First Solar (FSLR)

[Guest Klothilde]

OMG - Thank the lord and thank baby Jesus! This is absolutely amazing!!! Way to expand the pipeline!!! http://www.bloomberg.com/news/2013-04-01/first-solar-buys-150-megawatt-california-solar-power-project.html

[Guest eysteinh]

Is it possible to calculate system ASP for first solar? We know the following: Revenue of first solar in 2012 was = 3368,5 mil $ and q4 was 1075 (source: http://files.shareholder.com/downloads/FSLR/2343569807x0x638729/b4ffa41c-6e79-476e-90a7-5879a96dda75/Q412_Earnings_Call_Presentation_FINAL.pdf) Revenue recognization in q4 was for 679 MW, we know for 2012 this was ~ 2000 MW (AC, but does not matter as production is also in AC) "As of the end of the fourth quarter, we have recognized revenue for approximately 679MWAC equivalents, leaving 2.2GW of revenue remaining to be recognized. Please note that although we have provided this slide historically and do so today as a continuation of that process, we will cease to show it going forward because we believe that the following slides showing our expected revenue and shipments are a more robust representation of our future demand." (Source: http://seekingalpha.com/article/1227281-first-solar-s-ceo-discusses-q4-2012-results-earnings-call-transcript) (and 2gw from : (source: http://files.shareholder.com/downloads/FSLR/2343569807x0x638729/b4ffa41c-6e79-476e-90a7-5879a96dda75/Q412_Earnings_Call_Presentation_FINAL.pdf) ) Balance of system cost was 0.73$/watt year on year average (14% decline in BoS during 2012) If we assume half of BoS reduction of 14% year on year then we end up at 0.78 average during the whole year. On a cost per watt basis, full year module manufacturing costs, excluding our German manufacturing plant and un-utilization declined approximately 11% versus 2011 to $0.66. And our exit rate cost per watt for our best plant reached $0.64. On a year on year basis, we reduced average standard balance of system costs by approximately 14% to $0.73. (source: http://seekingalpha.com/article/1227281-first-solar-s-ceo-discusses-q4-2012-results-earnings-call-transcript) We know production was 1875 MW and calculated revenue was for around 2 GW so we know third party modules consisted of 125 MW. (So our ASP estimated will be slighly skewed by these 3rd party modules that we do not know ASP of.)

[Guest eysteinh]

Since they write "RECOGNIZED revenue of approximatly" we do not have to adjust for inventory account recivables etc since they give us the number for what they sold not just shipments.

[Guest eysteinh]

The one thing we dont know is revenue, we only know net sales and this is an exluded number that does not have to be the same as revenue. http://www.investopedia.com/terms/n/netsales.asp Sigh reminds me why I never tried to calculate first solar ASP :P

[Guest Klothilde]

Let's spice things up a notch. What if I told you that production is reported in DC? And what if I told you that the $0.73 in BOS does not include non-standard site specific costs like project development? Now it's your turn. Please calculate the module ASP.

[Guest eysteinh]

Ok my try: ac watt = dc watt ( http://www.solarpaneltalk.com/showthread.php?955-DC-watts-to-AC-watts-conversion-equation ) it is not clear if 0.73 BOS includes non-standard site specific costs like project development. "Our average solar system installed cost also fell from $1.59 in 2011 to a $1.39 in 2012, excluding $0.20 of development cost and based on the standard cost for a North American project larger than 100 megawatts excluding any site specific non-standard cost." (Notice they are here talking about total system cost and they add +0.2 development costs to this) and here: source: http://seekingalpha.com/article/1227281-first-solar-s-ceo-discusses-q4-2012-results-earnings-call-transcript "average standard balance of system costs by approximately 14% to $0.73. These improvements are a direct result of our continued investment in research and development efforts to improve module conversion efficiency as well as improve engineering, procurement, and construction techniques and a constant focus on operational excellence." But ok lets say 0.93 BoS roghly and 0.68 for modules. = 1,61 system cost. ASP For system with 27,3% gros margin formula is asp - system cost = 27,3% of revenue. We know system costs. We dont know ASP and we dont know revenue only net sales. Let us assume net sales = revenue ASP - 1,61 = (1075 / 671) * 0,273 ASP = 1,61 + 0,44 ASP = 2,05 (Remember system cost.) Profit is 0,44 per watt gross. asp for module if you assume no profit from system is 0,68 + 0.44 = 1,12. (but obviously this is very unfair.) Imho this just shows how important it has been to develop your own system revenue.

