A VERY Important Article for Solar Investors (I'm Talking to You First Solar, Trina Solar, Suntech and Sunpower) FSLR; SPWRA, SPWRB; STP; TSL; YGE

This is a few days old but worth the read if you have money in the sector. I sat on it because the group seemed to be bottoming.
I've been hearing similar rumblings (particularly on R&D) but The Street.com pulls it all together. A major piece by Eric Rosenbaum.
From TSCM:

Brave New Solar, or Grave New Solar?

There has been a debate within solar circles over the past year concerning the fate of the solar industry's bellwether stock, First Solar(FSLR Quote), and that debate boils down to this: Is First Solar still a growth stock?

In May of 2008, First Solar was trading at over $311. On Wednesday, First Solar closed at $114.

While the specific solar industry dynamics that have driven First Solar down do not define the solar industry -- it has been the rise of low-cost Chinese solar players that have been instrumental in changing First Solar's fortunes -- the question about First Solar's growth prospects may be one solar investors are forced to extrapolate onto the entire solar space, given recent political events in Germany and Italy.

By most accounts, Germany is still planning to move ahead with a bigger and faster feed-in tariff reduction than the solar industry expected, and Italy is planning to implement an 8 gigawatt (GW) cap on its solar industry by 2020 that would position it -- one of the the biggest growth markets for solar -- with a less-than-expected growth scenario.

Thus, are we in fact headed into a brave new world of solar, or do the political currents in Europe that are seeking to wipe out the lucrative feed-in tariffs -- which have served as a form of solar welfare -- spell doom for photovoltaic solar before it has a chance to evolve into a more mature industry?

Burt Chao, an analyst with energy firm Simmons & Company, doesn't view the public solar companies, first and foremost, as growth stocks with a high risk-high profit opportunity -- though many investors and capital markets players have acted as if that is the solar end-game. Chao, rather, thinks it is high time for solar to actually begin acting like a long-term energy play. The solar industry needs to reinvent itself to finally be a part of the renewable energy future.

"The fact that all of these companies are still alive and kicking is because of government subsidies," Chao said bluntly, adding, "There has been undisciplined, irrational growth for too long, and a pace of growth less frenzied is better for solar."

The solar industry has known that the reductions in feed-in tariffs would be coming, and solar executives have said all the right things in the past about the need to move past tariffs as a way of growing the solar industry. Still, the solar industry hasn't exactly walked the walked of evolving itself while the getting has been good on lucrative feed-in tariffs, which generate high rates of return for solar projects.

Case in point: analysts note that while solar stocks are considered technology growth stocks, there is virtually no research and development in the big public solar companies. There hasn't needed to be any.

Chao's hope is that the next outcome -- after what he thinks will be a painful period in solar, especially if China and the U.S. don't pick up the slack from the declining tariff regimes in Europe -- will be a more civilized and rational period of healthy growth for solar.

The potential implications of "Brave New Solar" are many: For one, a potential reclassification of the stocks away from their high-growth profile to a classification that better reflects long-term energy production and power purchase agreements. Steady, utility-like returns, which are pretty far from the current solar profile to which investors have become accustomed. Some analysts have even hypothesized about an era in which solar stocks are defensive plays, which, given the solar sector profile today, is not easy to imagine.

Secondly, there will be a period of protracted mergers and acquisitions as second-tier solar companies are absorbed or go bankrupt. Mehdi Hosseini, an analyst at FBR Capital Markets, said he doesn't expect the big public solar companies to go bankrupt -- particularly with the Chinese government unlikely to allow its solar cadre to fail -- but there will be many private solar players unable to make it, and that may mean the once-lucrative IPO market for solar -- which hasn't come back since the market downturn -- may never return to its former glory days.

On the other hand, there is the potential that new solar technologies emerge -- the industry equivalent of a disruptive technology that improves efficiency at a cost-effective level -- and pushes the current slate of big public solar companies to a position of weakness.

To that point, another big issue for solar is the potential need to ramp up the non-existent research and development among the public photovoltaic players, to improve efficiency and, as a result, increase returns in an era of declining feed-in tariffs and solar project returns.

These are all big "ifs" for solar, though, and there are skeptics who see the lack of current research and development as the doomsday indicator: the sector, they argue, has been acting like Nero, playing the feed-in tariff fiddle while the once-vast tariff empire burned.

Gordon Johnson, an analyst at Hapoalim Securities well-known for his bearish outlook on most photovoltaic players, believes that the recent political turn against solar is setting up the industry to be the next ethanol. "People assume you have to have photovoltaic solar, but that's not the case," Johnson said.

Johnson's point is not that investment in renewable energy will slow, but that the solar industry that has grown up on lucrative feed-in tariffs may not be entrenched enough within the global economy to ensure its survival.

"The cheapest renewable energy technology that emerges will be the most preferred, and right now, solar photovoltaic energy is the most expensive," Johnson said. Solar has received the most attention because it is one of the easiest forms of alternative energy to get up and running quickly, with low costs to build solar plants and low barriers to entry....MUCH MORE

First Solar Shows Utility Type Growth, Does it Deserve a Utility Type Multiple? A VERY Important Article for Solar Investors (FSLR; SPWRA; STP; TSL)

In early trade the stock is down $5.63 at $129.87.
Top line growth of 11.8% year-over-year and 4% sequentially from Q1 does not a growth stock make.
Here's a repost of a very solid bit of analysis done in late January:

A VERY Important Article for Solar Investors (I'm Talking to You First Solar, Trina Solar, Suntech and Sunpower) FSLR; SPWRA, SPWRB; STP; TSL; YGE

This is a few days old but worth the read if you have money in the sector. I sat on it because the group seemed to be bottoming.
I've been hearing similar rumblings (particularly on R&D) but The Street.com pulls it all together. A major piece by Eric Rosenbaum.
From TSCM:

Brave New Solar, or Grave New Solar?

There has been a debate within solar circles over the past year concerning the fate of the solar industry's bellwether stock, First Solar(FSLR Quote), and that debate boils down to this: Is First Solar still a growth stock? In May of 2008, First Solar was trading at over $311. On Wednesday, First Solar closed at $114.

While the specific solar industry dynamics that have driven First Solar down do not define the solar industry -- it has been the rise of low-cost Chinese solar players that have been instrumental in changing First Solar's fortunes -- the question about First Solar's growth prospects may be one solar investors are forced to extrapolate onto the entire solar space, given recent political events in Germany and Italy.

By most accounts, Germany is still planning to move ahead with a bigger and faster feed-in tariff reduction than the solar industry expected, and Italy is planning to implement an 8 gigawatt (GW) cap on its solar industry by 2020 that would position it -- one of the the biggest growth markets for solar -- with a less-than-expected growth scenario.

Thus, are we in fact headed into a brave new world of solar, or do the political currents in Europe that are seeking to wipe out the lucrative feed-in tariffs -- which have served as a form of solar welfare -- spell doom for photovoltaic solar before it has a chance to evolve into a more mature industry?

Burt Chao, an analyst with energy firm Simmons & Company, doesn't view the public solar companies, first and foremost, as growth stocks with a high risk-high profit opportunity -- though many investors and capital markets players have acted as if that is the solar end-game. Chao, rather, thinks it is high time for solar to actually begin acting like a long-term energy play. The solar industry needs to reinvent itself to finally be a part of the renewable energy future.

"The fact that all of these companies are still alive and kicking is because of government subsidies," Chao said bluntly, adding, "There has been undisciplined, irrational growth for too long, and a pace of growth less frenzied is better for solar."

