North Coast Solar Stocks

June 20, 2009

Partial Eclipse for Solar Shares?

Filed under: CSIQ, CSUN, DUK, ENER, ESLR, EXC, FPL, FSLR, JASO, LDK, SOLF, SPWR, STP, TSL, YGE — Tags: , , , , , — Jason @ 6:00 pm

By MIKE HOGAN
barrons.com

Mostly sunny skies for solar — but tread carefully.

INVESTORS IN SOLAR STOCKS TEND TO LOOK on the bright side of things. The result: some industry shares have risen to dizzying heights.

Share prices of Trina Solar (TSL), Canadian Solar (CSIQ), Yingli Green Energy (YGE), Suntech Power (STP), Solarfun (SOLF), JA Solar (JASO) and China Sunergy (CSUN) have logged triple-digit percentage gains over the past quarter, according to Barclays Capital (www.barclayscapital.com). LDK Solar (LDK), First Solar (FSLR) and Evergreen Solar (ESLR) have posted high-double-digit returns.

We will get to what we would do with the shares in a minute, but first let’s see how this relatively small industry came back after crashing harder than most when the bottom fell out of the stock market. One propellant has been resurgent oil prices, which tend to reinforce the need for alternatives. Of course, the overall market’s revival has helped a lot, too.

Also important, solar stocks have a halo of political favor that helped them avoid a capital-deprivation-induced coma a few months ago. Instead, they will spend the next eight years protected by the government with a generous allowance of federal, state and local tax incentives, reports the Solar Energy Industries Association (www.seia.org/cs/solar_tax_policy). This protection comes courtesy of the American Recovery and Reinvestment Act of 2009.

SUBSIDIES ARE REQUIRED — for the time being, at least — because even with a free supply of sunshine, solar is the costliest way to generate electricity by a sizable margin, notes global energy researcher New Energy Finance (www.weforum.org/pdf/climate/Green.pdf). It faces significant technology hurdles before it can take its place alongside baseload energy sources on the national power grid. On the other hand, solar is uniquely equipped to be a low-cost answer to the peak-demand problems that bedevil utilities.

“We feel that, within three years, solar will achieve price parity with natural gas and other sources during afternoon and summer peak-load hours,” says Barclays Capital Analyst Vishal Shah.

Delivering a fraction of 1% of America’s electricity at present, solar won’t command much more than a couple of percentage points 20 years from now, says the U.S. Energy Information Administration (www.eia.doe.gov/cneaf/alternate/page/renew_energy_consump/rea_prereport.html).

But of more relevance to investors is that this narrow slice of a very large energy pie is growing at an astounding rate, says Merrill Lynch researcher Steven Milunovich. Pre-eminent energy auditor British Petroleum (www.bp.com) reported a 69% increase in solar installations in 2008, of which the U.S. has about one gigawatt of the world’s 14 gigawatt capacity (www.bp.com/sectiongenericarticle.do?categoryId=9023789&contentId=7044135). A megawatt (MW) is one million watts and a gigawatt (GW) is 1,000 megawatts.

By Shah’s count, projects already in the pipeline should add more than three GW of new generating capacity by 2012 to each of two relatively untapped markets — utilities and large-scale commercial businesses. The recovery and reinvestment legislation lets businesses get cash back from the U.S. Treasury Department for 30% of the cost of a solar project (www.treas.gov/recovery/programs.shtml). That and low-interest loan guarantees, notes Shah, are adding jumbo solar arrays to the roofs of big-box stores like Wal-mart (WMT) (http://walmartstores.com/FactsNews/NewsRoom/ 9100.aspx) and multi-megawatt solar farms to the portfolios of utilities that need to offset carbon emissions.

Major coal user Duke Energy (DUK) will buy all 16 MW of capacity from a new SunEdison (www.sundedison.com) facility, and build 10 MW of its own capacity (www.duke-energy.com). Florida Power & Light (FPL), the nation’s largest solar operator, plans another 110 MW, including a 10 MW solar array at NASA’s Kennedy Space Center (www.fpl.com/news/ 2009/52709.shtml). Even nuclear powerhouse Exelon (EXC) is developing a new 10 MW facility with SunPower (www.sunpowercorp.com) in downtown Chicago (www.exeloncorp.com/aboutus/news/pressrelease/corporate/ 04232009_1Q+Earnings.htm).

