Q-Cells ends LDK supply agreement, claims guarantee

Mon Nov 2, 2009 2:51pm EST

* Q-Cells to apply to draw on bank guarantee

* LDK disputes Q-Cells claims, says will defend itself

* LDK shares tumble 20 pct; Q-Cells down 2.5 pct

By Christoph Steitz and Laura Isensee

FRANKFURT/LOS ANGELES, Nov 2 (Reuters) – Germany’s Q-Cells ended an agreement with its Chinese solar wafer supplier, LDK Solar (LDK), a sign that the solar industry is continuing to struggle with an oversupply of materials.

Q-Cells, one of the world’s largest makers of solar cells, said on Monday that LDK did not fulfill “significant contractual obligations” in a 10-year agreement to supply wafers to Q-Cells. The companies entered the contract when wafer prices were much higher.

LDK, whose shares dropped 20 percent on Monday, said in a statement that it “vigorously disagrees” with Q-Cells’ claims and plans to defend itself against what it called a wrongful termination.

The move comes as manufacturers of solar cells and panels around the world are struggling with oversupply that has driven down prices and curbed demand.

Prices for polysilicon — a key raw material for the solar industry — and for solar panels have tumbled dramatically in the last year, forcing many players to renegotiate contracts.

“People are coping with oversupply and companies are learning that long-term contracts don’t mean much in a down cycle,” said Oppenheimer & Co analyst Sam Dubinsky.

Q-Cells said in a statement that “the contractual parties have differing opinions concerning the validity of the termination of the agreement” and its plans to reclaim a $244.5 million prepayment it made in 2008 related to the agreement.

“Discussions between the two companies and a parallel arbitration process at the International Chamber of Commerce (ICC) in Paris have not resulted in an amicable settlement yet,” the company added.

LDK Solar Comments on Dispute With Q-Cells Relating to Q-Cells’ Termination of Supply Agreement

2:15 pm EST, Monday November 2, 2009

XINYU CITY, China and SUNNYVALE, Calif., Nov. 2 /PRNewswire-FirstCall/ — LDK Solar Co., Ltd. (LDK), a leading manufacturer of multicrystalline solar wafers, today commented on Q-Cells SE’s announcement of its unilateral termination of the solar wafer supply agreement concluded with LDK Solar in December 2007. In its announcement, Q-Cells has claimed that LDK Solar has not fulfilled significant contractual obligations under the supply agreement. LDK Solar vigorously disagrees with Q-Cells’ claims.

During rounds of discussions and negotiations, LDK Solar has clearly stated to Q-Cells that it has not only procured feed stock for the manufacturing of the solar wafers under the contract, but has also manufactured the requisite quantities of the solar wafers ready for shipment to Q-Cells at its indication of willingness to accept. LDK Solar made deliveries during the first quarter of 2009 pursuant to purchase orders of Q-Cells under the supply agreement. Subsequent to March 2009, LDK Solar suspended deliveries at the request of Q-Cells in order to engage in various negotiations with Q-Cells in the interest of reaching a mutually agreeable amendment to the supply agreement. During the negotiation process, Q-Cells unilaterally claimed, and has now publicly announced, the termination of the agreement. LDK Solar believes this termination is without any valid basis.

The supply agreement provides for LDK Solar to supply solar wafers to Q-Cells on the basis of contractually fixed amounts of polysilicon totaling 43,000 metric tons for the years from 2009 to 2018, with annual wafer supply quantity for 2009 set at 1,000 metric tons at fixed prices under the supply agreement. At the beginning of 2008, Q-Cells made a prepayment of $244.5 million pursuant to the supply agreement. LDK Solar has also provided a bank guarantee in the same aggregate amount to guarantee the performance of its obligations relating to such prepayment under the supply agreement. LDK Solar firmly believes that it has performed substantially on all of its obligations under the supply agreement, and is ready to perform the additional obligations under the agreement that are currently contingent upon cooperation of Q-Cells, such as its willingness to accept the additional deliveries of LDK Solar’s solar wafers pursuant to the supply agreement. Q-Cells has indicated in its announcement that it may draw down from LDK Solar’s bank guarantee, and LDK Solar believes that such drawdown, if made, constitutes a wrongful drawdown under the supply agreement and violates the purpose of such bank guarantee. While the Regional Court of Berlin, in preliminary proceedings LDK Solar instituted in August 2009, initially prohibited Q-Cells from drawing down from LDK Solar’s bank guarantee, it subsequently lifted the injunction in view of the nature and purpose of a bank guarantee, without deciding whether the termination by Q-Cells was valid and instead leaving the issue to be determined in the arbitration proceedings.

LDK Solar intends to vigorously defend its rights and interests as a result of Q-Cells’ wrongful termination of the supply agreement, breach of the supply agreement and wrongful drawdown from our bank guarantee, including the contractually provided arbitration yet to start at the International Chamber of Commerce.

LDK Solar Updates Outlook for the Third Quarter of 2009

3:30 am EDT, Tuesday October 27, 2009

XINYU CITY, China and SUNNYVALE, Calif., Oct. 27 /PRNewswire-FirstCall/ — LDK Solar Co., Ltd. (LDK), a leading manufacturer of multicrystalline solar wafers, today provided an updated outlook for its third quarter 2009 financial results. For the third quarter of 2009, LDK Solar expects to report between $270 million and $290 million in revenue with wafer shipments between 310 megawatts (“MW”) to 330 MW and module shipments between 5 MW to 10 MW. The Company’s prior guidance for the third quarter was revenue of $240 to $270 million, wafer shipments of 260 MW to 300 MW and module shipments of 10 MW to 20 MW.

This outlook for the three months ended September 30, 2009 is an estimate. Results are subject to change based on further review by the management. Once the third quarter reporting date is finalized, LDK Solar will issue a press release announcing the date and details of its third quarter conference call.

Enfinity Chooses LDK Solar for Largest Rooftop Solar Energy Installation Project With the Balta Group in Benelux

4:05 pm EDT, Wednesday October 21, 2009

XINYU CITY, China and SUNNYVALE, Calif., Oct. 21 /PRNewswire-FirstCall/ — LDK Solar Co., Ltd. (LDK), a leading manufacturer of multicrystalline solar wafers, today announced a supply contract with Enfinity for the largest rooftop solar energy installation project in Benelux (an economic union comprising Belgium, the Netherlands and Luxembourg).