The solar industry has known that the reductions in feed-in tariffs would be coming, and solar executives have said all the right things in the past about the need to move past tariffs as a way of growing the solar industry. Still, the solar industry hasn't exactly walked the walked of evolving itself while the getting has been good on lucrative feed-in tariffs, which generate high rates of return for solar projects. 

Case in point: analysts note that while solar stocks are considered technology growth stocks, there is virtually no research and development in the big public solar companies. There hasn't needed to be any.

Chao's hope is that the next outcome -- after what he thinks will be a painful period in solar, especially if China and the U.S. don't pick up the slack from the declining tariff regimes in Europe -- will be a more civilized and rational period of healthy growth for solar.

The potential implications of "Brave New Solar" are many: For one, a potential reclassification of the stocks away from their high-growth profile to a classification that better reflects long-term energy production and power purchase agreements. Steady, utility-like returns, which are pretty far from the current solar profile to which investors have become accustomed. Some analysts have even hypothesized about an era in which solar stocks are defensive plays, which, given the solar sector profile today, is not easy to imagine.

Secondly, there will be a period of protracted mergers and acquisitions as second-tier solar companies are absorbed or go bankrupt. Mehdi Hosseini, an analyst at FBR Capital Markets, said he doesn't expect the big public solar companies to go bankrupt -- particularly with the Chinese government unlikely to allow its solar cadre to fail -- but there will be many private solar players unable to make it, and that may mean the once-lucrative IPO market for solar -- which hasn't come back since the market downturn -- may never return to its former glory days.
On the other hand, there is the potential that new solar technologies emerge -- the industry equivalent of a disruptive technology that improves efficiency at a cost-effective level -- and pushes the current slate of big public solar companies to a position of weakness.

To that point, another big issue for solar is the potential need to ramp up the non-existent research and development among the public photovoltaic players, to improve efficiency and, as a result, increase returns in an era of declining feed-in tariffs and solar project returns.

These are all big "ifs" for solar, though, and there are skeptics who see the lack of current research and development as the doomsday indicator: the sector, they argue, has been acting like Nero, playing the feed-in tariff fiddle while the once-vast tariff empire burned.
Gordon Johnson, an analyst at Hapoalim Securities well-known for his bearish outlook on most photovoltaic players, believes that the recent political turn against solar is setting up the industry to be the next ethanol. "People assume you have to have photovoltaic solar, but that's not the case," Johnson said.  

Johnson's point is not that investment in renewable energy will slow, but that the solar industry that has grown up on lucrative feed-in tariffs may not be entrenched enough within the global economy to ensure its survival.

"The cheapest renewable energy technology that emerges will be the most preferred, and right now, solar photovoltaic energy is the most expensive," Johnson said. Solar has received the most attention because it is one of the easiest forms of alternative energy to get up and running quickly, with low costs to build solar plants and low barriers to entry....MUCH MORE

"Germany moves toward trimming solar power incentives" and "France Cuts Solar Tariffs by 24%" (FSLR)

Investors must bear in mind that solar is less a business than it is a subsidy conduit.
A twofer. First up, Reuters:

The government, photovoltaic companies and consumer lobby groups moved closer on Wednesday toward an agreement on trimming state-mandated incentives for solar power to reflect a steeper overall slide in costs.

Although no decision was reached at the meeting, officials at the two rounds of hearings at the Environment Ministry in Berlin said they expected a decision on moderate reductions in the feed-in tariffs to be made soon....

...A spokeswoman for the Environment Ministry said the ministry would likely make a new proposal next week, which would then be discussed by the ruling parties. It was not clear if the next cut in feed-in tariffs would be July 1 or on January 1, 2011.

Any added reduction in the state-mandated fees that utilities pay for photovoltaic power are expected to be moderate to avoid damaging this growing sector and its thousands of jobs....MORE

And from TheStreet.com:

France today announced that it is cutting its solar feed-in tariff for rooftop systems from 55 euro cents to 42 euro cents, a 24% reduction in its solar-incentive system. Solar companies and investors have been in panic mode about an upcoming feed-in tariff cut from Germany, the world's biggest solar market by far, but the French reduction is significant.
Is the French reduction a harbinger of worse to come from Germany? The German environmental minister has been quoted recently as saying an announcement about the feed-in tariff cut could be made within days.

There are some important distinctions to be made between France and Germany's solar markets. First and foremost, France is a blip compared to Germany on the solar power global grid. Germany represents between 50%-60% of the global solar market, while France, even breaking into the Top Ten in 2009, represents a mere fraction of Germany's solar dominance.

However, France is a growing solar market, and an important one, so the feed-in tariff reduction is reason for solar companies to pause and reflect on the significance of a 24% reduction. It probably won't keep solar companies from chasing business in France, though.

The big solar players like First Solar(FSLR), SunPower(SPWRA ) and the Chinese solar gang led by Yingli Green Energy(YGE), Trina Solar(TSL) and Suntech Power Holdings(STP) are all anxious to exploit new feed-in tariff geographies ahead of the German tariff reduction....MORE

Remember this headline from a few weeks ago?

UPDATE "...First Solar eyes Blanquefort for French plant" (FSLR)

Solar: "Italy proposes policy changes: New FiT looms" (TSL)

Trina shareholders should keep an eye on this as TSL has an approximate 25% market share in Italy AND is not in the BIPV biz.
From PV-Tech:

Earlier this month, the two main bodies in the Italian renewable energy world, Gruppo Imprese Fotovoltaiche Italiane (GIFI), the Italian Photovoltaic Association, and Federazione Nazionale Imprese Elettrotecniche ed Elettroniche (ANIE), proposed a new set of Feed in Tariffs (FiT) for Italy, which are planned for 2011, according to a Barclays Solar report.

Adding to the list of countries that have recently made changes to PV incentive proposals, Italy has made the decision to lower the FiT rate depending on system size and type. The new proposal separates installations into two segments: Ground Mounted and Rooftop.

Within these two segments, installations are separated into five different categories depending on system size. The proposal lowers FiTs between 5% for the smallest installations and 30% for the largest installations.

The proposal states that the installations for the smallest rooftop and ground-mounted systems (ranging from 1-6kWp) would decline 5% vs 2010 feed in tariffs. For projects ranging from 6-20kWp, tariffs would decline by 7% from 2010 levels, and for 20-200kWp, tariffs would decline by 14%. Ground mounted systems tariffs for projects 200kWp to 1MW would decline by 16% while tariffs for rooftop projects would decline by 22.5%. For projects greater than 1MW, tariffs for ground mounted projects would decline by 30% while tariffs for rooftop projects would decline by 27% from 2010 feed in tariffs.

Similarly to France, Italy is placing emphasis on built in PV, as tariffs for BIPV systems are proposed to be 25% more than a non-BIPV equivalent project. A bonus is also proposed for projects located in non-ideal locations such as landfills. For these projects subsidies are proposed to be 110% of the project equivalent....MORE

Focus on Feed-in Tariffs (FiT) at the state level for solar.

Warning: Wonks ahead! (but worth the read for pros and those who watch the money)
From GUNTHER Portfolio:

...Adam Browning kicked off the discussion with his presentation, "US Solar Market - Policy Drivers". In his opening, Mr. Browning said:

When it comes to Energy policy much of it is lead at the state level rather than at the Federal level. Most of the most critical electricity related rules and regulations are set at a state level.

This observation was echoed by many panelists who advocated activity at the state level over complex and protracted energy policy legislation at the Federal level.

However, a misleading comparison of Rebate programs with net metering versus the Feed-in Tariff model is shown in the slide above titled “Avoided Utility Purchases with Marginal Incentives vs. Feed-in Tariffs”.

Adam Browning said:

…From a policy maker’s perspective we are looking at what is the amount of public funds, the above market cost, that they are going to need to have to provide to a program in order to make that program work, give a financially interesting proposition to people who want to go solar.

