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While China's President Hu is in the United States laying out the
nation's ambition to tackle global warming, a tone that you can not
find in other leaders' speeches, Premier Wen Jiabao is hosting a conference
with the nation's top economists to pledge more investment in
low-carbon industries, such as renewable energy, and next generation
automobiles. China apparently is looking for a new spot to lead the
world for the decades to come. These new industries include solar
power, wind energy, nuclear power, and automotive, etc.
Wall
St. didn't expect solar companies to raise guidance for Q3, however on
last Thursday Solarfun came out, becoming the first Asian solar name to
raise Q3 guidance, Q3 module shipment to exceed 100MW. The company
expected a maximum 100MW in Q2 earnings report. It is no surprise if
you look back at how many solar farm projects have been signed in the
last 6 months in China. As I mentioned in my last article, Asian solar
names are experiencing better sales in Q3 and Q4 in Asia and Europe, as
a result, more upward guidances are expected from names with good
management team, such as Solarfun, Renesola , JA Solar , Trina Solar and Suntech power.
The
sales in Asia are simply not in Wall St. analysis model yet. In the Q2
conference call from Renesola, CEO Li clearly stated that sales in
China were not included in the guidance at the time of the Q2 release.
US solar companies however may face a tougher Q3 as they do not have
sales penetration into Chinese and Japanese markets yet. Some Chinese
solar makers have already established sales networks in Japan, such as
Solarfun, Suntech and JA Solar. The only company that has sales in Asia
is First Solar , who recently signed a massive 2GW contract with the Chinese government. Sunpower and ECD seem to have a lack of activities recently. These companies simply do
not have the edge to compete with Asian peers. On the technology side,
China's JA Solar is leading the rest of the industry with an 18%
efficiency on its inkprint thin film technology (First Solar achieved
only 13% on its CdTe thin film PV).
Another reason why Asian
solar names are having sequential sales growth quarter over quarter is
because of the Chinese government policy favoring solar over wind
power.
Disclosure: long FSLR, SOL
