German solar industry wants faster subsidy cuts (FSLR; TAN)

This may be aimed more at the Chinese rather than FSLR but the Big Dog will feel the effects.
From Reuters:

German solar companies in industry association BSW are proposing to cut subsidies faster than planned, Solarworld Chief Executive Frank Asbeck told a German magazine.

So far, plans had called for a 10 percent reduction of feed-in tariffs -- incentives utilities are obliged to pay for power generated from renewable sources -- in early 2010 and another 10 percent a year later. BSW is now proposing to add a cut in mid-2010.

"Some 10 percent on January 1, 5 percent at mid-year and then another 10 percent at the move into 2011," Asbeck said, according to an excerpt of an interview to be published in weekly Focus-Money magazine on Wednesday....MORE

Britain’s green rich list

From the Times of London:

There’s gold in those wind turbines. We highlight the top eco-tycoons, as rated by the compiler of our Rich List

The Copenhagen summit may have put the damper on global plans to tackle climate change — but British entrepreneurs are charging ahead regardless.

Research by Philip Beresford, author of The Sunday Times Rich List, has unveiled 20 British business people who have already made millions from going green. They range from Dale Vince, the New Age traveller turned wind-power tycoon, to the Cottingham family, which has quietly built up a fortune from insulating houses and installing energy-efficient heating. In drawing up the list, we have excluded businessmen like Sir Richard Branson, who have added environmental interests to their businesses.

Compared with other European countries, in particular Germany and Spain, Britain has been sparing with its subsidies for renewable energy and slow to push through big infrastructure projects in the face of local opposition.

All that might be about to change. After the fudge at Copenhagen, where world leaders failed to adopt firm targets to cut carbon-dioxide emissions, Britain is one of the few developed countries with a legally binding target on greenhouse gas emissions. The Climate Change Act 2008 says the UK must cut carbondioxide output 34% by 2020, a goal that should generate even more opportunities for our green millionaires.

1: DALE VINCE Ecotricity £85m

Dale Vince was a grammar school pupil in Great Yarmouth but realised he did not want a conventional career. He got his first taste of the hippie way of life at music festivals: “I’d seen people living in old buses and knew there was an alternative.”

So at 19 Vince decided to become a New Age traveller. His first home was an old ambulance. Eventually, he was living in a truck that he had converted into a home and he had an entire alternative lifestyle.

“I had a little wind turbine to charge old batteries and even run a laptop computer ,” he said. Vince wanted more than to lead a lowimpact lifestyle, though, so he drove to Cornwall to see Britain’s first wind farm. It gave him the dream of building a wind turbine on the hill where he lived in Gloucestershire.

It took five years of challenges and appeals before he managed to get planning permission. The next hurdle Vince faced was selling the power. The energy sector had not been deregulated and the price he was offered to supply the national grid was lower than he wanted. Undaunted, he came up with a bold solution. “The only way to make the venture work was to cut out the middleman and reach end-users directly. At that time the electricity industry was just liberalising and it was possible to get a supplier licence.”

The company he created, Ecotricity, has grown rapidly and now incorporates a wind-development arm, which deals with the turbines, and a retail arm, which delivers the energy to customers. In 2007 alone Ecotricity invested £25m in wind energy. In 2007-8 it made a £1.9m profit on £28m sales. It has £37.8m net assets and has been valued at more than £100m. Cautiously, in this difficult climate, we value Vince, 48, at £85m.

2: ANDREW OWENS and ALEX LEWIS Greenergy £50m

Andrew Owens formerly an oil trader, invested £300,000 in 1992 to set up Greenergy to supply what was, at the time, a new concept: low-sulphur petrol. As the oil giants muscled in on his niche, the Welshman, who had worked for Esso and Petrotrade, decided the company needed to focus on carbon itself.

Greenergy now makes car fuel from oilseed rape. By buying oil from the Continent, South America, Russia and Africa and mixing low–carbon versions for supermarket pumps, it has grown with its customers, the largest of which is Tesco. In 2007-8, Greenergy made £21.1m profit on £1.7 billion sales.

Owens, 47, and his wife Alex Lewis, 46, a former lobbyist who is the company’s communications chief, have a 33.1% stake worth perhaps £50m....MORE

Fannie Mae, Freddie Mac exec pay suggests stock worth nothing (FNM; FRE)

Fannie's trading up a few cents, Freddie's down a penny.
CNN pointed this out in their Christmas Eve story "Big paydays for Fannie and Freddie bosses":

...DeMarco said the pay packages were set in consultation with Kenneth Feinberg, the Obama administration's pay czar, who has to sign off on pay for executives at firms that received the most help from the Troubled Asset Relief Program.

But unlike typical pay packages for public companies, none of the executives are receiving stock grants or options as part of their compensation. That significantly reduces the risks for the executives at Fannie and Freddie.