Under this particular model, most of the value comes from avoided utility purchases and you give an incentive that is just the marginal difference to get to an economically interesting proposition.

Under a Feed-in Tariff, you must provide the full value of that electricity and from the policy maker’s perspective that often looks like a much larger amount which makes it harder to do.

This perpetuates Adam Browning’s flawed Feed-in Tariff versus Marginal Incentive article refuted by Michael Hoexter in Feed-in Tariffs: Getting off the Renewables Roller Coaster, both found at RenewableEnergyWorld.com....MORE

Chinese Solar Power Companies to Benefit from Supply Outstripping Demand for Solar Electricity in 2009

Excepting STP the group is up 3-5% in very early trade.
From A to Z of Cleantech:

The global solar energy market in 2008 is expected to grow by 50 percent compared to 2007. The Chinese solar PV industry is growing rapidly and will soon be the biggest producer of solar cells and modules in the world. There are now over 100 Chinese solar module manufacturers, and even more new market players are expected in the short term. The question is: what might the current credit crisis and pessimistic economic forecasts mean for the PV market and industry in 2009?

With solar modules becoming a commodity product, China will definitely be playing a key role as a major producer of solar cells and modules. However, if we look at the maturity of the PV industry right now, and what has happened in other industries, an imminent consolidation phase seems likely. That could mean that fewer producers, and only the bigger ones among them, will survive. So which companies are likely to be the winners, and be reliable business partners for the long term?

Global PV market developments

The PV market is likely to grow less rapidly in 2009. First of all, the world's biggest market in 2008 – Spain – has reduced its support for solar energy. Feed-in tariffs will be cut by 30% in 2009 and, even more significantly, only 500 MWp of new installed PV power will be eligible for this feed-in tariff. This could lead to a decrease in volume for the Spanish market of more than 60%. With feed-in tariffs going down by around 10% in the German PV market, which was the world's biggest PV market for many years, it is likely to grow, but at a moderate rate. Growth in other markets is also dependent on government support programs. And although the US government recently agreed on an eight-year extension of the federal tax credit scheme for solar energy, the US market is not likely to grow very rapidly. The current credit crisis, and the economic recession forecasted for 2009, will limit the available finance from banks, and therefore also limit the development of new PV projects.

On the supply side, along with the global PV industry as a whole, supply will grow even faster than market demand in 2009. A conservative forecast by the Prometheus Institute suggests that solar module production volume will grow by a massive 80% in 2009. Most of the investments in new production capacity were planned between late 2007 and 2008, under the highly profitable market conditions.

Consolidation phase

Last September, SolarPlaza held the second Global PV Demand Conference in Valencia, Spain. The conclusion was that the huge growth in solar module production over the next two years, compared with the ‘modest’ growth in demand, would lead to an oversupply situation commencing in 2009....MORE

First Solar, Inc. Q4 2007 Earnings Call Transcript Highlights (FSLR)

Seeking Alpha has the transcript.

FSLR gave a lot of information on their company and the industry; some good insight on the rent-seeking aspects of the business (feed-in tariffs, mandates [RPS], the Investment Tax Credit [ITC]), which regular readers know scare the heck out of me; being at the mercy of politicians). FSLR management seems more aware of this risk than most renewable energy co.'s and is hammering on costs to get to grid-competitive pricing.
Toward the end of this post is a question (and answer) on capacity I found interesting.
Some of the things that jumped out at me:

...We expanded our key customer base from six customers in 2006 to 12 customers by the end of 2007. And the addition of these customers had extended our geographic market coverage to all European markets with meaningful feed-in tariffs.

...the acquisition added balance of plant engineering and project management skills to the company that enable us to begin deploying cost effective solar electricity solutions for utilities seeking to meet renewable portfolio standard requirements in the U.S.

...our mid-term path to reducing solar electricity prices to levels competitive with retail conventional electricity. We believe we remain on track to reaching the 2010 to 2012 pricing capability goals that we have previously laid out.

...Conversion efficiency averaged 10.6% for the quarter, up slightly from 10.5% in the third quarter. Cost per watt declined to a $1.12 including $0.03 of stock based compensation...

...we continue to experience market demand in excess of supply. We sold 75.8 megawatts in modules and at an average sales price of $2.60 per watt. As mentioned on prior calls First Solar is pursuing revenue growth on two fronts, first we believe additional growth remains in markets supported by feed-in tariff incentive structures including countries in Europe as well as South Korea and Ontario, Canada [see our post Canadian Green Investments ]

...Second, First Solar is seeking opportunities to open new markets with limited or no dependence on traditional PV subsidies. A core focus in this regard is the U.S. utility market where we believe low cost PV represents an attractive solution for regulated utilities seeking to meet RPS quotas.

...This brings me to our guidance for 2008. For 2008, we expect to sell 400 to 430 megawatts driven by our demonstrated fourth quarter run rate and the steeper ramp of our Malaysian factories providing upside in the second half of 2008. We expect revenues of $900 million to $950 million subject to customer mix and foreign exchange fluctuations.

Revenues in the first quarter of 2008 are expected to decline sequentially over the fourth quarter of 2007, due to our contractual price decline which took effect January 1st of 2008 [this was known]. We expect plant start up cost of $28 million to $31 million up from $17 million in 2007.

...to achieve the targets we set for 2010 to 2012 in terms of pricing capability. Our average conversion efficiencies need to be in the range of 12%.

...Also be mindful that there was a pretty sizeable contribution from a very strong euro build into that gross margin performance.

...Operator

We will take our next question from the line of Michael Molner with Goldman Sachs. Your line is now open.

Michael Molner - Goldman Sachs

Hey, good morning, guys.

Michael J. Ahearn - Chairman and Chief Executive Officer

Good morning.

Michael Molner - Goldman Sachs

Question for you on your manufacturing inputs, specifically tellurium, how do you manage your input and specifically how much do you have under contract already and what is the risk that some of your inputs become scarce if other Cad-Tel players come to market.

Jens Meyerhoff - Chief Financial Officer

So, Michael, we have multiple suppliers, who are qualified for both the raw materials off as well as for the subsequent compounding into Cad-Tel. So, we are managing those closely. When we make investment decisions like right now as Mike mentioned in his script, that we are building out roughly a gigawatt of capacity, right, we asses the capability of our supply chain again, for capacity expansions. And, so we will make a decision on those capacity expansions without checking the box, and so we feel comfortable with our supply chain situation on Cad-Tel and tellurium, in particular and something we continue to manage obviously and we got a team working like all other supply chain matters.

Michael Molner - Goldman Sachs

Okay. And, just one other question. It seems like every other day there is a new thin-film entrant being funded. And, two related questions, do you feel a potential massive over supply for thin-film and number 2, is it possible or even something you are looking at to use your technology on a flexible substrate?

Michael J. Ahearn - Chairman and Chief Executive Officer

Yeah, I mean okay, let me take the first question. I think, that well first of all, how do we think about a competitive threat? Primarily, it's around whether some company or a set of companies could come in to the market, while we are all dependent on PV subsidy pools and take a share of the market that we are counting on to be able to scale and achieve the cost reductions that lead to our targets over 2010 to 2012. We think if we get to the pricing capability targets that we have set for 2010 to 2012, very large markets open for everybody in the PV industry. Our competition really becomes cost of deal based solutions.

