Evergreen Solar investors sell the Second-Quarter 2006 Results news

Although Evergreen Solar (ESLR) revenues almost doubled and gross margins increased 16.6 percentage points sequentially from the first quarter 2006, financial wire stories (AP, Reuters) erroneously focused on year over year comparisons to the second quarter 2005. Second quarter 2006 results were actually in-line with revenue estimates, and ESLR had a smaller loss than expected. The EverQ joint venture factory remains on track for full production by the end of the third quarter. Investors have sold the stock down over 19% since the second quarter results were announced, after the market close, on Tuesday, July 25.

Investors may have focused on the following issues:

• Capital expenditures will remain high for the next few years as ESLR aggressively invests in String Ribbon manufacturing capacity including the 50MWp EverQ2 expansion and a planned EverQ3 with joint venture partners Q-Cells (FRA:QCE) and Renewable Energy Corporation ASA, (OSL:REC).
• Selling, General and Administrative expenses increased with the EverQ ramp but also included the effects of $1.8 million in stock based compensation.
• Demand growth in the German solar photovoltaic market is “not the torrid pace of last year”. There is resistance to further price increases spurred by polysilicon constraints, but stable solar panel pricing should maintain demand growth.
• “Hot” solar stocks have lost momentum and cooled since peaking in March 2006.

ESLR is accelerating thin ribbon and other process improvement efforts. Thin ribbon wafers will use 6 grams of polysilicon (perhaps as low as 5 grams) per watt, compared to the industry standard of 10-12 grams per watt and represents ESLR’s key competitive advantage in polycrystalline solar cells.The Marlboro facility has been fully converted to thin ribbon (less than 200 micron), although yields are not as good as the 300 micron process. Thin ribbon yield improvement efforts center on wafer cutting and metallization. At the PV Industry Forum, ESLR discussed a laser scribe technique instead of laser cutting, resulting in less cell edge damage. In order to improve the metallization process, ESLR expedited new screen printing equipment from a “German company” and swapped out a decal printing line at the Marlboro facility in early July to validate the process. Screen printed metal contacts should also improve thin ribbon cell efficiency to the 2006 target of 15%. It is my guess that ASYS GmbH is the likely the supplier of the screen printing equipment (ESLR did not mention the name of the vendor), since their solar screenprinters can handle wafers as thin as 100 micron, in-line with ESLR's wafer “thinning” technology roadmap.

ESLR will begin to transition EverQ to thin ribbon in the third quarter and complete the conversion in the fourth quarter. Plans for rolling out the screen printing metallization process were not disclosed. I do not know if this equipment is already in place at EverQ, but the new screen printers are certain to be used at EverQ2 if the trial at Marlboro is successful.

ESLR’s new Quad Ribbon furnaces have cranked out “thousands” of wafers albeit at lower yields than existing process. Quad ribbon is a simplified growth technique for growing four (4) edge to edge ribbons from a single furnace. Since the concept is sound, Quad ribbon efforts will now be focused on process improvement for mass production. ESLR believes Quad ribbon may be ready for deployment at EverQ3 in 2008.

ESLR management continues to deliver revenue growth and improving gross margins and has an excellent track record in developing and deploying process technology improvements, even at the expense of near term production from the Marlboro facility. In my opinion, ESLR management is making all the right decisions to grow Evergreen Solar faster than the dynamic, worldwide solar photovoltaic energy market for the next few years.

For a different take on ESLR, see this summary of a report form Alternative Energy Investing.

(Full disclosure: I own some shares of ESLR stock).

Industrial Investment Council (IIC) helps international photovoltaic firms invest in eastern Germany

In recent news, the IIC played an important role in First Solar’s decision to build a 100MWp solar module manufacturing plant in Frankfurt /Oder, Brandenburg state, with €45.5 million of German government financial incentives. I suspect the IIC was also involved in Nanosolar’s decision to locate its first panel assembly factory, designed to produce more than one million solar panels per year, near Berlin, Germany.

Both First Solar and Nanosolar will have a ready and robust German market for their photovoltaic modules. Germany is the largest photovoltaic market in the world with €3 billion in 2005 sales and forecasted annual growth of 30%+ per year. Solar photovoltaic system adoption is driven by the German Renewable Energy Sources Act which established guaranteed 20 year feed-in tariffs (the price utilities must pay for solar electricity) to insure investment payback.

