The last week was interesting for the solar industry with companies expanding into new markets, supply deals being forged and countries taking their first steps with solar power projects. Here is a quick summary of the news that mattered in the solar sector.
US Solar Firms In China
US manufacturers First Solar (NASDAQ: FSLR) and SunPower (NASDAQ: SPWR) announced two separate deals in China as the firms look to cash in on the country’s growing utility scale solar market. First Solar will supply 2 MW of its thin-film panels to a demonstration project in China while SunPower will invest about $15 million for a 25% stake in a joint venture with three Chinese firms to manufacture and deploy its solar concentrator technology in the Chinese market.
- Why We Think First Solar Is Significantly Undervalued
- Clinton, Trump And The Future Of The U.S. Solar Industry
- Why We Cut Our Price Estimate For First Solar To $50
- First Solar Had A Solid Q2, But Contracting Remained A Mixed Bag
- First Solar’s Q2 Earnings Could Trend Lower On Less Favorable Revenue Mix
- First Solar Looks Address Its Balance Of Systems Handicap With Series 5 Modules
China is set to become the largest solar panel market by next year on attractive government subsidies and growing energy needs. However, US firms could face headwinds as they navigate the Chinese market given the competition they face from China’s massive solar industry which enjoys the full backing of the government. The firms also face the risk of repercussions of the solar trade war between China and the US.
Solar Project In Qatar
The Persian Gulf emirate of Qatar has taken its first step into the solar power space, with plans to construct a 200 MW solar farm beginning in the first quarter of 2013. About 2% of the nation’s electricity is expected to come from this project. ((Qatar to Tender 200 Megawatt of Solar-Power Projects in 2013, Bloomberg)) The country eventually plans to expand capacity to about 1,800 MW by 2020.
The Middle Eastern countries are fast becoming a hot bed for solar power projects despite the fact that the region boasts of the world’s largest hydrocarbon reserves. Oil and natural gas are sold at deeply subsidized rates in domestic markets, while they garner much better rates in export markets. This is encouraging countries to replace gas and oil powered generation with renewable sources. Saudi Arabia, for instance, has a target of deriving up to a third of its electricity needs from solar power by 2032.
Despite the growth opportunities in the Middle East, it remains to be seen how large a role international firms like First Solar and Suntech Power will play in these markets given that these countries have been investing in developing their own solar panel manufacturing capacity.
SunPower’s Japanese Contract
Sunpower has extended its long-standing supply agreement with Toshiba through 2018 and also agreed to supply the firm with its highest efficiency (20.1%) solar panels for sale in the Japanese market.  The move will give SunPower deeper access into the promising Japanese market as the government plans to phase out the country’s nuclear power capacity and replacing it with other generation sources including solar power.
The Japanese government has been providing feed-in-tariffs that are among the best in the world to incentivize solar power installations. While foreign manufacturers have made significant headway into the market, with the country’s panel imports tripling since last year, SunPower seems the best positioned given its portfolio of high efficiency panels which are well suited for the space constrained Japanese market.Notes: