Things are getting worse for Solar going into 2017. Perhaps the stocks will bottom but right now, fundamentals are getting worse. Some highlights from First Solar's Guidance Call:
http://investor.firstsolar.com/common/download/download.cfm?companyid=FSLR&fileid=917842&filekey=489D8E60-F80E-430E-84D2-81CD87211CA4&filename=2017_Guidance_Call_Presentation_Final.pdf
"From the demand side, there are several dynamics impacting our current competitive situation
• The lower demand in China in H2 2016 has been one of the key catalysts of the recent module pricing decline
• With the feed-in tariff structure that stepped down after June 30, there was a tremendous rush to shift modules in H1
• The spillover effect of this has rippled through the international markets over the past several months and has resulted in tremendous downward pressure on ASPs
Global Demand
• Looking forward, there may be additional pressure on global demand, resulting from the Chinese National Energy Administration’s proposal to lower the cumulative installed 2020 solar target from 150 gigawatts to 110 gigawatts
• Effectively, this potential reduces annual China demand through 2020 from 20 gigawatts to 9 gigawatts a year
Pricing
• On the supply side of the equation, decisions by competitors to maintain or increase production levels in the face
of demand headwinds has only added to the pricing pressures
• Over the course of 2016, we have seen over a 20 gigawatts of capacity additions by module manufactures
• With cell and module capacity ramping outside of China this year, the declines in the U.S. ASP have been more
rapid than in international markets, as module manufacturers have sought ways to circumvent existing tariffs and
duty structures
PPA
• And recently, there have been signs of some stabilization, however, it’s unclear if this will persist or it’s only
temporary pause before further price declines
• Pricing pressure has not only been on modules, we continue to see PPA pricing reach new lows, particularly in
international markets, based on bids by developers that may prove to be uneconomical
• How long such behavior may persist is unclear"
Right now, you're stepping into a cyclical industry experiencing a downturn. Perhaps things get better from here. But there isn't a lot of evidence of that right now...
http://investor.firstsolar.
• The lower demand in China in H2 2016 has been one of the key catalysts of the recent module pricing decline
• With the feed-in tariff structure that stepped down after June 30, there was a tremendous rush to shift modules in H1
• The spillover effect of this has rippled through the international markets over the past several months and has resulted in tremendous downward pressure on ASPs
• Looking forward, there may be additional pressure on global demand, resulting from the Chinese National Energy Administration’s proposal to lower the cumulative installed 2020 solar target from 150 gigawatts to 110 gigawatts
• Effectively, this potential reduces annual China demand through 2020 from 20 gigawatts to 9 gigawatts a year
• On the supply side of the equation, decisions by competitors to maintain or increase production levels in the face
of demand headwinds has only added to the pricing pressures
• Over the course of 2016, we have seen over a 20 gigawatts of capacity additions by module manufactures
• With cell and module capacity ramping outside of China this year, the declines in the U.S. ASP have been more
rapid than in international markets, as module manufacturers have sought ways to circumvent existing tariffs and
duty structures
• And recently, there have been signs of some stabilization, however, it’s unclear if this will persist or it’s only
temporary pause before further price declines
• Pricing pressure has not only been on modules, we continue to see PPA pricing reach new lows, particularly in
international markets, based on bids by developers that may prove to be uneconomical
• How long such behavior may persist is unclear"
No comments:
Post a Comment