by Paula Mints

In August, CdTe manufacturer First Solar (FSLR) sold its North America O&M business to NovaSource Power. According to First Solar CEO Mark Widmar, the decision was due to contracting O&M margins and customer demands for more services. The company is also exploring jettisoning its EPC business. First Solar plans to focus on its module manufacturing business.

Comment: Apparently, First Solar finally realized that O&M is low margin and that the EPC business may also not have much margin cushion. Now the company can concentrate on another low margin sector of the solar manufacturing chain, manufacturing.

First Solar has occasionally proven prescient with its strategic moves. It saw the FiT-driven boom in Europe before its competitors and rode the silicon shortage to a leadership position. The company correctly read the tea leaves and exited the market in Europe before it crashed to concentrate on the US market. First Solar was an early pioneer in O&M.

And then there is all of that Walmart (WMT) money that funded First Solar right up to, and after, its IPO.

So, First Solar can be forgiven for ignoring O&M’s dangerous undervaluing and chronic low margins in the field. Or … maybe not. Underfunding O&M is rife in the solar industry. Most assume that O&M costs will decrease in time depressed along with the artificially low price of modules. O&M costs rise over time as systems age. Underfunded O&M is under-done O&M, and this is dangerous for the future of the industry.

Lesson: First Solar’s move is akin to the over-used excuse ‘I’m leaving to spend more time with my family.’ Lesson – read the tea leaves earlier.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here. 
This article was written for SPV Reaserch’s monthly newsletter, the Solar Flare, and is republished with permission.

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by Paula Mints

In 2018, the US market for PV deployment is estimated at ~12-GWp. As the US does not have sufficient domestic cell manufacturing capacity to meet its demand, most of the 12-GWp will be met by imports of cells or, modules. Following the implementation of cell/module tariffs there were, as expected, new capacity announcements in the US, primarily for module assembly. If all the current announcements came true it would add an additional 4.2-GWp of module assembly and 1.7-GWp of cell manufacturing (thin film and crystalline) capacity to the US. First Solar (FSLR) is responsible for 1.3-GWp of the new module assembly and cell capacity announcements.

Including current US capacity, even if all the module assembly and cell manufacturing capacity announcements came to pass the US would still not have enough cell and module capacity to fulfill its demand. Module assembly is faster to establish but primarily requires imported cells. With tariffs on cell imports above 2.5-GWp, someone, somewhere along the value chain is going to eat margin that is, either the importer will absorb the tariff, or the domestic buyer will absorb the tariff, or the end user will pay a higher price for the PV installation.

In a price-taking industry such as the solar industry, the end user rarely chooses to absorb the higher price. Solar industry participants have little to no control over the price function as they are actors in a highly competitive industry where end users have no conception of manufacturing costs and there is an entrenched and well-funded competitor – conventional energy. Climate change crisis aside (and it should not be put aside), the conventional energy infrastructure is in place and it is very difficult to replace it with the renewable energy technologies. Habits will need to change, education will need to take place, new infrastructure developed and nascent technologies (such as storage) need to mature.

And frankly, adding module assembly capacity alone without additional cell capacity will not cut it.

The US needs new cell capacity and given the cost of new manufacturing capacity, manufacturers will need to consider whether the markets in the US, Canada, Mexico and countries in Central and South America will be worth the effort. The US offers a large market, but it faces a decreasing ITC, a lack of Federal government support, and then there are the tariffs. The US has yet to feel the full effect of the Trump Administration’s tariff, um, strategy. On a positive note, individual states are stepping up with programs for community solar and residential solar with storage while retaining an interest in utility-scale solar deployment.

Individual state plans aside, if the US wants to encourage domestic cell manufacturing it will need to invest, incentivize, exercise caution and have patience. Caution because no one needs another Solyndra, and patience because cell manufacturing is a years-long plan, not an overnight, instant gratification-satisfying success.

Taking the announcements in Table 1 one-by-one:

Jinko Solar (JKS): Announced a multi-gigawatt module deal with NextEra (NEE) as well as a module assembly facility in Jacksonville, Florida. Shifting announcements about capacity followed with rumors stabilizing at an expected 400-MWp and planned commercial output in Q4 2018.
Status: not going to happen in Q4 2018, look ahead to Q4 2019 and potentially 150-MWp.

