficiencies and voltage instability problems due to insufficient transmission within the region. Land and Radiation: The best windy land resources in Connecticut are on the ridge crests in the northwestern part of the state. Small wind turbines may have applications in some areas. For flat-plate collectors, Connecticut has a mid-range solar resource at around 4,000 Whr/m2 /day, potentially effective in certain applications. For solar concentrating collectors, the state has a relatively poor resource. This probably is not the best renewable energy technology for the state. Illinois Date enacted: 08/28/07 Effective Date: 08/28/07 Renewables requirement: 25% by 2020 Set-asides, tiers, minimums: 75% wind Highest potential/focus: To the extent that is available, at least 75% of the renewable energy resources used to meet these standards shall come from wind generation. The state also has excellent biomass resource potential as well as some low to moderate temperature resources that can be tapped for direct heat or for geothermal heat pumps. However, electricity generation from geothermal is not possible. Challenges: With the Illinois energy market the fifth largest in the country, it is estimated that the RES will require more than 4,000MW of new renewable energy to be delivered to bundled customers. However, challenges include: significant coal fired generation, low cost electrical generation, wind regime not the strongest, and lack of strong solar potential. Land and Radiation: Illinois has good windy land resources in its central and northern regions. For flat-plate collectors, it has useful solar resources throughout most of the state at 4,5005,000 Whr/m2 /day. For concentrating collectors, Illinois could make use of certain types of technologies, mainly in the southwestern region, but large-scale thermal electricity systems will not be effective. Minnesota Date enacted: 02/22/2007 (amended May 2007) Effective Date: 02/22/2007 Renewables requirement: Xcel energy: 30% by 2020, other utilities: 25% by 2025
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Set-asides, tiers, minimums: Of the 30% renewables required of Xcel Energy by 2020, at least 25% must be generated by wind power and the other 5% by other eligible renewables. Highest potential/focus: Wind is the first focus for Minnesota, but the state also has excellent biomass and vast low-temperature geothermal heat pump potential. Challenges: Because it aims to take advantage of good wind resources, the main challenges for Minnesota, like those of other wind states, largely involve siting and transmission difficulties. Land and Radiation: Minnesota has significant windy land resources, especially in the southwest region of the state. Small wind turbines may have applications in some areas. For flat-plate collectors, Minnesota has useful resources throughout the state where radiation is around 4,0004,500 Whr/m2 /day, especially in the western regions. For concentrating collectors, Minnesota could pursue some types of technologies, with 3,5004,000 Whr/m2 /day, but large-scale thermal electricity systems will not be effective. New Jersey Date enacted: 2001; amendments adopted 2004, 2006 Effective Date: 9/01 Renewables requirement: 22.5% by 2021 (2.12% from solar; 17.88% from other Class I renewables; 2.5% from Class II or additional Class I renewables) Set-asides, tiers, minimums: 2.12% of retail electricity supply must be generated using solar by 2021 (approximately 1500 MW solar) Highest potential/focus: New Jersey has been one of the most aggressive states in the use of a sola r set-aside. These development ta rgets are the la rgest in the country on a per capita basis and are now driving the high growth in PV installations in the state. Land and Radiation: The highest windy land resource areas in New Jersey are found along the Atlantic Ocean and Delaware Bay coastal areas, and on ridges of western and northwestern New Jersey. For flat-plate collectors, the state has a useful amount of solar resource averaging at 4000 to 5000 Whr/m2 /day, in the southern regions. For concentrating collectors, solar resources are only marginal at 3000 to 4000 Whr/m2 /day. Although certain technologies may work in specific applications, most concentrating collectors are not effective. New Jersey also has low to moderate temperature resources that can be tapped for direct heat or for geothermal heat pumps. New York Date enacted: 9/24/2004
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Effective Date: 9/24/2004 Renewables requirement: 24% by 2013 Set-asides, tiers, minimums: 2% of total incremental RPS requirement is set-aside for Customer-Sited Tier, for a total of 0.1542% of customer-sited generation. Highest potential/focus: The first, or Main Tier, consists of medium- to large-scale electric generation facilities that sell their electrical output into the wholesale power market administered by the NYISO. The second or Customer-Sited Tier consists of smaller, behind-the-meter resources such as solar and small wind projects that produce power for use on site. Challenges: Delays in the on line date of one of the states largest new renewable energy facilities, and higher REC prices than initially anticipated and budgeted. Land and Radiation: New York has excellent wind resources in some areas of the state. Small wind turbines may have applications in some areas. For flat-plate collectors, New York has useful resources throughout the state. For concentrating collectors, it has relatively poor radiation resources, at below 3000 Whr/m2 /day. The state also has good low to moderate temperature geothermal potential as well as good hydropower resource as a percentage of the states electricity generation. Oregon Date enacted: 6/6/2007 Effective Date: 6/6/2007 Renewables requirement: 25% by 2025 Set-asides, tiers, minimums: goal for community-based and small-scale renewables Highest potential/focus: The state offered a ta x credit for solar energy use 30 years ago, and now it is trying to take the lead again, with cash incentives for PV and thermal systems, and the passage of seven clean-energy bills in 2007. Green collar jobs are getting a boost from four PV component-manufa cturers moves into the sta te. Solar World AG announced plans to establish a solar silicon wafer and solar cell production plant in Hillsboro that it expects to become the largest in the U.S. by 2009. Oregon also has excellent biomass resource potential, as well as hightemperature geothermal resources that are suitable for electricity generation, as well as direct use and heat pump applications. Land and Radiation: Oregon has good windy resources, and the best areas are concentrated on ridge crests throughout the state. In addition, areas of the coast offer some of the worlds best wave energy and tidal power potential. For flat-plate collectors, Oregon has useful resources in most of the state, with the best resources falling in the eastern region of the state. For concentrating collectors, Oregons
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resource varies significantly across the state. In the eastern region, the resources are useful for most technologies at around 4000 Whr/m2 /day. Along the coastline, though, most concentrating collectors would not be effective. Pennsylvania Date enacted: 11/30/2004 Effective Date: 2/28/2005 Renewables requirement: 18% by 2020 (8% Tier I and 10% Tier II) Set-asides, tiers, minimums: Solar PV set-aside of 0.5% for June 1, 2020 and thereafter Highest potential/focus: Tier I resources include wind, low-impact hydro, solar energy and biomass. Challenges: Defining the boundaries from which renewable energy can be counted toward the PA standard has been a major challenge. Because the sta tes energy efficiency plan included coal mine methane, and other environmentally controversial sources such as waste coal and municipal trash, several state environmental groups characterized the proposal as the dirtiest RPS in the nation and urged opposition. Land and Radiation: Pennsylvania has windy land resources consistent with utilityscale production, with the best areas concentrated on ridge crests in the southwestern region, southwest of Altoona and southeast of Pittsburgh. Small wind turbines may have applications in some areas. There are useful resources across the state for flatplate collectors but relatively poor resources for concentrating solar. In the southeast corner of the state, certain technologies might be applicable, but most concentrating collectors are not effective. Texas Date enacted: 6/18/1999 Effective Date: 9/1/1999 (amendments effective 9/1/2007) Renewables requirement: 5880 MW by 2015 Set-asides, tiers, minimums: target of at least 500 MW from renewables other than wind Highest potential/focus: Wind power development in Texas has more than quadrupled since the RPS was established. While it will continue to be the bulk of renewable energy expansion under the states RPS, Senate Bill 20 was implemented in an effort to diversify the states renewable generation portfolio, requiring that Texas meet 500 MW with non-wind generation. This provision indirectly promotes solar
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power and biomass, and provides landowners with new from the use of crops and animal waste to produce energy. Challenges: The unexpected and rapid development of wind energy in remote sections of Western Texas has placed significant demands on the modest transmission systems that deliver electricity to areas of high demand, especially in peak wind periods. Land and Radiation: There is an abundance of exceptional wind resources in Texas. The state also provides very good solar resources for flat-plate collectors. In the southwestern region, radiation averages above 6500 Whr/m2 /day. For concentrating collectors, there are again very good resources in some areas, particularly in the Big Bend region. But they vary significantly across the state, and concentrating collectors along the Gulf Coast would be much less effective. Washington Date enacted: 11/7/2006 Renewables requirement: 15% by 2020 Set-asides, tiers, minimums: None Highest potential/focus: So far the focus as been on wind, but there is growing interest in solar. SB 5101 is especially responsible for growing solar PV demand. The law establishes a renewable energy feed-in production incentive, the first such application of this approach in a U.S. state. While it would represent a paradigm shift for solar legislation domestically, this has long been effective in Germany. Washington also has excellent biomass resource potential, as well as high-temperature resources that are suitable for both electricity generation and direct use and heat pump applications. Land and Radiation: Washington has wind resources consistent with utility-scale production. The largest contiguous areas of excellent resource are located in the central part of the state. Small wind turbines may have applications in some areas. For flat-plate collectors, Washingtons resource varies across the state, but is more or less average. For concentrating collectors, there is again a widely varied resource. The western region of the state could pursue some of the technologies, but the state does not have enough of a resource (averaging 2000 to 3500 Whr/m2 /day) for largescale thermal electricity systems. Nevada Date enacted: 1997 Effective Date: 2002 Renewables requirement: 20% by 2015
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Set-asides, tiers, minimums: 5% of the energy portfolio must be solar, PV credit multipliers. Highest potential/focus: Geothermal, concentrating solar plants, and PV. Challenges: A big challenge in implementation has been the financial woes of the state's two primary electricity suppliers, Sierra Pacific and Nevada Power. Their credit has delayed potential renewable energy investors who would need to enter into longterm contracts with the utilities in order to meet RPS requirements. There is also the need for direct transmission connection between North and South Nevada. Access to wind resources is limited, except for in Eastern Nevada. Land and Radiation: Much of the renewable energy resource base is located in isolated areas. Nevada is the seventh largest sta te in terms of land area, however, over 80% of the state is Federal land. It is the driest state in the nation, so sufficient water is always a concern (issue in CSP). The solar radiation profile is good in southern Nevada. Several CSP plants are in a planning phase in that area including Tonopah, NV.
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Design Internal Speci fications Review Bids Compile Shortlist Sign Binding Letter of Intent
Design Blueprints and floor plans Obtain Power Grid Connection Sign Financing Contract with bank Sign Firm Contract
Municipal, County, Energy Commission, and BLM Permitting Get PPA approval from state utilities commission
Purchase or lease land Clear and level ground site Receive equipment and supplies
Solar Energy Project Process Development Overview The first step in the Solar Energy Project Development process is to construct the plant and decide whether to buy the energy through a PPA, or produce it independently. The Design and Engineering team needs to connect the plant to the power grid and provide blueprints. This is done early on in the process because: Permitting is a bottleneck and dependent on blueprints and Purchasing/leasing land is dependent upon power grid connection. The next step is to apply for financing through loans, or investment. Permitting for a solar project depends on location, type (PV or CSP), and Environmental Quality. Finally, eligibility requirements are needed for RPS/Feed-in Tariff/Incentives and to construct the solar power plant.
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A typical sola r energy project takes anywhere from nine months to three years to complete construction. Factors impacting timeline of project development include: Size of project; Type of land planned to build upon (public or private); and Type of financing (debt, equity).
Four Solar Energy Project Models Model 1: Utility Buys Power to Fill RPS (U.S.) Description: Utility buys power from a supplier to fill a Renewable Portfolio Standard (RPS). In order to choose a supplier, the utility must issue solicitations for the project, review bids and choose based on reliability standards and credit worthiness. Once the utility chooses the supplier they must negotiate a contract, which includes a Power Purchase Agreement (PPA) and form a binding letter of intent to continue the subsequent steps in the process. Next the supplier and utility must plan grid connection and construction while obtaining permitting and financing. Next the project must secure financing and sign the PPA contract and submit for the approval of the Public Utility Commission. Finally, the project must secure the site for construction and produce the plant.
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Model 2: Utility Builds and Owns Plant Description: Utility builds solar energy plant and owns it as a subsidiary. In order for the utility to secure a developer, they must issue solicitations, review bids, and then begin negotiations with a developer. While the design and engineering is not required for financing, it is still required for permitting, which is still a bottleneck for this process. In this model, the contract negotiation and site acquisition overlap with the permitting process in order to prevent any further delay already caused by the permitting process. Once the PPA contract is agreed upon, the parent company and the subsidiary sign an LLC operating agreement and an O&M agreement that defines the relationship among owners. Once the PPA is approved by the public utilities commission, the developer can construct and install the plant.
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Model 3: Tax Advantage Project (U.S.) Description: Solar energy services provider installs plant on customers roof. Since an investor finances the project for the financial incentives, only the customer pays for the electricity and does not pay for the fixed assets. The financial incentives of this project are that the solar energy service provider owns the asset and can use accelerated deprecation while receiving tax credits. This process can be initiated by the investor, customer, or the solar energy service providers sales team. The Solar Energy Service Provider goes through the applications and only chooses those that would be good investments. Once these applications are approved they sign a binding letter of intent with the customer and send the PPA to be approved by the utilities commission. The process time for this model is less as the land rights do not need to be secured like they do in the previous two models. Once the PPA has been approved, the system is prepared and installed.
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Model 4: Solar Energy Project Process Development in Europe Description: Solar Project in Europe is initiated by an investor who works with a systems integrator to build the plant. Investors approach the systems integrator who conducts permitting, site acquisition, and design and engineering, while subcontracting project development, land and construction preparation and construction and after-site services. During the site acquisition, the systems integrator find a project developer and begins the design and engineering process, which includes connecting to the power grid, obtaining permits, and completing financing. Once the contract is complete the systems integrator hires the subcontractors for the land preparation and construction.
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Solar Energy What Is Solar Energy? Solar energy is described as the suns rays that reach the earth and can then be converted into either thermal (heat) or electricity. Solar energy converted into heat can be used to: heat water for use in homes and buildings and heat spaces. Solar energy can be converted into electricity in two ways: 1) photovoltaic cells; and 2) solar thermal plants (also known as concentrated solar power or CSP), which are essentially similar to coal and other fossil fuel power plants; however they use sunlight instead of coal or natural gas to generate electricity. According to the United States Department of Energy, sunlight falling on less than 0.5% of the mainland is sufficient to satisfy all U.S. electricity needs. What Is Photovoltaic Solar Energy? Photo = light and voltaic = electricity. In other words, photovoltaic technology which is essentially a scientific term used to describe solar energy referring to generation of electricity from light. Types of Solar Technology Although both solar PV and solar thermal technologies are capable of producing electricity on a large scale, the development of solar PV has been much faster than CSP over the past decade. The majority of the worlds CSP capacity is concentrated in the nine CSP power plants constructed in the Mojave Desert, California, during 19841990, and the worlds CSP capacity has increased at a very gradual pace since then. The different fate of these two solar technologies can be attributed to the relatively large space requirement for the construction of a solar farm under CSP (188,000 square meters per 30MW plant3), the higher operating cost compared with other renewable energy sources (10% of investment cost instead of less than 1% for sola r PV) and the la ck of government incentive in promoting CSP. History of the Solar Cell The first true solar cell, discovered in 1877 by Charles Fritts, was constructed from the semiconductor selenium coated with a nearly transparent layer of gold. Fritts cells were highly inefficient, converting less than 1% of absorbed light into electrical energybut it was a start. By the 1930s, selenium cells were used in light-sensitive photography devices. Russell Ohls breakthrough of the first silicon solar cell in 1941 was followed by the first c-Si solar panels in 1954, designed by AT&T Bell scientists Calvin Fuller, Daryl Chapin, and Gerald Pearson. They demonstrated a more refined silicon solar cell capable of 6% conversion efficiency. But at $300 per watt, the technology was considered far too expensive for widespread use. The Space Race of the 1950s and 1960s presented an opportunity for solar development, and satellites in both U.S. and Soviet space programs adopted this alternative energy source. The energy crisis and oil embargos of the 1970s led to greater national consciousness for reducing U.S. dependence on imported oil. This fueled the exploration of clean technology forms such as solar, wind, and geothermal. Solar PV costs
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began to decline as investments, subsidies, and research poured in. These cost savings opened the door to many novel solar applications, including: railroads, lighthouses, offshore oil rigs, remote homes, and more. In the late 1980s, silicon solar cells had a 20% conversion rate and concentrator cells had a 38% conversion rate. By the 1990s, solar energy costs had fallen as predicted, but fossil fuel costs had dropped to record low levels as well. This caused renewable energy industries in the United States to lose some degree of allure. However, rapid PV market growth was taking place overseas in countries such as Germany and Japan, where government incentives remained robust. How Solar Cells Generate Electricity The solar cell generates electric energy from light when solar radiation photons are absorbed by a semiconducting material, such as silicon, and electrons are shaken loose from their atoms. Separation of the charge carriers to a conductive contact transmits the electricity. The conversion of solar to electric energy is known as the photovoltaic effect, and the field of research around solar cells is photovolatics. During the PV process, light is first absorbed by the solar cell. The absorbed light causes electrons in the material to increase in energy, at the same time making them free to move around. However, electrons remain at this higher energy level for only a short time before returning to their original lower energy position. In order to create usable electricity current, the individual cell is designed with a positive and a negative layer to create an electric field. These two different layers are called p-type and n-type layer. In conventional polysilicon solar cell, the p-type and n-type layers are made by adding a small amount of impurities to the silicon. Boron is usually used for p-type layer, while phosphorous is used for n-type layers. Through doping the silicon with boron and phosphorus, p-type silicon contain holes, while n-type silicon contains extra electrons. When sunlight hits a solar cell, the electrons gain energy and start moving from p-type layer to the n-type layer. If we provide an external current path, electrons will flow through the path to their original side (the P side) to unite with holes that the electric field sent there, creating energy along the way. The solar cell industry has four generations of development. The first consists of silicon wafer-based solar cells, the dominant technology in commercial electricity production. The second generation is based on thin-film technologies. Here, amorphous silicon and Cadmium telluride (CdTe) are the most advanced technology. Copper indium gallium selenide (CIGS) is a relatively new semiconductor material being tested. Thin-film has the advantages of lower cost per watt and flexible installation, but the disadvantage of reduced efficiency relative to wafer-based silicon. Technologies under development in thirdgeneration PV include nanocrystal (quantum dot), photoelectrochemical, and polymer solar cells. Fundamentally, they do not rely on the traditional p-n junction to separate photogenerated charge carriers. Finally, fourth-generation PV involves the mixture of polymers with nano particles to make mutispectrum-layered cells. It is important to compare the conversion efficiencies of different solar technologies, and see that the most efficient developments are not usually the most economical. There is
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generally a range of 6% efficiency for amorphous silicon cells to 40% efficiency for multijunction research lab cells. Somewhere in the middle, commercially available c-Si cells have efficiencies around 15%. Another important concept for the solar industry is distributed generation potential, defined as the production of energy close to the point of use. Central generation refers to large 5002,000MW plants that use the underlying transmission infrastructure for delivery to end-users. In contrast, distributed generation avoids the complexity of building new lines and can be configured to meet peak electricity needs. Figure 250: How Electricity Is Produced in a Solar Cell
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Source: Miami University of Ohio, Barclays Capital research
Solar Cell Efficiency and the Concept of Watt Peak In order to judge whether a solar cell is good or bad, we consider an important parameter called cell efficiency, which is measured in terms of the following equation: = Pm Pin In simpler terms, cell efficiency measures how much energy from sunlight (Pin) can be converted into electricity (Pm ) by a solar cell. The higher the efficiency, the more electricity can be generated. Since different materials absorbs light with different energy levels, the materials used for cell manufacturing is one of the key determinants of cell efficiency level. The amount of electricity that can be generated not only depends on the cell efficiency, but also the level of sunlight and the surface area of solar cell. In order to make a meaningful comparison between solar cells, it is necessary to compare the power output under the same standard conditions. The rated power, expressed in watt peak (Wp), is a measure of the amount of energy that a solar panel can produce under optimal conditions. For comparison purposes, cell output is usually measured under standard test conditions (STC). Higher cell efficiency will result in a higher Wp. For example, a cell with an efficiency of 17% has a Wp of 170 watt per m2 under standard conditions. For a standard 5-inch solar cell (125mm x 125mm), the Wp is estimated at 2.66W. For mono-crystalline solar cell, the Wp may be even lower, as it is not a perfect square (the surface area is only 0.0147 m2). In this report, all units denominated in watt (W) refer to watt peak (Wp).
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Market Barriers Implications of Demand versus Supply Over the last few years, solar demand has entirely outpaced supply. This has imposed a bottleneck across the PV industry, driving spot prices as high as $450 per kilogram. The year 2009, however, will be a critical tipping point when supply continues to ease and exceed demand. Government support for solar will continue to be a critical driver of demand, which may slacken as subsidies in early-adopting countries such as Germany and Spain ramp down. But new markets like China and India may shift existing suppliers to new geographies. Interconnection Because we are still very early into the solar era, grid connection standards are not yet sufficiently streamlined. Considering the growth pace of renewable energy production in the nation, this presents a major market barrier to faster industry expansion. Solar is expected to contribute to instability of the electricity grid. The variable nature of most renewable energy forms presents new transmission needs in the nations overall distribution network. In spring 2007, the DOE launched the Renewable Systems Interconnection (RSI) study. Annual installations of grid-tied PV could reach a cumulative installed base of 7.524GW by 2015. One key finding of this study is that integration issues are likely to emerge much sooner than many experts believewithin the next five to 10 years for some regions of the country. Although national sentiment is generally receptive to solar development within the United States, many states and utilities currently have interconnection standards that inhibit PV adoption. Net Metering Similar to transmission complexities, a lack of standardization in netmetering regulations, and other policies affecting solar, has inhibited the escalation of U.S. installations. Moving ahead, it is critical for these market barriers to be addressed, alongside technological advancements. Net metering is intended to be made available for any consumer interconnecting their generator to the grid. A system owner receives retail credit for at least a portion of the electricity they generates. However, recovering credits and rebates have been highly difficult and inconsistent for renewable energy pioneers. Historically, policies have favored the entrenched conventional utilities, a hurdle for the industrial development of renewable resources such as solar and wind energy. Technical Challenges For crystalline silicon, the biggest technical challenge has been the thickness of solar cells leading to high material costs. Solar experts are exploring ways to enhance the use efficiency of silicon raw material, as well as the performance of cheaper, lower purity feedstock. Efforts to improve silicon efficiency include: reducing head and tail losses when pulling ingots, new wafer lift-off techniques to minimize kerf losses, and improving light trapping to ensure optimal absorption by solar cells. Again, a significant barrier to thin-film technology has been the low degree of module efficiency. Manufacturers currently are seeking ways to transition from prototype scale construction to commercially viable deployment. It is difficult to produce highly robust, yet
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transparent and moisture-proof material. Efforts have been made to use rigid glass encapsulated modules on the outset, in order to concentrate on cell performance, and to develop easily integrated products that allow for more frequent replacement cycles. Concentrating PV is not a new phenomenon, but historically, many manufacturers have been discouraged by the complications and costs associated with cell integration. Technical challenges include: dissipating heat from cells, sealing modules from moisture, and guaranteeing tracking precision. They were rarely able to reach the volume production necessary for these kinds of projects to be profitable. However, there has been a resurrection of interest in the CPV approach as multi-junction cell efficiency and power density levels reach new records. Cost of Solar Electricity Solar PV is currently the most expensive form of energy. Compared to conventional coalfired electricity, the total operating cost of a solar PV on a per kWh basis can be two to eight times more expensive. Even compared with other renewable energy sources such as wind power, solar energy is still much more expensive. For example, both solar PV and wind have minimal generation costs as no fuel is required. However, the investment cost per kW for solar PV is around US$6,000US$6,500 while wind power only costs about US$1,200US$1,400 per kW. The costs of solar PV have, however, historically fallen by around 20% for each doubling of installed capacity, or by about 5% p.a. According to the IEA Renewable Energy Outlook 2003, Solar Energys cost-cutting potential remains the most promising, with projected ASPs to fall by 15% for every doubling of installed capacity. The European Photovoltaic Association (EPIA) also projects a similar 15%18% cost-reduction factor, and expects PV module costs to come down from the current EUR4EUR5 per W to around EUR1 per W by 2020. By then, EPIA believes solar PV will become cost-competitive to peak load residential retail electricity prices and could be able to replace the peak load power usage by residential users in low sunshine regions (900 effective operating hours). A similar target and strategy was also introduced by the New Energy Development Organization (NEDO) in Japan, which aims to bring the PV electricity costs down from 50 per kWh currently to 23 by 2010, 14 by 2020, and 7 by 2030 through various next-generation production technology. For high-power band modules under 70 watts, prices have declined from $27/Wp to $4/Wp since the early 1980s. Prices will waver around this point depending on the order size. Note that the solar module typically makes up 40%50% of an entire solar systems total installed cost, although it varies depending on the nature of the application. There is little doubt that the solar industry will continue to see lower prices in the long term. Shortterm periods of price strength are indicative of solid interest in new installations. According to a June 2008 survey of 1,445 online retail prices, there were 74 price increases compared with29 last month, and 40 price decreases compared with 31 last month. The U.S. index was up one cent at $4.82 per watt.
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The price per delivered kilowatt-hour expresses economic costs of solar electric systems when taking solar conditions into consideration. Knowing the solar installations actual location is necessary to translate kWp to kWh. The amount of available sunlight in that region over the period of one year must be calculated. Solar electricity prices at present are around 30 cents/kWh, two to five times the average residential electricity tariff. Figure 251 takes a look at solar electricity generation costs compared with other energy sources available at present. Costs are expressed in cents/kWh. Figure 251: Benchmark Data for 2010 and 2015 Projections
Residenti al System T argets
$ 0.3 5 O &M $ 0.3 0 $ 0.2 5 $ 0.2 0 $ 0.1 5 $ 0.1 0 $ 0.0 4 $ 0.0 5 $ 0.0 0 200 6 Be nch mark 20 10 201 5 O the r Co sts In sta llatio n Bo S In ver ter Mod ules $ 0.1 2 $ 0.1 6 O &M O the r C osts I nsta llatio n Bo S I nve rte r Mod ule s $ 0.2 0
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When the solar phenomenon was first born in the 1970s, in response to rising oil prices, the cost of solar electricity was about $2.00 per kWh. These costs have declined more than 90% in the last two decades due to technological progress, a trend that is expected to continue. Improvements in cost, O&M, and performance efficiency and reliability are expected to have the largest direct impact on the levelized cost of energy. These measures,
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if executed successfully, will accelerate the growth of PV systems production, and move the industry closer to its 2015 goals of cost parity and five to 10GW of U.S. generation capacity. These targets require a two- to threefold improvement in cost per kWh for modules/inverters, realized through lower module manufacturing costs and long inverter lifetime. Design enhancements and installation simplification are also crucial. Next-Generation Technology The Solar Energy Technologies Program in the United States has announced the selection of 25 exploratory research projects dubbed Next-Generation Photovoltaic Devices and Processes. If successful, these pipeline projects could drastically change current solar market paradigms and standards, bringing reduced costs and greater efficiencies. Prototype cells and processes are expected to surface by 2015, with full commercialization in 20202030. Several technology categories are discussed further. Figure 253: Next-Generation Fund Allocation
New R&D Investm ents in Companies and Univers ities Under SAI Nex t Generation ($21.7 Million)
Inter mediate Bands, 4%, $0.9M Multiple Exciton G eneration, 11%, $2.4 M Hybr id Organic/Inor ganic , 4%, $0.9M High- Efficiency Multi-Junction, 4%, $0.9M Advanced Thin Films-T andem Cells, 13%, $2.7M Advanced Thin Films-Single Junction Cells, 21%, $4.5M Advanced Concentrator Cells, 8%, $1.8M Other, 12%, $2.6M Plasmonics, 8%, $1.8M Sensitized Cells, 4%, $0.9M
PV In cu bator, 21% , $ 55 M
Thin-Film Amorphous Silicon (a-Si): Layers of amorphous silicon are deposited as light-absorbing materials on rigid or flexible substrates instead of traditional crystalline silicon layers. The main advantage of this technology is that amorphous silicon absorbs solar radiation 40 times more efficiently than traditional crystalline silicon and consequently, only a 1-micron thick layer needs to be deposited as compared to about 200-micron thick layers in the case of crystalline silicon. The main disadvantage with this technology is that module efficiencies are typically between 6% and 8%, well below the 14%16% levels of crystalline silicon. In addition, efficiency loss occurs over a period of time due to the "Staebler-Wronksi" effect and in order to solve this problem a-Si cells usually have a three-layer structure. In the early 1970s, scientists found a use for a-Si in PV technology by controlling the conditions under which it is deposited and carefully modifying its composition. The
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material has long been popular in small consumer devices with low power requirements, such as wristwatches and calculators. Now, a better understanding of certain unique a-Si characteristics makes it appealing for solar electric systems, and at present, it is the leading thin-film PV material. Bandgaps increase from 1.1 eV in c-Si to 1.7 eV in amorphous silicon. It can also be produced at lower temperatures and deposited on inexpensive substrates such as plastic, glass, and metal. Employing a-Si thin-film does present some challenges. Instability is arguably the biggest obstacle. The mechanism of degradation, known as the Staebler-Wronski effect, causes conversion efficiency to decrease considerably during initial exposure to sunlight. Although output gradually stabilizes, losses of 20% can occur before this happens. Multi-junction designs can help to lessen this effect, as can capital equipment reduction, a faster rate of material deposition, and better module packaging to make the material less susceptible to glass breakage or moisture ingress in outdoor environments. Current layers in the amorphous silicon market include Energy Conversion Devices, Sharp, United Solar Systems, ersol Thin-Film, Schott Solar, and a growing number of others. Figure 254: Amorphous Silicon Cell Structure
Flexible Stairless Substrate Back Reflector Film Layer Red Cell Green Cell Blue Cell Transparent Conductive Film Thickness of complete multi-j unction cell <m
A typical amorphous cell employs a p-i-n design, in which an intrinsic layer (i-layer) is sandwiched between a p-layer and an n-layer.
Thin-Film Cadmium Telluride (CdTe): Solar modules use cadmium telluride as the absorption layer. Advantages of using this technology are that CdTe has absorption properties that are matched to the solar spectrum and uses 1% of the semiconductor material used by traditional crystalline silicon solar modules. In addition, CdTe technology has a relatively high-energy performance in low light and high-temperature environments compared to traditional crystalline silicon technologies. Disadvantages include lower module efficiencies and use of toxic material (cadmium).
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Transparent conducting oxide Current out CdS (~100nm) Cd-Te (~10 m) Gold Contact
Ribbon Technology Solar cell manufacturing using ribbon technology is highly similar to that of conventional crystalline silicon cell technology, except that the wafer manufacturing process is different. In conventional crystalline solar cell manufacturing, solar wafers are traditionally cut from a large ingot using wire saws. In ribbon technology, a two-dimensional polysilicon sheet or ingot is formed which can be cut into a silicon wafer by laser, reducing the material loss by almost 50%. Figure 256: String Ribbon Technology
Molten Silicon Growing Ribbon Solid-Melt Interface Silicon Feed Crucible String
Source: Altenergy S tore, Barclays Capital research
Dye-Sensitized Cell Although not in commercial production yet, this technology offers the promise of having a simple structure and low manufacturing costs. In this technology, a photo-sensitive dye is mixed with titanium dioxide and deposited on an iodide substrate using nanotechnology. Companies have been able to achieve lab efficiency rates as high as 10%; however, the cells decompose gradually under sunlight and as such have a much shorter life than conventional cells.
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Thin-Film Copper Indium Di-Selenide (CIGS): CIGS is the light-absorbing material of this thin-film technology. The main advantages of this technology are lower manufacturing costs, more efficient in low-light/low-angle applications. The main disadvantages are that the world's supply of indium is limited and in general the production process of such a multilayer structure is extremely complex. This technology can achieve lab efficiencies of 19.5%, although only about 9%13% efficiencies in commercial scale production. Figure 258: CIGS Solar Cell Structure
Compound Semiconductor (Crystalline Thin-Film Tandem Cell) In this case, a thin film of amorphous silicon is deposited over multi-crystalline silicon to form the p-n junction. Amorphous silicon is generally more efficient in absorbing visible light while multi-crystalline silicon is better absorbing the infra-red spectrum and the combination structure produces cells with efficiency levels as high as 21%. Thin-Film Micro-Crystalline Silicon: The technology is similar to the tandem cell technology, except that multi-crystalline silicon layer is completely replaced by microcrystalline silicon alloy. This process lowers material costs by as much as 99%; however, the efficiency reduces to about 14%.
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Glass TCO A-Si p-layer A-Si i-layer A-Si n-layer Microcystalline-Si p-layer
Spherical Silicon Cell Solar cells formed through this technology use combination of aluminum foil and spherical silicon. The main advantages of this technology are lower costs and material properties such as bendability and lightweight. In addition, the cells are capable of absorbing sunlight from different directions, thereby increasing the amount of electricity generated. The main disadvantages of this technology are lower efficiency levels (11%15%) and shorter life time (usually about three years, compared to more than 25 years for conventional cells). Figure 260: Spherical Silicon Solar Cell Production
Silicon Feedstock Front Foil
Back Bond
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Organic Photovoltaic As the name implies, organic materials such as carbon are used in the formation of solar cells. The main advantages of this technology are lower costs; however, this technology is still in the early-development stage. Multi-Junction Cells Multi-junction cells, also called cascade or tandem cells, achieve greater conversion efficiency through their stacked bandgap structure, which allows for more of the solar spectrum to be captured. Individual single-junction cells are stacked in such a way that high-energy photons, from solar radiation, not absorbed by the top cell are transmitted through the remaining transparent cell layers. Tandem Cells Tandem cells can be made two different ways: the mechanical stack and monolithic methods. In the first approach, two individual cells are independently made, one with a high bandgap and one with a lower bandgap, and then mechanically stacked. With the monolithic approach, one complete solar cell is made, with the second cell layers grown or deposited directly on top of it. A major challenge for todays multi-junction research lies in finding less expensive ways of making these structures. There has been a focus on gallium arsenide for component cells because of its 35% efficiency level under concentrated sunlighthigh for PV devices. Other materials being explored include amorphous silicon and copper indium diselenide. Multiple Exciton Generation When solar PV cells absorb photons from sunlight, some energy is converted to electrons but much of it is lost as heat. Multiple exciton generation, a way to reduce this wasteful heat, results in the formation of multiple excitons from the absorption of a single photon by the photovoltaic cell. This lends the advantage of higher sunlight-to-electricity conversion efficiency for single-junction solar cells, from 33.7% to 44.4%. Using MEG, semiconductor nanocrystals such as spherical quantum dots, rods, or wires can improve bulk semiconductor cell efficiencies. However, harvesting the energy is often difficult due to the short lifetimes of multiexcitons. Plasmonics Plasmons are density waves of electrons, generated when light hits the surface of a metal under specific conditions. Plasmonics, a new photonics branch of research, uses nanostructured materials to control light, allowing more of it to enter the absorber. These waves focus light into a PV cell that would not otherwise be absorbed, enhancing PV cell performance. CIT is also addressing plasmonics in earthabundant semiconductors through top cell and Si bottom cell integration. The project has a target efficiency of 25%. At University of California San Diego, researchers are combining plasmonics and III-V quantum well and nanowire solar cells for highefficiency PV. Expanding Photovoltaic Markets A more receptive U.S. solar market is manifesting, as supportive policy developments at both the federal and state level boost demand. New legislation concerning renewable portfolio standards has been passed or is pending in the majority of U.S. states. Residential and commercial installations tied to existing grid systems should continue to see rapid growth. According to the DOEs Renewable Systems Interconnection report of 2007, three
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key policies that are expected to have the best positive impact on solar demand in the United States include: improved interconnection standards; lifting net metering caps; and partial or full extension of the federal investment tax credit. The combination of all three policies is expected to increase overall U.S. installations to 24GW by 2015. Photovoltaic markets are taking off in several states thanks to cost reductions, record electricity prices, and attractive subsidies. The maps seen in Figure 261 and Figure 262 illustrate potential growth patterns for PV systems in various regions of the nation. Dark red areas pinpoint where solar has already or will achieve grid parity with conventional electricity sources. The map in Figure 261 shows PV and electricity price differences for the residential sector as they stood in 2007, reflecting existing incentives. Figure 261: PV and Electricity Price Difference for Residential Sector (2007)
Source: This map was generated by the National Renewable Energy Laboratory for the U.S. Department of Energy
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Figure 262: Solar Electricity Grid-Parity Scenarios in 2015 Due to Annual Electricity Price Escalation of 1.5%
Source: This map was generated by the National Renewable Energy Laboratory for the U.S. Department of Energy
The map in Figure 262 shows 2015 PV and electricity price differences for residential systems under the assumption that the real price of electricity will grow at a 1.5% rate annually. Given current market trends, this 13% overall increase is a moderate forecast. In addition, 1,000 of the largest U.S. electricity service territories were evaluated. These utilities produce 95% of all residential electricity sales in the country. Under this scenario, PV technology reaches parity in the Southwest states, due to abundant solar resources coupled with high energy prices there. For about 250 utilities, solar electricity will actually be cheaper than conventional electricity. About 620 more utilities see a price difference of less than 5 cents per kWh. Consequently, 85% of residential sales should occur in locations where the cost of PV electricity is less than 5 cents per kWh higher than the prevailing rate.
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Figure 263: Solar Electricity Grid-Parity Scenarios in 2015 Due to Annual Electricity Price Escalation of 2.5%
Source: This map was generated by the National Renewable Energy Laboratory for the U.S. Department of Energy
The map in Figure 263 reflects a more aggressive price escalation rate of 2.5% annually. Now many of the Central, Midwestern, and Southeastern states have achieved grid parity. In this case, PV electricity is cheaper than retail electricity for about 450 utilities. The price difference is less than 5 cents per kWh for an impressive 950 utilities, reflecting 90% of residential demand. In both future scenarios, the extent of parity across the United States also depends on whether engineering break-throughs, volume productions, installation simplifications, etc., exceed current expectations. Incentives are not present in either scenario. So while PV is not expected to be cost-competitive in every single utility territory, it should expand through much of the country in a truly self-sustaining manner. Solar America Initiative The Solar America Initiative (SAI), initiated under former President Bush, is working to accelerate widespread commercialization of solar energy technologies by 2015. The goal is to make photovoltaic electricity cost-competitive with conventional grid electricity, through government partnerships with industry, universities, national laboratories, state municipalities, and other public entities. If SAI is able to reach its full potential by 2015, PV
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technologies could provide at least five gigawatts of electric capacity and, at the same time, displace 7 million metric tons of CO 2 emissions annually. The DOE selected 13 cities in 2007 and an additional 12 cities in March 2008 to help lay the foundation for a domestic solar energy market.
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Glossary Amorphous Silicon: A thin-film solar photovoltaic (PV) cell material which has a glassy rather than crystalline structure. It is made by depositing layers of doped silicon on a substrate normally using plasma-enhanced chemical vapor deposition of silane. Anti-Reflection Coating: A thin coating of a material with a specific refractive index applied to a cell to reduce the reflection of light. Balance of System (BOS): All parts of a PV system excluding the solar module Base Load: The average amount of electric power that a utility must supply in any period. BIPV (Building-Integrated Photovoltaics): A term for the design and integration of PV technology into the building envelope, typically replacing conventional building materials. British Thermal Unit (BTU): The amount of heat energy required to raise one pound of water from a temperature of 60 degrees Fahrenheit to 61 degrees Fahrenheit at one atmosphere pressure. Cadmium Telluride (CdTe): A polycrystalline thin-film PV material. Cell Efficiency: The ratio of the electrical energy produced by a PV cell (under full sun conditions or 1 kW/m2) to the energy from sunlig ht fa lling upon the PV cell. Concentrator: A PV device that uses optical elements (e.g., mirrors or lenses) to increase the amount of light incident on a solar PV cell. Concentrator arrays track the sun and use only direct sunlight since the diffuse portion cannot be focused. Conversion Efficiency: The ratio of the electrical energy generated by a solar PV cell to the solar energy impacting the cell. Copper Indium Diselenide (CuInSe2, or CIS): A polycrystalline thin-film PV material (sometimes incorporating gallium (CIGS) and/or sulfur). Crystalline Silicon: A type of PV cell made from a slice of single-crystal silicon or polycrystalline silicon. Distributed Systems: Systems that are installed at or near the location where the electricity is used, as opposed to central systems that supply electricity to grids. A residential PV system is a distributed system. Electrical Grid: A network for electricity distribution across a large area. Electrochemical Cell: A device containing two conducting electrodes, one positive and the other negative, made of dissimilar materials that are immersed in a chemical solution
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(electrolyte) that transmits positive ions from the negative to the positive electrode and thus forms an electrical charge. Energy Payback Time: The time required for any energy producing system or device to produce as much energy as was required in its manufacture. Fixed Tilt Array: A solar PV array set at a fixed angle to the horizontal. Flat-Plate PV: A solar PV array or module that does not contain concentrating devices and so responds to both direct and diffuse sunlight. Fresnel Lens: A concentrating lens, positioned above and concave to a PV material to concentrate light on the material. Fuel Cell: An electrochemical device that converts the energy of a fuel directly into electricity and heat and is therefore highly energy efficient. Gigawatt (GW): A measurement of power equal to a thousand million watts. Gigawatt-Hour (GWh): A measurement of energy. One gigawatt hour is equal to one gigawatt being used for a period of one hour, or one megawatt being used for 1,000 hours. Grid-Connected System: A solar electric or PV system in which the PV array acts like a central generating plant, supplying power to the grid. Independent Power System: A power generation system that is independent of the mains grid. Inverter: An inverter converts DC power from the PV array/battery to AC power. Used either for standalone systems or grid-connected systems. Irradiance: The direct, diffuse, and reflected solar radiation that strikes a surface. Usually expressed in kilowatts per square meter. Kilowatt (kW): A unit of electrical power equal to one thousand watts. Kilowatt-hour (kWh): The amount of energy that derives from a power of one thousand watts acting over a period of one hour. The kWh is a unit of energy. 1 kWh = 3,600 kJ. Maximum Power Point Tracker (MPPT): A power conditioning unit that automatically operates the PV generator at its MPP under all conditions. Megawatt (MW): A measurement of power equal to one million watts.
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Mono-crystalline Solar Cell: A form of solar cell made from a thin slice of a single large crystal of silicon. Multi-crystalline: A material that has solidified at a rate such that many small crystals form. The multitude of grain boundaries in the material reduces the cell efficiency. Net Metering: The practice of exporting surplus solar power during the day to the electricity grid, which either causes the home owner electric meter to go backwards and/or simply creates a financial credit on the home owner's electricity bill. One-axis Tracking: A PV System structure that is capable of rotating on a single axis in order to track the movement of the sun. Orientation: Placement with respect to the cardinal directions N, S, E, W. Peak Sun Hours: The equivalent number of hours per day when solar irradiance averages 1,000 w/m2. Photocurrent: An electric current induced by radiant energy. Photoelectrochemical Cell: A type of photovoltaic device in which the electricity induced in the cell is used immediately within the cell to produce a chemical, such as hydrogen, which can then be withdrawn for use. Photovoltaic Cell: The smallest discrete element in a PV module that performs the conversion of light into electrical energy to produce a direct current and voltage. Photovoltaic Device: A solid-state electrical device that converts light directly into direct current electricity of voltage-current characteristics that are a function of the characteristics of the light source and the materials in and design of the device. Photovoltaic Module: The smallest environmentally protected essentially planar assembly of solar cells and ancillary parts, such as interconnections, terminals, intended to generate direct current power under unconcentrated sunlight. Photovoltaic Panel: refers to a physically connected collection of modules. Photovoltaic System: A complete set of components for converting sunlight into electricity by the photovoltaic process, including the array and balance of system components. Photovoltaic-Thermal System: A photovoltaic system that, in addition to converting sunlight into electricity, collects the residual heat energy and delivers both heat and electricity in usable form.
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Photovoltaic Effect: The effect that causes a voltage to be developed across the junction of two different materials when they are exposed to light. Polycrystalline Cell: A wafer of silicon with a multi-grained structure. All grains have the same atomic crystal lattice; however, each grain has a unique orientation in space, thereby producing a unique reflection of light. Power Conversion Efficiency: The ratio of output power to input power. Ribbon (Photovoltaic) Cells: A type of photovoltaic device made in a continuous process of pulling material from a molten bath of photovoltaic material, such as silicon, to form a thin sheet of material. Semiconductor: A material that has an electrical conductivity in between that of a metal and an insulator. Transistors and other electronic devices are made from semiconducting materials, and are often called semiconductors. Siemens Process: A commercial method of making purified silicon. Silicon: A chemical element with atomic number 14, a dark gray semi-metal. Occurs in a wide range of silicate minerals and makes up approximately 28% of the earth's crust (by weight). It is the most common semiconductor material used in making PV cells either traditionally in its crystalline form or more recently as an amorphous thin film. Solar Thermal: A form of power generation using concentrated sunlight to heat water or other fluid that may then used to drive a motor or turbine. Solar Thermal Electric: Method of producing electricity from solar energy by using focused sunlight to heat a working fluid, which in turn drives a turbogenerator. Thin Film: A layer of semiconductor material, such as copper indium diselenide, cadmium telluride, gallium arsenide, or amorphous silicon, a few microns or less in thickness, used to make photovoltaic cells. Tilt Angle: The angle of inclination of a solar collector or solar module measured from the horizontal. Tracker: Any device used to direct a PV array toward the sun. Tracking Array: A PV array that is moved to follow the path of the sun in order to maintain the maximum incident solar radiation on its surface. Two-Axis Tracking: A system capable of rotating independently about two axes (e.g., vertical and horizontal) and following the sun for maximum efficiency of the solar array.
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Wafer: A thin sheet of semiconductor (PV material) made by cutting it from a single crystal or ingot. Watt: The unit of electrical power commonly used to define the electricity consumption of an appliance. The power developed when a current of one ampere flows through a potential difference of one volt. Watt Hour: A unit of energy equal to one watt of power being used for one hour.