The top executives at other firms receiving bailouts, such as American International Group (AIG, Fortune 500) and General Motors, are receiving stock in their companies as part of their packages. Even some firms no longer under federal pay limits, such as investment bank Goldman Sachs (GS, Fortune 500), announced that all bonuses would be paid in stock rather than cash this year.

DeMarco pointed out that there is great uncertainty about whether the federal government will continue to operate the firms into the future. The could end up making Fannie and Freddie's current shares worthless.

"As this debate progresses, it will be essential that the enterprises continue to perform their current role," DeMarco said.

Pinto said the lack of any stock in the pay packages are a clear signal that neither company will remain a publicly-traded company in the long-term....

Here MarketWatch's take:

...recently disclosed pay packages for Fannie (FNM 1.31, +0.04, +3.15%) and Freddie (FRE 1.59, -0.01, -0.63%) executives suggest the shares are worthless, Bose George, an analyst at Keefe, Bruyette & Woods, wrote in a note to investors.

Fannie Chief Executive Michael Williams and Freddie CEO Charles Haldeman got $6 million annual compensation packages, according to regulatory filings last week. See details of their pay.

To get all that money, the companies have to meet longer-term performance targets. But the packages don't include any stock, despite the fact that the government's pay czar Kenneth Feinberg has been pushing for more stock-based compensation to better align management and shareholder interests.

A portion of Williams' and Haldeman's compensation will come from "deferred salary," which is cash that will be paid only if Fannie and Freddie meet performance goals set by the companies' boards and reviewed by the Federal Housing Finance Agency, their regulator.

This is supposed to replicate "stock salary" that Feinberg approved for executives at companies that benefited from huge government bailouts. However, because of Fannie and Freddie's "unique circumstances," this part of their CEOs' compensation will be in cash, the Federal Housing Finance Agency said in a Dec. 24 statement.

What makes Fannie and Freddie unique is that the companies can't issue new common stock for executive compensation without getting Treasury's approval first. But that probably wasn't a "meaningful impediment," KBW's George noted.

"The more obvious reason is that the shares have no long-term value and that no executive would accept unvested shares of the companies as part of their compensation package," the analyst said.

"This reinforces our view that the common shares will eventually trade to zero," George concluded. "The companies will never be able to repay the government.

See also:
Fannie's And Freddie's Last Man Standing (FRE; FNM)

An excellent piece by Maurna Desmond at Forbes:

KBW analyst Bose George is the only Wall Street analyst still covering the mortgage giants. He talks to Forbes about their future.

KBW says Fannie, Freddie common shares worthless (FRE; FNM)

Fannie, Freddie shares dive on zero-value prediction (FRE; FNM)

Fannie Mae, Freddie Mac "The new GSE as zero meme – laying the assumptions bare – and a modest plan for Obama" (FNM; FRE)

The Marijuana/Solar/Wine Connection

Back in '07 we showed the Hydro/B.C. bud connection in "6% of all power produced by BC Hydro is used to grow marijuana."
In "Solar Panels Stolen in Carbondale Found in Aspen" we had:

"There's a sort of a reverse-Robin Hood symmetry to this."

Here's another oddity from Slate's The Big Money:

Making Weed While the Sun Shines

California's wine country has seen a rash of thefts of solar panels from vineyards recently, giving rise to a mini-industry of vineyard security systems.

It makes sense. Thefts of scrap metal—the usual market for rural thieves—are way down thanks to falling prices. And solar panels are proliferating in vineyards, usually installed in remote (but easily accessible) locations.

There is another factor at work: Wine is legal, but marijuana isn't. That means criminals are running the massive marijuana-growing operations north of wine country, while legitimate businesspeople are growing grapes. The criminals, who also want solar energy to keep their electricity use undetected, steal from the businesspeople, according to the cops in wine country. (We won't go into the obvious solution to this problem.)...MORE

Indicators: "Burlington Northern's Tepid Outlook Is a Warning " (BNI; BRK.A)

From Barron's:

Burlington Northern warned of a weak economy and tepid recovery ahead of its merger with Berkshire Hathaway. Wall Street, take note.

A PESSIMISTIC BUSINESS FORECAST BY THE management of Burlington Northern Santa Fe as the railroad considered Berkshire Hathaway's merger proposal in late October may mean U.S. industrial activity will be less robust in 2010 than many on Wall Street anticipate.

Railroads, which transport more than 40% of the country's freight, are an excellent gauge of economic activity. If Burlington's (ticker: BNI) outlook proves accurate, the nation's other major railroads -- CSX (CSX), Norfolk Southern (NSC) and Union Pacific (UNP) -- also could see subpar results. Shares of all three have rallied since Burlington's Nov. 3 announcement of its acceptance of Berkshire's (BRKA) $34 billion proposal.