First Solar (FSLR): Plans to expand its Ohio facility to 1.6-GWp of series six, but, hold on, series six is slow out of the gate and the company’s expected full capacity date of EO 2019 is not entirely reasonable given the history of its series six ramp problems. Status: Likely to be additions, though not the announced volume.

Hanwha Q-Cells Korea (HQCL): Announced 1.6-GWp of new module assembly capacity by Q4 2019. This is a reasonable timeframe to establish some degree of module assembly though 1.6-GWp is a stretch. The company needs to decide whether the investment, as well as the higher cost of manufacturing in the US, is worth the market opportunity. Status: Likely to add a fraction of the announced capacity.

Sunpreme: Out of the blue the company announced 400-MWp of monocrystalline bifacial cell and module capacity in Texas with manufacturing and product availability in 2019. Could be a press release gone awry. Given that the company did not offer detail about whether it had a building in mind or, if the capacity would be greenfield or any detail about equipment let alone detailing a reasonable pilot production scale up schedule the status is: Give me a break.

LG Solar (066570.KS): Announced 500-MWp of module assembly capacity at its facility in Alabama for its 60-cell premium residential rooftop product. LG has not announced a date for equipment move-in, and even module assembly requires a period of pilot scale production. The target date for commercial product availability is Q4 2019. LG will face the same market issues and additional costs as other manufacturers. Status: Likely to move ahead with a degree of module assembly in the US at a lower volume than announced.

And, two not on the list:

Tesla (TSLA) Solar Shingles: In its Q3 call, Tesla gave an update on its solar shingle product. In sum, production has been delayed from Q4 2018 to the first half of 2019 due to the “complexity” of the product. Tesla did not give details on expected efficiency, manufacturing cost, price/Wp when available, and what the company means by complexity. Translation … this is a highly complex and expensive product to manufacture likely fated to serve a niche market of people who want to own a Tesla roof. Status: Expect more delays. Final comment, there is a long history of companies announcing solar shingles and tiles as a great innovative idea whose  time is here now … still not here for a variety of very good technical reasons. Tesla solar is using more of its imported Panasonic HIT modules, rebranded as Tesla. This is
outsourcing.

SunPower (SPWR): SunPower took a gamble that its acquisition of SolarWorld’s Oregon facility would help it earn an exemption for its IBC cells and modules. Maybe it worked or, maybe it won the exemption based on its IBC technology alone. Whatever the reason, the company is plunging ahead with its acquisition and will upgrade the Oregon facility’s module assembly for its P-Type modules (imported cells). Status: This one’s a go, albeit an expensive one. Expect a revival of some of the Oregon facility’s monocrystalline capacity and an upgrade to its module assembly.

The Lesson is about Risk and Reward

Manufacturing in the PV industry is akin to an acrobat balancing on a very thin high wire where the acrobat is the manufacturer and the very thin high wire are the margins the industry has accepted overtime. As the industry has effectively commoditized its cell/module product, there are very few high value markets for manufacturers. Competition is a battle for share where the winners are those who can best absorb margin pain.

A decision to establish module assembly or cell manufacturing in a market is not taken lightly. The US is an expensive manufacturing location. Manufacturers serious about establishing a base in the US need to accept that their costs will be higher than in other countries and hope for an expanding market to make it worth the expense and effort.

One example of a US manufacturing failure for a variety of reasons is Suntech. In 2009 China-based and former industry leading manufacturer Suntech chose Arizona for its first 50-MWp module assembly facility. By 2013 it had shuttered the facility.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here. 
This article was written for SPV Reaserch’s monthly newsletter, the Solar Flare, and is republished with permission.

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SunPower gets an exemption for its interdigitated back contact (IBC) solar cells – did it win the battle and lose the war?

by Paula Mints

If SunPower (SPWR) was playing a game of chicken with the Trump Administration to give it an edge towards the goal of getting an exemption, it a) won its gamble and can now focus on manufacturing p-type monocrystalline cells and modules to compliment imports of its n-type IBC cells and modules, b) won its gamble and now must keep its word and invest in resuscitating the long-in-the-tooth SolarWorld US manufacturing facility, or, c) won its gamble for a short-term advantage of an exemption for which it must keep its word and invest heavily in US manufacturing as competitors (notably LG) make the now fortified case for exemptions of their own.