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Figure 264: Barclays Capital Global Solar Comparable Valuation Metrics as of 4/30/2009
C ompany Sol ar C ell Manufacturers C hina Sunergy Energy C onversion Devices ErSol E-Ton Ev ergreen Solar First Solar J A Solar Motech Q-C ell s SunPow er SunTech P ow er Ticker CS UN EN ER B0LGLV4 B06BMV ESLR FSLR JASO 660944 QC E-D E SPW RA STP Rating 2-EW 3-UW NR NR 2-EW 2-EW 1-OW NR 2-EW 2-EW 3-UW S ector R ating 1-Pos 1-Pos NR NR 1-Pos 1-Pos 1-Pos NR 2-Neu 1-Pos 1-Pos Local C urrency U SD U SD E UR TWD U SD U SD U SD TWD E UR U SD U SD Price 4/30/2009 3.04 18.38 104.00 95.60 2.43 187.29 3.51 93.00 16.23 27.38 14.93 Mean Median Pol ysili con M anufacturers LDK Sol ar MEMC R eneS ola Shin-Et su Chemical Sino-American Silicon Sumco Tokuyama Corporation Topc o Sc ientif ic OCI W ac ker Market Cap ($M) 120 784 1,434 279 393 15,442 547 699 1,719 2,344 2,535 2,390 784 Enterprise Value ($M) 195 701 1, 422 560 666 14,924 640 742 1, 751 2, 662 3, 653 2, 538 742 Price to Sales 2009E 2010E 0. 5 2. 3 2. 9 0. 6 1. 2 8. 1 0. 7 1. 1 0. 8 1. 7 1. 3 1. 9 1. 2 0.3 1.6 2.1 0.6 0.8 5.9 0.5 0.9 0.6 1.1 1.1 1.4 0.9 EV to Sales 2009E 2010E 0. 7 2. 0 2. 8 1. 1 2. 1 7. 9 0. 8 1. 2 0. 8 1. 9 1. 9 2. 1 1. 9 0. 5 1. 4 2. 1 1. 2 1. 4 5. 7 0. 6 1. 0 0. 6 1. 3 1. 6 1. 6 1. 3 Pri ce to Earnings 2009E 2010E NM 25.8 26.1 7.4 NM 28.6 23.8 14.9 14.0 23.0 30.2 21.5 23.8 10. 1 14. 2 18. 4 6. 6 7. 6 22. 0 9. 5 10. 7 7. 9 13. 1 16. 4 12. 4 10. 7 PEG 2009E NM 0.7 0.5 0.2 NM 0.6 1.2 1.4 0.6 0.8 1.1 0.8 0.7 2010E NM 0.4 0.4 0.2 0.3 0.4 0.5 1.0 0.4 0.4 0.6 0.5 0.4
8.00 16.20 3.47 4,760.00 79.10 1,436.00 584.00 25.35 225, 000.00 78.38 Mean Median
894 3,647 227 21,992 518 3,894 1,722 104 3,331 4,999 4,133 2,526
1, 899 2, 778 478 19,994 601 6, 089 2, 157 112 4, 259 5, 087 4, 346 2, 468
0. 7 3. 3 0. 4 1. 9 1. 7 1. 4 0. 5 0. 5 2. 2 1. 0 1. 4 1. 2
0.6 2.3 0.4 1.8 1.4 1.2 0.5 0.5 1.6 0.9 1.1 1.1
1. 5 2. 5 0. 8 1. 7 2. 0 2. 3 0. 7 0. 5 2. 8 1. 0 1. 6 1. 6
1. 2 1. 8 0. 8 1. 6 1. 6 1. 8 0. 6 0. 5 2. 0 0. 9 1. 3 1. 4
17.5 30.4 8.2 16.3 14.6 NM 28.6 10.6 11.0 17.3 17.2 16.3
0.9 1.8 0.3 1.6 5.9 NM 1.1 NM 0.1 1.2 1.6 1.1
0.4 0.7 0.3 1.4 4.7 NM 0.5 NM 0.1 0.8 1.1 0.6
Module Manufacturers aleo s olar C anadian Solar Solar-Fabrik Solarf un Solart ron Solon AG
E UR U SD E UR U SD TH B E UR
0. 2 0. 5 0. 2 0. 4 NM 0. 1 0. 3 0. 2
0. 3 0. 5 NM 4. 0 NM 0. 4 1. 3 0. 4
0. 2 0. 4 NM 3. 4 NM 0. 3 1. 1 0. 4
5. 4 13. 1 12. 5 0. 0 NM 5. 2 7. 2 5. 4
System I ntegrators C armanah Technologies C entros olar AG C onergy Solars trom Sunways
NR NR 2-EW NR NR
NR NR 2-Neu NR NR
C AD E UR E UR E UR E UR
42 53 197 28 34 71 42
33 148 NM 35 56 68 45
0. 6 0. 1 0. 2 0. 2 0. 1 0. 2 0. 2
0. 5 0. 3 NM 0. 2 0. 2 0. 3 0. 3
0. 4 0. 3 NM 0. 2 0. 1 0. 3 0. 2
7. 7 3. 1 37. 0 5. 9 2. 8 11. 3 5. 9
NM NM NM NM NM N/A N/A
Verti call y I ntegrated Manufacturers R EC Solar World Trina Solar Yingli Green Energy
2-Neu NR NR NR
N OK E UR U SD U SD
2. 3 2. 3 0. 5 1. 3 1. 6 1. 8
3. 0 2. 2 0. 9 5. 3 2. 8 2. 6
1. 9 1. 7 0. 8 4. 5 2. 2 1. 8
7. 6 13. 1 6. 6 6. 2 8. 4 7. 1
Sol ar E qui pment C omposi te GT Solar R ot h & Rau C entrot herm Oerlik on Spire BTU International Manz Automat ion Meyer Burger
U SD E UR E UR SW F U SD E UR E UR SW F
7.09 18.08 29.35 66.00 7.00 3.74 34.78 158.80 Mean Median
1. 4 1. 0 1. 1 0. 3 0. 7 0. 6 0. 7 1. 2 0. 9 0. 9
1. 4 0. 7 1. 0 NM 0. 7 0. 3 0. 3 1. 1 0. 8 0. 7
1. 1 0. 6 0. 9 NM NM 0. 2 0. 3 1. 0 0. 7 0. 7
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Figure 265: Barclays Capital Global Solar Comparable Trading Statistics as of 4/30/2009
Com pa ny Sola r Cell Man uf actu re rs China Su nerg y Ener gy Conver sion Devices ErSol E-T on Everg reen So lar F irst Solar JA Solar M otech Q- Cells SunPower SunT ech Power CSUN ENER B0LG LV4 B06BMV ESLR FSLR JASO 6 60944 QCE-DE SPWRA STP 2-EW 3 -UW NR NR 2-EW 1- OW 1- OW NR 2-EW 1- OW 3 -UW 1-Pos 1-Pos NR NR 1-Pos 1-Pos 1-Pos NR 2 -Neu 1-Pos 1-Pos U SD U SD EUR T WD U SD U SD U SD T WD EUR U SD U SD 3 .04 1 8.38 10 4.00 9 5.60 2 .43 18 7.29 3 .51 9 3.00 1 6.23 2 7.38 1 4.93 M ean M edia n Polys ilico n M anu fac tur er s LDK Solar M EMC Ren eSo la Shin- Etsu Chemica l Sino- Am erican Silicon Sum co T okuyam a Corp orat o n i T opco Scien tific OCI Wacke r LDK WF R SOL 4063 6 33527 3436 4043 6 25408 6 49700 B11Y56 2-EW 1- OW 2-EW NR NR NR NR NR NR 1- OW 1-Pos 1-Pos 1-Pos NR NR NR NR NR NR 2 -Neu U SD U SD U SD JPY T WD JPY JPY T WD KRW EUR 8 .00 1 6.20 3 .47 4,760 .00 7 9.10 1,436 .00 58 4.00 2 5.35 2 25,00 0.00 7 8.38 M ean M edia n M odu le M anu fac tur er s ale o solar Can adian Solar Solar -Fa brik Solar fun Solar tron Solon AG B18 9YN CSIQ 7 39438 SO LF B06 XP07 74 5073 8 NR 3 -UW NR 3 -UW NR 3 -UW NR 1-Pos NR 1-Pos NR 2 -Neu EUR U SD EUR U SD THB EUR 5 .91 6 .55 4 .50 4 .29 0 .92 9 .48 M ean M edia n Syste m In teg ra tor s Car mana h Te chnolog ies Cen trosola r AG Con ergy Solar strom Sunways *CMH B0LL7 5 7 06672 5 66211 7 03682 NR NR 2-EW NR NR NR NR 2 -Neu NR NR C AD EUR EUR EUR EUR 0 .80 2 .84 0 .78 1 .79 2 .31 M ean M edia n Ver tical ly Int egr at ed M anu fac tur er s REC Solar World T rina Solar Yingli Gr een Ener gy REC-NO 5 81986 T SL YG E 1- OW NR 2-EW 1- OW 2 -Neu NR NR NR NOK EUR U SD U SD 6 0.50 2 1.65 1 4.14 6 .98 M ean M edia n Sola r Equ ipm en t Com p osit e GT Solar Roth & R u a Cen troth erm Oe rlikon Spire BTU I ntern ational M anz Autom ation M eyer Bur ger SOL R B14 2TD4 B2885 W6 46 1275 7 SPIR BT U I B1DXPB B1HDM D 2-EW 3 -UW 2-EW NR NR NR 2-EW 2-EW 1-OW 2 -Neu 2 -Neu NR NR NR 2 -Neu 2 -Neu U SD EUR EUR SWF U SD EUR EUR SWF 7 .09 1 8.08 2 9.35 6 6.00 7 .00 3 .74 3 4.78 15 8.80 M ean M edia n Nasd aq DAX T aiwan Nikkei COMP 1 87653 1 80530 NIK2K 1,021 3 16 7 27 7 70 61 45 1 61 4 28 4 41 3 72 # # 928 203 615 NM 59 23 79 394 329 203 1 .2 0 .2 0 .1 0 .1 0 .1 0 .0 0 .0 0 .0 0 .2 0 .1 4 .1 8 .3 1 .3 5 .6 5 .6 14 .4 -13. 1 8 .6 4 .3 5 .6 3 .9 5 .1 2 .0 -0.2 2.6 22.2 49.3 63.2 59.4 12.0 19.8 29.0 32.2 25.6 10.8 11.6 4.5 -0. 5 93 .5 34 .8 84 .8 53 .5 33 .4 -9.9 28 .6 77 .4 49 .5 44 .2 13 .5 7. 8 31 .9 -4.6 145.3 21.3 46.8 - 4.3 36.2 - 6.5 -1 6.7 32.4 31.8 26.9 8.6 - 6.6 19.2 -1 0.4 NA -59. 4 NA -84. 0 -51. 9 -63. 2 -78. 8 -57. 0 -65. 7 -61. 3 -29. 4 -41. 9 -43. 0 -34. 8 NA / 536. 39 NA / - 21.45 185. 63 35.9 2 587. 46 626. 96 325 .1 361 .0 9.8 22. 3 8.7 - 11.1 N/A -7 5.73 -7 3.33 -8 5.42 -7 8.27 -6 9.97 -7 3.30 -7 1.32 -7 5.3 -7 3.3 -4 0.5 -4 0.4 -4 6.0 -4 2.1 1 7.0 7 0.0 10 9.9 37 6.8 1 8.4 1 3.0 30 7.5 33 6.7 15 6.2 9 0.0 1.6 13.3 16.7 17.7 2.9 2.7 27.6 54.3 17.1 15.0 -58% -67% -66% -97% -62% -63% -85% -93% -0. 7 -0. 7 357% 75% 126% -4 5% 138% 81% 62% -5 7% 92% 78% 4,403 3,105 4 01 9 03 2,203 2,004 5,59 8 2,89 8 667 3,63 4 3,19 9 3,26 6 4 .6 1 .5 1 .1 3 .9 2 .8 2 .7 11 .0 9 .9 8 .8 8 .4 9 .5 9 .3 3.3 27.6 9.7 11.1 12.9 10.4 - 10.9 20 .4 72 .4 32 .4 28 .6 26 .4 - 6.2 43.4 52.2 14.4 26.0 28.9 -72. 8 -50. 3 -67. 4 -69. 9 -65. 1 -68. 7 142. 11 75.4 2 184. 66 NA / 134 .1 142 .1 -7 6.63 -6 3.83 -8 2.73 -8 4.24 -7 6.9 -7 9.7 3 6.2 5 7.0 5 3.5 2 8.0 4 3.6 4 4.8 5.7 13.5 5.6 2.5 6.8 5.7 -75% -51% -74% -75% -69% -74% 56% 105% 152% 179% 123% 129% 42 53 1 97 28 34 71 42 33 148 NA / 35 56 68 45 0 .1 0 .0 2 .3 0 .0 0 .0 0 .5 0 .0 0 .0 0 .0 -1.3 -2.7 3 .1 -0.2 0 .0 27.0 5.1 13.0 0.8 39.4 17.1 13.0 14 .6 11 .2 3. 9 0. 9 16 .1 9. 3 11 .2 63.3 -1 6.2 -2 2.0 - 8.7 -2 1.4 - 1.0 -1 6.2 -15. 6 -73. 0 -84. 1 -17. 8 -68. 6 -51. 8 -68. 6 - 59.66 - 3.09 - 48.13 12.9 8 10.1 0 - 17.6 - 3.1 -5 8.82 -6 2.79 -8 7.95 -3 9.13 -6 2.02 -6 2.1 -6 2.0 1 .3 1 5.4 8 .2 5 .0 1 4.7 8 .9 8 .2 0.3 2.3 0.4 1.3 1.7 1.2 1.3 -21% -76% -88% -54% -80% -64% -76% 211% 60% 124% 76% 74% 109% 76% 99 2 33 68 2 22 8 1 53 1 30 1 26 128 274 NM 2,33 4 10 401 629 274 0 .0 2 .2 0 .0 3 .0 2 .4 0 .2 1 .3 1 .2 3 .5 11 .8 9 .8 4 .6 -2.1 5 .2 5 .5 4 .9 10.8 5.6 72.6 -13 .3 12.1 -18 .6 11.5 8.2 23 .2 13 .4 13 .8 - 17.7 4. 4 -7.6 4. 9 8. 9 -1 4.3 1.4 -1 1.6 -1 4.4 35.3 -3 3.9 - 6.3 -1 3.0 -60. 7 -75. 8 -59. 9 -69. 3 -69. 1 -85. 0 -70. 0 -69. 2 144. 64 168. 61 68.6 4 179. 30 - 33.03 204. 44 122 .1 156 .6 -5 9.65 -7 7.05 -6 7.93 -8 4.66 -7 6.71 -8 0.07 -7 4.3 -7 6.9 2 2.8 5 1.8 1 7.3 2 9.2 0 .1 9 6.6 3 6.3 2 6.0 5.0 3.0 2.4 2.3 0.0 6.8 3.3 2.7 -67% -87% -67% -85% -72% -87% -78% -79% 51% 118% 137% 89% 102% 78% 96% 95% 8 94 3,647 2 27 21,99 2 5 18 3,894 1,722 1 04 3,331 4,999 4,133 2,526 1,89 9 2,77 8 478 19,9 94 601 6,08 9 2,15 7 112 4,25 9 5,08 7 4,34 6 2,46 8 2 .9 6 .6 2 .4 2 .7 6 .0 1 .9 2 .7 0 .9 0 .3 0 .2 2 .7 2 .5 7 .4 10 .4 11 .9 -0.4 -3.8 -2.0 -6.4 -8.2 -5.5 20 .2 2 .4 -1.2 7.0 -17 .7 -14 .9 -8. 0 -8. 7 -12 .3 -11 .2 -13 .8 0.1 1.2 -7. 8 -9. 9 - 38.2 8. 1 - 11.8 1. 2 16 .9 2. 0 -2.0 18 .3 6. 5 16 .3 1. 7 4. 3 -3 9.0 13.4 -2 1.3 17.0 17.5 29.4 -2 1.7 17.1 2.3 4.9 2.0 9.2 -75. 7 -78. 2 NA -23. 0 -65. 5 -44. 7 -34. 0 -58. 1 -58. 5 -60. 2 -55. 3 -58. 5 NA / 126. 09 NA / - 11.92 195. 98 - 35.98 - 38.02 - 9.75 413. 29 100. 55 92. 5 45. 4 -7 2.09 -8 3.86 N/A -4 2.02 -7 3.16 -6 5.53 -3 3.57 -6 3.38 -1 2.35 -6 2.21 -5 6.5 -6 3.4 5 2.4 7 3.6 2 9.5 6 6.5 7 .4 2 9.4 9 .5 1 .8 42 3.9 26 3.9 9 5.8 4 0.9 3.8 10.0 2.0 36.3 1.3 8.0 3.9 0.5 104.2 57.1 22.7 6.0 -85% -78% -88% -23% -69% -48% -34% -59% -65% -62% -61% -63% 113% 62% 72% 41% 77% 93% 60% 35% 43% 76% 67% 67% 1 20 7 84 1,434 2 79 3 93 15,44 2 5 47 6 99 1,719 2,344 2,535 2,390 7 84 195 701 1,42 2 560 666 14,9 24 640 742 1,75 1 2,66 2 3,65 3 2,53 8 742 1. 17 2 .9 0 .0 1 .8 6 .4 4 .0 5 .8 4 .5 1 .5 2 .6 4 .9 3 .2 2 .9 14 .2 12 .8 0 .0 -11. 1 14 .1 30 .5 11 .8 -6.9 -0.1 5 .6 12 .9 7 .6 11 .8 -21 .49 8.8 6.9 -11 .6 -6. 0 2.9 -21 .9 -10 .4 -0. 4 -1. 0 22.2 -2. 9 -1. 0 - 13.20 - 31.1 3. 9 12 .0 0. 9 10 .8 16 .7 23 .2 - 18.1 - 12.7 51 .2 4. 0 3. 9 -2 3.0 -2 7.1 - 3.8 2.5 -2 3.8 35.8 -1 9.7 20.2 -3 5.8 -2 6.0 27.6 - 6.7 -1 9.7 -67. 6 -46. 7 3 1.9 -67. 5 -74. 1 -46. 8 -86. 7 -64. 2 -82. 1 -71. 4 -67. 7 -58. 4 -67. 6 NA / - 0.97 57.8 8 - 15.52 128. 14 795. 24 NA / - 10.27 186. 47 250. 79 142. 05 170 .4 128 .1 -7 6.09 -2 5.08 48.71 -5 5.42 -8 1.53 -4 8.36 -8 1.22 -6 8.79 -7 4.08 -7 1.62 -8 5.79 -5 6.3 -7 1.6 15 .66 8 3.3 16 2.1 9 .5 1 2.6 31 7.0 2 7.0 8 .0 13 8.7 9 8.6 4 9.6 8 3.8 4 9.6 1.33 12.9 87.3 2.1 1.0 85.3 1.6 1.5 12.0 18.5 5.1 20.8 5.1 -81% -78% -18% -71% -81% -41% -87% -67% -85% -72% -70% -68% -72% 129% 43% 53% 29% 143% 120% 126% 81% 73% 48% 193% 94% 81% T icker Ratin g Sec tor R tin g a Loc al Cur ren cy Pr ice 4/30/ 09 M ark et Cap ($M ) Ente rp ris e Value ($M ) A era ge v Daily Vo l (M ) Week M on th Qua rte r % R tur n e YT D L TM 2 007 20 08 52 week High Lo w % Chan ge F ro m 52W Hi 52W L o
Note : All f orward estima tes ba sed on First call conse nsus figu res Sour ce: Com pany r epor ts, Fir stCall, Barclays Ca pital re search
241
Figure 266: Barclays Capital Global Solar Comparable Financial Metrics as of 4/30/2009
L oca l Price Balan ce Sh ee t EBIT DA ($, M) Co ns ens us Reven u e ($ M) C n sen sus EPS ( $) o
Co mp an y Sol ar Cell M an uf act urers Ch ina Sun erg y Ene rgy Conver sion D vices e Er So l E- Ton Ever gre en So a r l F irst So lar J A Sola r M ote ch Q -Cells Sun Power Sun Te ch Power
Tic ker
Rati ng
C rren cy u
4/30 /09
Sh ares Ou t ('M )
Cas h ($ M)
De bt ($M )
BV/Sha re ($)
20 08
20 09E
201 0E
200 8
2009 E
2 010E
2008
20 09E
20 10E
CSUN ENER B0LGL V4 B0 6BMV ESLR F SLR JASO 660 944 QCE-DE SPWRA ST P
USD USD EUR TWD USD USD USD TWD EUR USD USD
3 .04 1 8.38 10 4.0 0 9 5.60 2 .43 18 7.2 9 3 .51 9 3.00 1 6.23 2 7.38 1 4.93 Me an Me dia n
40 43 10 10 1 16 2 82 15 6 26 1 82 86 17 0 10 8 86
169 339 3 323 374 198 2,0 23 162 34 468 1,6 26 520 323
- 1.88 1.9 5 1.1 4 - 2.77 - 1.69 6.2 8 - 0.60 - 0.09 - 0.40 - 3.76 - 6.58 - 0.8 - 0.6
7 .98 7 .98 3 2.20 0 .46 7 .98 1 7.94 2 9.29 1 .54 7 .98 7 .98 4 .55 1 1.4 8.0
-11 .2 36.6 1 29.9 46.7 -0 .2 5 23.8 1,14 6.3 93.5 3 96.9 2 27.9 1 70.7 2 51.0 1 29.9
37. 0 109 .3 182 .6 76. 1 98. 6 994 .7 130 .1 90. 8 475 .7 382 .0 266 .2 258 .5 130 .1
386 489 680 460 473 2, 597 1, 051 759 2, 812 2, 071 2, 258 1, 276 759
- 0.5 7 0. 10 5. 64 0. 41 - 0.6 5 4. 34 3. 06 0. 27 2. 18 1. 15 0. 72 1. 51 0. 72
- 0.24 0.7 1 5.1 1 0.3 7 - 0.09 6.5 5 0.1 5 0.1 8 1.4 9 1.1 9 0.4 9 1.4 5 0.4 9
0.3 0 1.2 9 7.2 8 0.4 2 0.3 2 8.5 3 0.3 7 0.2 5 2.6 3 2.0 9 0.9 1 2.2 2 0.9 1
Pol ysili con M anu fac tu re rs L DK So lar M EMC Re neSola Shin -Etsu C em c al h i Sino -Ame rican Silico n Sum co T oku yama Corp ora tion T opc o Scien tific O CI Wa cker LDK WF R SO L 40 63 633 527 34 36 40 43 625 408 649 700 B11 Y5 6 2- EW 1-O W 2- EW NR NR NR NR NR NR 1-O W USD USD USD JPY TWD JPY JPY TWD KRW EUR 8 .00 1 6.20 3 .47 4 ,760 .00 7 9.10 1 ,436 .00 58 4.0 0 2 5.35 22 5,0 00.0 0 7 8.38 Me an Me dia n 11 2 22 5 65 43 0 22 8 25 2 27 4 14 3 22 50 18 0 18 4 256 898 112 2, 252 30 580 218 20 335 262 496 259 1,2 61 30 364 255 113 2,7 75 654 29 1,2 63 350 709 357 - 8.99 4.2 5 - 3.84 5.0 5 - 0.27 - 8.70 - 1.59 - 0.06 -4 1.59 - 1.76 - 5.8 - 1.7 5 .93 9 .25 7 .27 3 6.17 0 .83 1 4.44 7 .87 0 .76 3 2.50 5 2.82 1 6.8 8.6 2 06.3 6 90.8 -31 .5 4,00 2.4 78.9 1,45 0.1 5 21.2 15.2 4 83.9 1,38 6.6 8 80.4 5 02.5 185 .6 242 .6 32 .7 2, 840 .1 60 .9 429 .6 617 .9 10 .8 487 .2 932 .4 584 .0 336 .1 284 .5 528 .0 86. 9 3, 133. 9 72. 2 712 .2 623 .3 12. 7 783 .6 1, 197. 9 743 .5 575 .7 1, 643 2, 005 67 0 12 ,905 29 5 4, 212 3, 273 37 4 1, 843 5, 518 3, 274 1, 924 1 ,277 1 ,119 56 9 1 1,52 5 30 1 2 ,695 3 ,254 21 4 1 ,510 4 ,874 2 ,734 1 ,393 1, 622 1, 585 637 12 ,303 378 3, 312 3, 361 218 2, 126 5, 388 3, 093 1, 874 1. 42 1. 71 - 0.8 4 3. 89 0. 23 0. 80 - 0.2 4 0. 11 9. 62 11 .36 2. 81 1. 11 0.4 6 0.5 3 0.4 2 3.1 5 0.1 6 - 1.60 0.2 2 0.0 7 13. 62 5.8 3 2.2 8 0.4 4 1.1 1 1.4 5 0.5 3 3.6 0 0.1 9 0.0 0 0.4 7 0.0 8 21 .80 8.6 6 3.7 9 0.8 2
M od ule Ma nu fac turers a leo so lar Ca nadia n Solar Sola r-F abr ik Sola rfun Sola rtr on Solo n AG B189 YN CSI Q 739 438 SOL F B06XP07 745 0738 NR 3-UW NR 3-UW NR 3-UW EUR USD EUR USD T HB EUR 5 .91 6 .55 4 .50 4 .29 0 .92 9 .48 Me an Me dia n Syst em Int eg ra tors Ca rm anah Te chno o gies l Ce ntro solar AG Co ner gy Sola rstr om Sun ways *CMH B0 LL75 706 672 566 211 703 682 NR NR 2- EW NR NR CAD EUR EUR EUR EUR 0 .80 2 .84 0 .78 1 .79 2 .31 Me an Me dia n Vertic ally I nt egrat ed Man uf act urers REC Sola r Wo rld T rina Solar Ying li Gre en Ene rgy REC- NO 581 986 TSL YGE 1-O W NR 2- EW 1-O W NOK EUR USD USD 6 0.50 2 1.65 1 4.14 6 .98 Me an Me dia n 49 4 11 2 28 12 9 19 1 12 1 295 1, 074 132 1, 218 680 685 1 490 867 398 3 949 1 676 1 178 - 1.82 1.8 5 - 9.34 -2 1.10 - 7.6 - 5.6 3 .84 9 .28 1 4.99 3 0.18 1 4.6 1 2.1 7 97.7 3 62.2 92.0 1 70.0 3 55.5 2 66.1 728 .2 400 .8 65 .1 216 .6 352 .7 308 .7 1, 233. 5 507 .6 102 .4 292 .7 534 .0 400 .1 1, 206 1, 156 83 2 7, 553 2, 687 1, 181 1 ,877 1 ,346 73 4 1 ,121 1 ,269 1 ,233 2, 875 1, 745 888 1, 331 1, 710 1, 538 0. 91 1. 55 2. 45 5. 35 2. 57 2. 00 0.6 6 1.6 8 1.1 2 0.7 4 1.0 5 0.9 3 1.1 8 2.1 2 2.1 5 1.1 3 1.6 4 1.6 5 42 15 25 3 12 12 67 15 10 22 NM 3 5 10 7 0 117 NM 10 26 38 18 0.2 3 - 6.54 NM - 0.54 - 1.83 - 2.2 - 1.2 0 .81 2 .89 -0. 64 4 .19 4 .36 2.3 2.9 6.6 28.0 -29 8.9 5.6 3.9 -50 .9 5.6 3. 0 26 .0 22 .4 8. 5 17 .8 15 .5 17 .8 7. 6 37. 8 89. 4 11. 0 31. 0 35. 4 31. 0 76 42 7 1, 292 12 1 33 7 45 0.4 33 6.8 70 44 8 1 ,267 15 2 35 6 4 58.9 3 56.4 82 528 1, 512 170 418 54 2.2 41 8.2 - 0.2 8 0. 40 - 1.6 4 0. 14 - 0.2 1 - 0.3 2 - 0.2 1 0.0 5 0.7 6 - 0.14 0.2 9 0.1 9 0.2 3 0.1 9 0. 1 1. 2 0. 0 0. 4 1. 1 0.5 6 0.3 9 13 36 12 52 30 0 13 71 24 1 116 NM 411 0 6 107 6 30 157 NM 2 523 2 254 593 157 - 2.21 - 1.16 NM -4 0.85 - 0.01 -1 9.80 - 12.8 - 2.2 7 .82 1 0.70 6 .79 4 3.02 0 .08 3 5.54 1 7.3 9.3 34.2 21.0 0.3 -15 6.3 NM 1 17.0 3.2 21.0 28 .2 17 .6 13 .1 27 .5 NM 74 .1 32 .1 27 .5 36. 4 47. 6 16. 4 72. 0 NM 94. 6 53. 4 47. 6 46 3 70 9 27 9 4, 883 NM 1, 047 147 6 70 9 49 2 50 5 28 2 57 8 NM 1 ,133 59 8 50 5 583 684 272 685 NM 1, 329 711 684 1. 55 - 0.3 2 - 1.2 0 - 5.5 5 NM 3. 35 - 0.4 3 - 0.3 2 1.0 7 - 0.09 0.4 5 - 0.10 NM 1.7 8 0.6 2 0.4 5 1.4 1 0.5 0 0.4 6 0.2 6 NM 2.3 6 1.0 0 0.5 0
Sol ar Eq ui pmen t Co mp os ite G T Sola r Ro th & Rau Ce ntro ther m O erlikon Spir e BT U Inte rna tiona l M anz Au tom ation M eyer Burg er SOLR B142 TD4 B2 885W 6 461 2757 SPI R BTUI B1 DXPB B1HDMD 2- EW 3-UW 2- EW NR NR NR 2- EW 2- EW USD EUR EUR SWF USD EUR EUR SWF 7 .09 1 8.08 2 9.35 6 6.00 7 .00 3 .74 3 4.78 15 8.8 0 Me an Me dia n 14 4 NA 19 13 9 9 4 3 29 9 94 117 112 NM 6 34 88 39 70 88 0 5 0 NM 3 12 6 6 5 5 0.6 5 8.2 8 5.7 9 NM 0.3 1 2.4 9 22.7 2 11.0 9 7 6 0 .14 1 6.70 1 1.99 -41 .63 1 .49 6 .79 4 9.50 1 3.99 7 9 1 75.1 67.9 81.5 4 90.1 NM 3.3 46.0 71.2 13 4 71 186 .0 38 .4 93 .5 199 .6 NM -5.4 27 .5 48 .7 84 49 174 .8 43. 7 100 .4 361 .8 NM 8. 5 32. 7 53. 5 111 53 55 4 34 9 48 1 3, 709 69 93 30 4 41 4 74 7 38 2 68 2 31 2 64 4 3 ,020 82 77 23 8 35 2 67 6 33 2 811 338 712 3, 323 NM 107 263 386 849 386 0. 71 2. 33 2. 64 - 14.7 0 0. 57 - 0.1 5 6. 47 11 .29 1 2 0.8 2 1.7 2 2.8 6 - 12.7 0 0.5 1 - 0.76 3.2 7 7.6 1 0 1 0.9 4 1.9 6 3.3 1 1.6 2 NM 0.5 3 4.1 7 9.2 7 3 2
Not e: All for ward estim ates base d on Fir stcall co nsen sus fig ure s Sour ce: Comp any r epo rts, F irst Call, Barcla ys Cap t al est m ate s i i
242
Figure 267: Barclays Capital Global Solar Comparable Valuation Charts as of 4/20/2009
Solar Universe - 2008 price to earnings
25x 21 .5x 20x 17.2x 1 2.6x 9.x 13.x 1 3.6x
15x
8.4x
10x
6x 4x 2x
5x
x
Solar Cell
1
Module
Syst em 3 Integrators
Vertically Integrated
4
Poly/Waf er
x
S ol ar Cell
1
Module
Vertically 4 Integrated
P ol y/ Waf er
S ol ar Equipment 6 Composi te
E xhibit 3
Exhibit 4
.2x
.2x
Syst em Integrators
3
P oly/ Wafer
Solar Cell
Modul e
Vertically Integrated
4
Poly/Wafer
(1 ) So lar Ce ll co mp osit e in clud es : Ch ina Sun er gy, Ene rg y Co nv er sion De vice s, Er Sol So lar , E- To n, Ever gr ee n Solar , Fir st Sola r, JA So lar, Mote ch, Q- Ce lls, Su nPo wer , Su nte ch (2 ) Mo dule co mp os ite inclu de s: a leo so lar , CSI, Sola r- Fa br ik, Solar fu n, Solar tr on , Solo n AG (3 ) Sy ste m I nte gr ato rs comp osite in clud es: Ca rman ah Te ch no logie s, Cen tro so lar AG, Con er gy, Sola rs tro n n d Sun ways AG (4 ) Ve rt ically Int eg rat ed co mp osit e in clud es : REC, Sola rW or ld AG , Trin a So lar a nd Ying li Gr ee n Ene rgy (5 ) Po ly/W afe r c ompo site inc lude s: LDK Solar , MEMC, R en eSo la, Sin o- Ame ric an Silicon , Su mc o,To kuya ma, To pco Scien tific an d W ack er Ch emie (6 ) So lar Equ ipmen t C ompo site : inc lud es: GT So lar , Ro th & Ra u, C etr ot her m, Oe rlik on , Spir e, BTU In ter na tio nal, Man z Auto matio n, Meye r Bu rg er
S OLF
CSI Q
S PWR
+ 10% + 9% + 8% + 7% + 6% + 5%
10% 5% 0%
- 1%
- 6%
FSL R
ESL R
C SU N
ENER
TSL
STP
YGE
L DK
JASO
SPWR
SOLF
CSIQ
WFR
E xhibit 11
60%
40%
20%
-50% -60%
- 47% - 47%
-20%
- 18%
-70% -80%
- 71%
-40%
- 31% - 38%
- 78% - 87%
-90% -100%
-60%
Source: FactSet ; Note in the last week/month/quarter/12 months, the N ASDAQ Composite has cha nged by +3.9%/+10.8%/13.5%/-29. 4%. Last week refers to the 7 da ys ending 4/30/09, Last mo nth refers to 4 weeks th ending 4/24/09 Quar ter refers to 12 weeks ending April 24 2009, Last 12 Months refers to the period ending April 24th 2009.
CSUN
JAS O
T SL
ENER
FSLR
E SLR
WFR
STP
YGE
LDK
244
Figure 268: Barclays Capital Absolute Price Performance U.S. Solar Energy as of 4/20/2009
Price performance - last week Price performance - last month
25% + 31% 30% 25% 10% 20% 15% + 14% + 14% + 13% + 13% 5% + 12% + 12% 0% 20% 15% + 11% + 22%
35%
+ 10%
+ 9%
+ 7%
+ 6% + 3%
245
Annual Capaci ty (MW) Qu arterl y Capacity (M W) Number of Li nes Ohio Germany M al aysia New Location 1 New Location 2 New Location 3 New Location 4 Annual Nameplat e Capaci ty per Line Ohio Germany M al aysia New Location 1 New Location 2 New Location 3 New Location 4 To tal Produ cti on (M W) Ohio Germany M al aysia New Location 1 New Location 2 New Location 3 New Location 4 To tal Compon ent Ship ments (M W) M odul e ASPs ($/W) Y/Y (%) Exchange Rate (Euros/ $) M odul e ASPs (Euros/ W) System Shi pmen ts (MW) System ASPs ($/ W) $ $
318. 3 79. 6 7. 0 3. 0 4. 0 0. 0 0. 0 0. 0 0. 0 0. 0 45. 5 45. 5 45. 5 NA NA NA NA 79. 6 34. 1 45. 5 0. 0 0. 0 0. 0 0. 0 0. 0 79. 6 2.47 $ 7% 1. 48 1. 68 -6% 0. 0 $
456. 5 114. 1 9. 5 3. 0 4. 0 2. 5 0. 0 0. 0 0. 0 0. 0 48. 1 48. 1 48. 1 NA NA NA NA 114. 1 36. 0 48. 1 30. 0 0. 0 0. 0 0. 0 0. 0 103. 2
548.1 137.0 11.0 3.0 4.0 4.0 0.0 0.0 0.0 0.0 49.8 49.8 49.8 NA NA NA NA 137.0 37.4 49.8 49.8 0.0 0.0 0.0 0.0 137.0
629.6 157.4 13.0 3.0 4.0 6.0 0.0 0.0 0.0 0.0 48.3 48.3 48.3 NA NA NA NA 157.4 36.2 48.3 72.9 0.0 0.0 0.0 0.0 182.4 488.1 143.7 191.6 152.8 0.0 0.0 0.0 0.0 502.2 #
845. 0 211. 2 17. 0 3. 0 4. 0 10. 0 0. 0 0. 0 0. 0 0. 0 49. 7 49. 7 49. 7 NA NA NA NA 211. 2 37. 3 49. 7 124. 3 0. 0 0. 0 0. 0 0. 0 206. 2
972.1 243.0 19.0 3.0 4.0 12.0 0.0 0.0 0.0 0.0 51.2 51.2 51.2 NA NA NA NA 243.0 38.4 51.2 153.5 0.0 0.0 0.0 0.0 218.0
1211. 2 302. 8 23. 0 3. 0 4. 0 16. 0 0. 0 0. 0 0. 0 0. 0 52. 7 52. 7 52. 7 NA NA NA NA 302. 8 39. 5 52. 7 210. 6 0. 0 0. 0 0. 0 0. 0 237. 8
1257.7 314.4 23.0 3.0 4.0 16.0 0.0 0.0 0.0 0.0 54.7 54.7 54.7 NA NA NA NA 314.4 41.0 54.7 218.7 0.0 0.0 0.0 0.0 245.0 1071.5 156.2 208.2 707.1 0.0 0.0 0.0 0.0 907.1 $
1351.8 337.9 24.0 4.0 4.0 16.0 0.0 0.0 0.0 0.0 56.3 56.3 56.3 56.3 NA NA NA 337.9 56.3 56.3 225.3 0.0 0.0 0.0 0.0 337.9 1. 55 $ -19% 1. 20 1. 29 -8% 25.0 $ 3. 50 $
1392. 3 348. 1 24. 0 4. 0 4. 0 16. 0 0. 0 0. 0 0. 0 0. 0 58. 0 58. 0 58. 0 58. 0 NA NA NA 348. 1 58. 0 58. 0 232. 1 0. 0 0. 0 0. 0 0. 0 348. 1 1.50 $ -17% 1. 20 1. 25 -10% 25. 0 3.50 $
1687.9 422.0 28.0 4.0 4.0 16.0 4.0 0.0 0.0 0.0 60.3 60.3 60.3 60.3 NA NA NA 422.0 60.3 60.3 241.1 60.3 0.0 0.0 0.0 422.0 1. 46 $ -13% 1.20 1.22 -11% 25.0 3. 50 $
2004.4 501.1 32.0 4.0 4.0 16.0 8.0 0.0 0.0 0.0 62.6 62.6 62.6 62.6 NA NA NA 501.1 62.6 62.6 250.5 125.3 0.0 0.0 0.0 501.1 1609.1 237.3 237.3 949.0 185.6 0.0 0.0 0.0 1609.1
$ 1.90 $ 1.82 $ 1.69 $ -23% -30% -33% 1. 36 1. 40 -17% 5. 0 $ 4.00 1.31 1.39 -18% 10.0 $ 3.50 1. 24 1. 36 -19% 10. 0 $ 3.50 $
1.38 $ 1.47 -14% -15.9% 1.20 1.15 -14% 25.0 3.50 1.20 1.23 -10.5% 100.0
Compon ent Revenues ($, M) Y/Y (%) System Revenues ($, M) To tal Revenues ($, M)
Tot al Cost/ Wat t Stock based com p ($/ W) Act ual st ock based comp ($, M) Ramp Im pact ($/W ) Act ual ram p cost s ($,M) Underl ying Cost/Watt BoS Cost/Watt System Cost/ Watt Cost o f Reven ues ($,M ) Component s Gross M argin (%) System Costs ($, M) Syst em s Gross Margin (%) To tal Costs ($, M) Overal l Gross M argi n Wat ts per module Conversion ef ficiency (%) # modules per product ion l ine Q/ Q (%) Nameplate cap aci ty per li ne (M W)
$ $ $ $ $ $
$ $ $ $ $ $
$ 1. 08 $ 0. 03 4.0 $ 0. 04 6.0 $ 1. 01
$ $ $ $
0. 98 $1. 10 0. 02 -13% 3.0 0. 03 6.0 0. 93 $1. 03 -9% 1. 30 2. 28 178.8 54. 1% 20.9 52. 2% 199.7 539.2
$ 0.94 $ 0.01 2. 5 $ 0.02 0. 0 $ 0.91 $ 1.30 $ 2.24 193. 6 11. 2 204. 8 50.2%
$ 0.90 $ 0.01 1.5 $ 0.02 4.5 $ 0.87 $ 1.30 $ 2.20 196.7 22.0 218.7 49.3%
$ 0.87 $ $ 0.01 $ 1. 5 $ 0.02 $ 4. 5 $ 0.85 $ $ 1.30 $ $ 2.17 $ 207. 3 21. 7 229. 0 47.4%
0. 85 $ 0. 89 0. 01 -19% 1.5 0. 02 4.5 0. 83 $ 0. 86 -16% 1. 30 2. 15 209.0 53.8 262.8 45. 3% 806.5 108.8 915.3 49. 0%
$ $ $ $ $ $
0. 85 0. 00 1.5 0. 02 6.5 0. 83
$ $ $ $
$ $ $ $
0. 81 0. 00 1.5 0. 02 6.5 0. 79
$ $ $ $
0.78 $ 0.00 1.5 0.01 6.5 0.76 $ 1.30 2.08 390.8 52.0 442.8 43.3%
0.82 -8%
0.80 -8%
7%
73 74 75 76 10.9% 11.0% 11.1% 11. 3% 677,944 691,503 705, 333 719,440 2.0% 2.0% 2.0% 2. 0% 49. 7 51.2 52. 7 54.7
8%
13%
246
N on operati ng (i ncom e) expense Income (loss) before taxes Income Tax Expense N et Income (loss) Basic income (los s) per s hare D ilut ed income (los s) per s hare from Operations (i) Year-ov er-Year (%) W ei ghted average s hares used Avg Shares - Ful ly Di luted (M) Percent of Sales Gross Margin Incremental Gros s M argin R &D SG&A Operat ing I nc ome N et Income Tax R at e
79. 1 81. 6
79.9 82.0
80.4 82.4
81. 3 82. 5
82.3 84.0
83.3 88.1
84.3 88.1
85. 3 88. 1
85. 3 88. 1
85.3 88.1
85. 3 88. 1
85. 3 88. 1
54. 2% 57. 6% 2. 9% 16. 3% 33. 2% 26. 1% 25. 8% Fiscal Q2 $102.1 751.8% 49. 8% 38. 2% $313.5 $160. 0 59. 9% $13.4 11. 0% ($121. 6)
56. 1% 62. 1% 2.9% 14. 1% 37. 3% 28. 5% 25. 4% 2008 Q3 $147. 1 167.9% 44. 0% 42. 2% $405. 7 $95.7 27. 4% $16.9 11. 0% $9.9
54.4% 2. 7% 14.0% 35.2% 27.9% 24.9% FY 2008 $499. 1 202% 40.0% $499.1 $485. 5 39.0% $60.8 10.7% $0.7
48.0% 2. 8% 13.9% 30.4% 28.5% 8. 8% FY 2009E $728. 9 301.1% 41.4% 728.9 $325. 0 18.5% $193. 5 21.1% $286. 7
43.8% 2.3% 12.2% 28.7% 26.1% 10.0% FY 2010E $910.7 378. 4% 33.7% 910.7 $500.0 18.5% $135.2 8.9% ($500.0)
FYE: D ecember Pro Forma E BITD A % Change Y/Y % Change Q/ Q % Sales LTM EB ITDA C apital S pending % of Sal es D epreci ation % of COGs FCF Ops E st. (C FO-Capex)
Q1 $68.2 584.5% -22.8% 34. 6% $223. 4 $101.1 51. 4% $10.1 10. 9% $77.4
Q4 $181. 7 105.8% 23. 6% 41. 9% $499. 1 $128.7 29. 7% $20.4 11. 0% $35.0
Q1E $174.4 155.8% -4.0% 42.4% $605.3 $81.3 19.7% $45.3 11.0% $3.7
Fiscal 2009E Q2E Q3E $184.5 $179.6 80.6% 22.2% 5. 8% -2. 6% 42.8% 41.2% $687.7 $720.3 $81. 3 18.8% $47. 4 11.0% $90. 8 $81. 3 18.6% $47. 9 11.0% $88.5
Q4E $190.4 4.8% 6.0% 39.6% $728.9 $81.3 16.9% $52.8 11.0% $103.6
Q1E $208.1 19.3% 9.3% 34.1% $762.6 $125.0 20.5% $30. 5 8.9% $74.5
Fi scal 2010E Q2E Q3E $205.1 $235. 5 11.2% 31. 1% -1. 4% 14. 8% 33.6% 33. 5% $783.2 $839. 1 $125.0 20.5% $30. 5 8.9% $65.4 $125.0 17. 8% $35.2 8.9% $96.1
Q4E $261.9 37.6% 11.2% 33.6% $910.7 $125.0 16.0% $39.0 8.8% $119.4
Note: All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
247
Q1
Q2
Fiscal 2 008 Q3
Q4
Q 1E
Fiscal 20 09E Q 2E Q 3E
Q 4E
Q1E
Fiscal 201 0E Q 2E Q 3E
Q4E
$591 $90 $18 9% $59 30% $41 $798.3 $529 $27 $122
$511 $122 $50 19% $107 40% $49 $838.6 $674 $30 $132
$582 $133 $41 12% $126 36% $79 $962.4 $750 $30 $117
$716 $76 $62 14% $122 28% $102 $1,077.4 $843 $30 $164
$721 $0 $62 15% $103 25% $62 $948. 1 $879 $15 $124
$812 $0 $65 15% $108 25% $62 $1,046.8 $912 $15 $124
$900 $0 $65 15% $109 25% $62 $1,137. 1 $946 $15 $124
$1,004 $0 $72 15% $120 25% $62 $1,258. 5 $974 $15 $124
$1,079 $0 $92 15% $153 25% $62 $1,385.0 $1,069 $15 $124
$1,144 $0 $92 15% $153 25% $62 $1,450. 4 $1,163 $15 $124
$1,240 $0 $106 15% $176 25% $62 $1,583.8 $1,253 $15 $124
$1, 359 $0 $117 15% $195 25% $62 $1, 734. 1 $1, 339 $15 $124
Total A sset s
-----------$1,477
-----------$1,675
-----------$1, 860
-----------$2,115
-----------$1,965
-----------$2,098
-----------$2,222
-----------$2,371
-----------$2,592
-----------$2,752
-----------$2,975
-----------$3, 212
======
$0 $18 $167 85% $0 $43 $228 $18 $70 $10 $326 $0
======
$0 $25 $42 16% $0 $212 $279 $24 $109 $13 $425 $0
======
$0 $27 $37 11% $0 $234 $298 $28 $141 $8 $475 $0
======
$0 $35 $46 11% $0 $301 $382 $35 $164 $21 $601 $0
======
$24 $15 $185 45% $0 $15 $239 $13 $69 $6 $327 $0
======
$24 $15 $194 45% $0 $15 $248 $13 $69 $6 $336 $0
======
$24 $15 $196 45% $0 $15 $250 $13 $69 $6 $338 $0
======
$24 $15 $216 45% $0 $15 $270 $13 $69 $6 $358 $0
======
$24 $15 $275 45% $0 $15 $329 $13 $69 $6 $416 $0
======
$24 $15 $275 45% $0 $15 $329 $13 $69 $6 $416 $0
======
$24 $15 $317 45% $0 $15 $371 $13 $69 $6 $458 $0
======
$24 $15 $351 45% $0 $15 $405 $13 $69 $6 $493 $0
% sal es
Sharehol ders' Equit y Total Li abil it ies & Sharehol ders' Equity
-----------$1,151
-----------$1,251
-----------$1, 385
-----------$1,513
-----------$1,639
-----------$1,762
-----------$1,884
-----------$2,014
-----------$2,176
-----------$2,336
-----------$2,517
-----------$2, 719
-----------$1,477
-----------$1,675
-----------$1, 860
-----------$2,115
-----------$1,965
-----------$2,098
-----------$2,222
-----------$2,371
-----------$2,592
-----------$2,752
-----------$2,975
-----------$3, 212
======
Total Debt % Change Q/Q $ C hange $70.2 - 25% ( $23.1)
======
$108.6 55% $38.4
======
$140.8 30% $32.2
======
$163. 5 16% $22.7
======
$93.3 -43% ($70.2)
======
$93.3 0% $0.0
======
$93.3 0% $0.0
======
$93.3 0% $0.0
======
$93.3 0% $0. 0
======
$93.3 0% $0.0
======
$93.3 0% $0.0
======
$93.3 0% $0.0
P erformance Metrics
Profi tabili ty Ratios R etur n On Equity R etur n on Avg Equit y R etur n On Ass ets R etur n On Net As sets R etur n On Sales Ef fi ci ency Rat ios Sales / Total As sets A/ R D ays Sales Out I nventor y Turns D ays of Inventor y Liquidit y Rat ios C ur rent Ratio Quic k R at io N et Work ing C apital ( $M) Long-Ter m Debt / Equity D ebt/C apital Total Debt / E quity EB ITDA/ Interest EB ITDA- Capex/I nt erest Op Inc / Ass ets , exc. Cash B ook & Cash Value Book Value Per Shar e C ash Per Shar e N et Cash Per Share Tangible Book value 16% 14% 13% 23% 24% 22% 19% 17% 27% 26% 29% 21% 21% 35% 28% 35% 24% 25% 40% 31% 31% 27% 26% 40% 31% 28% 28% 24% 38% 29% 26% 28% 22% 37% 28% 26% 26% 22% 38% 27% 30% 26% 25% 43% 27% 27% 25% 23% 40% 26% 29% 26% 24% 42% 26% 30% 27% 25% 44% 26%
0.53 8 6.3 58
0.64 17 4.6 80
0. 75 11 4.9 75
0.82 13 6. 6 55
0.84 14 8. 0 46
0.82 14 8. 1 45
0.78 14 8. 4 43
0.81 14 8. 8 42
0.94 14 9.0 41
0.89 14 9. 0 41
0.95 14 9. 0 41
0. 97 14 9.1 40
2. 4 3. 2 $738 6.1% 5.7% 6.1% 10. 2 -4.9 7.3% $14.11 $8. 34 $7. 48 $14.11
2. 0 2. 6 $602 8.7% 8.0% 8.7% 20. 7 - 11.7 8.5% $15.25 $7. 72 $6. 40 $15.25
2.0 2.8 $701 10.2% 9.2% 10.2% 28.3 9.9 11.4% $16. 80 $8.68 $6.97 $16. 80
1.8 2.5 $742 10.8% 9. 8% 10.8% 47.2 13.8 12.2% $18.35 $9.61 $7.63 $18.35
2.9 3.5 $894 4. 2% 5. 4% 5. 7% 58.1 31.1 10.4% $19.52 $8.59 $7.48 $19.52
3.1 3.8 $993 3. 9% 5. 0% 5. 3% 61.5 34.4 10.7% $19.99 $9.21 $8.15 $19.99
3.4 4.1 $1, 083 3. 7% 4. 7% 5. 0% 59.9 32.8 10.0% $21.37 $10.21 $9.16 $21.37
3.5 4.2 $1, 204 3. 4% 4. 4% 4. 6% 63.5 36.4 10.1% $22.84 $11.39 $10.33 $22.84
3.3 3.8 $1,331 3.2% 4.1% 4.3% 69.4 27.7 11.7% $24. 69 $12. 24 $11. 18 $24. 69
3.5 3.9 $1, 396 2. 9% 3. 8% 4. 0% 68.4 26.7 10.9% $26.50 $12.98 $11.92 $26.50
3.5 3.8 $1, 530 2. 7% 3. 6% 3. 7% 235.5 110.5 11.5% $28.56 $14.07 $13.01 $28.56
3.5 3.8 $1,680 2.5% 3.3% 3.4% 261.9 136.9 12.0% $30.84 $15.42 $14.36 $30.84
Note: All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
248
Annual Capaci ty (MW) Quarterl y Capaci ty (MW) Number of Lines Fab1 (lines 1-3) Fab1 (line 4) Fab2 (lines 5-6) Line 7 Line 8-12 Line 13-16 Line 17+ A nnual Nam eplate Capac ity per Line Fab1 (lines 1-3) Fab1 (line 4) Fab2 (lines 5-6) Line 7 Line 8-12 Line 13-16 Line 17+ Utili zation rate Total Producti on (MW) Fab1 (lines 1-3) Fab1 (line 4) Fab2 (lines 5-6) Line 7 Line 8-12 Line 13-16 Line 17+ Total Shipm ents (MW) I nt. Shi p to S ystem s (M W) % of int ernal modules Components Shi pments (M W) S ystem s Shi pments (MW)
214. 0 53. 5
254.0 63.5
334.0 83.5
414. 0 103. 5
454.0 113.5
494.0 123.5
534.0 133.5
574.0 143.5
654.0 163.5
734. 0 183. 5
774.0 193.5
814.0 203.5
3. 0 1. 0 2. 0 1. 0 0. 0 0. 0 0. 0 25. 0 33. 0 33. 0 40. 0 40. 0 0. 0 0. 0 80% 42. 8 15. 0 6. 6 13. 2 8. 0 0. 0 0. 0 0. 0 38. 5 9. 3 38% 29. 2 24. 6
3.0 1.0 2.0 1.0 1.0 0.0 0.0 25.0 33.0 33.0 40.0 40.0 0.0 0.0 80% 50.8 15.0 6.6 13.2 8.0 8.0 0.0 0.0 43.7 18.5 50% 25.2 37.0
3.0 1.0 2.0 1.0 3.0 0.0 0.0 25.0 33.0 33.0 40.0 40.0 0.0 0.0 80% 66.8 15.0 6.6 13.2 8.0 24.0 0.0 0.0 63.5 19.4 70% 44.1 27.7
