The discussion begins with what I consider to be a misunderstanding, when Ishita is asked what are the two types of technologies used to generate electricity from the sun. The answer should be Photovoltaic (P.V.) and concentrating thermo-solar. Instead, she discuses the two most popular P.V. panel types  (silicon based and thin film based), completely ignoring the concentrating thermo solar industry. Oh, well.

She goes on to talk about a very important factor in the solar energy market – price of silicon. Due to oversupply, silicon prices have been dropping, causing silicon-based solar panels to become cheaper than thin film solar panels, which do not rely on silicon to generate electricity and who’s strongest selling point was low manufacturing costs. That trend (silicon based solar panels becoming cheaper than thin-film solar panels)  is nicely reflected in the stock prices of the two companies discussed in the video – First Solar(blue line),a thin-film panels manufactures vs. Suntech(red line), a market leader in silicon based solar panels:

China’s solar energy market

Another topic of discussion is the Chinese solar energy market. I’m a strong believer in china becoming a global solar energy leader, both on the supply but also on the demand side. China has deep pockets, a huge landmass,  and a terrible environmental track record, making it a strong candidate to dominant the solar industry. There are already very positive signs from the Chinese government and I predict that more and more Yuans will go into turning solar energy to electricity.

Ishita explains that the impact of the Chinese solar incentive program will not be immediate (Q3 and Q4 2009), and I have to agree with her. A company that is well positioned in the Chinese solar market is Canadian Solar, who has already won a couple of large projects there, and is headed by a Chinese CEO.

P.V. solar panels

Photovoltaic solar panels use the photo-electric effect to generate electrical current from photons – the small particles that carry energy from the sun all the way to earth.

This segment is where most of the R&D currently goes to, for good reasons. First, it is considered to be the most efficient solution for residential and commercial customers. Second, solar panels generate electricity, which is (and will be) in ever-growing demand. Third, the technology used by P.V. companies has been around for many years and was thoroughly researched.

The P.V. solar panels segment is heavily influenced by two forces driving its supply and demand dynamics – costs of silicon (on the supply side) and government incentives (on the demand side). We will write a separate article on the dynamics of supply and demand in the solar industry, as it has critical impact on the performance of all companies operating in the P.V. market.

Size of P.V. solar projects vary from small, residential, consumer oriented projects, to larger-either commercial or even utility scale projects, where thousands of solar panels are installed, usually in large, open areas.

Companies: First Solar (FSLR), SunPower, Trina Solar

Concentrating Thermo-Solar

Concentrating thermo-solar plants are composed of a large field of mirror, focusing sunlight onto a medium which conducts a fluid (usually water). The fluid’s temperature rises, steam is released, moving a turbine which generate electricity.

Concentrating solar projects are huge in size, usually located in deserts, are very efficient (close to 50% of the sun’s energy is converted to electricity, as opposed to 10-15% of P.V. panels). Due to their size, these projects require heavy funding, and are strongly influenced by the credit markets and incentive programs.

Several companies operating in the concentrating thermo-solar segment are on their way to find the holy grail of the solar industry – and efficient way to store solar energy (which is not available 24/7, a major drawback). Solar energy storage technology is a true gamechanger, and we will keep you up to date on where this technology is heading.

Companies: BrightSource (privately held), Solel (acquired by Siemens)

Solar Water Heaters

The dark horse of the solar industry, solar water heaters are simple tubes, sometimes enclosed in a glass frame, who’s sole purpose is to heat water running through them. The heated water is stored in tanks, usually mounted on rooftops, eliminating the need to use electrical water hearts.

Although the technology is very basic, solar water heating is the most accessible solar energy solution available today. In several sunny countries, solar water heaters are mandatory in new buildings. The potential for this market is huge, especially in developing countries, where reliability and reach of electricity grids are limited.

Most companies operating in these segments are Chinese manufacturers and local, small system installers. Very little, if any, R&D goes into these systems, despite the fact that in large numbers, they can make a huge difference in terms of carbon emission.

Company Name Canadian Solar

Website http://www.canadian-solar.com/

Description Canadian Solar Inc. is a vertically-integrated manufacturer of ingots, wafers, cells, solar modules (panels) and custom-designed solar power applications.

Suppliers LDK Solar, ReneSola, China Sunergy, lSatCon

Market Cap. (Nov. 09) 701.65M US$

Our takes A silicon producer that went up the supply chain and now supplies complete P.V. solutions. Sells under its own name as well as OEM.

Strengths Since Canadian Solar produces their own silicon, they are less influenced by supply and demand fluctuations in the solar industry supply chain. They are also well positioned in the booming Chinese solar energy market.

Risks Dependence on foreign exchange. Not clear how strong the Canadian Solar brand will become.

Realizing the huge potential of solar, billions of dollars go each year into the industry – funding research, building large scale projects and subsidizing end consumers.

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