Cleantech & Renewable Energy

[snowcloud]

Not a pretty picture for Solar in the near term --

http://seekingalpha.com/article/108356-expect-continued-drops-in-solar?source=email

The Third China International New Energy Summit was held in Beijing on Nov. 27 2008. This two day summit attracted many industry leaders in renewable energy sectors, including solar, geothermal, and wind. According to China’s QQ news report, Suntech Power (STP) CEO Shi Zhengrong attended the summit, and told reporters that the company is expecting 0% gross margin in Q4, compared to 21.6% gross margin in Q3. The gross margin drop is mainly due to the dramatic drop of PV module ASP and the weakening Euro. It is reported that nearly half of the company’s factory has been shut down due to weakening demand.

According to Shi, he will not be surprised to see 0% gross margin in Q4, and the worst is yet to come. In recent developments, most solar companies slashed Q4 and 2009 outlook. Sunpower (SPWRA) lowered profit in Q4, citing the weakening Euro and weak demand. Solar PV makers Trina Solar (TSL), China Sunenergy (CSUN), Yingli Green (YGE), Canadian Solar (CSIQ), and JA Solar (JASO) all reported a dramatic sales drop in Q3 and presented gloomy pictures going forward. In the US, companies like First Solar (FSLR) and Energy Conversion Devices (ENER) are also hit hard by the financial crisis. This confirmed Shi’s concern that “The worst is yet to come in the solar sector”.

Investors who were covering short in solar stocks for the last couple of days will likely come back to short the sector again as the fundamentals are deteriorating.