And … what if SunPower could have earned an exemption on the strength of its IBC technology alone? If so, its acquisition of SolarWorld is an expensive and unnecessary hedge.

Comment: This may be a case of winning the battle and losing the war or winning the battle and the war and being stuck with the cost of rebuilding. Manufacturing is expensive in the US and the Trump Administration’s trade war has made it more so. A strong dollar has not made US exports more affordable.

A recap of the pros and cons of the SolarWorld acquisition:

The Good

Pro: Following the acquisition, SunPower, at least for the time being, becomes the only c-Si manufacturer in the US and as the only c-Si manufacturer in the US, SunPower becomes the decider concerning tariffs, at least for a while.

Pro: The SolarWorld US acquisition may have tipped the scales in SunPower’s favor to earn an exemption, saving it millions of dollars in tariffs on imports of its IBC cells and modules.

The Bad

Con: SolarWorld’s monocrystalline and SunPower’s monocrystalline directions are not completely aligned and are not particularly complimentary.

Con: Manufacturing in the US is expensive and the current price drop showed that even with tariffs in place imports are cheaper than cells/modules manufactured in the US.

Con: After the acquisition, SunPower would be the sole crystalline cell manufacturer in the US, a temporary situation at best and this does not even consider First Solar’s (FSLR) announced intention to add 1.2-GWp of CdTe capacity or the plans of Jinko Solar (JKS) (c-Si) and others.

Con: All markets are vulnerable, a slowdown in the US and/or Latin America solar deployment would make the SolarWorld acquisition look like a very bad buy.

Con: Price competition from imports is not going away and SunPower might find itself a plaintiff in a future tariff dispute of its own instigation and thus wearing the mantle of industry villain.

Lesson: From the movie White Men Can’t Jump (1992) written by Ron Shelton: “Sometimes when you win, you really lose, and sometimes when you lose, you really win, and sometimes when you win or lose, you actually tie, and sometimes when you tie, you actually win or lose.”

In other words, even if internally SunPower is asking itself – did we really have to buy that deeply-in-need-of-investment company? Really? – SunPower will never admit it. So … as Ron Shelton continued, “Winning or losing is all one organic mechanism, from which one extracts what one needs.” 

In other words, it’s all spin baby.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here. 
This article was written for SPV Reaserch’s monthly newsletter, the Solar Flare, and is republished with permission.

The post Sunpower’s Tariff Exemption: When You Win, You Lose appeared first on Alternative Energy Stocks.

by Paula Mints

First Solar (FSLR) offered a great lesson about the announcing of plans (man plans, god laughs) in July when during its Q2 release call it discussed the yield problems slowing commercial production of it’s Series 6 large format module. The production delays are due to a single point of failure causing a bottleneck. First Solar expects to enter volume production with its Series 6 module early in 2019.

Muted-kudos to First Solar for discussing a not-so-secret problem with Series 6 production. The kudos are muted because if the company had been more circumspect in the first place there would be nothing to retract and defend.

Back in November 2016 when First Solar announced that it would leapfrog over its planned series 5 module and commit future production to its large area Series 6 the company enthu-siastically announced 3-GWp of Series 6 commercial capacity in 2018 and stated that the new format would offer cost advantages.

In 2017 First Solar spent $175-million retooling its Ohio manufacturing facility for its Series 6 ramp. In April 2018, amid rumors and leaks of problems ramping Series 6 as well as continued announcements that Series 6 was the future restarted manufacturing for its Series 4.

During the play, Waiting for Godot, by Samuel Beckett, others arrive, but Godot never does. Seriously though, it will obviously take a while for First Solar to recoup its investment in its own Godot. Meanwhile, prices for solar modules are currently being driven down by a market disruption in China – making it less likely that its Series 6 will be cost effective if and when it does arrive.

First Solar might want to rethink its continued optimistic announcements about its Series 6 and suppliers, such as tracker manufacturers, might consider constraint in developing products for this long-long-long awaited release. Seriously, again, continuing to announce and then retract release dates can do real damage to a company. Rumors rev, confidence falls. In this regard, continued announcements of Tesla’s solar tile rooftop product offer an example. Tesla (TSLA)  finally reduced announced optimism about its roof tile to a murmur.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here

The post First Solar: Companies Plan, God Laughs appeared first on Alternative Energy Stocks.

