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I read reports they want to cut the project subsidy to feed in vs fast track bonus as the fast track payments lead to shody work, non functioning plants and low output plants from cheap trashy low cost dumped modules. The thought is now to make the FIT around $0.05-$0.06 per kwHr. That places a 20 year generation subsidy of appx $1.80/watt. with a cost at $2.25/watt installed and financing, this will place the System at $0.05 subsidized generation costs. This is hardly profitable at the $0.07-$0.10 that industry gets charged.

So articles like these have put a tremendous amount of pressure on sector over past 2 weeks....


Clearly, China’s policymakers are running in high gear and distributed PV will most likely be getting a further policy boost later this spring or summer. The subsidy amount remains unclear, but the number in play at the moment is RMB 0.35/kWh, which would supplement the retail rate paid by the user of the electricity, typically a commercial enterprise.

Golden Sun

On the other hand, Wang does not see a bright future for the Golden Sun subsidy program, which provides a generous upfront subsidy to PV projects. According to the Minsheng Securities analyst, "it is very likely that Golden Sun will be cancelled soon."

http://www.pv-magazine.com/news/details/…/#axzz2NjEkvHNt

But just released early this morning while markets not open... Confirmation from Solarzoom that new raised rates will be updated as soon as April 1st. Also officials say Golden Sun cancelllation a false rumor and it will continue.... From translated article

The photovoltaic solar Reuters in Solarzoom reporter learned from authoritative industry in the 29th, the feed-in tariff subsidy program will be introduced in April, subsidized prices to be raised on the basis of the original draft. Resource area the Qinghai Haixi Haibei and Golok, Yushu, etc. I originally subsidized prices lowest from 0.75 yuan / kWh will be raised to 0.85 yuan / kWh, subsidized prices in other regions or more than 0.90 yuan / kWh and. Distributed generation subsidized price adjusted to 0.45 yuan from 0.35 yuan / kWh / kWh.

So no cancelation of golden sun and raised subsidy rates of between 15%-30%.

IMO, 8GW or 10GW does not matter. Demand isn't going to be larger than supply in 2013. We need to see capacity taken off line and destroyed. STP's bankruptcy will only matter if we never see any of their capacity ever again. Same for LDK. But so far, the talk has been for STP's and LDK's capacity to continue living like a blood sucking vampire. I don't know how to make the Chinese officials understand this. The longer they wait to try and put some balance between supply and demand, the more trouble are creating and more jobs will eventually be lost. JMHO.

Quoted from "larryvand"

8GW or 10GW does not matter. Demand isn't going to be larger than supply in 2013. We need to see capacity taken off line and destroyed. STP's bankruptcy will only matter if we never see any of their capacity ever again. Same for LDK. But so far, the talk has been for STP's and LDK's capacity to continue living like a blood sucking vampire. I don't know how to make the Chinese officials understand this.The longer they wait, the more trouble are creating and more jobs will eventually be lost.

I totally disagree Larry. 15%-30% increases in subsidy can make the difference between 5GW installed and 10-12GW installed. That's a 15-20% increase in overall global installs bases on average estimates of 32-35GW ( which is way to conservative) which that in itself would raise average ASP.

Let me also remind you that you point out to huge overcapacity but yet at current supply/demand we have seen confirmation of stable ASP and even a rise over past several weeks. Even if current ASP stays at current rate you will see atleast 2 solars (CSIQ and SOL) profitable by 2H 2013. What do you think will happen when solars report profits and it hits headlines?

I don't want to give out info for free but if you see export data released today you will see just how many MW STP and LDK exported in February. Hint.... STP had a major shift in shipments and LDK shipments will blow your mind...

The ASPs are stable for one reason because poly got from $15/kg to $19/kg. But even with those stable ASPs companies are still losing money. ASPs need to move higher and they will move higher with poly at $22-23/kg. So we have to wait and see if poly will move there with such overcapacity. The ones that have it want it to move there, and the ones don't are scared of it to move there. It remains to be seen what happens. Solar stocks are back down to where they were when poly was at $15/kg. The industry needs to see some profits (and I mean operating profits not gross profits). And for that to happen ASPs need to go higher from the levels they are now. And there is one sure way to make that happen. Cut capacity to bring balance.