[Guest Klothilde]

thx. Just to finetune: ac watt is not dc watt, because in reality dc watt refers to STC watt, and in the real world the inverter output power is dimensioned well below the stc power rating of the generator because the power under real conditions hadly ever reaches STC levels. FS uses a dc/ac ratio of 1.2 - 1.4 with about 1.3 the representative average (p.7 footnotes): http://files.shareholder.com/downloads/FSLR/2401933772x0x638729/b4ffa41c-6e79-476e-90a7-5879a96dda75/Q412_Earnings_Call_Presentation_FINAL.pdf note they make a mistake by speaking about ac/dc ratio, it should be dc/ac ratio.

[Guest eysteinh]

ok so if i understand you correctly 679 ac watt is 679/1.3 = 522 MW. I assume when they talk of cost per watt this is dc watt. ASP - 1.61 = ( 1075 / 522 ) x 0.273 ASP = 1.61 + 0.56 ASP = 2.17

[Guest larryvand]

Maybe someone can suggest what will be next year's First Solars ASPs? Based on a few articles I read that was the bearish argument with First solar. That their projects in late 2013 and 2014 are based on much lower ASPs. I'm just going by memory here so I could be wrong on the dates but the end result is the same. That profitability is in decline for FS as their newer projects get hit by the declining PV prices. JMHO and I hope that someone will correct me if I'm wrong.

[Guest Klothilde]

@eystein: The other way: 679 MW(ac) = 1.3*679 = 882.7 MW(dc) @larry: FS stated that they see their gross margin going down to 15% in the future. Current profitability is just due to the project backlog. Without the projects FS would be more or less at par with Tier 1 Chi in terms of profitability imo.

[thejaq 38]

FS uses a dc/ac ratio of 1.2 - 1.4 with about 1.3 the representative average (

Does this seem high to anyone else? Where are these losses coming from, is it a lifetime average taking into account something like 10-25% less output due to panel degradation? If they underestimate output by 4 to 12% and report projects in AC then isn't this an invisible lever they can pull to increase module GM by the same amount, 4 to 12%? What am I missing?

[Guest Klothilde]

Does this seem high to anyone else? Where are these losses coming from, is it a lifetime average taking into account something like 10-25% less output due to panel degradation?

No, lifetime degradation has nothing to do with the ratio. A panel rated at 100 W under STC (lab) conditions will never reach that power output under south west desert conditions. First you will get roughly 10% loss due to high module temperatures (up to 60 C), then you have further losses from suboptimal incidence angle of the sun, dust in the atmosphere and on the modules, losses from cabling, etc. So let's say your 100 W panel gives you dc power of less than 80 W in 99.5% of the time. If you thus match it with a 80 W ac rated inverter you'll get a dc/ac ratio of 100Wdc/80Wac = 1.25

If they underestimate output by 4 to 12% and report projects in AC then isn't this an invisible lever they can pull to increase module GM by the same amount, 4 to 12%? What am I missing?

I think all efficiency metrics (production volumes, costs) are referenced to dc power.

[explo 706]

Just STC DC to NOCT DC is a 25% loss. Then DC to AC should have some loss.

[Guest eysteinh]

Thanks guys. Ok so is this looking better then? 679 ac watt is 679*1.3 = 882,7 MW. I assume when they talk of cost per watt this is dc watt. ASP - 1.61 = ( 1075 / 882,7 ) x 0.273 ASP = 1.61 +0,33 ASP = 1,94 (system ASP per watt)

[thejaq 38]

Klothilde, I was under the impression that 1.3 is viewed as a conservative estimate in the residential space, with most systems out performing this number. Id expect lower losses due to: 1) better maintenance (reduced soilage), 2) higher efficiency on large inverters, 3) more optimal average incidence angles for utility scale projects, 4) arguably lower temperatures for ground mounted systems 5) First Solar's relatively low temperature coefficients It seems strange that their average loss estimate falls squarely on what has been a rule of thumb for over a decade. And as far as I can tell, that estimate comes from assuming over double the losses due to temperature and inverters that I'd expect in an FSLR project.

