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21 minutes ago, Mark said:

both of those CNs are nimble and can adjust pretty quickly.

Exactly.  Klothilde's been forecasting gloom and doom for CSIQ, JKS, and DQ for years now.  Yet miraculously, they've not only survived, but two of them (CSIQ and DQ) are solidly rebounding.  (We'll see about JKS.)  I'm beginning to look forward to those negative comments about CSIQ and DQ--every time she puts one out, their share price goes up!  Chuckle....

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12 minutes ago, SolarRoof said:

Good gosh, ENPH hit $35 today.  This was pennies not too long ago.  Crazy thing is they are just getting started.

Yeah, I'm nervous as a cat trading them at this level.  I keep expecting a sharp drop that so far has not come.  So I keep buying back as I keep trading small lots for small gains.  But I'm too chicken to establish large trading positions at these prices.

Here actually I would have been better off if I'd just bought and held.  It just goes to show--there is no single ideal trading strategy.

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12 hours ago, SolarRoof said:

BTW, anyone know what components are involved in the Tesla Solar Walmart fires?

They OEM'd from quite a few different companies Kyocera, REC, Trina, CSIQ, LG and themselves from Fremont in 2016. Not certain who they used on Walmart

 

https://www.pv-tech.org/editors-blog/teslas-solar-panel-suppliers-have-changed-rapidly

 

Back in 2016, Kyocera and REC Group had been the main panel suppliers to the company, accounting for 31% and 35% of supply to California installs, respectively. A much smaller share came from two ‘Silicon Module Super League (SMSL) members, Trina Solar and Canadian Solar with 7% and 6%, respectively. 

In that year, the company also sourced panels (only in the fourth quarter) from Hanwha Q Cells and LG Electronics, 1% and 3%, respectively. Unspecified ‘other’ suppliers accounted for 7% of the total through 2016. 

 

 

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13 hours ago, SolarRoof said:

BTW, anyone know what components are involved in the Tesla Solar Walmart fires?

The lawsuit also claims installation problems causing freyed wires  etc along with panel hot spot shading problems exasperating hot spots etc.

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13 hours ago, SolarRoof said:

BTW, anyone know what components are involved in the Tesla Solar Walmart fires?

According to the court filing which is included in this link, it is "several" vendors panels they used that had defective modules. This can be found on section 107 page 49.

 

https://www.philstockworld.com/2019/08/20/in-explosive-lawsuit-walmart-sues-tesla-over-solar-panel-fires-claims-solarcity-purchase-was-a-bailout/

 

From a quick read, it does not appear Tesla is blaming the issues on the the panel manufacturers rather they are indicating Tesla aka SCTY and subs were grossly negligent by installing broken equipment, improper installations, failing to replace identified defective products and general poor installations.

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35 minutes ago, SolarRoof said:

I assume all had string inverters?

They were using string inverters. I am not aware whose inverters but typically for large installations 100KW or more they use large  3 phase inverters. A place I worked at had a 300KW system installed and on the second floor of the parking garage there was a 4xx8x6 3 phase inverter. There is a reference in the lawsuit indicating that in one instance an inverter is believed to be the fault but that it was not properly sealed and closed and was left exposed to elements where rain got in. The entire lawsuit points to shoddy workmanship in installations inspections and repairs and troubleshooting when requested. Panels can be expected to fail and have cracked  cells, these should not be installed, when they are discovered after installing you do not put tape over the cell marking the failure as it creates shading and makes the hot spots worse. Some 66% of the sites inspected had improper grounding of the systems. They did inot screw connectors tight on water tight connectors allowing water to seep in. There is about 30 pages worth reading with pictures. It is uggly for Tesla and Solar City as this will kill their panel business for corporate customers. Forget the probable hundred million plus in lawsuits and hundreds of millions in damages and costs to install being refunded.

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Interesting discussion of 2019 PV trends by some of the smartest women in the PV space:
https://www.pv-magazine.com/2019/08/23/mini-series-on-prices-technology-and-2019-trends/

They all suggest cost reduction of the CNs will slow down for the next two years since margins have been squeezed and low-hanging tech fruits (aka DWS) have been picked.  Bodes well for FSLR with its strong cost reduction momentum.