3. 0 1. 0 2. 0 1. 0 5. 0 0. 0 0. 0 25. 0 33. 0 33. 0 40. 0 40. 0 0. 0 0. 0 80% 82. 8 15. 0 6. 6 13. 2 8. 0 40. 0 0. 0 0. 0 82. 8 21. 5 80% 61. 3 26. 9 243.2 60.0 26.4 52.8 32.0 72.0 0.0 0.0 228.5 68.7
3.0 1.0 2.0 1.0 5.0 1.0 0.0 25.0 33.0 33.0 40.0 40.0 40.0 40.0 80% 90.8 15.0 6.6 13.2 8.0 40.0 8.0 0.0 45.4 14.6 80% 30.8 25.0
3.0 1.0 2.0 1.0 5.0 2.0 0.0 25.0 33.0 33.0 40.0 40.0 40.0 40.0 80% 98.8 15.0 6.6 13.2 8.0 40.0 16.0 0.0 69.2 20.0 80% 49.2 25.0
3.0 1.0 2.0 1.0 5.0 3.0 0.0 25.0 33.0 33.0 40.0 40.0 40.0 40.0 80% 106.8 15.0 6.6 13.2 8.0 40.0 24.0 0.0 90.8 44.0 80% 46.8 55.0
3.0 1.0 2.0 1.0 5.0 4.0 0.0 25.0 33.0 33.0 40.0 40.0 40.0 40.0 80% 114.8 15.0 6.6 13.2 8.0 40.0 32.0 0.0 97.6 48.0 80% 49.6 60.0 411. 2 60. 0 26. 4 52. 8 32. 0 160. 0 80. 0 0. 0 302. 9 126. 6
3.0 1.0 2.0 1.0 5.0 4.0 2.0 25.0 33.0 33.0 40.0 40.0 40.0 40.0 95% 155.3 17.8 7.8 15.7 9.5 47.5 38.0 19.0 132.0 40.0 80% 92.0 50.0
3. 0 1. 0 2. 0 1. 0 5. 0 4. 0 4. 0 25. 0 33. 0 33. 0 40. 0 40. 0 40. 0 40. 0 95% 174. 3 17. 8 7. 8 15. 7 9. 5 47. 5 38. 0 38. 0 148. 2 44. 0 80% 104. 2 55. 0
3.0 1.0 2.0 1.0 5.0 4.0 5.0 25. 0 33. 0 33. 0 40. 0 40. 0 40. 0 40. 0 95% 183.8 17. 8 7.8 15. 7 9.5 47. 5 38. 0 47. 5 156.3 48. 0 80% 108.3 60. 0
3.0 1.0 2.0 1.0 5.0 4.0 6.0 25.0 33.0 33.0 40.0 40.0 40.0 40.0 95% 193.3 17.8 7.8 15.7 9.5 47.5 38.0 57.0 164.3 52.0 80% 112.3 65.0 706.8 71.3 31.4 62.7 38.0 190.0 152.0 161.5 600.8 184.0
159.8 116.1
176. 3 165. 0
416.8 230.0
3. 70 $ 0% 4. 31 $ 3% 7. 31 $ 3%
3.53
4.09
7.05
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
249
34.4%
24.2%
21. 6%
22.6%
16.3%
15. 1%
Costs ($/W) I nternal Modules S ilicon c ost s (incl . poly to wafer cos t) Non-s ilicon c osts Combi ned Systems S ili co n Co sts Breakdown P ol y t o waf er process ing cos t per Watt Grams per Watt P ol y c ost s ($/k g) P oly to ingot costs ($/ W) I ngot pull ing cost s ($/ kg) # of waf ers per k g Watt s per waf er poly to ingot process ing cos ts I ngot to wafer costs ($/W) Wafering cos ts ($/ kg) # of waf ers per i ngot Watt s per waf er ingot t o waf er c ost s E fficiency & Watts per wafer E ffic iency (%) Watt s per waf er Grams per Watt Calculation poly consumed in c ells k erf loss poly required Non-si licon Costs ($/ W) Wafer proc ess ing cost s ($/ wafer) # of waf ers (million) Watt s per waf er Fix ed/ ov erhead cos ts ($, M) Non-s ilicon c osts ($/W)
$ $ $ $
$ $ $ $
2. 97 1. 84 1. 14 5. 54
$ $ $ $
$ $ $ $
2.78
$ $ $ $
2. 43 1. 35 1. 08 4. 71
$ $ $ $
$ $ $ $
$ $ $ $
2. 22 1. 16 1. 06 4. 45
2.39
$ $ $ $
1. 99 0. 94 1. 05 4. 30
$ $ $ $
$ $ $ $
$ $ $ $
2. 05
$ $
0.49 $ 6. 3 237 $
0. 48 $ 6.1 221 $
0.45 5. 8 156
$ $
0. 45 $ 5.8 155 $
0. 45 5.8 122
$ $
0. 45 $ 5.8 84 $
0.45 $ 5. 8 99 $
0.45 5.8 99
70 60 3. 0 0.38 $
70 60 3.1 0. 37 $
70 60 3.2 0.36 $
70 60 3. 3 0.35
70 60 3.3 0. 35 $
70 60 3.3 0.35 $
70 60 3.3 0.35 $
70 60 3.3 0. 35
70 60 3.3 0. 35 $
70 60 3. 3 0.35 $
70 60 3.3 0.35 $
70 60 3.3 0.35
20 60 3. 0 0.11 $
20 60 3.1 0. 11 $
20 60 3.2 0.10 $
20 60 3. 3 0.10
20 60 3.3 0. 10 $
20 60 3.3 0.10 $
20 60 3.3 0.10 $
20 60 3.3 0. 10
20 60 3.3 0. 10 $
20 60 3. 3 0.10 $
20 60 3.3 0.10 $
20 60 3.3 0.10
20.3% 3. 0
20. 8% 3.1
21.4% 3.2
22.0% 3. 3
22. 0% 3.3
22.0% 3.3
22.0% 3.3
22.0% 3.3
22. 0% 3.3
22.0% 3. 3
22.0% 3.3
22.0% 3.3
5. 47 13% 6. 29
5. 19 13% 5. 97
5. 05 13% 5. 81
5. 05 13% 5. 81
5. 05 13% 5. 81
5. 05 13% 5. 81
5. 05 13% 5. 81
$ $
$ $
1. 00 34. 8 3.3 7. 0 1. 06
$ $
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
250
C ont. Fully D il uted EP S Total P rimary S hares Total Fully Dilut ed S hares Percent of Sal es Gros s Margin R &D SG&A Operating Income N et Inc ome Tax Rate
17.8% 1. 4% 7. 2% 9. 2% 6. 9% 24.0%
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
251
1 4.4 % 1 2.7 % 11.9% 0.6 1.9 7.7% 9.8% 1 1.9 % 0.65 53 4.4 82 5.1 3.8 $620 .8 4 7.1 % 4 7.1 % 1 1.7 % $10.78 $ 4.2 7
21.1% 15.4% 1 3.4 % 0.8 1.9 11.2% 13.7% 13.4% 0 .8 4 59 5.6 65 5.2 4.1 $7 88.1 43.9% 43.9% 18.1% $1 1.52 $3.99
19.6% 16.9% 12 .9 % 0 .8 1 .9 10.1% 13.0% 12.9% 0.78 47 5.6 65 3.9 3.2 $7 48.1 42.7% 42.7% 19.6% $1 1.7 9 $5.10
23.5% 19.1% 15 .0% 0.8 2.0 11.5% 14.5% 15.0% 0.77 44 4.5 81 3.9 3.0 $80 1.4 46.8% 46.8% 18.7% $11 .9 3 $5.09
1.5% 1 5.3% 2.0 % 0.4 1.9 0.8% 0.9% 2.0% 0.40 64 1.9 193 3.9 2.7 $79 6.2 4 1.7% 4 1.7% 2.6% $13 .03 $ 4.13
4.2% 1 1.1% 4 .2 % 0.5 1.8 2.3% 2.3% 4.2% 0.55 55 1.8 207 6.0 2.6 $76 4.2 4 1.3% 4 1.3% 3.3% $13 .09 $ 0.17
1 0.0 % 9.2% 6 .9 % 0.8 1.9 5.3% 5.2% 6.9% 0.76 55 2 .6 143 4.3 1.9 $749 .2 4 0.3 % 4 0.3 % 6.9% $13.42 ($ 0.4 4)
11 .1 % 6.6% 7 .4% 0.8 1.9 5.7% 5.6% 7.4% 0.77 55 2 .7 136 3 .9 1 .7 $728 .9 39 .2 % 39 .2 % 7.4% $13.79 ($0 .6 0)
11.8% 10.0% 7.0% 0 .8 2 .1 5 .5 % 5 .5 % 7 .0 % 0 .79 55 2.6 14 2 4.1 1.8 $8 94.3 53.2% 53.2% 8 .6 % $1 4.49 ($0.25)
12.0% 10.4% 6.9 % 0.8 2.1 5.7% 5.5% 6.9% 0.82 55 2.7 138 3.9 1.6 $87 0.1 51.6% 51.6% 8.6% $14 .9 3 ($ 0.91)
11.5% 10.5% 6.6% 0 .8 2 .1 5 .4 % 5 .3 % 6 .6 % 0 .8 1 55 2.7 13 3 3.7 1.6 $8 83.2 50.1% 50.1% 8 .2 % $1 5.37 ($0.64)
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
252
Revenues COGS Gross Profit Gross Margin (%) Out put (MW) S ilicon Breakdown S pot Contract Costs ($/W) S pot Contract P roc es sing Cos ts Chec k S ilicon P rices ($/kg) S pot Contract Conversion Efficiency Grams/Wat t ASP ($/Watt) P V Modules y /y ( %) q/q (%) $ $ $ $ $
467.1
18 44.0
85% 15% 3.14 2.14 0.20 0.80 0.00 320.3 345.0 180.0 16.6% 7.30 $ $ $ $ $
85% 15% 3.15 2.15 0.21 0.79 0.00 337.7 362.0 200.0 16.6% 7.00 $ $ $ $ $
90% 10% 3.16 2.22 0.13 0.80 0.00 350.3 367.0 200.0 16.6% 6.73 $ $ $ $
94% 6%
89% 12% $ $ $ $
50% 50%
1.36 $ 1.44 0.21 0.35 0.80 -28% 95.0 70.0 120.0 16.6% 5.88 107.5 85.0 130.0
$ 4.17 $ 4.25 $ 4.07 $ 3.19 $ 3.92 10% 12% 10% -18% 3% 6% 2% -4% -24%
$ 2.71 $ 2.58 $ 2.45 $ 2.37 $ 2.53 -35% -39% -40% -26% -36% -15% -5% -5% -3%
$ 2.15 $ 2.00 $ 1.86 $ 1.73 $ 1.94 -21% - 22% -24% -27% -23% -9% -7% - 7% -7%
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
253
($4. 2) $0. 3 $9. 5 ($5. 6) $45.9 ($0. 1) $46.0 ($14. 1) $0. 0 $31.9 $0.25 $0.25 127.3 129.6
($4. 8) $0. 0 ($9. 8) $14.6 $43.1 ($0. 2) $43.3 ($13.1) $0. 0 $30.2 $0.24 $0.23 127.4 129.6
($4. 4) $0. 1 ($19.6) $23.9 $31.7 ($0. 0) $31.7 ($9. 5) $0. 0 $22.2 $0.17 $0.17 127.4 129.4
($6.6) $0. 1 $10.1 ($3.6) $17.9 ($2.5) $20.4 ($5.7) $0. 0 $14.7 $0.12 $0.12 127. 4 128. 1
($6. 0) $0. 0 $0. 0 $6. 0 $7. 1 $0. 7 $6. 4 ($6. 0) $0. 0 $0. 4 $0.00 $0.00 127.4 128.1
($6. 0) $0.0 $0.0 $6.0 $29.8 $3.0 $26.8 ($10.0) $0.0 $16.8 $0.13 $0.13 127.4 128.1
($6. 0) $0.0 $0.0 $6.0 $61.0 $6.1 $54.9 ($10.0) $0.0 $44.9 $0. 35 $0. 35 127.4 128.1
($6. 0) $0.0 $0.0 $6.0 $98.9 $9.9 $89.0 ($10.0) $0.0 $79.0 $0. 62 $0. 62 127.4 128.1
($4.7) $0. 0 $0. 0 $4. 7 $90.2 $11.3 $78.9 ($16. 2) $0. 0 $62.7 $0.49 $0.48 127. 4 129. 4
($4.7) $0.0 $0.0 $4.7 $85. 8 $10. 7 $75. 1 ($18.2) $0.0 $56. 8 $0. 45 $0. 44 127.4 129.4
($4. 7) $0. 0 $0. 0 $4. 7 $75.6 $9. 4 $66.1 ($19.3) $0. 0 $46.9 $0.37 $0.36 127.4 129.4
($4. 7) $0. 0 $0. 0 $4. 7 $56.3 $7. 0 $49.2 ($21.1) $0. 0 $28.1 $0.22 $0.22 127.4 129.4
($19. 9) $0.4 ($9.9) $29. 3 $138.6 ($2.9) $141.4 ($42. 4) $0.0 $99. 0 $0.79 $0.77 127. 4 128. 1
($24. 0) $0.0 $0.0 $24. 0 $196.7 $19. 7 $177.1 ($36. 0) $0.0 $141.1 $1.11 $1.10 127. 4 128. 1
($18.8) $0. 0 $0. 0 $18.8 $307. 8 $38.5 $269. 3 ($74.8) $0. 0 $194. 5 $1.46 $1.50 127.4 129.4
15.0% 6. 5% 1. 2% 7. 4% 6. 4% 3. 1% 10.0%
25.2%
21.5%
-169. 3% -832. 0% 0.5% 0.5% 7.4% 7.9% 17.3% 13.1% 14.2% 12.5% 10.5% 12.5%
FY E: Decemb er P ro Forma EBITDA % Change Y/ Y % Change Q/Q % S al es LTM EBITDA Capital S pending % of S al es Depreci atio n % of COGS FCF Ops E st. (PF EBITDA + NI -Capex)
Fi scal 2008E Q2 Q3 $67.8 349. 5% 34.5% 23.4% $184. 6 $68.0 23.5% $10.1 4.7% ($0. 3) $65.6 219. 4% -3. 2% 20.2% $220. 4 $68.0 20.9% $10.1 4.0% ($2. 5)
Q1E $23.4 46.5% -4. 0% 11.5% $181.2 $22.1 10.9% $10.4 6. 0% $1. 3
Fi scal 2009E Q2E Q3E $46.2 68.2% 97.1% 15.9% $159. 6 $22.1 7.6% $10.4 4.4% $24.1
Q4E
Fi scal 2010E Q2E Q3E $101.8 220.5% -4.1% 22. 1% $400.7 $19.1 4.2% $11.3 3.4% $82. 7 $91.6 118. 5% -10.0% 19.7% $414. 9 $19.1 4.1% $11.3 3.3% $72.5
Q4E $72.3 62.7% -21.1% 15.5% $371. 9 $19.1 4.1% $11.3 3.1% $53.2
$77.3 $115. 3 117.8% 472.4% 67. 4% 19. 7% $171. 4 $22.1 5.6% $10.4 3.4% $55.2 49. 1% 24. 3% $262. 2 $22.1 4.7% $10.4 3.0% $93.2
Fiscal 2008E $208.2 91.0% 18.9% 208. 2 $272.2 24.7% $40. 3 4.7% ($64. 4)
Fi scal 2010E $371. 9 41.8% 20.2% 371.9 $76.4 4.1% $45.3 3.3% $295. 5
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
254
$119 $13 0 $0 $0 $0 $0 $151 $171 52% 53% $1 82 $ 282 6 2.7% 86.7% $2 60 $ 17 0 $86 $93 $0 $0 $0 $0 $798 $847 $0 $0 $104 $95 $3 27 $ 437 $9 $9 $1 01 $ 100 $6 $6 ------------ -----------$1,345 $1,494 ====== ====== $237 $0 $47 1 6.1% $21 $6 $2 $0 $1 $312 $14 $177 $504 $188 $0 $264 $0 $ 70 21.5% $24 $4 $2 $0 $1 $36 5 $ 15 $ 230 $610 $200 $0
$179 $231 $26 7 $288 $312 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $215 $159 $212 $267 $300 83% 78% 73% 68% 63% $2 99 $ 236 $ 17 4 $ 157 $1 90 115 .9% 116% 60% 40% 40% $113 $ 113 $ 11 3 $ 113 $113 $83 $83 $83 $83 $83 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $889 $821 $850 $908 $998 $0 $0 $0 $0 $0 $99 $99 $99 $99 $99 $4 96 $508 $52 0 $531 $5 43 $9 $9 $9 $9 $9 $98 $98 $98 $98 $98 $34 $34 $34 $34 $34 ------------ ------------ ------------ ------------ -----------$1,625 $1,570 $1,609 $1,680 $1,781 ====== ====== ====== ====== ====== $300 $0 $92 35 .7% $14 $8 $2 $0 $1 $416 $8 $2 98 $722 $204 $0 $300 $0 $3 1 15% $14 $8 $2 $0 $1 $354 $8 $ 298 $660 $204 $0 $300 $0 $4 3 15% $14 $8 $2 $0 $1 $36 7 $8 $ 298 $67 3 $204 $0 $300 $0 $59 15% $14 $8 $2 $0 $1 $383 $8 $ 298 $689 $204 $0 $300 $0 $71 15% $14 $8 $2 $0 $1 $395 $8 $2 98 $701 $204 $0 -----------$876 -----------$1,781 ====== $597.7 0% $0.0 $0.0
$517 $557 $0 $0 $0 $0 $294 $295 63% 63% $ 186 $ 187 40% 40% $ 113 $ 113 $83 $83 $0 $0 $0 $0 $1,193 $1,235 $0 $0 $99 $99 $567 $574 $9 $9 $98 $98 $34 $34 ------------ -----------$2,000 $2,049 ====== ====== $300 $0 $7 0 15% $14 $8 $2 $0 $1 $394 $8 $ 298 $700 $204 $0 $300 $0 $7 0 15% $14 $8 $2 $0 $1 $394 $8 $ 298 $700 $204 $0
------------ -----------$653 $68 5 ------------ -----------$1,34 5 $1,494 ====== ====== $494.8 20% $81.0 $0.0
------------ ------------ ------------ -----------$699 $705 $73 2 $787 ------------ ------------ ------------ -----------$1,62 5 $1,570 $1,609 $1,680 ====== ====== ====== ====== $597.7 21% $102.9 $0.0 $597.7 0% $0.0 $0.0 $597.7 0% $0.0 $0.0 $597.7 0% $0.0 $0.0
------------ -----------$1,096 $1,145 ------------ -----------$2,000 $2,049 ====== ====== $597.7 0% $0.0 $0.0 $597.7 0% $0.0 $0.0
1.9 2.7 $501 1.9% 32.6% 4 8.4% -12.1 4.2 $4.67 $0.65 ($1.62) $4.67
1.6 2.0 $486 2.2% 38.8% 63.4% -14.1 0.1 $5.04 $0.92 ($2.28) $5.04
1.4 1.5 $482 2.2% 42.0% 72.3% -15.1 0.6 $5.29 $1.01 ($2.82) $5.29
1.2 1.4 $473 1.1% 46.1% 85 .6% -3.7 2.4 $5.45 $1.39 ($3.27) $5.45
1.2 1.7 $467 1.1% 45.9% 8 4.8% -3.9 -0.2 $5.50 $1.80 ($2.86) $5.50
1.3 1.8 $482 1.1% 45.0% 8 1.7% -7.7 -4.0 $5.71 $2.09 ($2.58) $5.71
1.3 2.0 $525 1.0% 43.2% 7 6.0% -12.9 -9.2 $6.14 $2.25 ($2.42) $6.14
1.4 2.0 $603 0.9% 40.6% 68 .3% -19.2 -15.5 $6.83 $2.43 ($2.23) $6.83
1.5 2.3 $674 0.8% 38.5% 6 2.6% -22.6 -18.5 $7.38 $3.12 ($1.50) $7.38
1.6 2.4 $741 0.8% 36.7% 58 .1% -21.6 -17.6 $7.96 $3.58 ($1.04) $7.96
1.7 2.6 $799 0.7% 35.3% 5 4.5% -19.5 -15.4 $8.47 $4.00 ($0.62) $8.47
1.8 2.7 $841 0.7% 34.3% 5 2.2% -15.4 -11.3 $8.85 $4.30 ($0.32) $8.85
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
255
Fiscal 2009 E
Q1E Q2E Q3E Q4E
Fiscal 2009E
Fiscal 2010E
Pol ysil icon C apacity (Me tric Ton s/Year) Ca pacity Uti lization Pol y Output Inventory Pol y Capacity for Semis Pol y Capacity for Sol ar Spot Poly Market Spot Wafer Market Co ntract Market Semiconductor Rev enue D riv ers Total MSI (Milli on Squ are Inches) Y/Y (%) MEMC Market Share MEMC W afer Starts (MSI) Y/Y (%) Q /Q (%) W afer ASPs ($ per sq . inch) Y/Y (%) Q /Q (%) Semiconductor Rev enue Y/Y (%) Solar Rev enue Dr ive rs Pol y Output for Sol ar Spot Market Spot Wafer Market Co ntract Market Pol y Spot Pricing ($ pe r kg) Spot Wafer Pri ci ng ($ per Wa tt) Pol y Contract Pri ci ng ($ per W att) Pol y Spot Revenue Spot Wafer Revenue Sol ar W afer Con tract Revenu e Total Sola r Re venue Total MEMC Revenue Cost of Goods Semis ($ p er sq. i nch) Sol ar pol y ($ p er kg) Pol y to wafer toll ing ($/W ) G ross Mar gins Semis Spot poly Spot wafe r Sol ar contract G ross Profits Semis Spot poly Spot wafe r Sol ar wafer O vera ll G M
2317.5 1225 .0
8233.0 -6%
91 8.8
918 .8
1 500.0
1700.0
5037.5 -39%
190 0.0
2100 .0
2 300.0
2700.0
9 000.0 7 9%
13% 159 .3 -47% -47% 0.81 -38% -8% 129 .0 1070.3 -5%
0.94 -25%
0.77 -18%
0.7 8 2%
1007.6 -29%
503.2 -50%
917.8 8 2%
793 79 79 635 350 $2.70 $1.70 27.8 26.8 134.8 189.4 501.0
941 94 94 753 400 $2 .80 $1 .70 3 7.6 3 2.9 15 9.9 23 0.5 53 1.6
11 70 2 34 1 17 8 19 3 00 $2.50 $1.70 70.2 36.6 174.0 280.8 546.7 183.4 0.61 25 $0.55
1376 69 138 1170 200 $2.00 $1.70 13 .8 34 .4 248 .6 296 .7 425 .7 105 .9 0.67 27 $0.55
42 80
121 8 0 0 121 8 80 $1.1 0 $1.1 0 0.0 0.0 167.4 167.4 322.3 146.3 0.75 27 $0.5 5
1 617 0 0 1 617 80 $1.10 $1.10 0.0 0.0 222.3 222.3 397.7 154.7 0.70 25 $0.55
4 212
1780 0 0 1780 80 $1.05 $1.05 0 .0 0 .0 233 .6 233 .6 433 .8 163 .8 0.60 23 $0.45
199 9 0 0 199 9 70 $1.0 0 $1.0 0 0.0 0.0 249.9 249.9 499.3 170.4 0.5 7 23 $0.4 5
2230 0 0 2230 60 $0.95 $0.95 0.0 0.0 264.8 264.8 557.3 186.0 0.53 23 $0.45
758 1
0.57 25 $0.55
0 .55 25 $0 .55
34% 91% 69% 56% 1,004.3 378.2 137.3 90.3 398.5 50.1%
6% 66 % 30 % 30 % 59.5 9 0 0 51 18.4%
-6% 65% 32% 32% 177.9 (5.6) 0.0 7.2 183.5 16.1%
32 % 67 % 37 % 37 % 170.4 79 0 0 91 34.1%
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
256
Income (l oss) before taxes,equity income $229.4 C ash I ncom e Tax Income (l oss) before equity income JVs Equi ty i n income (loss) of JV s Minori ty i nterests N et I ncom e (l oss) C umulat ive pref erred s tock dividends N et I ncom e-Operations P ercent of R ev enue N on GAAP EP S (excludi ng opti ons) Options E xpens e N on GAAP EP S (inc options) GAA P EP S (inc options) Weighted average s hares used Avg S hares - Full y Di luted (M) Percent of S al es Gros s Margin Inc rement al Gros s Margin SG&A R &D Operating Income N et Inc ome Tax Rate 51.7% 71.7% 2.1% 6.1% 43.6% 38.7% 15.0% $34.4 $195.0 $0. 0 ($1.1) $193.9 $0. 0 $193.9 38.7% $0.84 $0.05 $0.79 ($0.18) 228. 5 231. 5
FILE: W FR wk sh.x ls FYE: D ec ember Pro Forma EBITDA % Change Y/Y % Change Q/Q % Sal es LTM EB ITDA Q1 $2 41 .2 1 2.7 % - 12 .5 % 4 8.1 % $9 65 .1
Fi sc al 20 08 E Q 2E $ 26 8.0 1 7. 8% 1 1. 1% 5 0. 4% $ 1,0 05 .6 Q3 E $25 4. 8 15 .4% - 4. 9% 46 .7% $1 ,03 9. 6 Q 4E $ 20 2.3 -2 6.6 % -2 0.6 % 4 7. 5% $ 96 6.3 Q1 E $ 1.6 - 99 .3% - 99 .2% 0 .7% $7 26 .7
FY 2 00 8 $ 96 6. 3 3% 48 .2 %
FY 2 00 9E $ 1,4 34 .4 4 8% 1 29 .7%
FY 20 10 E $ 54 7.7 -6 2% 29 .1%
$ 87 .3 1 6. 4% $ 25 .5 1 0. 3% $ 11 7.7
$ 63 .9 1 5. 0% $ 33 .0 1 4. 2% $ 32 1.6
$8 2.0 38 .3 % $2 8.0 14 .4 % $5 1. 8
$ 85 .0 4 9. 5% $ 30 .0 1 8. 3% ( $1 74 .2 )
$ 90 .0 2 7. 9% $ 31 .0 1 1. 8% $7 .8
$9 5.0 23 .9 % $3 3.0 10 .8 % $1 3. 9
$ 82 .0 2 0. 9% $ 28 .0 9.8 % $ 24 .0
$ 85 .0 19 .6% $ 30 .0 9. 8% $3 1.5
$9 0. 0 1 8.0 % $3 1. 0 9 .4 % $ 76 .5
$ 95 .0 1 7. 0% $ 33 .0 9.1 % $ 98 .6
$ 30 6. 2 15 .3 % $ 10 8. 6 10 .9 % $5 96 .8
$3 52 .0 3 1. 8% $1 22 .0 1 3. 2% ( $1 00 .7 )
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
257
$980 $306 $217 43% $33 7% $0 $28 $1,564 $904 $132 $0 $110 $155 -----------$2,864 ===== = $6 $160 32% $53 $0 $164 33% $86 $60 $32 $559 $29 $60 12% $0 $0 $0 $204 $852 $34 $0.0 -----------$1,978 -----------$2,864 ===== = $35.0 $4.1
$1,111 $276 $231 43% $34 6% $0 $27 $1,678 $950 $110 $0 $101 $141 -----------$2,980 ====== $6 $148 28% $54 $0 $168 32% $86 $43 $33 $537 $25 $57 11% $0 $0 $0 $238 $857 $35 $0.0 -----------$2,089 -----------$2,980 ====== $30.1 ($4.9)
$932 $187 $240 44% $41 8% $0 $28 $1,429 $976 $318 $0 $90 $172 -----------$2,985 ====== $6 $141 26% $65 $0 $210 38% $90 $69 $32 $613 $25 $42 8% $0 $0 $0 $190 $869 $36 $0.0 -----------$2,080 -----------$2,985 ====== $30.3 $0.2
$988 $148 $202 47% $81 19% $0 $39 $1,459 $1,041 $285 $0 $68 $87 -----------$2,940 ====== $6 $162 38% $68 $0 $187 44% $0 $18 $32 $473 $26 $46 11% $0 $0 $0 $275 $820 $35 $0.0 -----------$2,085 -----------$2,940 ====== $32.2 $1.9
$898 $109 $169 79% $118 55% $0 $38 $1,333 $1,018 $292 $0 $76 $81 -----------$2,800 === === $6 $122 57% $45 $0 $150 70% $0 $18 $31 $372 $24 $45 21% $0 $0 $0 $278 $720 $34 $0.0 -----------$2,046 -----------$2,800 === === $30.1 ($2.1)
$915 $109 $70 41% $83 48% $0 $38 $1,214 $1,073 $292 $0 $76 $81 -----------$2,736 === === $6 $98 57% $46 $0 $150 87% $0 $18 $32 $349 $24 $47 27% $0 $0 $0 $278 $698 $34 $0.0 -----------$2,004 -----------$2,736 === === $30.1 $0.0
$887 $109 $131 41% $138 43% $0 $38 $1,303 $1,132 $292 $0 $76 $81 -----------$2,884 == ==== $6 $184 57% $46 $0 $150 47% $0 $18 $33 $437 $24 $48 15% $0 $0 $0 $278 $787 $34 $0.0 -----------$2,062 -----------$2,884 == ==== $30.1 $0.0
$865 $109 $161 41% $164 41% $0 $38 $1,338 $1,194 $292 $0 $76 $81 -----------$2,981 ====== $6 $227 57% $47 $0 $150 38% $0 $18 $34 $482 $24 $50 12% $0 $0 $0 $278 $834 $34 $0.0 -----------$2,113 -----------$2,981 ====== $30.1 $0.0
$854 $109 $159 41% $153 39% $0 $38 $1,313 $1,186 $292 $0 $0 $81 -----------$2,872 ====== $6 $224 57% $47 $0 $150 38% $0 $18 $35 $480 $24 $51 13% $0 $0 $0 $278 $833 $34 $0.0 -----------$2,004 -----------$2,872 ====== $30.1 $0.0
$849 $109 $176 41% $154 35% $0 $38 $1,326 $1,241 $292 $0 $0 $81 -----------$2,940 ====== $6 $248 57% $48 $0 $150 35% $0 $18 $36 $505 $24 $53 12% $0 $0 $0 $278 $860 $34 $0.0 -----------$2,046 -----------$2,940 ====== $30.1 $0.0
$890 $109 $202 41% $173 35% $0 $38 $1,413 $1,300 $292 $0 $0 $81 -----------$3,086 ====== $6 $286 57% $48 $0 $150 30% $0 $18 $37 $544 $24 $54 11% $0 $0 $0 $278 $901 $34 $0.0 -----------$2,151 -----------$3,086 ====== $30.1 $0.0
$953 $109 $226 41% $195 35% $0 $38 $1,521 $1,362 $292 $0 $0 $81 -----------$3,256 ====== $6 $319 57% $49 $0 $150 27% $0 $18 $38 $579 $24 $56 10% $0 $0 $0 $278 $937 $34 $0.0 -----------$2,285 -----------$3,256 ====== $30.1 $0.0
39% 46% 27% 49% 39% 0.70 40 29.2 12 5,225 $384 1.8 2.7 $1,165 1.5% 1.7% 1.8% -19.3 -12.7 49.1% $8.54 $5.55 $5.40 $7.88
41% 44% 28% 53% 40% 0.71 40 29.4 12 5,240 $406 2.0 3.1 $1,290 1.2% 1.4% 1.4% -24.4 -16.4 53.2% $9.05 $6.01 $5.88 $8.44
38% 40% 26% 42% 36% 0.73 40 27.0 14 5,255 $416 1.6 2.3 $957 1.2% 1.4% 1.5% -24.5 -17.5 42.0% $9.14 $4.92 $4.79 $8.38
28% 37% 20% 32% 34% 0.58 37 26.1 14 5,270 $323 1.8 2.9 $1,149 1.3% 1.5% 1.5% -18.9 -12.9 32.5% $9.26 $5.05 $4.91 $8.88
0% 27% 0% 0% 1% 0.31 37 7.4 49 5,285 $162 1.9 3.3 $1,084 1.2% 1.4% 1.5% -0.1 7.1 0.4% $9.13 $4.50 $4.36 $8.77
(3%) 16% -2% (4%) (9%) 0.25 37 7.9 46 5,300 $130 1.7 3.2 $963 1.2% 1.5% 1.5% 0.0 9.2 -3.6% $8.91 $4.55 $4.42 $8.54
6% 8% 4% 6% 9% 0.45 37 7.6 48 5,315 $243 1.7 2.7 $1,051 1.2% 1.4% 1.5% -5.1 3.6 6.1% $9.37 $4.53 $4.39 $9.01
10% 3% 7% 11% 14% 0.53 37 7.4 49 5,330 $298 1.6 2.4 $1,084 1.1% 1.4% 1.4% -8.3 0.9 11.0% $9.61 $4.43 $4.29 $9.24
13% 4% 9% 14% 17% 0.55 37 7.4 49 5,330 $294 1.6 2.4 $1,057 1.2% 1.5% 1.5% -8.6 -1.0 14.0% $9.32 $4.48 $4.34 $8.95
17% 8% 12% 17% 20% 0.59 37 7.9 46 5,345 $325 1.5 2.3 $1,069 1.2% 1.4% 1.5% -9.8 -2.6 17.3% $9.52 $4.46 $4.32 $9.14
22% 14% 16% 23% 24% 0.65 37 7.6 48 5,360 $373 1.6 2.3 $1,154 1.1% 1.4% 1.4% -12.2 -5.2 23.0% $10.24 $4.76 $4.62 $9.86
25% 19% 17% 26% 25% 0.68 37 7.4 49 5,375 $415 1.6 2.3 $1,261 1.1% 1.3% 1.3% -13.2 -6.3 25.8% $10.88 $5.06 $4.92 $10.49
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
258
2.6 6
2 .61
2.59
2.79
2.66
1.89
1.72
1.57
1.49
1.66 617.2 159.5 146.7 19.9 0.0 193.6 34.8 97.6 0.28 652.0
1.28
1.1 5
0.99
0 .94
1.09
1 25.7 13 5.2 231.0 149 .7 641.7 66.2 2 9.8 53.9 51 .4 201.4 42.0 4 5.0 46.4 17 .6 151.0 1.6 0.0 19.3 0 .0 21.0 0.0 0.0 52.0 45 .9 97.9 0.0 4 1.6 41.6 20 .3 103.5 0.5 2.7 2.8 3 .2 9.2 15.8 1 8.7 17.8 14 .5 66.9 $ 0.2 0 $ 0.2 0 $ 0.20 $ 0 .27 $ 0.20 1 26.2 13 7.9 233.8 152 .9 650.8
66.1 111.6 172.2 267.3 46.9 42.4 36.0 34.3 7.2 32.9 53.3 53.3 0.0 3.2 8.3 8.3 0.0 0.0 0.0 0.0 1.5 15.0 47.1 130.0 5.6 7.0 8.5 13.7 10.5 18.2 27.5 41.4 0.30 $ 0.28 $ 0.25 $ 0.23 $ 71.6 118.6 180.7 281.0
269.1 2 35.1 233.0 25 2.5 989 .8 32.8 29.7 25.2 2 4.0 111 .6 42.0 38.3 37.3 3 7.3 155 .0 8.3 8.3 5.5 5.5 27 .6 0.0 0.0 12.8 3 9.1 51 .9 144.0 1 19.9 109.9 9 8.0 471 .8 12.3 13.0 15.3 1 6.8 57 .4 42.0 39.0 42.3 4 8.6 171 .9 $ 0.20 $ 0.1 9 $ 0.18 $ 0 .18 $ 0 .19 281.4 2 48.2 248.3 26 9.3 1047 .2
21 % 70 % 21.2%
21 % 70 % 2 3.5 %
2% 45% 7.6%
6% 45% 9.5%
1 2% 4 5% 14.3%
5% 3 5% 6.8%
10 % 35 % 1 1.8 %
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
259
$126.4 $33.6
$138. 2 $42.1
$244. 8 $67.5
$142.1 $1.4
$71.6 $5.9
$118.6 $12. 5
$180. 7 $30.2
$281.0 $64. 1
$281.4 $20. 4
$248. 2 $33.2
$248.3 $67. 8
$269.3 $91.0
$651.6 $144.6
$652.0 $112.6
$1,047. 2 $212. 4
Operating Income
$23.3
$31.5
$63.8
($17.8)
($3.1)
$3.5
$19.2
$53. 1
$9. 4
$21.2
$53. 8
$75.5
$100.9
$72. 6
$159. 9
Non operati n (income) expense: g I nt erest income (expens e) Ot her income (expens e) Forex gain (los s) Non operati n (income) expense g $1. 6 $3. 9 ($5.5) $0. 0 ($2. 7) ($23.8) ($5. 2) $31.8 ($7. 3) ($109.3) ($6. 0) $122. 6 ($7.2) $47. 2 ($2.0) ($38.0) ($5.0) $0.0 $0.0 $5.0 ($5.0) $0.0 $0.0 $5.0 ($5. 0) $0. 0 $0. 0 $5. 0 ($5.0) $0.0 $0.0 $5.0 ($4.6) $0. 0 ($2.0) $6. 6 ($4. 6) $0. 0 ($3. 0) $7. 6 ($4.6) $0.0 ($2.5) $7.1 ($4.6) $0. 0 ($2.0) $6. 6 ($15. 6) ($82. 0) ($18. 8) $116.4 ($20.0) $0.0 $0.0 $20. 0 ($18.4) $0. 0 ($9. 5) $27.9
$23.3
($0. 3)
($58.8)
$20. 3
($8.1)
($1.5)
$14.2
$48. 1
$2. 8
$13.6
$46. 7
$68.9
($15. 4)
$52. 6
$132. 0
$1. 3 $22.0
$0.8 ($1. 0)
$3. 0 ($61.7)
($1.5) $21. 8
($0.8) ($7.3)
($0.2) ($1.4)
$1. 4 $12.7
$4.8 $43. 3
$0. 4 $2. 4
$2. 0 $11.5
$7.0 $39. 7
$10.3 $58.5
$3.5 ($18. 9)
$5.3 $47. 4
$19.8 $112. 2
$0. 0
$0.0
$0. 0
$0.0
$0.0
$0.0
$0. 0
$0.0
$0. 0
$0. 0
$0.0
$0. 0
$0.0
$0.0
$0. 0
$1. 2
$1.2
$0. 0
$4.7
$1.2
$1.2
$1. 2
$1.2
$1. 2
$1. 2
$1.2
$1. 2
$7.1
$4.8
$4. 8
Bas ic inc ome (los s) per share Diluted income (los s) per share from Opera
$0.14 $0.14
$0. 30 ($0.01)
($0.13) ($0.36)
($0.01) ($0.01)
$0.08 $0.08
$0. 28 $0. 27
$0.02 $0.01
$0. 07 $0. 07
$0. 25 $0. 25
$0.38 $0.37
$0. 30 $0. 30
$0. 72 $0. 70
EP S (ADS) Weight ed av erage shares used Avg Shares - Ful ly Dil uted (M) Percent of Sales Gros s Margin I nc remental Gross Margin R&D SG& A Operating I nc ome Net I nc ome Tax Rate
6. 8% 100.8% 0. 3% 3. 3% 3. 1% 0. 8% 15.0%
14. 7% 0.5% 4.7% 9.5% 6.2% 10. 0% Fiscal 2009E $85. 7 -771.7% 11. 2% 85.7
16. 9% 0.6% 3.6% 12. 7% 8.9% 15. 0% Fiscal 2010E $180. 8 -10656.3% 14. 4% 180.8
Fi scal 2008E FYE : Decem ber Pro Forma EBITDA % Change Y /Y % Change Q/ Q % Sales LTM EBI TDA Q1E $25.2 219. 1% 27.2% 15.8% $81.3 Q2E $33.9 182.9% 34. 5% 18. 8% $103. 3 Q3E $67.3 177. 2% 98.3% 21.6% $146. 3 Q4E ($12.8) -164.3% -118.9% -8.9% $113.7 Q1E ($1.7) -106.8% -86. 6% -2.2% $86.8
Fi scal 2009E Q2E $5.8 -82.8% -440.7% 4. 5% $58. 7 Q3E $22.8 -66.2% 290. 3% 10.8% $14.1 Q4E $58. 8 -560.7% 158.0% 17. 0% $85. 7 Q1E $15. 0 -976.8% -74.4% 5. 0% $102.4
Fiscal 2010E Q2E $26.1 348. 1% 74. 1% 9.3% $122. 7 Q3E $58. 8 158.1% 124.8% 18. 6% $158.7 Q4E $80.9 37.6% 37.6% 22.4% $180.8
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
260
(4 %) (7 %) (3 %) (4 %) (9 %)
7% 4% 5% 7% 6%
1% 8% 1% 1% 1%
6% 9% 4% 6% 4%
28 % 14 % 19 % 26 % 16 %
1.0 1 16 24.2 15
0.67 13 24 .0 15
1.19 20 18.6 20
0.54 33 6.6 56
0.29 25 10.6 34
0.50 18 10 .7 34
0.79 18 9.9 37
1.24 18 10.0 36
1.08 14 15.0 24
1.00 14 14.2 26
1.08 14 12.6 29
1.17 14 12.0 30
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
261
Revenues P V Modules O ther COGS G ross P rofit G ross Margin (%) O utput (MW) S ilicon Breakdown S pot Contract Costs ( $/W) S pot Contract P rocessing Costs Chec k S ilicon Prices ($/kg) S pot Contract Conversion Ef ficiency G rams/Watt ASP ($/Watt) P V Modules y /y (%) q/q ( %) $ $ $ $ $
120.7 116.5 4.2 89.6 31.1 25.8% 29.5 45% 55% 3.04 1.03 0.98 1.02 0.00 203.0 231.0 180.0 16.6% 9.94 $ $ $ $ $
204.2 191.7 12.5 156.8 47.4 23.2% 47.6 45% 55% 3.29 1.29 0.98 1.02 0.00 228.6 288.0 180.0 16.6% 9.94
290.7 271.2 19.5 225.5 65.2 22.4% 66.4 45% 55% $ 3.40 $ 1.34 $ 1.04 $ 1.02 $ (0.00) 239.5 300.0 190.0 16.6% 9.94 $ $ $ $
216.3 196.8 19.5 195.5 20.8 9.6% 57.6 50% 50% 3.40 1.48 0.94 0.97
831.9
151.7 136.7 15.0 132.0 19.7 13.0% 50.0 40% 60% $ $ $ $ 2.64 0.60 1.07 0.97 $ $ $ $
184.3 169.3 15.0 160.0 24.4 13.2% 65.0 40% 60% 2.46 0.54 0.95 0.97 $ $ $ $
218.4 203.4 15.0 186.5 31.9 14.6% 80.0 40% 60% 2.33 0.50 0.86 0.97 $ $ $ $
245.3 230.3 15.0 203.9 41.5 16.9% 95.0 40% 60% 2.15 0.46 0.72 0.97
799.8
320.5 305.5 15.0 275.0 45.5 14.2% 140.0 50% 50% $ $ $ $ 1.96 0.50 0.50 0.97 $ $ $ $
336.2 321.2 15.0 298.3 37.9 11.3% 160.0 50% 50% 1.86 0.45 0.45 0.97 $ $ $ $
354.7 339.7 15.0 308.8 45.9 12.9% 180.0 50% 50% 1.72 0.35 0.40 0.97 $ $ $ $
138 0.8
343.1 1225.2 26.3 7.1% 200.0 50% 50% 155.6 11.3% 68 0.0 134% 50% 50%
1.72 $ 1.81 0.35 0.40 0.97 -24% 75.0 70.0 80.0 85.0 82.5 87.5
16.6% 9.94
$ 3.95 $ 4.03 0% 2%
2.73 $ 2.61 $ 2.54 $ 2.42 $ 2.58 -31% - 35% -38% -29% -33% -20% -5% -2% -5%
$ 2.18 $ 2.01 $ 1.89 $ 1.77 $ 1.96 -20% -23% -26% -27% -24% -10% - 8% -6% -6%
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
262
($2.2) ($4.0) $6.3 $13.9 $1.1 $12.9 $0.0 $12.9 $0.52 $0.51 25.0 25.1
($5.1) ($6.3) $11.4 $17.7 $0.6 $17.1 $0.0 $17.1 $0.68 $0.68 25.0 25.2
($7.2) ($4.9) $12.04 $34.8 $2.7 $32.05 $0.0 $32.1 $1.28 $1.13 25.0 28.4
($6.5) $2.1 $4.3 ($0.46) $0.2 ($0.7) $0.0 ($0.7) ($0.03) ($0.03) 25.1 25.1
($5.5) $0.0 $5.5 ($0.8) ($0.1) ($0.7) $0.0 ($0.7) ($0.03) ($0.03) 27.1 26.1
($5.5) $0.0 $5.5 $2.4 $0.3 $2.1 $0.0 $2.1 $0.08 $0.08 27.1 26.1
($5.5) $0.0 $5.5 $8.4 $1.0 $7.4 $0.0 $7.4 $0.26 $0.27 28.1 27.1
($5.5) $0.0 $5.5 $1 6.5 $2.0 $1 4.5 $0.0 $1 4.5 $0 .50 $0 .52 29.1 28.1
($3.0) $0.0 $3.0 $22.8 $2.7 $20.1 $0.0 $20.1 $0.65 $0.67 31.1 30.1
($3.0) $0.0 $3.0 $15.0 $1.8 $13.2 $0.0 $13.2 $0.42 $0.44 31.1 30.1
($3.0) $0.0 $3.0 $22.3 $2.7 $19.6 $0.0 $19.6 $0.61 $0.63 32.1 31.1
($3.0) $0.0 $3.0 $2.3 $0.3 $2.0 $0.0 $2.0 $0.06 $0.06 33.1 32.1
($21.0) ($13.0) $34.0 $66.0 $4.6 $61.4 $0.0 $61.4 $2.45 $2.28 25.01 26.91
($21.9) $0.0 $21.9 $26.6 $3.2 $23.4 $0.0 $23.4 $0.82 $0.85 24 .97 25 .19
($12.0) $0.0 $12.0 $62.4 $7.5 $54.9 $0.0 $54.9 $1.7 $1.80 25 .04 28 .39
F YE: December Pro Forma EBITDA % Chan ge Y/Y % Chan ge Q /Q % Sales L TM EBITDA Capital Sp ending % of Sales Depr eciatio n % of COGS F CF Op s Est. (PF EBITDA + NI -Capex)
Q1 $20.2
Fiscal 2008E Q2 Q3 $29.1 $53.6 672.7% 83.9% 18.4% $119.1 $67.4 23.2% $6.8 3.0% ($9.0)
Q4E $10.3 -36.7% -80.8% 4.7% $113.1 $28.0 12.9% $6.4 3.0% ($19.9)
Fiscal 2009E Q2E Q3E $7.9 $13.9 -72.9% 67.9% 4.3% $76.4 $15.0 -74.1% 76.1% 6.4% $36.7 $0.0
Fiscal 2010E Q2E Q3E $18.0 $25.3 128.0% -30.4% 5.3% $79.7 $62.5 82.1% 40.7% 7.1% $91.1 $62.5
352.2% 260.2% 24.5% 44.2% 16.7% 14.3% $51.4 $72.5 $50.0 41.4% 0.0% ($25.8) $50.0 24.5% 0.0% ($14.6)
($10.3)
($7.1)
$13.9
$2 2.0
($36.7)
($44.5)
($37.2)
($57.2)
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
263
$38 $60 $126 $126 $80 $88 67% 43% $73 $118 60.6% 57.8% $4 $11 $64 $59 $0 $0 $5 $11 $391 $471 $245 $294 $6 $7 $1 $2 $64 $91 ---------- -- ------ -----$708 $865 ====== ====== $245 $9 $46 39% $0 $2 $3 $0 $306 $15 $6 $327 $351 $14 $56 27% $0 $14 $3 $0 $439 $18 $8 $465
$132 $153 $111 $88 $78 $32 -$28 -$84 -$155 $45 $0 $0 $0 $0 $0 $0 $0 $0 $105 $91 $111 $131 $147 $128 $134 $142 $148 49% 60% 60% 60% 60% 40% 40% 40% 40% $86 $76 $92 $109 $123 $192 $202 $213 $222 39.6% 50% 50% 50% 50% 60% 60% 60% 60% $4 $4 $4 $4 $4 $4 $4 $4 $4 $42 $42 $42 $42 $42 $42 $42 $42 $42 $0 $0 $0 $0 $0 $0 $0 $0 $0 $5 $5 $5 $5 $5 $5 $5 $5 $5 $420 $372 $366 $380 $400 $405 $360 $323 $266 $358 $373 $388 $388 $388 $450 $513 $575 $638 $27 $27 $27 $27 $27 $27 $27 $27 $27 $3 $3 $3 $3 $3 $3 $3 $3 $3 $133 $133 $133 $133 $133 $133 $133 $133 $133 --- --------- ---------- -- ----- ------- ---------- -- ----- ------- ---------- -- ---- -------- --------- --- ---- -------$940 $907 $916 $930 $950 $1,017 $1,035 $1,060 $1,067 ====== ====== ====== ====== ====== ====== ====== ====== ====== $249 $18 $63 29% $0 $2 $4 $1 $336 $148 $23 $507 $249 $18 $30 20% $0 $2 $4 $1 $304 $148 $23 $475 $249 $18 $37 20% $0 $2 $4 $1 $310 $148 $23 $481 $249 $18 $44 20% $0 $2 $4 $1 $317 $148 $23 $488 $249 $18 $49 20% $0 $2 $4 $1 $322 $148 $23 $494 $249 $18 $96 30% $0 $2 $4 $1 $369 $148 $23 $541 $249 $18 $101 30% $0 $2 $4 $1 $374 $148 $23 $545 $249 $18 $106 30% $0 $2 $4 $1 $380 $148 $23 $551 $249 $18 $111 30% $0 $2 $4 $1 $384 $148 $23 $555
$0 $0 ---------- -- ------ -----$381 $400 ---------- -- ------ -----$708 $865 ====== ====== $260.4 52% $88.6 $0.0 $369.2 42% $108.8 $0.0
$0 $0 $0 $0 $0 $0 $0 $0 $0 --- --------- ---------- -- ----- ------- ---------- -- ----- ------- ---------- -- ---- -------- --------- --- ---- -------$433 $432 $435 $442 $456 $477 $490 $509 $511 --- --------- ---------- -- ----- ------- ---------- -- ----- ------- ---------- -- ---- -------- --------- --- ---- -------$940 $907 $916 $930 $950 $1,017 $1,035 $1,060 $1,067 ====== ====== ====== ====== ====== ====== ====== ====== ====== $396.4 -9% ($40.4) $0.0 $396.4 0% $0.0 $0.0 $396.4 0% $0.0 $0.0 $396.4 0% $0.0 $0.0 $396.4 0% $0.0 $0.0 $396.4 0% $0.0 $0.0 $396.4 0% $0.0 $0.0 $396.4 0% $0.0 $0.0 $396.4 0% $0.0 $0.0
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
264
ASP s ($/W) Own Waf er Sales Q/Q % OEM Q/Q % P roduct Revenues Own Waf er Sales OEM To tal Revenues ($, M)
2. 53 0. 56 10.6%
2. 73 0. 74 2. 0%
2. 51 10.6% 0. 70 47.6%
1. 30 -40. 0% 0. 70 -10. 0%
1. 10 -8. 0% 0. 65 -3. 5%
1. 16 -53. 8% 0. 66 -5. 4%
0. 99 -5. 0% 0. 60 -4. 0%
0. 89 -2. 5% 0. 52 -5. 0%
0. 94 -19. 1% 0. 56 -15. 7%
114. 4 8. 6 123. 0
Cost of revenu es Blended Silicon P rice ($/ kg) Sil icon consumpti on (g/ W) Sil icon cost per wat t Non-silicon cost per watt Total Co sts per Watt Own Waf er Cogs OEM COGS Overall Cost o f Revenu es Gross Margi n
$ $ $ $ $ $ $ $
$ $ $ $
$ $ $ $ $ $ $ $
250 6. 1 1. 52 0. 43
$ $ $ $
$ $ $ $ $
$ $ $ $ $ $ $ $
145 6. 0 0. 87 0. 36
$ $ $ $
$ $ $ $ $ $ $ $
110 6. 0 0. 66 0. 36
$ $ $ $
$ $ $ $
121 6. 0 0. 73 0. 36 1. 09
$ $ $ $ $ $ $ $
95 6. 0 0. 57 0. 32
$ $ $ $
$ $ $ $
80 6. 0 0. 48 0. 32
$ $ $ $
75 6. 0 0. 45 0. 32
$ $ $ $
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
265
($1.8) $0.0 ($0.1) $1.9 $21 .3 $3.6 $0.1 $17 .7 $0.31 $0.28 $0.16 $0.14 57.0 62.2 113 .9 124 .5
($2.5) $0.0 ($0.8) $3.3 $3 1.2 $6.8 $1.1 $2 3.3 $0 .39 $0 .37 $0 .20 $0 .19 60.0 65.4 120 .2 130 .9
($3.0) $0.0 ($1.2) $4.2 $3 2.7 $5.5 ($5.1) $3 2.4 $0 .47 $0 .46 $0 .24 $0 .23 68.8 70.0 13 7.6 14 0.0
($2.8) $0.0 ($1.1) $3.8 ($ 144.9) ($1 7.9 ) ($0.4) ($ 126.6) ($1 .84 ) ($1 .84 ) ($0 .92 ) ($0 .92 ) 68.8 68.8 13 7.6 13 7.6
($6.0) $0.0 $0.0 $6.0 ($3.6) ($0.4) ($0.4) ($2.7) ($0 .0 4) ($0 .0 4) ($0 .0 2) ($0 .0 2) 68.8 68.8 13 7.6 13 7.6
($6.0) $0.0 $0.0 $6.0 ($4.4) ($0.5) ($0.4) ($3.5) ($0 .0 5) ($0 .0 5) ($0 .0 2) ($0 .0 2) 69.3 69.3 13 8.6 13 8.6
($6.0) $0.0 $0.0 $6.0 $0.8 $0.1 ($0.4) $1.1 $0 .0 2 $0 .0 2 $0 .0 1 $0 .0 1 69.8 69.8 13 9.6 13 9.6
