Comments on Cleantech Blog: Rising Solar Prices - Where is the Shakeout?

lj - great points on where the margin is, and well...

2007-08-16T19:41:38.793-07:00

lj - great points on where the margin is, and well worth adding to the debate.

- Neal

David,You have current global capacity at 4,000+MW...

2007-08-16T16:41:00.000-07:00

David,

You have current global capacity at 4,000+MW. Is that correct? It seems high to me.

Great post!If the economics don't work, recycling ...

2007-08-16T16:06:00.000-07:00

Great post!

If the economics don't work, recycling efforts won't either.
As our little contribution to make this economics of recycling more appealing, http://LivePaths.com blogs about people and companies that make money selling recycled or reused items, provide green services or help us reduce our dependency on non renewable resources.

We have begun the long slow process of introducing...

2007-08-16T11:35:00.000-07:00

We have begun the long slow process of introducing solar PV finally into the Sunshine state of Florida. Companies mid state and like mine in south Florida are beginning to populate the roofs of homes with PV technology. Gov. Charlie Crist has introduced some plans for solar and alternative energy production offsets and that is a good thing with some caveats.
Neal makes the point (email) that subsidies tend to cause some unusual ripples in the inummutable supply and demand formula. With IBM, Nanosolar backed by Google and all of the other enormous capital flooding the market I think we see a major sea change sooner rather than later. Greedy or tight fisted material suppliers will see their margins evaportate when they are forced to compete because of the market influx. Thats my take on it anyway.
Entrepreneurism is willfully myopic to political winds and I hope this cycle remains the same.
Great blog Neal.

Interesting post Neal, I'm curious to see how this...

2007-08-16T09:54:00.000-07:00

Interesting post Neal, I'm curious to see how this will all pan out. Demand seems relentless right now but hey, anything could happen. Just for fun, I've been compiling a list of PV manufactures and its posted at http://www.energystats.org if anyone is interested.

If you look at gross margins throughout the supply...

2007-08-16T06:41:00.000-07:00

If you look at gross margins throughout the supply chain, polysilicon prices are where prices are inflated (70% or so) - profits at wafer and cell makers are high, but not unreasonably (30%). The lead time for expansion at these parts is quick, less than 6-months as well so they will adjust quickly to new poly capacity.

So when poly capacity opens up, poly margins will be pushed down first, so even though end module prices are falling fast, the costs for wafers and cells are falling as well and they should be able to maintain their margins.

If poly prices were to come down to more reasonable, say 30% gross margins, then we're looking at about $0.50/W reduction in polysilicon costs alone, which will be amplified thru the supply chain (assuming they hold constant 30% margins) so the net effect is more around $0.80/W reduction in module price - while wafer and cell makers are still maintaining the same profits.

$0.80/W off of $3.75/W or so today is over 20% reduction and will open up a decent amount of demand, so I think wafer and cell guys have a good buffer before they get squeezed.

Of course with talk of poly supply multiplying some 4-6 times over the next several years, oversupply is still indeed a big risk but I don't think it will happen in the next year or two.