Note the second advert which gives retail prices. AUD1.40 per watt for monocrystalline, $1.30 per watt for polycyrstalline. German modules.
The blended price from the last Trina Solar conference call (presumably a wholesale price which is lowe than a retail price) is $1.46 per watt. They told us that they had seen their prices stabilize.
Sorry. No dice. This gets worse. Much much worse.
John
Can't resist a follow up. Within two minutes of posting this the salesman who cold-called me trying to sell solar panels emailed a follow-up:
Just a quick note that the price of alex panel has been dropped to $1.30p/w (minimun purchase amount is 2 pallets).
The price of Ever-Solar inverter is also decreased:
Trina Solar was burning well over 100 million in cash per quarter whilst expanding its output. Discounting pressure is now increasing so it is going to get worse. Survival is not assured.
I hope you have a price in mind at which you will buy some panels for the house?! I mean, at Aussie houser prices they can't possibly be more expensive than a new doormat.
ReplyDeleteTrina actually guided module ASP will drop by 10%+, gross margin will also be down in Q3. I think price rallied on hope that margin will stabilise in Q4 (due to low cost poly).
ReplyDeleteRetail is more than 10% down already.
ReplyDeleteJ
John if you think TSL is bad, you should take a look at LDK. Highly geared. Made a loss in Q2, probably loss in Q3 too based on their guidance. Yet they have announced even more capex increases, and to top it off, they completed a $110M buyback recently. The Chinese banks are very understanding indeed.
ReplyDelete"presumably a wholesale price which is higher than a retail price"
ReplyDeletethat shoul;d read "lower"
Thanks for the on-going education and entertainment John
Don't overlook the elbow in the demand curve when solar hits grid parity.
ReplyDeleteBy my back of the envelope calculations $1.30/watt is already at parity with retail electricity in Australia, no?
Alas they can't hit parity in Australia without addressing the balance of system costs.
ReplyDeleteOr falling to near zero.
This is a real problem for the industry - because balance of system costs are harder to manage and are now 2/3 of cost.
Similar comments from the guy responsible for building Infigen's windfarms (the fact they don't have any money doesn't seem to concern him):
ReplyDelete'Mr Griffin says falling construction costs could bring the projects online sooner.
"I can say that as a positive development is that the price of these types of projects is continuing to fall and it's coming down quite strongly," he said.
"So the time when we can get this project over the line and built commercially is getting closer."'
http://www.abc.net.au/news/2011-08-05/funding-woes-delay-solar-farm-plans/2825642
Love your work and your posts - I religiously check for an update every morning whilst waiting for my train.
ReplyDeleteBy "balance of system costs", are you referring to the cost of connecting a PV site to the grid?
ReplyDeleteI've never understood why investors get attracted to businesses like these. This has been true of Micron $MU post the rare 1990's situation where supply was profoundly constrained. Now capacity is rampant and competition is all price since it's a commodity.
ReplyDeleteSo high investment needs for a business with high rivalry = low returns. This versus business like VMW, OPEN, ACOM, that have increasing returns with scale and competitive advantages.
Interesting that LDK Solar is expecting a price uptick in the second half of 2011.
ReplyDeletehttp://www.reuters.com/article/2011/08/30/us-ldksolar-idUSTRE77T2R520110830
Since solar energy is produced by mixing sunlight with tax dollars, it does not make for a good investment on the long side.
ReplyDeletethe Roller
http://abcnews.go.com/Blotter/white-house-backed-solar-solyndra-company-collapses/story?id=14420755
ReplyDeleteA "White House Backed" solar company collapses due to Chineses companies driving down solar prices but Trina is fine? I've read your Trina articles for a while now without investing but this is it for me. Im buying a put of Trina and FSLR tomorrow ( - :
no doubt you've seen the bloomberg piece (http://www.bloomberg.com/news/2011-08-31/solyndra-to-file-for-bankruptcy-mulls-sale-and-licensing-deals.html)on another solar panel firm in BK.
ReplyDeleteI understand your position on Trina, but it seems the vendor contracts could be renegiated.
So, if that trigger is no factor, I would be concerned about state financing support to keep them afloat until the industry shakes out panel prices begin to improve.
I think the limp through scenario is most probable.
Are you still short fslr?
ReplyDeleteJohn,
ReplyDeleteSo I've been bearish solar (via a specific stock, STP, Suntech) since fall 2009, and am beginning to wonder whether the time to go long solar stocks may be approaching. (emphasis on 'wondering')
With Solyndra going bankrupt and other players going through similar financial difficulties, I wonder if supply/demand dynamics will in time create a more favorable environment for the survivors.
Of course, I could be wrong,and the business can remain ponzi-esque (not in terms of fraud, but in its reliance on raising capital to cover previously raised capital).
Thoughts?
...seems to me two possible scenarios at play (or combination of both)...last sandman standing & sourced project financing as the pitch. One is a kabuki dance...the other involves the Texas two step. I've followed your pursuit of this story since you got the bug in your springtime bonnet. I think the two step will lead to the kabuki...& since I've stated this, it will of course, be the other way around.
ReplyDeleteDoes Trina have in-house capital financing for sales reinforcement...sell you the tank (solar farm) & finance it for you too, buddy, taboot. Large Chinese state banks with 20 year plans on control of the solar panel biz? Private industrialist interests as well? Is this just the same as Mitsui stealing silkworm larvae from the Italians & the rest is history?
I believe it is both...the art of war demands capitulation or annihilation (preferably the former)...victory is measured in the time it takes to achieve capitulation. According to your analysis of the conference call, Moe, Larry & Curly are stooges involved in a real enterprise of which they have little or no idea as to what the chuck is going on. Teleprompter illiterate, but users none the less. It is behind the scenes that needs elucidation. Are they one call away from the creditor's solicitors? Or are they too big to fail. The Japanese save face...the Chinese face gulag? The nonchalance of the company manager's suggest a rather large sugar daddy looming in the wings.
I've just read that the cost per watt has drop 40% since beginning of the year.
ReplyDeletehttp://www.nytimes.com/2011/09/01/business/energy-environment/solyndra-solar-firm-aided-by-federal-loans-shuts-doors.html?_r=1&ref=business
At this rate, when will solar energy become price competitive with other energy sources?
John,
ReplyDeleteHave you had a look at FSLR's most recent financial statements? Their cash burn puts TSL's to shame. Looks like $600M last quarter (when you strip out the debt financing and net sales of securities) vs -$200M the preceding quarter (using the same adjustments).
Not to mention the increase in AP.
If your prognostications for Q3 are valid, they could bleed even more cash next year. Now just to dig through the loan facility agreements...