LDK Solar will provide approximately 18,000 solar modules to be installed on the Balta Group’s factory rooftop in Sint-Baafs-Vijve, Belgium. The project will be the largest solar installation project in Benelux, with a capacity of 4.2 MWp (megawatt peak) and total panel surface of over 30,000 square meters. The solar panels will deliver an average power output of 3.6 million kW (kilowatt) hours per year, which is equivalent to the power consumption of approximately 1,200 families.

The Balta Group, a manufacturer of broadloom carpets, rugs and laminate flooring, will be utilizing a portion of the solar energy to power its own business activities, with any surplus flowing back to the public grid. For a 20-year duration of the project, Balta Group will enjoy reduced and more stable power bills, in addition to avoiding producing approximately 34.6 million kilograms in carbon dioxide( )emissions.

Enfinity, an international player in renewable energy, negotiated a 20-year lease for Balta Group’s rooftop space and has already begun installation of this project. Enfinity is utilizing revenue from the energy produced and the Green Energy Certificates from the Flemish Government to fund its participation in this project.

“Balta’s decision to manufacture green energy supports a broader view of sustainability in which the improvement in its energy efficiency and the reduction of CO2( )emission play an important role. As a market leader, we take responsibility to reduce our ecological footprint and contribute to achieving European goals in the area of renewable energy,” commented Jules Noten, CEO of the Balta Group. “We are excited to be working with Enfinity, who brings proven expertise and a track record of speedy execution to this project, as well as LDK Solar, who will provide best-in-class solar modules. Balta has more than 61 hectares of rooftop space in Belgium alone, so there is plenty of potential for additional projects in the future.”

“We are very pleased to partner with Balta and Enfinity for this ambitious project,” stated Xiaofeng Peng, Chairman and CEO of LDK Solar. “As we work diligently to expand our presence in Europe, we are very excited to provide the solar modules for the largest solar rooftop project in Benelux. This four megawatt module shipment also represents a significant milestone for LDK Solar – our first module volume shipment to Europe.”

About Balta Group

The Balta Group is a world leader in interior decoration. The company designs market-oriented, creative collections, including rugs, broadloom carpets and laminate flooring. Balta is a group of complementary businesses that together offer a complete set of decor solutions.

The group includes: Balta Broadloom (Sint-Baafs-Vijve), I.T.C. (Tielt), Balta Rugs (Avelgem, Sint-Baafs-Vijve & Waregem), Balterio (Sint-Baafs-Vijve & Vielsalm), Balta US (Dalton, USA), Balta Floorcovering and Balta Orient (Usak, Turkije).

In 2008, the Balta Group realised consolidated revenue of euro 667 million with a workforce today of 3,350 people.

For more information: www.baltagroup.com. Balta Groep – Wakkensteenweg 2 – B-8710 Sint-Baafs-Vijve – Belgium.

About Enfinity

Enfinity, located in Waregem, is a fast-growing and ambitious business, internationally active in renewable energy. As a project specialist, Enfinity looks after the development and financing of in-house solar and wind energy power stations for electricity generation and is currently present in 19 countries in Europe, Asia and North America.

Besides its own project development, Enfinity sells integrated solar installations to companies and individuals. For individuals, this happens through an extensive dealer network which is geographically spread across Flanders and Wallonia.

In 2008 Enfinity had a turn-over of euro 83 million and today Enfinity provides work to more than 150 employees. At the beginning of 2009 Enfinity strengthened its international position with an investment of euro 50 million by Waterland investment company.

Belgian site: www.enfinity.be – International site: www.enfinity.biz

Watch Out: Solar Stocks Might Sink

By James Altucher

As a financial adviser you have one goal: Don’t lose clients’ money. So even more important than finding stocks that could double or triple over the next year, you want to steer clear of stocks that could collapse.

It’s ugly, it’s painful, and nobody wants to call a client and point out an investment sank 90%.

Over the next two articles I’ll be analyzing a few stocks that fit this category. This is purely my view, of course, and I’d welcome anyone with differing views to use the comments section. (As I say in the comments section, I am not shorting these stocks.)

In general I don’t like the solar industry as an investment opportunity, which includes First Solar (FSLR), Energy Conversion Devices (ENER), JA Solar (JASO), LDK Solar Co. (LDK), Suntech Power (STP), Solarfun Power (SOLF), Yingli Green Energy (YGE), and Rene Sola (SOL).

First Solar, for instance, has been a glam stock for day traders for the past few years as the solar industry had almost as much hype behind it as the dot-com industry back in the heyday.

Let’s look at the macro picture and then the micro picture and you’ll see why this stock could go down 90%.

Macro picture:

Solar power is more expensive than other forms of power: coal, natural gas, nuclear, even wind, so the primary customer for all of the solar companies are the countries where solar power is subsidized with no cap on how high the subsidy could go.

In other words: Germany, which is the only such country. Spain tried it, but it was too expensive, so they began to cap the subsidy and as a result the solar industry is now one-fifth the size in Spain that it was when the subsidy was in place.

In fact, approximately 60% of First Solar’s revenue comes from sales to Germany.

Solar Power: Finally, A Reason to Invest Says HSBC

By Keith Johnson

After being relentlessly negative about the solar industry since the summer of 2008, investment bank HSBC is starting to warm up to the sector again.

A ray of hope

The upshot: The worst of the solar sector’s woes may be behind us. That doesn’t mean the good times are here yet—but it does open the door to selective investments in companies that can weather the three years of so of storms that still lie ahead, the bank says in a new report.

The thesis of “Global Solar Power: Solar Eclipsed?” is straightforward: The supply glut that has plagued the sector all year will persist until 2012. That will keep pushing prices down—bad news for corporate profits, good news for the sector as a whole as it becomes more competitive with traditional sources of power generation.

HSBC’s winners include Yingli Green Power (YGE), Sharp, Solar World, and REC. The bank doesn’t care as much for Suntech Power (STP) and LDK (LDK), among many others.

What’s really interesting about HSBC’s new report is how solar power stacks up today against other ways of generating electricity—it doesn’t. That is, all the other power-generation technologies are in roughly the same neighborhood, even wind power—but not solar.

