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Guest Klothilde

First Solar (FSLR)

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Cowen analyst Jeffrey Osborne weighed in after the ITC found harm from solar imports as part of the Section 201 trade case.

Osborne sees this as a net negative for domestic demand trends; however, the magnitude is unknown and will likely become apparent into the Oct. 31 vote and Nov. 13 recommendation to Trump.

In the near term, the news supports First Solar (NASDAQ: FSLR) and is negative for SunPower (NASDAQ: SPWR)/Canadian Solar (NASDAQ: CSIQ).

"... we expect support for FSLR shares as the trade complaint does not factor in non-silicon based modules such as what FSLR produces," the analyst commented.

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It's kind of a badge of honor that FSLR's literature would compare FSLR to CSIQ.  Happy to own both.  

Interesting that in even their own marketing literature they show that lifting an S6 is at the high end for a 2 person lift.. a little more & you are into 3 person lift.

Can't wait for the "jumbotron" Series 6000.  All your photons are belong to us!

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8 hours ago, Klothilde said:

Klothilde that is an impressive figure, but FLSR provides two figures, one is 24%. Considering that modules rating is 430W and 340W, the capacity of installing one to one is a gain of 21%. It appears to me that in the hands of the two companies test varied as far as 62% by such a variable you cannot assume any accuracy.  Either it is not sustainable, or sample is not big enough to represent a statistical constant.

S6 is a prototype, which weighs about 54% more than CSIQ module. Engineered studies will tell you that weight factor reduces productivity. Meaning by the time 4 hours hits, people who lift heavier slowdown by 50%, and by a certain measure, they also stop for twice longer to recuperate. Handling material of this size is also slower, just put a product on a forklift and try to put it away or bring it down.

Now the more likely potential for CSIQ, when a 370W module from CSIQ is used, the gains are 14% for S6, and as I said before, 7% more land coverage is needed for S6 module. At 33% more weight for S6, is tracking system suitable to handle all this weight? I note that tracking material is not included, and more of it is needed if the scale goes up. It is a custom-made tracking.

The cost is variable also by the level of compensation. The example is $60. What if two people are paid total of $30 working for CSIQ? Is this a competitive edge standard versus custom install to make this more competitive with FSLR?

At 395W module, which is 2019 potential, the module variance is 8% for S6 and coverage requires 14% more of the coverage or land. So this is happening when 2019 does not even point of total capacity for FSLR.

Lastly, the big difference, a 40-foot container ships 468 of S6 and same ships 660 of 370Ws, or 41% more module per container. For a 100MW install that is 497 containers, versus 410.  Say you ship from Canada to the US location. That is about $3K US per load or $1.2M in price. To ship FSLR from Malaysia or Vietnam, it is about $7K or $3.4M. More than a double in price. I wonder what FSLR should say about this? If they would ship from the US that is about $261K more for S6, substantial.

Final thought, the advantage of S5 was going to blow Chinese out of the water.  All it did was to blow $800M in a write-off and kept inferior S4 with a positive margin. I hope that FSLR does not build its success by the expediency of some overweight guys installing modules, but a real value like wiring costs per module. Those are effective now, but as efficiency for a silicon module rises, to said 395W, are easily neutralized and including other factors beatable. As usual, time will tell.

Side-note, perhaps using CSIQ as an example, solidifies CSIQ as the only competition capable of launching meaningful offset to FSLR post-Suniva. I would like to thinks so.   

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Robert, it goes without saying that the cost savings findings are not fully valid from a scientific and statistical point of view.  They are results from customer field trials, not more and not less.  However chances are FSLR is more interested in building solid customer references than running meticulous statistical studies.  Just imagine the sales pitch which is possible with these results in hand: "Yes, we've asked some of our customers to test S6 prototypes in the field and they were amazed by the cost savings.  Feel free to give them a call, they'll be happy to share their experience with you!"  Imho such a pitch is way more powerful for sales purposes  than pointing to an academic exercise that gave you  top accuracy but remained theoretical.