[Guest Klothilde]

@thejaq: The ratio numbers are from FS and not mine (p7 footnotes). Just look at the datasheet, as explo mentioned there is a loss of 25% going from STC to NOCT/800W or in other words the STC/NOCT800 ratio is already 1.33. Even if FS uses a comparable DC/AC ratio as c-Si it will have superior yield in hot climates because the temp losses of c-Si are higher.

[Pop2mollys 417]

“I would like to hear about how they reduce cost without significant capital expenditures and why Chinese competition won’t just decimate new markets,” said Ben Schuman, an analyst with Pacific Crest Securities LLC in Portland, Oregon. http://www.bloomberg.com/news/2013-04-08/first-solar-s-global-sales-head-brown-exits-before-analyst-day.html

[Guest Klothilde]

http://investing.businessweek.com/research/stocks/news/article.asp?docKey=600-201304090935BIZWIRE_USPRX____BW6059-1&params=timestamp%7C%7C04/09/2013%209:35%20AM%20ET%7C%7Cheadline%7C%7CFirst%20Solar%20Sets%20CdTe%20Module%20Efficiency%20World%20Record%2C%20Launches%20Series%203%20Black%20Module%7C%7CdocSource%7C%7CBusiness%20Wire%7C%7Cprovider%7C%7CACQUIREMEDIA%7C%7Cbridgesymbol%7C%7CUS;FSLR&ticker=FSLR Full area efficiency for a normal size module (1200x600). Corresponds to a 265W standard c-Si module. How bout that?

[Guest MichaelZhao]

IMO.

[dydo 1,558]

Based on SEMI publication, CTM (cell to module) ratio will be 99.5 to 101% in 2017 for alcaline and acid texturing. By 2017, this is the time line for the production of this Cdte module, cells from mc-si p-type will have 18.5% to 23.5% for mono n-type. so with CTM of 101%, this is about 25% at the top of the line. Exciting indeed.

[Dan 17]

Thanks odyd for giving the correct perspective to news like this.. otherwise, it is like misinformation

[Guest Klothilde]

Based on SEMI publication, CTM (cell to module) ratio will be 99.5 to 101% in 2017 for alcaline and acid texturing. By 2017, this is the time line for the production of this Cdte module, cells from mc-si p-type will have 18.5% to 23.5% for mono n-type. so with CTM of 101%, this is about 25% at the top of the line. Exciting indeed.

The CTO actually stated today in his analyst day presentation that they will overtake mc-si in average efficiency by 2017 if I'm not mistaken. Once the presentation becomes available we can post here to discuss. Also if I'm not mistaken CTM-ratios alone cannot be used to convert cell efficiencies into module efficiencies, since the difference also depends on the amount of inactive area (including. space between cells, frame, ribbons) For example with a mc-si cell efficiency of 18.5% you get 156mm cells of 4.502 W. 60 Cells will give you 270.1 W and with a CTM of 101% your module will give you 272.8 W. Now at a standard size of 1.65 m2 this equates to a module efficiency of 16.5%

[Guest rational_judgement]

Wow! FSLR just turbo-charged the sector!!!

[Pop2mollys 417]

Market loves it

[Guest solar123]

Wow, That is some crazy action!

[pg6solar 113]

Well that's what short squeeze can accomplish. May be that Chinese stock with same short interest as FSLRS' will have a likewise move (once they have good news).

[Guest MichaelZhao]

I am rewarded today!

[Guest Klothilde]

Thanks Pops for not bashing outright. As a FSLR shareholder I feel like the punching bag of this forum.

[Guest ILOVEPV]

TSL did it too (with no digits though) but no reaction. All in all the sector is heating. Extremely oversold an undervalued if you take a look from prospective. SOL and CSIQ are under "special" pressure today.

[Pop2mollys 417]

Thanks Pops for not bashing outright. As a FSLR shareholder I feel like the punching bag of this forum.

I want to see all the good people on this board make money! I'm happy you are having a big day for FSLR!! This is first time in years FSLR has sparked sector, It usually always brings Chinese down. What a great day for all!