For instance, HSBC estimates costs per megawatt for different options: Combined-cycle gas, 43 euros; regular coal, 62 euros; onshore wind, 58 euros; nuclear power, 48 euros; geothermal, 43 euros. Photovoltaic solar power costs 290 euros per megawatt; concentrated solar power 181 euros.

Or put another way: What price would oil or gas have to be for each technology to be break-even without subsidies, using combined-cycle gas turbines as the low-cost yardstick?

Geothermal is the cheapest: It is competitive with natural gas at $5.16 per million BTUs or oil at $57 a barrel. Nuclear power breaks even at $6.26 and $69.

Traditional, onshore wind power breaks even with gas at $8.33 or oil at $92. Offshore wind still needs a push: It requires gas at $17.14 or oil at $189.

In contrast, solar thermal needs to see natural gas at $35.66 or oil at $393. And good old photovoltaic solar, like the kind on rooftops? Natural gas needs to be at $59.61 or oil at $657 a barrel.

Quick reality check: Gas today is at $3.93 and oil is at $66.

That’s not to say there’s no hope for solar power. There’s always the government.

Thanks to price supports, HSBC expects solar power to reach retail “grid parity” in some places—California and New York—as soon as next year. That means solar power will generate electricity that’s competitive with what you pay on your bill every month. It will take another five years or so for solar to reach wholesale grid parity—when it becomes a no-brainer investment for big utilities.

A Power Surge for GT Solar?

Some analysts think the stock is a giveaway, given GT Solar’s No. 1 place in the silicon solar equipment market, its hefty order backlog, and strong balance sheet

By Gene Marcial

Whenever the subject of solar energy comes up, analysts invariably express concerns about the challenges that confront the industry. Indeed, solar-related stocks are mostly trading below their 52-week highs, as the housing slump weakened demand for solar wafers or panels. And the financial crisis also restricted the flow of credit for housing and solar energy projects.

However, it may well be a good time for investors to catch some rays. Attractive opportunities could arise in selected solar companies as demand should come back with the economic recovery. Also benefiting the solar sector are the various tax breaks and low-interest loans the government is currently providing as part of salvaging the beleaguered housing industry.

One outfit some analysts consider undervalued, with perhaps one of the stronger balance sheets in the solar segment, is GT Solar International (SOLR), the world’s largest provider of specialized manufacturing equipment and services essential for the production of photovoltaic wafers, solar cells, modules, and polysilicon.

GT Solar went public on July 23, 2008, as the financial crisis and economic downturn were gathering steam. Its initial offering price was 16.50 a share, but the stock has wilted since, closing at 6 a share on Sept. 22.

At that price, some analysts say the stock is a giveaway.

High-quality Polysilicon Shortage

Analyst Theodore O’Neill of investment firm Kaufman Bros. says GT Solar is undervalued because it is still No. 1 in the silicon solar equipment market, with a hefty order backlog worth $1 billion.

“Shares of GT Solar trade on orders for new equipment and those orders are starting to go up,” says O’Neill, who rates the stock a buy with a 12-month target price of 9.

LDK Solar Certifies Applied Materials’ HCT MaxEdge Wire Saws for High Volume Production of Solar Wafers

Monday September 21, 2009, 3:15 am EDT

XINYU CITY, China and SUNNYVALE, Calif., Sept. 21 /PRNewswire-FirstCall/ — LDK Solar Co., Ltd . (LDK), a leading manufacturer of solar wafers, has qualified Applied Materials’ (AMAT) HCT MaxEdge(TM) wire saws for volume production, certifying that the system has met all performance and quality specifications. The successful completion of this factory acceptance testing (FAT) is part of the installation of more than 50 MaxEdge systems at LDK Solar that is due to be finished next month.

“We selected Applied’s MaxEdge wafering systems because of their industry-leading productivity and capability to produce advanced solar wafers in very high volumes,” stated Dr. Yuepeng Wan, CTO of LDK Solar. “This new generation of Applied’s HCT wire saws has now proven it can deliver the repeatable high yields necessary to deliver superior quality, cost-effective wafers to our customers. In addition, LDK has received excellent on-site support from Applied’s engineers during our aggressive ramp.”

“We are very pleased that the MaxEdge system has passed this important milestone at LDK Solar,” said Dr. Mark Pinto, senior vice president, corporate CTO and general manager of Applied’s Energy and Environmental Solutions group. “LDK Solar is known for its advanced wafer production capability and Applied Materials is committed to providing leading-edge technology and service to meet the most critical performance, yield and uptime requirements to drive down the cost per watt of solar electricity.”

China Feed-In-Tariff Could Be 2 Years Away

By Eric Savitz
barrons.com

It could be two years or more before China adopts a national feed-in-tariff program, Hapoalim Securities analyst Gordon Johnson writes in a research note.

Johnson points out that there have been widespread expectations on the Street that China would adopt a national FIT during 2009. But he notes that an official with the Energy Research Institute at China’s National Development and Reform Commission apparently told a reporter at a conference in Shanghai that it will take at least two years to decided on a national FIT policy. Johnson refers to a Chinese-language Web story dated Tuesday; here is an English version, via Google Translate. Johnson says the comments came from Hu Runqing (you will notice that the translation garbles the name) who in fact has a Web page on the NDRC’s English language site. I’ve e-mailed her seeking comment, and will follow up with any response.

Anyway, Johnson notes that a number of solar companies – including Yingli (YGE), Suntech (STP), Canadian Solar (CSIQ), LDK Solar (LDK) and First Solar (FSLR) – have recently announced large solar projects in China that are least partially dependent on adoption of a national feed-in-tariff.  Those companies, which benefited from the announcement of their new China projects, now ought to warn investors that the projects face delays, Johnson asserts.

Johnson – a long-time bear on the solar sector – believes that this situation poses risks to the solar stocks, given that a 2-year delay for adoption of an FIT in China “contrasts with the current thinking from investors and solar companies alike.”

In today’s trading:

* Suntech is down 64 cents, or 3.7%, to $16.62.
* Canadian Solar is up 10 cents, or 0.6%, to $17.45. (See also the upgrade today from Collins Stewart.)
* LDK Solar is down 20 cents, or 2.1%, to $9.38.
* First Solar is up $4.17, or 2.8%, to $151.16. (See also the bullish comments today from Barclays.)