Solar farm owner and developer stocks are publicly traded companies who develop or manufacture equipment that converts sunlight into other types of useful energy.  Includes manufacturers and developers of both solar photovoltaic and solar thermal equipment, as well as their supply chain.

This list was last updated on 3/21/2022.

See also the list of Solar Manufacturing Stocks, the list of Residential Solar Stocks, and solar and wind inverter stocks.

7C Solarparken AG (HRPK.DE)
Abengoa SA (ABG.MC, ABGOY, ABGOF)
Acciona, S.A. (ANA.MC, ACXIF)
Adani Green Energy (ADANIGREEN.NSE)
Algonquin Power and Utilities (AQN, AQN.TO)
Atlantica Yield PLC (AY)
Azure Power Global Ltd. (AZRE)
Bluefield Solar Income Fund (BSIF.L)
Boralex (BLX.TO, BRLXF)
Brookfield Renewable Energy Partners (BEP)
Canadian Solar (CSIQ)
Capital Stage AG (CAP.DE)
Clearway Energy, Inc. (CWEN, CWEN-A)
Edisun Power Europe AG (ESUN.SW)
Etrion Corp. (ETX.TO, ETRXF)
Canadian Solar (CSIQ)
First Solar Inc (FSLR)
GCL-Poly Energy Holdings Ltd. (3800.HK)
Iberdrola, S.A. (IBE.MC, IBDSF, IBDRY)
Infigen Energy Limited (IFN.AX, IFGNF)
Infraestructura Energética Nova, S.A.B. de C.V. (IENOVA.MX)
Innergex Renewable Energy Inc. (INE.TO, INGXF)
JinkoSolar Holding Co. (JKS)
Greenbriar Capital Corp. (GRB.V)
Guggenheim Global Solar ETF (TAN)
Neoen S.A (NEOEN.PA)
New Energy Exchange Limited (EBODF)
NextEra Energy Partners, LP (NEP)
NextEra Energy, Inc. (NEE)
Northland Power Inc. (NPI.TO, NPIFF)
Panda Green Energy Group Limited (0686.HK)
Premier Power Renewable Energy (PPRW)
Principal Solar (PSWW)
Renesola Ltd. (SOL)
ReNew Energy Global plc (RNW)
RGS Energy (RGSE)
Scatec Solar ASA (SSO.OL)
Shunfeng International Clean Energy Limited (1165.HK)
Sky Solar Holdings Ltd. (SKYS)
Solar Wind Energy Tower (SWET)
Solaria Energía y Medio Ambiente, S.A. (SLR.MC, SEYMF)
Sunpower (SPWR)
Sunvalley Solar, Inc. (SSOL)
Sunworks, Inc. (SUNW)
Terraform Power, Inc. (TERP)
The Renewables Infrastructure Group (TRIG.L)
US Solar Fund PLC (USF.L)
UGE International (UGE.V)
Vivint Solar (VSLR)
Yingli Green Energy Holding Company (YGEHY)

If you know of any solar farm developer or owner stock that is not listed here and should be, please let us know by leaving a comment. Also for stocks in the list that you think should be removed.

The post List of Solar Farm Owner and Developer Stocks appeared first on Alternative Energy Stocks.

This list was last updated on 6/6/2022.

Solar manufacturing stocks are publicly traded companies who develop or manufacture equipment that converts sunlight into other types of useful energy.  Includes manufacturers and developers of both solar photovoltaic and solar thermal equipment, as well as their supply chain.

See also the list of Solar Farm Owner and Developer Stocks, the list of Residential Solar Stocks, and solar and wind inverter stocks.

