Tuesday, December 23, 2008

Four Technologies...

that would dramatically increase the value of LDK wafers, if applied by either LDK, or one of LDK's numerous customers.

Silicon Nanoparticles

Black Silicon

Metal nanoparticles (link credit to mgraffis of yahoo)

Frequency shifting by KbNO3 or similar compound (find and research credit to phreecash of yahoo)

The future is bright.

Tuesday, December 16, 2008

Great Poly / Wafer Presentation by Wacker.


Here's another one. This one reads like the Chinese gameplan for Solar Domination. It mentions LDK, and many other companies, back from October of 2005.

Sunday, December 14, 2008

Looking forward to 2020.

Per Wikipedia, Total World Consumption of Energy in 2005 was somewhere in the area of 15TW. It's suggested that 86.5% of this total is derived from Fossil Fuels, which amounts to a total World rate of Energy Consumption of 13TW. Note, this value includes the energy content of Oil and Liquid Fuels, so is not just the Electricity component.

Using 2005 as a rough basis:

The Total Energy Consumed over the whole Year could be written as 13TW*1Year.

There is a growing consensus in the World that the first International Targets will be in the area of 20% production of Energy from Renewables by 2020. Let's be conservative, and suggest that this target will be missed, at least on a Worldwide scale. There are several major Economies that might not play along, particularly among the heavy coal users.

We'll go with just a 15% target. 15% of 13TW*1Year = 1.95TW*1Year of renewables needed for, say, the year 2020.

Pulling a number out of my butt, let's say that Solar PV will provide just 10% of this amount of Energy by 2020. That makes for a Solar PV contribution of 195GW*1Year in 2020.

Since a Solar Panel doesn't provide constant Energy, we can take some averages, and assume that over an entire year, the panel will have provided a total Energy of about about 20% of its Peak Power Rating, so in order to provide 195GW*1Year, you'd need to install 971GWp of Solar Panels.

Hmm, 971GW of installed Solar Panels by 2020. Sounds crazy.

2007 Total Installation was in the area of 8.7 GWp. That leaves 962GWp to produce over the next 12 years.

What would this look like?

Photon Consulting put out some numbers quite some time ago suggesting what the growth curve in Solar would look like up to 2012. I took 10% off of the top from each of their yearly estimates to reflect the effects of the present slowdown, and came up with the following path to 962GWp by 2020.

The Spreadsheet is here.

For sake of completeness, I also made a more conservative scenario where the present downturn caused the Photon Numbers to be slashed by 30% over the next 3 Years. See the "Scenario 2" tab.

In the end, it makes little difference whether we slow down a bit for the moment, as the long term goal is largely set, and will almost certainly be acted on with great vigor by the Obama Administration.

Is it any wonder that I look with some scorn at the short-sighted calculations regularly drawn up by Yahoo bashers who suggest that today's Solar Manufacturers will wither due to lack of future demand for their products? The market that we're talking about is simply larger by orders of magnitude than most people can visualize, and it follows that so is the opportunity at a time when wholesale replacement of Existing Technology and Energy Sources are the order of the day.

Saturday, November 29, 2008

Residential thinking..

I mentioned housing back in December of '07, and though the idea behind the post hasn't become reality, I stand behind what I said.

The question right now is, how is Obama going to help to create this scenario. As it stands, we have the 15% Investment Tax Credit, but this isn't enough to give the market a sense of direction.

One item that I'd like to see would be a kind of a Government loan guarantee to banks that would support the financing of alt-energy projects. Domestic Energy Installations pay for themselves over time, and so the guarantee itself, would likely cost the Taxpayer very little. If the Government were to guarantee lending on some limited time and scale basis, banks would be incented to start to produce the lending programs that will benefit both, the banks, and the borrowers over the long term.

Thursday, November 27, 2008

GT Solar Company Profile (pdf).

From November 19th

There are various factoids about GT, and the World Polysilicon Scene.

LDK put out a new Presentation PDF.

Here's the link.

Here's a little comparison of a couple pics over a 6 month, or so, period of time. Great progress.

Click the image for a larger version.

Wednesday, November 19, 2008

LDK's Power Problems - Q3 Conference Call - 11/19/08

This turned up a bit ago on the Yahoo Board, translated from a Chinese News release.

"Ma Hong substation put into operation on November 11, with a total investment of more than 200,000,000 yuan and Jiangxi by the West's power supply companies Ma Hong 220KV electricity substation officially put into operation. The substation building will not only put into operation an effective solution to the economic development zone Xinyu capacity than the set too low, as well as to meet the Zevi LDK Solar Company's business, such as demand for electricity has greatly improved the reliability and quality of power supply, The grid structure of the more reasonable, safe and reliable."

Here's the Conference call of 11/19/08 transcript where Mr. Peng says:

"During commissioning, we have encountered some issues on delivery of equipment for the sub power station."

Sarno reiterated this elsewhere.

So, it looks like there's one known problem, and one problem solved.

Also, remember LDK signing a contract with ABB for Electrical Services:

Thinking about it, making poly is a very precision electrical process. It's not something you're going to really succeed at with dirty power from ye ole' power plant. If they hit a roadblock here, it could very well have stopped all progress. By the news, though, it looks like this might have been cleared up.

Sunday, November 16, 2008

Sit down and watch some Alt-Energy Documentaries.

Kudos to Aholdd of Yahoo for the find, for both of these videos.

Here Comes The Sun
Directed by: Rob van Hattum

The Gospel of Green
Directed by: Neil Docherty, Gil Shochat

(This image links to external page with video)

Both of these include conversations with Hermann Scheer, who is apparently one of the primary architects of German Solar Policies. Quite an interesting and persuasive fellow. He has the kind of vision about the future that should definately be spread. On the other hand, he also sees the conflict, between the present Entrenched Interests and Alt-Energy, very clearly. He rightly talks about their eventual destruction in the face of changing technology, and their interest in delaying the onset of the kind of change that people like myself and so many others are interested in bringing about, each in our own way. I happen to believe that the moment that "Big Fossil," and "Big Nuclear" are particularly looking to delay, is that moment in which one of the biggest industry players decides that for their own survival they must no longer suppress the Alt-Energy Industry, but must own it.

The First Video, in particular, is an excellent discussion of the big picture in Solar, and gives several good examples of the Corporate Interests in Solar, with mentions made of of Applied Materials, Solarfun, Schott, Sunpower, BP Solar, and others. Projects and Ideas from across the World the are described by various industry players.

The Second video has a greater focus on Canada and Germany, but includes some great examples of how Germans are making money off of this industry, as well as some of the outrageous hurdles faced by technology developers in Canada.

Wednesday, November 12, 2008

Congress is in session next week.

Dems will be aggressive next week, on saving US Auto.

JASO got crushed today by relationships with Lehmann, but I don't think LDK will have similar problems. Poly production remains in question, and it's to be hoped that no customers have crashed, but Q3 should rock.

Monday, November 10, 2008

A Letter to my Representative - 11/10/08

Dear Representative XXX,

I'd simply like to voice my support for the replacement of Dingell, on Energy and Commerce, by Henry Waxman.

I'll say that I do not strongly dislike John Dingell, from what I've seen of him, but I do strongly support Waxman's consistant demonstrations of willingness to battle for what is important. Dingell is too close to US Auto Manufacturing Behemoths, and has not shown that he has any ability to stand up to those Lobbies. By doing so, he has abetted their present state of finance. Example: when US Auto Manufacturers wanted to avoid improved CAFE standards, Dingell has been their ally, and yet, modernized standards would have been exactly the incentive that our Domestic Manufacturers could have used to support not only the production of efficient vehicles for domestic use, but also to produce vehicles that would stand a greater chance of being in demand outside of the US, where people don't have money to throw into their gas tanks like Americans have had.

So, yes, I think that an independent fighter would be of great value in this environment of great change. We need to help our Auto Industry, but not by simply throwing cash at them, at the whim of their lobbies. We need new standards and incentives to empower and to direct our manufacturers in a sustainable direction, and we need leadership to back it up in Congress. Bailing out the companies, and then supporting their Lobbies in defense of the status quo, is exactly what we can't afford to do.


Tuesday, November 4, 2008

Election Eve Thoughts - 11/3/08.

Obviously this election is critical in many ways, but the direction of Future Energy Policy is at the top of the list.

In the last few months we've seen Billions of Dollars come out of stock holdings of Exxon and other Big Oil Companies. We've seen literally Trillions of Dollars get pulled out of the markets as a whole, as fear of losses AND uncertainty in US policy direction has weighed on Investors' sense of security. This has been in addition to, and in part, caused by, massive losses and fear of losses in the Derivatives Markets, which will likely continue.

On the other hand, while Trillions of Dollars have been pulled out of the Stock Market, rather alot of it has been converted to various forms of Cash and Bonds. The money doesn't want to stay in these forms, it wants a place to grow. Without direction from the top, though, there has been no safe place to park this money; no safe place, at least, in which long term growth has appeared likely no matter who would take the Presidency.

Across the Globe, Governments and Central Banks have been dumping money on the immediate problems; to try to cover losses; and to try to stop the selling; but what is missing is an overall plan to stabilize housing prices, and get Americans (and Europeans, and Asians) back to productive and sustainable work. Obama has a plan in the US to do this through middle-class tax cuts, infrastructure / energy investment, and other common sense measures such as extension of unemployment insurance. The goal is to help keep as many people as possible in their homes while they find a way to adapt to the changing Economy, as well as to provide an overall stimulus for smart growth. In addition, an Obama Presidency will likely bring some confidence to Investors around the World that the US Markets will be regulated, open, and fair to all investors. The long term Naked Shorting of stocks is an example of a reason for Foreign Investors to be wary of investing in US Securities, or of offering their shares on US Exchanges. We've recently seen the shinking of the Naked Short Threshold List down to a very few companies, and in fact, LDK has fallen off. Now we just need a President who will assure that these regulations are enforced.

Overall market conditions aside, this election will mark a turningpoint in the direction taken in US Energy Policy. Though the immediate need for Fossil Energy will be unchanged no matter who wins, the future under Obama will be clear, and it will be green. The Markets must move to reflect this once the decision is made.

Under McCain, for instance, you'd want to be invested in Fossils and Nuclear. The fact that McCain has paid lip service to Renewables does not counter his history of inaction, nor his active opposition to these technologies. His prioirities as President have been quite clearly demonstrated by his Campaign Activities. A great symbol of the McCain Camp's Antipathy towards renewables is Sarah Palin's recent visit to a US Solar Manufacturer, and her entirely inappropriate and uninformed littany of sales pitches for Coal, Nuclear, and "Drill, Baby, Drill." The term "Solar" was used twice.

Obama represents a sharp departure from this position, and he's stressed over and over that Energy would be his TOP Priority, and at the top of this list will be investment in a "Smart Grid," which will modernize the US Power Grid. The modernized Grid will provide High Efficiency transport of Electricity across the Nation, irrespective of start and end points. This is critical to supporting a Decentralized Power Production Infrastructure, such as we will see with the implementation Green Energy Production. For instance, if T Boone Pickens wants to install a Billion Dollars worth of Wind Turbines, then Obama would let him do it, and would make sure that when Pickens sets up a farm, he'll have access to Electricity Markets all across the US, without the limits imposed by todays outdated grid. Simultaneously, Obama supports moves to get as many cars off of gas as soon as possible. The end result of this will be lower demand for gas and oil, and higher demand for electricity.

Is it any wonder that big money has left the market, and stayed on the sidelines? Who's going to bet Billions of Dollars that a black man would become President of the United States? And then again, who's going to bet their Billions on a 72 year old man backed up by an(other) Incompetent Dominionist? I think we know the answer. Nobody is making either bet, but they've got to be getting edgy.

The big decision is tomorrow, and the markets will respond appropriately to whatever certainty follows. I can't wait!

Tuesday, October 14, 2008

LDK Poly Plant News - 10/14/08

Well, now that I have time to say a few words, I'll do so.

LDK Solar Provides an Interim Update on Its Polysilicon Plant Construction.

LDK Solar Co., Ltd. (NYSE: LDK), a manufacturer of multicrystalline solar wafers, today provided an update on the progress on the construction of its 1,000 metric ton (MT) annualized capacity polysilicon plant.