After Berkshire CEO Warren Buffett made what proved to be a successful $100-a-share bid to Burlington CEO Matthew Rose, Burlington management sent the railroad's board four potential financial scenarios to consider as it weighed Buffett's proposal. The most optimistic -- that Burlington could earn $5.06 a share if the economy and the company's business recover in 2010 -- was at odds with Wall Street's far more upbeat 2010 consensus earnings estimate of $5.50 a share, according to the preliminary proxy for the merger.

Management thought it more likely the economy wouldn't start to recover until 2011 and that the railroad would earn a depressed $4.40 a share in 2010. The other two scenarios were even more bearish: Either there would be no recovery and unit growth would be flat for five years, or the economy would enter a "deeper recession."

These forecasts suggest Berkshire overpaid for Burlington. Wall Street thinks Buffett paid a full but not excessive price, especially as 40% of the deal price will be paid in Berkshire shares....MORE

Move over Sully, it's time for the Flying Dutchman

As we said in our Miracle on the Hudson post:

"Bravo Zulu"

Here's the Flying Dutchman story from Foreign Policy:

If anything good has come from the Flight 253 terror attack -- in which a 23-year-old Nigerian man attempted to detonate an explosive on a flight from Amsterdam to Detroit on Christmas Day -- it has been the tale of the Flying Dutchman.

Jasper Schuringa, a 32-year-old Dutch filmmaker, heard a popping sound and saw smoke emanating from the would-be terrorist's pants. He leaped to the rescue, jumping over other passengers to wrestle Umar Farouk Abdulmutallab and put out the fire on his pants, burning his bare hands in the process. (Abdulmutallab had hidden a plastic explosive in his underwear.) Schuringa then restrained Abdulmutallab in a headlock and helped the stewards handcuff him in first class. Needless to say, the tabloids are in love....MORE

Credit Suisse: Fannie, Freddie Action Means Large Scale Buyouts of Loans in Their Securities (FNM; FRE)

Bloomberg is on the job with some of the implications of the Christmas Eve Treasury move:

The U.S. government’s expanded capital backstops and portfolio limits for Fannie Mae and Freddie Mac increase “the prospect of large-scale” purchases by the companies of delinquent mortgages out of the securities they guarantee, according to Credit Suisse Group analysts.

The Treasury Department announced Dec. 24 that the two mortgage-finance companies, which were seized by the U.S. almost 16 months ago, could tap an unlimited amount of capital for three years, up from as much as $200 billion each. It reworked caps on Fannie Mae and Freddie Mac’s mortgage-asset portfolios to require the holdings to fall to $810 billion by Dec. 31, 2010, rather than about $690 billion.

“This announcement increases the prospect of large-scale voluntary buyouts by removing the portfolio cap hurdle and helping funding by potentially increasing debt-investor confidence,” Mahesh Swaminathan and Qumber Hassan, the Credit Suisse debt analysts in New York, wrote in a report yesterday.

Analysts including those at Credit Suisse and JPMorgan Chase & Co. have been predicting a spike in the companies’ buyouts of loans from their securities early next year. Aside from more purchases being required by the debt’s contracts as additional loans get modified under the Home Affordable program or fall more than two years past due, accounting-rule changes will force all loans in their securities onto their balance sheets, limiting the financial impact of actually buying them.

The changes announced by the Treasury last week are a “positive” for yield premiums on Fannie Mae and Freddie Mac mortgage bonds by eliminating “the overhang of potential” selling by the companies, the Credit Suisse analysts wrote. The portfolio- limit adjustment will give them “enough headroom” to absorb the approximately $220 billion “pipeline” of delinquent loans in their securities without having to sell other bonds, they wrote....MORE

Marc Faber Says Dollar May Rise 5-10% Versus Euro

I'm still trying to get my head around the Treasury move on Fannie and Freddie. We know it's a positive for the market but we're trying to quantify the effects on equities. Here's a place-holder story from one of our favorite analysts via Bloomberg:

The dollar may appreciate 5 to 10 percent against the euro in the “near term,” according to Marc Faber, publisher of the “Gloom Boom & Doom” newsletter.

U.S. equities and the dollar may keep rallying together, reversing a relationship that existed from March to November, Faber said in an interview on Bloomberg Television.

“Sentiment on the U.S. dollar was really extremely negative over the last three months,” Hong Kong-based Faber said. “The other currencies are not much better. The dollar will appreciate against the euro by another 5 to 10 percent, and later on we’ll have to see, but that would be a near-term target.”

The dollar has gained 4.2 percent to $1.4405 per euro this month, and was poised to end a five-month losing streak, on signs the U.S. economic recovery is gaining momentum.

