For one reason or another I'm talking to myself here, but please keep in mind that Jinko is the market leader in China, which is already the largest market for solar panels by some distance, and combine that with the following:
China, the world’s biggest carbon emitter, plans to speed up solar power development, targeting a more than tripling of installed capacity to 70 gigawatts by 2017 to cut its reliance on coal. The goal would be double a previous target set for 2015
Now keep in mind that the earnings "disappointment" of (20c instead of 40c) the Q1 figures would change into a whopping earnings beat (75 cent) if not for some unexpected foreign currency loss. Also consider that Jinko is the cheapest panel maker (47 cent per watt) and has the highest gross margins of 26%.
Even after the rally of the last two days, the shares are still quite far from the top earlier in the year and they still go for a single digit multiple.
Solar to match coal in China by 2016, threatening fossil dominance
Ambrose Evans-Pritchard The Telegraph
Here is a story to cheer us all up. Wuxi Suntech Power expects the cost of electricity from solar modules match to coal-powered stations in China as soon as 2016. If so, we are entering a dramatically different world.
“We are sure that by 2016 – or at the latest 2017 – the levellised cost of solar PV will be the same as coal-fired generation. It is going to completely transform the energy market in China,” he said.
Coal makes up 69pc of China’s energy supply. It is the biggest single cause of Airpocalypse, the suffocation of Chinese cities in perma-smog. The Communist Party is hell-bent on cutting reliance before the middle classes rise up in fury.
And demand is soaring:
The International Energy Agency had assumed that China would soon be burning more than half the world’s coal each year, dooming any chance of capping greenhouse gases at safe levels. “Like it or not, coal is here to stay for a long time to come. Coal is abundant and geopolitically secure, and coal-fired plants are easily integrated into existing power systems. But it is equally important to emphasise that coal in its current form is simply unsustainable,” it said in its December report.
Yet technology may have played another of its great tricks. The cost of extraction for fossils is ratcheting upwards (punctuated by cyclical bursts of supply, of course) as the easy reserves are exhausted.
Solar cost are coming down and down as the technology keeps getting better, right now helped by the US military and energy department. The US National Renewable Energy Laboratory says scientists can already capture 31.1pc of the sun's energy with a 111-V Solar Cell, though records keep being beaten.
Cheap energy storage from flow-batteries (a Harvard research project funded by the US Advanced Research Projects Agency) will soon overcome the curse of intermittency, letting us absorb the sun’s rays by day and release them again as heating and light overnight.
As I reported recently, Sanford Bernstein’s Michael Parker and Flora Chang say we have achieved a virtuous circle of "global energy deflation" that will erode the viability of oil, gas and the fossil fuel nexus over time. But even they would probably not have imagined that solar could match Chinese coal within two years.
The fossil industry seems strangely uninterested in the existential threat straight ahead. In almost three days of talks about oil, gas, and coal at the St Petersburg Economic Forum last week I never heard anybody mention solar as a possible factor in the global mix, not even half a century ahead.
There was much talk about the deal (or MoU to be precise) for Russia to supply China with natural gas for 30 years from 2018. There was talk too about the coming showdown between gas and coal. Nobody seemed aware that solar might intrude on these calculations.
This is typical at inflexion points. The energy industry was ambushed by shale fracking. It woke up late to realise that wildcat explorers had stolen their profit margins, and shaken up the whole global energy system as excess US coal was dumped on the EU market.
But cheap shale is a stopgap for a few years, and it is not that cheap at a break-even cost of nearly $80 a barrel. Solar is for keeps. The more it expands, the cheaper it gets as economies of scale kick in. It becomes ever more dangerous for the petro-powers and rentier carbo-states with time.
It is of course true that solar makes up just 0.17pc of the world's $5 trillion energy market at the moment, or 3pc of its electricity. But once costs are consistently below coal without any subsidy, the switch becomes an avalanche.
Suntech’s Eric Luo predicted that the annual rate of solar installations in China would reach 25 Gigawatts by the end of the decade.
By then it may be unstoppable. The 2020s look like the decade of sweet vindication for solar idealists, just in the nick of time. Providential.
When the United States in early 2012 imposed tariffs of up to 35% on solar panels imported from China, the goal was to prevent the Chinese solar panel makers from dumping their production at below cost. But the U.S. tariff left a loophole that the Chinese drove a truck through.
If a solar cell made outside of China was used in the manufacture of a solar module or panel, then the U.S. tariff did not apply. Chinese solar panel makers simply commissioned solar cell manufacturers outside China to produce the cells then ship them back to China for final assembly and duty-free shipment.
