Time to Flee Solar?

In what will without question be a crushing blow to the solar industry, the European Union is ready to punish Chinese solar imports with a huge tariff imposed on them of an average of 47 percent, for the majority of photovoltaic panels. Most people are scratching their heads over this, as it'll harm the largest solar farms in the EU, and only benefit a small group of solar manufacturers. Many feel if the June 6 deadline is adhered to, it will crush the solar industry, and not only in China.

This is the result of the Chinese dominating a market once controlled by European companies. Fast growth by Chinese manufacturers has resulted in a glut, which has shrunk margins, pushing a number of companies into bankruptcy.

continue reading ...

Battle Between Two Solar Strategies ... And the Winner is...

The dismal condition of the solar industry, and the response of the U.S. and Europe to Chinese solar imports, brings to the fore what the strategy being fought over is all about. On the part of the Chinese, they're attempting to build market share while temporarily forsaking profits. Revenue is what they're generating, not earnings.

This has disturbed the U.S. and Europe, which aren't able to effectively compete against the Chinese strategy at this time. While this is attempted to be spun as unfair competition, it's in fact a common business practice that is employed all the time.

continue reading ...

Solar Could Drive Silver Prices Even Higher

To begin with, I'm not in any way a fan of government-subsidized solar, and think it's a terrible idea that any market is interfered with from the government. Having said that, it doesn't take away from the fact that solar energy should continue to grow significantly in the years ahead, and that means silver will get a major industrial boost in demand as a result of that.

Probably the most important story emerging in that regard is the fallout from the Fukushima nuclear facility, which has caused Japan to change more of its energy focus on solar. That means photovoltaic technology, which further means growing demand for silver,  drives up demand because they require about two-thirds of an ounce or 20 grams per each panel.

To generate more demand, even if it's artificial, Japan has offered utility companies a rate boost of three times conventional power if they go with solar. There is no doubt many of them will take the bait and boost solar-generated power in the country.

The point is, whether you agree with this or not, it must be taken into account as part of the overall industrial demand for silver. At this time approximately 11 percent of all industrial demand for silver comes from the solar sector; and that will continue to grow, albeit the ongoing debt crisis in Europe and unsurety about the short-term fate of the economy could cause uncertainty and volatility in silver demand from the sector.

For example, Germany has cut back on subsidies to the industry, and Italy has made overtures the same way. But when reports say over 100 countries are now using solar panels as part of their energy strategy, some will continue to spend while others may fluctuate in their spending.

But the trend will continue to go higher no matter what happens in the short term, and taking into account this growing market as it relates to silver demand is a must for those looking at the overall picture.

To put some perspective on this, CPM Group reports that industrial demand for silver climbed by about 11.2 million ounces in 2011, and that doesn't include the decision by Japan to raise its solar capacity.

In the solar panel industry, silver demand has soared from one million ounces in 2002 to an extraordinary 60 million ounces in 2011. And that doesn't factor in jewelry demand.

And while German silver demand in the solar sector has declined, many other nations, such as the United States, Japan, France and China, among others, has more than made up for it.

Also needed to be taken into account is the estimate by CPM that silver demand in Europe for solar panels will drop in 2012, but again, that doesn't include the initiative from Japan, which should offset that and easily increase the demand factor for the metal.

According to SolarBuzz, by 2020 Japan may have 28GW of solar capacity installed, and by 2030 that could rise to 50GW. That will take an enormous amount of silver to make that happen. In 2011 only about 1.3GW of power was installed in Japan.

The risk in the assumption of much higher silver use in solar panels is the price of silver itself, which is poised to jump to much higher levels on the investment side of the metal, where it is considered a protection against inflation and a place of safety in light of the loose money policies of governments around the world.

But in the short term that won't matter, as it'll take time to change to silver alternatives as manufacturers look to lower prices. In the case of the price of silver soaring, that probably would cause solar panel demand to fall, and of course that would have some effect on the price, although even there it'll take time for more solar panel market penetration before it's a major factor in the already volatile price of silver.

That's the positive about any segment which needs silver for industrial usage, as the more demand there, the more the price of silver is more predictable and consequently less volatile.

What makes silver hard to follow is the fast and growing number of products that use silver as an essential part of its makeup. So following the major demand sectors, as far as the industrial side of the equation is the way to go, and with that in mind, solar could become the fastest-growing single segment of the industrial market, so should be closely watched in how it impacts demand.

Other general areas that generate big industrial silver demand are food packaging, lighting and medicine.

As with everything associated with silver, there will always be more swings in prices because of the precious metal aspect, lower supply, and uncertainty surrounding demand in the short term, especially in a recessionary global environment.

But over the long term, there is no doubt silver could very well be among the top, if not the top performers over the next decade.

Goldman (NYSE:GS) Maintains "Buy" on First Solar (Nasdaq:FSLR), Raises Price Target

Goldman Sachs (NYSE:GS) said while maintaining their "Buy" on First Solar (Nasdaq:FSLR), they're raising their price target from $155 to $165, citing a couple of new manufacturing plants coming online in 2012.

One of the plants will be based in the U.S., while the other will be in Vietnam.

First Solar has pricing power in thin-film solar panels which compete against silicon modules, which should last for some time.

Goldman marked-to-market USD/EUR to $1.40 from $1.30, increased ASPs +$0.01
higher to $1.35 for FY11, and added the the new capacity in 2H'12. Consequently they increased their earnings per share projections for 2011 from $9.00 to $9.40 and for 2012 from $10.75 to $11.

First Solar closed Friday at $144.56, gaining $2.29, or 1.61 percent.