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1 hour ago, Klothilde said:

Interesting discussion of 2019 PV trends by some of the smartest women in the PV space:
https://www.pv-magazine.com/2019/08/23/mini-series-on-prices-technology-and-2019-trends/

They all suggest cost reduction of the CNs will slow down for the next two years since margins have been squeezed and low-hanging tech fruits (aka DWS) have been picked.  Bodes well for FSLR with its strong cost reduction momentum.

LOL

 

The CN are sub $0.20 production costs now. A slow down in their cost reductions still places them sub $0.20 costs and even lower. FSLR is going to take 2 years plus to get  sub $0.20 which  is optimisitc at this point with their line production cluges.

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1 hour ago, Klothilde said:

CNs sub $0.20? 😂

We make each other laugh, I like that. 

 

No they are making over 20% GM these days in modules. Based on the Q2 MSS numbers, their ASP is around $0.25. JKS may not be there yet but they should be close as they get gains due to their learning curve and ramp of Mono Perc and the RMB depreciation.

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I don't really buy those 25 cts ASP.  I know the data can be interpreted that way, however it can also be interpreted to yield 27-28 cts.  Just assume EPC revenue under MSS was primarily module revenue because they happened to be in a heavy module installation phase in Australia or s.th. alike.

Qu stated an ASP of 30 cts in Q1 and guided a bit lower but still strong and stable ASP in Q2.  You will probably agree that a 5 ct drop qoq isn't consistent with strong and stable.

I was thinking of JKS myself before reading your post.  Why don't we wait for results and see if they provide an ASP data point.  And let's take the derived CPW as indicative for CN solars.  This would be more down to earth than speculating our bases off with CSIQ.

 

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2 hours ago, Klothilde said:

I don't really buy those 25 cts ASP.  I know the data can be interpreted that way, however it can also be interpreted to yield 27-28 cts.  Just assume EPC revenue under MSS was primarily module revenue because they happened to be in a heavy module installation phase in Australia or s.th. alike.

Qu stated an ASP of 30 cts in Q1 and guided a bit lower but still strong and stable ASP in Q2.  You will probably agree that a 5 ct drop qoq isn't consistent with strong and stable.

I was thinking of JKS myself before reading your post.  Why don't we wait for results and see if they provide an ASP data point.  And let's take the derived CPW as indicative for CN solars.  This would be more down to earth than speculating our bases off with CSIQ.

 

Well even taking all of MSS you do not get 28 cents for 2.376GW.

At half the EPC and none of the  oem services and other materials, you have $0.252. By the way the leaves 100% of the money from Kits as just panels which they are not.

So lets just disagree some here as the numbers suggest somewhere between $0.195 and $0.215 for production costs.

 

I really believe as we discussed about Q1, that they have laggard shipments and those higher costs are being recognized in revenues.  They had somewhere between 233MW and 298MW in Q2 that were revenues recognized from modules shipped before Q2. When you factor that in with the suggested MSS margins, then the module costs suggests below $0.20 for current production as I have been stating now regarding spot pricing and costs since  late 2018.

"Total solar module shipments in the second quarter of 2019 were 2,143 MW, compared to 1,575 MW in the first quarter of 2019 and second quarter 2019 guidance of 1.95 GW to 2.05 GW. Total solar module shipments in the second quarter of 2019 included 65 MW shipped to the Company's utility-scale solar power projects. Module shipments recognized in revenue in the second quarter of 2019 totaled 2,376 MW,"

 

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1 hour ago, SCSolar said:

Well even taking all of MSS you do not get 28 cents for 2.376GW.

You need to deduct 228MW of modules from the 2.376 that were embedded in the projects sold in the energy division. That would bring module ASP even up to 31 cents if you take all of MSS. However I consider 27-28 more realistic.

