The past week saw various solar companies’ stocks soar. Companies all along the value chain – from poly to panel saw significant gains. The confidence in the solar companies was plain to see. Chinese solar companies though saw the largest gains (in terms of percentages) amongst the other companies of the world further reinforcing the view that most of the future solar installations are likely to use modules made in China.
Some of the gainers include:
- GCL Poly (China) – up by 13.2%
- OCI Co Ltd (South Korea) – up by 14.9%
- First Solar (USA) – up by 7.8%
- JA Solar (China) – up by 35%
- Trina Solar (China) – up by 29%
It is very likely that the surge is due to the larger than expected demand for solar PV equipment over the past two months. The surge was largely attributed to the huge demand in two countries – Germany and U.K.; Germany witnessed 3 GW worth of capacity addition in December 2011 alone – the largest ever capacity addition witnessed over the course of a month in the country. U.K had new capacity additions of about 760 MW in 2011 up from 76.8 MW in 2010.
These countries experienced significant demand largely because of the announcement that the generous FiTs that were offered are likely to be cut over the course of the year leading to project developers scrambling to get the best possible tariffs, while setting up projects at throw away prices (solar PV system prices cratered last year and reached never before seen lows at the end of the year). In addition to this, the announcement by the Chinese government stating that they would be pursuing solar capacity additions more seriously over the year has only served to bolster the industry.
The positive solar trend saw price gains all along the value – most significantly in the upstream segment. Polysilicon prices were up by about 8% over the previous week with most of the top suppliers having finalized their Q1 deals. Wafer prices were up by a modest 0.6% with most of the demand expected to come for the higher efficiency wafers.
On the module side, low cost of land seems to be having an indirect impact on module price. This is because in such a scenario the efficiency of the module would not matter, while the price of the module would be much more significant. This led to a lot of developers adopting tier 2-3 modules leading to prices remaing rather flat.
The first half of the year should see incremental rise in the price of materials all along the value chain owing to the growing demand. Following this, the prices are likely to fall or in a more optimistic scenario remain flat.
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