5N Plus Inc (VNP.TO, FPLSF)
Amtech Systems Inc (ASYS)
Array Technologies, Inc. (ARRY)
Apollo Solar Energy (ASOE)
Ascent Solar Technologies Inc (ASTI)
Canadian Solar (CSIQ)
DAQO New Energy Corp. (DQ)
First Solar Inc (FSLR)
GCL-Poly Energy Holdings Ltd. (3800.HK)
Guggenheim Global Solar ETF (TAN)
Hanwha Q CELLS Co., Ltd. (HQCL)
Iberdrola, S.A. (IBE.MC, IBDSF, IBDRY)
Infraestructura Energética Nova, S.A.B. de C.V. (IENOVA.MX)
JA Solar Holdings (JASO)
JinkoSolar Holding Co. (JKS)
LDK Solar Co., Ltd. (LDKYQ)
LG Electronics Inc. (066570.KS)
Mechanical Technology (MKTY)
Meyer Burger (MBTN.SW, MYBUF)
REC Silicon ASA (REC.OL)
Scatec Solar ASA (SSO.OL)
Shunfeng International Clean Energy Limited (1165.HK)
SolarWindow (WNDW)
SolarWorld AG (SRWRF)
Spire Corporation (SPIR)
STR Holdings, Inc. (STRI)
Sunpower (SPWR)
Sunvault Energy, Inc. (SVLT)
SwissINSO Holding Inc. (SWHN)
Timminco Ltd (TIMNF)
Yingli Green Energy Holding Company (YGEHY)

If you know of any solar manufacturing or supply chain stock that is not listed here and should be, please let us know by leaving a comment. Also for stocks in the list that you think should be removed.

The post List of Solar Manufacturing Stocks appeared first on Alternative Energy Stocks.

by Tom Konrad Ph.D., CFA

Will shareholders accept the deal?

On Monday, 8point3 Energy Partners, the joint YieldCo from First Solar and SunPower, entered into a definitive agreement to be acquired by Capital Dynamics.

When public companies are sold, it’s almost always at a premium to the market price. It’s that price premium that persuades shareholders to sell. So why would 8point3 (NASD: CAFD) shareholders accept a deal that offers them only $12.35, or 15 to 20 percent below the roughly $15 price CAFD has been trading around for the past three months?

To answer this question, we need a little history.

Jan Schalkwijk, founder and portfolio manager at investment advisory firm JPS Global Investments, said that First Solar (NASD: FSLR) created 8point3 to unlock capital for its solar project development business.

“First Solar got into the solar project business as a means to pull demand for its panels in an over-supplied market,” said Schalkwijk. “As it turns out, First Solar was quite good at it, and many of the largest utility-scale solar plants in operation in the U.S. today are First Solar projects.”

“But operating a solar plant is inherently a different business from producing solar panels and locks up a lot of capital,” Schalkwijk added. “Also the investment thesis is different and more yield-driven than the higher risk (and higher cost of capital) product side. To free up capital and reduce the cost of capital for projects to pencil out, it formed a YieldCo, 8point3.”

He expects that SunPower’s reasons were similar.

From the point of view of solar manufacturers like First Solar and SunPower, the reason to own a YieldCo is to have a captive buyer of solar projects. Since that YieldCo could not raise money in the stock market to buy projects at attractive prices, they chose to sell the YieldCo itself.

JPS Global holds First Solar and a small position in SunPower in client accounts. They sold all holdings of 8point3 in 2017. JPS is also the manager of the Green Income Folio strategy. I am the primary research provider and joint developer of this strategy, which includes First Solar on Schalkwijk’s recommendation, but no position in CAFD.

An offer they can’t refuse

The argument for shareholders to approve the buyout amounts to: “Not the best YieldCo you got there. Shame if no one were to buy it.”

The long-term prospects for 8point3 as a standalone company are not bright. This has been apparent for some time, but the price has been going up anyway. I believe that the recent stock price strength (which has eroded since the sale was announced) arises out of mostly small investors focusing only on the current dividend without any consideration of its sustainability, while the more sophisticated investors are reluctant or unable to short the stock. Recent news headlines (like this and this) support this point.

Obviously, 8point3’s stock was risky, something I and most professional investment analysts have been pointing out for the last year. According to Yahoo, eight out of 11 analysts rated 8point3 a “Hold” or “Underperform” at the start of the month.

I personally wrote an article on Greentech Media last July, which attempted to value the YieldCo in the case of a sale. Looking at the long-term sustainability of 8point3’s cash flow, I came up with a valuation range of $8 to $13, which puts the actual offer at the high end of my range.

Significant challenges for 8point3 as a standalone public company

An investor presentation on the sale of 8point3 outlines the risks to the YieldCo’s business model, while trying to shift the blame for the company’s perilous condition onto “market conditions.” These are the same risks that professional analysts have been highlighting, but which small investors seem to have ignored.

What 8point3 wrote: “The evolving nature of the solar industry has enabled the Sponsors’ strategies of recycling capital faster and more efficiently by selling projects at a stage of construction and development that is earlier than best suited for 8point3.”

