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  1. solarpete

    Pattern Energy Group Inc. (PEGI)

    I'm not sure how hard it is for a new company to enter the PV manufacturing market, as there is a significant up-front capital investment, but by now there is more than enough existing capacity to justify calling solar cells a commodity even without new market entrants. And the trend for ever-cheaper cells continues. Cut-throat competition forces manufacturers to drop their prices, which drives two processes. First, investment in cost-cutting procedures and technology, be it basic R&D in the design of solar cells or just avoiding waste in existing manufacturing processes. That's a good thing all around, for the company (lower costs means they can lower prices without reducing margins, all other things being equal [except they're not, but that's a separate discussion--see below]), for consumers (lower prices for PV products eventually means lower electricity prices, whether consumers purchase their own PV systems or just buy power from other companies/organizations owning/operating such systems), and for the planet (cheaper renewable power will eventually supplant dirty fossil fuels just by economic forces alone, never mind arguments between climate skeptics and those of us living in the real world). Second, and not so good all around, is a drive to increase capacity in a desperate attempt to make up in volume what you're losing in unit profitability. (In other words, if you used to make 10% profit on a given unit, and now you're only making 5%, you have to sell twice as many to maintain your profits.) That's what you're seeing now--prices are dropping faster than companies can cut costs, leading to this ever-intensifying competition for market share. Odyd has remarked on this before as well. But this is a self-destructive spiral--the lower selling prices become, the more I have to sell at those lower prices, which drives my competitors to lower their prices even more to do the same, which I have to match, etc., etc. That's why I say PV manufacturing has now become a commodity. At some point, that spiral has to end--no one can sell at below production cost indefinitely; weaker financial players will start going under, and the system will stabilize. But it's hard to know if we're at that stabilization point yet--witness the continuing announcement of capacity expansions by large players, even while market data suggests the overcapacity situation is not yet resolved. And once we do reach stabilization, the once-fat profit margins will be razor-thin. Not an economic situation that fills an investor with confidence. As for FSLR, their sales will tell the tale. If they do come up with a technology that provides a significant price advantage to their competitors, and that technology can be protected, yes, they would have a moat. But they're currently locked in the same desperate struggle as their competitors--just look at their stock performance, plummeting from a high above $70/share, due to disappearing profits. That alone tells you they're not able to significantly differentiate themselves in the current marketplace. Maybe they will come up with that miracle breakthrough--or maybe one of their competitors will. There'll be plenty of time to "load the boat" when that happens. For now, though, I'd say it's too early to make that bet. Just my 2 cents' worth.... Pete
    1 Points
  2. sunnypease

    Canadian Solar (CSIQ)

    Hi Explo - Sorry, I didn't mean that I expect earnings to be weaker than guided. More like if they guide the same numbers as before, maybe people will realize it really is just max 0.45 EPS for 2017. That, combined with possibly weaker reports from everyone else might drive down the price. Or maybe they'll have positive series 6 news & the stock will shoot through the roof. About the size. I am not a materials scientist or PV engineer, but I would imagine making CdTe panels is more difficult than making TVs. For the simple reason we already have these giant TVs, but we do not yet have large format CdTe panels. I really do hope they can pull it off, but it does seem like a big technological leap. Another reason going from small to big is a leap... if it were easy First Solar would have done it a while ago. As he said, margins would be much better on those large format panels. Another negative is that many smart people have tried & failed at making cheaper than silicon panels. I do not understand the reason for CIGS failures, but there have been some serious smart & well financed people trying this over longer periods of time that ultimately failed. I think the larger the surface area, the more difficult making them becomes due to how the energy must travel across the surface. And it's probably a sort of non linear type of increase in complexity. On the other side of the scale is the efficiency. FSLR management has promised the moon: larger panels && higher efficiency at the same time. If Series 6 is real & those $/W are real, then I bet we'll see some extreme buying of FSLR sooner rather than later. Matt
    1 Points
  3. sunnypease

    Pattern Energy Group Inc. (PEGI)

    Hi Robert - I've looked over past posts here & I see that time & time again you have been very forward with your thinking & thoughtful for the community. Early during SUNEQ meltdown, you warned readers to close their positions. I'm sorry that I ask too many questions sometimes. What I started doing is going back & deleting ones that didn't seem to add or spark any worthwhile conversation. The basic problem is that I spend too much time on this stuff. And I'm completely new to investing. But slowly, after reading more & more seeking alpha articles & notes from Credit Suisse, I'm learning more about what numbers are important. I need to focus more on that & less on the daily movement of FSLR. I realize it is a lot of work. I'd be happy to help out with the research for anyone here. It's too bad it's been a rough road for many. It's been bumpy for me too, in a short 6 months I've lost money on FSLR as a long and as a short. But it does not matter. Clean energy is certainly the future. If some of these companies can make moats, they'll do ridiculously well. Once people realize the change is happening, it's going to be a stampede. It looks like there was a taste of that in the early days of solar stocks. Matt
    1 Points
  4. odyd

    Pattern Energy Group Inc. (PEGI)

    It is published http://seekingalpha.com/article/4037099-2017-renewable-yieldco-investing Sent from my HTC One_M8 using Tapatalk
    1 Points
  5. sunnypease

    TerraForm Power, Inc. (TERP)

    There was something about this on Credit Suisse's weekly solar newsletter (pasted below). What struck me was the use of $/W to value other Yieldcos (such as mostly wind energy PEGI). I thought the W in $/W refers to the max power generation of the item. Which does not take into account capacity factors / local feed in rates does it? Could someone else confirm or reject this idea that portfolio $/W is a valid way to compare Yieldco valuations? Thank you- Matt TERP UK deal supportive of sector valuation. This morning Terraform Power announced plans to sell 365MW of UK solar assets to Vortex for what amounts to $1.58/watt on an EV-basis. Management claims the deal is valued at 16x projected 2016 EBITDA for the portfolio, but declined to provide more important cash return metrics. Lack of clarity on portfolio financials and capital structure – the press release references only $370M in project debt versus a $475M portfolio refinancing from November 2015 – make valuation read-through on a multiple or yield basis difficult. As the first example of a YieldCo asset disposition, however, we do find the per watt transaction metrics instructive and supportive of run-off valuation in the cases of Outperform-rated Pattern Energy (PEGI) and NEE Partners (NEP). Marked-to-market at $1.58/watt, we estimate Pattern's current portfolio is worth about $19/share and NEE Partners' current portfolio is worth around $21/share. The same analysis is less friendly to Underperform rated CAFD shares, which imply a $7/share value to the current portfolio based on our analysis
    1 Points
  6. odyd

    Solar News

    And sale of FBR production to GCL by SUNEQ, nice new year sortings http://www.pv-tech.org/news/sunedison-gets-greenlight-to-close-us150-sale-to-gcl-poly
    1 Points
  7. odyd

    Donations

    Hello, This thread is to recognize those members who have donated money to keep as a float, Big thank you goes on behalf of the forum to: 1. @saush11 $250 CAD
    1 Points