LDK Solar Completes First Polysilicon Production Run at 15,000 MT Polysilicon Plant

Wednesday September 9, 2009, 3:15 am EDT

XINYU CITY, China and SUNNYVALE, Calif., Sept. 9 /PRNewswire-FirstCall/ — LDK Solar Co., Ltd. (LDK), a leading manufacturer of multicrystalline solar wafers, today announced that it has successfully completed the first production run and initiated production ramp-up of operations of its first 5,000 metric ton (MT) train in its 15,000 MT annualized capacity polysilicon plant in Xinyu, China on September 5, 2009.

A ceremony was held to mark the occasion and was attended by Mr. Su Rong, Secretary of the Jiangxi Provincial Party Committee, Mr. Wu Xinxiong, Governor of Jiangxi, and other government officials. Customers, suppliers and members of LDK Solar’s polysilicon project team were also present to celebrate this important achievement.

“We are pleased to successfully complete of our first production run and begin to ramp manufacturing at our state-of-the-art 15,000 MT polysilicon plant. The construction of this facility has been an unprecedented undertaking for many of us in attendance. This achievement is thanks to our international teamwork and collaboration efforts,” commented Nick Sarno, Senior VP of Manufacturing and Polysilicon Plant Project Manager. Xiaofeng Peng, Chairman and CEO of LDK Solar, also congratulated and thanked the team for their contributions to achieving this goal.

LDK Solar to Cooperate with Best Solar on Downstream PV Projects

Tuesday September 8, 2009, 3:15 am EDT

XINYU CITY, China and SUNNYVALE, Calif., Sept. 8 /PRNewswire-FirstCall/ — LDK Solar Co., Ltd. (LDK), a leading manufacturer of multicrystalline solar wafers, today announced it has entered into a framework agreement with Best Solar Co., Ltd. (Best Solar) to cooperate on downstream photovoltaic (PV) projects. Under terms of the agreement, LDK Solar will supply the solar wafers and Best Solar will manufacture the solar modules.

“Although we have established a PV engineering company to construct solar power stations in and outside China, we have not yet engaged in any substantial downstream PV businesses, such as solar cell or module manufacturing, solar panel assembly or provision of certain solar utility services,” stated Xiaofeng Peng, Chairman and CEO. “Best Solar, on the other hand, is a large manufacturer of solar modules and a significant provider of solar panel solutions. Additionally, Best Solar is in possession of the relevant product certifications in several jurisdictions. In order to take advantage of the opportunities created by the latest PRC government policies to financially support the construction and operation of PV power stations in China, LDK Solar and Best Solar have agreed to cooperate with each other, by taking advantage of our respective complementary strengths in the different sectors of the PV industry, in order to achieve mutually beneficial results under the current market conditions.”

Best Solar is wholly owned by LDK New Energy Holding Limited, which is LDK Solar’s controlling shareholder, and wholly owned by Mr. Xiaofeng Peng, chairman and chief executive officer of LDK Solar. Best Solar has agreed to provide the solar manufacturing services to LDK Solar at comparable pricing to independent third parties for similar quantity and quality.

About Best Solar

Best Solar Co., Ltd. is one of the world’s largest solar panel solution providers for both thin film and crystal solar modules. The company has two sites, Best Solar SuZhou and Best Solar NanChang, which are designed to produce thin film solar panels as well as crystalline solar panels in phases. The Company’s partnership with the leading solar equipment provider Applied Materials and other major equipment suppliers allows Best Solar to use the most advanced technology in the thin film as well as the crystal solar market. In additional to the thin film product, the Company provides a whole spectrum of products that cover all of the most popular multicrystalline and monocrystalline modules in market place. By providing both thin film and crystal solar panel solutions in large volume, Best Solar is uniquely positioned to ensure its customers success in their competitive market places.

Solar crisis set to hit in 2010

50% of manufacturers may not survive, says The Information Network

Michael McManus, DIGITIMES, Taipei [Friday 4 September 2009]

The solar industry is at a critical stage and 50% of existing solar manufacturers may not survive 2010, according to The Information Network.

The market research firm recently noted massive inventory buildup and huge overcapacity were having a serious impact on the solar panel industry and manufacturers, and Dr. Robert Castellano, president of The Information Network has now pointed out that inventory is averaging 122 days in 2009 versus 71 days in 2008. Capacity utilization dropped to 27.9% in 2009 from 48.0% in 2008.

A key reason is increased supply from China, which added an additional 1GW of capacity. The price per watt has now dropped to US$1.80 for polysilicon-based products, which is lower than the US$1.85 level The Information Network previously thought the industry would see at the end of 2009. By way of comparison, the average selling price in the third quarter of 2008 was US$4.05 per watt.

The Information Network doesn’t expect other industry players to back down from increased competition from China. Other makers are expected to increase their capacities despite the low utilization rates in order to reach economies of scale and better compete against the Chinese. The market research firm expects the industry to see a 25.7% capacity utilization rate and 133 days inventory in 2010.

Average selling prices could drop below US$1 per watt in 2010 and US$0.50 in 2011. As many as 50% of the more than 200 solar manufacturers, mired in red ink with current selling prices above US$2.00 per watt, may not survive, The Information Network stated.

Solar panel manufacturers that have reported loses just in the past few weeks include Energy Conversion Devices (ENER), JA Solar (JASO), LDK Solar (LDK), Q-Cells, ReneSola (SOL), Solar Power (SOPW), and Yingli Green Energy Holding (YGE).

The Information Network: Planned global solar capacity increases, 2008-2010
Item	2008	2009	2010
Solar consumption (MW)	5,625	4,894	6,215
Solar capacity (MW)	11,722	17,551	24,212
Utilization	48.0%	27.9%	25.7%
Inventory days	71	122	133

Source: The Information Network, compiled by Digitimes, September 2009

Spain’s Solar-Power Collapse Dims Subsidy Model

By ANGEL GONZALEZ and KEITH JOHNSON

Spain’s hopes of becoming a world leader in solar power have collapsed since the Spanish government slammed the brakes on generous subsidies.

The sudden change has rippled across the global solar industry, in a warning of the problems that government-supported renewable-energy programs can encounter.