So the question we look at is whether the threat that somebody takes share in the next several years that we are counting on to be able to scale and in that regard, we don't currently see a strong probability of that occurring. We feel pretty good about our position. To the extend that other thin-film technology to scale well and reach price points that can achieve the same kind of about group parity type pricing. We would think that's good for the industry and is eventually will occur. So that's sort of a thought on competition, in terms of over supply we also think there is a distinct possibility that that could occur sometime in the next year or two but the timing is difficult to handicap but that would be driven in our view more by more by crystal and silicon supplies rather than thin film that reached in the short term.
Oh, on flex substrate, yes, Cad-Tel... its capable of being deposit on flex substrates, its not something but its been our product road map currently but it is not a technical barrier to doing that, so we have looked at it from time to time.

...Robert W. Stone - Cowen & Company

And finally with respect to the feed-in rate, the new numbers haven't been finalized yet for Spain and Germany, are you hearing anything different than the last proposed that the rates have been discussed?

Michael J. Ahearn - Chairman and Chief Executive Officer

No, it's pretty much the same discussions as several months ago.

...Michael J. Ahearn - Chairman and Chief Executive Officer

We do have through our... on module sales efforts in U.S. we had exposure to utilities in Europe there. We are not seeing any greater interest from that now, I think the discussions are sort of proceeding along the same lines they have in the last six to 12 months. In terms of First Solar Electric, you know we are at such an early stage of flushing out the division strategy and plans that we don't really talk about those kind of details and if we did I mean it wouldn't be very good information because its still in flux, its still dynamic at this point. But there are a number of states that have RPS. Our focus right now is on load serving entities that have a legal or regulatory requirement to procure renewable energy. That's driving off these RPS programs and there are obviously a number of potential utilities in that space.

...Michael J. Ahearn - Chairman and Chief Executive Officer

Well it's possible. I mean the way we are thinking about that is, you know we do have some pricing capability here and we would like to use that to find ways to broaden the market broadly entire time, to the solar industry by finding markets that aren't relying on traditional PV subsidies and using the pricing capability to build in those markets. And I think the U.S. utility RPS market is an example but there could be as you say smaller systems driven markets as well. It doesn't mean we wouldn't continue to participate in the PV subsidized markets at the same time and in fact there is long term contracts in that revenue streams pretty important to our ability scale and hit these cost targets but I think its helpful for us and the industry to work to expand the overall market and in ways to demonstrate decreased reliance on the traditional subsidies rather than piling on and taking share from the highly subsidized market. So, that's the direction we'll likely get to move in.

...Kelly Dougherty - Calyon Securities

Good morning and congratulations again. It's obvious that cost need to come down all along the value chain to get to grid parity and we saw the Turner acquisitions last year and its evidence that you have begun to move downstream, just wondering if this was a one off effort to break into the U.S. market or if we could possibly see something similar as you tried to get into other markets as well?

Michael J. Ahearn - Chairman and Chief Executive Officer

It's sort of hard to predict what the future will bring in that regard. I think we are in a stage right now where these markets are evolving and the learning is pretty iterative. I think the U.S. is the first real opportunity to try to expand outside these traditional PV subsidized markets. I think we are going learn a lot through the U.S. utility effort about what we need to occur elsewhere and I also think as channels mature, your need to do many things obviously than that issues, I would imagine that our roles will be dynamic in the channels overtime, as the markets mature.

...Sanjay Shrestha - Lazard Capital Markets

Got it, terrific. And, one quick follow-up and, given that you guys are focusing a lot in the utility market here in the U.S. and somewhat of an uncertainty here on the ITC [investment tax credit-ed.] front but, since majority of your focus is here on the pilot and the sort of the demonstration project right now, what's been the overall interaction up to this point? Can you guys talk a little bit about that as to some of the positives, some of the negatives, and how big of a roll this somewhat of an uncertainty here in the near term related to ITC is playing in terms of the negotiating process?

Michael J. Ahearn - Chairman and Chief Executive Officer

Well, I think most utilities, low serving entities in the U.S. under this RPS obligations, are negotiating. They are out in the market negotiating to procure renewable energy without in the event that the DTCs or ITCs aren't extended. So, I think the discussions are proceeding generally across the board. It is not like there is a freeze on discussions, because of the uncertainty concerning those tax benefits. As far as the tax percentage themselves, its hard to... its obviously hard to predict what will happen there but we don't have any knowledge that they don't have, we are monitoring it pretty closely, and we will just have to wait and see how it plays out.

...Unidentified Analyst

Okay. Then, just a quick follow-up on that, you said that on the, cost per watt goes, since you lowered your cost per watt by about 12% in 2007 should we think that to be a reasonable goal for 2008?

Michael J. Ahearn - Chairman and Chief Executive Officer

No, I think if you look at our road map, in order to achieve $1.25 to $1 pricing capability, right, in the outer years which is in line with our good parity goal of $0.08 to $0.10 per kilowatt hour, that requires us to achieve cost per watt of about $0.65 to $0.70 and that's our long term goal. So we believe we are on track for the road map.

...Colin Rusch - Broadpoint Capital

Good morning, gentlemen and congratulations on the continued phenomenal execution. My questions about price elasticity in the U.S. utility market, maybe a little bit too early for you guys to have real hard data on this but how are you thinking about elasticity in the market, are you looking at RPS requirements post the market, price reference and if you could give me a little bit more... little bit of guidance on how to frame that?

Michael J. Ahearn - Chairman and Chief Executive Officer

Well, in general in risk market segment, our offering is competing against all other renewable energy alternatives. So we are not running the gamut, so you are going to have to be at a price that's competitive with non-PV technologies.
...Colin Rusch - Broadpoint Capital

And then and going over to French market, if the EU decides to define Nuclear Energy as not clean energy for its 2020 targets, have you guys done a preliminary assessment on what the market opportunities would be in France for PV if they weren't able to consider all those nuclear assets as clean energy?

Michael J. Ahearn - Chairman and Chief Executive Officer

No, we really haven't done that Colin. We are... our market analysis right now in Europe is more around the feed-in tariffs and what market opportunity and market structures would drive off of those and what's a reasonable base line to plan on in terms of availability of the structures. I think that next chapter that you're referring to is that's probably the more interesting question but we just haven't reached that yet.

...Paul Leming - Soleil Securities

Good morning and congratulations on a great quarter. I have got a question for Mike, you've raised this specter of over-capacity couple of times on the call and I am wondering if you could just walk me through how you see that playing out over the next 12 to 18 months given the un-kept nature of the German market? Are you worried about a shortage of capital to buy and install systems as long as installed cost hit the levels needed to generate desired project returns? What, really is going to be the limiting factor on installation of modules of projects in Germany to absorb all the capacity that's coming?

Michael J. Ahearn - Chairman and Chief Executive Officer

That's a good question. I guess one question is where we see additional supplies coming into the market as a result of, for example Silicon feedstock constraints being alleviated and possibly removed. That's a scenario we looked at definitely as probability. But the timing of that is kind of hard to... at least for us to pin down because it is fairly empirical and you are getting announcements it seems like every week that bear on that question. So, whether that's 12 months to 18 months or close to 18 months, I think at least for sale it's a lot a little softer and little fuzzy on that but we think it's a distinct possibility that there would be a lot more volumes, crystalline silicon-based coming into the market. In terms of -- yeah, we're with the constraint the down strain from the modules to observe it. We have them looking at the adequacy of projects finance to continue to support the projects in Europe, given the issues in the credit markets in general. So far we haven't seen any issues there, and we haven't learnt anything that would suggest that it is right for you to be a constraint, but obviously that's a dynamic situation in itself. So, we got to keep an eye on that.

That's the first nine pages of ten. The whole thing is here.

German Economics Minister: 16%-17% Solar Subsidy Cut Realistic (FSLR)

There is a reason that the first winner of the prestigious Climateer Our Hero award was (March '07):

Finally for investors in rent-seeking organizations there is the real risk that the politicians will change the rules. Heed the words of Sen. Simon Cameron (R&D!-Pa.):

"The honest politician is one who when he is bought,
will stay bought."