Regarding shipping cost differences my numbers are slightly different.  For S6 I have 468 modules x 445W (upper limit of datasheet below) = 208.26kW vs. CSIQ Ku at 624 modules x 360W (datasheets below) = 224.6kW.  Means 7-8% higher shipping cost per  watt, i.e. 0.1-0.2 cts/W higher.  This should be one order of magnitude smaller than the overall installation cost savings, i.e. not very relevant imho.
http://event.lvl3.on24.com/event/14/81/23/3/rt/1/documents/resourceList1504220001558/20170831_ds_s6_na.pdf
https://www.canadiansolar.com/fileadmin/user_upload/downloads/datasheets/en/new/KuMax_CS3U-P_Poly_Flyer_V2_EN.pdf
https://www.canadiansolar.com/fileadmin/user_upload/downloads/datasheets/en/new/Canadian_Solar-Datasheet-MaxPower_CS6U-M__1500V__en.pdf

By the way, I remember you worked in logistics but your freight rates strike me as quite high.  $7k for a container from Malaysia to the U.S.?  That would mean freight approaching 4 cts/W for S4 currently,  which is significantly above the 2 cts/W that they communicated several years ago.  Have rates gone up recently?

Lastly you talk about S4 inferiority.  Are you tying this to any kind of metric or is this your interpretation?  If you look at S4 gross margins over the last several quarters (components segment) it has consistently trended significantly above CN4 gross margins (even before the write-off in Q4 you are referring to).  Also cost-wise they have given enough information supporting costs at par or below chinese peers.

 

 

 

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4 hours ago, Klothilde said:

 

By the way, I remember you worked in logistics but your freight rates strike me as quite high.  $7k for a container from Malaysia to the U.S.?  That would mean freight approaching 4 cts/W for S4 currently,  which is significantly above the 2 cts/W that they communicated several years ago.  Have rates gone up recently?

 

 

Here is a World Freight Calculator link you can use to look up shipping rates anywhere to anywhere. A sample 40ft container from Malaysia  Port Kelang  to  Los Angelas  California in the U.S.  costs $2977 to $3290.

 

http://worldfreightrates.com/freight

 

Edited by SCSolar

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Klothilde -  

  I think what Robert was referring to was that the weight per watt of current S6 vs silicon panels is higher.  Is this because FSLR needs serious glass to protect & ensure the CdTe does not enter the environment?

  It's too bad, because one big reason why I would prefer CdTe over CSPV is that polysilicon probably burns a lot of coal.  Then again, building in Vietnam & shipping to the US is a waste of energy too.

  This reminds me that FSLR was hiring for a materials engineer to help create a poly plastic substance.  Maybe they plan to replace glass with plastic to reduce the weight.

  Thanks to both of you

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1 hour ago, SCSolar said:

Here is a World Freight Calculator link you can use to look up shipping rates anywhere to anywhere. A sample 40ft container from Malaysia  Port Kelang  to  Los Angelas  California in the U.S.  costs $2977 to $3290.

 

http://worldfreightrates.com/freight

 

I am happy for you, those on the water costs. How do you get from the port to the location in either direction I forget to add that I have given a 53-foot trailer rate for the mainland US. From the door to site.

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Klothilde there is a difference in a cost in transport, and yes it is significant. You cannot quote the container cost traveling on the water or port to port without adding a land move as well. Moving it from Guelph is just the land move. The price from Malaysia is double for running a smaller unit (40) versus larger unit (53) in the continental the US when all costs are calculated.  The rates are based on length of the trip, time at sea, as well, and they would vary.

The time spent on the water is significant. Two weeks in best or a lot more, those two weeks can be used to install. It would take tandem driver set deliver anywhere within two days in the US.

This is before freight gets loaded on a ship or gets unloaded, which could take a month if you hitting busy time, especially in Asia.

The metric about S4 is not interpretation, the amount write-offs taken by the company for this particular product, made it positive gross margin. My calculation made  S4 be in the level of Chinese cost from Q1. The cost is going up as they use it less, but the ASP has helped them. They were selling this module 9 to 10 cents above Chinese ASP due to Suniva by Q2 and actually cost going a bit higher from what they had in Q1. Yes, the product is inferior, has plenty of costs, reverse to S6 is true, and as S6 is a custom-made form factor.  S6 comparisons are an improvement to S4, but I frankly yawn about how fast someone installs it to make a difference (agility) versus the fix quality of how less to connect it is etc.

Let's see the real 100MW installation in S6 and we can discuss the cost dynamic.

 

 

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