Translation: The 2017 downturn in solar installation meant that First Solar and SunPower need to sell solar farms quickly, often before they are completed. YieldCos like 8point3 typically buy solar farms after completion.

What 8point3 wrote: “8point3’s higher cost of capital and difficulty in accessing the capital markets on a consistent basis resulted in several replacements of projects under the [right of first offer], as well as 8point3 later waiving its rights to acquire a number of ROFO projects from the Sponsors, with such waived projects subsequently acquired by third-party buyers at purchase prices higher than those offered to 8point3.”

Translation: 8point3’s stock price is not trading at a large enough premium for it to sell shares to investors and invest in new solar farms while increasing the dividend. In short, investors are not willing to pay more for 8point3 shares than its current projects are worth. Unless First Solar and SunPower can sell projects to 8point3 at attractive prices, they have no reason to own it.

What 8point3 wrote: “Such challenges present strategic and financial implications for 8point3’s operations and prospects as a standalone public company without the Sponsors, and its resulting competitive position in the market for renewable energy assets:

• Lack of an acquisition pipeline or visible growth strategy
• Difficulty maintaining a sustainable, long-term distribution growth strategy
• Refinancing 8point3’s capital structure may be necessary, in the near-term and over time, with amortizing debt (among other financing options) in order to acquire additional projects.”

Translation:

• 8point3 can’t grow in current market conditions
• Our dividend growth is unsustainable
• We have to refinance debt before 2020, and that would require a dividend cut

What 8point3 wrote: “In light of these and other factors, the Sponsors’ and 8point3’s Boards determined that Capital Dynamics’ offer is the most compelling proposal to all shareholders relative to other options, including the option to continue as a stand-alone public company.”

Translation: If shareholders reject this offer, they’ll regret it.

All of these risks have been clear to analysts (if not the investing public) since 8point3 started looking into refinancing its debt a year ago. What’s truly groundbreaking here is that these arguments are now being put forward by a YieldCo and its sponsors.

In 2017, 8point3 gave guidance for the year on the January 26, 2016 fourth-quarter conference call. It now looks like they delayed the 2017 fourth-quarter call in anticipation of this announcement. My 2017 analysis indicated that, without further acquisitions, 8point3 would likely see a slight decline in 2018 cash available for distribution.

Now that this deal has been announced, management has an incentive to release the bad news. I think we can expect plenty in the Q4 conference call, which, in turn, should get shareholders to vote for the deal.

The big picture

While many YieldCos have struggled since the popping of the 2015 YieldCo bubble, the discounted purchase price for 8point3 stock points more to specific problems at one company, rather than the YieldCo space in general.

On February 7, as this article was being written, NRG Energy (NYSE:NRG) announced the sale of its ownership stake in its YieldCo NRG Yield (NYSE:NYLD and NYLD/A) and its renewables development business and projects to global infrastructure investor Global Infrastructure Partners (GIP). On the same day, TerraForm Power (NASD:TERP) made an offer for Spanish YieldCo Saeta Yield (Madrid: SAY) at a 20 percent premium to the recent market price.

In contrast to the 8point3 sale, NRG Yield’s public shares are not being purchased. GIP will continue as a new sponsor of the public YieldCo, and is committed to NRG Yield’s future growth. In a press release, Adebayo Ogunlesi, chairman and managing partner of GIP, said, “We are…excited about the opportunity to grow the value of NYLD, which allows public market investors to access attractive investments in renewable energy.”

This echoes the sentiments of Brookfield Asset Management (NYSE:BAM) and Algonquin Power and Utilities (NYSE:AQN) in their recent purchase of sponsorship stakes in TerraForm Power and Atlantica Yield (NASD:AY) when those YieldCos’ respective sponsors filed for bankruptcy.

Most recent YieldCo sales have been a result of problems at the former sponsors, while 8point3’s sale is more a product of problems at the YieldCo itself. This is why 8point3’s shareholders are faced with selling at a discount, while shareholders of TerraForm Power and Saeta Yield received and/or are being offered a premium.

Stay tuned for a more in-depth analysis of the four recent YieldCo transactions and the state of the YieldCo space in general.

***

This article was first published on GreenTech Media.