In 2008, Spain accounted for half the world’s new solar-power installations in terms of wattage, thanks to government subsidies to promote clean energy. But late last year, as the global economic crisis worsened, the government dramatically scaled back those subsidies and capped the amount of subsidized solar power that could be installed.

Factories world-wide that had ramped up production of solar-power components found that demand for solar panels was plummeting, leaving a glut in supply and pushing prices down. Job cuts followed.

“The solar industry in 2009 has been undermined by [a] collapse in demand due to the decision by Spain,” says Henning Wicht, a solar-power analyst at research group iSuppli.

Spain is providing important lessons for the U.S., where lawmakers are engaged in a debate about how to support renewable energy. Boosters of clean energy, including President Barack Obama, have pointed to Spain as a success story showing how government policies jump-started renewable energy, created new industries, and helped the environment.

Spain’s early bet on wind power paid off: The country is one of the world leaders in generating such power, only recently eclipsed by the U.S. Spanish wind-power companies have become global players. In 2008, wind power accounted for 11% of Spanish electricity production, compared to less than 1% for solar power.

Reyad Fezzani, chief executive of BP Solar, a unit of oil giant BP PLC (BP), said that despite the current crisis, the Spanish model succeeded in creating a solar industry from scratch. “Once you pay for the infrastructure, you have a skilled work force and you can expand and contract very easily,” he said.

Clean-energy skeptics, however, point to Spain as a cautionary tale of a government policy that created a speculative bubble with disastrous consequences. Some Republicans have cited Spain’s solar bubble and bust as an example of how unsustainable government clean-energy pushes are.

Chinese Solar Stocks Slide After Big Shanghai Tumble

Posted by Eric Savitz
barrons.com

Shares of China-based solar stocks are down across the board today after the Shanghai stock market fell 6.7% overnight on fears that the country’s economic growth could slow due to a slowdown in lending growth. Acording to Bloomberg, former Morgan Stanley Asian economist Andy Xie said the China market could drop another 25%, on top of a 22% slide in August.

Among the China-based solar names:

* JA Solar (JASO) is down 14 cents, or 3.9%, to $3.48.
* LDK Solar (LDK) is down 32 cents, or 3.5%, to $8.92.
* China Sunergy (CSUN) is down 29 cents, or 6.3%, to $4.29.
* Suntech (STP) is down 78 cents, or 5.2%, to $14.27.
* Canadian Solar (CSIQ) is down 60 cents, or 4%, to $14.59.
* Yingli Green Energy (YGE) is down 46 cents, or 4.2%, to $10.56.
* ReneSola (SOL) is down 9 cents, or 1.6%, to $5.64.

LDK Solar Partners with Suqian City on PV Projects

Monday August 31, 2009, 3:15 am EDT

XINYU CITY, China and SUNNYVALE, Calif., Aug. 31 /PRNewswire-FirstCall/ — LDK Solar Co., Ltd. (LDK), a leading manufacturer of multicrystalline solar wafers, today announced that it has entered into an agreement with Suqian City of Jiangsu Province for the development of PV power projects. According to the agreement, LDK Solar will develop PV power projects in buildings, plants and integration systems, totaling up to 300 MW by 2015. The terms, including financing, design and specific location of each of the projects, will require a feasibility study as well as final approval from relevant governmental departments prior to initiation.

“Suqian City has unique advantages in developing PV projects, with average annual sunshine of up to 3,000 hours as well as strong support from the government for growing the solar energy industry,” stated Xu Huiming, Vice Mayor of Suqian City. “Suqian City has become a leading area for the development of the solar PV industry and we hope that our partnership with LDK Solar will further increase our solar resources and promote the expansion of the local solar industry.”

“We are very excited to partner with Suqian City and to support the development of its local economy and Chinese solar industry,” stated Xiaofeng Peng, Chairman and CEO of LDK Solar. “We are encouraged by the continued support from our government for PV projects and pleased with the enthusiasm for this partnership demonstrated by Suqian City.”

The PV application market has been rapidly developing in China this year and the Chinese government is supporting the establishment of the domestic PV market through the use of governmental financial subsidies.

Ban on scrap polysilicon to boost China solar sector

Thu Aug 27, 2009 5:40am EDT

By Leonora Walet, Asia Green Investment Correspondent

HONG KONG, Aug 27 (Reuters) – A Chinese ban on imports of a waste material used for solar wafers may be bad news for foreign competitors but it is a big boost to China’s solar sector.

Scrap polysilicon, which can be reused to make solar wafers, is low-grade silicon that fails to meet the grade for chips found in most electronics.

Beginning this month, China stopped accepting scrap polysilicon to comply with environmental regulations.

The ban threatens the income of Chinese scrap polysilicon traders and limits the market for companies that sell to them, such as top contract chipmaker TSMC. It is particularly harsh for small and new domestic solar players who rely on the cheap material to make wafers and panels.

For China’s polysilicon companies, including GCL-Poly Energy Holdings and LDK Solar (LDK), the ban is an opportunity to expand business. For foreign rivals South Korean OCI Co Ltd, MEMC Electronic Materials Inc (WFR) or Japan’s Tokuyama Corp the ban is a potential threat.

China produces over 60 percent of the world’s solar panels, and is among the heaviest users of pure polysilicon and the scrap variety. Scrap polysilicon accounts for up to 30 percent of silicon fed into some of the solar wafers and panels in China.

“In a way, the ruling was designed to protect (China’s) very young polysilicon industry,” said KK Chan, chief executive of private equity firm Nature Elements Capital. “The sector needs all the help it can get given a supply glut of the material.”

The ban comes at a time when Chinese polysilicon companies are ramping up production, despite an oversupply of the key solar component.

GCL-Poly, which acquired $3.4 billion worth of solar assets in June, is on track to produce about 3,000 tonnes of polysilicon by year end. LDK Solar aims to produce 5,000 tonnes by 2010.

Yingli Green Energy Holding Co (YGE), ReneSola (SOL) and Tongwei Co should benefit.

After the credit crunch dried up funding for solar projects, the sector was hit by a massive oversupply of polysilicon. Prices fell to $69 per kilogram from its peak of $400 in 2008.