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6 hours ago, Klothilde said:

You need to deduct 228MW of modules from the 2.376 that were embedded in the projects sold in the energy division. That would bring module ASP even up to 31 cents if you take all of MSS. However I consider 27-28 more realistic.

I do not believe that is the case.. If that were true. It is as I said more likey that some modules shipped in the past were delayed revenue recognition.

For example, in Q1 they shipped 1575MW of which 52MW was for internal projects. That places 1523MW as shipped for revenues. However if you look they state that only 1423MW of modules shipped was recognized as revenues in the quarter.

The Q1 PR  indicates they had atleast  100MW of modules shipped to customer in the quarter but not booked as revenues. These would be contracts that have certain acceptance criterias with their customers. These would be booked as future sales. When they do get counted towards revenues, they are shipped modules but just not from that quarter. They have been doing this for several years now.  That is also why the ASP and costs do not neccesarilly line up wih their numbers if you look at them as only that quarters costs. My estimation is they generally have several hundred MW of future revenues to be recognized in a quarter.

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5 hours ago, SCSolar said:

I do not believe that is the case.. If that were true. It is as I said more likey that some modules shipped in the past were delayed revenue recognition.

Well have a closer look at the data and you will see that it is indeed true.

Their 'total solar module shipments' over the last 10 quarters, e.g. since Q1 2017 were 17259MW.  And "module shipments recognized in revenue" over the same time span was 17507MW.

The above shows that the averages of these metrics align over time.  It further shows that 'module shipments recognized in revenue" must include modules sold within projects in the energy division because if it excluded these the sum of modules recognized in revenue above would have to be significantly lower than total module shipments.

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21 hours ago, Klothilde said:

...Just assume EPC revenue under MSS was primarily module revenue because they happened to be in a heavy module installation phase in Australia or s.th. alike...

Found some evidence to support my wild speculations.  They had 'hundreds of megawatts' delivered to the Kiamal Solar Farm in Australia by June 8:
https://www.sunraysiadaily.com.au/story/6206607/ouyen-boost-kiamal-solar-farm-on-schedule/

In an EPC payment schedule those modules usually are invoiced upon delivery, so it is likely that the EPC revenue within MSS in Q2 contains a nice chunk of those modules.

http://investors.canadiansolar.com/news-releases/news-release-details/canadian-solar-partners-biosar-build-256-mwp-solar-project-total

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On 8/21/2019 at 8:08 AM, SolarRoof said:

BTW, anyone know what components are involved in the Tesla Solar Walmart fires?

You can add Amazon as a company that has claimed a Tesla Solar Installation. That is a 1 out of 11 installed.

 

https://www.forbes.com/sites/rachelsandler/2019/08/26/amazon-also-experienced-tesla-solar-panel-roof-fire/?ss=cio-network#6550c15e72c2

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52 minutes ago, Klothilde said:

Things looking horrible again over at PVInsights you guys.  You sure about that booming market?

Well the RMB depreciated by 1.4% over the past week. You would expect to see the average ASP decline within that range.  When you subtract out the 1.4% devaluation of the RMB, those drops do not look that bad. 

https://www.xe.com/currencycharts/?from=USD&to=CNY&view=1W

Those numbers look very promising for downstream module producers. The trends are necessary to reach True grid parity with storage in most of the world and especially in China.

By my estimates they are making Mono Perc modules for about $0.20 now. That is based on the $0.11 for Chinese Perc cells.  That $0.23 China ASP with that manufacturing cost is 15% margins.

That foreign average ASP of $0.25 is  greater than 25% margins.

The U.S. is the higher price range so even that market is likely more profitable than any market around even with the tariff. That U.S. market has surged and has price increases due to a rush to get projects in under the ITC  planned reduction in 2020.  

 

Looking at those numbers, I only see positives for the next 6 months for the module manufacturers like CSIQ which had improved margins and JKS which is likely to beat their margin guidance.

