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Guest Klothilde

First Solar (FSLR)

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Guest spiritcraft

It's usually installation costs also... labor, "soft costs" like permitting, fees, profit etc. We concentrate so much on trying to figure out who can squeeze a penny or two here and there and often overlook BOS costs. It is really stunning how low BOS costs are in Germany as compared to the US. Germany has a union-like, well paid and experienced workforce and their BOS costs for utility scaly install is like 35% of that in the US. I can't quote the exact figures but have read much about it somewhat recently. Perhaps Boss could help or if ABC is lurking as he was the expert in this area. Whatever the figure, it is astonishing. Here in the US, if we could get BOS costs under serious control, you could see unsubsidized utility scale development expand into the 10's of GW annually. I do remember that "soft costs" were crazy high here as opposed to Germany. I suspect there is a corporate skimming off the top by the sponsor, developer? My 20 years in Real Estate development, working on multi-million dollar projects makes me immediately suspect that "soft costs" here may be greatly enhanced by developer fees and profits that actually hinder economic feasibility. (I have seen it all) I can't figure out what else might cause the huge discrepancy as it certainly isn't labor costs. I also don't believe it is land, site acquisition costs... especially if we are talking areas of desert in the SW. The gist of it is that we seem to forget sometimes that BOS costs in the US in particular are really holding back massive installations since we are now talking about grid parity rather than reliance on subsidies. That's my rant...

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Guest littleguyintucson

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.

FSLR just reported blow out number that no other solar even comes close to. They have a matrue proect pipeline to drive margins. Q1 pushing 25% GM is phenominal. Only other of the C11 coming close in the near future is CSIQ and their close is like $1 EPS.

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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.

The fact that they can buy a module with 15% conversion efficiency, saving a lot of BOS cost compared to their own 13%, for 65 cents while having a 68 cent cost to make their own inferior modules, says that their module production is holding back their project profitability. Modules too bad, sad but true? Projects too good to be true, over time?

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Guest nanofrogfish_spf

We concentrate so much on trying to figure out who can squeeze a penny or two here and there and often overlook BOS costs. It is really stunning how low BOS costs are in Germany as compared to the US.

spirit, you hit on a very important topic, that people seem to be simply ignoring...that we're down to pennies on the modules, while there are nickles, dimes and quarters to be saved on the BOS side.

I believe most of the inefficiency happens before construction starts. This includes both design and permitting requirements. In the US, permitting is erratic from state to state, and usually involves multiple agencies with long delays. Many companies have been working more towards cookie-cutter designs and details to help cut down on the design side....for instance, a residential solar comapny can sell kits that come in 5kW increments, but nothing in-between unless you pay a premium...

On the red-tape side, over time this will become more efficient as the industry matures and the process is streamlined...something Germany has a huge head-start over the US. I think you'll find the same dynamic unfold in all new markets...it's just part of the industry's maturation process.

We should really pay more attention to the BOS side, as lowering this will help fuel future growth. I've posted this comment before from an article in REW about module costs, but I think it's worth repeating because it supports this theme;

Shah adds that most developers today are “not looking for price reductions,” citing significantly lowered costs as the primary reason. “The difference between getting a 70 cent a watt module and a 65 cent a watt module is just not that big of a deal anymore for system costs,” Shah said. “People are now looking at non price features for making decision on who to buy from.”

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Guest littleguyintucson
The fact that they can buy a module with 15% conversion efficiency, saving a lot of BOS cost compared to their own 13%, for 65 cents while having a 68 cent cost to make their own inferior modules, says that their module production is holding back their project profitability. Modules too bad, sad but true? Projects too good to be true, over time?
So what you are stating is, they have room to grow margins. :)

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Guest ILOVEPV

he is talking about FSLR. Too early to pick up. I will take it back below 22 (if any). My policy of not holding any stock through earnings works this time. What really makes me surprised is so adverse reaction for SOL shares. The stock lost almost 25% from its top only on good news. Shorts are working extremely effective and hard to bring all the sector down. I understand this stance with regard to american based stocks -they are grossly overvalued but the same approach to grossly undervalued prime Chinese one makes me puzzling. Playing this way big boys actually let you load at low price instead of forcing you to chase.

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Guest spiritcraft

Back of the envelope... they could shut down module production and become and absolute giant in project development. They do know that business. If the worked on the BOS side they could use Chi modules and likely install a massive amount of GW's in the desert southwest alone in the coming years? Sounds like a plan.

