Evergreen Solar manufactures and markets solar power products, including solar cells, panels and systems. It finalized its agreement with Greenway Solar-Tech and the government of Wuhan on July 30.
Evergreen Solar Signs Contract Manufacturing agreement with Jiawei Solar
Evergreen Solar, Inc. (NasdaqGM: ESLR), a manufacturer of String Ribbon™ solar power products with its proprietary, low-cost silicon wafer technology, today announced it has finalized its agreements with Jiawei Solarchina Co., Ltd., and the Wuhan Government’s Hubei Science & Technology Investment Co., Ltd. (“HSTIC”). Under these agreements:
Evergreen Solar will manufacture String Ribbon wafers using its state-of-the-art Quad furnaces at a leased facility being built by Jiawei in Wuhan, China on Jiawei’s campus.
Jiawei will convert the String Ribbon wafers into Evergreen Solar-branded panels on a contract manufacturing basis.
Evergreen Solar will reimburse Jiawei for its cell and panel conversion costs, plus a contract manufacturing fee. The actual price paid to Jiawei will be negotiated annually.
Evergreen Solar will invest $17 million in cash and equipment in the Wuhan String Ribbon operation. HSTIC will provide Evergreen Solar $33 million of 7.5% financing, which Evergreen Solar must repay no later than July 2014. Jiawei will make a similar investment for its cell and panel operations with the support of HSTIC.
Initial capacity will be approximately 100 MW. Factory construction has begun and the parties expect that wafer, cell and panel production will begin in the spring of 2010.
The parties intend to expand production capacity of their respective manufacturing operations to approximately 500 MW by 2012, the timing and extent of any potential expansion will be determined in 2010.
Evergreen Solar and Dynamic Green Energy, Ltd, Jiawei’s parent company, have agreed to exchange warrants representing 1% of their outstanding shares. These warrants will have a five-year term and may be exercised for 20% of the warrant shares for each incremental 95 MW of production capacity achieved.
“Our String Ribbon wafer technology, combined with Jiawei’s low-cost manufacturing capabilities, should enable our products to stand out distinctly among customers seeking both value and dependability for their solar energy solutions,” commented Richard M. Feldt, Chairman, President and CEO. “As we reach the 25 MW quarterly capacity by the end of 2010, we expect total manufacturing costs of our String Ribbon panels produced in China to be in the range of $1.40 per watt to $1.50 per watt with both companies working aggressively to further improve technological performance as well as reduce manufacturing costs. Our mutual goal is to drive conversion efficiency and manufacturing performance so that panels are produced at the $1.00 per watt level by no later than 2012.”
LDK Solar Partners with Suqian City on PV Projects
LDK Solar Co., Ltd. (NYSE: LDK), a leading manufacturer of multicrystalline solar wafers, announced that it has entered into an agreement with Suqian City of Jiangsu Province for the development of PV power projects. According to the agreement, LDK Solar will develop PV power projects in buildings, plants and integration systems, totaling up to 300 MW by 2015. The terms, including financing, design and specific location of each of the projects, will require a feasibility study as well as final approval from relevant governmental departments prior to initiation.
"Suqian City has unique advantages in developing PV projects, with average annual sunshine of up to 3,000 hours as well as strong support from the government for growing the solar energy industry," stated Xu Huiming, Vice Mayor of Suqian City. "Suqian City has become a leading area for the development of the solar PV industry and we hope that our partnership with LDK Solar will further increase our solar resources and promote the expansion of the local solar industry."
"We are very excited to partner with Suqian City and to support the development of its local economy and Chinese solar industry," stated Xiaofeng Peng, Chairman and CEO of LDK Solar. "We are encouraged by the continued support from our government for PV projects and pleased with the enthusiasm for this partnership demonstrated by Suqian City."
The PV application market has been rapidly developing in China this year and the Chinese government is supporting the establishment of the domestic PV market through the use of governmental financial subsidies.
About LDK Solar (NYSE: LDK)
LDK Solar Co., Ltd. is a leading manufacturer of multicrystalline solar wafers, which are the principal raw material used to produce solar cells. LDK Solar sells multicrystalline wafers globally to manufacturers of photovoltaic products, including solar cells and solar modules. In addition, LDK Solar provides wafer processing services to monocrystalline and multicrystalline solar cell and module manufacturers. LDK Solar’s headquarters and manufacturing facilities are located in Hi-Tech Industrial Park, Xinyu City, Jiangxi Province in the People’s Republic of China. LDK Solar’s office in the United States is located in Sunnyvale, California.