Our Hero

I put First Solar's symbol in the headline because they have the largest exposure among the American producers.
From the Wall Street Journal:

The German government could realistically cut between 16% and 17% of the subsidies it gives to solar-power providers, Economics Minister Rainer Bruederle said Tuesday.

Addressing an energy conference in Berlin, Bruederle said solar power is one facet of a broader program to encourage investment in renewable energy in Germany.

Bruederle said Germany must position itself as a leader in developing renewable energy technologies, both for the benefit of German companies and to increase the country's energy independence.

"There is no alternative to increasing our pursuit of alternative energy and energy storage," Bruederle said.

Last week when the 16-17% number was first being bandied about the German trade association said (via PV-tech):

In response to the to unconfirmed media reports concerning the possible threat of between 16-17% cuts in the EEG feed-in tariffs by as early as April 2010, the German Federal Solar Industry Association (BSW-Solar) said in a statement on its website that there was no room for such large cuts, especially on the back of what is effectively a 10% cut automatically in place since the beginning of the year. The trade association warned that lowering the FiT rates too fast, endangered 50,000 jobs in the German solar industry, and put at risk over €10 billion in planned production expansion plans and future R&D investments.

As previously reported, the BSW-Solar has supported further cuts as solar module prices have fallen by as much as 40% in 2009; however, the group supported extra cuts lower than what is being claimed in news reports that the German government is planning to adopt.

In a statement BSW-Solar President Günther Cramer said, "For this we need the support of the policy and funding policy with a reliable sense of proportion."

A report by Landesbank Baden-Wurttemberg (LBBW) and noted in the BSW-Solar statement claims that a reduction in FiT rates in double-digit percentage range would not only harm the German solar industry with much production shutdown due to lack of demand, but that Asia-based PV module suppliers would benefit the most as their lower manufacturing costs would see them gain market share over German-based producers.

Ironically, according to a Digitimes story, Chinese- and Taiwanese-based module producers they contacted believed the revised FiT cuts were designed to slow demand because foreign producers have been gaining market share and that a majority of modules installed in the German market were foreign not domestic. How this would actually benefit German producers wasn’t clear.

They follow up today:

German FiT: Masdar PV threatens revisions to solar manufacturing investment plans
The possibility of heavy cuts to the German solar feed-in tariffs could not only reduce demand for solar installations in what should become the largest market in the world in 2009, it could also see reduced investments and job losses in the sector, according to Masdar PV, CEO Dr. Rainer Gegewart. Speaking at the World Future Energy Summit currently being held in Abu Dhabi, Gegewart warned that should muted FiT cuts be made, the a-Si thin film manufacturer would revise their investment plans in Germany and look for new opportunities abroad as those markets would grow, compared to a possible contraction in Germany....MORE

"Why Germans won’t heat their homes even with free electricity?"

Following up on a point raised by the Financial Times' Izabella Kaminska in her Solar post on February 26.
From Finland, the Kaikenhuipun blogi, February 18:

This is a translation/guest post by Riku Merikoski. The original can be found here (in Finnish). All mistakes due to translation are my fault.

On Monday 10th February 2020 something historical happened. For the first time, the market price of electricity fell below zero in Finland. While -0.2 € per megawatt hour (or -0.02 cents / kWh) is not dramatically different from earlier lows of 0.1 €/MWh, going negative is a strong symptom of the sickness that ails our electricity markets. Governments have created a situation where it is not worthwhile to use low carbon electricity even if it is free from time to time.

There are several reasons for the negative prices, but the main driver is the reckless support-policy for renewable electricity in Germany and Denmark.

In 2017 the total subsidies paid for renewable electricity in Germany were around 26 billion euros, of which 8.5 billion was paid to wind producers. Most of the wind production in Germany gets high feed-in-tariffs regardless of the market price of electricity. Only turbines built in 2016 or later take even a small hit to their revenues if prices go below zero, and more than 75 % of the production capacity was built before that.

As a result, Germany and Denmark have experienced negative prices already for years, and this time they remained negative for six hours. Strong imports from Denmark and Germany during the night were among the main causes for pushing Finnish prices below zero.

Germany had around 104 TWh of wind production in 2017. Divided to that amount, the 8.5 billion euros in tariffs means a tariff of around 82 €/MWh. Just a few years ago, new wind projects got a higher tariff of around 80 €/MWh for the first five years, and a lowered tariff for the next 15 years, which is most of their practical operational lifetime. Offshore wind had even higher tariffs, which increases the average wind tariff further. You can find out more about these numbers from the Bundesnetzagentur statistics.

Average onshore tariff is around 66 €/MWh and offshore tariff average is 159 €/MWh. There has not been much new onshore wind coming online during the last two years and just 2,000 MW of offshore wind, so the averages have not changed that much since 2017. The production for this day (10^th February) was estimated to be around 40,000 MWh/h on average, meaning that almost 1,000,000 MWh of wind electricity was produced during the 24 hours. This means that roughly 80 million euros of wind tariffs were paid. On top of this, solar PV and bioenergy also got paid some tariffs, but during a windy winter day those are usually smaller amounts.

So is 80 million euros a lot or not? It’s a lot. The average market price for electricity in Germany was 8 €/MWh and total demand was around 1,500,000 MWh (1.5 TWh). During daytime electricity demand is higher and so is the market price, so the total market price for the 24 hours is roughly 15 million euros. The value of the wind production of around 1,000,000 MWh was roughly 8 million euros. The sources for all these numbers are from EEX and Entso-E.
Let’s take a moment to contemplate the numbers once more:

German electricity consumers paid 80 million euros in tariffs to get 8 million euros worth of wind power to the market. The total value of all electricity consumed in that day was 15 million €.

....MUCH MORE

If you want to teach yourself some Finnish by following the link to the original, two quick points:

1) It's not the simplest language for non-natives to learn. Finnish kids seem to think it's easy but it isn't.
2) Approach your study in a jovial frame of mind. As noted in another post:

I remember asking a Finnish woman why it sounded like people were laughing when they spoke Finnish, were they happy?
"Oh no" she said and then she stopped talking.

Someone, I can't recall who, mentioned that on public transportation Finns sit and stare at their shoes. It is considered very forward to stare at someone else's shoes.
I don't know as much about Finland as I do about Norway but here are some of our posts:

Thousands Of Migrants Flee Finland Hoping For A Better Life In Iraq

 "Embracing päntsdrunk, the Finnish way of drinking alone in your underwear"

The Finns used to dance the Tango but maybe not so much anymore. The only Finnish band I could name is an old-school Finnmetal band, Children Of Bodom described as:

"Melodic death metal meets virtuoso guitars: Children Of Bodom took the spirit of eighties
 heavy metal and thrash, and married it to a contemporary death metal framework"....

Italy's Solar Orgy (FSLR; SPWRA; STP; TSL; YGE)

The SEO consultants say that words like 'orgy' in the headline are good for pageviews.
Personally I think it just leads to confused [and disappointed -ed] visitors.
Here's a Barron's Feature:

Italy's subsidized solar-energy program has produced a huge boom for big panel makers like First Solar. Unfortunately, it isn't likely to last too much longer.

Italy has found another passion. This time, it's solar energy. At a hearing last month in that nation's senate, regulators reported a subsidy offer for solar-generated electricity had elicited 2½ times more installations than predicted. A flood of applications at the December deadline overwhelmed the energy agency's Website. The sunny southeastern region of Puglia has so many new solar farms that its Ecology Party president is begging for a moratorium. If Italy continues its photovoltaic rush, it will add more solar capacity this year than world leader Germany, and the "feed-in tariffs" paid to Italy's new solar generators will raise the country's electric bills by almost $8 billion.