Established in 1997 by the German Federal government and the east German states, the IIC acts as an intermediary between investors, industry, and federal, state, and local governments. Best of all for investors, the comprehensive suite of IIC value added consulting services are free of charge to international companies. [Don’t tell McKinsey or Bain about this.]

Also, the IIC website has great competitive information about the German photovoltaic industry and the PV tooling industry in the Downloads, Key Industries section.

Beyond photovoltaics, the IIC can assist with many key east German industries, from Aerospace to Wind Energy. Besides Berlin, local IIC offices support international companies in Washington, Detroit, San Francisco, Tokyo, and Paris.

SolFocus brings other solar photovoltaic concentrator companies into focus

As reported today in Silicon Beat:
The VC frenzy over solar company SolFocus; VCs shower it with $32M
VCs continue to invest their green in green. The SolFocus investment follows on the heals of the $75 Million Series C funding of Nanosolar in June. Unlike other solar startups developing new and cheaper thin film solar cell/module technologies, SolFocus is developing optics, mirror, passive cooling, and sun tracking technologies to focus the equivalent of 500 suns on high efficiency solar cells. Apparently, SolFocus has partnered with Spectrolab (a Boeing Company) and will probably use Spectrolab's 28.3% Ultra Triple Junction (UTJ) Solar Cells (or similar), designed for space applications, in the Concentrator PhotoVoltaic (CPV) arrays. SolFocus claims to have developed a low part count, low material cost (glass optics instead of fresnel lenses), and easy to assemble CPV array approach (see presentation) which can drive solar photovoltaics below the $1 per watt price point.

Practical CPV systems face two key challenges. Since CPV systems can only focus direct beam light from the sun, not diffuse light scattered by the atmosphere, they are best used in direct light rich locations. CPV systems must also be pointed at and track the sun, and the tracking mechanisms add to system cost, decrease reliability, and increase maintenance.

Concentrator photovoltaics is not a new idea, and a number of other startup companies are competing with SolFocus to commercialize their concentrator technologies. Concentrix Solar, a Fraunhofer ISE spin-off, is bringing a fresnel lens concentrator product to market about the same time as SolFocus. Concentrix showcased their technology at the Intersolar 2006 tradeshow. Solar*Tec AG (Munich, Germany) and Solaria (Fremont, USA) are two more examples of many competing companies at various stages of concentrator photovoltaics commercialization.

PV Industry Forum 2006 in Freiburg Part 2

Since Part 1 implies at least one follow up post, Part 2 will focus on the “Reducing material consumption: Thin film and silicon ribbon techniques” afternoon session held at the 2^nd PV Industry Forum in Freiburg im Breisgau, Germany. I did not attend the second parallel afternoon session titled “Success in large-scale rural PV projects: Experience reports by international operators”.

Despite the title, the afternoon session on reducing material consumption began with presentations by Schott Solar and Evergreen Solar on silicon ribbon techniques. The balance of the presentations concerned thin film technologies including a-Si (amorphous silicon), CIS (Copper-Indium-diSelenide), and CdTe (Cadmium Telluride). While seven technology/product presentations were made by the participating companies, only two companies have announced plans for 100MWp or greater production: Evergreen Solar and First Solar.

Silicon ribbon technologies grow a continuous silicon wafer from molten silicon using a vertical or horizontal pulling method, eliminating silicon “saw dust” or kerf losses of 30% or more through the wire sawing of silicon ingots/blocks. Evergreen Solar’s (ESLR) string ribbon technology, developed by Mobile Solar alumni, stole the spotlight with plans to expand the capacity of EverQ to 300MW by 2010. Renewable Energy Corporation ASA, (OSL:REC) has joined the EverQ joint venture between Evergreen Solar and Q-Cells (FRA:QCE), committing raw silicon supplies for the EverQ JV beginning in 2008.