Polysilcion ASP will not move higher. poly costing will move down. Supply chain needs to get money from modules from outside industry not to squeeze itself within. Efficiency and cost savings are the priority, margins will be recovered but pricing will be measured effort, controlled with healthy capacities. Poly over $20 is not a good business for the whole industry. No worries SOL will be fine with this price.

So how do you explain GCL's comment of poly heading to more than $20 but less than $25 poly? We can't believe only partially of what GCL says. They either have credibility for all of it or none of it. And GCL is still losing almost half a billion a quarter. Under utilization by itself does not explain it alone.

What needs to be explained here?
In the place where demand is greater than supply prices go up. GCL believes this condition is upon us. At the same time they are looking for ways to lower its costs. I am not sure why you continue to state the same thing about their losses. Their loss is not as big as they have written many things off as everyone else did. If there is a point please make it, but it is time to make something out of it.
GCL is a corporation which is trying to predict future, like anyone else.

Have you misunderstood my statement?
"will" stipulates the future, future is uncertain, that makes the statement an expectation not a fact.
To complete my statement it is an opinion.
I actually wanted for people to provide facts, could you elaborate on 12GW by Q4?

Quoted from "Klothilde"

Quoted from "odyd12"

Polysilcion ASP will not move higher. poly costing will move down.

I thought you wanted people to write "In my opinion" or "I think" before their forecasts.

In my opinion poly will rise beyond $25 by the end of the year. Reason is darn simple: Demand is expanding and it looks like we'll hit 12 GW in Q4 already. There is not enough cheap poly <$25 to satisfy this demand. Also there is relatively little new capacity coming online in 2013 and 2014.

What's your estimate on GW installed in 2013? I think we EASILY hot 40GW+

Anything over 35 and we should see solid movement up in ASP which should allow for several proftable solars by 2H. Anything over 38-40GW and you really could see a parabolic move in top 4-5 solars. ASP should have a pretty big jump.
I think many really confuse supply/demand situation. You don't have to have same level of demand as capacity. The market shows you right now with 30GW of installs in 2012 vs 70 GW estimated capacity prices are stable at current ASP and even rising. Just imagine if capacity shrinks a little bit and installs added are at a conservative 36GW based on hard data right now ASP has to go up and then "boom goes the dynamite" you have multi baggars before You can say "OMG" "OMG"

Okey, let's look at poly price optimum from a PV vs traditonal energy perspective.

What do we need?

We need low price poly with ample supply to make PV cheap.

Old structure state of the art plant outside China:

Plant cost 100 $/kg
Depreciation + interest (16% of plant cost)16 $/kg
Cash cost 12 $/kg
OPEX $2
10% ROI 4 $/kg
Sustainable poly price 34 $/kg

Now with new modified siemens in China (hydrochlorination, closed loop, 100% in house TCS):

Plant cost 40 $/kg
Depreciation + interest (16% of plant cost) 6.5 kg
Cash cost 13.5 $/kg
OPEX $2
10% ROI $3
Sustainable poly price $25

Future with Silane based FBR in China:

Plant cost 40 $/kg
Depreciation + interest (16% of plant cost) $6.5
Cash cost $7.5
OPEX $2
10% ROI $2
Sustainable poly price $18

The current capacity is now at full demand between first and second case. With anemic demand the second case will likely set the price. In future we might have capacity were second and third case sets price and in the end the third or better case will dominate. Note that the 10% ROI is optimistic. Building a world class poly plant is quite an captial and time undertaking and 10% might not be incentive enough (buy a decent hedge fund instead).

I think the prudent thing regardless of poly exposure of your pick is to make sure it is ok with a poly price between $25 and $35 coming 3 years. At shortage or glut it will swing beyond this. If demand stays anemic we might enjoy prolonged poly glut and sub $25 prices, but by nature if things are tasty demand picks up.