Investors need to be “very careful” holding U.S. Treasuries and cash, and U.S. stocks will rally as Federal Reserve Chairman Ben S. Bernanke and his colleagues may have to print more money to help the government finance its debts, said Faber....MORE

Fannie, Freddie Soar 20% on Treasury’s “Blank Cheque” (FNM; FRE)

Update III: "Fannie Mae, Freddie Mac exec pay suggests stock worth nothing (FNM; FRE)"
Update II: "Credit Suisse: Fannie, Freddie Action Means Large Scale Buyouts of Loans in Their Securities (FNM; FRE)"
UPDATE: This is such a big deal we are still working on the implications. We'll have more later today or tomorrow morning.
Original post:
In premarket trade Fannie's up 20%, Freddie's up 21%.
From Barron's "Stocks to Watch Today" blog:

Shares of mortgage issuers Fannie Mae (FNM) and Freddie Mac (FRE) are surging this morning on the U.S. Treasury Department’s announcement Thursday, after the close of the shortened session, that it will amend its agreements with both firms to allow for, in a sense, unlimited funding of both institutions. The Treasury said it will amend its preferred stock purchase agreement (PSPA) with both, which had been capped at $200 billion, to allow its funding commitment “to increase as necessary to accommodate any cumulative reduction in net wroth over the next three years.”...MORE

From Bloomberg (Christmas Eve):

U.S. Removes Caps on Fannie, Freddie Lifelines for Three Years

The U.S. Treasury Department said today it will remove the caps on assistance to Fannie Mae and Freddie Mac for the next three years to alleviate market concern about the effect of limited government assistance.

The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each in backstop capital from the Treasury. Under the new agreement, these caps can rise as needed to cover net losses over the next three years.

Fannie Mae and Freddie Mac now are using a combined $111 billion of the total $400 billion in available assistance. Treasury Department officials said they did not expect the companies to need assistance beyond what is available under the current caps, barring significant deterioration in the economic outlook.

Today’s announcement “should leave no uncertainty about the Treasury’s commitment to support these firms as they continue to play a vital role in the housing market during this current crisis,” the Treasury said in a statement in Washington.

The Treasury also relaxed its timeline for Fannie Mae and Freddie Mac to shrink their portfolio of retained mortgages. Previously, the companies were instructed to shrink their portfolios at a rate of 10 percent a year. Now, they will be required to keep their portfolios below a maximum limit, currently $900 billion, that will fall by 10 percent a year....MORE

The Year in Energy

From MIT's Technology Review:

Liquid batteries, giant lasers, and vast new reserves of natural gas highlight the fundamental energy advances of the past 12 months.

With many renewable energy companies facing hard financial times ("Weeding Out Solar Companies"), a lot of the big energy news this year was coming out of Washington, DC, with massive federal stimulus funding for batteries and renewable energy and programs such as Energy Frontier Research Centers and Advanced Research Projects Agency-Energy ("A Year of Stimulus for High Tech").

But there was still plenty of action outside the beltway, both in the United States and around the world. One of the most dramatic developments ("Natural Gas Changes the Energy Map") was the rush to exploit a vast new resource; new drilling technologies have made it possible to economically recover natural gas from shale deposits scattered throughout the country, including in Texas and parts of New York, Pennsylvania, and Ohio. Advances in drilling technology have increased available natural gas by 39 percent, according to an estimate released in June. The relatively clean-burning fuel could cut greenhouse gas emissions by becoming a substitute for coal. Natural gas might even provide an alternative to petroleum in transportation, especially for buses and taxis--if only policymakers could take advantage of the new opportunity.

Meanwhile a number of technologies promise to cut down on emissions from coal plants. Feeding heat from the sun into coal plants could at once increase the amount of power that can be generated from a given amount of coal and reduce the cost of solar power ("Mixing Solar with Coal to Cut Costs")....MORE

Santa's Carbon Footprint

First posted Christmas Eve, 2007:

MERRY CHRISTMAS

Ho Ho Ho!

Santa may have one of the biggest carbon footprints of an individual, anywhere in the world, even greater than that of Al Gore.

Santa in recent years has seen his workload increase as Christmas is seen as holiday by not just Christians but by people of all faiths around the world. Whilst no exact figures are available, and Santa has not published any to date, according to UNICEF there are 2.2 billion children in the world. For this we will assume Santa will deliver to all children, since none have made it on to the naughty list this year.

Using UK National Statistics, the average household in the UK has 1.8 children, unfortunately we do not have an international average. So Santa would need to visit roughly 1.22 billion homes. Assuming Santa travels east to west, which would be the most logical route thanks to the different time zones and the rotation of the Earth, he has 48 hours to work with. Anders Larsson of the engineering consultancy Sweco, estimated that the average people per sq km on Earth is 48, and 20m between each home. Using these figures, Santa would need to travel a total distance of 24.4m km, or 141.46km per second, not including the fact he has stop the sleigh, get out, go down the chimney and deliver the presents, avoiding fires and chimney balloons, that may obstruct his path, then return to the sleigh and continue delivering presents. And visit 7073 homes a second, or 1.4 millisecond per visit.