First Solar burst on the worldwide solar industry in 2006 with aggressive capacity expansion plans for CdTe thin film solar modules on frameless, glass substrates. In the United States, First Solar is now ramping 50MWp of new production to augment their existing 20MWp base. Furthermore, First Solar has begun construction of a 100MWp facility located in Frankfurt (Oder), Germany, scheduled to begin production in mid-2007. Although CdTe is a mining waste by-product, First Solar believes CdTe is available in sufficient quantities to mass produce solar modules. While First Solar did not provide an “efficiency” for their modules, they have outperformed comparable crystalline and amorphous silicon modules in a commercial installation at Tucson Electric Power (TEP) in Arizona. First Solar has a sustainable vision for CdTe solar modules from low cost production to end of life recycling. Reminiscent of Henry Ford’s production innovations, First Solar plans to build just one product, a 600x1200mm module, in 3 hours with fully automated assembly lines. This “Model-T”, one size fits all, solar module is targeted at large scale, commercial, solar power installations where cost, not form factor, is the key requirement. Recognizing environmental concerns about the disposal of heavy metals, First Solar has developed a pre-funded program, administered by an independent company, to take back and recycle their CdTe solar modules at their end of life (25 or more years).

GP View: Evergreen Solar continues to execute on their plans to commercialize and ramp their silicon string ribbon technology (Full disclosure: I own some shares of ESLR stock). First Solar appears to have an interesting CdTe thin film photovoltaic technology and an integrated product, production, and marketing strategy. The photovoltaic material properties of CdTe are superior to crystalline silicon, but First Solar will need to deliver modules at a lower cost per watt than crystalline silicon to succeed. In addition, First Solar must source their CdTe raw materials at competitive prices and evangelize their sustainable product life cycle vision to allay environmental fears about their heavy metal product content.

Blogger Online Community offers focused help for your Blog

When I started my blog back in May 2006, I decided to use Blogger because of their Google affiliation, and the opportunity to exert maximum control over my blog via the html code template. In terms of control, this has been a great choice. I have been able to do exactly what I want. Once I figured out how to do it! My first challenge was to add a third (left) column to my standard Minima Blogger template. After consulting Blogger online help and Google, I stumbled upon the perfect blog with help: http://gevkaffeegal.typepad.com/the_alliance/2006/01/adding_a_third_.html. This blog exposed more issues than I had considered and helped me successfully add my desired third column.

After this experience, I have found the various affiliate programs such as Google AdSense, Amazon, sitemeter, feedburner, and technorati offered wizard generated html code to drop into my Blogger template, supporting a variety of display link options.

Just this week, I noticed a strange problem that caused my right column to be pushed down the page in Internet Explorer 6 (Firefox was just fine). After pulling out my hair (it is sparse) late one night and half the next day, a Blogger help forum directed me to http://blogger-tricks.blogspot.com/. While the tips of experience here did not offer a magic bullet, I did embrace the advice to downgrade to an old saved template after backing up my current erratic template. This fixed my right column problem. As I added back the upgrades I had made over the past two weeks to my template, I made sure to check my blog in both Firefox and IE6 for any compatibility problems. None occurred. Problem solved. Thanks Blogger Community!

Solar Renewable Energy Programs and resources in New Jersey: The Solar Garden State

Although the California Solar Initiative (CSI) has dominated renewable energy headlines, New Jersey’s Solar Renewable Energy Programs (part of New Jersey’s Clean Energy Program^TM (NJCEP) administered by the New Jersey Board of Public Utilities, NJ BPU) are among the best in the United States.

346 Solar Systems totaling 4533kWp of solar capacity were installed in Q1/2006 with $21.25 Million in NJCEP Solar Rebate assistance. This represents 82% of New Jersey solar capacity installed in all four quarters of 2005!

The basic NJCEP programs for solar photovoltaic systems include:

• Customer On-Site Renewable Energy Rebates (CORE Program)
• Solar Renewable Energy Certificates (SREC Program)
• Clean Energy Financing Program

The CORE Program offers “financial incentives” (rebates) of $4.35 per watt for residential solar electric systems of 10kWp (10,000 watts peak) or less in size. This CORE Program incentive covers about 50% of the solar electric system’s cost. The financial incentives for private and public/non-profit solar electric systems of various sizes are shown in the New Jersey Clean Energy Program Incentives - Chart II for applications since 3/15/06.

CORE Program incentives have driven a boomlet in New Jersey private solar electric installations, and solar rebate applications have outpaced program funding. As a result, private sector solar rebates are being held in an application queue until final rebate approval is issued by the NJ BPU Office of Clean Energy. There are rebate queues for systems less than or equal to 10kWp (CORE Queue LT 10 kW) and systems greater than 10kWp (CORE Queue GT 10 kW). These queues provide solar installers and manufacturers a competitive view into the New Jersey solar photovoltaic market.