Quoted from "odyd12"

GCL is a corporation which is trying to predict future, like anyone else.

GCL is a corporation not Santa Claus. They are in it for the money. And for all of 2012 they haven't made a dime for all the billions they borrowed and spent in building all that capacity and mortgaged the the company for. In other words their "higher than $20/kg and lower than $25/kg" was not by accident.

This is from their 2012 annual report (dollars converted from HK$ to US$):
http://www.gcl-poly.com.hk/uploadfiles/b…_MNaikievka.pdf

The Group suffered losses of US$ 436 million from operations for the year ended 31 December 2012 and as of 31 December 2012, the Group has current liabilities exceeded its current assets by US$ 1.065 billion. As of the same day, the Group had cash and cash equivalents of US$ 579 million with bank borrowings due within one year of US$ 2.538 billion.

As at 31 December 2012, the Group has undrawn banking facilities of US$ 576.7 million and renewable bank borrowings, which are originally due within one year, of US$ 2.062 billion. To improve liquidity, the Group has successfully negotiated with certain banks and will continue to negotiate with other banks to obtain revolving banking facilities to ensure the Group’s bank borrowings
can be renewed on an on-going basis. The Group’s management believe that the Group will successfully renew the bank borrowings based on past experience and strong relationships with the banks. Subsequent to the end of the reporting period, the Group has renewed bank borrowings of approximately US$ 37.87 million with banks and with corresponding maturity dates extended to 2014. In
addition, the Group has obtained additional banking facilities of approximately US$ 505.7 million from banks for operating use subsequent to the end of the reporting period.
..............
Pledge of Assets
As at 31 December 2012, property, plant and equipment and prepaid lease payments with a carrying value of approximately US$ 1.378 billion and US$ 61.4 miillion respectively, were pledged as security for certain banking facilities and borrowings granted to the Group (31 December 2011: US$ 1.333 billion and US$ 54.8 million respectively). Apart from these, bank deposits of an aggregate amount of US$ 204.9 million (31 December 2011: 200 million) were pledged to the banks to secure borrowings granted to the Group and obligations under finance leases.
..............
Key Financial Ratios of the Group
2012 2011
Current ratio 0.73 1.03
Quick ratio 0.62 0.86
Net debt to equity attributable to the owners of the Company 167.8% 104.9%

Current ratio = Balance of current assets at the end of the year/balance of current liabilities at the
end of the year

Quick ratio = (Balance of current assets at the end of the year — balance of inventories at the
end of the year)/balance of current liabilities at the end of the year

Net debt to total equity attributable to owners of the Company = (Balance of total interest-bearing borrowings at the end of the year — balance of bank balances, cash and pledged and restricted bank deposits at the end of the year)/balance of equity attributable to owners of the Company at the end of the year

Quoted from "larryvand"

GCL is a corporation not Santa Claus. They are in it for the money. And for all of 2012 they haven't made a dime for all the billions they borrowed and spent in building all that capacity and mortgaged the the company for. In other words their "higher than $20/kg and lower than $25/kg" was not by accident.

To my knowledge GCL did not expand any of its capacities during 2012. In fact during 2011, the company made a substantial profit. I think GCL and Trina are only two, which have retained earnings (reserves in case of GCL) which remain positive.
Of course they are for the money. However, what I have gathered from my recent conversations is that tendency is to improve efficiency and reduce costs and not artificially increase prices, or hope for them to increase.
GCL made the pricing estimate, but this estimate did not materialize in Q1.
Based on Chinese economy, imports of raw materials, which support products for export are free of tariffs. Based on this idea, if the domestic costs were to increase, the entire value chain in China would increase. I do stipulate this not to be the case.
I see very controlled almost surgical price increase, to keep the lid on small operators. This is not only in area of poly but all other areas. GCL is too interdependent on downstream operators that they are cooperating on pricing, instead of squeezing margins within the value chain.
Their Siemens is already $17. My conversation highlighted $16 total costs.
Another observation made was that Mainland 10GW, will be kept for Chinese, meaning any poly imported will be for export only. If we assume 35% installations in China will be made with 11- solar modules most of them will be made on GCL wafers and if not, certainly on their poly.