($6.0) $0.0 $0.0 $6.0 $0.5 $0.1 ($0.4) $0.9 $ 0.0 1 $ 0.0 1 $ 0.0 1 $ 0.0 1 70.3 70.3 1 40.6 1 40.6
($6 .0) $0 .0 $0 .0 $6 .0 $8 .4 $1 .0 ($0 .4) $7 .8 $ 0.11 $ 0.11 $ 0.06 $ 0.06 70 .3 70 .3 1 40.6 1 40.6
($6 .0) $0 .0 $0 .0 $6 .0 $6 .7 $0 .8 ($0 .4) $6 .3 $ 0.09 $ 0.09 $ 0.04 $ 0.04 70 .8 70 .8 1 41.6 1 41.6
($10.1) $0 .0 ($3 .1 ) $13.2 ($59.7) ($2 .1 ) ($4 .4 ) ($53.2) ($0.84) ($0.84) ($0.42) ($0.42) 63 .6 63 .6 127.1 127.1
($24.0) $0 .0 $0 .0 $24.0 ($6 .6 ) ($0 .8 ) ($1 .6 ) ($4 .2 ) ($0.06) ($0.06) ($0.03) ($0.03) 69 .6 69 .6 139.1 139.1
($24.0) $ 0.0 $ 0.0 $24.0 $30.7 $ 3.8 ($ 1.6 ) $28.5 $0.40 $0.40 $0.20 $0.20 6 9.9 6 9.9 139.9 139.9
-82 .0% 3 08.0% 1.7% 5.2% -89 .0% -79 .8% 12 .4%
14.7% 1 .9% 5 .6% 7 .3% 3 .8% 12.4% Fisca l 2 010 E $67.5 13 9.9 % 9 .0% 6 7.5 $56.4 7 .5% $12.8 2 .0% $11.1
Fisca l 200 8 FYE: D ecem ber Pr o Forma EBITDA % Change Y/Y % Change Q/Q % Sales LTM EBITDA C apital Spending % of Sales D epr eciation % of COGS FCF Ops Es t. (PF EBITDA + NI -C ap Q1 $26 .4 25 2.3% 54.4% 21.5% $68 .0 Q2 $3 9.0 3 12.2% 47 .6% 22 .5% $9 7.5 Q3 $4 2.1 1 80.3% 8.0% 19 .5% $ 124.5 Q4 ($ 135.2) -8 90.9% -4 21.5% -85 .3% ($2 7.8 ) Q1E $4.5 -83 .1 % -1 03.3% 3.9% ($4 9.8)
Fisc al 20 09E Q2E $4.1 -89 .6 % -8.8% 3.0% ($8 4.7) Q3E $1 0.1 -76 .1 % 147.8% 5.6% ($116 .7 ) Q4 E $9.6 -107.1% -4.7% 5.6% $ 28.2 Q1 E $ 17.6 296.4% 8 4.2% 9.3% $ 41.3
Fis cal 2 010E Q2 E $ 15.9 290 .8% -1 0.1% 8.6% $ 53.2 Q3 E $ 16.5 6 4.4% 4.3% 8.8% $ 59.6 Q4E $ 17.5 8 2.5% 5.7% 9.1% $ 67.5
2 008E ($27.8)
-156 .7 % -20 1.2 % -4.1% -27 .8 $18 3.0 27.3% $18.7 2.7% ($21 0.8) 4.7% 28 .2 $1 76.5 29.3% $10.8 2.0% ($1 48.4)
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
266
$67 $274 $99 $112 $202 $117 $98 $93 $43 $61 $73 $68 $0 $0 $26 $6 $6 $6 $6 $6 $6 $6 $6 $6 $16 $3 $3 $43 $11 $14 $18 $17 $19 $18 $19 $19 13% 2% 2% 27% 10% 10% 10% 10% 10% 10% 10% 10% $156 $206 $320 $193 $69 $68 $72 $69 $114 $92 $75 $77 127% 119% 148% 122% 60% 50% 40% 40% 60% 50% 40% 40% $89 $100 $124 $38 $38 $38 $38 $38 $38 $38 $38 $38 $36 $28 $6 $0 $0 $0 $0 $0 $0 $0 $0 $0 $4 $2 $1 $15 $15 $15 $15 $15 $15 $15 $15 $15 $14 $12 $16 $34 $34 $34 $34 $34 $34 $34 $34 $34 $382 $625 $596 $442 $376 $292 $282 $272 $269 $264 $260 $257 $172 $184 $261 $341 $405 $485 $496 $507 $518 $529 $540 $551 $0 $17 $23 $0 $0 $0 $0 $0 $0 $0 $0 $0 $90 $101 $194 $222 $222 $222 $222 $222 $222 $222 $222 $222 -- ---------- -------- ---- ---- -------- ---------- -- ----- ------- ---------- -- ------ ------ - ----------- ------- ----- -- ---------- -------- ---- ---- -------$645 $927 $1,074 $1,005 $1,002 $999 $1,000 $1,001 $1,009 $1,015 $1,022 $1,029 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== $89 $22 $72 $0 $12 $196 $134 $34 $1 $365 $134 $22 $94 $0 $17 $266 $137 $44 $2 $450 $167 $20 $152 $0 $28 $368 $139 $45 $8 $559.70 $192 $38 $49 $12 $42 $333 $139 $33 $117 $621 $192 $38 $49 $12 $42 $333 $139 $33 $117 $621 $192 $38 $49 $12 $42 $333 $139 $33 $117 $621 $192 $38 $49 $12 $42 $333 $139 $33 $117 $621 $192 $38 $49 $12 $42 $333 $139 $33 $117 $621 $192 $38 $49 $12 $42 $333 $139 $33 $117 $621 $192 $38 $49 $12 $42 $333 $139 $33 $117 $621 $192 $38 $49 $12 $42 $333 $139 $33 $117 $621 $192 $38 $49 $12 $42 $333 $139 $33 $117 $621
$18 $1 $1 $0 $0 $0 $0 $0 $0 $0 $0 $0 -- ---------- -------- ---- ---- -------- ---------- -- ----- ------- ---------- -- ------ ------ - ----------- ------- ----- -- ---------- -------- ---- ---- -------Shareholders' Equity $262 $476 $513 $383 $381 $377 $378 $379 $387 $393 $400 $408 -- ---------- -------- ---- ---- -------- ---------- -- ----- ------- ---------- -- ------ ------ - ----------- ------- ----- -- ---------- -------- ---- ---- -------Total Liabilities & Shareholders' Eq $645 $927 $1,074 $1,005 $1,002 $999 $1,000 $1,001 $1,009 $1,015 $1,022 $1,029 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== Total Debt % Change Q/Q $ Change Check- sum P erformance Metrics P rofitability Ratios Return On Equity Return on Av g Equity Return On Assets Return On Net As sets Return On Sales E fficiency Ratios S ales / Total Assets A /R Days Sales Out Inventory Turns Days of Inventory Liquidity Ratios Current Ratio Quick Ratio Net Working Capital ($M) Long-Term Debt / Equity Debt/Capital Total Debt / Equity E BITDA/Interest E BITDA- Capex/Interest Book & Cash Value B ook Value Per S hare Cash Per Share Net Cash Per S hare Tangible Book value $257.1 $39.3 $0.0 $315.3 $58.2 $0.0 $351.2 $35.9 $0.0 $363.7 $12.6 $0.0 $363.7 $0.0 $0.0 $363.7 $0.0 $0.0 $363.7 $0.0 $0.0 $363.7 $0.0 $0.0 $363.7 $0.0 $0.0 $363.7 $0.0 $0.0 $363.7 $0.0 $0.0 $363.7 $0.0 $0.0
1% (35%) 0% 0% 1%
1% (1%) 0% 0% 0%
8% 2% 3% 3% 4%
6% 4% 2% 3% 3%
7% 5% 3% 3% 4%
7% 7% 3% 3% 4%
0.63 25 6.0 61
0.46 9 5.9 62
0.54 9 7.3 50
0.72 9 9.0 41
0.69 9 8.9 41
0.75 9 5.7 64
0.72 9 6.9 53
0.74 9 8.5 43
0.74 9 8.5 43
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
267
Effective Utilization Ra te Own Wafer Sale s As a % of total shipments OEM T otal Prod uctio n (MW)
960.0 240.0 1200.0 4 7% 1.27 1.40 -39.8% 0.73 8.2% -3 6% 1490.0 -9%
1997.5 2350.0 96% 0.99 1.06 -24.4% 0.62 -15.7% -22% 2314.8 55%
ASPs ($/W) Own Wafer Sale s Q/Q % OEM Q/Q % Y/Y (%) Prod uct Revenue s Y/Y (%)
Co st of revenu es Blended Silicon Price ($/kg) Silicon consumption (g/W ) Silicon cost per watt Non-silicon cost per watt To tal Costs per Watt Own Wafer Co gs OEM COG S O ve rall Co st o f Revenu es G ross Mar gin
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
$ $ $ $ $ $ $ $
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
268
F iscal 2008 Q2 Q3 $441.7 $541.8 89.2% 345.9% $329.4 $112.3 $0.4 $11. 6 $12. 0 $100.3 22.7% 241. 3% $419.0 $122.8 $2. 6 $12. 5 $15. 1 $107.7
Q1E $236.8 -44. 5% 1.5% $223.1 $13. 7 $2.0 $17. 0 $19. 0 ($5.3)
Fiscal 2009E Q2E Q3E $357. 9 $433. 0 51.1% -19.0% $315. 0 $42.9 $2. 0 $17.0 $19.0 $23.9 21.0% -20.1% $367. 6 $65.4 $2. 0 $17.0 $19.0 $46.4
Q4E $462.2 6.7% 8.3% $369.4 $92. 8 $2.0 $17. 0 $19. 0 $73. 8
Fi scal 2010E Q2E Q3E $560. 1 $628. 9 16.1% 56.5% $451. 9 $108. 2 $2. 0 $25.0 $27.0 $81.2 12.3% 45.2% $513. 7 $115. 2 $2. 0 $25.0 $27.0 $88.2
Fiscal 2008 $1,643. 6 214% $1,470. 5 $173.0 $7.5 $59. 9 $67. 4 $105.6
Fi scal 2009E $1, 490.0 -9% $1, 275.0 $214. 9 $8. 0 $68.0 $76.0 $138. 9
Fi scal 2010E $2, 314.8 55% $1, 880.8 $434. 0 $8. 0 $100. 0 $108. 0 $326. 0
($3. 9) $4. 4 $5. 3 ($5. 8) $58.3 $8. 5 $49.8 $0. 0 $0. 0 $49.8 $0.47 $0.45 106.5 111.8
($8.5) $65. 2 $5.8 ($62. 6) $162.9 $13. 3 $149.5 $0.0 $0.0 $149.5 $1.40 $1.29 106. 5 115. 9
($10. 4) $4. 8 $0. 0 $5. 6 $102.1 $13. 8 $88. 3 $0. 0 $0. 0 $88. 3 $0.78 $0.77 113. 1 114. 9
($7.3) $5. 9 $5. 0 ($3.6) ($151.3) ($18. 4) ($132.9) $0. 0 $0. 0 ($132.9) ($1. 25) ($1. 25) 106. 5 106. 5
($15. 0) $11. 0 $0.0 $4.0 ($9.3) ($1.1) ($8.2) $0.0 $0.0 ($8.2) ($0. 08) ($0. 08) 106. 5 106. 7
($15. 0) $10.0 $0. 0 $5. 0 $18.9 $2. 3 $16.6 $0. 0 $0. 0 $16.6 $0.16 $0.16 106. 5 106. 9
($15.0) $11.0 $0. 0 $4. 0 $42.4 $5. 2 $37.3 $0. 0 $0. 0 $37.3 $0.35 $0.35 106.5 107.1
($15. 0) $11. 0 $0.0 $4.0 $69. 8 $8.5 $61. 3 $0.0 $0.0 $61. 3 $0. 58 $0. 57 106. 5 107. 3
($20.0) $5. 7 $0. 0 $14.3 $57.2 $7. 0 $50.3 $0. 0 $0. 0 $50.3 $0.47 $0.43 106.5 115.9
($20.0) $6. 0 $0. 0 $14.0 $67.3 $8. 2 $59.1 $0. 0 $0. 0 $59.1 $0.55 $0.51 106.5 115.9
($20.0) $6. 3 $0. 0 $13.7 $74.5 $9. 1 $65.4 $0. 0 $0. 0 $65.4 $0.61 $0.56 106.5 115.9
($20.0) $6. 4 $0. 0 $13.6 $71.5 $8. 7 $62.8 $0. 0 $0. 0 $62.8 $0.59 $0.54 106.5 115.9
($30. 1) $80. 4 $16. 1 ($66. 3) $172.0 $17. 2 $154.7 $0.0 $0.0 $154.7 $1.40 $1.26 106. 4 112. 3
($60.0) $43.0 $0. 0 $17.0 $121. 9 $14.8 $107. 1 $0. 0 $0. 0 $107. 1 $1.01 $1.00 106.4 111.8
($80.0) $24.5 $0. 0 $55.5 $270. 5 $32.9 $237. 6 $0. 0 $0. 0 $237. 6 $2.23 $2.05 106.4 111.8
10.5% 0. 2% 0. 5% 3. 6% 6. 4% 9. 4% 10.0%
FYE: December Pro F orma EBI TDA % Ch ange Y/Y % Ch ange Q/ Q % Sales LT M EBITDA Capi tal Spendi ng % of Sal es Depreciati on % of COGS FCF Ops Est. (PF EBIT DA + NI -Cap ex)
F iscal 2008 Q2 Q3 $108.0 $118.3 250.4% 85.5% 24.5% $256.1 $263.6 59.7% $7.7 2. 3% 173. 9% 9. 5% 21.8% $331.2 $530.0 97.8% $10. 6 2. 5%
Q1E $1.6 -97. 3% -101.1% 0.7% $85. 0 $47. 4 20% $6.9 2.9% ($56. 8)
Fiscal 2009E Q2E Q3E $34.3 $59.0 -68.2% 2065% 9. 6% $11.3 $71. 6 20% $10. 4 2. 9% ($47. 3) -50.1% 72.0% 13.6% ($48.0) $86.6 20% $12.6 2. 9% ($38.6)
Q4E $87. 0 -160.9% 47. 4% 18. 8% $181.9 $92. 4 20% $13. 2 2.9% ($16. 4)
Q1E $82.6 5114.0% -5. 0% 17.1% $263. 0 $83.0 17% $11.1 2. 3% ($6. 0)
Fi scal 2009E Q2E Q3E $94.1 $102. 6 174. 2% 13.9% 16.8% $322. 7 $96.3 17% $12.9 2. 3% ($8. 3) 73.9% 9. 1% 16.3% $366. 3 $108. 2 17% $14.5 2. 3% ($11.9)
Q4E $99.9 14.8% -2. 7% 15.5% $379. 2 $110. 7 17% $14.8 2. 3% ($17.2)
Fi scal 2009E $196. 6 47.6% 13.2% 196.6 $298. 0 20.0% $57.7 4.5% ($144. 3)
Fi scal 2010E $396. 0 101. 4% 17.1% 396.0 $522. 6 22.6% $70.0 3. 7% ($151. 1)
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
269
$801 $5 $24 5% $241 50% $84 $32 $71 $1,258 $2,024 $233 $1 $99 $105 -----------$3,721 ====== $666 $48 10% $256 $464 $1,435 $733 $533 $2,701 $11 -----------$1,021 -----------$3,721 ====== $1,399.2 0% $0.0
$742 $5 $28 5% $280 50% $84 $32 $71 $1,242 $2,108 $233 $1 $99 $105 -------- ---$3,788 ====== $666 $56 10% $256 $464 $1,443 $733 $533 $2,709 $11 -------- ---$1,080 -------- ---$3,788 ====== $1,399.2 0% $0.0
$683 $5 $31 5% $314 50% $84 $32 $71 $1,220 $2,201 $233 $1 $99 $105 ----- ------$3,861 ====== $666 $63 10% $256 $464 $1,450 $733 $533 $2,715 $11 ----- ------$1,145 ----- ------$3,861 ====== $1,399.2 0% $0.0
$643 $5 $32 5% $322 50% $84 $32 $71 $1,189 $2,297 $233 $1 $99 $105 - ----------$3,925 ====== $666 $64 10% $256 $464 $1,451 $733 $533 $2,717 $11 - ----------$1,208 - ----------$3,925 ====== $1,399.2 0% $0.0
------ ------ -- ---------- ------ ------ ------------ ------- ----- ------------ - ----------- ------ -----$769 $687 $999 $863 $855 $872 $909 $970 ------ ------ -- ---------- ------ ------ ------------ ------- ----- ------------ - ----------- ------ -----$1,853.1 $2,428 $3,181 $3,461 $3,381 $3,453 $3,549 $3,669 ====== ====== ====== ====== ====== ====== ====== ====== $351.7 22% $62.5 $874.8 149% $523.1 $1,011.4 $1,220.5 $1,248.9 $1,291.8 $1,343.8 $1,399.2 16% 21% 2% 3% 4% 4% $136.6 $209.0 $28.4 $43.0 $52.0 $55.5
Check-sum Performance Metrics Profitability Ratios Retur n On Equity Retur n on A vg Equity Retur n On Assets Retur n On Net As sets Retur n On Sales Ef ficiency Ratios Sales / Total Assets A/R Day s S ales Out Inv entory Turns Days of Inv entory Liquidity Ratios Current Ratio Quick Ratio Net Working Capital ($M) Long-Term Debt / Equity Debt/Capital Total Debt / E quity EBITDA/Interest EBITDA- Capex/Interest Book & Cash Value Book Value Per Share Cash Per Share Net Cash Per Share Tangible Book value
$0.0
$0.00
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
8% (4%) 2% 2% 5%
16% (10%) 4% 5% 9%
0.50 3 1.3 280 0.9 0.7 $278 4.9% 31.4% 45.7% -14.8 37.5
0.73 7 2.0 181 0.8 0.8 $477 72.7% 56.0% 127.3% -12.7 18.3
0.68 7 2.4 153 0.7 0.7 $364 56.0% 50.3% 101.2% -11.4 39.6
0.49 20 3.2 116 0.5 0.4 ($186) 64.2% 58.6% 141.4% 19.6 86.7
0.28 9 3.8 97 0.5 0.7 ($206) 68.1% 59.4% 146.0% -0.1 3.1
0.41 7 4.2 88 0.5 0.6 ($208) 71.8% 59.7% 148.2% -2.3 2.5
0.49 6 4.5 80 0.5 0.6 ($193) 74.5% 59.6% 147.8% -3.9 1.8
0.50 5 4.9 74 0.5 0.7 ($155) 75.5% 59.0% 144.2% -5.8 0.4
0.52 5 6.4 57 0.5 0.7 ($177) 71.8% 57.8% 137.1% -4.1 0.0
0.59 5 6.5 56 0.5 0.7 ($201) 67.9% 56.4% 129.6% -4.7 0.1
0.65 5 6.6 56 0.4 0.6 ($229) 64.0% 55.0% 122.2% -5.1 0.3
0.66 5 6.6 55 0.4 0.6 ($262) 60.7% 53.7% 115.8% -5.0 0.5
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
270
Revenues COGS G ross Profit G ross Margin (%) O ut put ( MW) S ilicon Breakdown S pot Contract Costs ($/W) S pot Contract P roces sing Costs P oly to W afer Costs S ilicon Prices ($/kg) S pot Contract Conversion Eff iciency G rams/Watt ASP ( $/Watt) P V Modules y /y (%) q/q ( %) $ $ $ $ $
77.0 69.9 7.1 9.2% 24.0 50% 50% 2.64 1.39 0.65 0.30 0.30 205.0 280.0 130.0 16.6% 9.94 $ $ $ $ $
111.6 100.0 11.6 10.4% 35.0 50% 50% 2.69 1.44 0.65 0.30 0.30 210.0 290.0 130.0 16.6% 9.94 $ $ $ $ $
119.0 108.0 11.1 9.3% 34.2 45% 55% 2.68 1.27 0.81 0.30 0.30 209.4 285.0 147.5 16.6% 9.94 $ $ $ $ $
30.5 32.9 -2.4 -7.8% 15.0 50% 50% 2.19 0.70 0.80 0.40 0.30 150.0 140.0 160.0 16.6% 9.94 $ $ $ $ $
48.8 48.1 0.8 1.6% 25.0 80% 20% 1.92 0.97 0.25 0.40 0.30 126.0 125.0 130.0 17.0% 9.71 $ $ $ $ $
75.4 67.2 8.3 10.9% 40.0 80% 20% 1.68 0.82 0.21 0.35 0.30 106.0 105.0 110.0 17.0% 9.71 $ $ $ $ $
106.9 94.3 12.6 11.8% 60.0 80% 20% 1.57 0.77 0.20 0.30 0.30 106.0 105.0 110.0 18.0% 9.17
75.7 66.9 8.8 11.6% 50.0 60% 40% 1.34 0.44 0.30 0.30 0.30 85.0
85.0
111.5 98.0 13.4 12.0% 80.0 60% 40% $ $ $ $ $ 1.23 0.36 0.26 0.30 0.30 72.0
70 .0
141.0 125.2 15.8 11.2% 110.0 60% 40% $ $ $ $ $ 1.14 0.31 0.23 0.30 0.30 62.0
60.0
3.17 $ 2.79 1.56 0.88 0.43 0.30 245.6 285.0 197.5 16.6% 9.94 217.5 285.0 151.3
$ 3.21 $ 3.19 - 1%
$ 2.03 $ 1.95 $ 1.89 $ 1.78 $ 1.91 -37% -39% -46% -39% -40% -31% -4% -4% -6%
$ 1.51 $ 1.39 $ 1.28 $ 1.22 $ 1.35 -26% - 29% -32% -31% - 29% -15% -8% -8% -5%
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
271
$0. 0 $0. 0 $0. 0 ($26. 3) (0. 66) (0. 66) 39.8 39.8
$0.0 $0.0 $0.0 ($5.5) (0. 13) (0. 13) 41.8 41.8
(i)
9. 2% 45.0% 0. 7% 5. 7% 2. 8% 0. 7% 39.7%
FYE: D ecember Pro Form a EBI TDA % Change Y/Y % Change Q/Q % Sales LTM E BITD A C api tal Spendi ng % of Sales D epreciati on % of COGS FC F Ops Est. (P F EB ITDA + N I -C apex)
Fiscal 2008 Q2 Q3 $7.3 -1323.1% 111.7% 6. 6% $8.2 $14.5 13.0% $1.3 1. 3% ($6.0) $7.1 -374.1% -2.7% 6.0% $17. 9 $8.7 7.3% $1.4 1.3% $2.9
Q4
Q1E
Fiscal 2009E Q2E Q3E ($3.6) -149.3% -48.6% -7. 4% ($23. 3) $7.3 15.0% $0.7 1. 5% ($10. 9) $4.3 -39. 8% -219.0% 5. 7% ($26.1) $11. 3 15.0% $1.1 1. 5% ($7.0)
Q4E
Q1E
Fi scal 2010E Q2E Q3E $8.4 -333.2% 98.1% 7.5% $26. 0 $11.1 10.0% $1.7 1.5% ($2.7) $10.2 137.4% 21. 1% 7.2% $31.9 $14.1 10. 0% $2.1 1.5% ($3.9)
Q4E $14.2 55.8% 39.3% 7.2% $37.0 $19.6 10.0% $2. 9 1.5% ($5. 4)
($19. 8) ($7. 0) -60024.0% -303. 0% -377.8% -64.5% -45.8% -23.0% ($1.9) ($12.4) $6.5 15.0% $0.6 1. 5% ($19. 7) $4. 6 15. 0% $0. 5 1.5% ($11.6)
$9.1 $4. 2 -146.0% -160. 5% 112.2% -53.4% 8. 5% 5.6% $2.8 $14.0 $16.0 15.0% $1.6 1. 5% ($6.9) $7. 6 10.0% $1. 1 1.5% ($3. 3)
-135. 4% -246. 3% 1239.4% -0.5% -1.9 $41.9 11. 9% $4.6 1.4% ($31.7) 1.1% 2.8 $39.2 15. 0% $3. 9 1.6% ($36.5) 7.1% 37.0 $52.4 10. 0% $7.9 1.7% ($15.4)
Source: Company reports, Barclays Capital estimates All numbers in USD MM unless otherwise noted
272
$110 $2 6 $9 12 % $1 9 $5 4 69.4% $4 5 $1 $264 $6 6 $2 $0 $0 -----------$333 == === = $122 $0 $8 11 % $6 $3 $2 $140 $0 $0 $0 $1 $141 $0 $0 -----------$192 -----------$333 == === = $1 21.8 0% ($ 0.0 ) $ 0.0
$12 4 $29 $6 5% $16 $42 3 7.5 % $39 $4 $26 0 $84 $2 $1 $0 -----------$34 6 ==== == $12 3 $0 $11 10% $7 $4 $1 $14 6 $0 $0 $0 $1 $14 7 $0 $0 -----------$19 9 -----------$34 6 ==== == $123.2 1% $1.4 $0.0
$122 $57 $16 14% $11 $41 34.4% $34 $18 $300 $88 $2 $0 $42 -----------$432 == ==== $103 $15 $15 13% $2 $5 $1 $141 $1 $31 $55 $1 $230 $0 $0 -----------$202 -----------$432 == ==== $10 4.3 -15% ($18.9) $ 0.0
$1 42 $27 $15 40% $11 $29 80% $34 $18 $2 77 $93 $2 $0 $42 -----------$4 14 === === $1 03 $15 $5 15% $2 $5 $1 $1 32 $1 $31 $55 $1 $2 20 $0 $0 -----------$1 93 -----------$4 14 === === $104 .3 0% $0.0 $0.0
$ 148 $ 93 $27 $ 27 $8 $ 24 40% 4 0% $11 $ 11 $16 $ 47 80% 8 0% $34 $ 34 $18 $ 18 $ 264 $255 $95 $103 $2 $2 $0 $0 $42 $ 42 ------------ -----------$ 404 $403 === === = ==== = $ 103 $15 $3 15% $2 $5 $1 $ 129 $1 $31 $55 $1 $ 218 $0 $0 $103 $ 15 $9 1 5% $2 $5 $1 $135 $1 $ 31 $ 55 $1 $224 $0 $0
$73 $27 $27 35% $11 $53 70% $34 $18 $24 4 $11 4 $2 $0 $42 -----------$40 2 === === $10 3 $15 $11 15% $2 $5 $1 $13 8 $1 $31 $55 $1 $22 6 $0 $0 -----------$17 6 -----------$40 2 === === $104.3 0% $0.0 $0.0
$37 $67 $55 $27 $27 $27 $33 $15 $17 30% 10% 10% $11 $11 $11 $76 $62 $68 70% 40% 40% $34 $34 $34 $18 $18 $18 $ 236 $23 5 $231 $ 128 $14 2 $156 $2 $2 $2 $0 $0 $0 $42 $42 $42 ------------ ------------ -----------$ 409 $42 1 $432 == ==== = === == == ==== $ 103 $15 $16 15% $2 $5 $1 $ 142 $1 $31 $55 $1 $ 231 $0 $0 $10 3 $15 $23 15% $2 $5 $1 $14 9 $1 $31 $55 $1 $23 8 $0 $0 $103 $15 $26 15% $2 $5 $1 $152 $1 $31 $55 $1 $240 $0 $0
$ 43 $ 27 $ 18 1 0% $ 11 $ 73 4 0% $ 34 $ 18 $225 $172 $2 $0 $ 42 -----------$441 = ==== = $103 $ 15 $ 27 1 5% $2 $5 $1 $154 $1 $ 31 $ 55 $1 $242 $0 $0 -----------$199 -----------$441 = ==== = $ 104.3 0% $0.0 $0.0
$28 $27 $20 10% $11 $80 40% $34 $18 $219 $189 $2 $0 $42 -----------$452 == ==== $103 $15 $30 15% $2 $5 $1 $156 $1 $31 $55 $1 $245 $0 $0 -----------$207 -----------$452 == ==== $10 4.3 0% $ 0.0 $ 0.0
------------ -----------$ 186 $179 ------------ -----------$ 404 $403 === === = ==== = $104 .3 0% $0.0 $0.0 $ 104.3 0% $0.0 $0.0
------------ ------------ -----------$ 178 $18 3 $191 ------------ ------------ -----------$ 409 $42 1 $432 == ==== = === == == ==== $10 4.3 0% $ 0.0 $ 0.0 $104.3 0% $0.0 $0.0 $10 4.3 0% $ 0.0 $ 0.0
6% (2 %) 4% 5% 3% 1.29 5 9 .6 38
1% 1% 0% 0% 0% 1 .10 12 1 0.6 35
17 % 6% 8% 9% 5% 1.58 9 9.0 41
17 % 15 % 8% 8% 4% 1 .77 9 9.1 40
273
Revenues PV Modules Wafer to modules Cell to modules Other PV cel ls PV integrati on services Total revenue MSK revenue Total (ex-MSK) revenue COGS PV Modules Wafer to modules Cell to modules Other PV cel ls PV integrati on services Total COGS Gr oss Profit PV Modules Wafer to modules Cell to modules Other Total profit Gr os s Mar gin (%) PV Modules Wafer to modules Cell to modules Other Total Mar gin Output (MW) PV Modules Wafer to modules Cell to modules Other PV cel ls PV integrati on services Total output Silicon Breakdown Spot Contract Costs ($/W) Spot Contract Processing Cos ts Silicon Pr ices ($/kg) Spot Contract Conver sion Efficiency Gr ams/Watt Check ASP ($/Watt) PV Modules y/y (%) q/q (%) $ $ $ $ $
432.9 414.7 18.2 1.6 1.6 0.0 434.5 0.0 434.5 334.7 318.1 16.6 1.9 336.6 98.2 96.6 1.6 -0.3 97.9 22.7% 23.3% 8.8% -18.8% 22.5% 110.0 106.0 4.0 0.0 0.0 110.0 50% 50% 3.08 1.44 0.89 0.74 290.0 180.0 16.6% 9.94 3.06 3.95 $ $ $ $ $
480.0 480.0 0.0 0.0 0.0 0.0 480.0 0.0 480.0 364.3 364.3 0.0 0.0 364.3 115.7 115.7 0.0 0.0 115.7 24.1% 24% 7% 10% 24.1% 116.5 116.5 0.0 0.0 0.0 0.0 116.5 50% 50% 3.13 1.49 0.89 0.74 300.0 180.0 16.6% 9.94 3.13 4.12 $ 9% 4% $ $ $ $
594.5 574.8 19.7 0.0 0.0 0.0 594.5 0.0 594.5 469.0 450.7 18.3 0.0 469.0 125.5 124.2 1.4 0.0 125.5 21.1% 22% 7% 10% 21.1% 150.9 145.9 5.0 0.0 0.0 0.0 150.9 45% 55% 3.11 1.34 1.04 0.73 110.1 300.0 190.0 16.6% 9.94 3.11 3.94 $ 7% -4% $ $ $ $
414.3 414.3 0.0 0.0 0.0 0.0 414.3 0.0 414.3 411.8 411.8 0.0 0.0 411.8 2.5 2.5 0.0 0.0 2.5 0.6% 1% 7% 10% 0.6 % 120.1 120.1 0.0 0.0 0.0 0.0 120.1 25% 75% 3.43 $ 0.81 1.83 0.80 96.1 325.0 245.0 16.6% 9.94 3.43 3.45 $ -5% -12%
480.3 480.3 0.0 0.0 0.0 0.0 480.3 0.0 480.3 405.9 405.9 0.0 0.0 405.9 74.5 74.5 0.0 0.0 74.5 15.5% 16% 9% 15% 15.5% 174.0 174.0 0.0 0.0 0.0 0.0 174.0 26% 74% $ $ $ $ 2.33 0.47 1.07 0.80 180.0 145.0 16.6% 9.94 2.33 2.76 $ -33% -2% $ $ $ $
522.5 522.5 0.0 0.0 0.0 0.0 522.5 0.0 522.5 436.3 436.3 0.0 0.0 436.3 86.2 86.2 0.0 0.0 86.2 16.5% 17% 9% 15% 16.5% 195.0 195.0 0.0 0.0 0.0 0.0 195.0 30% 70% 2.24 0.43 1.01 0.80 145.0 145.0 16.6% 9.94 2.24 2.68 $ -32% -3% $ $ $ $
550.5 550.5 0.0 0.0 0.0 0.0 550.5 0.0 550.5 451.4 451.4 0.0 0.0 451.4 99.1 99.1 0.0 0.0 99.1 18.0% 18% 9% 15% 18.0% 210.0 210.0 0.0 0.0 0.0 0.0 210.0 10% 90% 2.15 0.14 1.21 0.80 145.0 135.0 16.6% 9.94 2.15 2.62 $ -24% -2% $
1923.3 1579.8 1544.8 34.9 1.9 1581 .7 341.9 338.9 3.0 -0.3 341.6
350.6 303.2 303.2 0.0 0.0 303.2 47.3 47.3 0.0 0.0 47.3 13.5% 14% 9% 15% 13.5%
125.0 125.0 0.0 0.0 0.0 0.0 125.0 22% 78% 2.43 0.39 1.24 0.80 180.0 160.0 16.6% 9.94 2.43
162.5 146.3
3.87
2.72 -30%
Sour ces: Company reports & Barc lays Capi tal es ti mates
274
Non opera ting (inc ome) ex pe ns e Inc ome (los s) before ta xes Inc ome Ta x Expens e Net Income (loss ) b4 minority int. Mino rity In te rest Equ ity i n (lo ss) e arn ing s of a ffi lia te s Net income EPS basi c i nco me (lo ss) p er ADS EPS dilute d income (loss ) per ADS Weig hted a vera ge sh ares u sed Avg Sha res - Fu lly Dilu te d (M) Per cent of Sa le s Gr oss Marg in In creme ntal Gro ss Ma rgi n R&D SG&A Op era ti ng Inco me Net Incom e Ta x Rate
$ 1.9 $60 .0 $ 5.5 $54 .5 $ 1.3 $ 0.0 $55 .8 $0.36 $0.33 153 .1 173 .8
$9.0 $6 8.4 $3.5 $6 4.9 $0.4 $0.0 $6 5.2 $0 .42 $0 .38 15 3.9 18 5.2
$27 .6 $59 .4 $ 3.7 $55 .8 $ 0.1 $ 0.0 $55 .9 $0.36 $0.33 155 .8 185 .5
$3 0.9 ($7 4.7) ($8 .9 ) ($6 5.8) ($0 .4 ) $0.3 ($6 5.9) ($0 .42) ($0 .42) 15 5.8 15 5.9
$ 5.5 ($ 4.6) ($ 0.5) ($ 4.1) $ 0.0 $ 0.0 ($ 4.1) ( $0.03 ) ( $0.03 ) 155 .8 156 .0
$5.0 $2 5.6 $2.8 $2 2.8 $0.0 $0.0 $2 2.8 $0 .15 $0 .15 15 5.8 15 6.1
$ 5.0 $34 .9 $ 3.8 $31 .1 $ 0.0 $ 0.0 $31 .1 $0.20 $0.20 155 .8 156 .1
($2 .5 ) $5 7.5 $6.3 $5 1.1 $0.0 $0.0 $5 1.1 $0 .33 $0 .33 15 5.8 15 6.1
$69 .4 $1 13.1 $ 3.8 $1 09.3 $ 1.4 $ 0.3 $1 11.0 $0.72 $0.62 154 .7 175 .1
$1 3.0 $ 113 .3 $1 2.5 $ 100 .9 $0.0 $0.0 $ 100 .9 $0 .65 $0 .65 15 5.8 15 6.1
17.8% 22.6% 0 .8 % 7 .5 % 9 .5 % 5 .7 % 3 .3 % Fisc al 2 00 8 $2 21.8 30 3.8% 11.5% 221 .8 $3 47.9 18.1% $39 .3 2 .5 % ($1 19.5 )
16 .1% 0.9% 8.6% 6.6% 5.3% 11 .0% Fis ca l 20 09E $ 158 .3 -5 91.4 % 8.3% 15 8.3 $ 147 .0 7.7% $3 1.9 2.0% ($9 7.7)
FYE : Dece mber Pro Forma EBITDA % Change Y/Y % Change Q/Q % Sales LTM EBITDA Capital Spending % of S ales Depr eciation % of COGS FCF Ops Est. (CFO-Cape x)
Q1 $69 .5 12 1.4% 26.6% 16.0% $2 28.6 $63 .2 14.5% $ 7.7 2 .3 % ($1 37.8 )
Fisc al 200 8 Q2 Q3 $8 7.2 $97 .3 1 06.3 % 57.4% 25 .4% 11.5% 18 .2% 16.4% $ 273 .5 $3 09.0 $7 3.2 15 .2% $9 .8 2.7% ($4 0.9) $1 02.4 6 .5 % $10 .2 2 .0 % ($1 86.9 )
Fisc al 200 9E Q2 E Q3E $3 8.7 $48 .6 -55 .6% - 50.0% 4 54.8 % 25.7% 8.1% 9 .3 % $ 110 .7 $62 .1 $3 7.5 6.0% $8 .1 2.0% $4 4.0 $38 .4 6 .0 % $ 8.7 2 .0 % ( $41 .7 )
Note: All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
275
Q1
Fiscal 2008 Q2 Q3
Q4
Q1E
Q4E
$60 5 $11 6 $21 9 46% $18 3 38% $14 3 $49 $26 1 $1,575 $41 2 $15 8 $85 0
$ 395 $ 124 $ 233 39 % $ 248 42 % $ 202 $77 $ 301 $1,579 $ 575 $ 161 $1,025
$41 3 $71 $28 6 55% $28 7 55% $76 $57 $16 6 $1,356 $77 0 $17 7 $1,066
$ 410 $71 $ 302 55 % $ 297 54 % $76 $57 $ 166 $1,378 $ 800 $ 177 $1,066
------- ----$2,995
------ -----$3,145
------- ----$3,369
======
$443 $7 3 $9 7 $612 $1 ,08 8 $5 8 $1 ,75 8 $1 8
======
$55 6 $76 $11 4 $74 6 $1,085 $80 $1,911 $6
======
$ 704 $85 $ 162 $ 950 $1,082 $ 166 $2,198 $8
======
$638 $117 $221 $977 $987 $179 $ 2,1 43 $8
======
$6 38 $1 17 $2 21 $9 77 $9 87 $1 81 $2,145
======
$638 $117 $221 $977 $987 $182 $2 ,14 6
======
$63 8 $11 7 $22 1 $97 7 $98 7 $18 4 $2,148
======
$ 638 $ 117 $ 221 $ 977 $ 987 $ 185 $2,149
------- ----$1,077
------ -----$1,000
------- ----$1,221
------- ----$2,995
------ -----$3,145
------- ----$3,369
======
Total Debt % Change Q/Q $ Change Che ck-su m $1,530.6 82 % $6 88.7 $ 0.0
======
$1 ,64 0.7 7% $110.1 $0.0
======
$1,786.0 9% $14 5.3 $0 .0
======
$1,625 .6 -9% ($ 160.5) $0.0
======
$ 1,6 25.6 0% $0.0 $0.0
======
$1,625.6 0% $ 0.0 $ 0.0
======
$1 ,62 5.6 0% $0.0 $0.0
======
$1,625.6 0% $0 .0 $0 .0
0 .63 57 7.6 48
0.64 42 8 .0 46
0.71 36 7.5 48
0.5 1 47 7.1 51
0.45 55 6.1 60
0 .58 50 6.1 60
0.62 50 6 .1 60
0.64 50 6.1 60
Liquidity R atios Curre nt Ratio Quick Rati o Net Wo rki ng Capi tal ($M) Lo ng-Te rm Debt / Equity Deb t/Capi ta l Tota l Debt / Eq uity EBITDA/Intere st EBITDA- Capex/Interes t Book & Cash Va lue Book Value Per Share Cash Per Share Net Cash Per Sha re Tangi ble Book va lue
S ources: Company reports & B arclays Capital est imates Not e: Al l Num bers i n US D M M un less oth erwise not ed
$5 .8 1 $3 .2 7 ($5 .59 ) $5 .8 1
276
178.0
178.0
200.0
200.0
200.0
300.0
360.0
420.0
44.5
44.5
50.0
50.0
50.0
75.0
90.0
105.0
29.5
32.5
22.5
22.5
107.0 48%
30.0
41.3
72.0
89.3
232.5 117%
ASPs ($/W) Y /Y ( %)
3.04 $ - 26%
2.99 $ -11%
2.87 $ - 5%
2.77 -10%
2.92 $ -14%
2.71 -11%
2.63 $ -12%
2.50 -13%
2.33 $ -16%
2.54 -13%
97.3 $ 8% 89%
64.7 $ -34% - 1%
314.1 $
81.2 30%
577.8
33%
-9%
84%
Ot her Revenues
6.1 $
5.8 $
4.0 $
4.0
19.9 $
4.0
4.0 $
4.0
4.0 $
16.0
Total Revenues
95.8 $
103.1 $
68.7 $
66.4
333.9 $
85.2
112.6 $
184.1
211.9 $
593.8
2.09 $ - 40%
1.94 $ -31%
1.98 $ -15%
2.14 -1%
2.04 $ -24%
1.99 -5%
1.92 $ -1%
1.88 -5%
1.88 $ -12%
1.92 -6%
Cost of revenues Cost of product revenues Cost of rev s fr om pdt dev agreements and other costs
$ $ $
228.0 $ $ $
$ $ $
$ $ $
453.4
31.3%
35.2%
31.2%
23.0%
26.7%
27.1%
24.8%
19.3%
33.6%
36.0%
31.0%
23.3%
26.7%
27.1%
24.9%
19.5%
S ources: Company reports & Barclays Capital estimates Note: All numbers in USD MM unless otherwise noted
277
$0.1 ($0.9) $1.1 $12.7 $0.1 $12.7 $0.0 $0.0 $12.7 $0.0 $12.661 13.2% $0.30 $0.29 42.2 43.1
$1.4 ($0.1) $1.5 $14.5 $0.2 $14.2 $0.0 $0.0 $14.2 $0.0 $14.2 13.8% $0.34 $0.33 42.4 43.3
$1.5 $0.0 $1.5 $1.9 $0.0 $1.8 $0.0 $0.0 $1.8 $0.0 $1.8 2.7% $0.04 $0.04 42.6 43.5
$1.5 $0.0 $1.5 ($5.1) ($0.1) ($5.0) $0.0 $0.0 ($5.0) $0.0 ($5.0) -7.5% ($0.12) ($0.11) 42.8 43.7
$1.5 $0.0 $1.5 $3.1 $0.5 $2.6 $0.0 $0.0 $2.6 $0.0 $2.6 3.0% $0.06 $0.06 43.0 43.9
$1.5 $0.0 $1.5 $9.3 $1.5 $7.8 $0.0 $0.0 $7.8 $0.0 $7.8 6.9% $0.18 $0.18 43.2 44.1
$2.0 $0.0 $2.0 $22.6 $3.6 $19.0 $0.0 $0.0 $19.0 $0.0 $19.0 10.3% $0.44 $0.43 43.4 44.3
$2.0 $0.0 $2.0 $17.4 $2.8 $14.6 $0.0 $0.0 $14.6 $0.0 $14.6 6.9% $0.33 $0.33 43.6 44.5
$4.5 ( $1.0) $5.5 $24.0 $0.2 $23.8 $0.0 $0.0 $23.8 $0.0 $23.8 7.1% $0.56 $0.55 42.5 43.4
$7.0 $0.0 $7.0 $52.4 $8.4 $44.0 $0.0 $0.0 $44.0 $0.0 $44.0 7.4% $1.02 $1.00 43.3 44.2
31.9% 17.9% 2.4% 8.8% 7.1% 0.9% FY 2009E $60.6 239% 18.1%
23.6% 11.2% 1.3% 10.0% 7.4% 16.0% FY 2010E $99.4 64% 16.7%
FYE : June P ro Forma EBITDA % Change Y/Y % Change Q/Q % Sales LTM EBITDA Capital Spending % of Sales Depreciation % of COGs FCF Ops E st. (CFO - CapEx)
Q1 $20.7 -431.3% 41.6% 21.7% $44.9 $46.9 49.0% $7.0 11.0% ($20.6)
Fiscal 2009E Q2E Q3E $24.0 $11.4 -1054.6% -5.0% 15.5% -52.4% 23.2% 16.6% $71.3 $70.7 $56.3 54.6% $8.0 12.2% ($72.0) $58.8 85.6% $8.0 16.9% ($35.6)
Q4E $4.5 -69.4% -60.7% 6.7% $60.6 $58.8 88.6% $8.0 15.8% ($54.9)
Q1E $14.6 -29.8% 225.2% 17.1% $54.4 $35.0 41.1% $10.0 16.0% ($29.7)
Fiscal 2010E Q2E Q3E $20.8 $34.6 -13.2% 204.0% 42.8% 66.6% 18.5% 18.8% $51.2 $74.5 $35.0 31.1% $10.0 12.2% ($27.8) $35.0 19.0% $10.0 7.2% ($33.6)
Q4E $29.4 556.4% -15.2% 13.9% $99.4 $35.0 16.5% $10.0 5.9% ($21.1)
Note: All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
278
Q1
Q4E
Q1E
Q4 E
$46 7 $ 11 $0 $ 63 6 6% $ 34 3 6% $2 $7 $58 4 $44 3 $ 47 -----------$ 1,0 75 ====== $0 $ 58 6 1% $4 $1 $3 $3 $ 68 $31 6 $0 $0 $0 $ 34 $4 18.851 -----------$65 6 -----------$ 1,0 75 ====== $ 316.3 ($1.1) $0.0
$423 $ 11 $0 $ 70 6 7% $ 44 4 3% $1 $0 $549 $486 $ 64 -----------$1 ,1 00 ====== $0 $ 74 7 2% $0 $0 $0 $0 $ 74 $349 $0 $0 $0 $0 $423 -----------$676 -----------$1,099.50 7 ====== $3 49.5 $33 .2 $ 0.0
$3 87 $11 $0 $46 67% $29 43% $1 $0 $4 75 $5 37 $64 -----------$1,077 ====== $0 $49 72% $0 $0 $0 $0 $49 $3 49 $0 $0 $0 $0 $3 99 -----------$6 78 -----------$1,077 ====== $34 9.5 $0 .0 $0 .0
$3 32 $11 $0 $45 67% $28 43% $1 $0 $4 18 $5 88 $64 -----------$1,070 ====== $0 $48 72% $0 $0 $0 $0 $48 $3 49 $0 $0 $0 $0 $3 97 -----------$6 73 -----------$1,070 ====== $349 .5 $0.0 $0.0
$30 2 $ 11 $0 $ 58 6 7% $ 36 4 3% $1 $0 $40 9 $61 3 $ 64 -----------$ 1,086 ====== $0 $ 61 7 2% $0 $0 $0 $0 $ 61 $34 9 $0 $0 $0 $0 $41 0 -----------$67 6 -----------$ 1,086 ====== $ 349.5 $0.0 $0.0
$27 5 $ 11 $0 $ 76 6 7% $ 48 4 3% $1 $0 $41 1 $63 8 $ 64 -----------$ 1,114 ====== $0 $ 81 7 2% $0 $0 $0 $0 $ 81 $34 9 $0 $0 $0 $0 $43 0 -----------$68 3 -----------$ 1,114 ====== $ 349.5 $0.0 $0.0
$24 1 $ 11 $0 $12 4 6 7% $ 79 4 3% $1 $0 $45 6 $66 3 $ 64 -----------$ 1,184 ====== $0 $13 2 7 2% $0 $0 $0 $0 $13 2 $34 9 $0 $0 $0 $0 $48 1 -----------$70 2 -----------$ 1,184 ====== $ 349.5 $0.0 $0.0
$220 $1 1 $0 $143 67 % $9 1 43 % $1 $0 $466 $688 $6 4 -----------$1 ,2 18 ====== $0 $152 72 % $0 $0 $0 $0 $152 $349 $0 $0 $0 $0 $501 -----------$717 -----------$1 ,2 18 ====== $3 49.5 $ 0.0 $ 0.0
Pr ofitability R atios R etu rn On Equ ity R etu rn on Avg Eq uity R etu rn On Assets R etu rn On Ne t Assets R etu rn On Sal es Efficiency Ratios Sal es / Total Asse ts A/R Days Sales Out Inven to ry Turns D ays o f Inventory Liquidity R atios C urrent Ratio Quick Ra tio N et Workin g Capi ta l ($M) L ong-Term Deb t / Equ ity D ebt/C apital Total De bt / Eq uity EBITD A/Interest EBITD A- Ca pex/In te rest Op Inc / Asse ts, exc. Ca sh B ook & Cash Va lue Boo k Va lue Per Share C ash Per Sh are N et Ca sh Pe r Sha re Tang ibl e Bo ok va lue Sou rces: Co mpany repo rts & Ba rclays Capi ta l e sti mate s
8% 4% 5% 8% 1 3% 0.3 6 60 7.4 49 1.4 8.0 $574 48.2% 32.5% 48.2% 162 .0 -204 .4 8.5% $ 15.24 $ 11.11 $3.76 $ 14.14
8% 7% 5% 9% 1 4% 0 .3 8 62 6.0 61 1.3 6.8 $549 51.7% 34.1% 51.7% 1 7.2 -2 3.2 8 .6 % $1 5.63 $1 0.03 $1.95 $1 4.14
1% 6% 1% 1% 3% 0.26 62 6.5 56 1.2 9.1 $ 475 5 1.5% 3 4.0% 5 1.5% 7.6 -31 .6 1.1% $15 .60 $ 9.16 $ 1.12 $14 .12
2% 2% 1% 1% 3% 0.31 62 6.9 53 1 .0 6 .1 $40 9 51 .7% 34 .1% 51 .7% 9.7 -13.6 1.3% $ 15.41 $7 .15 ($0.82 ) $ 13.94
5% 1% 3% 4% 7% 0.40 62 6.8 53 1 .0 4 .5 $41 1 51 .1% 33 .8% 51 .1% 13.9 -9 .5 3.8% $ 15.51 $6 .49 ($1.45 ) $ 14.05
1 1% 4% 6% 8% 1 0% 0.62 62 7.1 52 0 .9 2 .9 $45 6 49 .7% 33 .2% 49 .7% NM NM 8.2% $ 15.87 $5 .70 ($2.20 ) $ 14.42
8% 6% 5% 6% 7% 0 .7 0 62 7.6 48 0.9 2.5 $466 48.7% 32.8% 48.7% NM NM 5 .9 % $1 6.13 $5.20 ($2.66) $1 4.68
279
447 240 15
505 140 82
670 180 15
648 77 99
598 7 57
541 83 140
493 63 109
411 68 150
359 68 120
315 76 120
316 76 75
335 84 65
351 100 65
383 100 68
417 104 70
449 108 76
200 23 0 15
300 100 0 82
418 118 0 15
659 241 0 99
664 5 0 57
837 58 96 205
837 0 0 150
837 0 0 120
887 50 0 120
838 50 99 174
148. 4 #
5. 3 0. 0 5. 3 34.7%
94.0 1.7
23.9 0. 4
61.4 0. 0
Note: All numbers in USD MM unless otherwise noted Source: Barclays Capital estimates
280
FYE: March R evenue QoQ Yo Y C ost of Goods Gross Profit R &D Sel lin g a nd Marketing Genera l And Admini strative Amortization of Intangi ble Asse ts Ope rating Expense s Ope rating Income N on oper ating (income) ex pense: Interest inco me (expen se ) Othe r in come (expe nse) N on oper ating (income) ex pense Income (loss ) before taxe s Income Tax Ex pense N et Inc ome (loss) Basi c in come (lo ss) per share ( i) D iluted income (loss) per share from Opera tio ns W ei ghted average shares used Av g Share s - Fully Diluted (M)
Q1 $57.1
Q1E $120 .0 -2 0.0 % 110.2% $ 74.4 $ 45.6 $2.4 $4.8 $3.6 $0.8 $ 11.6 $ 34.0
Fisca l 2010 E Q2E Q3E $1 20.0 $174.4 0 .0% 45 .3% -14.4% -15 .0% $74.4 $45.6 $ 2.4 $ 6.8 $ 6.8 $ 0.8 $16.8 $28.8 $106.1 $6 8.3 $3.5 $9.9 $9.9 $0.8 $2 4.1 $4 4.1
Q4E $2 12.8 22.0% 41.9% $1 29.0 $83.8 $ 4.3 $12.1 $12.1 $ 0.8 $29.3 $54.5
Fisca l 2008 $ 244.1 3 05.9% $ 151.7 $92 .3 $10 .5 $10 .5 $21 .4 $3.0 $45 .4 $46 .9
Fiscal 20 09E $552 .5 126.4% $320 .3 $232 .2 $ 16.2 $ 20.5 $ 27.4 $3.1 $ 67.2 $165 .0
Fis cal 20 10E $627 .2 1 3.5 % $383 .9 $243 .3 $ 12.5 $ 33.7 $ 32.5 $3.0 $ 81.8 $161 .5
$1.8 ($1 .1) ($0 .7) $8.9 $3.4 $5.5 $0.04 $0.04 142.3 147.7