New Jersey exempts solar photovoltaic installations from the state’s sales tax (increased to 7% on Saturday, July 15, 2006) although there is no property tax exemption. In addition, New Jersey solar photovoltaic installations are eligible for the Federal - Residential Solar and Fuel Cell Tax Credit for 30% ($2,000 maximum) of the purchase and installation cost of a residential solar photovoltaic system. Almost every practical solar photovoltaic system easily qualifies for this tax credit which directly reduces your US Federal income tax bill.

New Jersey’s revolutionary SREC Program creates tradable Solar Renewable Energy Certificates representing the clean energy benefits of electricity generated by solar electric systems independent of the actual power. An SREC is issued for every 1000kWh (1MWh, 1 megawatt-hour) of electricity a solar facility has generated and delivered to the grid, either through estimated or actual metered production. SRECs facilitate a medium of exchange for individuals and businesses to finance and invest in clean solar electricity.

New Jersey's Renewable Portfolio Standard (RPS) requires electricity suppliers to provide a percentage of their electricity sales from solar generation, and the NJ BPU requires electric suppliers to purchase and retire SRECs to satisfy this requirement. In April 2006, the NJ BPU increased the Renewable Portfolio Standard (RPS) for renewable energy to 20% of New Jersey’s electricity by 2020. The new RPS mandates 2% from solar photovoltaic or an estimated 1500MWp of installed solar electricity capacity by 2020.

New Jersey launched the world’s first on-line marketplace for trading SRECs on June 25, 2004. Once a solar facility owner has registered and opened an SREC account, SRECs are automatically accumulated on a monthly basis. SRECs may only be traded in discrete 1MWh increments and have been trading for about $200 (or $0.20 per kWh) in March 2006. Solar Alternative Compliance Payments (SACP) allow suppliers to satisfy their solar generation requirements by paying $300 to the NJ BPU fund in lieu of each SREC, capping the price of SRECs. In effect, the SREC Program encourages efficient solar electricity production and provides an additional payback revenue stream for the solar facility owner. For example, a 5kWp solar facility in southern New Jersey is estimated to generate just over 6MWh (1200kWh per kWp annually) of electricity or 6 SRECs per calendar year. At $200 per SREC, this represents $1200 of annual income for the solar facility owner in addition to the electricity savings from grid connected, net metering. If they are willing to forego this income, solar facility owners can retire their own SRECs or abstain from the SREC program to retain the clean, green benefits of their solar electricity production.

Clean Energy Financing and Assistance Programs are offered by the NJ BPU in partnership with the New Jersey Economic Development Authority (NJ EDA) through the NJCEP to encourage businesses to invest in clean, renewable energy projects. Grants and financing are available to encourage the development of large-scale renewable energy facilities larger than 1MWp. Grants are available to finance up to 20% of eligible, renewable project development costs. The NJ EDA can also arrange long-term, low-interest rate bonds or loans to finance the balance of project costs, although project developers are required to make a minimum 10% project investment.

Nanosolar rocks your “solar world” with plan to build 430MWp Solar Cell Factory

Back on June 21, 2006, while I was attending the PV Industry Forum in Freiburg im Breisgau, Nanosolar Inc., a “global leader in solar power innovation”, announced their plans to build a 430MWp solar cell production factory, when fully equipped (about 200 million cells per year), in the San Francisco Bay area. In addition, a panel assembly factory, designed to produce more than one million solar panels per year, is expected to be built near Berlin, Germany.

At the same time, Nanosolar announced the completion of a Series C Preferred Stock financing greater than $75 million along with government factory subsidies lifting Nanosolar’s cash assets to over $100 million. Among the venture roll call of investors were Grazia Equity, the original backers of Conergy AG, and Christian Reitberger, the original backer of Q-Cells.

Founded by CEO Martin Roscheisen, Nanosolar claims to have developed a process to print/solution coat CIGS (Copper-Indium-Gallium-Diselenide) solar cells with a nanoparticle ink on a foil substrate. This breakthrough continuous process enables low cost and high yield production versus traditional thin film vacuum deposition techniques such as sputtering or evaporation as well as lower capital expenditures per unit of production.