Disclosure: Long TERP, AY, NYLD, NYLD/A, AQN. Short calls on CAFD. Short puts on FSLR (an effective long position). Tom Konrad and Jan Schalkwijk have an affiliation with the Green Income Folio, which is long TERP, AY, NYLD, NYLD/A and FSLR.

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2016 was a wild year and not just for solar and after decades of reliance on government incentives, subsidies and mandates the global solar industry may be inured to unpredictability but the industry as a whole should be wary of global trends.  Solar PV expert Paula Mints looked at a number of the developments for solar companies in the December edition of  SPV Market Research‘s Solar Flare.  Adapted for AltEnergyStocks.com, this series of articles is reprinted with permission.

Though First Solar (FSLR) indicated recently that 2017 would be a transition year there is no indication from the company’s behavior in 2016 that it knows where it is going.

The company has been restructuring since Q1 2016. Early in the year it pulled the plug on TetraSun, shifted focus from its EPC and its O&M businesses to a new strategic focus on module sales and community solar deployment. Recently it leapfrogged over its Series 5 module, which it showcased at the 2016 Solar Power International Trade Show, scrapping it to instead launch its Series 6 module. The company also an-nounced 1600 layoffs.

What this means for solar: Pardon the pun but First Solar would not be the first solar company to fail to read the market and stumble strategically.

It is easy to step back and suggest that a focus on module sales in an industry with historically painful price pressure is a mistake and to applaud an implicit admission that expansion via acquisition into crystalline may have been an unnecessary loss of focus from its core technology, CdTe.
The global solar industry is brutally competitive internally – and this is before the competitive effect of cheap natural gas is thrown into the mix. Solar industry participants should hope that this industry pioneer and largest thin film manufacturer globally rights the ship.

Previous articles:

•  SunEdison, First Solar, and SolarCity
• Chinese Solar-Boom or Bubble?
• Solar Module Prices Drop To New Lows

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here

The post What Just Happened: First Solar’s Strategy Shifts appeared first on Alternative Energy Stocks.

by Joseph McCabe, PE

My uber-conservative utility, Intermountain Rural Electric Association (IREA) has been against solar since before I moved into the service territory in 2007.  IREA’s long-serving general manager, Stanley Lewandowski Jr., would include climate change denial leaflets in the envelope along with the monthly electric bills.

Now he is gone, and attitudes seem to be changing towards solar. With a new general manager, a couple of forward thinking board of directors and a handful of active IREA owners/members the solar landscape has changed and now includes a large solar project.

Currently IREA has 550 MW of installed electrical generating capacity, about 270 miles of transmission lines and many more of distribution.  Residential users account for about 65% of electricity demand. Like most rural electrical utilities, there are few customers per mile. At the end of 2014 there were 354 solar electric systems, end of 2015 had 1,087 and currently there are 1,250 totaling 7.1 MW out of 152,300 total customers. IREA’s perspective has been that net metering is a subsidy paid for by other ratepayers. Unfortunately, in a mis-guided attempt to recoup this perceived subsidy, since the beginning of the year IREA has placed a load factor adjustment (LFA) on all new customers including new PV.  I expect that many people will soon be clamoring as to their unfair bottom line monthly bills compared to their neighbors.

LFA is a penalty charged for periodic high demand. The LFA discourages both customer sited PV and electric vehicle (EV) charging.  It also presents further confusion to the typical energy consumer, a tower of babble. The new, much higher LFA rate is triggered if the average demand over the billing period divided by the peak demand over the same period exceeds 10% for residential service.  If triggered a peak demand charge is added to the bill. The typical load factor for an average residential IREA customer is about 20%. But EV charging and PV generators will almost certainly send customers into lower than 10% LFA; EVs because of higher peak demand and PV because of lower average demand. One more intelligent solution would be to incentivize EV charging at night, when IREA’s electricity supply from Xcel Energy’s (XEL) Comanche III coal plant output and wind power produce the cheapest electricity.

For the 8 years I have been an IREA member/owner I have been going to the microphone at the annual membership meetings and been a pebble in the shoe of my representative to try and implement community solar gardens (CSG, also known as community solar or shared solar). In parallel, I was helping the state of Colorado pass the first ever CSG legislation (House Bill 10-1342, Levy), and before that I invented and implemented the first large scale utility owned CSG located in Sacramento starting in 2005. It almost feels like the efforts of a few people are helping to change the attitudes of our utility towards cost effective solar.