$2.4 ($1.7) ($0.7) $43 .9 $15 .9 $28 .0 $0.20 $0.19 142 .4 145 .1
$0.2 ($1.3) $1.1 $ 69.9 $ 26.8 $ 43.1 $ 0.3 0 $ 0.3 0 1 42.8 1 44.0
$1.0 $0.0 ($ 1.0 ) $43.7 $17.3 $26.4 $0.19 $0.18 142.3 147.7
$1.0 $0.0 ($1.0) $ 35.0 $ 13.9 $ 21.2 $ 0.1 5 $ 0.1 4 1 42.3 1 47.7
$ 1.0 $ 0.0 ($ 1.0 ) $29.8 $11.8 $18.0 $0.13 $0.12 142.3 147.7
$1.0 $0.0 ($1.0) $4 5.1 $1 7.9 $2 7.3 $0 .19 $0 .18 14 2.3 14 7.7
$ 1.0 $ 0.0 ($ 1.0 ) $55.5 $22.0 $33.5 $0.24 $0.23 142.3 147.7
$4.9 ($1.2) ($3.7) $50 .6 $14 .5 $36 .1 $0.25 $0.25 142 .3 144 .1
$5.4 ($4.1) ($1.4) $166 .4 $ 65.9 $100 .5 $ 0.7 1 $ 0.6 9 1 42.4 1 46.1
$4.0 $0.0 ($4.0) $165 .5 $ 65.5 $ 99.9 $ 0.7 0 $ 0.6 8 1 42.3 1 47.7
Percent of Sales Gr oss Margin Incremental Gross Margin R&D Selling and M arketing General and Administrative Oper ating Income Net Inc ome Tax Rate
FYE: Dece mber Pro Forma EB ITDA % Cha nge Y/Y % Cha nge Q/Q % Sale s LTM EBITDA C apital Spe nding % of Sales D epre cia tion % of COGS FCF Ops Est. (PF EBITDA + N I -Cape x)
$9.2
$ 36.4 294.8% -20% 3 0.4 % $198 .9 $3.6 3.0% $2.4 2.0% $195 .3
$31.2 -29.8% -14 % 26.0% $1 85.6 $ 3.6 3 .0% $ 2.4 2 .0% $1 82.0
$4 7.6 -34 .1% 53% 27 .3% $161.0 $5.2 3.0% $3.5 2.0% $155.7
Note: All numbers in USD MM unless otherwise noted Source: Barclays Capital estimates, Company reports
281
F YE: March Assets Cu rrent Assets: Cash and cash equivalents Restricted Cash - Current Accounts recei va ble, net % Sale s Invento ri es % Sales Deferred Costs Advances to rela ted invento ry purcha ses Notes Recie vabl e Valu e Added tax recoverable/refundabl e fed and state tax Deferred Income Taxes O ther current a ssets To tal Curren t Assets Net PP&E O ther non-current assets Restricted Cash - Long T erm Due fro m Realized Parties Intangible assets, net G oodwill To tal Assets
Fiscal 2010E Q 2E Q 3E
Q4E
$112.21 $132.51 $38.37 67% $63.92 1 12% $143.60 $120.96 $0.00 $0.00 $48.64 $5.77 $665.97 $13.92 $0.08 $0.00 $0.00 $8.23
$6.40 $103.30 $ 46.00 33 % $88 15 % $162.70 $154.80 $0.00 $0.00 $ 61.60 $4.90 $627.70 $ 16.00 $1.10 $0.00 $0.00 $7.50
$93.67 $27.62 $83.51 41% $ 128 15% $160.86 $153.42 $0.00 $0.00 $69.00 $4.37 $720.33 $17.63 $1.01 $0.00 $0.00 $6.71
$220.47 $2 7.62 $3 9.00 26% $23 15% $160.86 $153.42 $0.00 $0.00 $6 9.00 $4.37 $697.23 $1 9.13 $1.01 $0.00 $0.00 $6.71
$2 44.46 $27.62 $31.20 26% $18 15% $1 60.86 $1 53.42 $ 0.00 $ 0.00 $69.00 $ 4.37 $7 08.92 $20.33 $ 1.01 $ 0.00
$0 .0 0
$ 6.71
$260.79 $27.62 $31.20 26% $18 15% $160.86 $153.42 $0.00 $0.00 $69.00 $4.37 $725.26 $21.53 $1.01 $0.00 $0.00 $6.71
$274.47 $ 27.62 $ 45.34 26 % $26 15 % $160.86 $153.42 $0.00 $0.00 $ 69.00 $4.37 $761.24 $ 23.28 $1.01 $0.00 $0.00 $6.71
$30 1.51 $27.62 $55.33 26% $32 15% $16 0.86 $15 3.42 $0 .00 $0 .00 $69.00 $4 .37 $80 4.02 $25.40 $1 .01 $0 .00 $0 .00 $6 .71
$ 43.19
$731.39
$42 .6 0
$694.90
$ 42.60
$788.28
$42 .6 0
$766.68
$4 2.60
$7 79.57
$ 42 .6 0
$797.11
$42 .6 0
$834.83
$4 2.60
$87 9.74
LIAB. & SHR HLDR S' EQU ITY Notes Paya ble Accoun ts Pa ya ble % COGS
Accrued exp ense s Custome r Deposits Deferred Revenue Accrued Income Taxes To tal Curren t Liabilities : L -T erm Debt Deferred Income Taxes O ther non-current liabil iti es To tal Liabilities Sh areho ld ers' Eq uity T otal Liabilities & Sh areho lde rs' Eq uity
$0.00 $49.97 152.41% $12.72 $307.25 $234.78 $22.78 $627.51 $0.00 $3.08 $1.00 $631.59 $99.80 $731.39
$0.00 $41.50 52.65% $21 $311 $275 $11 $658.40 $0.00 $3.08 $1.00 $662.48 $ 32.42 $694.90
$0.00 $68.55 59.26% $22 $ 307 $ 292 $24 $713.56 $0.00 $2.80 $2.46 $718.82 $69.46 $788.28
$0.00 $ 23.25 25% $22 $307 $292 $24 $668.26 $0.00 $2.80 $2.46 $673.52 $9 3.16 $766.68
$ 0.00 $18.60 25% $22 $307 $292 $24 $6 63.61 $ 0.00 $ 2.80 $ 2.46 $6 68.87 $1 10.70 $7 79.57
$0.00 $1 8.60 25% $22 $307 $292 $24 $663.61 $0.00 $2.80 $2.46 $668.87 $128.24 $797.11
$0.00 $26.54 25 % $22 $307 $292 $24 $671.55 $0.00 $2.80 $2.46 $676.81 $158.02 $834.83
$0 .00 $32.25 25% $22 $307 $292 $24 $67 7.26 $0 .00 $2 .80 $2 .46 $68 2.52 $19 7.22 $87 9.74
$0.00
$0.00
$0.00
$0.00
$ 0.00
$0.00
$0.00
$0 .00
$0.0
$0.0
$0.0
$0.0
$0.0
$ 0.0
$0.0
$0.0
Pe rformance Me trics
Pro fitability Ratio s Return O n Equity Return o n Avg Equity Return O n Assets Return O n Net Assets Return O n Sales Efficiency Ratios Sales / Total Assets A/R Days Sales O ut Inventory Turns Days o f Inventory L iq uidity Ratios Current Ratio Q uick Ratio Net W orking Capita l ($M) Lo ng-Term Debt / Equity Debt/Capita l T otal Debt / Equity EBITDA/Interest EBITDA- Cape x/Interest Bo ok & Cash Valu e Book Valu e Per Share Cash Pe r Share Net Ca sh Per Share T angible Book value
22% 3% 4% 39%
345% 1 6% 1 6% 8 0%
7 5% 1 4% 2 1% 6 8%
0 .78 24 1 6.5 22
0.62 24 16.5 22
0.60 24 16.5 22
0.84 24 16.2 22
0.97 24 16.2 23
Note: All numbers in USD MM unless otherwise noted Source: Barclays Capital estimates, Company reports
282
Total Shipments (MW) Internal P roducti on (MW ) Third Party C el ls (M ) W Tolli ng/Service (MW) ASP s ($/W ) Y/Y (% )
0 -
2. 2 3.74
10.0 3.55
5.0 3. 14
17. 2 3.48
2. 0 2.46
10.0 2.24
20.0 2. 13
25. 0 1.97
40.0 1.42
45.0 1. 29
50. 0 1.23
55.0 1.13
190.0 1.27
Sil icon Product R evenues Y/Y (% ) UMG P roduct Revenues Y/Y (% ) Total Revenues Y/Y (% )
204.4 238% 8. 2
46.3 -73% 4. 9
171.2 878%
212.6 252%
236.1 142%
73.0 -43%
692.9 129%
51.3 -70%
88.7 -58%
Cost of revenues Sil icon Product C osts Y/Y (% ) Silic on C os t/W att Spot Contrac t Proc es sing Cost s Poly to Wafer Cost s Check UMG P roduct Costs Y/Y (% ) UMG C os t/W att Total Cost/W att
179.4 172.5 3.84 2.52 0.66 0.66 0.00 6.91 3.14 3.81
201.1 175.2 3.58 2.08 0.83 0.66 0.00 25.90 2.59 3.41
621.6
47.5 43.1
80.3 60.7 2.34 0.58 0.80 0.66 0.30 0.00 19.52 1.95 2.23
155.2 112.4 2.01 0.48 0.57 0.66 0.30 0.00 42.81 1.71 1.92
418.1
163.2 117.8
194.8 143.9 1.58 0.30 0.32 0.66 0.30 0.00 50.93 1.02 1.38
207.3 154.9 1.53 0.27 0.30 0.66 0.30 0.00 52. 41 0.95 1.33
740.2
3.74
2.30
1.64
1.04 1.42
3.91
2.64
2.22
1.54
Sil icon Breakdown Spot Contrac t Sil icon Prices ($/kg) Spot Contrac t Blended Conversion Efficiency (Sili con) Grams/W att (Sili con) 289.0 245.0 275.8 15.7% 10. 00 325.0 295.0 318.3 15.7% 10.00 311. 0 253. 0 291. 9 15. 7% 10.00 350.0 300.0 320.0 15. 8% 9.94 318.8 273.3 301.5 150.0 198.0 176.4 16.0% 9. 81 135. 0 152. 5 144. 6 16.5% 9.52 125.0 138.0 132.2 17. 0% 9.24 115.0 112.0 113.4 17.0% 9. 24 131.3 150.1 141.6 90. 0 100. 0 94. 5 18.0% 8.72 75.0 95.0 84.0 18. 5% 8.49 65.0 85.0 74.0 18.7% 8. 40 60.0 81.0 69.5 19.0% 8. 26 72. 5 90. 3 80. 5 70% 30% 78% 23% 67% 33% 40% 60% 64% 36% 45% 55% 45% 55% 45% 55% 45% 55% 45% 55% 55% 45% 55% 45% 55% 45% 55% 45% 55% 45%
Gross Margi n Internal c ells Third-part y c ells Tolling UMG Total 16. 5% Source: Company R eport s and B arclays Capital Es timates 16. 5% 15. 0% 9.0% 15.6% 14.0% 5.0% 16.0% 15.6% 12.7% 10.0% 7. 0% 27.0% 14.8% -5. 5% 5.0% 6.0% 8.0% -34.5% 9.8% 11. 0% 6.8% 17. 0% 3.1% 7.1% 3.0% 6.0% 10.0% 7.4% 8. 3% 3. 0% 6. 0% 13.0% 9. 5% 11.2% 2.0% 6.0% 13.0% 11.7% 11. 9% 2.0% 6.0% 13. 0% 12. 2% 9.6% 2.5% 6.0% 12.3% 10.2% 10.8% 5. 0% 4. 0% 20.0% 13.5% 8.4% 5.0% 4.0% 18.0% 11.2% 8.9% 5.0% 4.0% 17. 0% 11. 2% 4.5% 5.0% 4.0% 16. 0% 7.7% 8. 1% 5. 0% 4. 0% 17.8% 10.9%
283
FYE: Dec embe r Pro Forma EBI TDA % Change Y/Y % Change Q/ Q % Sa les LTM EBITDA Capit al Spendi ng % of Sa les Depreci ati on % of COGS FCF O ps Est . (PF EBITDA + N I -Ca pe x)
Q1 $ 31, 035 .0 -95 3.5 % 2 33. 7% 1 8.1 % $ 41, 563 .6 $1 3,6 98 .8 8.0 % $ 2,8 60.0 2.0 % $ 19, 480 .2
Fis cal 200 8E Q2 Q 3E $ 16 ,112 .2 - 10 87. 8% -4 8.1 % 7.6 % $ 59 ,307 .0 $1 7,0 06 .8 8.0 % $ 3,5 90. 2 2.0 % $2, 208 .4 $ 20 ,14 5.1 6 04 .7% 25. 0% 8.0 % $ 76 ,59 3.3 $ 20, 189 .0 8.0 % $ 4,2 65. 1 2.0 % $2, 516 .2
Q 4E ($4 7,2 83 .3) -60 8.4 % -33 4.7 % -6 4.8 % $ 20 ,009 .0 $2 0,0 00 .0 8.0 % $ 1,9 64. 7 2.0 % ($6 7,3 56 .3)
Q1 E $7 45 .5 -97 .6% - 10 1.6 % 1.5 % ( $1 0,2 80. 5) $4 ,61 2.8 9.0 % $9 49. 7 2.0 % $2 32 .8
Fi sca l 20 09 E Q 2E Q3 E $3, 616 .1 -7 7.6 % 3 85 .0% 4.1 % ($ 22, 776 .6) $ 8,8 70. 4 10. 0% $ 1,6 05. 2 2.0 % ($ 1,1 54. 3) $ 11, 770 .8 -41 .6% 2 25. 5% 7.7 % ( $3 1,1 51. 0) $2 2,9 54. 4 1 5.0 % $2 ,70 3.3 2.0 % ($6 ,78 3.6 )
Q4 E $1 4,6 39 .0 - 131 .0% 2 4.4 % 8 .3% $3 0,7 71 .4 $26 ,52 1.1 1 5.0 % $3 ,10 3.9 2 .0% ( $7 ,48 2.1 )
Q1E $18 ,42 9.7 2 37 2.0% 25. 9% 9.8 % $48 ,45 5.6 $ 15, 096 .8 8.0 % $ 3,2 63 .3 2.0 % $8, 032 .9
Fis cal 20 10E Q2E Q3E $14 ,78 7.8 308 .9% -1 9.8 % 7.5 % $59 ,62 7.3 $ 15, 759 .7 8.0 % $ 3,4 97 .4 2.0 % $3, 728 .1 $16 ,33 1.7 38. 7% 10. 4% 7.4 % $64 ,18 8.3 $ 17, 546 .0 8.0 % $ 3,8 96 .5 2.0 % $3, 485 .7
Q4E $9, 084 .0 -3 7.9 % -4 4.4 % 4.0 % $58 ,63 3.3 $ 17, 970 .1 8.0 % $ 4,1 46 .7 2.0 % ($ 4,1 86 .1)
$62 ,95 8.7 1 3.4 % $8 ,36 2.1 2 .0% ( $15 ,18 7.3 )
$66 ,37 2.6 8 .0% $14 ,80 3.9 2 .0% $1 1,0 60. 6
Note: All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
284
Note: All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
285
Revenues Product Revenue Toll ing Revenues Other Revenue COGS P roduct COGS Tolling COGS Additional Costs Gross Profit Gross Margin (%) M odule Gross Margins Tolling Gross Margins Total Shipments (MW) Internal M odules (MW) Tolling Modules (MW)
171.0 164.0 0.0 7.0 142.9 142.9 0.0 0.0 28.2 16.5% 16.5% 0.0% 40.3 40.3 0.0
197.1 179.7 0.0 17.4 152.7 152.7 0.0 0.0 27.0 13.7% 22.5% 0.0% 43.1 43.1 0.0
187.8 168.9 0.0 18.9 145.6 145.6 0.0 0.0 23.3 12.4% 22.5% 0.0% 41.8 41.8 0.0
164.6 160.4 0.0 4.2 219.9 172.1 0.0 47.8 -55.3 -33.6% -4.5% 0.0% 47.6 47.6 0.0
720.6
82.9 82.9 0.0 0.0 84.9 79.9 0.0 5.0 -2.0 -2.4% 3.7% 20.0% 30.0 30.0 0.0
123.9 111.9 12.0 0.0 116.6 107.0 9.6 0.0 7.3 5.9% 4.4% 20.0% 70.0 45.0 25.0
153.8 141.8 12.0 0.0 143.9 134.3 9.6 0.0 9.9 6.4% 5.3% 20.0% 85.0 60.0 25.0
146.7 134.7 12.0 0.0 134.3 124.7 9.6 0.0 12.4 8.5% 7.4% 20.0% 85.0 60.0 25.0
507.3
146.9 134.9 12.0 0.0 135.0 125.4 9.6 0.0 11.8 8.1% 7.0% 20.0% 95.0 70.0 25.0
175.0 163.0 12.0 0.0 161.2 151.6 9.6 0.0 13.9 7.9% 7.0% 20.0% 115.0 90.0 25.0
184.1 172.1 12.0 0.0 170.0 160.4 9.6 0.0 14.1 7.6% 6.8% 20.0% 125.0 100.0 25.0
191.8 179.8 12.0 0.0 177.2 167.6 9.6 0.0 14.6 7.6% 6.8% 20.0% 135.0 110.0 25.0
697.8
661.0
479.7
643.4
23.2 3.2%
27.6 5.4%
54.4 7.8%
172.8
S ilicon Breakdown S pot Contr act Costs ($/W) $ S pot $ Contr act $ W afer to modul e process ing Co $ P oly to wafer processi ng costs Check $ S ilicon P rices ($/kg) S pot Contr act Conversion Efficiency Grams/Watt ASP ($/Watt) P V M odules y/y (%) q/q (%) Tolli ng $
70% 30% 3.54 2.01 0.73 0.80 3.40 275.8 289.0 245.0 16.6% 9.94 $ $ $ $ $
78% 23% 3.95 2.54 0.60 0.80 0.35 316.5 330.0 270.0 16.6% 9.94 $ $ $ $ $
67% 33% 3.83 2.20 0.83 0.80 0.29 304.6 330.0 253.0 16.6% 9.94 $ $ $ $ $
40% 60%
64% 36% $ $ $ $ $
60% 40% 2.66 0.76 0.81 0.80 0.30 186.0 150.0 240.0 16.6% 8.40 $ $ $ $ $
60% 40% 2.38 0.58 0.70 0.80 0.30 153.0 115.0 210.0 16.6% 8.35 $ $ $ $ $
60% 40% 2.24 0.54 0.59 0.80 0.30 138.0 110.0 180.0 16.6% 8.25 $ $ $ $ $
60% 40% 2.08 0.49 0.49 0.80 0.30 120.0 100.0 150.0 16.6% 8.15
70% 30% 1.79 0.48 0.22 0.80 0.30 86.5 85.0 90.0 16.6% 8.00 $ $ $ $ $
70% 30% 1.68 0.39 0.19 0.80 0.30 73.0 70.0 80.0 16.6% 8.00 $ $ $ $ $
70% 30% 1.60 0.34 0.17 0.80 0.30 63.0 60.0 70.0 16.6% 8.00 $ $ $ $ $
70% 30% 1.52 0.28 0.14 0.80 0.30 53.0 50.0 60.0 16.6% 8.00
3.62 $ 3.73 0.97 1.49 0.85 0.30 248.0 245.0 250.0 16.6% 9.94 286.2 298.5 254.5
4.07
4.17 2%
4.04 -3%
$ 2.76 $ 2.49 $ 2.36 $ 2.24 $ 2.46 -32% -40% -42% -33% -37% -18% -10% -5% -5% $ 0.48 $ 0.48 $ 0.48 $ 0.48 $ 0.48
$ 1.93 $ 1.81 $ 1.72 $ 1.63 $ 1.77 -30% -27% -27% -27% -28% -14% -6% -5% -5% $ 0.48 $ 0.48 $ 0.48 $ 0.48 $ 0.48
N/A
N/A
N/A
All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
286
20.2% 15.3% 594.3% 224.3% $142.9 $28.2 $0.7 $6.8 $7.5 $20.7 $170.1 $27.1 $1.1 $9.0 $10.1 $17.0
FYE: Decemb er Pro Forma EBITDA % Change Y/Y % Change Q/Q % Sales LT M EBIT DA Capital Spend ing % of Sales Depreciation % of COGS FCF Ops Est. (PF EBITDA + NI -Capex)
Q4 ($61.1) -538.4%
Q1E ($9.8) -83.9% -11.8% ($54.0) $4.1 5.0% $1.7 2.0% ($14.0)
Fiscal 2009E Q2E Q 3E ($1.6) -83.3% -1.5% ($72.6) $5.6 5.0% $2.2 2.0% ($7.2) $1.4 -2595.2% -186.3% 1.0% ($71.1) $7.1 5.0% $2.8 2.0% ($5.7)
Q4E $3.6 -105.8% 151.9% 2.7% ($6.5) $6.7 5.0% $2.7 2.0% ($3.2)
Q1E $3.8 -138.6% 5.9% 2.6% $7.1 $7.3 5.0% $2.9 2.0% ($3.6)
Fiscal 2010E Q2E Q 3E $5.4 -426.3% 41.6% 3.1% $14.1 $8.8 5.0% $3.5 2.0% ($3.4) $4.8 235.5% -11.2% 2.6% $17.5 $9.2 5.0% $3.7 2.0% ($4.4)
Fiscal 2009E ($6.5) -72.5% -1.4% -6.5 $23.6 5.0% $9.4 2.1% ($30.0)
Fiscal 2010E $19.3 -399.0% 2.8% 19.3 $34.9 5.0% $14.0 2.2% ($15.6)
-147.5% -109.7%
-17.9% -100.3% 107346.4% 8.6% 0.0% -37.1% $60.0 $42.4 21.5% 0.0% ($26.0) $51.5 $16.0 8.5% $3.8 2.0% ($20.9) ($23.5) $31.0 18.8% $3.3 2.0% ($100.1)
($4.2) ($165.5)
Note: All numbers in USD MM unless otherwise noted Source: Company reports, Barclays Capital estimates
287
$85 $81 $75 $68 $71 $58 $96 $64 $51 56% 33% 27% $108 $120 $111 63.4% 60.9% 59.0% $160 $176 $200 $0 $0 $0 $29 $46 $23 $540 $541 $541 $122 $165 $191 $13 $14 $25 $29 $29 $53 ---------- -- ------------ -----------$705 $750 $810 ====== ====== ====== $143 $27 16% $13 $20 $3 $206 $198 $1 $406 $16 $0 $160 $25 13% $11 $21 $2 $219 $202 $1 $422 $26 $0 $147 $26 14% $5 $51 $2 $230 $201 $4 $436 $2 $0
$60 $13 $47 28% $107 65.2% $199 $0 $51 $477 $219 $31 $27 -----------$753 ====== $172 $32 19% $1 $29 $6 $241 $198 $4 $442 $1 $0 -----------$311 -----------$753 ====== $369.8 6% $21.6 $0.0
$43 $4 $5 $5 $37 $50 45% 45% $54 $73 65% 65% $199 $199 $0 $0 $51 $51 $389 $382 $221 $225 $31 $31 $27 $27 ------------ ---- -------$668 $664 ====== ====== $172 $8 10% $1 $29 $6 $217 $198 $4 $419 $1 $0 $172 $11 10% $1 $29 $6 $220 $198 $4 $422 $1 $0
$20 $5 $57 40% $92 65% $199 $0 $51 $423 $229 $31 $27 -----------$710 ====== $222 $14 10% $1 $29 $6 $273 $198 $4 $475 $1 $0 -----------$283 -----------$758 ====== $419.8 14% $50.0 $48.0
$24 $5 $47 35% $88 65% $199 $0 $51 $414 $233 $31 $27 -----------$705 ====== $222 $13 10% $1 $29 $6 $272 $198 $4 $474 $1 $0 -----------$278 -----------$753 ====== $419.8 0% $0.0 $48.0
$4 $5 $51 35% $96 65% $199 $0 $51 $406 $237 $31 $27 ------- ----$701 ====== $222 $15 10% $1 $29 $6 $273 $198 $4 $475 $1 $0 ------- ----$273 ------- ----$749 ====== $419.8 0% $0.0 $48.0
$68 $5 $61 35% $114 65% $199 $0 $51 $498 $243 $31 $27 -----------$799 ====== $322 $18 10% $1 $29 $6 $376 $198 $4 $578 $1 $0 -----------$268 -----------$847 ====== $519.8 24% $100.0 $48.0
$49 $31 $5 $5 $64 $67 35% 35% $120 $125 65% 65% $199 $199 $0 $0 $51 $51 $488 $477 $248 $254 $31 $31 $27 $27 ---- -------- ---------- -$794 $789 ====== ====== $322 $18 10% $1 $29 $6 $377 $198 $4 $579 $1 $0 $322 $19 10% $1 $29 $6 $378 $198 $4 $580 $1 $0
---------- -- ------------ -----------$283 $302 $372 ---------- -- ------------ -----------$705 $750 $810 ====== ====== ====== $341.4 154% $207.0 $0.0 $361.8 6% $20.4 $0.0 $348.2 -4% ($13.6) $0.0
------------ ---- -------$297 $290 ------------ ---- -------$716 $712 ====== ====== $369.8 0% $0.0 $48.0 $369.8 0% $0.0 $48.0
---- -------- ---------- -$262 $257 ---- -------- ---------- -$842 $837 ====== ====== $519.8 0% $0.0 $48.0 $519.8 0% $0.0 $48.0
Total Debt % Change Q/Q $ Change Check-sum P erf ormance Metrics P rofitability Ratios Return On Equity Return on Avg Equity Return On Assets Return On Net A ssets Return On Sales E fficiency Ratios S ales / Total Assets A /R Day s S ales Out Inventory Turns Days of Inventory
Liquidity Ratios Current Ratio Quick Ratio Net Wor king Capital ($M) Long-Term Debt / Equity Debt/Capital Total Debt / E quity E BITDA/Interest E BITDA- Capex/Interest
Book & Cash Value B ook V alue Per Share $5.86 Cash Per Share $1.75 Net Cash Per Share ($5.30) Tangible Book value $5.86 S ources: Company reports & Barclays Capital estimates Note: All Numbers in USD MM Unless otherwise noted
288
289
Private Companies in America 6N Silicon 6N Silicon was founded in September 2006 by Scott Nichol. With headquarters in the Toronto area, 6N Silicon is in the heart of Canada's metal processing industry and is surrounded by Canada's extensive metal processing knowledge. 6N Silicon's mission is to become the leading global supplier of sola r grade silicon to the solar industry. 6N's goal is to be the first company to market with an affordable solar grade of silicon that does not require any mixing with electronic grade silicon to maintain optimum cell performance while allowing customers to maintain high overall production yields in their processes. Abound Solar (Formerly known as AVA Solar) is a producer of Thin Film CdTe modules used mainly in large scale and utility scale solar installations. Based in Colorado, Abound Solar broke ground on a new manufacturing facility in 2008 with commercial production beginning around April 2009. This facility should produce 200MW of solar modules at full capacity. Advent Solar is a leading innovator for the next generation silicon based solar technology. Advent Solar Ventura Technology provides the blueprint for high-performance solar modules that deliver the industrys best value for silicon PV modules. Advent Solars unique approach enables higher value at many levels, to shift solar from an alternative to a mainstream energy source. One of the worlds largest solar power companies, BP Solar International, Inc. designs, manufactures, supplies, and installs solar PV and solar thermal systems for a range of applications in the residential, commercial, and industrial sectors. The company was founded in 1999, is based in Frederick, Maryland, and has operation facilities in the United States, Spain, India, and Australia. Cool Earth Solar is a developer of utility-scale concentrated solar power plants. The company uses unique mirror concentrators in its systems. These inflatable balloon mirrors, suspended on metal and wire structures, reflect light onto a solar cell to generate electricity and are 400 times cheaper than polished aluminum mirrors, bringing radical reductions to material costs and the weight of CPV.
Abound Solar
Advent Solar
BP Solar
Cool Earth
Deeya Energy
Deeya has engineered a powerful energy storage platform for applications in the telecommunications, defense, and other mission critical industries. Deeya's ESP is a powerful complement to Wind, Solar, Biomass and other renewable energy generation platforms. By cost effectively storing Grid or Electricity Board (EB) power, wind, solar, and other renewable power, the ESP significantly reduces diesel generator usage thereby lowering greenhouse gas emissions. Envision Solar LLC provides solar power generation services, and is one of the only companies that specialize in solar shading structures. It was founded in 2006 and is based in San Diego, California. The company hopes to commercialize a variety of PV carport systems, including its popular Solar Grove, which consists of solar treescentral poles supporting a canopy of solar panels.
Envision Solar
290
Private Companies in America eSolar eSolar, Inc. builds solar thermal power projects for utilities and renewable resource owner-operators, and provides heliostat mirrors. The company was founded in 2007 and is based in Pasadena, California. It announced in June 2008 a solar power tower contract with Southern California Edison to procure an additional 245MW of solar power ramp-up by 2013. The project, which will be built in California, is expected to begin delivery in 2011. Global Solar Energy, Inc. manufactures and distributes thin-film PV solar cells, portable solar chargers, and next-generation glass modules. It was founded in 1996 and is headquartered in Tucson, Arizona. In January 2008, Global Solar Energy announced that its CIGS cells had achieved a 10% cell efficiency rate. At Intersolar, the company introduced a new thin-film product called PowerFlex Solar Strings that will simplify and accelerate the process for Building Integrated Photovoltaic, or BIPV, manufacturers. GreenVolts concentrating photovoltaic (CPV) solution is a state of the art technology designed to achieve the highest solar-to-electricity conversion efficiency through an innovative integration of optics and solar tracking. Similar to central station power plants, GreenVolts technology enables a low levelized cost of energy, and yet it can be built close to load, further increasing efficiency and reducing costs. GreenVolts is based in San Francisco. HelioVolt Corp. specializes in thin-film PV coatings, in particular, CIGS nanomaterial-based solar panel technology. It was founded in 2001 and is headquartered in Austin, Texas. The company is known for its patented FASST manufacturing process based on semiconductor printing for CIGS synthesis, which reduces costs by building cells 10100 times faster than competitors processes. In May 2008, HelioVolt announced that it had reached 12.2% efficiency with its CIGS cells. Infinia Corp. develops and sells stirling generators and cryocoolers. The most notable feature of its technology is the thermodynamic cycling of air to produce energy. Infinia uses a hermetically sealed, single-piston design that reduces maintenance costs (24% efficiency), although efficiency is somewhat reduced. The company was founded in 1985 and is based in Kennewick, Washington. It received $50 million in funding in February 2008, and plans to begin dish production in November, building up to 200MW per year of manufacturing capacity by the end of 2009. Kyocera Solar, Inc. sells solar electric systems for use in rural homes, vehicle sites, telecom and pipeline monitoring equipment and traffic signal locations. It is located in Scottsdale, Arizona. The company has announced plans to increase its solar cell production to 500MW per year in 2010, more than three times its 2007 output of 180MW. It will reinforce production bases in the United States, Japan, Europe, and China, investing a total of 30 billion through the next two years. Miasol produces thin-film solar cells based on CIGS semiconductor, and is developing a new sputtering production process. It is based in Santa Clara, California. In September 2007, the company raised $50 million, bringing its total financing to $100 million. At the same time, Miasol received a $20 million grant from the Solar America Initiative.
Global Solar
GreenVolts
HelioVolt
Infinia Corporation
Kyocera
Miasol
291
Private Companies in America MP2 Capital MP2 Capital, LLC is a leading renewable energy financial services firm focused on developing financing and investing in distributed generation and utility scale projects worldwide. MP2 works with a wide range of commercial and government customers, utilities, load serving entities, energy merchants, material suppliers, developers, service providers builders and investors. MP2 is based out of San Rafael California, with offices in New York. Nanosolar, Inc. manufactures and distributes solar electric panels using thin-film CIGS cells. It has commercialized a low-cost printable cell manufacturing process, and began selling panels midDecember 2007. Nanosolars products include nanosolar powersheet, solarply for commercial buildings, and utility-scale for ground-mounted plan installations. The company was founded in 2002, is based in Palo Alto, California, and has operation facilities in San Jose, California and Berlin, Germany. Hayward, California-based OptiSolar Inc. is a fully integrated solar energy company that manufacturers PV modules and uses amorphous silicon panels to produce power from its own planned large-scale solar farms. The company is working to build nine 10MW solar farms in southwestern Ontario by 2010. It has announced plans to build a 550MW solar plan in San Luis Obispo County, California a project with the capacity to power about 190,000 homes. Construction on this $1 billion project is expected to begin in 2010. Permacity Solar, Inc. has emphasized the design and installation of systems atop large commercial buildings, master planned communities, vertical high-rise structures, and individual homes. In January 2004, it built the first free-standing RWE Schott Solar array in Southern California and continues to building dynamic PV systems in the United States. The company is located in Los Angeles, California. Petra Solar designs and manufactures the innovative, turn-key SunWave solar electric system for utility, commercial, and residential installations. These systems scale from a single panel to multi-mega watts providing the most deployable, cost effective and intelligent solar solutions in the industry. The US Department of Energy recently recognized Petra Solars unique technology with the Energy Innovator Award. Petra Solar is located in South Plainfield, NJ. Recurrent Energy is a developer and owner of locally-sited solar power systems, selling clean electricity to their customers worldwide at competitive rates via a Power Purchase Agreement (PPA) or Feed-in Tariffs (FiT). In return, utility, commercial, and government customers achieve energy independence, predictable pricing, and enhanced sustainability. Signet Solar, Inc. develops and manufactures thin-film PV modules. It was founded in 2006 and is based in Menlo Park, California, with a research development center in Mochau, Germany. The company fabricated the industrys first generation 8.5 (5.7 square meters) silicon thin-film solar PV module in May 2008 in a record 10 months. A ramp-up in production and shipment to customers will begin in the third quarter. Signet has existing customer commitments of over $400 million.
Nanosolar
Optisolar
Permacity Solar
Petra Solar
Recurrent Energy
Signet Solar
292
Private Companies in America Solar City Solar City is a residential PPA provider that offers a comprehensive service package to customers. Solar City provides continuous 24/7 monitoring with the SolarGuard Monitoring System which continually tracks the performance of their systems. First Solar recently made an investment in Solar City a deal that allowed Solar City to use First Solar modules in their systems. Solar Depot, Inc. is a wholesale distributor and systems integrator of solar electric and solar thermal systems. Its products include PV power generation and pool-heating systems. The company was founded in 1979 and is headquartered in Petaluma, California. Its customers include U.S. military, federal government, NASA, the states of California, Nevada, Oregon, and Washington. Solar Power Partners, Inc. (SPP) develops, owns, and operates distributed solar energy facilities and sells solar-generated electricity through solar Power Purchase Agreements (sPPAs). Solar Power Partners is a leading solar energy developer in the United States with over 37 completed projects, equaling 12.8 MW of commercial solar systems in operation. SPP is based out of Mill Valley California. Solar Reserve builds power plants designed as Solar Power Towers. This configuration captures and focuses the sun's thermal energy with thousands of tracking mirrors (called heliostats) in a two square mile field. Their partners consist of companies such as Citi, Good Energies, US Renewables Group, and United Technologies among others. Founded in 1984, SolarCraft Services, Inc. designs and manufacturers solar systems. The company has installed over 4,000 systems in Northern California that account for over a million square feet of solar energy collectors. Solaria designs, develops, and manufacturers industry leading silicon PV products. The companys cell multiplication technology maximizes the energy yield of silicon PV, accelerating cost savings in order to help PV get closer to Grid Parity. The company was founded in 1998 and currently is located in Fremont, California, with facilities in the Philippines and Germany. Solfocus, Inc. develops and markets solar concentrator photovoltaic systems. The company was founded in 2005 and is based in Palo Alto, California. Last July it bought Madrid -based solar tracking company Inspira to help reduce tracker costs.
Solar Depot
Solar Reserve
SolarCraft Services
Solaria
SolFocus
Soliant Energy
Soliant Energy, Inc. manufactures and sells concentrating solar panels for commercial rooftops and carports, developing tracking and concentrating PV Heliotube product platforms, selling its products through installers. The company was founded in 2005 and is based in Pasadena, California. At Soliant, engineers are working in partnership with members of NASAs Jet Propulsion Laboratory to develop solar panels that use 88% less PV material.
293
Private Companies in America Solyndra Solyndra designs and manufactures PV systems for commercial rooftops. The company uses proprietary cylindrical modules and thin film technology in order to increase output while minimizing costs to purchasers of rooftop solar systems. Solyndra was founded in 2005 and is based in Freemont, California. Sopogy is a leader in MicroCSP technologies that bring the economics of proven large scale Concentrating Power Systems (CSP) to the distributed generation markets. MicroCSP technologies are used to create Process Heat, Solar Air Conditioning or Electrical Power. Sopogy was founded in 2002 at the Energy Laboratories, and are now based out of Honolulu, Hawaii.
Sopogy
SPG Solar
SPG Solar, Inc. develops and installs solar PV systems. The company was founded in 2001 and is based in Novato, California. Over 500 of the companys systems have been for homes in northern California. The others have been commercial systems ranging from a 4.0kW project at San Franciscos AT&T Park, to a 1.18MW installation for Butte County. SPG has received the largest renewable energy rebate in state history twice. SunEdison LLC is a large solar energy services provider for North America. The company was founded in 2003 and is headquartered in Beltsville, Maryland, with three locations in California. It serves commercial, government, and utility customers. In May 2008, Duke Energy Carolinas LLC announced that it will purchase the entire electricity output of the nations largest PV sola r farm to be built in Davidson County, North Carolina. SunRun is a home solar service company located in San Francisco, California. The company offers two premium solar solutions, SunRun Total Solar and SunRun Power Plan. Silicon Valley Solar is a manufacturer of flat plate internal concentrator solar modules. It supplies silicon wafers and feedstock to the semiconductor and solar industries. The company is working to commercialize its proprietary Sol-X brand technology. The first Sol-X module is expected to deliver twice the concentration, effectively reducing silicon requirements by more than 50%. The development is relevant to fixed-mount commercial arrays, BIPV projects, and utility scale projects. The company was founded in 2006 and is located in Santa Clara, California. Teksun was incorporated in April 2007 as a result of the expansion of Cat Solar. Teksun will manufacture and sell solar power panels as well as selling solar power to large utilities and industrial users of peak power. TekSun is based in Austin, Texas.
