Page 1 solar

Mosaic lands on NYT front page, Colville examines Yingli’s (lack of) capex, Lux gazes in Chinese PV sector crystal ball

There are few more valuable pieces of old-school journalistic real estate than the front page of the New York Times. Of course, in our increasingly digital age, this classically optimal physical-design positioning is only apparent to those who still receive the morning paper, while the rest of us who rely on the media outlet’s web presence for information encounter the lucky stories among the highlighted posts. One of the poster children for alternative solar financing, Mosaic, benefited from a Page 1 feature headlined “A Bet on the Environment” in the NYT’s Sunday, Sept. 2 edition—albeit the first page of Section B.

Along with quotes from Mosaic’s cofounders, Billy “the Kid” Parish and Dan “the Man” Rosen, reporter Diane Cardwell caught up with board member Danny “Sungevity” Kennedy, Equity Net’s Judd Hollas, and others. Many in the solar community are familiar with the back-story and current efforts of the crowd-funding company and its leadership, especially Parish, who has crammed a lot of living into his 31 years on the planet. The article does a pretty good job of broad-brushing the background and hitting the main points of Mosaic’s disruptive approach, characterizing the firm as a “virtual renewable energy bank.” “Capturing [the]…distributed, decentralized phenomenon—and applying it to financing an energy source that is also built around a distributed architecture is a very big play,” Kennedy opined. “That’s why the crowd makes sense. This is a distributed future.”

(A guest post titled “Why is Solar Energy A Good Investment?” from the peripatetic Parish also turned up on Solar Power World last week. Although an interesting read, the article might have been more accurately named “Why Is Mosaic A Good Investment?” I’m just saying….)

Elsewhere during the Curator’s extended Labor Day weekend hiatus, NPD Solarbuzz’s Finlay Colville examined the opposite end of the solar industry value chain, the upstream portion where technologies are developed and deployed in manufacturing. His gaze was fixed on the capital expenditures—and lack thereof–of one of the PV world’s big dogs, Yingli Green. As he pointed out, the company’s recent second-quarter earnings underscored Yingli’s continued dominance (six quarters and counting) as the leading module supplier by volume. But the Chinese firm has been anything but the top dog of late when it comes to spending money on new production facilities and equipment.

“During the entire six-month period of 2H13, capex (for a company with >2GW vertical integration [and plans to get to 4GW of shipments this year–SC]) is only $40 million,” Finlay noted. “That’s as close as you can get to maintenance-only” levels of spending. The analyst’s point—and one that he has made before and has been duly noted here–is that Yingli and other players do not need to build out new capacity for a variety of reasons, including the gigawatts of un(der)utilized production lines extant in China that can be tapped. His gloomy conclusion (for the production tool manufacturers anyway): Barring an upsurge in technology-driven capex, “this all points to the equipment spending downturn lasting well into 2014, and perhaps the next meaningful new capacity is not going to arrive until 2015.”

Late last week, Lux Research issued a timely report, “The Great Shakeout: China’s Path to a Rational Solar Industry,” authored by Zhun Ma of the firm’s China Innovation Intelligence service. Although the full study is only available to subscribers and media types (yes, the Curator has a copy), Renewable Energy World’s Tildy Bayar provides a sturdy overview with ample commentary from Ma. For those who think that China’s dominant role in the solar industry will start to dissipate, think again: Ma sees the top-tier manufacturing companies “surviving and thriving,” while small to midsize system developer and EPC firms have a good shot too, given the better margins in the project development space.

The analysis section of the report is especially intriguing, as it lays out five prospective scenarios, each accompanied by helpful infographic dashboards, for the Chinese solar industry’s future prospects. Before going through the scenarios, Ma outlines five crucial drivers of sector consolidation:

  • Companies’ financial standings define their likely position in the consolidation wave.
  • Products from out-of-date equipment and processes have no place in an oversupplied market.
  • The government wants to build large-scale players with innovative technologies.
  • The geographic location of a company will largely determine its fate.
  • Undervalued solar assets stimulate the appetite of diversified industry investors.

The quintet of forecast scenarios interweave with the themes stated among the consolidation drivers:

  • Tier-1 companies add new facilities with new technologies.
  • Big suppliers merge with small companies within provincial borders.
  • Leading players disintegrate vertically to focus on specialized core production.
  • New investors engage China’s solar business.
  • The solar firms at the brink of collapse move toward nationalization.

To find out the reasoning behind the Lux team’s most-likely scenario (hint: Trina and Yingli ain’t going away), you’ll have to obtain a copy of the report.