In terms of Co2 emissions these will be greatly increased by the continued starting and stopping of the sleigh in addition to that with the extraordinary speeds at which the sleigh will be travelling. If we were to consider that the sleigh was being powered by a jet engine as touted in the film "Elf", namely a cringle 3000, whilst no vehicle can travel at that speed we will try to calculate the equivalent jet engine requirements. Before we do this we need to calculate the weight of Santa's sleigh load, all those toys in the sleigh. If each child was given only a Sony PS3 for Christmas, since not even Santa can get hold of Nintendo Wii's, at 7kg each, Santa would be pulling an average load during the journey of 4.3m tonnes. This is of course assuming that people all live evenly around the world with 20m between homes, and of course Santa hasn't died from exertion, or even slowed down, even a little.

Assuming Santa's sleigh fuel consumption was similar to that of a 747-400, taking the payload into consideration (9772 times more than a 747), the fuel consumption per km would be 116 000 litres per km. Note we have not taken into account that Santa is carrying the fuel in these assumptions, adding further weight to the sleigh, unless of course he stops off at some mega huge filling station, which he would need to do, or else he would need to carry over 2.8 billion litres of fuel, just for the presents alone, adding to his payload. So Santa now stops off at a filling station each km. To ensure he makes each km, he would need at least 60% extra fuel due to the starting and stopping which would increase his fuel consumption, or 185 600 litres per km.

Since Santa's sleigh is using a 747-400 engine technology, he is using kerosene, which emits 2.58kg of CO2 per litre. Meaning Santa's sleigh emits at least 478t of CO2 per km, or over the entire journey 11.683 billion tonnes of CO2 (42.88% of global CO2 emissions).
Lifted from EnergySaving blog.
Here's an alternate (and much lower) count.

"Do you want China building U.S. power lines?" (DUK; AES)

I lifted the headline from the Houston Chronicle's EnergyWatch blog. They also get the HT.
From the Wall Street Journal:

Duke, State Grid Discuss Energy Venture

Duke Energy Corp. is in talks with State Grid Corp., China's biggest electricity distributor, over a joint venture that may involve cooperating on power transmission lines in the U.S., according to two people familiar with the situation.

The move -- which could test U.S. acceptance of Chinese investment in domestic projects -- shows how U.S. utilities are keen to tap China's low-cost equipment and access to cheap credit to advance capital-intensive projects. These projects likely include the construction of high-voltage transmission lines, which experts say are more efficient over long distances than conventional power cables.

The talks also highlight the need for China's utilities to find foreign partners with cutting-edge technology that can eliminate years of costly research and development. According to a person close to the negotiations, State Grid wants to study Duke's smart grid technology for use in China....

...Duke isn't alone in looking to China. In recent months, global power generator AES Corp. announced it would sell a 15% equity stake in the company to China's sovereign-wealth fund China Investment Corp., while Progress Energy Inc. agreed to share information with Shandong Nuclear Power Co., which is a unit of China Power Investment Corp....MORE

State Grid is floating 20Bil. Yuan ($2.93 Bil) in 7 and 10 year paper today.

Top 10 questions for 2010 - Climate change and clean tech edition

From the Financial Times' Energy Source blog:

There are easily more than 100 ‘big questions’ for climate change and clean technology in 2010, but here’s a few, based on some of this year’s big themes:

1. Will a binding post-Copenhagen agreement ever be struck – and between whom?

2. How will low-carbon investment fare in the fallout from Copenhagen?

3. How will carbon offset projects fare after Copenhagen?

4. How quickly and effectively will the ‘quick start’ financing promised to developing countries be deployed?

5. Who (if anyone) will win the so-called clean tech race?

6. Will renewables mandates be favoured over cap-and-trade in the US?

7. Will natural gas be an interim saviour?

8. Will interest in nuclear as a low-CO2 option continue to grow, or will safety and cost/delay concerns?

9. Will China become more estranged from some other developing countries on climate negotiations?

10. Will we all forget about hacked emails and climate sceptics, or will the peer review process itself be reviewed?

See also:

Top 10 energy questions for 2010 - Hydrocarbons edition

Solar: "100 times less silicon generates same amount of electricity"

I hate it when scientists use terms like "100 times less..."
From Sandia National Laboratory:

Adventures in microsolar supported by microelectronics and MEMS techniques

Representative thin crystalline-silicon photovoltaic cells – these are from 14 to 20 micrometers thick and 0.25 to 1 millimeter across. (Image by Murat Okandan) Click on the image to download a high-resolution image.

ALBUQUERQUE, N.M. — Sandia National Laboratories scientists have developed tiny glitter-sized photovoltaic cells that could revolutionize the way solar energy is collected and used.