SunEdison
SunRun
SV Solar
Teksun
294
Private Companies in America Tigo Energy Tigo Energy builds hardware and software intelligence into solar energy installations, making them more efficient, more manageable, and safer. By maximizing the energy output of each individual module, Tigos advanced balance of system products deliver lower cost of ownership and faster return on investment for existing and new solar installations. Tigo Energy increases output power, up-time, and reliability on existing and new solar installations, resulting in a faster return on investment and lower cost of ownership. Tioga EnergySM accelerates access to clean energy through long-term power purchase agreements (PPA) for renewable energy. The companys SurePathSM Solar PPA provides solar electricity to commercial, government, and non-profit organizations. From assessment to on-going operations, Tioga Energys expert guidance puts its customers on the right path to renewable energy and improved financial performance. Tioga Energy is based in San Mateo, California.
Tioga Energy
295
Private Companies in Asia (China) Aide Solar Jiangsu Aide Solar Energy Technology was founded in 2003. The companys business covers solar cells, solar modules, and other applied PV products manufacture, sale, and service. The companys products are used in PV grid-in, independent electricity generation system, lighting, communication, transportation and military field. In 2008, the company built a high-efficiency 40MW mono solar cells production line and enlarged its solar modules capacity to 150MW. ENN Solar Energy, part of The Xinao Group Co. Ltd., produces and sells PV. In collaboration with Applied Materials, ENN Solar introduced the SunFab thin-film production line to produce its 5.7m2 module. This 60MW line will be the first phase of an expected 500MW capacity plant. The company aims to ramp-up production on its Applied Materials line to 500MW by 2010. Golden Sun (Fujian) Solar Technic Co., Ltd. was established in 2002 as a joint venture PV company specializing in the R&D and manufacturing of thin-film solar cells. It has a research center in Beijing and two branches located in the United States and Germany. Golden Sun currently has an annual production capacity of 30MW. It aims to produce 430kW of amorphous silicon tandem cells this year, and 1GW in 2010, using technology developed with a Chinese university. Jiawei Solarchina manufactures high-efficiency PV solar cells, modules, portable systems, and large integrated systems. The company built a silicon feedstock factory in Beijing in 2007, and the companys capacity reached 120MW in 2007. It has established a number of long-term partnerships with other PV companies such as SunPower and Astropower (currently GE Energy). The company was founded in 1993 and is based in Shenzhen, China. Nantong Qiangsheng PV Technology Co. Ltd. (QS Solar) began making thin-film solar cells in 2008, using a new amorphous silicon solar cell production line in Jiangsu, with the largest production capacity in China (25MW), at 6% conversion efficiency It plans to have six production lines by 2009, creating 340MW in capacity. By 2010, it plans to add another six lines to reach 550MW.
ENN Solar
GS Solar
Jiawei Solarchina
QS Solar
296
Private Companies in Europe Concentrix Solar Founded in 2005, Concentrix Solar GmbH specializes in concentrator solar power plants. It set a new record in Germany, in May 2008, after achieving A/C system efficiencies of 23% and higher. The company recently successfully installed the first 100 kW system that is ready to be grid-connected.
GERMANY
CSG Solar
CSG Solar AG manufactures thin-film solar modules, with products that are of CSG technology. In 2006, the company won the World Technology Award for Innovations in Energy. The company was founded in 2004 and in based in Thalheim, Germany.
GERMANY
IBC
IBC Solar AG manufacturers and supplies PV modules and systems, as well as system components (charge regulators, inverters, batteries). The companys customers include electrical wholesalers and specialist trade firms. IBC Solar was founded in 1982 and is based in Bad Staffelstein, Germany. In March 2008, it announced a strategic partnership with Solar Semiconductor valued at over $575 million over the next three years.
GERMANY
Solarwatt
Solarwatt AG engages in the development and manufacturing of solar modules made of crystalline silicon cells in lamination technology. It the one of the biggest PV manufacturers in Germany, with an output of 62MW in 2007. The company provides roof and ground systems and components (inverters, batteries, charge controllers), as well as value-chain equipment (stringers, framing, testing). It was founded and is based in Dresden, Germany.
GERMANY
Solel
Solel specializes in solar thermal technology for solar systems and central power plans. The company is based in Beit Shemesh, Israel. In April 2008, Solel announced plans for a major expansion into the Spanish market with a new $120 million facility, to be completed by 2011, that will produce the key components for constructing solar fields, including its Solel 6 parabolic trough solar collectors. In May 2008, the company closed a deal agreeing to supply Ibereolica Solar with over 190,000 UVAC 2008 receiver systems that will power eight 50MW solar power plants in southern Spain.
ISRAEL
Solland
Solland Solar Energy B.V. is a German-Dutch developer and manufacturer of crystalline solar cells, selling to solar module producers and original equipment manufacturers. The company was founded in 2004 and is based in Heerlen, the Netherlands. In 2008, Solland Solar and Amtech Systems entered into a R&D agreement for in-line solar diffusion furnace system. The company is currently cooperating with AT&S to develop a new solar module concept with increased efficiency and reduced costs.
NETHERLANDS
297
Private Companies in Europe Isofoton Isofoton S.A. provides PV electricity and solar thermal hot water production solutions. It is one of the biggest solar PV manufacturers in Europe, and recently broke into the North American market. The company was founded in 1981 and is based in Madrid, Spain. It has locations in Europe, Africa, America, Asia, and Oceania, as well as factories in Malaga and China. Historically, much of its products have been used for rural electrification in several countries in the developing world.
SPAIN
Solarcentury Holdings
Solarcentury Holdings is the United Kingdoms leading solar company, specializing in a range of proprietary and third-party PV and solar thermal products to commercial, residential and public sector customers in the United Kingdom and other European countries, focusing on building integrated product solutions. The company maintains a strong network of distributors and installers, working with large building contractors and property developers. It was founded in 1998 and is based in London.
UK
298
299
U.S. Companies SunPower (2-Equal weight, 1-Positive, V. Shah) designs, manufactures, and delivers high-efficiency solar electric technology worldwide. The companys customers include residential, commercial and utility-scale power plant customers. SunPower products and services include high-efficiency cells, solar panels for residential requirements, integrated systems and multi-megawatt solar power systems. The company has developed single-axis tracking systems for large-scale solar electric projects and power plants. The SunPower T20 tracker, which tilts up to 25 degrees for increased energy capture, is the latest in solar tracking technology. The company also provides performance monitoring in real-time and energy efficiency services. First Solar (2-Equal weight, 1-Positive, V. Shah) manufactures PV modules with an advanced thin-film semiconductor process that greatly reduces raw material and manufacturing costs compared with traditional crystalline silicon PV modules. The companys proprietary thin-film semiconductor technology allows it to achieve an average manufacturing cost per watt that is significantly less than the per watt manufacturing cost of producing crystalline silicon solar modules. It manufactures solar modules on highthroughput production lines that complete all manufacturing steps, from semiconductor deposition to final assembly and testing, in an automated, continuous process to greatly reduce production costs. The company uses a systematic replication process to build new production lines with operating metrics that are comparable to the performance of its base plant. Employing Continuous Improvement methodologies and Copy Smart replication, the company has been able to rapidly expand its production capacity to meet demand. MEMC (1-Overweight, 1-Positive, V. Shah) is a global leader in the manufacture and sale of wafers and related intermediate products to the semiconductor and solar industries. Wafers are the fundamental building blocks that virtually all solar cells are built upon. The company has been a pioneer in the design and development of wafer technologies for more than four decades and maintains R&D and manufacturing facilities in Europe, Japan, Korea, Malaysia, Taiwan and the United States. MEMC continues to remain at the forefront of technology innovation with advanced manufacturing capabilities and a suite of process technologies including alternate materials. The company produces wafers in sizes ranging from 100 millimeters to 300 millimeters and in the prime polished, epitaxial and test/monitor categories. MEMC also sells intermediate products such as polysilicon, silane gas, partial ingots, and scrap wafers to semiconductor device and equipment makers, solar customers, flat panel, and other industries. Evergreen Solar (2-Equal weight, 1-Positive, V. Shah) develops, manufactures and sells solar power products, primarily solar panels that provide reliable and environmentally clean electric power worldwide. The company serves the wireless power, rural electrification, and grid-connected applications markets. It expects to exploit its proprietary and patented technology to produce distinctive products, to reduce manufacturing costs through lower materials use and streamlined processes, and to manufacture internationally for global market penetration. The companys products are enabled by the companys proprietary String RibbonTM technology. The company sells its products through distributors, systems
300 May 01, 2009
integrators, and other value-added resellers, who often add value through system design by incorporating the modules with electronics, structures, and wiring systems. The company has entered into a strategic partnership with Q-Cells and REC to form Ever-Q, whose purpose is to develop and operate facilities to manufacture, market, and sell solar products based on the String RibbonTM technology using fabrication processes that combines the manufacturing technologies of the three. Energy Conversion Devices (3-Underweight, 1-Positive, V. Shah) has maintained a strong core competence in materials research and advanced product development throughout its history. United Solar Ovonic, a subsidiary of the company, has become the world leader in thin-film amorphous photovoltaics technology and commercial applications. Using its proprietary thin-film, vapor-deposited a-Si alloy materials, the company has developed proprietary technology to reduce the materials cost in a solar cell. The companys high-volume production equipment, built by its Production Technology and Machine Building division, is the worlds largest and most advanced machine for the manufacture of thin-film amorphous silicon alloy solar cells that are flexible, rugged and lightweight, enabling various lines of commercial and residential building-integrated solar products. The companys unique solar cell technology characteristics make it ideal for residential and industrial building-integrated photovoltaic (BIPV) roofing systems. The company sells its products to various markets including the Off-Grid systems, Residential, Commercial and Industrial systems. GT Solar (2-EW, 1-Positive, V.Shah) supplies PV fabrication lines and manufacturing equipment across the value chain used to produce multi-crystalline solar wafers, cells, and modules. It provides tabbers/stringers, ribbon flux stations, optical scanning systems, etching wet benches, cell testing machines, DSS furnaces, SoG silicon feedstock production, and polysilicon reactors. GT Solar, Inc. was found in 1994 and is based in Merrimack, New Hampshire. Key developments in 2008 include major contracts with Nexolon Co., The Silicon Mine, and DC Chemical. Akeena Solar (not rated) is a solar power system designer and integrator. It is also one of the largest national installers of residential and small commercial solar power systems in the United States and services customers in California, New Jersey, New York, Connecticut, and Pennsylvania. The company is concentrating its strategic efforts on three factors: developing proprietary solar power installation technology optimized for these market segments; leveraging and enhancing its brand name and reputation, and utilizing a process-driven approach to sell and installing solar power systems efficiently in multiple locations. Akeena recently gave Suntech the license to distribute its solar panel technology, Andalay, in Europe, Japan, and Australia. The companies had previously entered into an agreement to manufacture the Andalay solar panels. Andalay is an advanced, highperformance, integrated solar power system designed for use in on-grid residential, commercial, and government applications. Hoku Scientific (not rated) is a materials science company focused on clean energy technologies. Historically focused on developing new products for hydrogen fuel cells, it is
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now diversifying its business to include integrated photovoltaic modules and polysilicon. Hoku Solar is a provider of turnkey PV systems, offering installation services through direct sales, leases, and power purchase contracts for commercial and select residential markets. The company is focused on installing these systems in Hawaii using modules and other equipment purchased from third-party suppliers. Hoku Materials is developing a polycrystalline silicon manufacturing plant with planned capacity of up to 2,500 metric tons per year. Construction commenced in May 2007 and Hoku plans to have it operational by year-end 2008. The company has already entered into long-term sale agreements with Sanyo, Suntech, and Solar-Fabrik. The polysilicon business is designed to support the solar installation business by providing opportunities for partnerships in the solar industry. China-Based Companies Listed in the United States Suntech Power (3-Underweight, 1-Positive, V. Shah) is the largest solar module manufacturer worldwide and has production sites at Wuxi, Luoyang, Qinghai and Shanghai. Suntech Power produces a wide range of PV cells and modules. The company also provides PV system integration services in China. Its products are used in a variety of residential, commercial, industrial and public utility applications. The company offers highperformance polycrystalline and mono-crystalline modules with an array of features including stability, capacity, and power-generating endurance over multiple applications. The companys extensive R&D and product innovation continues to drive conversion efficiencies. Suntechs China-based production lines also help keep costs down. Suntech Power believes that its strength lies in its ability to manufacture capacity, streamline and optimize its manufacturing processes and enhancing process technologies. Suntechs subsidiary, MSK, is one of the top-ranked companies in the building-integrated photovoltaics (BIPV) space. Through the MSK brand, Suntech is able to provide a complete range of solar solutions. JA Solar (1-Overweight, 1-Positive, V. Shah) is emerging as a fast-growing manufacturer of high-performance solar cells. Based in China, it continues to bridge the gap between financial feasibility and environmental awareness. Advancing PV as a financially viable sustainable solution, JA Solar continues to supply energy demand and utilize its global marketing ability. Its products are utilized worldwide including China, Germany, Sweden, Spain, South Korea, and the United States. The companys objective is to be a leader in the developing and manufacturing of low-cost, high-performance solar cell products. The company sells its solar cells to module manufacturers which assemble and integrate them into modules. Yingli Green Energy (1-Overweight, 1-Positive, V. Shah) is one of the leading verticallyintegrated PV product manufacturers in China. Yingli Green Energy designs, manufactures and sells PV modules and designs, assembles, sells and installs PV systems that are connected to an electricity transmission grid or those that operate on a standalone basis. Yingli Green Energy is currently one of the largest manufacturers of PV products in China. In addition, Yingli Green Energy is one of the few large-scale PV companies in China to have adopted vertical integration as its business model. Its products and services substantially cover the entire PV industry value chain from the manufacture of multi-crystalline polysilicon
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ingots and wafers, PV cells, PV modules and PV systems to PV system installation. The company expects to gradually expand annual production capacity of polysilicon ingots and wafers, PV cells and PV modules. The company produces a wide variety of module types that reflect the requirements of on-grid systems, off-grid systems, and other configurations. Yingli Green Energy sells PV modules under its own brand name, Yingli Solar, to PV system integrators and distributors located in various markets worldwide, including Germany, Spain, China, and the United States. LDK Solar (2-Equal weight 1-Positive, V. Shah) is a pure-play manufacturer dedicated solely to the design, development, manufacturing, and distribution of multi-crystalline solar wafers. The companys manufacturing process is based on proprietary production processes utilizing both virgin and recyclable polysilicon for ingot production. Through this proprietary process, LDK is able to offer its global solar cell and module manufacturer customers considerable cost advantages while maintaining quality and performance. LDK also provide wafering services to both multi-crystalline and mono-crystalline solar cell and module manufacturers which provide their own ingots to be sliced. LDK currently produces and sells multi-crystalline wafers in two principal sizes of 125 x 125 mm and 156 x 156 mm. The company has strategic relationships with world-class PV equipment manufacturers GT Solar (USA) and HCT (Switzerland), which support LDK on equipment, process and technology. The company has also begun construction on its polysilicon production plant, which is expected to be completed in 2009. Canadian Solar (3-Underweight, 1-Positive, V. Shah) is a standard solar module and specialty solar module and product company, serving customers located in various markets worldwide. The company is incorporated in Canada and conducts all of its manufacturing operations in China. Canadian Solar has become a major global provider of solar power products for a wide range of applications. The companys major product lines are its PV modules from 5W300W and its custom-engineered solar specialty products. Canadian Solar also operates one of the largest silicon reclaiming business centers worldwide. The company specializes in purchasing, processing and supplying ingots, broken wafers, reclaimed wafers and broken cells. Trina Solar (2-Equal weight, 1-Positive, V. Shah) is a manufacturer of high-quality monocrystalline modules and has a long history as a solar PV pioneer. The company was founded as a system installation company in China. Trina Solar is currently one of the few PV manufacturers which has developed a vertically-integrated business model from the production of mono-crystalline ingots, wafers, and cells to the assembly of high-quality modules. The company has achieved a high degree of vertical integration in the solar value chain through the production of mono-crystalline silicon ingots and wafers and through the assembly of solar modules. This integrated value chain helps to ensure highquality products to its end customers. The company produces modules with power ranging from 160W185W. Trina Solar's modules are used for residential, commercial, industrial, and public utility applications worldwide. The company's mission is to expand the global solar PV industry and make solar PV energy cost-effective for every consumer by aggressively pursuing grid parity.
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ReneSola (2-Equal weight, 1-Positive, V. Shah) is a leading manufacturer of wafers for the PV industry and one of the fastest-growing companies in the industry. The raw materials used in ReneSolas production process are sourced principally through recycling silicon, in the form of different types of part processed and broken wafers, pot scrap, ingot tops and tails and other off-cuts, from the semiconductor industry and increasingly, the PV industry. ReneSola sells solar wafers both to Chinese and international PV cell manufacturers. ReneSola believes that continuing effort in R&D is an important corporate strategy to maintain its competitive edge over the competition. The company plans to improve existing technology in two synergic core businesses of the Group, recycling and wafer production operations. Solarfun (3-Underweight, 1-Positive, V. Shah) manufactures both PV cells and PV modules, provides PV cell-processing services to convert silicon wafers into PV cells, and supplies solar system integration services in China. The company produces both monocrystalline and multi-crystalline silicon cells and modules, and manufactures 100% of its modules with in-house produced PV cells. The company is also able to sell its additional PV cells to end users due to its large manufacturing capacity. Solarfun sells its products both through third-party distributors and directly to system integrators. Solarfun Modules have been used worldwide for various residential, commercial, industrial, and solar field projects. The modules sold by the company range in power between 160W200W. Solarfun also provides PV cell-processing services for silicon suppliers. The company has also recently started commercial activities to provide solar system integration services to end-users in China through a subsidiary. China Sunergy (2-Equal weight, 1-Positive, V. Shah) is a leading manufacturer of solar cell products in China as measured by production capacity and a pure-play cell manufacturer focusing on the highest value segment of the solar value chain. The company produces high-efficiency mono-crystalline and multi-crystalline silicon solar cells. It sells these solar cell products to Chinese and overseas module manufacturers and system integrators, which assemble the solar cells into solar modules and solar power systems for use in various markets, particularly to European markets. The majority of the companys sales are to customers located in China. Cells are also sold to customers in Italy, South Africa, and other countries. European Companies Q-Cells (2-Equal weight, 2-Neutral, R. Madlani) is the second-largest manufacturer of PV cells worldwide. The company develops, produces, and sells high-performance solar cells made of mono-crystalline and multi-crystalline silicon. The company supplies these cells to the manufacturers of solar modules. It offers a range of mono-crystalline (Q6M, Q6LM) and multi-crystalline (Q5, Q6, Q6LTT, Q6LPS, Q8TT3). Q-Cells has deliberately established itself as a specialist in a key position of the PV supply chain. The company has consistently focused on extending its product capacities and constantly advancing its production methods, thus setting industry standards. Q--Cells has built a worldwide presence with customers in countries such as Germany, Austria, Canada, Cyprus, Japan, Korea, India, Netherlands, Spain, and Turkey. The company has entered into a strategic partnership with
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Evergreen Solar and REC to form Ever-Q, whose purpose is to develop and operate facilities to manufacture, market, and sell solar products based on the String RibbonTM technology using fabrication processes that combines the manufacturing technologies of the three. Solarworld (2-Equal weight, 2-Neutra, R. Madlani) started off as a solar trading house and is now one of the largest solar concerns worldwide. Solarworld AG has positioned itself as a sustainable vertically integrated organization in the international solar market place. The objective of the integration strategy is to be able to define and optimize the development of technology at all stages of manufacture and thus to gain in terms of costs from the synergy effects and to derive a qualitatively high-quality product from the experience gained at all levels of the value chain. The company is focused on the manufacture and marketing of PV products worldwide by integrating all components of the solar value chain, from feedstock to module production, from trade with solar panels to the construction of solar power plants. The group controls the development of solar power technologies at all levels in-house. The products offered include custom-made construction kits, integrated roof systems, PV modules and mounting systems. The company has international production and sales units in Germany, Sweden, Spain, Asia, Africa, and the United States. REC (1-Overweight, 2-Neutral, R. Madlani) is organized in three divisions: REC Silicon, REC Wafer, and REC Solar. REC Silicon is the worlds largest dedicated producer of silicon materials for the PV industry, and produces silane and polysilicon for the photovoltaic and electronics industries. REC Wafer is the worlds largest producer of multicrystalline wafers and produces multi-crystalline wafers for the solar cell industry at two production facilities in Norway, as well as specialized mono-crystalline wafers. REC Solar produces solar cells at its plant in Norway and solar modules at its facilities in Sweden. It also operates a small systems installation company, Solar Vision, in South Africa. The presence in all parts of the value chain of the PV industry is one of REC's key strengths as it provides in-depth industry insight, which makes REC well-positioned to analyze and execute on strategic opportunities. It also enables REC to perform joint technology development. Its own production of polysilicon secures the growth potential of all REC businesses, enhancing other strengths, notably efficient and scalable operations with lean manufacturing and mass production concepts implemented throughout the group. The company has entered into a strategic partnership with Evergreen Solar and Q-Cells to form Ever-Q, whose purpose is to develop and operate facilities to manufacture, market, and sell solar products based on the String RibbonTM technology using fabrication processes that combines the manufacturing technologies of the three. Ersol (not rated) is a German PV company with production plants in Arnstadt, Erfurt, and Camarillo in California. The company produces multi and mono-crystalline silicon solar cells and has also started thin-film module production. Ersol is divided into the four major business segments of silicon, wafers, solar cells, and crystalline PV modules. Ersol Silicon specializes in the recycling of silicon, and the scope of the Ersol Group subsidiary currently covers silicon for solar and semiconductor applications, metallurgical grade silicon, and
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support products. Ersol Wafers is a specialist manufacturer of mono-crystalline ingots and wafers, currently producing mono-crystalline silicon ingots, mono-crystalline silicon wafers, crystals and wafers with a special twin structure, and crystals and wafers with special dopant impurities. Ersol Solar Cells currently manufactures multi-crystalline and monocrystalline silicon solar cells in 156 mm x 156 mm format. Ersol claims that its cells provide high, stable outputs, which remain within close tolerances over long periods. Ersol Modules supplies photovoltaic modules based on high-efficiency mono-crystalline and multi-crystalline silicon solar cells in the sizes 125 mm x 125 mm, 150 mm x 150 mm, and 156 mm x 156 mm. The company plans to significantly increase its capacities for manufacturing wafers and solar cells. Ersol is currently focusing on markets in North America, Southern Europe, and China. Conergy (2-Equal weight, 2-Neutral, R. Madlani) manufactures solar-thermic, photovoltaic and wind components and supplies exclusively via commercial partners. Conergy has offers products in both PV and solar thermals. Within PV, it offers products that cater to private homes and businesses as well as large solar plants. These include PV modules, mounting systems, string inventers, central inverters, off-grid inverters, grid connected inverters, solar charge controllers, and system monitoring equipment. The solutions offered are for grid-connected installations as well as off-grid installations and architecturally unique constructions. In solar thermal products, Conergy develops solar collectors and systems, which include flat-plate collectors, control units, pump assemblies, storage tanks, and complete systems. Conergy uses its know-how to offer tailor-made components and complete systems for optimal exploitation of solar energy and in order to continually develop them further. Conergy now operates subsidiaries in 25 countries on five continents. Besides recently expanding into the most promising solar markets worldwide, Conergy is planning a customer-oriented diversification of its product range. Solon (3-Underweight, 2-Neutral, R. Madlani) is a major European solar module manufacturing company focused on the European market, although it has production centers worldwide. The company specializes in the integration of PV technology into buildings. The core business of the Solon group consists of solar modules and system technology. The solar modules segment comprises standard modules with outputs of 120 130 watts. Most of these modules are manufactured at Solon's German facilities and marketed under the company's own brands. A small number of OEM products are manufactured. Apart from module production, this segment also includes a wholesale business based on products from other manufacturers. The most important target customers of this business segment are wholesalers specializing in solar technology and installation companies. The system technology segment comprises the manufacture and distribution of the Solon mover power plant system and the solar module project business. Also included is the production of sine wave inverters for off-grid applications. The company acquired a stake in Global Solar Energy in 2006 to gain access to the U.S. market and is also working to capture market share in Spain, Italy, and France.
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Taiwanese Companies E-Ton (not rated) is a pure-play solar PV cell manufacturer focused on the production of mono-crystalline solar PV cells. The company has recently started a series of vertical integration activities to capture more value from the solar chain. E-Ton designs, develops, manufactures and markets a variety of PV cells. Its product offerings including 5 monocrystalline solar PV cell, 5 multi-crystalline solar PV cell, 6 mono-crystalline solar PV cell, and 6 multi-crystalline solar PV cell. The company is committed to developing highefficiency solar cells with innovative technologies such as AR coating and in-line PECVD. ETons top-tier customer base includes companies such as Solar-Fabrik, Solaria, and Solara. E-Ton established a subsidiary, Gloria Solar, to enter the PV module business in 2006, which formed a joint venture with Spire to address the PV system installation market in the United States. E-Ton also recently acquired ADEMA Technologies, a wafer manufacturer in the United States. The Taiwan-based company has customers across the globe, with a strong focus on Europe, and is developing new customer relationships in the United States and China. Motech (not rated) is one of the largest solar PV cell manufacturers worldwide. The company designs, develops, manufactures, and sells a variety of high-q uality monocrystalline and multi-crystalline PV cells and PV systems. In addition to solar PV cells and systems, Motech also produces high-precision test and measurement equipments. The company has started to vertically integrate since 2006. The company is currently expanding its in-house ingot and wafer capacity in China. Motechs current end customers are concentrated in Europe, especially Germany, Spain, and Italy. But the company has also started diversifying its geographical exposure and expanding to more end markets including the United States and South Korea. Solar Equipment Companies Applied Materials (2-Equal weight, 2-Neutral, C. J. Muse) offers customers solutions for fabricating three types of solar modules based on crystalline silicon wafers, which deliver the highest sunlight-to-electricity conversion efficiencies. They are also used for areaconstrained applications such as homes, for large-area thin-film solar modules on glass that are well-adapted for large-scale power plants and building integrated photovoltaics (BIPV), and for flexible PV solar modules that use non-traditional substrates to provide light-weight solar power for mobile applications and facilitate innovative low-cost methods for installing solar on buildings. Applied SunFab thin-film Line enables customers to manufacture worldclass, 5.7m2 thin-film silicon PV modules. The Applied SunFab Line delivers state-of-the-art manufacturing capability needed to produce the lowest cost per watt modules. Leybold Optics (not rated) is one of the world's leading providers of vacuum technology. The company focuses on 3D-Coating/Web, Display/Glass, Optics, Solar and Special Systems. Headquartered in Alzenau, Germany, it is managed by Mr. Helmut Frankenberger. Since 2001, has been part of the private equity fund EQT, founded by the Swedish industrialist family of Wallenberg. The company also uses PHOEBUS, its PECVD solution for the silicon thin-film solar cell industry. PHOEBUS is based on a vertical, carrier-
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free linear cluster approach to avoid both particle contamination issues common for horizontal systems and the elevated costs associated with vertical systems. The most crucial component of any silicon thin-film solar cell is the light-absorbing layer. Compared to the overall thickness of the solar cell, the absorber represents the biggest part, which is particularly true for so-called tandem and triple cells. PECVD (plasma enhanced chemical vapor deposition) is generally used to deposit the absorber layer consisting of a PIN junction from a silane hydrogen gas mixture using boron and phosphor containing dopant gases for the P and N layers, respectively. Oerlikon Solar (not rated) offers field-proven production solutions for thin-film silicon solar modules based on its extensive experience in thin-film mass production technology. The fully automated high-yield, high-uptime, and low maintenance solutions focus on reducing device cost and maximizing productivity. Oerlikon mass production solutions are modular and upgradeable in throughput, as well as process technology. ULVAC Technologies (not rated), founded in Japan in 1952, is an international corporation that designs, manufacturers, and markets equipment and materials for industrial applications of vacuum technology. Today, ULVAC is a leading global supplier of production systems, instrumentation, pumps and vacuum components used in the semiconductor, flat-panel display, disk/magnetic media, and industrial manufacturing markets. The corporation is composed of some 36 individual companies engaged in all sectors of the vacuum industry. The ULVAC name is derived from the company's conceptual foundation, "The ULtimate in VACuum Technology." VON ARDENNEs (not rated) core skill in the field of PV, the conversion of solar energy into electrical current, lies in thin-film technologies, which are used to manufacture different kinds of solar cells. VON ARDENNE supplies the necessary production equipment and essential technologies used in the manufacture of both wafer-based and thin-film solar cells. Centrotherm (2-Equal weight, 2-Neutral, R. Madlani) has been a part of the PV industry since 1979 and is a technology and service provider for the manufacturing of solar cells and solar-grade silicon. It offers key equipment and turnkey production lines for crystalline cells and thin-film modules. The company has supplemented its crystalline cell product offer with reactors and converters for manufacturing solar silicon. The company also has thin-film module turnkey lines. Centrotherm has expanded its global footprint in Asia, southern Europe and the United States and established sales and service subsidiaries in these regions, while maintaining its production and technology centers in Germany. Manz Automation, (2-Equal weight, 2-Neutral, R. Madlani) with more than 20 years of experience in robotics, image processing, and control engineering, is a world leader in its field. The company works in close cooperation with its customers to develop sector-specific automation solutions, which are sold worldwide. Roth & Rau (3-Underweight, 2-Neutral, R. Madlani) is among the leading suppliers of PECVD equipment for deposition of amorphous hydrogenated silicon nitride as passivation
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and anti-reflective coatings for crystalline silicon solar cells. Further products are plasmaetching systems for edge isolation, and other dry etching applications in photovoltaics and plasma process equipment for research and development. Schmid (not rated): Gebr. Schmid was founded in 1864 in Freudenstadt, Germany, as an iron foundry and mechanical workshop. Since 2001 the third Schmid business field, photovoltaics, is a success story worldwide. Schmid delivers production equipment for wafers, cells, and modules. Spire (not rated) is a diversified technology company providing innovative solar energy manufacturing equipment and solar systems, biomedical devices, and optoelectronic components. Applying its expertise in materials technologies across all product lines, Spire has a rich heritage of applying science and research to develop products that generate renewable energy, improve health care, enhance security, and deliver advanced solutions to businesses worldwide. Meyer Burger (2-Equal weight, 2-Neutral, R. Madlani) is a leading supplier of highprecision machines with wire saws, band saws and ID/OD slicing systems for cutting hard and brittle materials such as silicon, sapphire or other crystals into wafers, prisms, and other shapes. The companys offering includes various models of high-precision machines, spare parts, wear-and-tear parts, consumables, regrooving service, process know-how, support, training and other services. Meyer Burgers machines, skills and technologies are mainly used in the solar industry (PV), the semiconductor industry, and in the optical industry. These three markets all require the thinnest possible wafers of silicon or sapphire for the manufacture of solar modules, integrated circuits, or high-performance LEDs. BTU International (not rated) has participated globally in the PV industry since the 1990s. BTU was a pioneer in the diffusion, APCVD coating, and metallization processes. Solar cell manufacturing requires several thermal steps similar to semiconductor manufacturing, an industry where BTU is also a market leader. These processes include diffusion, drying, coating, and firing of the solar cell. BTU provides thermal solutions for all of these process steps.
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Spain 38%
US 7%
World solar PV market installations reached a record high of 5,900MW in 2008, representing growth of 90% over the previous year. Germany's PV market reached 1,793MW in 2008 and now accounts for 35% of the world market. Installations in Spain grew by 350% to 1,926MW, while the United States increased by 55% to 341MW. The U.S. is the world's fourth-largest market behind Japan. World solar cell shipments reached a consolidated figure of 6,115 MW in 2007, up from 3,363 MW per year earlier. Polysilicon production for both solar and semiconductor use rose 37% in 2008.
P roduc tion 1 4%
Installation 75%
The solar industry offers significant social benefits in the form of job creation. A large number of jobs created are in the installation part of the value chain. This essentially gives a boost to the local economy. Extensive research on the solar industry has shown that approximately 10 jobs are created per MW during production and nearly 33 jobs per MW are created during the installation. The job creation extends across the value chain and also influences supplementary industries and businesses. Wholesaling of the systems and indirect supply for the production process each create three to four jobs per MW with research having one to two jobs per MW.
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Euro pe 7 4%
O ther 2 5%
East Asia 1% Chin a 1% Cen tra l and So uth Am erica 11% Ea st Asia 8%
O the r 14%
Sou th Asia 1%
The value generated across the PV chain has been increasing considerably over the past few years. Currently, Europe has garnered the most part of the PV value with over 74% in 2007. This is primarily due to the large solar markets of Germany, Spain, and Italy. As other markets continue to evolve around the world, the share of Europe is expected to decrease steadily over the next few years. Developing markets like North America, China, and South Asia are expected to garner a large part of the share. Other developing markets include OECD Pacific, Middle East, Africa, and Economies in Transition which are expected to create over 25% share in the PV value chain.
The major demand centers for the PV industry remain the markets of Europe. In the past few years, China and Taiwan have emerged as the new and growing supply centers. While Japan and Europe continue to be important cell manufacturing hubs, their proportion in the total has steadily decreased. Europe has continued its trend as a major net importer due to the increased demand from Germany and other southern European markets such as Spain, Italy, and Greece. The U.S. has steadily moved from an exporter in 2004 and 2005 to a net importer from 2006 onwards. Japan has meanwhile maintained its position as a major exporter as its own solar consumption has stagnated.
OECD Europe, which includes Germany, Spain, Italy, and Greece, is expected to remain the largest market through 2020 both in terms of annual installations and cumulative installations. North America, and especially the United States, is expected to emerge as a large market with consistent growth in the next few years. China and South Asia is expected to emerge as a large market by 2020, mainly due to growth in annual installations, with China accounting for more than 10% of annual installations in 2020 and South Asia accounting for 9% of the 2020 installations. China and South Asia are expected to continue their growth, possibly becoming the largest markets by 2030.
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Tokuyama 10% MEM C 7% Wacker 14% REC 11% Mitsubishi M at erials 3% Sumitomo Titanium 2% M itsubishi Polysilicon 2%
Currently, only about eight polysilicon manufacturers are able to produce high-quality polysilicon on a large commercial scale. About 71% of polysilicon is supplied by eight companies. The major poly producers are Hemlock, Wacker, REC, MEMC, Tokuyama, Mitsubishi Materials, Mitsubishi Polysilicon, and Sumitomo. We estimate 52,000 metric tons of production in 2008, up 35% from 37,000 metric tons in 2007.
Figure 318: Polysilicon Supply The polysilicon industry supplies the semiconductor and solar industries. The semiconductor industry has been able to garner a larger share of the poly silicon market due to early -mover advantage in ensuring supply from the major polysilicon producers. Despite this, the share of solar in polysilicon procurement has been rapidly increasing over the past few years. We estimate that only 28,000MT of high-purity silicon was available to meet the demands of the entire solar industry in 2008. We estimate that 22,500MT of scrap and reclaimable silicon was used by the major solar companies in 2008. In 2008, a number of companies also began using upgraded metallurgical silicon to meet their silicon requirements.
Solar, 28,036MT
Semiconductor 26,214MT
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USA 17%
In 2008, China was the worlds largest solar cell producer. Led by Suntech, JA Solar and Yingli Green Energy, China produced more than 1,600MW worth of Solar Cells in 2008. Europe was the second largest producer of solar cells in 2008, with a 27% market share. Europe produced more than 1,300MW of solar cells in 2008. The United States and Japan were the third and fourth largest producers of solar cells in 2008, with a 17% and 15% market share, respectively. In total, the world produced more than 5MW of solar cells in 2008.
10 ,0 00
8 ,0 00
6 ,0 00
4 ,0 00
2 ,0 00
The PV market is expected to continue its rapid growth. The pessimistic scenario is shown in the chart and is based on the premise that the market is unable to receive any major enforcement of support mechanisms. The policy-driven scenario shown expects the follow-up and introduction of support mechanisms, such as feed-in tariffs, in a large number of countries, and other measures taken by governments worldwide to aid the solar PV industry.
Pe ssimi sti c S ce nari o Poli cy Sc ena rio
Module , 15%
We estimate that the solar equipment market was $1.4 billion in 2006, with the wafering market roughly $200 million (or 15%), the cell market around $1 billion, and the module market roughly $200 million. Approximately $160 million of the cell equipment market was thin-film and the rest was crystallinesilicon.
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Yingli 6%
Q-Cells remained the biggest solar cell producer worldwide in 2008. The solar cell market is becoming less fragmented, with the top 10 producers accounting for 70% of the global market, vs. 50% one year ago. A number of companies such as First Solar (FSLR) and Yingli Green Energy (YGE) raised production considerably in 2008. We expect First Solar to become the largest solar company in 2009 with more than a 20% market share. Sharp is planning to increase solar capacity in order to regain the top spot in 2009. Companies such as SunPower, Trina Solar, JA Solar, Sanyo, Yingli Green Energy, and Motech are also among the largest module manufacturers worldwide.
Kyocera 4%
Othe r 1%
Multicrys talline 4 3%
Crystalline silicon is the mainstay of most PV products as it is widely available in nature. Efficiencies of over 20% have been obtained with silicon cells in mass production. Wafer thickness is also an important factor. Average thickness is expected to reduce to 150 microns by 2010. Thin-film modules have also become commercially accepted due to the current shortage of silicon. They are manufactured from amorphous silicon, Copper indium diselenide (CIGS), and cadmium telluride (CdTe). Multicrystalline thin-film on glass (CSG) is also a promising thin-film technology now entering industrial production.
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The semiconductor industry has been the major consumer of silicon traditionally. It was only in the recent past that the demand from the PV industry began to compete with semiconductors for the silicon feedstock. In 2007, silicon feedstock supply to the PV industry first overtook the semiconductor industry supply. This has been despite the fact that the supply to the semiconductor industry has grown steadily whereas the solar industry growth has been considerably higher. The broad range of consumer electronic products based on semiconductors has been the main driver for the semiconductor demand.
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Solar cells are created from wafers. The major wafer manufacturers include companies like REC Wafer, SolarWorld, LDK, and Renesola. The larger wafer manufacturers have been moving toward greater levels of vertical integration. This has led to a number of solar cell companies also announcing backward integration into wafer manufacturing. Wafer manufacturing capacity is expected to expand considerably in the next few years as companies expand to meet increased demand. Most of the wafer manufacturing plants are large in size, being more than 100MW in capacity. The remaining plants are nearly equally divided between those greater than or equal to 50MW10MW and those greater than or equal to 10MW 1MW.
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Figure 326: Cell Manufacturing Plants Solar cells are a basic building block for solar modules and panels. They are generally created from wafers. Major solar cell companies include Q-Cells, Sharp, Suntech, and First Solar. A number of these companies such as Suntech and First Solar have vertically integrated and use their own cells to produce their modules. A number of companies are also backward integrating into creating their own wafers, with Q-Cells announcing such plans. The largest portion (45%) of solar cell manufacturing companies are extremely small in size and produce less than 10MW of solar cells annually. The largest proportion of cell production (61%) nonetheless comes from the larger manufacturers (greater than or equal to 100MW).
Figure 327: Australian PV Market (MW) The Australian PV market has grown gradually over the past few years. This is expected to change in the near future due to a number of incentives announced by a number of state governments. The federal government currently provides a grant of AUD8,000 per household for installations and 50% for schools. The most attractive tariff has been announced by the state of Victoria, which will provide AUD0.60 for every unused kWh fed back into the system. This will start from 2009 and run for 15 years. It will be available for household installations up to 2kW and have a cap of 100MW.
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California is the largest solar market in the United States and continues to grow at a rapid pace. The installed capacity in California grew by 38% in 2007 to 81MW from 59MW in 2006. In 2007, California launched the Go Solar California campaign, which plans to install 3,000MW of solar capacity by 2017. The initiative is expected to require investments of $3.3 billion. Individual cities have also initiated steps to promote solar. San Francisco plans to install a total of 360MW of renewable energy by 2017. This would power more than half the electricity needs of the city.
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The Canadian PV market has grown at a CAGR of nearly 25% since 1993. In Canada, solar energy technologies are primarily used for air and water heating. The lack of any major financial incentive has meant that the industry has not been able to grow to its full potential. Canada, though, is home to some of the major solar companies involved in nearly every aspect of the value chain, from polysilicon manufacturing to BIPV products. The Canadian Solar Energy Industries Association believes that Canada has a potential PV market of 3GW in the coming years.
Figure 330: Chinese PV Market (MW) The Chinese government has said that it will increase the development of renewable energy to curb its reliance on oil and gas. China plans to increase its share of non-hydro renewables to 1% of total power generation by 2010, and to 3% by 2020. The country also plans to increase its renewable energy capacity to 60GW by 2010, including 450MW of solar generation capacity. Solar capacity is to be increased to 1.8GW by 2020. China has been more focused on solar hot water as an energy source as it has a larger benefit for the rural population. It has targeted 150 million sq. meters by 2010 and 300 million sq. meters by 2020. The government has not provided any financial incentive for solar, which is being seen as a barrier to exponential growth.
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France has set itself a target of 20% share of renewables in energy consumption by 2020. In addition, the French government is planning to have an installed capacity of 5.4GW by 2020. Five million solar thermal units are also to be installed in buildings by 2020. The government has also initiated a strong feed-in tariff scheme especially attractive for BIPV installations. The government is also giving a 50% income tax credit for private individuals. France also benefits from favorable irradiation conditions, especially in the south and in the overseas territories. Grid parity in France is expected to be achieved by 2012, despite its high electricity prices, by which time cumulative installations in France are expected to rise above the 1GW mark.
The introduction of the Renewable Energy Law in 2000 accelerated the German PV market by providing a buyback rate of EUR0.50/kWh. In 2004, a revised feed-in tariff program accelerated the PV deployment even further. By the end of 2006, 300,000 PV systems were installed in Germany.
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The solar PV market in Great Britain has lagged behind other markets of mainland Europe. Although growing at a CAGR of about 35% from 1993 to 2006, other countries such as Germany (55%) have grown at a much faster rate despite a larger base. The government has set a target of renewable energy generating 15% of the nations needs by 2020, which is a near fivefold increase over the current scenario. The government also plans to ensure that all new homes are zero carbon by 2016. The British government had offered to subsidize solar installations by giving up to 7,500 to install PV panels. The success of this measure had an adverse effect as the government capped the payouts to 500,000 per month and reduced by two-thirds the maximum amount paid for PV panels. These measures have been a severe damper for the market.
Figure 334: Greek PV Market (MW) Greece has become one of the potentially most attractive markets for solar PV development after the introduction of the RES law in June 2006. The government has set a target of 840MW of solar PV installations by 2020. Out of these, 640MW are to be on the mainland and 200MW on the islands. Under the new feed-in tariff program, new tariffs are adjusted annually on the basis of retail price increases and inflation. The tariff is guaranteed for 20 years. In addition, the 0.8GW cap that was initially part of the tariff has been removed. There have been about 2.5GW of applications already submitted to the government. The Greek market is expected to grow the fastest among the large solar markets, but lack of infrastructure may be a concern for installations.
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The Indian government plans to increase its renewable capacity to 35GW in 2012 from the current 11GW. The main incentive for the solar industry has been in the form of financial assistance announced in January 2008. The assistance has been set at Rs 12 ($0.30) per kWh for solar PV and Rs 10 ($0.25) per kWh for solar thermal power fed into the grid. A number of states, such as West Bengal and Punjab, have also introduced subsidies for solar. West Bengal plans to generate 50MW from solar by 2015 while Punjab is offering 100MW of solar PV projects. The Indian government hopes that the private sector will invest about Rs 10 billion (US$253.7 million) during 2008 12 to develop solar plants.
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The government in Israel has committed to propagating solar by announcing a feed-in tariff scheme to encourage household solar electricity generation. The tariff scheme started from July. The Public Utilities Authority will purchase the electricity at NIS2.01 ($0.46) per kWh. Individuals currently pay NIS0.50 ($0.11) per kWh Private producers will be able to install a photovoltaic system with a capacity of up to 15kW. It is expected that a return on capita investments will take seven to 10 years. Businesses can also instal up to 50kW of capacity although no tariff scheme has been disclosed for them yet. Typical installations in Israel center on remote homes, agriculture, security and alarm systems, communications, and exterior lighting.
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Figure 337: Italian PV Market (MW) The Italian government plans to reach an installed capacity of 3GW by the end of 2016. The government has also set up an attractive feed-in tariff structure. The structure, inspired by the model used in Germany, entails fixed remuneration for the first 20 years for PV projects. There is an annual reduction of 2% every year for new applications. The structure has been put in place until a cap of 1.2GW is achieved. The government has also simplified the process of getting access to the grid by the introduction of the new program in February 2007. Large IPP and medium to large commercial systems offer good potential in the near term.
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Figure 338: Japanese PV Market (MW) Japan is one of the largest markets worldwide for solar products The governments target is to increase the solar installed capacity to 70% of all new homes by 2020. Japanese companies such as Sharp and Kyocera are among the larges solar cell producers in the world. These firms have lost a considerable amount of market share since the Japanese government scrapped solar subsidies in March 2006. Japan has reintroduced subsidies on solar power equipment in 2009 in order to boost the PV industry in the country. The governmen is paying 70,000 Yen/KW ($775/kw) in subsidies during 1Q09. They expect 35,000 applications during 1Q09. The prices of solar panels are then expected to halve in three to five years in Japan.
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Mexico is believed to have one of the best potentials for solar electricity generation worldwide. The gross solar potential is estimated at above 5kWh/m2 daily. This corresponds to about 50 times the national electric generation requirement of the country. Despite this, the PV industry has grown at a slow pace with a CAGR of about 8% from 1993 to 2006. By 2013, Mexico is estimated to have an installed capacity of 25MW, which would generate about 14GWh of electricity per year. Mexico also has a large solar thermal capacity in addition to this. A major cause of the lack of any rapid growth in the industry has been the lack of any major financial incentive for the industry from the central government. Mexico currently generates about 24% of its electricity from renewables, predominantly from hydro and geothermal sources of energy.
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The South Korean government has set a target of 5% energy generation from renewables by 2011. It also plans to install 1.3GW of PV capacity by 2011. The country has provided an incentive through feed-In tariffs of US $0.64/kWh for systems 30kW200kW and US$0.61/kWh for systems between 200kW and 1MW. Systems between 1MW and 3MW will receive incentives of $0.58/kWH while systems in excess of 3MW will receive incentives of $0.49/kWh. These tariffs will decrease by 4% per year from 2009 onwards. We estimate that South Korea will provide over $15.4 billion in subsidy for PV installations in a bid to meet its targets. Grid parity is expected to be reached by 2012 in the country, although a large increase in the fossil fuel prices could take it closer.
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The main incentive driving PV demand in the United States is the 30% federal tax credit. Recently the ITC was extended by eight years. In addition, the $2,000 cap was removed and utilities are not allowed to take advantage of the subsidy. Various state governments and municipal governments have taken active steps to propagate PV installations including feed-in tariff structures in some states. Seventeen states have committed to fund installations of more than 10GWp of solar power in the next 15 years. California and New Jersey led in solar installations in 2007.
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The state of Illinois has seen a steady increase in business and home solar power installations. This has been aided and encouraged by state and federal incentives. The recent extension of the ITC for solar installations is also expected to provide a tailwind to the industry. The Illinois Department of Commerce and Economic opportunity provides a Solar Energy Rebate Program that reimburses 30% of the solar projects costs up to $10,000 for PV and solar thermal systems. The department has allocated about $1 million over the past two years. The city of Chicago has been the epicenter for installations in the state. Homeowners and businesses are increasingly turning to solar power in the city. The city is expected to generate 25% of its electricity from renewables by 2010.
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Europe is home to some of the biggest markets for PV power such as Germany, currently the largest market, and Spain, which has grown considerably in PV installations in 2007. Other important markets include Italy, Greece, and France. Luxembourg has the maximum PV power per inhabitant in the entire European Union, largely due to its small population. Germany, given its size and population, continues to be the most important market for solar in the world. The results of the various measures taken by Germany are visible through the high amount of PV power per inhabitant in the country. Countries such as Spain, Italy, and Greece are expected to increase this considerably in the coming few years, due to the strong sustained growth being shown in these markets.
Figure 344: U.S. Solar Market The U.S. solar market is expected to be boosted by the recent extension in the ITC. This is expected to provide significant headwind to the solar markets in California and the rest of the country. A number of recent contract announcements and solar farms were dependent on the extension of these subsidies. Other initiatives such as the Renewable Portfolio Standards have also contributed to the rapid growth in the industry. The share of ongrid installations has also increased considerably since 2003 with a large portion of the new installations being on-grid while the off-grid market has stagnated. California has been the largest market in the U.S. and had a 57% share in the 2007 on-grid installations.