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Guest littleguyintucson
The fact that they can buy a module with 15% conversion efficiency, saving a lot of BOS cost compared to their own 13%, for 65 cents while having a 68 cent cost to make their own inferior modules, says that their module production is holding back their project profitability. Modules too bad, sad but true? Projects too good to be true, over time?
There are other intangibles within differing technologies that is not an apples to apples comparison of a performance of a watt in a real world scenario. Current cSi technology loses up to 25% efficiency depending on hot days. They break down much faster with elevated temps. You do not see companies bragging about this in their charts. You also have different performances in low light absorption due to angles of lights(AM/PM). Companies that do better in these areas are starting to point these out. SOL it touting better performance numbers from low light angles in their specs now. If you can perform 10-15% better through the day on average, that $0.03 cost difference is a $0.03 advantage.

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So what you are stating is, they have room to grow margins.

Or did I suggest that their projects margin is too good to be true in the future?

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Guest eysteinh

Some of the c-si modules have better temperature coefficient and better NOCt performance than first solar. Some others have worse. I should know i compared 950 different module specs in q3.

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Guest MichaelZhao
Guest Klothilde

For apples to apples you need to consider: - approx. 5 cents in warranty and shipping costs that is included in FS COGS but not in Chi-Solar costs - an additional 3 cents in end-of-life recycling provision, included in FS COGS but not in Chi-Solar costs - my guess is that even though this is not necessarily a must for c-Si modules most projects will incur a decommissioning provision. - a yield advantage of 5-9% relative to c-Si under hot climate conditions (FS target markets) - a BOS penalty resulting from lower efficiency of the CdTe panels Do the math and you end up more or less at parity with the most competitive Chi-Solars. I'm eager to see the YGE figures to see at what cost per watt they exited 2013... However imho the value of FS results not from their current position but from the technological potential going forward. It seems to me that the room for higher efficiencies is larger for FS than for c-Si. For one the record cell efficiencies for c-Si have been stagnant for a long while (mono record set in 1999, poly record in 2004), and c-Si modules have already pushed the envelop considerably relative to these records. On the CdTe side the record cell efficiency is being pushed up at a much higher frequency and there is more room to expand module efficiency relative to record cell. What is quite unique in the case of FS is that the very same company owning the upstream cell record is the same marketing the electricity.

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Guest eysteinh

- approx. 5 cents in warranty and shipping costs that is included in FS COGS but not in Chi-Solar costs - an additional 3 cents in end-of-life recycling provision, included in FS COGS but not in Chi-Solar costs - my guess is that even though this is not necessarily a must for c-Si modules most projects will incur a decommissioning provision. - a yield advantage of 5-9% relative to c-Si under hot climate conditions (FS target markets) - a BOS penalty resulting from lower efficiency of the CdTe panels

Klothilde I agree with you in many things so dont take this the wrong way. What I heard is that Canadian solar did not include warrenty and shipping costs in the cost estimate they made, (source of this is a photon international article where one of the stock analysists says the number from canadian solar does not include warrenty and freight.) I have not had this confirmed by other sources or if for example Trina solar dont include this. I know REC includes it in the costs they make and they had also lower cost than first solar in q4. (REC with yesterdays euro to dollar conversion had 0.65$/watt cost vs first solar including all costs 0.68, granted the real costs of first solar is lower as they point out in the presentation.) Things gets more interesting if you add the opex costs. Rec is at 0.08$/watt opex while fslr is around 0.19$/watt. (sg&a r&d) Trina solar including one off (rec includes one off in its opex so i assume this for both) is 0.17$/watt. They have lower processing cost than rec at 0.51 vs 0.56 for rec. Also trina has underutilization like fslr while REC is at allmost 100% capacity. Meaning that the real cost of both trina and first solar is lower if they produced at 100% (spreading deprecation costs over more volume.) Trina commented deprecation was at 9 cents and could down to 6 cents with 90%+ utilitization. (Currently at 70%.) When it comes to the yield advantage of FSLR vs c-si modules I am more sceptical. This is research done by FSLR, but there are other modules out there that perform exellent in tropical climates and hot climates. Again you just have to look at the temperature coefficent number and nominal operation temperature. Regarding your previous comment about sun at early and late night, this is because of the spectrum of radiance, mostly at the red wavelenght, REC is using backside passivation sensitive to this and yes this is an advantage some manufactures tout to try to achive higher ASP. The higher ASP is justified by higher effiency during the whole day of operation of the module.

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