China Guangdong Nuclear: Plan 550 MW New Solar Projs In Gansu
State-owned China Guangdong Nuclear Power Group signed a cooperation agreement with the Jiuquan municipal government in northwestern China’s Gansu province to develop solar power projects with a combined generation capacity of 550 megawatts, the company said over the weekend.
A 10-MW solar power plant in Dunhuang county, where construction began Friday, will get a 50-MW expansion as part of the deal, Guangdong Nuclear said on its Web site. The agreement comprises projects totaling an additional 500 MW in other counties under Jiuquan city’s jurisdiction, it said, without elaborating on the size of investment involved.
China had less than 100 MW of installed solar generating capacity at end-2008, but analysts have said it is on course to reach 2 gigawatts by 2012, as the government has introduced unprecedented support measures for the sector.
The Jiuquan municipal government will provide Guangdong Nuclear preferential access to resources, land and grid connections for the solar projects, the company said.
A consortium led by Guangdong Nuclear that includes Belgian renewable energy project developer Enfinity BV and domestic solar module maker Best Solar Co. started construction Friday on the Dunhuang solar power plant.
It won the public auction for the project after its proposed on-grid tariff of CNY1.09 per kilowatt-hour was accepted by the National Development and Reform Commission, China’s economic planning agency. The nation’s coal-fired power plants get an average of CNY0.3-CNY0.4/kWh for supplying grids.
The three companies will also work together on the expansion as well as on the other projects in the region, with preliminary Phase-II work at Dunhuang to start immediately, said an official with Enfinity, who declined to be named.
Solar Manufacturing Capacity Grows Rapidly
DisplaySearch’s latest quarterly report on photovoltaic cell capacity database and trends for stated that solar cell manufacturing capacity is expected to grow 56 percent in 2009 to 17GW. Ramped capacity, which was only 2.3GW in 2005, is forecast to grow at a CAGR of 49 percent to more than 42GW in 2013.
"Despite PV module demand shrinking 17 percent in 2009, so much cell manufacturing equipment was ordered and installed over the past year that capacity is still expected to grow 56 percent this year," said Charles Annis, VP of manufacturing research at DisplaySearch and author of the report. "With demand and capacity moving in different directions, the PV industry is currently experiencing an enormous over-supply that is causing rapid price erosion and potentially setting the stage for the failure of multiple cell manufacturers, particularly companies pursuing a-Si thin film solar cells. The PV industry will begin working through this excess capacity as demand recovers next year and takes off in 2011 and beyond."
Through 2006, Japan had the largest solar cell production capacity in the world. However, China companies started to ramp up a host of new facilities in 2005 and by 2007 had more solar cell capacity on-line than any other country. China has continued to invest heavily in production facilities, about a third of the worldwide cell capacity in 2009 and is forecast to be the main region for cell production well into the future.
Of the 3.58 GW of thin-film capacity available in 2009, more than 30 percent use 600mm x 1,200mm glass substrates, the standard CdTe glass size used by First Solar. Gen 5-equivalent substrates, ranging from 1,000mm x 1,200mm to 1,100mm x 1,400mm, are the second most common glass size, used for 18 percent of available thin film capacity.
Between January 2008 and July 2009, approximately 11.4 GW of new solar cell capacity was installed in fabs around the world. These previous investment commitments are the reason that capacity is continuing to grow 56 percent in 2009 despite falling demand.
In 2005, 95 percent of solar cell manufacturing capacity was for crystalline silicon solar cells and 5 percent for thin film solar cells. In 2009, thin film will account for more than 20 percent of capacity. By 2013, thin-film technologies are forecast to account for as much as 30 percent of solar cell capacity.
For a-Si factories, in 2009 the four largest turnkey equipment vendors are AMAT, Oerlikon ULVAC and EPV, representing 946 MW of ramped capacity or more than 50 percent of a-Si capacity on-line this year.