"Never doubt the greed factor with feed-in tariffs," says Shyam Mehta, a solar-market analyst with New York firm GTM Research. The tariffs guarantee developers an above-market rate for their solar-generated electricity over 20 years.
The makers of all those solar panels had a great December quarter. On Thursday SunPower announced its fourth-quarter earnings had tripled, duly rewarding the hopes that have lifted its shares (ticker: SPWRA) more than 30% this year. Similar year-to-date share gains have been enjoyed by China's Suntech Power Holdings (STP), Yingli Green Energy (YGE) and Trina Solar (TSL), not to mention industry leader First Solar (FSLR). They all have a stake in Italy's market. Higher oil prices and a strengthening euro also helped, but the most frenetic buyers of First Solar may be the bears who had sold short almost 30% of the company's free-trading shares. At 168, the solar pioneer has a market value near $15 billion, which is about 19 times the company's earnings guidance for this year.

The solar Saturnalia is good for business now, but the unexpected burden on Italy's rate-payers and electrical grid has prompted calls to limit the incentives. That's what happened in Spain, the Czech Republic and France. Germany is mulling an early reduction of its subsidies. Europe probably accounted for 80% of world demand last year.

Meanwhile, the world's solar manufacturers are aggressively boosting production of just about everything, be it raw polysilicon or the new-fangled panels that use a thin film of copper, indium, gallium and selenium—otherwise known as CIGS. A company called Solar Frontier, part of the big Japanese refiner Showa Shell Sekiyu, is cranking out CIGS products in what will soon be the world's largest solar-panel factory. Solar Frontier's panels will be marketed and financed by General Electric (GE), elevating the thrifty but efficient CIGS technology into a real challenge for crystalline-silicon technology like SunPower's or the thin-film cadmium telluride recipe of First Solar.

The broadening consensus among Wall Street analysts is that global photovoltaic supply might exceed demand by 25% by the end of 2011. As word spread of Italy's solar-cell orgy, and as solar shares soared, a number of analysts downgraded the sector. If a hole opens up next year where Europe's subsidies used to be, they warn that a high-priced stock like First Solar could drop 20% to 25% from its recent height.

None

"This is a very unsustainable situation," says Joel Silverman, a solar analyst at London's Arete Research Services. When Spain's installations jumped sixfold in 2008, that country capped its subsidies.
First Solar wouldn't talk to Barron's in the quiet period before it reports December results, on Feb. 24, but the Phoenix-based company's quarter probably went as splendidly as those of its peers. In their latest conference call in mid-December, company executives confidently predicted that revenue would grow by more than 45% in 2011, to about $3.8 billion, producing earnings of about $800 million, or roughly $9.10 a share.

EVEN IF GERMANY'S solar demand shrank 40% in 2011, First Solar would have sufficient revenue from existing European contracts and a two-gigawatt pipeline of projects for North American utilities, said CEO Rob Gillette in the December call. The company boldly plans to invest $1 billion to increase annual production capacity by 50% this year, to 2.1 gigawatts, and by another 30% by the end of 2012.

The newly discovered evidence of Italy's solar spree will surely prompt questions on First Solar's Thursday conference call. Forecasters had expected Italy to install perhaps 1.8 gigawatts of solar power in 2010. Instead, the country's renewable-energy agency, Gestore Servizi Energetici, got 42,000 online applications, 26,000 e-mails and 6,500 registered letters—representing 3.77 gigawatts. With applications still pouring in, the GSE says the nation has already reached the level targeted for 2020.

Power to revise the country's Conto Energia directive lies with Minister of Economic Development Paolo Romani. His ministry may propose some measures to moderate solar spending when it introduces a scheme to meet European emissions standards, around the end of February.

In Germany the Bundestag committee on the environment will debate a plan on Feb. 23 that would increase the level of subsidy cuts in July, if installations continue to run high between March and May. As Europe phases out its feed-in tariff subsidies next year, Silverman expects the solar market to suffer a hard landing.

By how much will supply exceed demand? Arete's Silverman has a more generous outlook for global demand than most analysts. But he expects production output to exceed global demand by about 3.5 gigawatts this year, and more than 15 gigawatts in 2012, as solar vendors' exuberant sales to Italy end. "This is all very reminiscent of Spain," he warns. "People are forgetting the lessons of the past."...

Demand By:	2010	2011	2012
Germany	8.0*	7.9	4.5
Italy	5.8	7.3	3.0
North America	1.1	2.5	4.5
Japan	1.0	1.4	1.9
China	0.7	1.6	2.9
Other	4.6	5.1	6.1
Supply Total	19.7	29.4	39.1
Oversupply	-1.5	3.6	16.2
*Gigawatts	Source: Arete Research

Also at Barron's Features:
Time for a Change in Techland
New Leaders, Fresh Advice
Pricing Power in the Grocery Aisle

Italy: About to Give Solar the Boot? (TSL)

If true this is bad news for Trina Solar. Approximately 25% of their revenues came from Italian operations. They have a 25% market share in Italy.*
The stock is down $1.38 at $21.28.
From The Street.com:

...Many solar analysts are of the opinion that Italy will pay close attention to the moves made by other European countries, most closely to Germany, which has been the bellwether solar market, and that Italy is likely to follow suit with Germany's policy thinking on solar. France announced last week a solar tariff cut of 24%, hoping to stave off what France already saw as increasingly speculative behavior.

That doesn't meanItaly's tariff scheme will not be a boon in 2010 for solar, but it does mean that boon may be a bust by 2011.
Currently, Italy has among the most attractive feed-in tariffs in the world.
If Germany moves ahead with its proposed cut, Italy's tariffs will all of a sudden be way out of line with the situation in France and Germany.

"The disconnect in returns between Italy and the other countries could grow so wide that the Italians will have to ask themselves why they are providing solar with such high returns," cautions Navigant Consulting director Andrew Kinross.
Currently, Italy's tariffs are even more favorable to solar projects than tariffs in Germany.
Kinross said that in the immediate future, Italy will be one of the key solar growth drivers. "Three years ago, it wasn't even on the solar map, and now people are talking about passing the 1.5GW cumulatively threshold this year," Kinross noted.

Something else that Italy itself has been talking about is capping solar tariffs, as Spain did. The Italian government has already said that it will not put a cap in place before the end of 2010. That seems like a good thing, since the Italian government had made previous comments that once solar capacity reached the 1200MW mark a cap would be implemented.

The critical issue is that beyond 2010, no one knows what Italy will do in terms of a cap. "This is basically the same mistake that Spain made," Navigant's Kinross said.

What's more, the risk that with Germany planning such a drastic move, Italy could surprise solar and do a political about-face on its promise to not cap solar in 2010 cannot be discounted either...MORE

...Finally for investors in rent-seeking organizations there is the real risk that the politicians will change the rules. Heed the words of Sen. Simon Cameron (R&D!-Pa.):

"The honest politician is one who when he is bought,
will stay bought."

Our Hero

*Prior posts:

Sep. 28, '09: Solar: "Italy proposes policy changes: New FiT looms" (TSL)

Trina shareholders should keep an eye on this as TSL has an approximate 25% market share in Italy AND is not in the BIPV biz....

June '08: Solar: Arrivederci Germania, Viva Italia!

As the herd moves off in search of tasty subsidies...

July '08:
Trina, Suntech in supply deals with Italy's Enel (STP; TSL; ENEI.MI)

Trina had jumped ahead of the herd's movements, Germany, Spain, Italy, Greece by establishing a strong presence in Italy where they have a 26% market share. By being early they were able to make the connections and develop the relationships. Enel is a big dog*....