The new tax regime helps defray what can be $30,000 in up-front costs for residential solar systems that now account for most American capacity (www.nrel.gov/docs/fy09osti/44853.pdf). EIA anticipates another 1.6 million installations by 2016 (www.eia.doe.gov/oiaf/aeo/demand.html) from consumers who can find which local, state and federal programs apply to their locales in the National Renewable Energy Laboratory (www.nrel.gov) database at DSIRE (www.dsireusa.org).

The real catalysts for share appreciation, though, will be the megawatt-sized utility and commercial installations, says Shah. Government pump priming has restarted the flow of private capital, adds New Energy Finance (www.newenergyfinance.com): “Already in the second quarter, investment in clean energy companies via the public markets has rallied sharply with well over $2 billion of completed secondary issues.”

SO WHAT SHOULD INVESTORS DO? Chinese solar companies sell at a median multiple of 55 times 2009 earnings, a heady bounce from their median nine times just before China announced its stimulus plans in March. Meanwhile, their American cousins have climbed to a median multiple of 27 times — led by a 74% run-up in U.S. technology leader First Solar.

Depending on the price you paid, Shah suggests you might want to lighten up on Canadian Solar and Solarfun based on valuation. But don’t abandon the sector altogether. As high as they are, valuations aren’t that rich in terms of projected 2010 earnings, says Shah. He and Milunovich agree this could be a breakout year, in which select companies — leading Chinese crystalline-silicon panel makers like Yingli, JA and Suntech, and U.S. thin-film innovators like First Solar, SunPower (SPWRA, SPWRB) and Energy Conversion Devices (ENER) — will be able to support a 20-plus multiple.

While small solar companies have more headroom for share-price gains than do larger energy companies, their shares come with more risk and volatility. Don’t be blind to the downside.

April 23, 2009

SunPower Reports First-Quarter 2009 Results

Filed under: EXC, FPL, PCG, SPWR, XEL — Tags: , , , , , — Jason @ 4:05 pm

Thursday April 23, 2009, 4:05 pm EDT

– Signed 3-year, 300 to 600 MW supply agreement with FPL Group in April 2009

– Awarded 17 MW power plant agreement with Xcel Energy in April 2009

– Announced 8 MW power plant development agreement with Exelon in April 2009

– Received regulatory approval of 210 MW power purchase agreement with Pacific Gas and Electric

– Booked more than $60 million in North American commercial systems projects

– Began construction of SunPower’s first Italian power plant with Api Nova

SAN JOSE, Calif., April 23 /PRNewswire-FirstCall/ — SunPower Corporation (SPWRA, SPWRB) today announced financial results for its 2009 first quarter which ended March 29, 2009. Revenue for the 2009 first quarter was $214 million and compares to revenues of $401 million in the fourth quarter of 2008 and $274 million in the first quarter of last year. The Components and Systems segments each accounted for 50% of first-quarter 2009 revenue.

“The first quarter of 2009 was the most challenging quarter we’ve seen since SunPower went public in 2005,” said Tom Werner, SunPower’s CEO. “Our quarterly performance was impacted by seasonality, the continuing effects of the credit crisis and difficult economic conditions. Despite these headwinds we were able to deliver strong gross margins in our Components business and positive non-GAAP net income. We have responded to current market conditions by moving to a demand-driven manufacturing model and reducing our planned operating expenses to align with our adjusted revenue outlook. Our recent announcements with FPL Group (FPL), Exelon (EXC) and Xcel (XEL) are representative of the range of opportunities in our utility and power plant business pipeline. Looking forward, we see positive trends emerging in a number of market segments, including the rooftop, distributed power plant and utility markets that give us confidence that we are well positioned for growth in the second half of 2009, 2010 and beyond.

“We were also pleased to announce today our expanded partnership with FPL Group through a significant supply agreement for future solar projects. This builds on our successful commencement of construction of the 25 megawatt DeSoto Next Generation Solar Energy Center in the first quarter of 2009. We look forward to working with FPL Group on future solar power plants around the country,” Werner concluded.