ENVIRONMENTAL FACTOR

China’s Environmental Protection Ministry said it imposed the ban because the heavy chemicals that come in contact with scrap polysilicon when reused to make solar wafers and panels produce waste that could harm the environment.

The ministry said in a notice posted on its website last month that the regulation was imposed in line with China’s solid waste pollution laws.

A ministry spokesman declined to comment.

“This is positive for China’s polysilicon sector, and the environment,” said GCL-Poly president Hunter Jiang.

The new rule is slowly having a positive impact for local makers of the solar component. Spot prices of polysilicon in China rose to $72 per kg in August from $67 in July weeks after the rule was enforced, said New Energy Finance analyst Julia Wu.

“The segment most likely affected by the policy are local panel and wafer makers, especially the smaller ones,” Wu said.

Established Chinese solar wafer companies are least affected.

“It should not have an impact, given there is sufficient supply of polysilicon in the market,” said Renesola chief finanical officer Charles Bai.

(Additional reporting by David Stanway in Beijing and Suilee Wee in Hong Kong; Editing by Chris Lewis)

LDK Solar Partners With Yancheng City on PV Projects

Tuesday August 25, 2009, 4:05 pm EDT

XINYU CITY, China and SUNNYVALE, Calif., Aug. 25 /PRNewswire-FirstCall/ — LDK Solar Co., Ltd. (LDK), a leading manufacturer of multicrystalline solar wafers, announced today that it has entered into an agreement with Yancheng City of Jiangsu Province for the development of PV power projects. According to the agreement, LDK Solar will develop a number of PV power projects, including PV ground-power stations, and roof and building integration systems totaling up to 500 MW over the next five years. The terms, including financing, design and specific location of each of the projects, will require a feasibility study as well as final approval from relevant state departments prior to initiation.

“Yancheng City is currently one of the most important wind power bases in China. Yancheng City possesses the largest coastal area in Jiangsu Province and is rich in natural resources,” stated Li Qiang, Mayor of Yancheng City. “We plan to partner with LDK Solar to build large ground-power stations to take advantage of wind and photovoltaics as complementary power sources. With the support of the Chinese government and their financial subsidy programs, we hope that our partnership with LDK Solar further increases the development of solar resources and promotes growth of the solar PV industry in Yancheng City.”

“We are pleased to partner with Yancheng City on PV projects and participate in the development of the Jiangsu coastal area. We believe that an increasing number of PV application projects will originate in China in the future and we will continue to work to position LDK Solar favorably within China’s rapidly developing PV market,” stated Xiaofeng Peng, Chairman and CEO of LDK Solar.

Why the Gloom on Solar-Energy Stocks?

Solar-power equipment makers’ profits have been hit by the credit crunch and the glut of a key raw material

By David Bogoslaw

The global credit freeze and a supply glut of polysilicon—the key raw material used in photovoltaic solar panels—have hurt solar-power equipment manufacturers’ earnings this year. Over the long run, some analysts are hopeful the lower prices will make the technology more competitive with conventionally generated power and make these companies more compelling plays in the eyes of investors. But the road to solar riches remains bumpy.

Case in point: On Aug. 12, China-based LDK Solar (LDK) reported a second-quarter loss of $2.03 per American Depository Share (ADS) on a 48% drop in revenue, to $228.3 million, compared with a profit of $1.29 per ADS a year ago on $441.7 million in revenue. A writedown of $176.3 million on a plunge in value of its inventories accounted for most of the $216.9 million quarterly loss.

LDK, which makes multicrystalline wafers used in solar panels, also issued a third-quarter revenue outlook well below Wall Street expectations, sending its ADSs down 18% on Aug. 13.

Major Shifts in Market Share

LDK’s results came on the heels of two other Chinese solar companies that disappointed the market on Aug. 12. Wafer producer ReneSola (SOL) posted a loss of 3¢ per ADS, vs. earnings of 19¢ a year ago, on a 52% drop in revenue, to $82.6 million. The company’s bottom-line results beat the market’s consensus estimate of a 6¢ loss but missed analysts’ forecast of $90 million in revenue.

Meanwhile, solar-cell maker JA Solar (JASO) recorded a loss of 18¢ per ADS, missing analysts’ estimates by 12¢. That compared with a 1¢ loss in the second quarter of 2008, while revenue fell more than 51%, to $88 million. The latest loss included charges related to stock-based compensation and a hedging loss.

The move from shortage to oversupply of polysilicon in just around 18 months has caused a major shift in business models and market share. Panel manufacturers that locked in fixed-price contracts for polysilicon, which gave them an edge over producers that had to pay much higher prices in the spot market, now have to scramble to renegotiate contracts at lower prices or write down the value of their inventories.

Solar shares tumble on 2nd-quarter results, analysts warn of near-term sector weakness

Thursday August 13, 2009, 2:24 pm EDT

NEW YORK (AP) — Shares of solar stocks tumbled Thursday on troubled second-quarter results, as analysts warned of a dismal near-term outlook.

After the closing bell on Wednesday, LDK Solar Co. Ltd. (LDK) reported a second-quarter loss as it wrote down the plummeting value of its inventory, missing analyst expectations. Shares of the company plunged $2.09, or 18.6 percent, to $9.12 in afternoon trading.

JA Solar Holdings (JASO) on Wednesday posted a wider second-quarter loss on sharply lower revenue, stock-related expenses and buying back bonds. JA Solar shares fell 35 cents, or 7.6 percent.

Credit Suisse analyst Satya Kumar said JA Solar, along with other solar companies, has little visibility beyond November. Kumar estimates that fourth-quarter shipments will tumble up to 15 percent quarter over quarter. Kumar rates the company “Neutral” and raised its price target to $4 from $3.

Barclays Capital analyst Vishal Shah said there are few near-term catalysts to boost the sector. That, combined with weak seasonality and the sector trading near fair value, will likely weaken solar stocks. Shah downgraded the sector to “Neutral” from “Positive.”

Shah predicted greater-than-expected pricing declines through the first quarter of 2010 and said industry oversupply could extend into the second half of next year.

Elsewhere, shares of Suntech Power Holdings Co. Ltd. (STP) fell $1.28, or 7 percent, to $17.05. Trina Solar Ltd. (TSL) shares dropped $2.65, or 8.9 percent, to $27.16. Shares of Yingli Green Energy Holding Co. (YGE) slid $1.20, or 8.9 percent, to $12.26.