Equipment installation for the 1,000 MT annualized capacity polysilicon plant has been completed and plant process commissioning has commenced. To date, installation has been completed of eight reactors and one converter in the reactor/converter station, and eight distillation/purification columns, heat exchangers and associated piping in the TCS purification station. The 10kV utility power substation, 10kV process power station, and 110kV/10kV switchgear are operational.

The anticipated polysilicon production levels in the fourth quarter of 2008 will be updated in a separate announcement as the entire manufacturing system continues to progress through the startup and commissioning phase. Additionally, LDK Solar remains confident in its 15,000 MT polysilicon plant construction progress and reiterates its plans to produce between 5,000 and 7,000 MT of polysilicon in 2009.

"We are pleased with the progress made to date on our aggressive schedule for the construction of our polysilicon plants and to continue to work on the long term productivity and safety issues of our new factory," commented Xiaofeng Peng, Chairman and CEO of LDK Solar. "We would like to recognize the hard work and contributions made by our employees during the construction of the polysilicon plants and in readying the facilities to ramp polysilicon production."

This PR is full of good news. It was unclear previously whether they even had all of the equipment on-site, and particularly, whether they had a Converter Reactor. It's now clear that it's all there, and it's installed.

Of course, the Stock went down today, and there are Bashers all over the boards. Nothing new there.

This is news we've been waiting for, and I'm actually suprised at the actual level of completion of the plant. If it weren't for overall market conditions, which are not only been attracting all of the attention, but also have wiped out a tremendous amount of long-interest buying power, we'd have had a major move. As it is, long interest is still on the sidelines, probably in Cash or Government debt, and they continue to wait.

Shorts were given another chance to short sell the news, but they're running up against major forces that are lining up against them.

For one, LDK will announce earnings in November, and they should far exceed even the expectations that LDK raised just a few days ago. Today's announcement increases the likelihood that along with earnings, we'll actually get word that LDK has successfully produced Polysilicon In-house. This will be the final nail in the coffin for the claims of analysts like Jesse Pichel who have said that LDK would NEVER produce Poly.

Second, we're looking at a very likely Obama win in just three weeks. When you come up to an intersection, you make a choice. Which way do you go? Your future is irrevocably defined by this decision. When you choose the direction, you may not know exactly what lies down that particular path, but at least you will have some idea of where you're heading. Likewise, on the 5th of November we won't be able to see any detail of what will happen in the days, months, and years ahead, but we'll know that the choice has been made between "Drill, Baby, Drill" and a renewably-powered US grid. Money will move on that difference in vision.

Third, Solar Earnings for the quarter will demonstrate that even in this shitty Economy, Solar Energy is a bright spot. It takes very little money in the greater scheme of things to completely buy up all of the Solar Industry Output for the next few years. Even without further positive changes by Obama, we already have the extension and expansion of the Solar Energy Tax Credits in the US by way of the recent passage of the Wall Street Bailout. As money continues to flee underperforming industries, it will continue to find its way into those growing industries like Solar. In addition, as risks to the Economy continue to suprise and frighten people around the world, those people with resources available will increasingly find personal use of Solar for their Energy needs to be a comforting hedge against the possibility of breakdown, or hyperinflation.

Sunday, October 12, 2008

Wednesday, October 8, 2008

What this is.

This is assuming that the Market survives. I'm sorry that I have to preface this way.

This is a rare chance for "the little guy" to buy in BEFORE "the big guy." We KNOW how big the totality of the various alternative Energies are striving for, and it's as big or bigger than the totality of today's Coal and Oil Industries. That's freakin' big.

So, today's big money, that is invested in yesterday's technology, is looking at a situation where they are simply unable to take part in the presently tiny alt-Energy industry with any significant portion of their vast wealth, without creating an incredible bubble.

On the other hand, they are also looking at a situation where that tiny industry is going to replace them, unless they own it, and they simply cannot let that happen.

Therefore, they will have to buy in at some point, bubble or not, and the advantage goes to the little guy, as he can put a huge portion of his total wealth into this industry without moving the dial at all. The little guy can wait till the big guy comes looking for shares in final desperation for ownership of future productive capacity.