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Figure 345: Japanese Solar Market Japan has been one of the largest markets for solar energy in the world. Initially aided by government support, the country was the largest producer and consumer of solar panels. Japan was replaced by Germany as the largest market thanks to the aggressive push from the German government. The lapsing of solar subsidies in Japan dealt a severe blow to the Japanese market which was recently overtaken by Spain and is currently one of the largest solar markets outside Europe. From 1994 to 2004, the Japanese residential market grew at a CAGR of 85% while it only grew at a CAGR of 13% from 200107. The government has recently said that it is considering measures to boost the sector.
Figure 346: Japanese Solar Market The Japanese market had started to stall post the expiry of the residential market subsidies in 2005. The solar market in Japan decreased from 300MW in 2006 to about 230MW in 2007. Japan though remains one of the largest producers of solar panels and is a net exporter. Most of the exports are to Europe which has seen significant growth in the last few years. The largest segment in the Japanese market is the residential market which accounted for over 85% of the total market. The fastest growing market is the public sector market.
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The U.S. solar market has been growing over the last few years. This growth is expected to continue now after the passage of the ITC. The government structure in the U.S. has allowed a number of cities and states to come out with their own local policies and subsidies despite a lack of such initiatives from the federal government. The solar programs in California and other states have been very successful in propagating the technology. The major demand centers for solar include California, Nevada, New Jersey, Arizona, Colorado, and New York.
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The Building Integrated Photovoltaic (BIPV) industry is expected to grow rapidly in the next few years. The size of the commercial rooftops market is expected to rise from nearly 2GW in 2008 to close to 5GW in 2012. This is being driven by commercial installations such as retailers, shopping malls, airports, schools and universities, warehouses and factories apart from utilities and residential installations. A number of major markets have also put in place specific incentives for the BIPV market. The tariff is currently highest in France, which provides a fixed tariff of EUR0.55/kWh ($0.88) for BIPV installations and EUR0.30/kWh ($0.48) for Building Applied and ground-mounted PV installations. Germany provides a EUR0.05/kWh ($0.08) premium for BIPV installations. Tariffs in Italy vary inversely with the size of the systems.
The California Solar Initiative pays solar companies their incentive in two ways. The payments can be a lump sum for smaller systems or can be taken over the course of five years. The initiatives two payment types are Expected Performance Based Buy-Down (EPBB) and Performance Based Incentive (PBI). The EPBB payments are made on a $ per watt basis. The PBI payments are provided on a per kWh basis. Although any size system can take PBI, all systems over 50kW must take it from 2008 and all systems over 30kW must do so from 2009. The payments are made for a total of five years and are based on actual kWh production.
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In addition to tax rebates and RPS programs, some states are enacting other programs to motivate both residents and non residents to build solar and renewable projects. For example, Florida revived a property tax exemption for homes and businesses that installed solar, wind, and geothermal energy sources, while North Carolina created a law that exempted a portion of the value of the PV system from property tax. While some states gave rebates on property taxes, Kentucky gave an exemption on sales and use taxes on property which was purchased for creating renewable energy systems.
Traditional RPS programs carry a concern that they will benefit mostly least-cost projects as all eligible renewable technologies can compete. A number of states have thus taken the initiative of designing their policies to give support to higher cost renewable technology applications. Set-asides for solar technologies exist in nearly half of the U.S. State RPS programs. In 2007, new solar or distributed-generation (DG) set-asides were created in Delaware, Maryland, New Hampshire, New Mexico, and North Carolina. Colorado also effectively expanded its previously initiated solar set-aside through an increase of its states overall RPS target.
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The incentives provided under the California Solar Initiative (CSI) are monitored by the California Public Utilities Commission (CPUC). For the under 10kW sector, which primarily consists of residential applications, the demand through CPUC has increased considerably over the earlier demand seen for the Emerging Renewable Program (ERP). However, the ERP had funded both residential and small commercial installations under 30kW. The program had not categorized the applications by residential versus non-residential systems. The combined demand had been the highest in 1Q07 at 11.0MW, but has since decreased slightly to 7.1MW. The projects considered below under ERP are largely residential, although some small commercial applications have also been included as they were less than 10kW in capacity.
Figure 353: California Solar Initiative Demand The California Solar Initiative (CSI) started in 2007 with the Go Solar California campaign that aims to install 3,000MW of new grid-connected solar by 2016 through a $3.3 billion effort. The participation of the Investor Owned Utilities is primary to achieving the aims of the CSI. The demand for the CSI program is nearly exceeding the demand seen by earlier initiatives such as the Self-Generation Incentive Program (SGIP), which installed 33MW in 2007, and the Emerging Renewables Program (ERP) which installed 26MW in 2007. Both these programs are now closed to solar and have been replaced by CSI.
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The goal of the California Public Utility Commission (CPUC) portion of the California Solar Initiative is to increase the solar installations in the state to 1,750MW by 2017. Since the start of 2007, the program has received over 359.8MW worth of applications. Although the CPUC has divided the goals by program administrator and customer segment, there are no annual targets, as demand is expected to vary due to changes in incentives and market maturity. Out of the three administrators, Southern California Edison (SCE) has the largest target of 806MW, Pacific Gas & Electric (PG&E) has a target of 764MW, and the California Center for Sustainable Energy (CCSE) has a target of 180MW.
The demand generated by the California Solar Initiative (CSI) is quickly surpassing that of the previous programs launched in California. The previous programs, i.e., the Self-Generation Incentive Program (SGIP) started in 2001 and the Emerging Renewables Program (ERP), started in 1998, had also managed to generate considerable demand for solar. These two programs are now closed to solar. There were 97.9MW of solar in 2006 through the ERP and SGIP programs. In 2007, the confirmed applications grew to 178.8MW of solar capacity through the ERP and CSI programs. Although 208MW of applications were received in 2007 through the CSI program, only 160.3MW of confirmed reservations were processed. In 2008, the CSI program received 18,826 applications totaling 222.5MW.
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All systems in O UI areas except New homes in All systems in new homes IOU territories POU areas Builders, Various Various home buyers Jan-07 Jan-07 Jan-08
The goal of the Go Solar campaign is to install 3,000MW of solar electricity generation capacity over the next 10 years. The statewide budget for the initiative is $3.3 billion. The campaign is split into three distinct programs, each of which has its own set of budgets and goals. The California Solar Initiative is overseen by the CPUC. It provides incentives to customers in investor-owned utility (IOU) areas of PG&E, Southern California Edison, and San Diego Gas & Electric. These utilities control more than 75%80% of the states electricity usage. The New Solar Homes Partnership is managed by the California Energy Commission (CEC). It propagates solar in new home constructions within the territories of the three investor-owned utilities. The Publicly Owned Utilities (POU) program requires every municipal utility to provide a solar incentive program.
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Net-metering is an electricity policy for consumers who own, generally small, renewable energy facilities. It allows for the flow of electricity both to and from the customer. When the customer's generation exceeds use, electricity from the customer to the utility offsets electricity consumed at another time by the customer. In effect, the customer is using the excess generation to offset electricity that would have been purchased at the retail rate. Under most state rules, residential, commercial, and industrial customers are eligible for net-metering, but some states restrict eligibility to particular customer classes.
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Public Benefit Funds are state-level programs developed as a measure to ensure continued support for renewable energy resources, initiatives for energy efficiency, and low-income support groups. This is typically done through the electric utility restructuring process. All customers are typically charged a certain amount on electricity consumption as a means of supporting the charge. Rebates on renewable energy systems, funding for renewable energy R&D, and the development of renewable energy educations programs are ways in which the fund can be used .
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The German government has been a major proponent of renewable sources of energy. Germany enacted the Renewable Energy Legislation, which has been effective since 2000. The legislation aims to support the introduction of renewables-based electricity generation plants and meet the emissions reduction targets set. The legislation calls for different levels of subsidy according to the source of electricity generated. About EUR 7.7 billion of feed-in tariffs were given in 2006. It is projected that EUR7.9 billion of feed-in tariffs will be paid in 2008, rising to EUR10.1 billion in 2010. Grid operators have the right to pass on all surcharge payments to the suppliers and the amount can be reduced to EUR0.05/kWh if a company consumes more than 10GWh.
Source: RWE Factbook, German Interconnected Power Grid Association, Barclays Capital research
Figure 360: U.S. Renewable Portfolio Standards In addition to the support at federal level, the states and municipal governments provide rebates for PV system purchases. Furthermore, about half of the states have currently committed to fund the installation of more than 10GW of peak solar power in the next 15 years, with California, New Jersey, Arizona, Maryland, and Pennsylvania leading the charge.
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The lack of a clear nationwide solar goal for the United States has resulted in a number of states taking the lead and committing to solar by setting individual targets for installations by 2020. Primary among these is California, which is not only the largest market in the United States but is also among the largest in the world. The Mojave desert in California has among the highest solar insolation rates across the globe and is a hub for solar PV and solar thermal projects. New Jersey is currently the second largest state in terms of solar installations and is also the fastest-growing market in the United States. Most of these states have also set up Renewable Portfolio Standards to meet their goals of reducing dependence on fossil fuels.
Figure 362: Kyoto Target for Reduction of Greenhouse Gases The Kyoto Protocol was adopted in 1997 in Kyoto by the 3rd Conference of the Parties. It came into effect in 2005. The objective of the protocol is to reduce greenhouse gases in order to prevent climate change. The protocol cover 181 countries across the globe but only 60% of global greenhouse gas emitting countries. The U.S. is the only developed country not to have ratifies the Kyoto Protocol although it has signed it. The Kyoto Protocol calls for industrialized countries to reduce their collective emissions of greenhouse gases by 5.2% compared with the year 1990. The goal is to lower emissions of six greenhouse gases carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons, perfluorocarbons averaged over the period 200812.
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In addition to the Federal Investment Tax Credits, residents from Minnesota can also receive rebates from their utility companies for installing solar panels on their roof. According to the Solar Electric Power Association, there are three utilities offering incentives for installing PV in Minnesota. The rebates that these utilities provide vary, and are based on the size of the system installed (in watts) or the amount of energy the system products (in kWh). The chart details the different utilities in Minnesota and their specific incentive plans.
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In addition to the Federal Investment Tax Credits, residents from the state of Washington can also receive rebates from their utility companies for installing solar panels on their roof. According to the Solar Electric Power Association, there are seven utilities offering incentives for installing PV in Washington. The rebates that these utilities provide vary, but they vary based on whether the installation is for Residential or Commercial use, as well as if the system is a solar water heater or PV installation. The chart details the different utilities in the state of Washington and their specific incentive plans.
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In addition to the Federal Investment Tax Credits, residents from Florida can also receive rebates from their utility companies for installing solar panels on their roof. According to the Solar Electric Power Association, there are two utilities offering incentives for installing PV in the state of Florida. The rebates that these utilities provide vary, but they vary based on whether the installation is for Residential or Commercial use, as well as if the system is a Solar Thermal or PV System. The chart details the different utilities in Florida and their specific incentive plans.
In addition to the Federal Investment Tax Credits, residents from Colorado can also receive rebates from their utility companies for installing solar panels on their roof. According to the Solar Electric Power Association, there are five utilities offering incentives for installing PV in Colorado. The rebates that these utilities provide vary, but they vary based on whether the installation is for Residential or Commercial use. In addition to the solar incentives provided by the utility companies, the utilities also provide Renewable Energy Credits (RECs) to homes and businesses that install solar panels. The chart details the different utilities in Colorado and their specific incentive plans.
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In addition to the Federal Investment Tax Credits, residents from Texas can also receive rebates from their utility companies for installing solar panels on their roof. According to the Solar Electric Power Association, there are three utilities offering incentives for installing PV in the state of Texas. The Three utilities participating in the program are Bryan Texas Utilities, CPS Energy and Austin Energy. The incentives range between $4.00/W and $5.60/W, and in the case of Austin Energy, provides additional rebates for PV systems that were manufactured in the state of Texas. The chart summarizes the incentives that the Texas utilities provide.
Photovoltaic and other renewable applications have generated significant benefits in terms of job creation. A large part of the job creation is at the end installation point, leading to job opportunities at the local level. Industry information suggests that 10 jobs are created per MW during production and 33 jobs are created per MW during the installation. Although these numbers are expected to decrease over the coming years, the increase in volumes will continue to propel job creation. Nearly 6.3 million people across the world are expected to work in solar-related activities by 2030, according to a scenario generated by the EPIA. Nearly 35,000 people were employed in Germany alone in 2006.
Rule of Thumb: One square foot of mono-crystalline or polycrystalline PV module area produces 10 watts of power in bright sunlight. A 1kW system requires about 100200 square feet of roof area, depending on the type of PV module. In general, the amount of roof area needed depends upon the PV modules efficiency in converting sunlight to electricity and the generating capacity or rating of the PV system. A PV array using 5001,000 square feet of roof space is required for meeting all of a homeowners needs.
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Over the past few years the % share of On-grid applications has increased considerably. In 2007, over 90% of the new PV installations were on-grid. This has been aided by the various government subsidies and programs such as feed-in tariffs. All applications for PV installations such as on-grid, off-grid rural electrification, off-grid industrial and consumer applications are expected to increase in absolute terms. In the future it is expected that the share of on-grid installations will fall. The primary reason for this is expected to be the rise in off-grid rural electrification, which due to its immense potential should witness considerable growth.
Figure 371: Cell Manufacturing Japan and Europe have been the traditional manufacturing centers for the solar industry. These have also been the major demand centers with Europe being the largest market. The solar industries in Germany and the southern European markets of Spain, Italy, Greece and France have benefited from attractive government subsidies. Since 2004, there has been a distinct shift in manufacturing towards China. Although China is not a major demand center, it has become the largest producer of solar cells. China and Japan are major exporters of cells while Europe and the U.S. have now become net importers. This trend is expected to continue in the near future.
Source: Solarbuzz, Barclays Capital research
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Figure 372: Solar Cell Growth Traditionally, solar cells have been primarily made from crystalline silicon. The recent shortage of silicon has also led to an exponential growth in solar cells made from thin films. The growth in the thin film segment has been higher than the growth in the crystalline silicon solar cells. In 2007, the thin film segment grew by over 120% while the crystalline silicon segment grew by only ~50%. The predominance of crystalline silicon though meant that the total solar cell growth in 2007 was 56%. This was a considerable increase from the 33% in 2006. Among crystalline silicon, the growth in both multicrystalline silicon and monocrystalline silicon was equivalent.
Source: Solarbuzz, Barclays Capital research
Off-grid applications are mostly already cost competitive compared to the alternative options. PV is generally competing with diesel generators or the potential extension of the public electricity grid. The fuel costs for diesel generators are high, whilst solar energys fuel is both free and inexhaustible. The high investment costs of installing renewable energy systems are often inappropriately compared to those of conventional energy technologies. In fact, particularly in remote locations, a combination of low operation and maintenance costs, absence of fuel expenses, increased reliability and longer operating lifetimes are all factors which offset initial investment costs. This kind of lifecycle accounting is not regularly used as a basis for comparison. The other main alternative for rural electrification, the extension of the electricity grid, requires a considerable investment. Off-grid applications are therefore often the most suitable option to supply electricity in dispersed communities or those at great distances from the grid. However, although lifetime operating costs are much lower for off-grid PV than for other energy sources, initial investment costs can still be a barrier for people with little disposable income.
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In recent years, PV connected to the network has seen impressive growth, driven by the successful promotion policies of some countries, rising fossil fuel prices, the lower costs of technology, and climate change and the need for a sustainable energy model. Isolated PV installations, on the other hand, have lagged, growing at a CAGR of 12% from 200207 compared with grid-connected growing at 56% and total PV installations growing at 46% over the same period. The share of gridconnected PV has increased substantially from 66% of the total installations to 91%. This is expected to further increase over the next few years as the growth in isolated PV stagnates.
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The major PV applications include on-grid, off-grid rural electrification, off-grid industrial, and consumer applications. All of these are expected to increase in absolute numbers from 2006 to 2030. Currently, grid-connections dominate with 85% of the market share. This share is expected to fall in the future to off-grid applications. Off-grid systems often have batteries to store the electricity produced and have no access to the electricity grid, whereas grid-connected applications can feed electricity directly into a netw ork. Rural electrification is expected to experience considerable growth due to its immense potential.
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It is estimated that US$300 billionUS$500 billion will be used to finance company investments in the PV sector. Most of the money required is expected to be raised through debts taken by the companies. A large portion is also expected to be generated through the capital markets by issuing equity. Venture capital funds have played an important part in setting up a number of companies over the past few years and are expected to continue investing in small private companies before taking them public. As venture funds gain more exposure to the sector, their total amount of investment is expected to increase.
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Renewable electricity capacity worldwide reached an estimated 207GW in 2006, which was about 5% of the 4,300GW tota worldwide capacity. This did not consider large hydropower in renewable capacity. The 2006 capacity was a 14% increase over the 2005 capacity. The largest component in this was small hydro and wind power, which together comprised nearly 75% of the tota l capacity . The largest countries in terms of capacity were China (52GW), Germany (27GW), the United States (26GW), and Spain (14GW). Global capacity was estimated to reach 240GW in 2007.
Figure 378: Production Capacities (2010) Silicon supply has long been the bottleneck of the PV industry With the vast expansion of production capacities of known players and the introduction of new capacities, silicon capacities should reach 810 GWp by 2010, according to EPIA. Being a major raw material, silicon capacity predefines the upper production limit for the solar industry. Thin-film capacity is also expected to increase and represent about 20% of the overall module production capacity.
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First Solar (FSLR) is expected to be the worlds largest module producer, closely followed by Sharp and Suntech (STP). The solar module market is very diverse in terms of geography, with companies from countries such as Japan, Germany, China, and the United States. The fastest-growing companies in the solar module space include Suntech, which grew by 38%, and FSLR, which grew by more than 150%. These companies have already started to rapidly gain market share while major companies such as BP Solar, Mitsubishi Electric, and Sanyo have consistently lost market share to them over the past few years. While crystalline solar continues to be the dominan technology, they have continued to lose their dominant marke share position to thin film players such as FSLR.
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As the competition in the solar industry grows, companies are moving toward lower cost centers for their manufacturing needs China and Taiwan have been seen as the major manufacturing hub for the world. This holds true for the solar industry as well, with an increasing number of Chinese and Taiwanese companies entering the market in the last few years. A large part of this is concentrated in polysilicon production plants, silicon cells and modules and thin film cells and modules. A large number of these companies are still to reach volume production but already have contracts lined up for their expected future production.
Figure 381:Cell Manufacturing Japan and Europe have been the traditional manufacturing centers for the solar industry. These have also been the major demand centers with Europe being the largest market. The solar industries in Germany and the southern European markets of Spain, Italy, Greece, and France have benefited from attractive government subsidies. Since 2004, there has been a distinc shift in manufacturing toward China. Although China is not a major demand center, it has become the largest producer of solar cells. China and Japan are major exporters of cells while Europe and the U.S. have now become net importers. This trend is expected to continue in the near future.
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Figure 382: Solar Cell Growth Traditionally, solar cells have been primarily made from crystalline silicon. The recent shortage of silicon has also led to an exponential growth in solar cells made from thin films. The growth in the thin film segment has been higher than the growth in the crystalline silicon solar cells. In 2007, the thin film segment grew by over 120% while the crystalline silicon segment grew by only about 50%. The predominance of crystalline silicon though meant that the total solar cell growth in 2007 was 56%. This was a considerable increase from the 33% in 2006. Among crystalline silicon, the growth in both multi-crystalline silicon and mono-crystalline silicon was equivalent.
Berlin Paris Washington Hong Kong Sydney Buenos Aires Bombay Madrid Bangkok Los Angeles Dubai
Off-grid applications are mostly already cost competitive compared with the alternative options. PV is generally competing with diesel generators or the potential extension of the public electricity grid. The fuel costs for diesel generators are high, while solar energys fuel is both free and inexhaustible. The high investment costs of installing renewable energy systems are often inappropriately compared with those of conventional energy technologies. In fact, particularly in remote locations, a combination of low operation and maintenance costs, absence of fuel expenses, increased reliability and longer operating lifetimes are all factors which offset initial investment costs. This kind of lifecycle accounting is not regularly used as a basis for comparison. The other main alternative for rural electrification, the extension of the electricity grid, requires a considerable investment. Off-grid applications are therefore often the most suitable option to supply electricity in dispersed communities or those at great distances from the grid. However, although lifetime operating costs are much lower for off-grid PV than for other energy sources, initial investment costs can still be a barrier for people with little disposable income.
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Figure 384: Annual Installed Capacity for Solar Hot Water Systems The DOE and other organizations are currently researching new technologies for heat transfer fluids and thermal storage systems. In order to lower the cost and increase efficiency of CSP technologies, researchers are trying to identify and characterize novel fluids that possess physical and chemical properties needed to improve thermal storage. These researchers are also attempting to find new ways to use thermal technologies to store the energy that will be cheaper and more efficient than the current thermal storage systems. This research is applied to all CSP technologies. The goal of this research is for more utility companies to consider CSP as an addition to their power plants, by lowering the price of solar thermal and increasing the storage period and efficiency of the energy source.
Figure 385: Solar Water Heating by State Like PV installations, solar water heating and space heating installations are concentrated in a few states and territories. However, the states with the most installed capacity are different for solar hot water than for PV. Hawaii represents almost half of the solar hot water market. High energy prices and good government policies have built the solar hot water market in Hawaii. In addition, installation costs are lower in Hawaii than in most other locations in the United States because freezing is not a concern. New policies under development will likely continue Hawaiis status as a market leader for solar hot water.
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Figure 386: Australian Electricity Market Australia has witnessed a rapid increase in the adoption of solar and other renewable sources of energy. The countrys share in the total electricity market has increased from 0.9% in 2002 to 1.4% in 2006. In 2007, Australia produced 6.8M RECs, equivalent to 6.8 mWh. The Australian government has set itself a target of generating 45 billion mWh of additional electricity from renewable sources by 2020. The new government in Australia is also expected to actively pursue the increased adoption of renewable sources of energy including solar. Australia is also a leading market for solar hot water capacity and provides capital grants and rebates for installations.
Other 15%
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Source: Australian Office of the Renewable Energy Regulator, Barclays Capital research
Figure 387: Austrian Electricity Market The Austrian electricity mix has witnessed a rapid increase in the adoption of solar and other forms of renewable energy such as geothermal and wind energy. The share of renewable energy in the total mix has increased from 22% in 2000 to about 33% in 2007 (including hydro) Austria consumed 63.8 billion kWh in 2007. The Austrian government has also been active in promoting the use of solar energy, making Austria a large exporter of solar components to the rest of Europe. The European Union has further accelerated the adoption of renewables by setting Austria a target of 34% renewables share by 2020.
Thermal, 33%
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Figure 388: Denmark Electricity Market The Danish electricity mix has witnessed a high percentage of solar and other forms of renewable energy such as geothermal and wind energy. The share of renewable energy in the total mix has increased from 10.9% in 2000 to 19% in 2007. The Danish government has been active in promoting the use of renewable energy and has set a target of maintaining renewable energy at around 20%, along with a 2% reduction in total energy consumption by 2011. The European Union has further accelerated the adoption of renewables by setting Denmark a target of 30% renewables share by 2020. Denmark utilized 37.4 billion kWh in 2007.
N uclear, 77%
France has the second-largest electricity market in the European Union, behind Germany. In 2007, France utilized 544 billion kWh. The French electricity mix has seen a modest increase in the adoption of solar and other forms of renewable energy such as geothermal and wind energy. The share of renewable energy (including hydroelectric) has increased from about 7% in 2000 to 12% in 2007. France has been set a target of 23% renewables share by the European Union for the year 2020. This should help accelerate the adoption of renewables in the electricity mix.
Although a small part of the Greek electricity mix, solar and other forms of renewable energy have witnessed a rapid increase in their adoption. The share of renewable energy in the total mix has increased from 5% in 2000 to about 8% including hydro in 2007. The European Union has further accelerated the process by setting Greece a target of 18% renewables share by 2020. Greece utilized 58.1 billion kWh in 2007.
Thermal 92%
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Figure 391: Italian Electricity Market The Italian electricity mix has witnessed a gradual increase in the adoption of solar and other forms of renewable energy such as geothermal and wind energy. The share of renewable energy in the total mix has increased from about 5 % in 2000 to more than 16% including Hydro in 2007. The European Union has further accelerated the process by setting Italy a target of 17% renewables share by 2020.
Figure 392: Portuguese Electric Market The Portuguese electricity mix has witnessed a rapid increase in the adoption of solar and other forms of renewable energy such as geothermal and wind energy. The share of renewable energy in the total mix has more than doubled from 15% in 2000 to over 32% in 2007 including Hydro. Portugals total electricity usage in 2007 was 46.1 billion kWh. The solar irradiance in Portugal is also among the highest in the European Union. The EU has further accelerated the adoption of renewables by setting Portugal a target of 31% renewables share by 2020.
Figure 393: Spanish Electricity Market The Spanish electricity mix has witnessed a rapid increase in the adoption of solar and other forms of renewable energy such as geothermal and wind energy. The share of renewable energy in the total mix has increased significantly from 5.7% in 2000 to 19% including hydro in 2007. This increase has been aided by the policies of the Spanish government, aimed at increasing the renewable share. The European Union has further accelerated the process by setting Spain a target of 20% renewables share by 2020. Spains total electricity consumed in 2007 was 296.9 billion kWh.
Nuclear, 18%
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The South Korean market is dominated by thermal and nuclear electricity. Although the share of renewables such as solar and geothermal has been increasing steadily, it generated only 0.13% of electricity in 2006. Solar is a large part of this, due to the attractive feed-in tariff incentive of the government. The NPV of subsidies provided by South Korea is believed to be around US$11.90/W. The country has set a target of 5% energy consumption to be sourced from renewables and also plans to install 1.3GW of PV capacity by 2011. The government further provides assistance and support to the industry through joint R&D projects by the Korean Development Organization.
Electricity prices in Europe are among the highest in the world A major reason for this is the dependence on imports by many countries for generating electricity. Italy, which has the highes cost of electricity in Europe, imports a large part of its generation raw materials. The current increase in commodities and, more particularly, fossil fuels is expected to further increase electricity prices in Europe. Germany, which has been attempting to propagate the use of fossil fuels, has managed to keep its electricity prices stable over the last few years. The lowest prices in Europe are currently in France due to its over dependence on nuclear power for generating electricity. This consistent increase in electricity prices is expected to bring grid parity for solar closer.
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The domestic generation capacity in Germany is abou 127GW. Reserve capacity is the difference between the dependable capacity and the capacity required at peak demand. The minimum reserve capacity is generally 5% of the total capacity. Currently, Germany has an adequate reserve capacity, but this is expected to tighten, according to the Union for the Coordination of Transmission of Electricity (UCTE). This tightening of the reserve capacity is also true for most of Europe A major result of this has been the increase in spot electricity prices and the spikes often seen in the electricity trading markets. By July 2020, Germany is expected to have a reserve margin capacity slightly greater than 5%, which may not be adequate for the country.
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Germany is one of the largest producers and consumers of electricity in Europe. After falling considerably in 2000, electricity prices in Germany have steadily increased from 2000 to 2007. Electricity prices also include taxes, levies, and fees imposed by the government. This has been a major componen of the electricity price rise. From 1998, while the net electricity price for industrials has decreased by 3%, taxes have increased by 1,250% causing a combined increase in electricity prices of 20%. The average electricity bill of a three-person household in Germany has increased from EUR49.95/month to EUR60.20/month. Taxes contribute 40.7% of this electricity bill However, the effect of subsidies for renewables makes up a small part of the monthly electricity outlay.
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Figure 398: Solar Energy and Peak Power Electricity Market We believe solar has the potential to address peak power electricity generation and achieve grid parity with peak electricity prices in a number of markets. The marginal cost of electricity is highest during the middle of the day as electricity usage is highest. Solar energy production is also the highes during the same time (as sun intensity is the highest). Peak power generation represents approximately 30% of global electricity generation.
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U.S. generation capacity is about 920GW. Reserve capacity is the difference between the dependable capacity and the capacity required at peak demand. The minimum reserve capacity is generally 5% of the total. The United States is divided into regions for electricity purposes. Currently, each of these regions has an adequate reserve capacity, with the Florida Reliability Coordinating Council (FRCC) having the maximum margin of 18.3%, which is expected to increase to 27.1% by 2011. The capacity margin in most of the other regions is expected to fall during this time. Major concerns are the Electric Reliability Council of Texas (ERCOT) and the Midwest Reliability Organization (MRO), whose margins are expected to be 5.0% and 7.5%, respectively, in 2011 according to the EIA.
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BIPV is a term for the design and integration of PV technology into the building envelope, typically replacing conventiona building materials. Faade-integrated PV systems could consist of different transparent module types, such as crystalline and microperforated amorphous transparent modules. In such case, a part of natural light is transferred into the building through the modules. A high level of expertise is required for successful BIPV systems planning, not only in regard to architecture, but also to civil and PV engineering.
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Cell efficiency is a measure of the effectiveness of a solar cell in converting the incident solar energy on it into electricity Average cell efficiencies have increased over time due to the R&D efforts of various solar companies. An increase in cel efficiencies along with a decrease in wafer thickness has led to a rapid decrease in the costs of solar cells and a reduced Energy Payback Time for grid-connected PV. Cell efficiency is expected to continue rising, with Crystalline Cz efficiency expected to reach 20% by 2010 and 22% by 2020 Crystalline Mz efficiency is expected to reach 18% by 2010 and 20% by 2020, and Ribbon-sheet efficiency is expected to reach 17% by 2010 and 19% by 2020.
Figure 402: CIGS Solar Technology CIGS is the light-absorbing layer in the case of this thin-film technology. The main advantages of this technology are lower manufacturing costs, more efficient in light-weight/low-angle applications. The main disadvantages are that the worlds supply of indium is limited, and in general, the production process of such multilayer structure is highly complex. This technology can achieve lab efficiencies of 19.5%.
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According to the Department of Energy, Cadmium Telluride technology has the potential to achieve 13% module efficiency in commercial scale compared with approximately 10.5% efficiency currently achieved by companies such as First Solar Presently the champion device efficiency is 16.5% and future goal is to reach 18%20% efficiency by 2015. Current LCOE (assuming $4$5/W installed system cost) is 1822 c/kWh and the DOE roadmap suggests LCOE of 78 c/kWh is possible at installed system cost of $2/W.
De velop ne w en cap sula tion sch emes a nd ap pro pria te Pil t Flexib le roll- to- roll o man ufa ctu ring (in itially p ack age d ac celer ate d life te sting fo r fle xible a nd rig d modu les i a s a gla ss to gla ss la min ate) 5 m/ h, 1 .25 3 m CIG S a bso rb er thickn ess 3 04 0 m/ h < 1 m CIGS ab sor ber th ickne ss
According to the Department of Energy Commercial CIGS modules produce efficiency between 5% and 11%. The DOE has set a goal of increasing the efficiency in commercia modules to between 10% and 15% by 2015. Currently Champion device efficiency for CIGS modules are at 19.50% The DOE has a goal of increasing this level of efficiency to between 21% and 23% by 2015. The DOE has estimated tha the cost of a CIGS based module is around $2 per watt. They believe that this cost could come down to around $1 per Wat by 2015.
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An important advantage of solar PV systems is that there are no carbon dioxide emissions during their operation, although there are indirect emissions during the other stages of the solar life cycle. PV also does not involve any other polluting emissions in the form of exhaust fumes or noise. The decommissioning of a system is also not problematic. Reduction in annual globa carbon emissions are expected to reach 1 billion tonnes by 2030. The cumulative reduction in carbon emissions by 2030 is expected to reach nearly 6.7 billion tonnes.
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Conventional Photovoltaic technology is constrained by high costs and low efficiency. CPV attempts to overcome these by concentrating the sunlight, falling on the solar panels, on smal areas of high-efficiency PV cells. Because they are only used to concentrate the suns rays, the panels can be made of materials such as steel and glass, thereby reducing dependence on silicon and bringing down costs. The panels can be designed to track the sun throughout the day, thus increasing their efficiency.
Concentrating solar power technologies directly collect solar radiation to provide medium- to high-temperature heat that is used to operate a conventional power cycle through a steam or gas turbine. Solar thermal benefits from some attractive characteristics that could make it a potential significan contributor to future power generation. While development of the technology suffered from lack of investment in the 1980s, the technology has progressed and it also benefits from an attractive cost of energy at approximately $0.10$0.15/kWh, which is expected to reduce to $0.05/kWh through advanced technologies. Solar thermal also overcomes another constrain as it is able to be scaled up to deliver significant amounts of power generation. The most promising areas are the southwestern United States, Mediterranean countries, Africa, the Middle East, Iran, Pakistan, the desert regions of India, the former Soviet Union, China, and Australia.
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Conversion efficiency is the ability of a solar cell to convert the incident radiation into electricity. The conversion efficiency for crystalline siliconbased cells is currently more than that for thin film cells. This is viewed as a major reason for the predominance of the crystalline technology in producing solar cells. As the conversion efficiency of thin-film continues to increase, it is expected to increase its market share. The major thin-film technologies are amorphous silicon, which has an efficiency of 6%7% under standard testing conditions, Microcrystalline Amorphous technology, which is a combination of amorphous silicon and microcrystalline silicon has an efficiency of 8% with Cadmium Telluride recording 8%11% and CIS recording 10%11% under standard testing conditions SunPowers conversion efficiency is 22.5%.
The solar PV supply chain is focused on improving the cost of solar electricity by increasing watt/m2 (or cell efficiency) and decreasing cost/m2 (manufacturing costs). The manufacturing costs can be effectively reduced by companies achieving economies of scale in their manufacturing operations Competition among the established players and the entry of new companies is also expected to lead to a reduction in the costs. An increase in the level of automation in the manufacturing process will bring down recurring labor costs. An increase in research in the field, coupled with the developmen of next-generation technologies being brought to market, should lead to better products and cheaper solar power. As wafer prices decline, manufacturing costs are also expected to move lower; this, along with the reduction in wafer thickness used, is expected to be a cost advantage for companies. Continued improvement in cell efficiency through research is expected to improve the watt/m2, causing the total cost/watt for solar to decrease.
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Electrochemical solar cells have their active component in a liquid phase. A dye sensitizer is used to absorb the light and create electron-hole pairs in a nanocrystalline TiO 2 semiconductor layer. This is sandwiched between a tin oxide coated glass sheet and a rear carbon contact layer, with a glass or foil-backing sheet. These cells are considered to offer lower manufacturing costs in the future because of their simplicity and use of cheap materials, although they are faced with the challenge of scaling-up manufacturing and demonstrating continuous reliability.
Figure 411: Energy Payback Times Energy Payback Time (EPBT) is the length of deploymen required for a PV system to generate an amount of energy equa to the total energy that went into its production. The value of EPBT depends upon three factors: 1) conversion efficiency of the PV system; 2) the amount of insolation that the system receives; and 3) manufacturing technology used to make PV cells.
Cell Tec hnology Sing le-crystal si lico n N on-rib bon mu lti-crystal si lico n Ri bbo n multicrystal lin e si lico n Cadm ium tell urid e
Total Ene rgy Ener gy Us ed to Produce Sy stem Gener ated by Syste m Compare d to Tota l Divide d by Amount of Ene rgy U sed to Ener gy Paybac k Gener ated Ene rgy 1 (%) Pr oduce Syste m 1 Time (yr ) 2.7 2.2 1.7 1.0 10.0% 8 .1 % 6 .3 % 3 .7 % 10 12 16 27
1: Assu mes 30 yea r p erio d performa nce, 80% ma xi mum rated p ower at end o f li fe ti me Note ab ove data assu mes 1,70 0 kWh /sq .m tr/yr inso lation a nd 75 % performa nce ratio fo r the system com pared to the mo dule
Source: DoE, Energy, Efficiency and Renewable Energy, Barclays Capital research
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Energy costs are a major factor in polysilicon deposition technologies. Fluid Bed technology reduces this cost by approximately a factor of 10, due to the following reasons: 1) elimination of traditional Siemens cold wall design, which draws energy out of the process and results in inefficiencies; and 2) continuous versus batch process, which efficiently utilizes input energy.
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A major concern with using fossil fuels to generate electricity is the emissions of greenhouse gases. These fuels generate a considerable amount of carbon dioxide and other greenhouse gas emissions, which have been increasingly viewed as a direc contributor to weather changes. The switch to renewable sources of energy is expected to reduce the emissions of greenhouse gases worldwide. Multi-crystalline silicon creates 37gms/kWh of CO 2-equivalent emissions and cadmium telluride creates nearly 18gms/kWh of CO 2-equivalen emissions. This is comparable to other renewable sources such as biomass (45gms/kWh) and wind (11gms/kWh). Compared to renewable sources, fossil fuels generate considerable higher amounts of CO 2 equivalents, with coa (900gms/kWh) and oil (850gms/kWh) leading the pack.
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Typically, five major manufacturing steps are involved: 1) etching and polishing (removing an unusable layer after the wire-sawing process); 2) cleaning; 3) diffusion; 4) anti-reflective coating (to avoid energy losses; the major chemical used is silicon nitride or titanium dioxide; layering is conducted through PECVD process); 5) screen printing (grid-like metal contact is screen-printed on front surface using silver paste and on rear side using Al paste).
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Siemens reactor process is the most widely used for producing polysilicon. It was developed in the 1950s and currently produces a higher purity of material. In this process, high temperature polysilicon rods are put in a thermal decomposition furnace. The rods are contained in a cooled bell jar. Silane or trichlorosilane (TCS) gas is passed over these rods. The silicon in the gas is deposited on the rods evenly , increasing its dia meter When the rods reach the required size, they are extracted. The end product is in the form of chunks or rods of polysilicon, which is used to form wafers. Siemens process was used in nearly 90% of the polysilicon produced in 2006. About 70% of the new start-ups will use the Siemens process.
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Silicon is the second most abundant element in the earths crust The purity of the silicon determines its use for further applications. To be used in solar cells, silicon must be refined to a purity of 99.9999%. To create an effective PV cell, silicon has to be doped with other elements to make in n-type or p-type The current shortage of polysilicon has led a few companies to start production of metallurgical-grade silicon. This is generally less pure than traditional silicon and is thus cheaper. The conversion efficiencies of the cell are also lower than those made from traditional polysilicon. The current production of metallurgical silicon is being met with considerable demand Metallurgical silicon is currently being mixed with normal silicon, although some companies have now started using it directly to create modules.
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Silicon is one of the most important raw materials in the solar chain. The most common production method for silicon is the Siemens Reactor process. Initially developed in 1950, the technology produces nearly 90% of the polysilicon currently produced. The Fluidized Bed Reactor process is gaining considerable market share over the Siemens process despite being relatively new and technically challenging. A major reason for this is that the cost of production of polysilicon is expected to be less than half that from the Siemens process. The market share of Siemens is expected to decline over the next few years despite most new Chinese entrants using it due to the ease of finding access to equipment and technologica knowledge.
Figure 418: Solar Batteries Batteries are a key component in a grid-tie with backup or a standalone system, as all other components rely on it for operating. The batteries are a storage vessel for the direc current produced from the modules. A lead acid battery is designed to absorb and generate electricity by a reversible electrochemical reaction. There are three major types of batteries: Flooded Lead Acid batteries are the most used due to their low cost and long life but also require regular maintenance. The Absorbed Glass Mat Sealed (AGM) batteries have been increasing market share with reducing prices and are mainly preferred by commercial installations. The Gelled Electrolyte Sealed batteries have been losing ground since the arrival of the AGM battery due to their longer charging times.
Source: Barclays Capital research
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Solar-grade silicon is not as pure as polysilicon. The conversion of metallurgical silicon to solar-grade silicon requires the remova of a number of metallic impurities, and reduction in the boron and phosphorous content in the metal. Although a number of companies have their patented processes, the sequence of steps needed remains essentially similar. The metallurgical silicon is first melted in a furnace to remove volatile impurities. Further refining is achieved by introducing reactive gases and through the addition of slag-forming agents. Most of the impurities are thus removed, with the rest being separated from the silicon through directional solidification. This leaves behind the solar grade silicon, which is more than 99.99% pure.
Directional Solidification
Figure 420: Solar Invertors The inverter is a basic component of PV systems and converts DC power from the PV array into high-voltage AC power Although inefficient and unreliable in the past, inverters are now highly efficient (85%-95%) and reliable. The two main types of inverters are the modified sine and the sine wave inverter. The major manufacturers of inverters worldwide are SMA Technologies AG, Xantrex Technology, and PV Powered. The inverter market is estimated to grow at a CAGR of 38% in 20072010, with growth being driven by commercia applications.
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The area needed to generate solar electricity depends on the conversion efficiencies of the solar modules. The conversion efficiency largely depends on the type of technology used to create the modules. On average, silicon-based modules have a higher conversion efficiency than thin-filmbased modules Currently, the area needed to generate a kWp of electricity using a silicon based module is 78 m2. The area required for a thin-film module can be between 1015 m2, depending on the technology. The area required to generate electricity from solar panels often plays a big role in deciding the type of panel to use. It is expected that as the conversion efficiencies of thin-film modules improve in the near future, the area difference betw een these technologies and silicon-based technologies would decrease rapidly. SunPower has a conversion efficiency of 22.5%.
Figure 422: Thin-Film Conversion Efficiencies Potential CIGS, or Copper Indium Gallium Di-Selenide, offers higher conversion efficiency potential; however, this technology has not been proven in volume production. NanoSolar, Miasole, and Solyndra are some CIGS companies. Cadmium Telluride (CdTe) offers the potential of 16% conversion efficiencies at the cel level. First Solar is the company successfully using CdTe technology in high-volume manufacturing and achieving 10.5% conversion efficiency. Micromorph is a micro-crystalline silicon/amorphous silicon dual-junction solar PV cell structure and is also known as tandem junction or dual junction.
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6 .0% - 7.0 %
a- Si
5.0 % - 6. 5%
Thin-film technologies traditionally have had a lower conversion efficiency than silicon-based modules. Of the major thin-film technologies, the low-silicon-based technologies such as amorphous silicon (a-Si) and crystalline silicon on glass (CSG) technologies have the lowest panel efficiencies. The silicon-free technologies have comparatively higher panel efficiencies Cadmium telluride (CdTe)-based modules, on average, have panel efficiencies of 7%9%, and CIGS-based technologies have efficiencies of up to 11%. With the recent improvements in technology, thin-film panel efficiencies are bridging the gap with silicon-based modules. Individual companies are also playing an active part in this, with First Solar, which produces CdTe panels, recording an efficiency of 10.6%.
400
12
15 11 10 12 9 8.5 8 7.5 9 6 170 160 150 3 0 2004 2005 2006 2007 2008 2009 201 0
300
300 m
200 100 0
Silicon is a major raw material for the solar industry. The ability to produce thinner wafers has led to the reduction of silicon consumption. This has also reduced the energy payback time for PV systems. Wafer thickness is expected to fall to 150 microns in 2010 from current levels of 180 microns (2007). This reduction in thickness is also expected to reduce consumption to 7.5 gm/Wp by 2010 from 9 gm/Wp in 2007.
g/Wp
USA , 36%
USA , 23%
Japan, 17%
2007
2010
The solar market across the world has been constrained due to the non-availability of silicon. This supply/demand mismatch was also affected as most of the silicon prior to 2007 was absorbed by the semiconductor industry. This had caused the spot price of silicon to reach over $450/kg in 2008 as most of the additional supply was absorbed by the solar industry. The gap in supply demand also saw a number of large entrenched manufacturers announce expansion plans as a number of new startups came up in China. These new developments are expected to make China the worlds largest silicon producer taking this spot from the U.S.
362
1 9.9%
$ 5.27
1 3.1
4 0.7% 1 1.1%
There has been considerable research in the solar industry over the last few decades. The research mainly concentrated on improving the conversion efficiency of the various technologies that were currently in use and also discovering newer technologies for use. Although early work happened primarily on silicon based cells, continued research led to the development of thin film technologies such as Cadmium Telluride (CdTe), CIGS and amorphous Silicon (a-Si) becoming viable The increase in raw material costs of silicon also contributed to increased focus on thin film technologies. Organic and dye sensitized technologies are currently being seen as a source for future growth in the industry.
Figure 427: Laser Reactive Deposition The laser reactive deposition process is finding use in solar technologies. The process is also being used for the development of thin-film photovoltaic process equipment. The Laser Reactive Deposition (LRD) process is thought to be faster than the conventional thin film PV CVD process. The LRD process deposits extremely uniform amorphous and microcrystalline silicon films at a significantly fast deposition rate. The high uniform deposition is achieved as particle stream is highly uniform because of the uniformity of the laser reaction zone. The precursor flexibility allows the LRD process to create a wide range of complex film compositions.
Source: NanoGram Corporation, Barclays Capital research
The two major technologies for producing solar cells are the crystalline silicon technology and the thin film technology. The major thin film technologies include Cadmium Telluride (CdTe), amorphous silicon (a-Si) and CIGS. Over the last few years, thin film technology has been growing at a faster rate than crystalline technologies primarily due to its small base and the demand supply gap in polysilicon. The leading thin film manufacturers include First Solar, United Solar, Kaneka and Mitsubishi Heavy Industries. These 4 companies account for 77% of thin film PV production in 2007. First Solar (CdTe) is also one of the largest producers of solar panels in world.
363
Figure 429: Two Types of Linear Concentrator Systems The two main types of Linear Concentrator Systems are Parabolic trough systems and linear Fresnel reflector systems Parabolic Trough Systems make up the majority of the Concentrated Solar Power (CSP) systems in the United States. In the Parabolic Trough System the receiver tube is positioned along the focal line of each parabola-shaped reflector. The tube is connected to the mirror and the fluideither a heat-transfer fluid or water/steamflows through and out of the field of solar mirrors to where it is used to create steam. The steam then spins a turbine in order to power a generator. The other major Linear Concentrator System is the linear Fresnel reflector system. Flat or curved mirrors reflect sunlight onto a receiver tube placed above the mirrors. A small parabolic mirror is sometimes added atop the receiver to increase the focus of the sunlight.
Figure 430: Dish/Engine Systems Another form of CSP system is the Dish/Engine System. A parabolic dish of mirrors directs and concentrates sunlight onto a central engine that produces electricity. The main dish (otherwise known as a Solar Concentrator), gathers energy from the sun. The resulting beam of concentrated sunlight is reflected onto a thermal receiver that collects heat from the sun. In order to reflect the most sunlight possible, the dish is mounted in a way that tracks the sun continuously throughout the day. The power conversion unit is made up of the thermal receiver and the engine/generator. The thermal receiver connects the dish to the engine/generator by absorbing the energy, converting it to heat, and then transferring it to the engine/generator system The engine/generator then takes the heat and converts it to electricity.
364
Figure 431: Power Tower System One of the three types of Concentrating Solar Power Systems is the Power Tower System. A number of large flat mirrors, known as heliostats, focus sunlight onto a receiver which is placed on the top of a tower. The receiver contains a heat transfer fluid which generates steam used by a turbine generator to produce electricity. Power towers have very high sola r-to-electrica conversion efficiency, and system prices are expected to continue to fall making it a viable longer term CSP technology.
One of the biggest issues preventing the current widespread use of Solar Energy is how to utilize solar energy when the sun is blocked by clouds or at night. By utilizing Thermal energy storage, solar systems are able to harness the power of Solar Energy even when the sun is not visible. In a CSP system, the sun's rays are reflected onto a receiver, creating heat that is then used to generate electricity. All CSP systems contain a hea transfer medium, but if this medium is either oil or molten salt, the thermal energy can be stored for later use. The ability to have a solar energy system that can be used during cloudy periods and at night makes it much more competitive with other forms of electricity.
365
Figure 433: Thermal Storage Systems- Two Tank Direct System The Two-Tank Direct System is a form of CSP system that stores energy in the same fluid used to collect it. The system consists of two tanksone at high temperature and the other at low temperature. Fluid from the low-temperature tank flows through the solar collector or receiver. The Solar Energy heats the water and then flows through to the high temperature tank where it is stored. Once the water is stored in the high temperature tank, fluid from the high-temperature tank flows through a hea exchanger, where it generates steam which gets converted into electricity. The fluid exits the heat exchanger at the low temperature and returns to the low-temperature tank. Another system called the Two-Tank Indirect System functions similarly, except different fluids are used as the heat-transfer and storage fluids. The indirect system is only used where the heat-transfer fluid is too expensive or cannot be used.
-1 0
-1 5
-2 0
The single Tank Thermocline System stores thermal energy in a solid medium. However unlike the Two Tank System, the medium is stored in a single system, a portion of the medium a a hot temperature, and the other at a cold termperature. The tank is split into two regions, separated by a thermocline or temperature gradient. The high temperature fluid flows into the top of the thermocline and exits the bottom at a colder temperature. When this happens the thermocline moves downward and creates more thermal energy. When the colder energy moves into the thermocline, it is released into the warm section, and moves the thermocline upward. This creates steam which generates electricity.
Source: Federal Energy Management Program, US Department of Energy, Barclays Capital research
366
De pth of Tank , Ft
Figure 435: Global Renewable Energy Capacity Growth Global renewable energy capacity grew at an annual rate of 15%30% for many technologies during the five-year period of 200206, including wind power, solar hot water, geotherma heating, and off-grid solar PV. The growth of grid-connected solar PV eclipsed all other technologies, with a 60% annua average growth rate for the period. Biofuels also grew rapidly during the period, at a 40% annual average for biodiesel and 15% for ethanol. In comparison, global growth rates for fossil fuels were 2%4% in recent years.