"Trina Solar Renews Contract in Italy, A Key Solar Market Now That Spain Is Sputtering (TSL)"

"SunPower: Italy Next Big European Solar Market, Trina Solar Contract Encouraging (SPWR;
TSL)"

In accordance with the prophecy "Solar: Arrivederci Germania, Viva Italia!".*
That concludes our pseudo-mystical moment for today, now back to our regularly scheduled programming....

Trina Solar in Three-year $158 Million Pact (TSL)

Nov. '09:
Trina Solar Trumps Them All (TSL)

"Old green power plants seek to regenerate as Germany turns off subsidies"

From Reuters, September 22:

Wilfried Haas owns a 3 kilowatt solar system which has been running as a micro power station since 1992, helping Germany, Europe’s largest economy, curb its dependence on coal and nuclear power. All that might be about to change.

Together with thousands of other pioneer investors, Haas is considering whether he can continue his micro-generation without the subsidy scheme that helped to give Germany the highest level of installed renewable capacity in Europe.

After the scheme begins to wind down at the start of next year, Germany in the worst case scenario would lose wind and solar energy equivalent to four nuclear power plants in 2021 alone, industry figures show. For now, it is unclear how any gap will be filled.

Lobby groups on all sides are bickering as Berlin thrashes out an updated version of its renewable energy law. The government will discuss the latest draft on Wednesday.

The legislation is needed because when policymakers limited German subsidies to 20 years in 2000, the country had yet to decide on its Energiewende - or shift from coal and nuclear power to renewable energy.

Haas, 62, began his career in renewable generation before the government’s big policy change. The Chernobyl nuclear disaster in 1986 prompted him to leave his job in industry and he set up a renewable project company GEDEA-Ingelheim in Ingelheim, west of Frankfurt.

Once they became law, Haas benefited from the subsidies, known as feed-in tariffs, for selling renewable energy to the grid at about 50 cents per kilowatt hour.

Without them, he faces earning no more than the wholesale power price of around of 2-4 cents.

Protecting the environment was central, Haas said, and he hoped to continue operating his micro generation but it may cease to be economic if at any stage he faces a major repair bill.

“In that case the financial burden would become too great, meaning that in the current regulatory framework continuing to operate it likely won’t pay off,” he said....

....MUCH MORE

You don't hear much about Feed-in Tariffs (FiT) these days but a decade ago, oh those were jolly times.
January 2010 
"Germany moves toward trimming solar power incentives" and "France Cuts Solar Tariffs by 24%" (FSLR)
Investors must bear in mind that solar is less a business than it is a subsidy conduit....
February 2011 
Italy's Solar Orgy (FSLR; SPWRA; STP; TSL; YGE)
The SEO consultants say that words like 'orgy' in the headline are good for pageviews.
Personally I think it just leads to confused [and disappointed -ed] visitors....

There was a reason for the choice of our first recipient of the Climateer "Our Hero" award back in 2007.

The 26th Secretary of War, the Democrat and Republican (!) Senator from Pennsylvania, Simon Cameron:

Our Hero

"The honest politician is one who 
when he is bought, will stay bought."

Cows and Pigs and Insights from Alltech’s Global Feed Survey

The survey was released a couple months ago so we're tardy getting to it but what with tariffs and floods and all the things that happen in the world I have a feeling we're going to be referring back to the baseline numbers.
Via Farm Journal: Pork, January 25:

Eight countries, China, U.S., Brazil, Russia, India, Mexico, Spain and Turkey, produce 55% of the world’s feed and have 59% of the world’s feed mills. ( Lori Hays )

Global feed production is at an all-time high. In the 2019 Global Feed Survey, Alltech estimates a strong 3% growth to 1.068 billion metric tons of feed produced. This is the third consecutive year the survey exceeded the billion-ton production mark.

The feed industry has seen 14.6% growth over the past five years, says Dr. Mark Lyons, during the media webinar Tuesday. As the population grows, so does the middle class, which is well reflected in an increase in overall protein consumption.

Eight countries, China, U.S., Brazil, Russia, India, Mexico, Spain and Turkey, produce 55% of the world’s feed and have 59% of the world’s feed mills.
Here’s a brief look at the top trends from the survey:

China Remains Top Feed Producer and User
The world’s largest producer and consumer of feed has faced clear challenges in its pig herd with African swine fever (ASF) and foot-and-mouth disease in cattle. But overall, this year the country saw only a small decline of 0.4% in animal feed production.
China maintained status as the top feed-producing country in the world with 187.89 million metric tons, 10 million metric tons more than the U.S. More than 42% of the country’s feed production goes to pigs. ASF has only further accelerated China’s move toward larger, more professional farms and improved cost-efficient pork production. While feed production growth might not be as high this year as one might expect, the feed-cost ratio has improved dramatically.

The survey only showed a small portion of the ASF’s effect on feed use and demand. Lyons said some industry estimates are predicting a loss of up to 30% of China’s hog production in 2019 and 2020.

“That’s something for us to think about. Even if as that pork is removed from the market, we recognize that exports can only represent a certain percentage of the picture. The Chinese market is so dominant and so large, there’s few countries can export enough pork to make up that gap,” he said.

China’s dairy and beef feed production also both declined by 17%. China’s dairy industry is struggling as dairy farmers try to balance high priced inputs with poor returns from milk processors. The beef industry’s decline indicates the displacement of local production with both cheaper imports and higher quality imported meats. China’s layer and broiler industries also saw small declines of 11% and 5% in feed production, respectively.

Regional changes:

• North America, 2% growth

• Latin America, 1% Growth

• Europe, 4% Growth

• Africa, 5% Growth

• Middle East, 2% Growth

• Asia Pacific, 3% Growth

...MUCH MORE

"Suntech, First Solar Warn Of Lower Prices, Greater Competition" (FSLR; STP)

FSLR is trading down $3.04 at $127, Suntech is up 2 cents at $8.53.
From the Wall Street Journal:

Suntech Power Holdings Co. Ltd. (STP) and First Solar Inc. (FSLR), the world's top solar panel suppliers, warned Monday that potential cuts in European government subsidies for solar power could lead to both lower demand and prices for their products, a combination that could hit their bottom lines.

Both China-based Suntech and U.S.-based First Solar have ramped up production of solar panels over the last few years, amid growing demand for solar power in Europe and a handful of other countries, including the U.S., China and India. Although both companies have been working to increase sales outside Europe, which accounted for more than 80% of solar-panel demand in 2010, the region is expected to dominate the global solar-power market this year. If European demand falls, it is unclear if the rest of the world will pick up the slack.

"Reductions in feed-in tariff programs may result in a significant fall in the price of and demand for (solar photovoltaic) products," Suntech wrote in an annual report filed with the U.S. Securities and Exchange Commission. "We believe that in the time of uncertainty of political and policy developments, competition among solar manufacturers could become fierce."

First Solar expressed a similar sentiment, saying that pending cuts in government subsidies for solar power, called "feed-in tariffs" in Germany, France and Italy, could hit the market hard.

"In light of continually evolving (feed-in tariff) structures in our core European markets, it is uncertain whether growing demand from other countries and markets could absorb industry-wide module supply without significant inventory build-up or price reductions," First Solar wrote in an annual 10-Q report filed with the SEC....MORE

There was a reason for the choice of our first recipient of the Climateer "Our Hero" award back in 2007.

The 26th Secretary of War, the Democrat and Republican (!) Senator from Pennsylvania, Simon Cameron:

Our Hero

"The honest politician is one who 
when he is bought, will stay bought."

Trade War: "Germany Solar Incentives in Jeopardy?"