The economics of CSG are supported by the Public Utility Regulatory Policies Act (PURPA) which encourages the development of renewable energy projects by requiring utilities to purchase energy and capacity from qualifying facilities if at or below avoided costs. In 2015 juwi, headquartered in Boulder Colorado, was able to propose a solar project at IREA’s avoided costs. IREA announced the groundbreaking has begun by juwi on the 13 MW CSG named Victory Solar. This is close to Denver in Adams County. It is unique in that it is 15.9 megawatt DC but 13 MW AC, a 1.3% DC overrating which should save on the overall project economics.  This project has a long-term power purchase agreement with an IREA purchase option in a few years.  IREA upgraded an underutilized substation for the interconnection at a cost of  $1.4M. The asset utilization for this project, the out of pocket expense for IREA, is fantastically low compared to ownership of other generation. Solar is now cost effective at this scale. Currently IREA is planning a portion or all of this project to be a CSG. I am excited to be able to charge my EV with solar electric power from my utility by the end of the year.

IREA obtained special approval from Xcel Energy to generate 15 MW of solar electricity in violation of their All-Requirements contract. Smaller utilities often have such All-Requirements contracts with larger utilities or with transmission organizations like Tristate. Recently, FERC has ruled against Tristate for imposing similar all-requirements on Delta Montrose Electric Association (DMEA). This is a major national tipping point for smaller utilities like IREA and DMEA to enable more distributed generation from renewable energy.
 
The next steps for the active IREA members are to correct the LFA to encourage EV and customer sited PV and to get an additional 2 MW CSG on disturbed or contaminated land in IREA territory. Electric Muni’s, Co-operatives and Associations are perfectly suited to reap the benefits of distributed generation, create local jobs, and revitalize land for local projects. A great example of such a project is located south of Boulder adjacent to the superfund Marshal Landfill site. EPA helped envision and spearhead this Community Energy Collective (First Solar FSLR has a 27% interest in CEC) project.

This large CSG by IREA is a watershed event, where like many conservative local utilities, IREA has been waiting for solar to be cost effective for their needs. That day has come, and will be showing up at many more utilities who are more focused on their customers than on stockholders. CSG’s are also well suited for rural utilities who have fewer customers per mile, justifying distributed energy from solar as opposed to central station generation from fossil fuels.

Disclosure: Joseph McCabe is a Xcel Energy stockholder.

Joseph McCabe is an international solar industry expert with over 20 years in the business. He is a Solar Energy Society Fellow, a Professional Engineer, and is a recognized expert in developing new business models for the industry including Community Solar Gardens and Utility Owned Inverters. McCabe has a Masters Degree in Nuclear and Energy Engineering and a Masters Degree of Business Administration.

Joe is a Contributing Editor to Alt Energy Stocks and can be reached at energy [no space] ideas at gmail dotcom.  Please contact Joe for permission to reprint.

Related article: Comparing Community Solar Subscriptions And Yieldcos

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by Paula Mints

CdTe and crystalline manufacturer and project developer First Solar (FSLR) announced positive results for Q1 as well as a switch in strategy emphasis from deployment to module sales.

Honestly, revenues, positive net income and other financial metrics matter less in this case than the company’s strategy switch to module sales. Downward price pressure and margin compression along with continued aggressive pricing from China makes this move confusing. Cost leadership is mutable in the PV industry and it is difficult to imagine that First Solar will have an advantage in this regard for long.

First Solar has a history of abrupt strategy changes, typically with successful results. In the mid to late 2000s, when demand in Europe was at its peak, the company shut down module sales to the US and other countries and focused on sales into Europe. As demand in Europe slowed First Solar switched its strategy to projects, selling almost all of its module product to its systems division. Now, with continued margin compression, aggressive pricing and a seemingly stable utility scale market in the US the company switches back to a focus on module sales.

Lesson: Companies in all industries make decisions that lead to head scratching moments for observers. When a company with a strong and leading project business makes a dramatic strategic switch observers should ask themselves what the company sees happening to its project pipeline. Another equally important question is what is happening to the company’s project margins. Given traditional low bidding on PPAs and tenders, the answer may be: Get out while you can.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here.

This article was originally published in the April 30 issue of  SolarFlare, a bimonthly executive report on the solar industry, and is republished with permission.

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