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Guest Klothilde

First Solar (FSLR)

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Guest Klothilde

http://www.bloomberg.com/news/2013-01-31/first-solar-s-new-mexico-project-may-get-less-than-coal.html Horrible news for the Solar 11: FS signed a PPA for 5.79 uscents/kWh, which is less than the LCOE of new coal plants. Nice try to fool people with your "long-term" unsubsidized PPA price goal of 10-14 cents, FS !!! 5.79 uscents has the ITC in it, but take it out and you still get 8.3 uscents.

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Ok, just to straighten this out; what IRR at what subsidy free price would such a New Mexico plant achieve with FS modules?

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Guest eysteinh

Klothilde how is this horrible news for the solar 11? First solar undercutting prices and getting little income for watts sold. Is not this a desperate move to still keep building new projects imho? Also I would like to see the economics of this. How the plant owner expect to turn a profit. Interesting news for sure. I am just not sure what to make of it yet.

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Guest Klothilde

Ok, just to straighten this out; what IRR at what subsidy free price would such a New Mexico plant achieve with FS modules?

I ran a quick and dirty calculation WITHOUT ITC For a single-axis installation:

PPA rate: 8.3 uscent/kWh escalated at 3%/year for 20 years

Capex: $2140/kWdc, this includes 25% gross margin for FS (plant COGS= $1712/kWdc)

Opex: 1% of Capex, escalated at 2% annually

Yield: 2188 kWh/kWdc, annual degradation of 0.5%

Project IRR: 6.8%

Equity IRR: 10.1% at 80/20 Debt/Equity and Debt cost of 6%

I will try and do an in-depth LCOE comparison between FS and c-Si over the next weeks and would also appreciate your feedback/input

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If we use efficiency as the leverage this is still good for everyone in the industry as the pv silicon is more efficient then thin-film. I think Klothilde is somewhat sarcastic, this is a great news for all of them. Finally Bloombergs are typing news which makes oil and coal magnates to sweat profusely and reach quicker for their scotch.

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Guest Klothilde

@odyd: efficiency doesn't matter by itself. Ultimately it all comes down to LCOE or cost per kWh. Who provides the cheaper electricity, FS or c-Si from China? We will know over the next weeks. For now I just wanted the c-Si investors to panic a little bit.

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@Klothilde, certainly, but wasn't the case in the past to build up 20% of more install to meet the plant expectation just in case? <p> Was there performance issues at stake as well. At the dawn of Chinese EPC, they will undercut any EPC project, and LCOE will follow. <p> FS margins will suffer a lot when they will go on with this model. Just from the floor perspective FS could be heading down while the Chinese seem to have way up only ahead of them, my two cents. Would like to see your analysis on costs in a short while. I am excited for FS.

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Thanks. I'll give it a detailed look later.

PPA rate: 8.3 uscent/kWh escalated at 3%/year for 20 years

I'm not very familiar with PPA structure, but is 3% inflation adjuster common in these agreements as opposed to FiT where price is fixed, giving a frontloaded discounted cashflow for the owner, allowing quicker ROI on these capex intense projects. From the purchaser side there's no capex so they can accept backloaded return on the (FiT) agreement.

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Guest larryvand

FSLR getting crashed after hours. $28.10 is so far the low, from a $31.36 regular close (which was down 4% but now down 12% AH).

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Guest joshchang

FSLR $0.66 cost per watt vs. TSL $0.61 cost per watt. FSLR's cost advantage is completely gone now.

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Guest joshchang

projects development & pipeline is still way ahead of chinese competitors. but chinese peers will catch up quickly in this area I believe.

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Guest spiritcraft

projects development & pipeline is still way ahead of chinese competitors. but chinese peers will catch up quickly in this area I believe.

This is the big deal... utility scale PV is going global fast and I don't think any of us dare to imagine it. The old inflection point that was once ten years off is very close indeed. Somehow our companies have to be ready price wise and performance wise or someone else will step in and do these globally. First Solar and SunPower are both way up due to the simple fact that they are utility scale companies with pipelines. Some think that FSLR may one day morph into a developer using Chi-Solar modules since Si PV offers more wattage per square foot.

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Boy it really sounds like they are waving the white flag to Chinese solars. From there cc it really sounds like they are try to transform themself into a developer instead of a producer. Very good news... Demand is ramping again but they refuse to open closed down factories because they can't compete on a per watt production basis with solar 11. This is very interesting and good news

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Guest Klothilde

FSLR $0.66 cost per watt vs. TSL $0.61 cost per watt. FSLR's cost advantage is completely gone now.

That's apples to oranges. If you look at apples to apples you'll get a different result.

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That's apples to oranges. If you look at apples to apples you'll get a different result.
Care to share?

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Ummm that's about a direct comparison as you can get ... Just look at the 9 cent gap between fslr and SOL and tell me how they are not in trouble. That gap is only going to extend throughout 2013 too

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Guest larryvand

All you have to know to figure out that FSLR is in trouble is the fact that they did not want to give guidance for 2013.

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Guest eysteinh

First solar has more cost than both rec and trina solar. (Rec 0.65 Trina 0.61 First solar 0.68) If you add opex costs things get even more interesting. Only strenght of First solar now is low interest on debt, but this is in no way enough to compensate. Btw, Rec produced a system in q4 at 1euro per watt = 1.3$/watt. First solar according to the conference call has a cost of 0.68 for module and BoS cost of 0.73 for a system cost of attleast 1.41 $/watt. (http://seekingalpha.com/article/1227281-first-solar-s-ceo-discusses-q4-2012-results-earnings-call-transcript?page=4) If REC can produce system cheaper than First Solar I am pretty sure Trina solar can too. And since system cost was the advantage first solar has claimed so far, this is very dramatic for first solar.

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