From Greentech:

German politicians have revived debates over the popular feed-in tariff, some arguing that the subsidies benefit largely Chinese – instead of German – companies.

More than a year after German politicians fought over whether to dramatically slash the country's solar incentives, they are going at it again, this time ahead of a federal election next month.

In media interviews, political leaders from major parties have expressed concerns that the incentives, called feed-in tariffs, have largely benefited Chinese solar energy equipment makers instead of Germany's own, according to Alexander Karnick, an equity analyst at the Deutsche Bank, in a research note Monday.

The chatter has come about in advance of the parliamentary election on Sept. 27. A change in the political makeup of the ruling coalition could have a significant impact on solar energy policies over the several years if not sooner, Karnick wrote.

There isn't a strong indication at this point that Germany would lower its solar incentives soon, he added. "However if realized, it could mean a strong setback to 2010 demand, as well as margin expectations," Karnick said.

Until last year, Germany had been the world's largest solar market thanks to its feed-in tariffs, which require utilities to buy all the solar energy produced at premium, government-set prices. Spain took the lead last year, but the government has since reduced the subsidies and capped the amount of energy that could be sold under the subsidy program....MORE

UPDATED: Power-One Announces Record 2010 Results, Probably Not Enough (PWER)

Update: "Power-One Misses on EPS, Guides Lower, Stock Takes 20% Hit in After Hours (PWER)"
Original post:
See our earlier post on the reality/perception thing.
From the company via NASDAQ:

Power-One Announces Record Fourth Quarter and Fiscal Year 2010 Results

• Revenue exceeds $1 billion in 2010
• Quarterly revenue grows 157% year-over-year to $366 million
• Operating income reaches $265 million in 2010
• 2010 diluted EPS of $0.96 includes $0.14 charge from SynQor litigation

CAMARILLO, Calif., Feb. 3, 2011 (GLOBE NEWSWIRE) -- Power-One, Inc. (Nasdaq:PWER), a leading provider of renewable energy and energy-efficient power conversion and power management solutions, today announced financial results for the fourth quarter and fiscal year 2010. For the quarter ended January 2, 2011, Power-One posted net sales of $366 million, an increase of 157% from the fourth quarter 2009. Net income attributable to common stockholders for the fourth quarter was $54 million, or $0.35 per diluted share, compared to $5 million, or $0.05 per share for the same period last year. Net income was negatively impacted by a $22 million charge as a result of the SynQor litigation, which lowered diluted EPS by $0.14.

For the full year, Power-One achieved net sales of $1.05 billion, an increase of 143% compared to 2009. Net income attributable to common stockholders was $144 million, or $0.96 per diluted share, compared to a loss of $65 million, or a $0.74 loss per share for the prior year.

"We gained market share and achieved record sales and net income in 2010, as both Renewable Energy Solutions and Power Solutions posted positive operating income in the fourth quarter," said Richard Thompson, Chief Executive Officer of Power-One. "With our focus on technology-leading products and customer service, Power-One is positioned for continued revenue and profitability growth in 2011."

Renewable Energy Solutions
Renewable Energy Solutions posted a revenue increase of 285% versus last year as it continued to grow at a faster pace than the photovoltaic (PV) inverter market. In the quarter, Power-One introduced its U.S. inverter product line and opened its manufacturing and research and design center in Phoenix, Arizona.
Inverter and related product sales reached a record $263 million in revenue for the fourth quarter 2010. Renewable Energy Solutions contributed nearly 72% of the company's revenue, versus 48% in the fourth quarter of 2009. In the quarter, Power-One shipped 932 MW of inverters, bringing its 2010 total to 2.6 GW.

Power Solutions
Power Solutions increased sales by 39% year-over-year, with revenue of $103 million in the fourth quarter 2010 versus $74 million in the same period of 2009. During the fourth quarter, Power Solutions introduced products that exceed Climate Savers Computing Initiative platinum targets, providing its customers with greater efficiency and higher power density. At the same time, Power-One recorded a number of design wins with its platinum-level products.

Business Outlook
For the first quarter of 2011, Power-One forecasts revenue of $260 million to $290 million, indicating 80% growth at the midpoint of the forecast versus the prior year period. First quarter revenue is expected to be impacted by seasonality, heightened by inclement weather in Europe and a reduction in feed-in-tariffs across multiple markets, as well as excess inverter inventory in the channel. Based on current market demand and expectations of further feed-in-tariff reductions, coupled with expected contributions from the US and China, primarily in the second half of the year, Power-One anticipates generating revenue between $1.1 billion and $1.3 billion for the full year 2011.

Earnings Conference Call
Power-One will discuss its 2010 fourth quarter results today beginning at 2:00 p.m. Pacific Time. The call will be available both via the telephone at (877) 390-5535 or (631) 291-4579, conference ID #35367972, or over the Internet through the Power-One's investor relations Web site at http://investor.power-one.com. To listen to the call, please log-in at least 10 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, the webcast will be available on the investor relations section of the Power-One's web site at http://investor.power-one.com throughout the current quarter.

German Solar Subsidy Cut 15%; Company by Company Exposure (FSLR; STP; YGE)

Call it the revolt of the hausfraus. They made a billionaire of First Solar's Michael Ahern. FSLR is trading down $3.04 at $120.90, considerably below the May 16, 2008 closing price of $311.14
As 24/7 Wall Street commented at the time:

...While an insider sell of 250,000 shares isn’t normally a big sale elsewhere, it represents a larger number than most people will ever see in their lifetimes. First Solar shares closed down almost 5% today at $295.90. At that price this represents nearly $74 million worth of common stock. But his share sale prices came mostly north of $305.00 per share on May 15 and May 16, so the amount of funds raised was probably closer to $77 million....

Mr. Ahearn should get down on his knees every morning to thank Gott for those Teutonic ratepayers.

A twofer from Reuters:

* Aid for roof sites to fall 15 pct from April

* Cuts for open field, farmland sites seen for July

* Shares in German solar stocks extend losses

(Adds fund manager quote, share reaction)

By Markus Wacket

BERLIN, Jan 20 (Reuters) - German Environment Minister Norbert Roettgen proposed a 15 percent cut in support for new roof-mounted solar power, a bid to ease the industry towards free competition but a slightly smaller reduction than expected.

The cut confirmed figures earlier published by Reuters and will take effect from April. It amounts to slightly less than the 16 to 17 percent reduction to the so-called feed-in tariffs that sources said last week was being eyed. [ID:nLDE60D273] Roettgen added that the tariffs for solar energy generated from open field and farmland sites should also be cut from July, by 15 percent and 25 percent respectively.

Cuts in public support will weigh on companies like Q-Cells (QCEG.DE), Phoenix Solar (PS4G.DE) and SolarWord (SWVG.DE), which depend on demand from Germany, the world's biggest market for solar energy as measured by installed capacity.

Proponents of cuts say the industry is overly subsidised. Prices for solar products have fallen by as much as 50 percent over the last year, which has increased pressure on industry players to have more efficient production and become more competitive....MORE

And:

FACTBOX: Sales exposure to Germany's solar market

The German government said Wednesday it would propose to cut solar feed-in tariffs -- prices utilities have to pay generators of renewable energy -- by an additional 15 percent.

With Germany being the world's biggest solar market by installed capacity, this will put pressure on industry players around the world.

Following are key facts about some of the world's biggest solar companies and their sales exposure to Germany based on the latest available information:

* Q-Cells, one of the world biggest makers of solar cells, made 56 percent of its sales in the first nine months of 2009 in Germany.

* U.S. First Solar, set to become the world's largest maker of solar cells, said it made 60-70 percent of its sales in Germany last year....MORE