Germany’s SolarWorld, which makes solar panels in Oregon, filed a complaint about the practice with the U.S. Department of Commerce, which issued a preliminary ruling on Tuesday that slaps a duty of 35.21% on imported panels made by Suntech Power and 18.56% on panels made by Trina Solar Ltd. (NYSE: TSL). Other Chinese makers will pay a tariff of 26.89%.
The Chinese responded quickly, calling the U.S. decision “an abuse of trade remedies,” accusing the U.S. of trade protectionism and warning of an escalation in trade disputes between the two countries.
Shares of Trina Solar fell about 3.3% on Tuesday to $12.97, in a 52-week range of $5.00 to $18.77.
JinkoSolar Holdings Co. Ltd. (NYSE: JKS) also saw its shares sink, down about 4.2% to $27.02, in a 52-week range of $7.25 to $37.98.
Shares of Canadian Solar Inc. (NASDAQ: CSIQ) dropped about 2% on Tuesday and were down another 5.6% in premarket trading on Wednesday, at $24.18 in a 52-week range of $8.30 to $44.50.
Even as regulators continue to wrestle with the protracted trade conflict with China over solar panels, the case has already started to reshape the industry, lifting manufacturers based outside China while also raising prices of panels for developers.
On Friday, the United States Commerce Department took another step in that direction, finding that Chinese solar companies had dumped their products on the American market at below cost, and imposing duties of 10.74 percent to 55.49 percent. The ruling follows a separate decision in June that ruled that Chinese solar panel manufacturers had benefited from unfair government subsidies and that imposed steep duties of about 19 percent to 35 percent.
Even though Friday’s ruling, like the one in June, is preliminary and could change — final rulings are expected this year — the effect of the higher tariffs imposed in June has been evident in the market. Panel prices have increased by about 10 percent since then, developers and analysts say, resulting in decreased demand for some of the large, low-cost manufacturers that have dominated the market, like Yingli and Suntech.
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But it has been a boon to other companies, whose products are suddenly seen as competitive and are winning new business. American and European manufacturers that survived the fierce competition with Chinese companies have already shown glimpses of a revival.
SolarCity, the fast-growing rooftop solar power provider based in San Mateo, Calif., recently announced it would buy as much as 240 megawatts’ worth of panels from REC Solar, a Norwegian manufacturer, and acquired a start-up, Silevo, with plans to produce panels in Buffalo. SolarWorld Industries America, the manufacturing company based in Oregon that brought the original case, has also benefited with a recent deal to sell equipment to RGS Energy, an installer.
“We’re scrambling to buy modules with solar cells made in Korea, Japan and Malaysia,” said Ocean Yuan, the president and founder of Grape Solar, a solar panel importer in Eugene, Ore. He added that the effect of the June ruling was clear at a big industry conference in San Francisco this month, where few Chinese companies even bothered to set up displays. Companies that used to take up an entire floor filled only a small corner.
“There are only a handful of Chinese manufacturers showing at the exhibition,” he said. “There used to be a lot of them.”
The United States had already imposed duties on solar panels made from Chinese solar cells — the final major parts that are assembled into modules — in 2012, but many makers avoided the duties by using cells produced elsewhere, especially in Taiwan. The current proceeding is part of an effort by SolarWorld Industries America, a subsidiary of a German company, to close that loophole. Indeed, the decision on Friday included Taiwanese cells and imposed duties on them of 27.59 percent to 44.18 percent.
Still, many issues remain in the air, injecting an unwelcome uncertainty into the solar market.
“For the industry the most important thing is access to a steady supply chain of products that are particularly priced, and not just priced today or a week from now or a month from now but really looking out to 2015 and ’16,” said Robert Petrina, managing director of Yingli Green Energy Americas. “Where is that certainty going to come from?”
As a result of higher prices on Chinese panels, companies that both make and install systems, like SunPower, which is based in San Jose, Calif., could end up in a more competitive position, said Robert Stone, an analyst at Cowen and Company, because higher-efficiency equipment could offer cost savings over the long term.
But he cautioned that the trade case was harmful to the industry as a whole, which needs to keep lowering its prices, since generous subsidies are set to diminish after 2016.
“It’s a waste of effort all around,” he said. “What will ultimately happen is it will be some other offshore manufacturing location or Mexico or something that will end up being the next best alternative if products made in China are blocked by trade barriers.”
Although solar analysts and executives say that they do not expect development to stop, the uncertainty over pricing has already put some projects — especially new large solar farms planning to sell power to utilities — on shaky ground.