U.S. solar stocks down on dim results, Barclays cut

Thu Aug 13, 2009 1:06pm EDT

* LDK Solar drops more than 18 percent

* Barclays downgrades U.S. solar energy sector to neutral

* Analysts upgrade, raise target price for JA Solar

NEW YORK, Aug 13 (Reuters) – U.S. solar power company shares fell on Thursday, led by an 18-percent drop in LDK Solar Co Ltd (LDK), which posted a wider-than-expected quarterly loss.

The slump came as Barclays Capital downgraded the U.S. solar energy sector to “neutral” from “positive,” as it sees slowing growth in demand and recommended that investors wait for better entry points.

And in Germany, Q-Cells AG, one of the world’s largest solar cell makers, said it would slash its workforce by about a fifth as a result of a price slump in the industry that caused a first-half loss before interest and tax.

“Although solar shares have underperformed so far, we believe lack of potential near-term catalysts, relatively rich valuation and weak seasonality could likely result in further downside pressure,” Barclays analyst Vishal Shah wrote in a note to clients.

In trading on the New York Stock Exchange, LDK Solar’s stock was down $2.06, or 18.38 percent, at $9.15.

China’s Yingli Green Energy Holding Co Ltd (YGE) was down 8.25 percent to $12.35, Suntech Power Holdings Co Ltd (STP) fell 7.19 percent to $17.03 and Trina Solar Ltd (TSL) fell 8.69 percent to $27.22.

On the Nasdaq, First Solar Inc (FSLR) was down about 60 cents at $144.39 and Sunpower Corp (SPWRA, SPWRB) slipped 44 cents to $28.32.

Still, some analysts saw a few sunny rays. Analysts at Simmons and Co upgraded Chinese solar company JA Solar Holdings Co Ltd (JASO) to “neutral” from “underweight” and Credit Suisse raised the target price of the company’s stock to $4 from $3.

JA Solar’s stock was down more than 8 percent to $4.09 on the Nasdaq on Thursday, a day after it posted a quarterly net loss.

(Reporting by Steve James in New York and Laura Isensee in Los Angeles. Editing by Gerald E. McCormick and Robert MacMillan)

Solar: More Trouble Looms Ahead, Barclays Warns

Posted by Eric Savitz
barrons.com

The troubles for the solar sector are far from over, Barclays Capital analyst Vishal Shah warned this morning.

Formerly bullish on the group as a whole, Shah today reduced his sector rating on solar to Neutral. Shah says the Q2 weakness in solar company results represents a “secular, not seasonal decline.”

Pricing pressure, he contends, is intensifying. Shah says checks find Q4 module ASPs from Chinese companies could drop to $1.80/watt, worse than the $2/watt he had previously been expecting. “Given the overly optimistic demand outlook of most Chinese solar players and expectations of continued production ramps, we see additional downside risk to module pricing exiting 2009,” he adds. “More importantly, we expect 2010 module ASPs to decline by 25%-30%.”

At the same time, Shah warns that the supply/demand outlook is deteriorating, rather than improving. “We expect U.S. demand to pick-up at a slower pace relative to prior expectations and see potential downside risk to inflated demand expectations in China,” he writes. “Moreover, our updated supply outlook suggests that industry over-supply could persist in [the 2010 second half] until production capacity reductions occur at a rapid pace across the industry.”

For the Chinese solar stocks, he warns, earnings risk is to the downside. “Market share gains and not profitability is the motive for most Chinese solar companies – given the inflated opex/interest cost structures, operating break-even levels of companies continue to increase and as such we expect companies to continue to produce even as overall profitability levels deteriorate.” As for the U.S. solar players, he says the outlook is “mixed at best,” given a pick-up which he thinks will be slower than expected.

Finally, raising a potentially huge problem for the solar industry, he wonders whether the current German feed-in tariff level is sustainable, given significant volume growth in 2009 and the potential for further acceleration in 2010, and the impact of the trend on rate-payers in the difficult economic environment. He adds that significant module price declines and attractive project economics “may prompt policy makers to reconsider generous FIT levels.”

Shah’s comments follow earnings disappointments yesterday from JA Solar (JASO), ReneSola (SOL) and LDK Solar (LDK), The reports spurred a number of rating changes this morning:

* Shah cut JASO to Equal Weight from Overweight, trimming his price target to $4, from $5.
* On SOL, there was a split decision. Piper Jaffray analyst Jesse Pichel cut his rating to Underweight from Neutral, with a new price target of $4, down from $6.50. But Creidit Suisse analyst Satya Kumar upgraded the stock to Outperform from Neutral, with a target price of $7.50, up from $3.80.

In today’s trading:

* JA Solar is down 20 cents, or 4.5%, to $4.27.
* LDK Solar is down $1.66, or 14.8%, to $9.55.
* ReneSola is up 22 cents, or 4.1%, to $5.58.
* SunPower (SPWRA, SPWRB) is off 38 cents, or 1.3%, to $28.38.
* Suntech (STP) is down 67 cents, or 3.7%, to $17.68.
* First Solar (FSLR) is up $2.15, or 1.5%, to $147.14.
* MEMC Electronic Materials (WFR) is up 9 cents, or 0.5%, to $16.89.
* Canadian Solar (CSIQ) is off 22 cents, or 1.2%, to $18.12.
* Yingli Green Energy (YGE) is down $1.08, or 8%, to $12.38.

Q-Cells to cut about 500 jobs in restructuring

Thu Aug 13, 2009 3:49am EDT

* Q-Cells says to review all investment projects

* Aims to reduce production costs by 25 pct

* Books further write-down for REC, H1 loss 697 mln euros

* Phoenix Solar EBIT lags expectations, confirms ‘09 outlook

* Q-Cells indicated down 6.6 pct, Phoenix Solar up 0.4 pct

By Christoph Steitz

FRANKFURT, Aug 13 (Reuters) – Q-Cells, one of the world’s biggest makers of solar cells, is planning to slash about a fifth of its workforce, it said on Thursday, in a move to counter the effects of a price war.

“Together with the necessary reduction in overheads in all areas, around 500 jobs will be cut permanently. Short-time work will continue to be in operation at the Thalheim plant depending on the market development,” Q-Cells said in a statement, adding it would review all investment projects.