Nanosolar Press Release

GP View: Nanosolar has the potential to revolutionize photovoltaics and the economics of solar energy = if they can deliver on their grandiose vision=. The road to solar thin film production is littered with numerous commercial failures. Nanosolar has kept their nanoparticle ink technology and its technical specifications top secret. No efficiency targets for volume production have been announced, and, despite accelerated life testing, the durability of Nanosolar’s foil based CIGS solar cells are unproven in real world deployments. Also, per Nanosolar’s own manufacturing capital estimates, their new $100M in funding is perhaps sufficient to build about one-half or ~215MWp of their planned factory capacity. In 2008, 215MWp could represent at most 5% of worldwide crystalline silicon and thin film solar capacity. Perhaps the real test of Nanosolar’s technology will be the timing of their IPO; if Nanosolar can wait for production to ramp and prove their revolutionary technology, this will be the clearest signal of their confidence in CIGS nanoparticle ink and their vision of photovoltaics on every roof.

Viva Italia! Italy beats France 5:3 on penalty kicks

Viva Italia! Italy beats France in a shootout to win the 2006 FIFA World Cup, and France's Zinedine Zidane ends his World Cup career with a red card in extratime play after an unsportsmanlike head butt. Italy deserved the win with a questionable penalty kick awarded to France early in the game, and an earned goal ruled offsides in regulation play.

Germany 3: Portugal 1 in the World Cup consolation game

Germany bounced back from the 0:2 loss to Italy in the semifinal to take third place in the 2006 FIFA World Cup. An (extreme?) German fan in southern New Jersey celebrates the first German goal in the second half. The 2006 World Cup final is now in progress between France and Italy. Hopefully these "football" fans will return to normal soon! For an interesting overview of the 2006 World Cup, see Without a Team in the Final, Germany Achieves a Victory (New York Times - free registration may be required to access). Here is a link to the aforementioned Günter Grass interview (German only) in the Süddeutsche Zeitung.

ErSol breaks ground on new ErSol Thin Film module production plant in Erfurt, Germany

On Friday, July 7, 2006, ErSol Thin Film GmbH (ETF), a wholly owned subsidiary of ErSol Solar Energy AG (ES6.DE), held a groundbreaking ceremony for their new amorphous silicon, thin film module production plant. ETF will ramp annual production capacity to 40MWp by 2008 and plans to expand to 100MWp in the “medium term”. ErSol is investing €80 Million in the plant and expects to create over 120 jobs in Erfurt. ErSol has partnered with UNAXIS S.A., a global leader in integrated solutions based on thin film and vacuum technology, to equip the production plant.

ErSol CEO Dr. Claus Beneking outlined the strategy behind the entry into amorphous thin film technology:
1) Growth independent of supply constrained raw polysilicon
2) Potential to achieve efficiency of >10%
3) Production cost could fall significantly below €2 per MWp by 2010
4) Positioned thin film for large photovoltaic power plant and BIPV (building integrated photovoltaic) applications

Erfurt’s Oberbürgermeister (Head Mayor) Andreas Bausewein (SPD), ETF Managing Directors Karsten Weltzien and Dr. Lutz Mittelstädt, and ErSol CEO Dr. Claus Beneking participated in the ritual "spade of earth" ceremony. The 6,000 sq. meter (64,600 sq. feet) plant will be built on a 35,000 sq. meter (8.65 acre) site located east of Erfurt in the Güterverkehrszentrums (freight center) and should be completed by the summer 2007.

The thin film modules will consist of a few micrometers of amorphous silicon deposited on a 3mm glass substrate using a batch process with an initial efficiency of 6%. The raw polysilicon material requirements will be reduced by a factor greater than 100 versus mono and polycrystalline solar cells.

ErSol Press Release (Deutsch, English).

GP View: Photovoltaics is basically a commodity business, despite the current raw polysilicon shortages constraining production and propping up solar cell and module prices amid strong worldwide demand. Lowest cost per watt will beat highest efficiency per unit area for many customers, even in space constrained, residential roof top applications. This will especially be true where rebates or net metering rates or both are not subsidized by government incentive programs. Customers will be content with whatever capacity fits on their roof and reduces their dependence on the centralized electric utility. ETF’s amorphous thin film modules have the potential to exploit this trend for the ErSol Group.

Lizard Found! - Selected Reptiles and Amphibians from the New Jersey Pine Barrens

Sure enough, some lizards have been observed as the summer has heated up in Southern New Jersey. The gray color and line pattern on the back indicates this is a female Northern Fence Lizard. Males of the species (Sceloporus undulatus hyacinthinus) are brown with no or a minimal pattern on their backs. No salamanders have been sighted - yet.

Northern Fence Lizard

Online Field Guide for Reptiles and Amphibians