In terms of capacity available for production in 2009, First Solar is the largest solar cell manufacturer with more than 1 GW of capacity. Q-Cells and Suntech are not far behind and essentially tied for second place. These and other current leading PV cell manufacturers are forecast to invest at the highest rates over the next four years. By 2013, these three companies plus JA Solar, Motech, REC, SunPower, Yingli, Showa Shell Solar (assuming it moves forward with a planned 1GW CIGS fab), and Sharp are forecast to be the top 10 makers, with more than 16 GW or 38 percent of 2013 capacity.
China’s Photovoltaic Industry
Nothing is more indicative of the disconnect between the rhetoric and the reality of solar energy applications than the Chinese photovoltaic (PV) industry.
China now leads the world in PV production, with about 26% of global production. Last year, China produced about 1.8 gigawatts of solar panels. And it appears that the vast majority of those panels are being exported. Suntech Power Holdings, China’s biggest solar panel producer, exports about 98% of the panels it produces. If that percentage is true for the entirety of China’s solar panel sector, then only about 40 megawatts (MW) of solar power was actually installed in China in 2008 (0.73% of the world total). And that solar capacity is miniscule when compared to the coal-fired power generation that was added last year: Some 65,750 megawatts of coal plants were brought online in China in 2008, or about 1,600 times as much capacity as was gained from solar.
Prior to 2008, China was importing about 90% of the raw material, polycrystalline silicon, or polysilicon, from Japan and US to make its PV panels. Even in 2008, China imported 12,000 tons of the 16,000 tons of the polysilicon it needed. With most of the raw material imported and most of the products exported, China had been merely a manufacturer that was happy to gain a relatively small profit. As the global solar energy became hotter, the price of polysilicon rose. By mid-2008, the price of polysilicon was as high as $500 per kilogram, up from $200 per kilo in 2007. Nevertheless, more and more businesses jumped on the bandwagon to meet the international demand for PV. This situation lasted until September 2008, when the global economy tanked.
To get enough polysilicon, China invested heavily to improve the techniques and upgrade equipment. Since mid-2008, China has been self-sufficient in polysilicon, with local prices averaging about $75 per kg, three times as high as the international average of $25 to $30 per kg. But the raw materials issue is only one aspect. The industry also has other big costs. The production process involves a number of toxic gases and it produces significant quantities of waste water.
In the wake of the global financial crisis, global demand for PV panels tanked. Major markets like Germany and Spain decreased their solar subsidies. International polysilicon prices dropped from $360 per kg in October to $180 per kg in November 2008. In 2009, the price slid further to $120 per kg in February, $100 in March, and as low as $50 in July. Many predict that the price of polysilicon may fall to $30 by next year.
Many manufacturers have large stockpiles of polysilicon with few orders. With the current production capacity of over 60,000 tons and the expected capacity of 140,000 tons in 2010, a glut is in the making. Global demand for polysilicon in 2010 is expected to be just 80,000 tons. The whipsaws in the market have left many Chinese PV producers in bad shape. More than half of the manufacturers have begun limiting production and some have gone bankrupt.
It appears that a major PV bubble is forming. Many local governments in China have been pushing for more PV production and that has continued despite the excess capacity. Last month, the China National Energy Bureau took the unusual step of suggesting that the development of PV production capacity be decreased. At the State Council working meeting on August 26, 2009, Premier Wen Jiabao pointed out that it is time for “the redundancy in production capacity of wind energy and solar energy be controlled.” This makes it certain that the PV business in China will cool down considerably.
Even if that happens, it appears that Chinese PV producers will continue to push their panels onto the world market. And they will do so at prices that undercut PV producers in the US and Europe. Last month, the New York Times quoted Thomas M. Zarrella, the chief executive of GT Solar International, a New Hampshire-based company that sells equipment to solar panel makers about the looming shift in global PV production. “I don’t see Europe or the United States becoming major producers of solar products — they’ll be consumers,” he said.
For now, Suntech and some of the other Chinese PV makers appear willing to sell their goods for less than their cost of production. How long that will last, no one can possibly guess. But it’s interesting to note that China, a country filled with pragmatic people particularly when it comes to energy, is choosing to export nearly all of the PV panels that it produces rather than use them at home. Do the Chinese know something we don’t?
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