The tiny cells could turn a person into a walking solar battery charger if they were fastened to flexible substrates molded around unusual shapes, such as clothing.

The solar particles, fabricated of crystalline silicon, hold the potential for a variety of new applications. They are expected eventually to be less expensive and have greater efficiencies than current photovoltaic collectors that are pieced together with 6-inch- square solar wafers.

The cells are fabricated using microelectronic and microelectromechanical systems (MEMS) techniques common to today’s electronic foundries.

Sandia lead investigator Greg Nielson said the research team has identified more than 20 benefits of scale for its microphotovoltaic cells. These include new applications, improved performance, potential for reduced costs and higher efficiencies.

“Eventually units could be mass-produced and wrapped around unusual shapes for building-integrated solar, tents and maybe even clothing,” he said. This would make it possible for hunters, hikers or military personnel in the field to recharge batteries for phones, cameras and other electronic devices as they walk or rest.

Even better, such microengineered panels could have circuits imprinted that would help perform other functions customarily left to large-scale construction with its attendant need for field construction design and permits.

Said Sandia field engineer Vipin Gupta, “Photovoltaic modules made from these microsized cells for the rooftops of homes and warehouses could have intelligent controls, inverters and even storage built in at the chip level. Such an integrated module could greatly simplify the cumbersome design, bid, permit and grid integration process that our solar technical assistance teams see in the field all the time.”

For large-scale power generation, said Sandia researcher Murat Okandan, “One of the biggest scale benefits is a significant reduction in manufacturing and installation costs compared with current PV techniques.”

Part of the potential cost reduction comes about because microcells require relatively little material to form well-controlled and highly efficient devices.

From 14 to 20 micrometers thick (a human hair is approximately 70 micrometers thick), they are 10 times thinner than conventional 6-inch-by-6-inch brick-sized cells, yet perform at about the same efficiency.

100 times less silicon generates same amount of electricity

“So they use 100 times less silicon to generate the same amount of electricity,” said Okandan. “Since they are much smaller and have fewer mechanical deformations for a given environment than the conventional cells, they may also be more reliable over the long term.”

Another manufacturing convenience is that the cells, because they are only hundreds of micrometers in diameter, can be fabricated from commercial wafers of any size, including today’s 300-millimeter (12-inch) diameter wafers and future 450-millimeter (18-inch) wafers. Further, if one cell proves defective in manufacture, the rest still can be harvested, while if a brick-sized unit goes bad, the entire wafer may be unusable. Also, brick-sized units fabricated larger than the conventional 6-inch-by-6-inch cross section to take advantage of larger wafer size would require thicker power lines to harvest the increased power, creating more cost and possibly shading the wafer. That problem does not exist with the small-cell approach and its individualized wiring....MORE

HT: DiscoveryNews

What is Solyndra’s Cost Per Watt? (SOLY; FSLR; TSL)

First Solar is the low cost leader although Trina has something to say* about the subject.
From Greentech:

Solyndra’s module costs could be higher than their selling price. Or just under it.

Thin film solar vendor Solyndra (SOLY) was not exactly explicit in declaring their module price per watt in their recently filed S-1 (which we dissected in Part 1). In short, the company doesn't put the number in there. Trony Solar, which recently pulled its IPO, and others do.

Some simple math, which admitedly does not tell the full Solyndra story, yields some interesting numbers.

Solyndra's revenue in the nine months ending Oct 3 was $58.814 million and their cost of goods sold for the same period was $108.321 million for the total of 17.2 Megawatts of CIGS solar panels shipped in that period. Almost half of that revenue (49 per cent) came from three customers - USE Umwelt Sonne Energie, Carlisle Syntec and Alwitra.

That works out to:

• A sale price of $3.42 per Watt
• A cost of $6.29 per Watt

Note that in Solyndra's case, there is not an exact clear comparison with other flat panel modules - because what Solyndra considers a "module" includes some mounting equipment. Anup Jacob, a Solyndra investor at Virgin Green Fund, told us in August that the company's install costs come to around 50 cents a watt, lower than the $2 to $4 a watt install costs for other thin film companies. Arguably, the lower installations cost could drop Solyndra's cost per watt to anywhere from $4.79 to $2.79 ($6.29 minus $1.50 to $3.50 for the lower installation costs.) With a $3.42 sale price, that means Solyndra might be able to coax some profit from their billion dollar investment. Attention Wall Street: trying to figure this out with a straight face is why you pay high prices for hardworking, replaceable associates.