Shayle Kann of GTM Research said that the increases came at a particularly difficult time for the large-scale end of the market because developers had been signing power purchase agreements with utilities at low prices that could become difficult to fulfill if equipment costs nudged up.
In China, the looming possibility of even higher tariffs has alarmed the industry, even though its dependence on the American market has already shrunk, and is prompting at least some executives to consider shifting production elsewhere, possibly the United States. Existing tariffs have already limited sales of Chinese solar panels to the United States, to the point that they account for a little less than a tenth of the Chinese industry’s worldwide sales.
Steven Han, a solar industry analyst at SWS Research, an investment analyst based in Shanghai, said that without adding more tariffs, Chinese manufacturers would account for two to three gigawatts out of an American market of about five gigawatts this year. By contrast, Chinese manufacturers supply virtually all of China’s market, the world’s largest, which could reach 14 gigawatts this year. They also ship about five gigawatts each to the European Union and Japan each year, with smaller shipments to markets like Thailand.
But the United States market could still spell the difference between recovering profitability for Chinese manufacturers and continued losses. Steeply declining prices from 2010 through 2013 prompted some Chinese manufacturers, like Suntech, to mothball part of their factory capacity, and that has resulted in a leveling of prices since January this year.
If the United States increases the duties, that equilibrium could be disrupted with renewed pressure for discounting. “Every market is very important” for absorbing Chinese production, Mr. Han said.
One of the largest Chinese solar panel manufacturers by production, JA Solar of Shanghai, registered in the United States this month to issue up to $250 million worth of securities, without specifying the type of shares. Gary Dvorchak, a spokesman for JA Solar, wrote in an email that the registration, “increases its financial flexibility for any opportunities that come along,” but he declined to say what was planned.
Mr. Yuan of Grape Solar said that JA Solar wanted to build a panel factory in the United States to bypass American tariffs, much as Japanese automakers did three decades ago to bypass American import restrictions. Mr. Yuan added that he had been advising the company and had shown its officials possible locations in Oregon, but, he said, they were likely to choose among other states that were offering more generous tax incentives.
Manufacturing in the United States is not necessarily more expensive for a capital-intensive business like solar panel manufacturing.
“The only higher-cost component is labor, which can be offset by a higher level of automation, and by American workers’ productivity and stable work force,” Mr. Yuan said.
The global solar trade wars are myopic at best, and downright criminal at worst. Various countries around the world have been working to bring down the cost of solar power, and that has happened at a very good clip. Chinese solar cell and solar panel manufacturers have been very helpful, bringing the costs to record lows, and they have likely received a bit of support from the Chinese government. The US government and other governments have also supported their manufacturers. Yet, under bankruptcy threat, a handful of no longer competitive solar manufacturers in the US and Europe instigated efforts to put anti-dumping tariffs on Chinese technology. The results haven’t been pretty.
Without any legitimate willingness to compromise on the topic, the trade attack has gone on for a few years now. In response,China has started its own attack on polysilicon imports from the US (and South Korea). Recently, the World Trade Organization (WTO) came out and stated that the US tariffs on Chinese solar modules, steel products, and other exports were inconsistent with obligations under the 1994 Marrakesh accord. Nonetheless, the US Department of Commerce has just imposed preliminary anti-dumping tariffs on solar cells and solar modules produced in China (or Taiwan). The tariffs range from 26-165%.
Yingli, Canadian Solar, Hanwha SolarOne: 42.33% / 47.27%
Trina Solar: 26.33% / 29.30%
Wuxi Suntech: 42.33% / 49.24%
Companies not named due to “adverse facts” (for example, for not cooperating with the investigations): 165.04% / 197%
The final ruling will come around December 16th, 2014, and an International Trade Commission confirmation around January 29th, 2014.
Overall, GTM Research projects that these penalties on Chinese solar products will result in an increase in cost of about 14%. Needless to say, solar power installers in the US are not happy with these tariffs. Given that they make up the bulk of the 120,000+ solar jobs in the country, this has been a hotly opposed target. The leading company behind the tariffs is Germany-based SolarWorld, which has some manufacturing facilities in Washington state.
I do understand the point of anti-dumping tariffs. If a company or country artificially lowers the price of a product without actually lowering its costs and it kills off competitors that are actually have more cost-effective products, it can stifle technological and manufacturing advancement in the country. However, practically every major country in the world has supported its solar manufacturers, in a variety of ways, and at this point in the fight against global warming, what we need is a global effort to bring down the costs of solar (which is going to happen most as manufacturing scales up). What we don’t need is countries fighting companies from other countries in order to protect a few vested interests and their lobbyists.