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Getting some vibes in the PVIL weekly write-up that Q4 demand will be below expectation:
"...the heat of single crystal PERC in the fourth quarter is still expected, but it is likely that some of the domestic demand in the fourth quarter will be deferred to the first quarter of next year. The price of components in the fourth quarter is unlikely to rebound significantly..."
http://m.solarzoom.com/index.php/article/129942

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Here is an interesting two article in China. It appears that the State governments of China are starting to buy the PV plants out from under the private companies and removing the risk and liability of not getting tariffs. . This may be a means to avoid paying the massive amounts of FIT and getting cash into the hands of companies and out of some debts. They are also transferring some geothermal plants out of hands of private companies and it is believed this is part of a process to push grid solar. This is an interesting change in policies that needs more monitoring.

 

http://guangfu.bjx.com.cn/news/20190903/1004325.shtml

 

http://guangfu.bjx.com.cn/news/20190903/1004368.shtml

 

 

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More guangfu gossip.  This piece summarizes results of a recent module tender in China, where both the lowest and the average bids for mono-PERC modules came in below 23 uscents.  This is consistent with the horrible numbers we've been getting from PVInsights:
http://guangfu.bjx.com.cn/news/20190904/1004654.shtml

This is bad for all manufacturers who rely on big shipments to China in H2 in order to meet their guidance.  They will have to swallow those prices.  No names please.

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1 hour ago, Klothilde said:

This is bad for all manufacturers who rely on big shipments to China in H2 in order to meet their guidance. 

You continue to interpret any ASP decrease as all bad news for manufacturers.  If that were true, then the entire solar industry has had nothing but bad news since its inception decades ago.  Instead, the opposite is true--the steady decrease in the cost of the technology over time has driven exponential growth in the industry, not caused its overall demise.

ASP decreases are good for the overall adoption of solar by the general public by lowering end consumer costs.  In that respect, ASP decreases are good for manufacturers by driving demand.  ASP decreases are bad for manufacturers if they happen so quickly that said manufacturers cannot adapt by lowering costs at the same pace.  But if ASPs decrease gradually enough so as to allow manufacturers to maintain margins while driving end user demand, then such ASP decreases are actually good for everyone--consumers, manufacturers, and investors!

So what we should be watching for is data on margins for those manufacturers with big markets in China.  If the margins contract while the ASPs decrease, your concern is justified.  If the margins hold steady, then those manufacturers will actually prosper as their volumes increase due to increased demand due to the lower ASPs.

Last not least, those decreasing ASPs are also bad news for your beloved FSLR, as it increases price competition in general.

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6 hours ago, Klothilde said:

More guangfu gossip.  This piece summarizes results of a recent module tender in China, where both the lowest and the average bids for mono-PERC modules came in below 23 uscents.  This is consistent with the horrible numbers we've been getting from PVInsights:
http://guangfu.bjx.com.cn/news/20190904/1004654.shtml

This is bad for all manufacturers who rely on big shipments to China in H2 in order to meet their guidance.  They will have to swallow those prices.  No names please.

Are you suggesting that these companies are selling the modules below costs? For the past several months Mono Perc cells have bene in the price range of $0.11. That basically means they are building modules for $0.19 to $0..20. There is virtually no shipping costs in China to get the modules to projects. They can be profitable at a 10% GM in China due to that imho.

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10 hours ago, SCSolar said:

Are you suggesting that these companies are selling the modules below costs? For the past several months Mono Perc cells have bene in the price range of $0.11. That basically means they are building modules for $0.19 to $0..20. There is virtually no shipping costs in China to get the modules to projects. They can be profitable at a 10% GM in China due to that imho.

I agree with your numbers but was thinking a step beyond.  If China's prices don't bounce back soon then they will drag down prices everywhere else, and that could prove extremely painful for our companies.

For example JKS is running OPEX & Interest at 4.3 cts/W.  At an ASP of 29 cts they require a margin of 14.8% to break even.  If that ASP drops to 23 cts then the break-even threshold jumps to 18.7%.  We've all applauded their GM guidance of 18-20% for Q3, but truth is in a low price world that GM may bring you just to break-even.

Do you understand my concern?

