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Wednesday, October 03, 2007

Solar Power 2007: Discussion Panels Aplenty – Part 2

Cost Competitiveness, CEO Panel, and Solar Stocks

Solar Power 2007: Discussion Panels Aplenty – Part 1 covered the German American Business Association (GABA) Solar Power: Achieving Cost Competitiveness event. GABA just posted a video of the event here.

Next up is the CEO Panel Discussion. Jordan Goodman, America's Money Answer Man, acted as Moderator of the CEO Panel including:

Anton Milner, CEO, Q-Cells AG
Steve Hill, President, Kyocera Solar
Dr. Zhengrong Shi, Chairman and CEO, Suntech Power Holdings Co., Ltd.
Thomas Werner, CEO, SunPower Corporation
Ron Kenedi, Vice President, Sharp Corporation’s Solar Energy Solutions Group
Hans-Martin Rüter, CEO, Conergy AG

The photo left is from the press conference following the CEO Panel.

I will focus on interesting statements from the CEO Panel grouped by topic with my own commentary.


Photovoltaic (PV) Industry Outlook (Forecast)
Kyocera Solar President Steve Hill expects a 3GW (GigaWatt) market size in 2008 and 9GW in 2010 factoring in positive development with US solar policies.

Q-Cells CEO Anton Milner left the panel in the dust with an aggressive 5GW worldwide production estimate (4GW installed) for 2008 growing to 14-15GW (12GW installed) by 2010 (http://www.youtube.com/watch?v=Pc9i5GBi84o).

As the key determinants of PV Industry growth, Suntech Power CEO Dr. Shi asked: “How fast we can reduce the price? How fast we can have a lot of cheap silicon?”

SunPower CEO Tom Werner cited a wide center point forecast of 5-10GW by 2010.

At the recent 4th European PV Industry Forum in Milan, Michael Schmela, PHOTON International, Editor in Chief, presented the 2007 PHOTON Consulting PV Industry Forecast with 6.1GW in 2008, 15.1GW in 2010, and 20.5GW by 2011.

A number of the panelists slipped and said MegaWatt instead of GigaWatt since the large unit is still new to the PV Industry.

These forecasts are up almost 50% since last year (see Cost, Price and Politics: The Growing Photovoltaic Industry or my Blog version), but I continue to favor the aggressive, successful track record of Q-Cells and PHOTON although I have near term concerns I will discuss at the end of this series.

Grid Parity
Conergy CEO Hans-Martin Rüter discussed the converging trends of rising retail electricity rates of about 4+% per year while PV prices decline on average 5-7% leading to grid parity in high solar radiation areas of the US and the European Mediterranean by around 2011 given a balanced supply demand market.

Suntech Power CEO Dr. Shi said, “Still the most limiting factor here is Silicon Prices still fairly high.” Dwelling on his silicon theme, Dr. Shi thought USD $0.15 per kWh (kiloWatt-hour) generation costs were possible 5-7 years from now in California.

Solar Potential
As is his habit, Q-Cells CEO Anton Milner stole the spotlight with a compelling vision of solar’s future contribution to worldwide electricity generation. Mr. Milner quoted top line worldwide electricity demand growth from 18,000 TWh (TeraWatt-hours) in 2006 to 26,000 TWh by 2020 leading to 11,000 TWh of new and replacement electricity generation capacity investments by 2020. He extrapolated that 4-9% of this 11,000 TWh of capacity investment would be solar.

By 2020, Mr. Milner concluded 12%-33% of new installed electricity generation capacity would be solar resulting in a transformation of the energy industry from centralized large power stations to decentralized solar systems.

Government Incentive Policies
There was a basic disagreement between American panelists and the rest of the world on incentives for photovoltaics in the US market.

SunPower CEO Tom Werner represented the myopic US Solar Industry line on the critical importance of the current Energy Bill in the US Congress with the ITC (Investment Tax Credit) extensions to maintain the PV market status quo.

Again, Q-Cells CEO Milner best articulated how the Feed-in Tariff (FiT) engages return oriented investors to purchase and install PV systems instead of just environmentalists provided there is unlimited guaranteed access to the grid.

Mr. Milner stated a US Feed-in Tariff could turbo charge the PV Industry here until grid parity is achieved, and said “This should be a no brainer,” for US politicians but cautioned about “Stop and go policy” creating uncertainty and killing market development. Does the New Jersey Clean Energy Program or the bad start for the residential California Solar Initiative come to mind?

Last year, I thought the US could develop our own unique American program to spur PV Industry market development. Since then I have dropped my NIH (Not Invented Here) attitude and agree the German Feed-In Tariff rate payer model is superior to the budget constrained and unfair rebate approach. Watching the Stop and go policy for solar in New Jersey convinced me on the power of the Feed-In Tariff model. Spain and Italy have adopted similar Feed-In Tariff models so let’s just admit imitation is the sincerest form of flattery.

Overcapacity
Is overcapacity looming for the PV Industry?

Again with the silicon, Suntech Power CEO Dr. Shi said:

If our Silicon people can be more considerate, can be part of the team, because in a way we are the same team, this industry is going to continue to grow.

The key risk for the PV Industry is continuing support from government subsidies until grid parity is achieved in each local market.

Silicon
When will the silicon shortage be ending?
SunPower: Next year to three years perhaps sooner
Suntech Power: Two years time
Conergy: Not easy to say
Q-Cells: Normalization of the silicon markets Mid 2009
Sharp: Next two years. Exploring Thin Film and Concentrators
Kyocera: Next 24-36 months should ease up


When asked about metallurgical silicon, CEO Milner promoted Q-Cells supply deal with Elkem Solar, though not by name, for refined metallurgical silicon. This material was said to be as good as polysilicon resulting in equivalent performance multicrystalline silicon solar cells at 100% mix. Mr. Milner also mentioned this at the GABA event, but I didn’t get a video clip.

Covering the CEO Panel wasn’t as brief as I anticipated. Part 3 will tackle the Investing in Solar Stocks: What You Need to Know session.

The Awards Ceremony for the 2007 CALIFORNIA CLEAN TECH OPEN will be on Monday, October 29, 2007, at the Palace of Fine Arts Theatre in San Francisco, California USA, with registration and exhibits beginning at 4:30PM. I suggest early pre-registration.

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