Now, this is always the game, right? Everybody is trying to get in before everybody else. The trick is to be right about where the big guy is going, beforehand. Why am I so confident? Because we're talking about Energy.

There is no Economy without Energy. That's a basic physical fact, and not even the most powerful equations of Economists can supersede it. The Economic Powerhouse that gives value to the present set of World Currencies, demands an incredible amount of Energy.

Therefore, since the Rich and Powerful benefit neither from the collapse of the economic system as a whole, nor from the inevitable replacement of the Fossil-based Industries that they currently own, the conclusion of greatest likelihood is that those Rich and Powerful will at some point move to own the future industries. When the move is made, there will be competition between the wealthy, and associated rapidly inflating prices.

Friday, October 3, 2008

$700 Billion, plus Renewable Energy Tax Credits - LDK, STP, WFR.

This is an interesting situation, and there are alot of unknowns. Personally, I really don't even know who is really for, and who is really against this "rescue." I know that the majority of the populace is against it, but then I also gather that as they are learning about what's going on, they're starting to get scared, and may be turning around. On the other hand, I wouldn't put it past Wall Street to use the markets and a threat to the people's 401K's and Pensions, simply to extort a huge wad of cash from the Taxpayer. I do tend to believe, though, that Wall Street is in very serious trouble right now, and the fears and solution of Paulson / Bernanke could very well be entirely justified.

A few days ago I was wondering whether Democratic Leadership in Congress really wanted to pass this thing. Why else would Pelosi go out there and insult House Republicans right before they had decided to vote. So, I got the feeling that the goal was to not actually pass this Bill, but just to not be the ones taking the hit for actually stopping it.

This move by the Senate to amend the Bill to Include modifications to the Alternate Minimum Tax, Disaster Recovery for Hurricane-ravaged Texas, and Tax Credits to support Alternative Energy and Efficiency is an incredibly suprising more. The exact same Amendment just failed to pass in the House last week, but it was Democrats that killed it. House Democrats, following Pay as you Go rules, did not support a Bill that did not pay for itself. Republicans, of course, don't care if it's payed for, or not, and they are in VERY Strong support of the Alternate Minimum Tax Cut.

So, when the Senate added this Amendment to the main Bailout Package, they were giving to the Republicans in the House something that they Really Really wanted, and forcing the House Democrats into an unenviable position, where passing the Bill means backtracking on their previous position, by adding to the Deficit, but where failing to pass the Bill sets upon them the blame for an increasingly likely catastrophic Market Crash.

Wow. Housemembers must be sweating profusely right now.

Apparently the House plans to vote on this Bill on Friday, which gives them just about zero chance to make any modifications to the Bill without delaying into next week (unless they work all Weekend). If they fail again to get a Bill to the President by Market-open on Monday, then I can't help but think that all Hell is going to break loose. I'll say, though, that the way I see it, if anybody kills this Bill, or at least the Alt-Energy Incentives, sadly, it will now be the Democrats in the House.

Now, having followed the Energy Debate way too closely over the last year or so, I can tell you that it's been a long and brutal battle. Powerful forces have been working against this part of the Bill for quite a long time, though they don't often take credit for their success in blocking these critical extensions to Wind and Solar Tax Credits. Could this current game finally force the issue through Congress and onto the President's Desk for a signature?

I don't know. We'll have to see. For those that are watching the industry, and particularly the Associated Public Companies, the risks are that the House will either fail to pass the Bill at all by Monday, at which point just about every stock will be dropping like a rock, no matter the industry, or else that the House and Senate will wrangle out a deal by Monday that doesn't include the Energy Tax Credits, which would create a rally in Financials, but would have a very limited effect on Alt Energy Company Valuations.

On the other hand, if this Bill passes with Renewable Investment Tax Credits, the upside on valuations will be incredible for the Alt-Energy Industry and its Shares.

When the 2006 Election was said and done, it became quite clear that the Conversation going on in the US had subtly changed. Republicans and those supporting their ideologies became slightly quieter and less confident. Suddenly people were starting to look forward to... ehem... "Change," even if the exact nature of the Change was uncertain.