Compare this to First Solar. First Solar's average manufacturing cost per watt declined by $0.23 per watt, or 21.3%, from $1.08 in the three months ended September 27, 2008 to $0.85 in the three months ended September 26, 2009....MORE

*"Trina Solar: First Solar Won’t Be Low-Cost Leader for Long (FSLR; TSL)"

"How to Enter Natural Gas With Resistance So Close" UNG

From Minyanville:

Chart of the Day: Natural Gas Futures (@NG)

Click to enlarge

• It’s hard to believe it has been more than two weeks since I last highlighted natural gas. At that time, I recommended buying on a breakout above $5.30. The commodity
  
  has since approached $6 and now resides more than 6% above the breakout level.
  
  
• The problem now is that natural gas is wrestling with important resistance at a downtrend line in place since May.
  
  
• My best guess is that if natural gas futures are going to break the downtrend and continue higher, it will only happen after a pullback to short-term support to “re-fuel” and gather some more strength. Given that scenario, I'd advise those who want to buy natural gas to only consider entering long positions in natural gas futures or related holdings on a pullback to the previous breakout level of $5.30 on the futures.
  
  
• One big problem I see for natural gas is the “bearish reversal” pattern that may be developing. That is where the RSI is making higher highs even as the price of the underlying security/contract is making lower highs. The resolution of a “bearish reversal” pattern typically results in new lows in price that correspond approximately in magnitude to the lower peak that was made in the pattern setup. In this case, a new low price print of $4.14 would be the resolution of the “bearish reversal” pattern.
  

Strategy: Given that resistance for natural gas is so close and the loss potential for a short position is identifiable and relatively small, I'd rather enter short sales against natural gas and related holdings here with tight stops in place on any close above the downtrend line resistance.

"Physicists may have directly observed dark matter"

From the Houston Chronicle's SciGuy:

...MORE

Piper Jaffray Comments on Solar & Manufacturing Technologies Stocks. Raises Price Targets on YGE, TSL, CSIQ and JASO

Trina is leading the pack, up 3 1/2% with CSIQ up 3 1$%, YGE up 2 1/4% and JASO up 1/3%.
From StreetInsider:

...These four Chinese suppliers continue to win global share of a WW market poised for significant unit growth in 2010. More stable ASPs in 2010 and lower polysilicon costs are allowing sequential margin increases for the group to q2-q3....

...YGE's price target increased from $17 to $19, JASO from $6 to $7, CSIQ from $25 to $35 and TSL from $53 to $65....MORE

"Schwarzenegger to seek federal help for California budget"

Ain't that just special.
California reaped the benefits of their fantasy economy and when reality bites back they want the other 49 states to save 'em.
Well Guv, New Jersey is circling the drain and Illinois is following right behind. No help there.
I guess you're counting on North Dakota and Kansas.
Good luck

From the Los Angeles Times:

Facing another huge deficit, the governor wants $8 billion or threatens massive cuts in social services. He also plans to renew push for offshore oil drilling.
Reporting from Sacramento - Facing a budget deficit of more than $20 billion, Gov. Arnold Schwarzenegger is expected to call for deep reductions in already suffering local mass transit programs, renew his push to expand oil drilling off the Santa Barbara coast and appeal to Washington for billions of dollars in federal help, according to state officials and lobbyists familiar with the plan.

If Washington does not provide roughly $8 billion in new aid for the state, the governor threatens to severely cut back -- if not eliminate -- CalWORKS, the state's main welfare program; the In-Home Health Care Services program for the disabled and elderly poor, and two tax breaks for large corporations recently approved by the Legislature, the officials said.

Schwarzenegger also will propose extending a cut in the state payroll that is scheduled to expire this summer. That cut has translated into 200,000 state workers being furloughed three days a month, the equivalent of a 14% pay cut. Lawmakers would have the option of extending the furloughs, imposing layoffs or some combination of the two.

The governor is scheduled to unveil his plan publicly early next month. Administration spokesman Matt David declined to comment on the details.

The governor and lawmakers have already had to close shortfalls this year totaling $60 billion, as tax revenues plummeted at rates not seen in California since the Great Depression. Amid the continuing budget crisis, the state ran short of cash needed to cover its bills and was forced to issue IOUs over the summer.

Activists were particularly alarmed by the potential cuts to social service programs, which have taken big hits recently.

"Families are struggling, we have an incredibly high unemployment rate, and we can't afford to cut these programs any more," said Nancy Berlin, director of California Partnership, a statewide coalition of advocates for the poor based in Los Angeles. "Sacramento has got to pull it together and find another way out of this. They can't take more from low-income families. If they do, we will find more people on the streets."

Jean Ross, executive director of the California Budget Project, a think tank focused on how budget policies affect low-income Californians, was similarly critical of the proposals for CalWORKS and in-home healthcare. But she said the administration was justified in pushing for more federal dollars.

"There is a strong case not only here in California but across the country for continued federal aid to the states," she said. "Absent additional assistance we could see state governments prolonging the national economic downturn by continuing to cut their budgets."

