Monday, July 26, 2010

Barron's: "More Heat on First Solar" Tempest in a Teapot (FSLR)

We devoted a post to the Cadmium Telluride question back in early June, "Hapoalim Cuts First Solar Target to $65 on Cadmium Telluride Risk; It Won't Matter and Probably Sets an Intermediate Low (FSLR)":
The stock is at $105.35 +0.37 in subdued pre-market trade.
This fear is not immediate and for First Solar may not even be relevant in five years. I'm not sure Hapoalim understands the politics, the science or the company I'll explain after the jump....
The stock did set it's intermediate low that day, at $100.19, and went on a 40% run from there. If you have an interest in this stuff we have a lot of links in that post. We also explain why FSLR's move into CIGS makes the whole question moot.
Here's Barron's:

A new study questions the safety of the solar company's panels. But pricing of silicon may be a bigger problem.

FIRST SOLAR HAS WORKED MIGHTILY in the last year to reassure investors that its "thin-film" solar-energy panels will continue to enjoy a cost advantage over rivals' increasingly cheap silicon-based wares. Shares of Tempe, Ariz.-based First Solar (ticker: FSLR) have yo-yoed from 170 to 100 and then back to about 140 recently, as the company's gross margins veered from 56% to 42% and then back up to 50% for the March 2010 quarter—reflecting the competitive pressures that we predicted when the price of raw silicon began to drop ("Nightfall Comes to Solar Land," March 30, 2009).

But another front is heating up in First Solar's fight with competitors like Suntech (STP), Trina Solar (TSL) and Yingli Green Energy (YGE)—a debate over the long-term safety of First Solar products. First Solar's panels use cadmium-tellurium technology while the others use silicon wafers. The company has presented tests to show that the highly toxic cadmium is safely sealed in glass, and First Solar runs a voluntary program that will reclaim the panels at the end of their 30-year lives. Yet some silicon-panel rivals have argued for the treatment of First Solar products as hazardous waste.

On July 28, the California Department of Toxic Substances Control will hold a workshop in Sacramento to discuss how solar panels should be exempt from the state's hazardous-waste category. A non-profit group concerned about cadmium toxicity released a lab study last Thursday that asserts that cadmium-tellurium panels crushed in a landfill would leak the toxic substance at levels exceeding California's allowed levels.
The report was commissioned by The Non-Toxic Solar Alliance, a group organized by a University of Stuttgart professor named Jürgen Werner. The analysis (which is available at was conducted by an outfit called Sierra Analytical Labs in Laguna Hills, Calif. It crushed the product samples and immersed them in a mildly acidic solution (with a pH level of 5) meant to replicate the liquid runoff in a landfill. The resulting cadmium levels, said the lab, were almost three times the threshold considered hazardous.

Other lab studies had concluded that, under realistic conditions, the cadmium-based panels did not release the toxic substance at dangerous levels, including studies sponsored by the U.S. Dept. of Energy....MORE