I believe that if this Amendment is signed by the President, a similar change will again happen in America. This change will be reflected in a new explosion of productivity, entrepreneurialism, and industrial growth surrounding "Green Energy." We've all seen the numerous commercials and political statements of support for Green Energy. For the most part, this has been alot of hot air. There has been very little substantial backing for action in support of these popular Green Ideas. If passed, this Bill will change this. Real money will begin pouring into actual Green Technologies, no long just in Germany, Spain, China, and California, but literally across the US. US Solar Companies will find themselves excellent partners, and yes, competitors, in China and Europe.

Focusing on Solar, following are a couple of reasons for my belief in this potential for Explosive Industrial, and Shareprice Growth.

Short Interest: Solar Energy Companies have been heavily suppressed over the last year by way of incredible levels of Short Interest piled on just about every Solar Stock. If this Amendment passes IT WILL BE A SUPRISE. The failure of Congress and the President to extend these tax credits for the last year, even though they are due to expire at years end, has given shorts plenty of reason to believe that the Solar Industry would continue to suffer at least until next January when we'll get a new President. If these shorts have to reverse direction in response to this highly significant change in US Government Policy, they will certainly feel a squeeze. There's nothing like Shareprice Performance to create a self-fulfilling prophecy. If Industry Share Prices take off all of a sudden in an extended expectation of increasing production and profits, many new investing eyes will turn to look and buy.

Jobs: This Bill will provide for a 30% Tax Credit on Residential Installation of Solar Energy Systems, just like the Tax Credits that it extends. Unlike those previous Credits, these new Credits DO NOT have a $2000 Cap. This means that for those that benefit from the full Tax Credit, the Cost of Installing a System in many parts of the US has suddenly become cost-effective, particularly in those States that provide additional benefits. This new buying will not only produce jobs, but it will also generate the narrative that Solar Energy is for real, as every new installation will stand out as a kind of free advertisement for the Industry and the Technology. People will be increasingly have opportunies in some area of this new industry to make a living. From this will come new selling, lending, and buying of goods and services related to Solar, and other Renewable Energy Industries.

Inflation: If this Bill passes, it will almost certainly put us on an inflationary path. Though the Dollar may strengthen in the short term, over the long term, it will weaken, and Traditional Energy prices will increase. Since the Olympics we've seen crashing prices in Oil and Commodities. Some of this may actually be due to decreasing demand from China, as well as from the slowing Western Economy. However, remember that even at today's prices, Oil is still incredibly high, and could easily go higher on either the prospect of a weaker Dollar, or a stabilized World Economy. Even with the Crisis in the West, China continues to grow at an astounding pace, and Oil and Coal Demand in Asia continues to increase. Energy Prices will follow, which will once again focus awareness on Alternatives as Cost-Effective Solutions to Increasing Demand.

We'll soon know what action is chosen by the House of Representatives, and from there we'll see clear results in one direction or another.

I could go on, but it's very late, so I'll leave it here for now, with just a couple of nice links.

So What Happened To Solar Stocks This Time? - Barrons
"And finally, one other note. Paul Lemming, an analyst with Princeton Tech Research, today picked up coverage of the sector, setting Buy recommendations on LDK Solar (LDK), Q Cells, Suntech (STP), Wacker Chemie and MEMC (WFR)."

I note here that three of the four companies mentioned are Polysilicon Producers. Poly Producers are in a sweet spot under this Rescue Plan and Energy Amendment. Increased demand for Poly from an reinvigorated US Energy Policy will drive up World Poly Prices by a significant amount. The Production of Polysilicon is the key component of a Silicon-based Solar Industry, and it's by far the trickiest part of the Supply Chain.

Green the Bailout - NY Times - Friedman
"In a green economy, we would rely less on credit from foreigners “and more on creativity from Americans,” argued Van Jones, president of Green for All, and author of the forthcoming “The Green Collar Economy.” “It’s time to stop borrowing and start building. America’s No. 1 resource is not oil or mortgages. Our No. 1 resource is our people. Let’s put people back to work — retrofitting and repowering America. ... You can’t base a national economy on credit cards. But you can base it on solar panels, wind turbines, smart biofuels and a massive program to weatherize every building and home in America.""

This is a great article by Friedman, which to me, provides support to the importance of investment in Alternative Energy as a critical part of the long term resolution of today's Economic Troubles. Credit to RamblerGambler of Yahoo for the find.