(more…)

April 22, 2009

Exelon and SunPower to Develop Nation’s Largest Urban Solar Power Plant

Filed under: EXC, SPWR — Tags: , , , — Jason @ 9:00 am

10-megawatt solar installation would turn Chicago South Side brownfield site into a source of low-carbon electricity

Wednesday April 22, 2009, 9:00 am EDT

CHICAGO–(BUSINESS WIRE)–Exelon and SunPower Corp. (SPWRA, SPWRB) today announced an agreement to develop the nation’s largest urban solar power plant at a former industrial site on Chicago’s South Side. The 10-megawatt solar photovoltaic (PV) facility is scheduled for completion by the end of this year.

The $60 million project is contingent upon Exelon receiving a federal loan guarantee under the recently passed federal stimulus legislation formally known as the American Recovery and Reinvestment Act, which includes provisions for investment in green jobs and emissions reduction. Exelon is seeking a loan guarantee for up to 80 percent of the project cost from the U.S. Department of Energy Loan Guarantee Program Office (LGPO).

Exelon plans to lease 39 acres of the West Pullman Industrial Redevelopment Area from the City of Chicago for the project. The former industrial site is a “brownfield” property that will be redeveloped for productive reuse. Exelon Generation will own and operate the plant and market the electricity and Solar Renewable Energy Certificates (SRECs) it generates. SunPower, a manufacturer of high-efficiency solar cells, solar panels and solar systems, will design, manufacture and install the solar system.

“With nearly 2,000 megawatts of renewable power in our energy portfolio, including hydro-electricity, wind, landfill gas and solar, Exelon is investing aggressively but wisely in renewables as part of our comprehensive environmental strategy, Exelon 2020,” said Exelon Chairman and CEO John W. Rowe. “As a provider of electrical service in urban areas, we understand the importance of finding urban locations for renewable energy and we are pleased to bring the largest urban solar installation to West Pullman, helping to revitalize an area where industry once thrived.”

The project’s 32,800 solar panels will convert the sun’s rays into enough clean, reliable electricity to meet the annual energy requirements of 1,200 to 1,500 homes per year. According to the U.S. Environmental Protection Agency’s system for calculating emissions savings, the installation will displace approximately 31.2 million pounds of greenhouse gas emissions annually, the equivalent of taking more than 2,500 cars off the road or planting more than 3,200 acres of forest.

“Today, SunPower’s solar PV technology can be implemented anywhere and at any scale – from rooftops, to parking lots, to utility-scale power plants, and urban industrial sites,” said SunPower Chief Executive Officer Tom Werner. “Delivering a 10-megawatt solar plant in a space-constrained, 39-acre area is only possible using SunPower’s high-efficiency solar technology, which generates more power per square foot than competing technologies.”

Exelon and SunPower’s environmentally sustainable design supports the City of Chicago’s efforts to create an environmental legacy for its residents. The project will create about 200 jobs at prevailing wage rates during construction, maximizing the use of local labor and providing job training opportunities. The solar power systems will consist of many U.S.-made components, including steel tubing sourced from businesses on Chicago’s South Side.

“Exelon’s planned solar installation will benefit the West Pullman community in many ways, including increased economic activity, new jobs, and the revitalization of these unused parcels of land,” said Chicago 34th Ward Alderman Carrie M. Austin. “Exelon has always been a great corporate citizen to Chicago, and I look forward to working with Exelon and the community to bring this high-tech solar plant to the West Pullman area.”

SunPower solar panels generate up to 50 percent more power than conventional solar panels and two to four times as much power as thin-film solar technology. Exelon selected SunPower® Trackers, solar tracking systems that tilt toward the sun as it moves across the sky, increasing daily energy production by up to 25 percent, improving the economics of solar power and reducing land-use requirements. SunPower has installed more than 500 solar power systems totaling more than 400 megawatts worldwide, including solar power plants in Europe, Asia and North America.

The project supports Exelon 2020, Exelon’s strategy to reduce, offset or displace more than 15 million metric tons of greenhouse gas emissions per year by 2020. Among other things, Exelon 2020 calls for Exelon to offer more low-carbon electricity in the marketplace that will replace electricity generated by higher-emitting energy sources.

About Exelon

Exelon Corporation is one of the nation’s largest electric utilities with nearly $19 billion in annual revenues. The company has one of the industry’s largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. Exelon distributes electricity to approximately 5.4 million customers in northern Illinois and southeastern Pennsylvania and natural gas to 485,000 customers in the Philadelphia area. Exelon is headquartered in Chicago and trades on the NYSE under the ticker EXC.

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