Source: REN21, Barclays Capital research
Biofuels 17%
Wind 43%
New investment in alternative energy technologies was $117.7bn in 2007. Wind accounted for 43% of alternative energy investment in 2007, or $50.2 billion. This was an increase from 38% of new investment in renewables in 2006 Solar was next with 24%, or $28.2 billion, followed by biofuels at 17%, or $20 billion. Together, Wind, Solar, and Biofuels made up approximately 85% of total investment in renewable energy technology.
Solar 24%
Source: REN21, Barclays Capital research
367
Figure 437: A Brief History of the U.S. Wind Industry The U.S. wind industry began in the 1970s in California, when the high price of oil created the demand for new sources of electricity. This demand for wind energy continued through the 1980s, with California installing 1.2GW of wind power by 1986, equal to 90% of global installations at the time. However, the United States dominance in the wind power market began to shift during the 1990s. By 2000, Europe had more than 12,000MW of installed wind power compared with only 2,500MW of U.S. installations. In order to change this trend and become an important player in wind generation again, many states have begun requiring electricity companies to obtain a percentage of their supply from renewable energy sources such as Wind and Solar. These Renewable Portfolio Standards have been adopted by a number of states, reestablishing the United States as a player in wind power generation. In 2006, the United States retained its leadership of wind development in 2006 and is likely to remain a major player in the wind market due to the large wind resources the country possesses.
Source: US Department of Energy, Energy Efficiency and Renewab le Energy, Barclays Capital research
368
Figure 438: Todays Modern Wind Turbine Today, wind turbines have three bladed rotors with diameters of 70m to 80m mounted on top of a tower which is 60 to 80 meters high. Typically installed in arrays of 30 to 150 machines, the average turbine installed in the United States in 2006 can produce approximately 1.6 megawatts (MW) of electrical power. Turbine power output is controlled by rotating the blades around their long axis to change the angle of attack with respect to the relative wind as the blades spin around the rotor hub. This is called controlling the blade pitch. Generally, a turbine will start producing power in winds of about 5.36 m/s and reach maximum power output at about 12.52 m/s13.41 m/s. The turbine will pitch or feather the blades to stop power production and rotation at about 22.35 m/s. The amount of energy in the wind available for extraction by the turbine increases with the third power of wind speed; thus, a 10% increase in wind speed creates a 33% increase in available energy. A turbine can capture only a portion of this cubic increase in energy, though, because power above the level for which the electrical system has been designed, referred to as the rated power, is allowed to pass through the rotor. Many turbine designers do not expect the rotors of land-based turbines to become much larger than about 100 m in diameter, with corresponding power outputs of about 3 MW to 5 MW.
Source: US Department of Energy, Energy Efficiency and Renewab le Energy, Barclays Capital research
369
Figure 439: Size of Wind Turbines Throughout the past 20 years, average wind turbine ratings have grown almost linearly. Experts have continuously stated that wind turbines will not be able to grow any bigger than they currently are. However, every five years the size has grown along the linear curve and has achieved reductions in life-cycle cost of energy (COE). This long-term drive to develop larger turbines is a direct result of the desire to improve energy capture by accessing the stronger winds at higher elevations. (The increase in wind speed with elevation is referred to as wind shear.) Although the increase in turbine height is a major reason for the increase in capacity factor over time, there are economic and logistical constraints to this continued growth to larger sizes The primary argument for limiting the size of wind turbines is based on the square-cube law. This law roughly states that as a wind turbine rotor grows in size, its energy output increases as the rotor swept area (the diameter squared), while the volume of material, and therefore its mass and cost, increases as the cube of the diameter. In other words, at some size, the cost for a larger turbine will grow faster than the resulting energy outpu revenue, making scaling a losing economic game.
15
10
0
tr al M ou Ea nt st ai n So ut h Ce W nt es ra tN l or th Ce nt ra l us la n d nt ic uo tra l ti c Ce n tla n To uo ta l us Ce n
Offshore wind technology is a relatively new technology with great potential in the United States. In the United States, 28 of the 48 contiguous states touch coastline in some part. These 28 states have shown to use up 78% of the nations energy and are home to some of the highest electricity prices in the United States. Of these 28 states, only six have enough wind resources to meet the required electricity through on shore wind turbines However, if offshore wind potential was included in the wind resource mix, 26 of the 28 states could supply 20% of electricity requirements through wind turbines. A number of states could currently supply 100% of their electricity through wind turbines Twenty-six offshore wind projects with an installed capacity of roughly 1,200 MW are currently under operation in Europe. In the United States, nine offshore project proposals in state and federal waters are in various stages of development.
co nt ig
En g
At la
n ti g
th
th A
US
Ne w
Pa c if ic
es tS ou
No n
M id
So u
ific
Source: NREL, US Department of Energy, Energy Efficiency and Renewable Energy, EIA, Barclays Capita l research
370
Pa c
Ea st
No rth
dle
Co
2,300
2,250
2,200
2,150
2,100
Geothermal energy has significant potential for producing electricity. About 8,000 megawatts (MW) of geotherma electricity are currently produced around the world. The United States had the capacity to produce about 2,300 MW worth of geothermal energy in 2007. There are two types of geotherma power plants used today, Steam and Binary plants. These plants use hot water to create steam or vapor which is used to turn a turbine. This turbine drives an attached generator which produces electricity. Geothermal capacity is a small percentage of the United States renewable energy profile, only making up 8% of renewable energy used in the United States in 2007.
Figure 442: Geothermal Steam Plants Geothermal Steam Plants use very hot (more than 300 F) steam and hot water resources. The steam either comes directly from the resource, or the very hot, high-pressure water is depressurized to produce steam. The steam then turns a turbine which is connected to a generator used to produce electricity The only significant emission from these plants is steam. While there are small amounts of carbon dioxide, nitric oxide, and sulfur emitted, these amounts are insignificant as compared to traditional, fossil-fuel power plants. Energy produced from a Geothermal Steam plant currently costs about 4-6 cents per kWh.
Source: Energy Efficiency and Renewable Energy, US Department of Energy, Barclays Capital research
371
Figure 443: Geothermal Binary Plant Binary plants use hot water resources, but at a much lower temperature than those that are utilized by steam plants. These resources generally range between 100 and 300 degrees Fahrenheit. The hot water is passed through a heat exchanger in conjunction with another fluid with a lower boiling point. The second fluid vaporizes, which turns the turbines, which drives the generator. The remaining fluid is simply recycled through the heat exchanger. The geothermal fluid is condensed and returned to the reservoir. Because binary plants use a self-contained cycle, nothing is emitted. Energy produced by binary plants currently costs about 5 to 8 cents per kWh. Because these lower-temperature reservoirs are far more common, binary plants are the more prevalent.
Source: Energy Efficiency and Renewable Energy, US Department of Energy, Barclays Capital research
Figure 444: Announced versus Realistic Power Plant Projects (by 2012) in Europe
According to RWE, only 60% of the announced power pl ant projec ts (by 2012) are realistic due to volatile gas prices and probl em to s ecure critical components s uch as gas turbines. s
Source: BCG, RWE, Barclays Capital research
372
Figure 446: EU 15 Reserve Margin Calculated by CERA (CERA expects capacity bottleneck in Europe as soon as 2009)
30% 24% 1 8% 12% 6% 0%
Rerserve Margin
1995
2000
2005
2010
CERA definition: Reserve margin is the difference between dependable capacity and peak demand divided by peak demand. Dependable capacity is firm capacity at peak; CERA's forecast includes existing plants and new plants under construction. For the EU 15 as a whole, CERA estimates a declining reserve margin, even after accounting for new projects. If only these projects currently under construction are built, the electricity market would be short of around 26GW in 2010 and the EU 15 reserve margin would drop from 22% in 2006 to around 10% in 2010.
Source: CERA, 2006, RWE, Barcla ys Capital research
373
46%
25 % 19 % 1 1% 6% 1% Denmark Germany 1% Estonia Ireland Greece Spain France 0% Cyprus Latvia 2% Lithuania Luxemborg 11% 12% 7% 1% 0% Hungary Malta The Netherlands Austria 7% 1% Poland
31%
9%
3%
Note: The European Commission h as set in dividu al country targets for 20% renewable energy use by 2020.
Source: European Commission, Barclays Capital research
United Kingdom
374
Figure 449: Renewable Energy Ac t Accounts for About 3% of German Household Electricity Bills
Sales and Marketing 0.87, 4% Wholesale Price, 22% Value-added Tax, 14% Electricity Tax, 10% Concess ion fee, 10% Renew able Energy Ac t, 3% Combined Heat and Pow er Ac t, 2%
2)
By 2021
By 2025
By 2022
Rhode Island
California
Penns y lv ania
New J ersey
Vermont
Connecticut Hawaii
Arizona
Illinois
Montana
New Mexico
Was hington
Virginia
North Carolina
Minnes ota
Delaware
Colorado
New York
Mis souri
375
$1.2 0 $0.9 0
W afe r to cells
$0.6 0 $0.3 0 $JASO CSIQ CSU N Q -Cells STP SOLF SPW R YGE TSL ESLR
376
377
Table of Figures Figure 1: Rela tionship Between Solar System Price and Natural Gas Prices ................ 5 Figure 2: Potential Solar Grid Parity Scenarios...................................................... 6 Figure 3: Solar Module and Balance of System Pricing Trend.................................. 6 Figure 4: China versus U.S. Consensus EPS Estimates............................................ 9 Figure 5: 2009 EPS Estimate Reductions From Peak Levels...................................... 9 Figure 6: Suntech Power Earnings Momentum...................................................... 9 Figure 7: Quarterly Supply Demand Outlook...................................................... 11 Figure 8: 2010 Gross Margin Scenario Analysis................................................ 12 Figure 9: Suntech Power Estimate Revisions ....................................................... 13 Figure 10: Foreign Exchange Could Act As Potential Tailwind ............................... 14 Figure 11: System Pricing vs. Shipments Growth................................................. 15 Figure 12: Global Wind vs. Solar Shipments..................................................... 16 Figure 13: Global Solar Company Valuations.................................................... 17 Figure 14: Potential Renewable Energy Investment Drivers..................................... 20 Figure 15: GDP Growth versus Per Capita Electricity Consumption......................... 21 Figure 16: Reserve Period (Number of Years) of Traditional Energy Resources........... 21 Figure 17: Potential Solar Contribution to Carbon Emissions Reduction By 2012E...... 22 Figure 18: European Union Target Shares of Renewables by 2020........................ 23 Figure 19: Percentage of U.S. Consumer Wallet Spent on Electricity....................... 24 Figure 20: Electricity-Generating Assets in Key Solar Markets ................................ 24 Figure 21: Interest Rate Environment Acts As a Tailwind for Solar Fundamentals......... 25 Figure 22: Job Creation Potential of Various Electricity Generation Technologies........ 25 Figure 23: Microsoft Employees versus Market Cap ............................................ 26 Figure 24: Solar Employees versus Market Cap.................................................. 26 Figure 25: Oil Price and Government Incentives ................................................. 26 Figure 26: Solar Energy Investment Potential Growth Drivers.................................. 27 Figure 27: Oil Forecasting Trends.................................................................... 28 Figure 28: U.S. Mobile Subscribers Forecasting Trends........................................ 28 Figure 29: Solar Subsidies Should Provide Significant Catalyst for Solar Demand ...... 29 Figure 30: Potential Solar Demand Drivers......................................................... 30 Figure 31: Solar Multistage Growth Cycle...................................................... 30 Figure 32: Solar Market Development.............................................................. 31 Figure 33: Effect of Incentives in Major Markets on PV Shipments........................... 32 Figure 34: Market Cap Creation by Solar Companies in Growth Phase 1 (Ending August 2008)............................................................................ 33 Figure 35: Comparison of Solar IRRs versus Government Bond Yields...................... 35 Figure 36: Germany IRR Trends....................................................................... 36 Figure 37: Italy IRR Trends.............................................................................. 36 Figure 38: New Incentives Announced in 2008................................................. 36 Figure 39: Incentives News by Region200809............................................. 36
378
Figure 40: Incentives News by Month (2008-09).............................................. 37 Figure 41: Deals by Month (200809)............................................................ 37 Figure 42: Deals by Country ( in MW) 2008Jan. 2009).................................... 37 Figure 43: Deals by Country (2008Jan. 2009)................................................. 37 Figure 44: Net Present Value of Subsidies in Select Solar Markets ($/W)................ 38 Figure 45: Installations Used In Calculating Growth Phase 2 Subsidies.................... 39 Figure 46: Total Subsidy Amount Allocated by Various Countries ........................... 39 Figure 47: Net Present Value of Gross and Net Subsidies ............................... 40 Figure 48: Comparison of Net Subsidy Burden to Health Care and Education Spending............................................................................... 41 Figure 49: Annual Solar Incentives in Germany (EUR Millions) ............................... 42 Figure 50: Potential Increase in German Electricity Bills for Every 1GW Increase in PV Shipments (2009E)................................................................................ 42 Figure 51: 2009 German Incentive Program: Net Present Value Analysis for 1GW Shipments............................................................................................ 43 Figure 52: 2009 Solar Electricity Scenarios (Germany)........................................ 43 Figure 53: Solar System Price versus Natural Gas Price........................................ 44 Figure 54: Grid Parity Timeline....................................................................... 45 Figure 55: Levelized Cost of Energy (LCOE)Combined Cycle Gas Plants versus Solar ................................................................................. 46 Figure 56: Levelized Cost of Electricity Using Various Technologies (Total Electricity Cost)............................................................................. 47 Figure 57: Household Electricity Price Trend and Projections In Key Solar Markets ..... 48 Figure 58: Grid Parity in Several Markets Likely Before 2012................................ 48 Figure 59: Commercial Solar Grid Parity Timeline............................................... 49 Figure 60: Commercial Solar Grid Parity Timeline............................................... 49 Figure 61: Silicon-Based Solar Industry Competitive Dynamics............................... 51 Figure 62: Conversion Efficiency and Cost Trends............................................... 52 Figure 63: Solar Market Share versus Margins................................................... 52 Figure 64: Solar Industry Competitive Analysis ................................................... 53 Figure 65: Normalized Industry Profits Pool........................................................ 54 Figure 66: ROIC Integrated Module Manufacturer Current versus Normalized........ 55 Figure 67: ROIC Integrated Cell Manufacturer Current vs. Normalized................. 55 Figure 68: Normalized ROIC: Thin Film, Polysilicon Manufacturers......................... 56 Figure 69: Prepayments and Capex Breakdown................................................. 57 Figure 70: Global Electricity Generation Mix..................................................... 60 Figure 71: U.S. Electricity Generation Mix ........................................................ 60 Figure 72: Cumulative Installed Capacity (2008)................................................ 61 Figure 73: New Solar PV Installations (2008).................................................... 61 Figure 74: Solar Subsidy Demand Relationship .................................................. 63 Figure 75: Costs of Various Sources of Energy ................................................... 63 Figure 76: Solar Electricity Costs ($/kWh) in Key Regions.................................... 64
379
Figure 77: Key Cost Per Watt Reduction Drivers ................................................. 64 Figure 78: Module and Cell EfficienciesCrystalline versus Thin Film Solar Technologies ................................................................................ 65 Figure 79: Life Cycle Positions of Alternative Energy Technologies .......................... 66 Figure 80: Comparison of Thin Film Technologies............................................... 66 Figure 81: CIGS Technology Matrix................................................................ 67 Figure 82: Using Stock Screening Methodology for Coverage Stocks ..................... 71 Figure 83: Using Stock Screening Methodology for Coverage Stocks ..................... 72 Figure 84: Solar Value Chain Cost and ASP Assumptions..................................... 76 Figure 85: PV Supply Chain and Major Players.................................................. 77 Figure 86: Polysilicon Cost Per Watt Projection (200712E)................................. 78 Figure 87: Polysilicon Supply Breakdown, 2008E.............................................. 79 Figure 88: Solar Polysilicon Breakdown, 2008.................................................. 79 Figure 89: New Entrants Polysilicon Supply Projections, 200312E....................... 80 Figure 90: Worldwide Polysilicon Capacity ...................................................... 81 Figure 91: Worldwide Polysilicon Supply.......................................................... 82 Figure 92: Barclays Capital Polysilicon Demand Model ....................................... 83 Figure 93: Polysilicon Demand Drivers Semiconductor Industry ............................ 85 Figure 94: Worldwide Polysilicon Demand (Metric Tons)...................................... 85 Figure 95: Polysilicon Capacity, Supply, and Demand...................................... 86 Figure 96: Polysilicon Spot and Contract Pricing Trends ....................................... 86 Figure 97: Schematic Approach for the Refining Process ...................................... 88 Figure 98:Wafer Price Forecast...................................................................... 90 Figure 99: Multi-Crystalline Solar Cell Manufacturing Process................................ 92 Figure 100: Cell Price Forecast....................................................................... 92 Figure 101: Barclays Capital Global Solar Installed Capacity Model (MWp)........... 93 Figure 102:Module Pricing............................................................................ 94 Figure 103: Module Market Share (2007)........................................................ 95 Figure 104: Active Residential Installers (MW Basis)............................................ 98 Figure 105: Active Non-Residential Installers (MW Basis)..................................... 99 Figure 106: EBITDA Return over Capital Investments.......................................... 102 Figure 107:EBITDA Return over Capital Investments........................................... 102 Figure 108: Solar Equipment Capex ($, Million) .............................................. 103 Figure 109: Crystalline Cell Capacity Utilization (MW versus % utilization)............. 103 Figure 110: Thin Film Equipment Landscape.................................................... 104 Figure 111: Crystalline Silicon Equipment Landscape........................................ 104 Figure 112: Overall 2008 Solar Equipment Market Breakdown .......................... 105 Figure 113: Solar Cell Production Process Flow Chart........................................ 105 Figure 114: Solar Module Production Process Flow Chart................................... 106 Figure 115: Crystalline Cell Equipment Market Breakdown................................. 106 Figure 116: DSS Furnace and Silicon Ingot..................................................... 107 Figure 117: Tabber/Stringer........................................................................ 110
380
Figure 118: Thin Film Cell Equipment Market Breakdown................................... 112 Figure 119: Thin Film Production Process ........................................................ 112 Figure 120: Parabolic Trough Technology....................................................... 117 Figure 121: Central Receiver Technology........................................................ 118 Figure 122: Parabolic Dish Technology.......................................................... 119 Figure 123: European Solar Thermal Market (2007)......................................... 121 Figure 124:German Incentive Program........................................................... 125 Figure 125: Annual Solar Installations (MW).................................................... 125 Figure 126: Solar Electricity per Capita.......................................................... 125 Figure 127: Electricity Market Breakup........................................................... 126 Figure 128: Solar Penetration....................................................................... 126 Figure 129: Spain Incentive Program............................................................. 127 Figure 130: Annual Solar Installations (MW).................................................... 127 Figure 131: Solar Electricity per Capita.......................................................... 127 Figure 132: Electricity Market Breakup........................................................... 128 Figure 133: Solar Penetration....................................................................... 128 Figure 134: U.S. Market Annual Solar PV Installations (MW) .............................. 129 Figure 135: U.S. Incentives.......................................................................... 130 Figure 136: Renewable Portfolio Standard Incentives......................................... 130 Figure 137: Renewable Portfolio Standards..................................................... 131 Figure 138: Net Metering Rules.................................................................... 131 Figure 139: State Incentives for PV Projects...................................................... 132 Figure 140: Annual Solar Installations (MW).................................................... 133 Figure 141: Solar Electricity per Capita.......................................................... 133 Figure 142: Electricity Market Breakup........................................................... 133 Figure 143: Solar Penetration....................................................................... 133 Figure 144: Annual Solar Installations (MW).................................................... 134 Figure 145: Solar Electricity per Capita.......................................................... 134 Figure 146: Electricity Market Breakup........................................................... 134 Figure 147: Solar Penetration....................................................................... 134 Figure 148: South Korean Feed-In Tariff Program.............................................. 135 Figure 149: Annual Solar Installations (MW).................................................... 135 Figure 150: Solar Electricity per Capita.......................................................... 135 Figure 151: Electricity Market Breakup........................................................... 136 Figure 152: Solar Penetration....................................................................... 136 Figure 153: South Korean Feed-In Tariff Program.............................................. 137 Figure 154: Annual Solar Installations (MW).................................................... 138 Figure 155: Solar Electricity per Capita.......................................................... 138 Figure 156: Electricity Market Breakup........................................................... 138 Figure 157: Solar Penetration....................................................................... 138 Figure 158:Italian Solar Incentives................................................................. 140 Figure 159: Annual Solar Installations (MW).................................................... 141
381
Figure 160: Solar Electricity per Capita.......................................................... 141 Figure 161: Electricity Market Breakup........................................................... 141 Figure 162: Solar Penetration....................................................................... 141 Figure 163:Greek Solar Incentives................................................................. 142 Figure 164: Annual Solar Installations (MW).................................................... 143 Figure 165: Solar Electricity per Capita.......................................................... 143 Figure 166: Electricity Market Breakup........................................................... 143 Figure 167: Solar Penetration....................................................................... 143 Figure 168: Annual Solar Installations (MW).................................................... 144 Figure 169: Solar Electricity per Capita.......................................................... 144 Figure 170: Electricity Market Breakup........................................................... 145 Figure 171: Solar Penetration....................................................................... 145 Figure 172: Annual Solar Installations (MW).................................................... 146 Figure 173: Solar Electricity per Capita.......................................................... 146 Figure 174: Electricity Market Breakup........................................................... 147 Figure 175: Solar Penetration....................................................................... 147 Figure 176: Australia Capital Territory Estimated Financial Return (AUD) ................ 148 Figure 177: Annual Solar Installations (MW).................................................... 148 Figure 178: Renewable Electricity Market Breakdown ....................................... 148 Figure 179: Annual Solar Installations (MW).................................................... 149 Figure 180: Electricity Market Breakdown....................................................... 149 Figure 181: Ontario Proposed Feed-in-Tariff .................................................... 150 Figure 182: Annual Solar Installations (MW).................................................... 150 Figure 183: Electricity Market Breakdown....................................................... 150 Figure 184: Annual Solar Installations (MW).................................................... 151 Figure 185: Electricity Market Breakdown....................................................... 151 Figure 186: Portuguese Solar Incentives.......................................................... 152 Figure 187: Annual Solar Installations (MW).................................................... 153 Figure 188: Electricity Market Breakdown....................................................... 153 Figure 189: Switzerland Solar Incentives ........................................................ 154 Figure 190: Annual Solar Installations (MW).................................................... 155 Figure 191: Electricity Market Breakdown....................................................... 155 Figure 192: Annual Solar Installations (MW).................................................... 156 Figure 193: Electricity Market Breakdown....................................................... 156 Figure 194: UK Solar Incentive Program......................................................... 157 Figure 195:Belgium Solar Incentives .............................................................. 158 Figure 196: Annual Solar Installations (MW).................................................... 159 Figure 197: Electricity Market Breakdown....................................................... 159 Figure 198: Bulgaria Feed in Tariff................................................................ 159 Figure 199: Annual Solar Installations (MW).................................................... 160 Figure 200: Electricity Market Breakdown....................................................... 160 Figure 201: Czech Republic Solar Incentives................................................... 160
382
Figure 202: Annual Solar Installations (MW).................................................... 161 Figure 203: Electricity Market Breakdown....................................................... 161 Figure 204: Solar Demand Scenario (200512E)............................................ 162 Figure 205: New PV Installations Breakdown .................................................. 163 Figure 206: Germany Solar PV Demand Model............................................... 164 Figure 207: Spain Solar PV Demand Model.................................................... 165 Figure 208: Italy Solar PV Demand Model...................................................... 166 Figure 209: France Solar PV Demand Model................................................... 167 Figure 210: Greece Solar PV Demand Model ................................................. 168 Figure 211: Japan Solar PV Demand Model.................................................... 169 Figure 212: South Korea Solar PV Demand Model ........................................... 170 Figure 213: U.S. Solar PV Demand Model...................................................... 171 Figure 214: China Solar PV Demand Model ................................................... 172 Figure 215: India Solar PV Demand Model..................................................... 173 Figure 216: Mandatory and Non Binding Renewable Energy Goals .................... 176 Figure 217: State Description of RPS Policies ................................................... 177 Figure 218: State Description of RPS Policies ................................................... 178 Figure 219: Qualifying Renewable Energy Resources........................................ 179 Figure 220: Life Cycle Positions of Various Technologies.................................... 179 Figure 221:Annual Capacity Additions........................................................... 180 Figure 222:Total Capacity Additions (19982007).......................................... 180 Figure 223: New Renewable Capacity needed by 2025 (Nameplate MW)......... 181 Figure 224: New Renewable Generation Needed by 2025 as a Percent of Projected Statewide Retails Sales......................................................................... 181 Figure 225: Different Renewable Mix Across Regions........................................ 182 Figure 226: RPS Impacts on Residential Electricity Bills ....................................... 182 Figure 227: Carbon Reduction and Displacement Rate...................................... 183 Figure 228: States Enacting Renewable Portfolio Standards ................................ 184 Figure 229: State RPS Exemptions ................................................................. 185 Figure 230: States Allowing Unbundled RECs.................................................. 186 Figure 231: States with Solar or DG Set Asides ............................................... 187 Figure 232: States with Solar Set Aside.......................................................... 187 Figure 233: Timeline of Annual and Cumulative Solar Additions .......................... 188 Figure 234: States with the Highest Capacity Potential ...................................... 189 Figure 235: Projecting the Future Market Impacts of Existing State Solar Set Asides (Assuming Full Compliance with Existing RPS Standards).............................. 190 Figure 236: U.S. Annual PV Solar Radiation.................................................... 191 Figure 237: New Renewable Capacity Needed by 2025 (Nameplate MW)........ 192 Figure 238: Solar Energy Project Development Process Overview......................... 202 Figure 239: Model 1: Utility Buys Power to Fill RPS........................................... 204 Figure 240:Gantt Chart; Model 1................................................................. 205 Figure 241:Model 2: Utility Builds and Owns Plant........................................... 206
383
Figure 242: Gantt Chart: Model 2................................................................ 207 Figure 243:Model 3: Tax Advantage Project................................................... 208 Figure 244: Gantt Chart: Model 3................................................................ 209 Figure 245: Model 4: General Solar Energy Project Process Germany ............... 210 Figure 246: Model 4: General Solar Energy Project Process Spain.................... 211 Figure 247: Model 4: General Solar Energy Project Process Italy ...................... 212 Figure 248: Model 4: General Solar Energy Project Process Greece.................. 213 Figure 249: Europe Comparative Gantt Chart: Model 4.................................... 214 Figure 250: How Electricity Is Produced in a Solar Cell ..................................... 218 Figure 251: Benchmark Data for 2010 and 2015 Projections ............................ 221 Figure 252: Solar Technology Price Trends...................................................... 221 Figure 253: Next-Generation Fund Allocation.................................................. 222 Figure 254: Amorphous Silicon Cell Structure................................................... 223 Figure 255: CdTe Solar Cell........................................................................ 224 Figure 256: String Ribbon Technology ........................................................... 224 Figure 257: Structure of a Dye-Sensitized Cell.................................................. 225 Figure 258: CIGS Solar Cell Structure............................................................ 225 Figure 259: -Si/a-Si Solar Cell Structure....................................................... 226 Figure 260: Spherical Silicon Solar Cell Production........................................... 226 Figure 261: PV and Electricity Price Difference for Residential Sector (2007)........... 228 Figure 262: Solar Electricity Grid-Parity Scenarios in 2015 Due to Annual Electricity Price Escalation of 1.5%.......................................................... 229 Figure 263: Solar Electricity Grid-Parity Scenarios in 2015 Due to Annual Electricity Price Escalation of 2.5%.......................................................... 230 Figure 264: Barclays Capital Global Solar Comparable Valuation Metrics as of 4/27/2009..................................................................................... 240 Figure 265: Barclays Capital Global Solar Comparable Trading Statistics as of 4/27/2009..................................................................................... 241 Figure 266: Barclays Capital Global Solar Comparable Financial Metrics as of 4/27/2009..................................................................................... 242 Figure 267: Barclays Capital Global Solar Comparable Valuation Charts as of 4/20/2009..................................................................................... 243 Figure 268: Barclays Capital Absolute Price Performance U.S. Solar Energy as of 4/20/2009..................................................................................... 244 Figure 269: FSLR Earnings Drivers ................................................................. 246 Figure 270: FSLR Income Statement............................................................... 247 Figure 271: FSLR Balance Sheet................................................................... 248 Figure 272: SPWRA Earnings Drivers............................................................. 249 Figure 273: SPWRA Earnings Drivers............................................................. 250 Figure 274: SPWRA Income Statement........................................................... 251 Figure 275: SPWRA Balance Sheet............................................................... 252 Figure 276: YGE Earnings Drivers................................................................. 253
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Figure 277: YGE Income Statement............................................................... 254 Figure 278: YGE Balance Sheet................................................................... 255 Figure 279: WFR Earnings Drivers................................................................. 256 Figure 280: WFR Income Statement............................................................... 257 Figure 281: WFR Balance Sheet................................................................... 258 Figure 282: JASO Earnings Drivers................................................................ 259 Figure 283: JASO Income Statement.............................................................. 260 Figure 284: JASO Balance Sheet.................................................................. 261 Figure 285: TSL Earnings Drivers................................................................... 262 Figure 286: TSL Income Statement................................................................. 263 Figure 287: TSL Balance Sheet..................................................................... 264 Figure 288: SOL Earnings Drivers.................................................................. 265 Figure 289: SOL Income Statement................................................................ 266 Figure 290: SOL Balance Sheet.................................................................... 267 Figure 291: LDK Earnings Drivers .................................................................. 268 Figure 292: LDK Income Statement................................................................ 269 Figure 293: LDK Balance Sheet.................................................................... 270 Figure 294: CSUN Earnings Drivers .............................................................. 271 Figure 295: CSUN Income Statement............................................................ 272 Figure 296: CSUN Balance Sheet................................................................ 273 Figure 297: STP Earnings Drivers .................................................................. 274 Figure 298: STP Income Statement................................................................ 275 Figure 299: STP Balance Sheet.................................................................... 276 Figure 300: ENER Earnings Drivers................................................................ 277 Figure 301: ENER Income Statement.............................................................. 278 Figure 302: ENER Balance Sheet.................................................................. 279 Figure 303: GT Solar Revenue Drivers............................................................ 280 Figure 304: GT Solar Income Statement......................................................... 281 Figure 305: GT Solar Balance Sheet............................................................. 282 Figure 306: CSIQ Earnings Drivers................................................................ 283 Figure 307: CSIQ Income Statement.............................................................. 284 Figure 308: CSIQ Balance Sheet.................................................................. 285 Figure 309: SOLF Earnings Drivers ................................................................ 286 Figure 310: SOLF Income Statement.............................................................. 287 Figure 311: SOLF Balance Sheet.................................................................. 288 Figure 312: World Solar PV Market (2008).................................................... 312 Figure 313: Job Creation Potential of Solar PV Industry....................................... 312 Figure 314: Value of PV Market.................................................................... 313 Figure 315: PV Cell Exports ......................................................................... 313 Figure 316: Cumulative PV Installations (2020)................................................ 313 Figure 317: Polysilicon Market Share, 2008E................................................. 314 Figure 318: Polysilicon Supply...................................................................... 314
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Figure 319: PV Cell Production (MW) in 2008................................................ 315 Figure 320: PV Market Scenario................................................................... 315 Figure 321: Solar Cell Equipment Market, 2008.............................................. 315 Figure 322: Solar Cell Production, 2008........................................................ 316 Figure 323: Solar Cell Technologies, 2008.................................................... 316 Figure 324: Silicon Demand for Semiconductors .............................................. 317 Figure 325: Wafer Manufacturing Plants ........................................................ 317 Figure 326: Cell Manufacturing Plants............................................................ 318 Figure 327: Australian PV Market (MW)......................................................... 318 Figure 328: California PV Market (MW)......................................................... 318 Figure 329: Canadian PV Market (MW) ........................................................ 319 Figure 330: Chinese PV Market (MW)........................................................... 319 Figure 331: French PV Market (MW)............................................................. 320 Figure 332: German PV Market (MW)........................................................... 320 Figure 333: U.K. PV Market (MW)................................................................ 321 Figure 334: Greek PV Market (MW).............................................................. 321 Figure 335: Indian PV Market (MW).............................................................. 322 Figure 336: Israel PV Market (MW)............................................................... 322 Figure 337: Italian PV Market (MW).............................................................. 323 Figure 338: Japanese PV Market (MW).......................................................... 323 Figure 339: Mexican PV Market (MW).......................................................... 324 Figure 340: South Korean PV Market (MW).................................................... 324 Figure 341: U.S. PV Market (MW)................................................................ 325 Figure 342: Solar Energy in Illinois................................................................ 325 Figure 343: PV Power per Person in the European Union.................................... 326 Figure 344: U.S. Solar Market..................................................................... 326 Figure 345: Japanese Solar Market............................................................... 327 Figure 346: Japanese Solar Market............................................................... 327 Figure 347: U.S. Solar Market..................................................................... 328 Figure 348: Building Integrated Photovoltaic Incentives ...................................... 329 Figure 349:California Solar Initiative PBI......................................................... 329 Figure 350: State Tax Incentives ................................................................... 330 Figure 351: Solar Specific RPS in the U.S....................................................... 330 Figure 352: California Solar Initiative............................................................. 331 Figure 353: California Solar Initiative Demand................................................. 331 Figure 354: California Solar Initiative Installations............................................. 332 Figure 355: California Solar Initiative Program................................................. 332 Figure 356: California Solar Initiative Program................................................. 333 Figure 357: Net Metering ........................................................................... 333 Figure 358: Public Benefit Funds................................................................... 333 Figure 359: Renewable Energy Act, Germany ................................................. 334 Figure 360: U.S. Renewable Portfolio Standards .............................................. 334
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Figure 361: U.S. State Solar Goals............................................................... 335 Figure 362: Kyoto Target for Reduction of Greenhouse Gases............................. 335 Figure 363: Minnesota State Utility Solar Incentives........................................... 336 Figure 364: Washington State Utility Solar Incentives ........................................ 336 Figure 365: Florida State Utility Solar Incentives ............................................... 337 Figure 366: Colorado State Utility Solar Incentives............................................ 337 Figure 367: Texas State Utility Solar Incentives................................................. 338 Figure 368: Employment Generated by Solar .................................................. 338 Figure 369: Roof Area Needed for Various Sizes of PV Systems .......................... 338 Figure 370: PV Installations by Applications..................................................... 339 Figure 371: Cell Manufacturing.................................................................... 339 Figure 372: Solar Cell Growth..................................................................... 340 Figure 373: Competitiveness of off grid applications......................................... 340 Figure 374: Evolution of Solar Applications..................................................... 341 Figure 375: PV Installations by Applications..................................................... 341 Figure 376: PV Sector Investments ................................................................. 341 Figure 377: Renewable Power Capacities, 2006............................................ 342 Figure 378: Production Capacities (2010)...................................................... 342 Figure 379: Solar Module Production, 2008E................................................. 342 Figure 380: Taiwanese Solar Companies....................................................... 343 Figure 381:Cell Manufacturing..................................................................... 343 Figure 382: Solar Cell Growth..................................................................... 344 Figure 383: Competitiveness of Off-Grid Applications ....................................... 344 Figure 384: Annual Installed Capacity for Solar Hot Water Systems..................... 345 Figure 385: Solar Water Heating by State...................................................... 345 Figure 386: Australian Electricity Market......................................................... 346 Figure 387: Austrian Electricity Market........................................................... 346 Figure 388: Denmark Electricity Market.......................................................... 347 Figure 389: French Electricity Market............................................................. 347 Figure 390: Greek Electricity Market.............................................................. 347 Figure 391: Italian Electricity Market.............................................................. 348 Figure 392: Portuguese Electric Market........................................................... 348 Figure 393: Spanish Electricity Market........................................................... 348 Figure 394: South Korean Electricity Market.................................................... 349 Figure 395: Electricity Prices in Europe........................................................... 349 Figure 396: German Reserve Capacity .......................................................... 350 Figure 397: Germany Electricity Prices ........................................................... 350 Figure 398: Solar Energy and Peak Power Electricity Market............................... 351 Figure 399: United States Reserve Capacity.................................................... 351 Figure 400: Building-Integrated Photovoltaics (BIPV)........................................... 352 Figure 401: Cell Efficiencies for Crystalline Cells .............................................. 352 Figure 402: CIGS Solar Technology.............................................................. 352
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Figure 403: Roadmap for Cadmium Telluride Technology .................................. 353 Figure 404: Roadmap for CIGS Technology.................................................... 353 Figure 405: CO 2 Emission Reduction Due to Solar............................................ 353 Figure 406: Concentrated Photovoltaic Technology (CPV)................................... 354 Figure 407: Concentrating Solar Thermal........................................................ 354 Figure 408: Conversion Efficiencies of Major Solar Technologies......................... 355 Figure 409: Cost per Watt Reduction Process.................................................. 355 Figure 410: Electrochemical PV Cells............................................................. 356 Figure 411: Energy Payback Times................................................................ 356 Figure 412: Fluid Bed Technology Cost.......................................................... 356 Figure 413: Greenhouse Gas Emissions ......................................................... 357 Figure 414: Multi-Crystalline Solar Cell Manufacturing Process............................ 357 Figure 415: Siemens Reactor Process............................................................. 358 Figure 416: Silicon .................................................................................... 358 Figure 417: Silicon Manufacturing Processes................................................... 359 Figure 418: Solar Batteries .......................................................................... 359 Figure 419: Solar Grade Silicon Production Process.......................................... 360 Figure 420: Solar Invertors........................................................................... 360 Figure 421: Solar Module Technologies......................................................... 361 Figure 422: Thin-Film Conversion Efficiencies Potential....................................... 361 Figure 423: Thin-Film Panel Efficiencies........................................................... 362 Figure 424: Wafer Thickness and Silicon Usage.............................................. 362 Figure 425: Silicon Feedstock Market............................................................ 362 Figure 426: Solar Industry Technologies ......................................................... 363 Figure 427: Laser Reactive Deposition............................................................ 363 Figure 428: Thin Film Manufacturers .............................................................. 363 Figure 429: Two Types of Linear Concentrator Systems...................................... 364 Figure 430: Dish/Engine Systems ................................................................. 364 Figure 431: Power Tower System.................................................................. 365 Figure 432: U.S. Parabolic Trough Power Plants............................................... 365 Figure 433: Thermal Storage Systems- Two Tank Direct System............................ 366 Figure 434: Single Tank Thermocline System................................................... 366 Figure 435: Global Renewable Energy Capacity Growth................................... 367 Figure 436: Renewable Energy Investment...................................................... 367 Figure 437: A Brief History of the U.S. Wind Industry........................................ 368 Figure 438: Todays Modern Wind Turbine.................................................... 369 Figure 439: Size of Wind Turbines................................................................ 370 Figure 440: Offshore Wind Technology ......................................................... 370 Figure 441: Geothermal Capacity in the United States ...................................... 371 Figure 442: Geothermal Steam Plants ............................................................ 371 Figure 443: Geothermal Binary Plant............................................................. 372 Figure 444: Announced versus Realistic Power Plant Projects (by 2012) in Europe... 372
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Figure 445: CO 2 Avoidance Costs Through Building New Power Plants................ 373 Figure 446: EU 15 Reserve Margin Calculated by CERA................................... 373 Figure 447: New Thermal Power Plant Capacity Requirements in Europe............... 374 Figure 448: Percentage of Electricity from Renewable Sources (including Hydroelectric)374 Figure 449: Renewable Energy Act Accounts for About 3% of German Household Electricity Bills..................................................................................... 375 Figure 450: U.S. States Renewable Portfolio Standard (RPS) Targets ..................... 375 Figure 451: Non Silicon Costs ..................................................................... 376 Figure 452: US Utility Sector Potential from ITC................................................ 376 Figure 453: Global Private Investment by Solar Technology................................ 377
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On Septem ber 20, 2008, B arclays Capital acquired L ehman Brothers North American investment banking, capital markets, and private investment management businesses. We have endeavored to provide conflicts of interest disclosures on a combined basis. All ratings and price targets prior to the acquisition date relate to coverage under Lehman Brothers Inc.
1.212.526.7726
jake.greenblatt@barcap.com
390
4-06
7-06
10-06
1-07
4-07
7-07
10-07
1-08
4-08
7-08
10-08
1-09
4-09
Currency=US$ Date 08-Apr-09 17-Mar-09 17-Mar-09 13-Nov-08 09-Oct-08 Closing Price 135.69 115.96 115.96 125.31 118.10 Rating Price Target 120.00 110.00 140.00 180.00 Date 23-Jun-08 13-Feb-08 08-Nov-07 23-Oct-07 23-Oct-07 Closing Price 288.00 228.46 224.43 150.16 150.16 Rating Price Target 335.00 280.00 220.00 180.00
2 -Equal weight
1 -Overweight
FOR EXPLANATIONS OF RATINGS REFER TO THE STOCK RATING KEYS LOCATED ON THE BACK PAGE. Barclays Capital and/or an affiliate makes a market or provides liquidity in the securities of First Solar Inc.. Barclays Capital and/or one of the ir affiliates beneficially owns 1% or more of any class of common equity securities of First Solar Inc.. Barclays Capital and/or an affiliate trade regularly in the shares of First Solar Inc.. Risks Which May Impe de t he Achieve ment of t he Price Tar get: 1) First Solar is highly leveraged to demand trends in German and Spanish markets, both of which are expected to remain strong through 2H07. Although we believe a significant portion of revenue is already secured in the form of long-term contracts, a substantial portion of unsecured revenue could be impacted by any potential changes in the government incentives in these regions. We generally remain bullish on F irst Solars growth potential in the US market; however, any environmental concerns that arise with the use of cadmium may slow down the growth potential for this technology in the US market. 2) First Solars shares are currently discounting significant top-line growth resulting from highly secured contracts with fixed price digressions and robust margin expansion resulting from the company s aggressive cost reduction plans. We believe any further upside to estimates hinges upon the companys ability to secure additional long-term contracts at currently favorable pricing terms as well as better tctedxre is some element of scarcity factor in First Solars valuation and as more thin film companies go public over the next 12-18 months, this may reduce the scarcity factor in First Solars current valuation.
391
1-Overweight / 1-Positive
4-06
7-06
10-06
1-07
4-07
7-07
10-07
1-08
4-08
7-08
10-08
1-09
4-09
Currency=US$ Date 10-Mar-09 13-Nov-08 15-Oct-08 29-Sep-08 28-May-08 13-Mar-08 Closing Price 2.21 2.55 5.68 10.24 22.17 15.17 Rating Price Target 3.65 4.00 22.00 24.00 29.00 Date 03-Mar-08 18-Dec-07 26-Nov-07 23-Oct-07 23-Oct-07 Closing Price 14.74 23.78 17.70 18.34 18.34 Rating Price Target 27.00 26.67 21.67 18.33
2 -Equal weight
1 -Overweight
FOR EXPLANATIONS OF RATINGS REFER TO THE STOCK RATING KEYS LOCATED ON THE BACK PAGE. Barclays Capital and/or Lehman Brothers Inc. and/or one of their affiliates has managed or co-managed within the past 12 months a 144A and/or public offering of securities for JA Solar Holdings Co., Ltd.. Barclays Capital and/or an affiliate makes a market or provides liquidity in the securities of JA Solar Holdings Co., Ltd.. Barclays Capital and/or Lehman Brothers Inc. and/or one of their affiliates has received compensation for investment banking services from JA Solar Holdings Co., Ltd. in the past 12 months. Barclays Capital and/or an affiliate expects to receive or intends to seek compensation for investment banking services from JA Solar Holdings Co., Ltd. within the next 3 months. Barclays Capital and/or an affiliate trade regularly in the shares of JA Solar Holdings Co., Ltd.. Barclays Capital and/or Lehman Brothers Inc. and/or one of their affiliates has received non-investment banking related compensation from JA Solar Holdings Co., Ltd. within the last 12 months. JA Solar Holdings Co., Ltd. is or during the past 12 months has been an investment banking client of Barclays Capital and/or Lehman Brothers Inc. and/or one of their affiliates. JA Solar Holdings Co., Ltd. is or during the last 12 months has been a non-investment banking client (securities related services) of Barclays Capital and/or Lehman Brothers Inc. and/or one of their affiliates. Risks Which May Impe de t he Achieve ment of t he Price Tar get: Risks include: 1) policy risks in Germany, Spain; 2) polysilicon supply tight ness causing margin pressure; 3) oversupply in the cell market
392
4-06
7-06
10-06
1-07
4-07
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1-08
4-08
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1-09
4-09
Currency=US$ Date 17-Mar-09 17-Mar-09 13-Nov-08 05-Nov-08 22-Oct-07 Closing Price 20.91 20.91 28.11 32.99 101.75 Rating 2 -Equal weight 35.00 65.00 115.00 Price Target 18.00 Date 22-Oct-07 20-Jul-07 27-Apr-07 21-Apr-06 Closing Price 101.75 67.94 59.55 38.46 Rating 1 -Overweight Price Target 70.00 60.00 39.00
FOR EXPLANATIONS OF RATINGS REFER TO THE STOCK RATING KEYS LOCATED ON THE BACK PAGE. Barclays Capital and/or an affiliate makes a market or provides liquidity in the securities of SunPower Corp.. Barclays Capital and/or one of the ir affiliates beneficially owns 1% or more of any class of common equity securities of SunPower Corp.. Barclays Capital and/or an affiliate hold a short position of at le ast 1% of the outstanding share capital of SunPower Corp.. Barclays Capital and/or an affiliate trade regularly in the shares of SunPower Corp.. Barclays Capital and/or Lehman Brothers Inc. and/or one of their affiliates has received non-investment banking related compensation from SunPower Corp. within the last 12 months. SunPower Corp. is or during the last 12 months has been a non-investment banking client (securities related services) of Barclays Capital and/or Lehman Brothers Inc. and/or one of their affiliates. Risks Which May Impe de t he Achieve ment of t he Price Tar get: SunPower faces a number of risks including polysilicon pricing and other macroeconomic factors. While execution risk on its capacity ramp from 25 to 75 mW is also prevalent, at present we believe Line 2 ramp is slightly ahead of plan with Line 3 now beginning. While we believe SunPower has solid contracts and supply agreements with its polysilicon suppliers, there is risk that suppliers could demand higher prices or not deliver supply as agreed. We be lieve the currently favorable subsidy environment in Germany, other areas in Europe and select states in the United States is important for overall industry momentum and eventual price parity with other readily available forms of electricity. In addition, we believe that the growth and efficiency of surrounding ecosystem of installation services, maintenance and consumer education is key to continued growth and health of the industry. Lastly, competition and the race for capacity is meaningful, and we expect large conglomerates such as Sharp, Sanyo and Kyocera to continue to use their substantial cash balances to continue to invest in capacity as well as R&D. We also expect new players to be attracted to the market. Honda recently announced a thin film cell init iative for 2007, and speculation continues around other diversified companies interested in solar's growth prospects.
393
3-Underweight / 1-Positive
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1-07
4-07
7-07
10-07
1-08
4-08
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Currency=US$ Date 18-Feb-09 20-Nov-08 13-Nov-08 03-Nov-08 03-Nov-08 26-Sep-08 Closing Price 8.95 5.39 11.80 17.82 17.82 38.48 Rating Price Target 6.50 4.00 8.00 11.00 Date 21-Feb-08 19-Feb-08 18-Dec-07 12-Dec-07 16-Nov-07 Closing Price 39.60 45.89 78.05 80.53 69.42 Rating Price Target 60.00 75.00 100.00 80.00
1 -Overweight
3 -Underweight 1 -Overweight
FOR EXPLANATIONS OF RATINGS REFER TO THE STOCK RATING KEYS LOCATED ON THE BACK PAGE. Barclays Capital and/or an affiliate trade regularly in the shares of Suntech Power Holdings. Risks Which May Impe de t he Achieve ment of t he Price Tar get: Growth of the PV industry, and hence growth in Suntech's profits, depends largely on government incentive policies. Government policies are not highly predictable. Hence the accuracy of our estimates for the company may be affected by changing policies that impact the solar energy sector.
394
Barclays Capital offices involve d in t he pr oduction of E quity Research: London Barclays Capital, the investment banking division of Barclays Bank Plc (Barclays Capital, London) New York Barclays Capital Inc. (BCI, New York) Tokyo Barclays Capital Japan Lim ited (BCJL, Tokyo) So Paulo Banco Barclays S.A. (BBSA, So Paulo)
Mentioned Company
First Solar I nc. JA Solar Holdings Co., Ltd. SunPower Corp. Suntech Power Holdings
Ticker
FSLR JASO SPWR STP
Price
US$ 187.29 US$ 3.51 US$ 27.38 US$ 14.93
Price Date
30 Apr 2009 30 Apr 2009 30 Apr 2009 30 Apr 2009
395
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US09-0031