 

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3 hours ago, Klothilde said:

I agree with your numbers but was thinking a step beyond.  If China's prices don't bounce back soon then they will drag down prices everywhere else, and that could prove extremely painful for our companies.

For example JKS is running OPEX & Interest at 4.3 cts/W.  At an ASP of 29 cts they require a margin of 14.8% to break even.  If that ASP drops to 23 cts then the break-even threshold jumps to 18.7%.  We've all applauded their GM guidance of 18-20% for Q3, but truth is in a low price world that GM may bring you just to break-even.

Do you understand my concern?

 

Do not presume Opex and interest will not drop. RND tracks revenue and Opex is somewhat stagnant.  With little to no shipping costs for Chinese modules a slight increase to say 4GW per quarter drops that Opex per watt down to ~ $0.031 or20- 25%. That is with the addition of appx 500MW of new shipments in China which may happen around Q4.

 

If you break down the Opex and interest, from Q2 you are sitting at

sales/watt=$0.024

GA/watt=$0.01

RnD/watt=$0.003

Interest/Watt=$0.005

 

Lets look at the big chunk of Sales/watt. That is 2.4 cents of which some $0.017-$0.02 is the cost of freight to the U.S and other countries. If you compare the average ASP on PV insights of China to non China module ASP for mono PERC the delta is $0.022. Part of that delta is caused by the U.S. tariffs.

 

This is pretty much true for all sales, they have a base manufacturing cost of around $0.20  then add  appx $0.022 for  RnD,GA interest and insurance and packaging.shipping. This gives you a base cost less shipping of around $0.212-$0.222.

From there you add shipping costs tariff costs

To the Asia Pac you add under a penny

To Europe you and about $0.015

To the U.S. you add about  $0.13

 

As you can see, the average ASP is only spiked up due to the U.S. tariffs. If you back them out, the average ASP is likely closer to $0.255-$0.26/watt today. That is manufacturing costs + cost to operate + profit.

 

I expect the ASP to plummet next year by 10-15% or more. The reason is that the U.S. tariffs will be removed throughout the year due to the introduction of bifacial modules. The increased shipments to the low ASP from China will drive down the cost as well as lower mfg costs.

 

I could see an average ASP in the $0.245 range when accounting for various shipping costs. If manufacturing costs for Perc is at $0.20(flat) today as you do not dispute, there is  clearly room for profits at lower margins in the ASP decline.

 

There is also room for margin improvements to around 20% under that situation offsetting your concerns regarding margins.

 

 

By my estimates they have manufacturing costs of around $0.22 in Q2 2019 when you back out tariff impacts. They likely have another $0.02 in higher costs due to the outsourcing of modules. As their module capacity ramps and tariffs get removed from bifacial and U.S. produced modules, this all will lower their costs to that $0.20 range or lower we agree that modules can be manufactured for today. Their numbers make sense as does cost cutting avenues to increase margins. Wethere they do all that is yet to be seen.

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I didn't agree that manufacturing costs for PERC modules were 20 cts today, I agreed that you can build a PERC module today for 20 cts if you buy PERC cells for 11 cts (below cash cost of cell makers) and convert them to modules for 9 cts.  But you have to hurry up since PVInsighs has those cells on the rise again as cell makers may have gotten fed up of selling below cash cost.

I would put JKS's in-house cost for mono-PERC modules in China nearer to 22 cts, i.e. 7 for the wafer, 6 for cell processing and 9 for module processing.

As to OPEX & Int the watt figure has not fallen over the last quarters but increased, so I'm not very confident they can bring it down much below 4 cts/W even including China. Throwing in 500MW of CN for free lowers it to 3.7 cts/W but AFAIK gasoline in China is not free of charge (btw, how did you get to 3.1 cts/W??).

Keep in mind that they threw additional equipment lease payments into OPEX and also that their debt increased significantly over the last quarters (...and their project debt is a very small part of it).

In summary selling for 23 cts when you produce for 22 cts and are running an avg. of 4 cts in OPEX & Int is not such a good proposition imho.

 

 

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