Tuesday, September 30, 2008

Thought for the day - 9/29/08

Today alot of cash was pulled out of stocks. Maybe there will be more selling tomorrow.

At some point some, at least, of that money is going to go back into the market. Where is it going to go? Exxon was down 8.3% today, and other "Big Oil" suffered as much or more.

Ok, so LDK was down 15+%, but that's normal for LDK. What happened to Exxon isn't normal. In LDK's case, 5.11 Million Shares traded on average around $32 per Share. So, $163 Million traded hands on LDK, whereas $4.5 Billion traded on Exxon alone. The same kind of ratios apply to other companies in the Solar and Oil Industries.

The conclusion? Yeah, I don't know. The Markets are dangerous right now, but if reality sets in, it's a pretty safe bet that some of that money from the Oil Behemoths will spill onto World Solar. Big Money is simply UNABLE to make significant investment into this little critical industry without sending prices through the roof. We're seeing how long they can hold off, right now.

Wednesday, September 17, 2008

WSJ - Bill Gates Goes For Algae, Invests in Biofuel Maker Sapphire Energy

Bill Gates is plunging his hands into pond scum.

"Cascades Investments LLC, Mr. Gates’ personal investment vehicle, is backing Sapphire Energy, a start up working towards a commercial-scale facility to produce oil from algae. And by all indications, he is not trying to save the world from its petroaddiction. He’s trying to make some money."

GE Energy - Threatens to Leave America if no Renewable Support.

“If the U.S.government is not going to be reliable and predictable [on clean-energy policy], we’ll go to Germany and China,”

- John Krenecki, head of GE Energy

'The head of GE Energy, the conglomerate’s unit that makes everything from wind turbines to nuclear reactors, flew down to Washington again today to plead with senators to extend tax credits for renewable energy. The credits, still crucial to making clean energy competitive, are set to expire at the end of the year, despite at least eight tries so far to renew them. That threatens to slam the brakes on two gangbuster years for American wind and solar power.'


That's right, GE is threatening to move their fastest growing Division OUT OF THE UNITED STATES, because of the expiration at the END OF THIS YEAR of the existing tax credits for Renewable Energy.

Congressional Democrats have tried EIGHT TIMES to get the credits extended, but the President and Lockstep Republicans have blocked every attempt. Why have they blocked it? Because they Refuse to PAY FOR IT. One of those attempts to extend the Credits was paid for by Deficit Spending, and guess what? It passed the Senated with 80 Votes. In that case, though, Democrats in the House refused to back it, because they are making the hard choice to be fiscally responsible. In another case, a Bill got to the Senate with 59 votes. McCain was in Washington DC and was available to vote, but he did not show up for work, instead he claimed that the issue needed further study. It's outrageous.

Friday, September 12, 2008

LDK News - New Contract - Q-Cells - UMG Processing.

LDK Solar Signs 11-Year Agreement for Processing of Solar-Grade Silicon for Q-Cells AG, Coupled With MOU for up to 5 GW in Additional Wafer Supplies

"LDK Solar Co., Ltd. (NYSE: LDK), a leading manufacturer of multicrystalline solar wafers, announced today that it has signed an 11-year processing service agreement to process upgraded metallurgical grade (UMG) solar-grade silicon provided by Germany-based Q-Cells AG into wafers.

Under the terms of the agreement, LDK Solar will process a minimum of 20,000 metric tons of UMG solar-grade silicon in the years 2008-2018, with an option to process an additional 21,000 metric tons during the same period. The processing service agreement is linked to a Memorandum of Understanding between the parties for LDK Solar to supply Q-Cells with up to five giga watts of multicrystalline solar wafers via a "take or pay" contract for the ten-year period between 2009-2018."

WOW! LDK Does it again, with a contract that assures that they'll have work available for every Wafer-Cutting Machine, and for pretty much as many employees as they can handle.

Their early adoption of UMG Technologies is a powerful advantage, particularly in today's Silicon Market, as the price of UMG is presently less than half the price of High Quality Polysilicon. It should also be noted that this supply agreement becomes effective THIS YEAR, 2008, and so will be reflected in Earnings for Q4, at least.