It now employs about 2,600 staff.

The news comes a day after Chinese rivals JA Solar Holdings Co Ltd (JASO) and LDK Solar Co Ltd (LDK) posted quarterly net losses due to a price slump that has put a sudden stop to growth in the sector.

Q-Cells in July withdrew its 2009 sales forecast after the price slump and high operating costs brought a 62 million-euro ($87.58 million) second-quarter operating loss. At the same time it announced outline details of the restructuring program.

It expects the restructuring to cut production costs by 25 percent, necessary after Asian rivals cut prices.

In the first half of 2009 the company made a net loss of 696.9 million euros, caused by further writedowns on the sale of its stake in Norway’s Renewable Energy Corp in May. The writedowns were widely expected by analysts.

Solar cos LDK, JA Solar lose money, shares slump

Wed Aug 12, 2009 8:04pm EDT

* China’s JA Solar, LDK Solar post quarterly losses

* LDK takes bigger-than-expected inventory writedown

* JA Solar inventories up, prices down nearly 30 pct

* JA stock slides nearly 15 pct, LDK down 15 pct

By Nichola Groom

LOS ANGELES, Aug 12 (Reuters) – Chinese solar companies JA Solar Holdings Co Ltd (JASO) and LDK Solar Co Ltd (LDK) posted quarterly net losses on Wednesday as a global glut of solar panels battered prices for their products, sending the companies’ shares down sharply.

The solar industry has suffered from a dearth of financing for renewable energy projects due to the global financial crisis. In addition, an economic recession and a pullback in solar incentives in Spain have led to an oversupply of solar panels that has sent prices into tailspin and hampered manufacturers’ profits.

JA Solar, which is based in Shanghai, said inventories rose 18 percent in the second quarter while average selling prices tumbled nearly 30 percent.

LDK, meanwhile, posted a wider-than-expected net loss after taking a large inventory writedown. It also forecast third-quarter revenue below Wall Street estimates.

“The numbers were miserable,” Soleil analyst Paul Leming said of LDK’s results. “This company continues to burn cash and book value has been cut in half over the last three quarters …. There is not much to like here.”

LDK Solar posts big loss on writedown, shares dive

Wed Aug 12, 2009 5:17pm EDT

* Q2 shr loss $2.03 vs $0.92/shr loss estimate

* Took $175.8 mln inventory write-down

* Q3 revenue view below expectations

* Shares down 10.3 pct in extended trade

LOS ANGELES, Aug 12 (Reuters) – LDK Solar Co Ltd (LDK) reported a wider-than-expected quarterly net loss on Wednesday after taking a large inventory writedown, and forecast third-quarter revenue below Wall Street estimates, sending its shares down 8.7 percent in extended trade.

The company, which makes silicon wafers for the solar power industry, posted a second-quarter net loss of $216.9 million, or $2.03 per share. Wall Street analysts, on average, had been expecting a loss of 92 cents per share, according to Reuters Estimates.

The loss was bigger than LDK forecast on July 23 when it said it expected to report a net loss of $180 million to $200 million for the quarter.

LDK last August reported a second-quarter net profit of $149.5 million, or $1.29 per share.

“The numbers were miserable,” Soleil analyst Paul Leming said. “This company continues to burn cash and book value has been cut in half over the last three quarters… There is not much to like here.”

Like many in the solar industry, LDK is grappling with fallout from a dearth of financing for renewable energy projects and a global oversupply of solar panels that has sent prices on solar power products tumbling.

LDK’s results included a $175.8 million inventory write-down and $16.7 million loss on purchase commitments of polysilicon materials. Last month, the company had said it expected a writedown of $150 million to $160 million.

LDK Solar Reports Financial Results for Second Quarter 2009

Wednesday August 12, 2009, 4:05 pm EDT

XINYU CITY, China and SUNNYVALE, Calif., Aug. 12 /PRNewswire-FirstCall/ — LDK Solar Co., Ltd. (“LDK Solar”) (LDK), a leading manufacturer of multicrystalline solar wafers, today reported its unaudited financial results for the second quarter ended June 30, 2009.

All financial results are reported in U.S. dollars on a U.S. GAAP basis.

Recent Highlights:

• Second quarter 2009 revenue was $228.3 million;
• Shipped 231.7 MW of wafers, up 20.9% year-over-year;
• Secured a RMB 500 million (equivalent to approximately US$73 million) short-term loan from The Export-Import Bank of China, and an RMB 500 million three-year loan from Huarong International Trust Co., Ltd.;
• And reached mechanical completion of the first 5,000 metric ton (MT) train in its 15,000 MT annualized capacity polysilicon plant in Xinyu, China.

Net sales for the second quarter of fiscal 2009 were $228.3 million, compared to $283.3 million for the first quarter of fiscal 2009, and $441.7 million for the second quarter of fiscal 2008.

For the second quarter of fiscal 2009, gross profit was negative $205.5 million, compared to $4.9 million in the first quarter of fiscal 2009, and $112.3 million for the second quarter of fiscal 2008.

During the preparation of its second quarter 2009 financial results, LDK Solar’s management determined that an inventory write-down and loss on firm purchase commitments of polysilicon materials of approximately $175.8 million and $16.7 million, respectively, was required as a result of the continued rapid market price decline for solar wafers. As a result, gross margin and results from operations were negatively impacted in the second quarter of fiscal 2009.

Gross margin for the second quarter of fiscal 2009 was negative 90.0%, compared to 1.7% in the first quarter of fiscal 2009 and 25.4% in the second quarter of fiscal 2008.

Loss from operations for the second quarter of fiscal 2009 was $235.0 million, compared to a loss of $16.1 million for the first quarter of 2009, and compared to income from operations of $100.3 million for the second quarter of fiscal 2008.

Operating margin for the second quarter of fiscal 2009 was negative 102.9% compared to negative 5.7% in the first quarter of fiscal 2009 and 22.7% in the second quarter of fiscal 2008.

Excluding the inventory write-down and loss on firm purchase commitments of polysilicon materials, gross profit was negative $13.0 million, or a gross margin of negative 5.7% for the second quarter of 2009 and loss from operation was $42.5 million, or an operating margin of negative 18.6% for the second quarter of 2009.