Schwarzenegger's pitch for federal assistance will hit on familiar themes: Californians pay substantially more in federal taxes than make it back to the state, the crushing burden of unfunded federal mandates, the way funding formulas have made it impossible for the state to trim certain programs....MUCH MORE

Schaeffer's Research on Options Activity in ReneSola, LDK Solar and Solarfun (SOL; LDK; SOLF)

Three from Schaeffer's this week:

12/21

Near-Term Traders Bet on a Breach of Resistance for ReneSola Ltd. (SOL)

Short-term option traders are betting on additional upside for the shares of ReneSola Ltd. (SOL: sentiment, chart, options), as indicated by today's surge in front-month call activity. So far today, the China-based manufacturer of solar wafers has seen more than 1,500 calls cross the tape – nearly tripling the norm – with more than half of the calls changing hands at the ask price, suggesting they were likely bought.

The influx in call buying echoes the recent trend on the International Securities Exchange (ISE), where speculators during the past couple of weeks have bought to open more than 69 times as many SOL calls as puts. What's more, the stock's 10-day call/put volume ratio of 69.42 ranks in the 82nd annual percentile, indicating that traders on the ISE have initiated bullish positions at a faster pace only 18% of the time during the past 12 months.

Garnering the most attention today has been the at-the-money January 2010 5 strike, which has seen more than 1,200 calls exchanged – 51% of which have traded at the ask price. The 5 strike is already home to peak call open interest in the newly front-month series, with about 5,750 contracts in residence. However, this heavy accumulation of call open interest could actually act as an options-related speed bump on the charts.

Technically speaking, SOL has been a broad-market standout lately, outpacing the S&P 500 Index (SPX) by 17% during the past 20 sessions. However, the looming $5 neighborhood could pose a threat in the near term for a couple of different reasons. First, the aforementioned call open interest at the January 5 strike could act as options-related resistance in the short term. Plus, the $5 - $5.20 region played the part of support from July to late September 2009, and could now switch roles to act as a technical ceiling....MORE

12/21

Option Player Predicts Long-Term Trajectory for LDK Solar Co., Ltd. (LDK)

Using January 2011 options to initiate a short strangle on the solar concern

The shares of LDK Solar Co., Ltd. (LDK: sentiment, chart, options) surrendered almost 13% on Friday, after the Chinese solar concern slashed the size of its stock offering, which it priced at an 11% discount to the shares' closing price on Thursday. As such, it was no surprise that bearish bettors bombarded LDK on Friday, with single-session put volume skyrocketing to more than 4.5 times the norm.

On that same note, put traders have pummeled the stock today, too, with more than 18,000 puts traded so far. Interestingly enough, most of the activity is attributable to some very long-term option speculators, as the January 2011 2.50 strike has seen roughly 12,600 puts change hands. However, it was some activity surrounding the January 2011 5 put and 7.50-strike call that piqued my curiosity today.

Earlier this morning, a block of 175 January 2011 5 puts crossed the tape for the bid price of $1.52, implying they were likely sold. At the same time, an equal amount of January 2011 7.50 calls traded for the bid price of $1.58, suggesting they were also written. As such, it appears one option player is attempting to pinpoint LDK's long-term trajectory by employing a short strangle on the stock.

Since both the puts and calls were sold, the strangle was initiated for a net credit of $3.10. By implementing this strategy, the investor's primary objective is for the shares of LDK to finish between the 5 and 7.50 strikes when January 2011 options expire, rendering all of the options worthless and allowing him to pocket the initial credit – which represents his maximum potential reward....MORE

12/22

Front-Month Call Players Flock to Solarfun Power Holdings Co., Ltd. (SOLF)

Call buying heats up on Solarfun Power Holdings Co., Ltd. (SOLF)

Solarfun Power Holdings Co., Ltd. (SOLF: sentiment, chart, options) attracted a slew of front-month call traders on Monday, with single-session volume nearly quintupling the norm. More specifically, the Chinese maker of photovoltaic cells saw roughly 10,400 calls cross the tape, compared to its average daily volume of about 1,250 contracts.

Most active by far was the equity's at-the-money January 2010 7.50 call, which saw nearly 4,500 contracts change hands – 30% of which traded at the ask price, implying they were likely bought. What's more, call open interest jumped from fewer than 3,250 to more than 5,830 contracts overnight, making the 7.50 strike the new home to peak call open interest in the front-month series. Taking runner-up is the out-of-the-money 10 strike, with almost 5,100 contracts outstanding.

However, digging deeper into SOLF's sentiment backdrop reveals that yesterday's bullish bias was by no means a single-session phenomenon. During the past couple of weeks, traders on the International Securities Exchange (ISE) have bought to open a whopping 142 times as many SOLF calls as puts. In fact, the stock's 10-day call/put volume ratio of 141.84 stands only two percentage points shy of an annual optimistic acme....MORE