Quoted from "odyd12"

Polysilcion ASP will not move higher. poly costing will move down.

Odyd, you’ve said this so many times, in so many ways...and I still don’t understand why people refuse to see this. It’s a lot easier for costs to come down (only need a few to start underselling for almost any reason), than for costs to go up appreciably (almost everyone has to raise prices at same time). And I don’t see GCL raising WAFER prices much to their bulk buyers anytime soon...especially considering their super-low cost structure potential that you have detailed so well...they want their clients to not only survive, but dominate. Where on earth is SOL going to find the money to keep up with GCL over the next 3-5 years?...they’re up against a real monster of a company...

Maybe the problem is people get too caught up in the micro-calcs, and forget that there is a huge solar dynamic that can’t be fully modeled by any one formula or any one piece. The micro-calcs on solars have been wrong for years...and still are. Almost exactly a year ago, I read expert after expert say 55c-60c YE costs were impossible based on all their very detailed micro-calcs...and look how wrong they were...

The costs of solar installations will on average continue to fall slightly every year moving forward, after some period of price stabilization so cost reductions can catch up, and this will happen in every part of the supply chain....PERIOD...and Odyd has provided solid numbers and insight to back not only how this is possible, but also why. Anyone who thinks otherwise can’t see the forest thru the trees imo...I know, its “impossible”, but I wouldn’t be holding my breath (or investing any money) hoping for tariffs to change any of this globally anytime soon.

Quoted from "Klothilde"

I thought you wanted people to write "In my opinion" or "I think" before their forecasts.

Kloth, I don’t understand why you continue to make statements like this. This is just ridiculous. According to you 90% of the sentences on this forum should have imo after them....REALLY??? Maybe you think you’re being witty and funny, but you come off to me as being nitpicking and petty. Odyd puts way more time then he should into making this forum what it has become today...by far the best place when it comes to the solar industry to have intelligent conversation and obtain knowledge and obtain endless FACTUAL data. And you belittle his hard work with statements like that. You needlessly wasted his time, and mine, replying to your nonsense...

And what’s with the endless OMG stuff... like a bad Knock-knock joke told over and over, it was barely funny the first time, let alone the tenth time...give me a break already...

So Kloth, I implore you to be part of the solution on this board, not part of the problem, as you do bring a lot of good knowledge and insight to these conversations...

Too bad there’s nothing Odyd can really do about Larry’s refusal to listen to anything that paints a bad picture on SOL, regardless of what the facts say, and have to read his endless and repetitive SOL sales pitch over and over, with all of his “maybes” and inaccuracies continually presented as facts...and all based on a prayer that somehow poly is going to spike to the moon, and all SOL’s competitors will be buying all their poly at spot pricing...(some think poly will rise over $35 and $40????...). Odyd, I think this is why your favorable analysis on GCL’s cost structure outlook has generated so much resistance...it kinda kills the “SOL the Powerhouse” theme.

Btw, it looks now like the powerhouse coming out of this downturn cycle will actually be YGE-GCL..., but SOL will also do well since they've put a good plan in place...all imho "of course".

@nano,
I really appreciate your post, very supportive. At the end it is a view not gospel, and readers should have an opportunity to see logic using another approach, that is it. This is why I carry on posting, perhaps when it would be easier not to write a word.
I would hope that Klothilde seen more than just a quote in what I said, but perhaps this is the outcome, people pick what they like, what they dislike and this is how the conversation continues. We got a lot better and more facts have been posted again. Lastly I do spend a a lot of time here and for good times, I thank you all.

I consider the "powerhouses" those who will be profitable first... That will be CSIQ and SOL... IMHO


BTW I love how this thread got so off topic. Everyone loves throwing jabs at each other and no one paying attention to the fact that china will be raising subsidy prices dramatically from original draft of 2 weeks ago.... Which obviously put pressure on sector