This is another example of LDK Maximizing their their use of all available Resources, for the purpose of growing business Now, and for the Future.

Thursday, September 11, 2008

Senate Energy "gang" Grows To 20

This is a good compromise, and Obama has already stated that he would support it.

We need this Bill for a host of reasons, from Economic Benefit to National Energy Security Benefits.

It will be interesting to see what McCain says about it as I don't believe he's made any public statements on it.

Credit to Timdo67 of Yahoo for the link!

Sunday, September 7, 2008

Biden / Friedman - Meet the Press - Video.

See it Here.

Excellent Interviews.

Biden definately shows his smarts in a way that I hadn't seen before, and Thomas Friedman is a must see if you're looking for the Energy Revolution. He's all over it, and from this interview, he's demonstrating that he's watching the situation carefully. He describes the situation with China well, and is clearly quite inspired.

Friday, September 5, 2008

More LDK News. WOW! 9/4/08

LDK Solar Signs Eight-Year Wafer Supply Agreement With Sumitomo Corporation

'LDK Solar Co., Ltd., a leading manufacturer of solar wafers, announced today that it has signed an eight-year contract with Japan- based Sumitomo Corporation ("SC"), one of the leading trading and investment houses in Japan to supply multicrystalline solar wafers to a leading manufacturer of solar cells and modules in Japan.
Under terms of the agreement, LDK Solar will deliver approximately 750 MW of multicrystalline silicon wafers to Sumitomo over an eight-year period, commencing in 2009 and extending through 2016. Sumitomo will make an advanced payment representing a portion of the contract value to LDK Solar.

"We are excited to announce this agreement with Sumitomo to supply high- quality wafers to Japan's leading manufacturer of solar modules," Xiaofeng Peng, Chairman and CEO of LDK Solar. "For LDK Solar, this supply contract with another industry leader, signifies another step towards our goal of becoming the leading supplier of wafers worldwide."'

Incredible! Three PR's in Three Days; Two of which being Wafer Contracts with PrePayments (as usual).

Not only this, but this particular deal expands LDK's relationships in Japan, which is the World's Second Largest Economy, and is particularly suited for Solar by its utter lack of Fossil Resources and Island Geography, as well as by its particular risks in the case of Climate Change.

You can bet that companies around the World are looking at the business that they're entering with LDK, and planning and designing the equipment and infrastructure that will be used to cheaply and efficiently turn all of these LDK Wafers into Modules for sale on the World Market.

LDK has set out to become a World Class company, and every day it seems that they leave us with a new pice of Evidence.

Spain raises Solar Limit to 450MW for '09 and '10

Spain Raises Cap on Solar Energy in Revision, Confidencial Says

"Sept. 4 (Bloomberg) -- Spain raised the limit on solar energy production to as much 450 megawatts for next year and 2010 in a revision to proposed rules, El Confidencial reported, citing unidentified people in the industry.

Spain's Industry Ministry will cap output at 400 megawatts to 450 megawatts a year, up from a proposal of 300 megawatts, El Confidencial said."

For some Background of the situation in Europe, see this.

Here's a new IBD article on Solar Pricing Estimates

Credit to Hacker4502 and Diaoko of Yahoo for links.

Thursday, September 4, 2008

LDK Reactor Contract - GT Solar - 9/4/08

LDK Solar Signs Polysilicon Reactor Agreement With GT Solar for an Estimated Value of $32 Million

"LDK Solar Co., Ltd., a leading manufacturer of solar wafers, today announced it has signed a new agreement with GT Solar International, Inc. (Nasdaq: SOLR) ("GT Solar") to purchase polysilicon CVD reactors for installation in LDK Solar's manufacturing facilities in Xinyu City, Peoples Republic of China. This equipment is used to make polysilicon. The estimated value of the contract is $32 million.

"We are pleased to have signed this new agreement with GT Solar, a valued provider with which we have a long-standing relationship," said Xiaofeng Peng, LDK Solar's chairman and chief executive officer. "As the demand for solar energy continues to grow, so does our need to increase and accelerate our manufacturing capacity. With GT Solar's reactor and DSS furnace technologies and expertise, we feel confident that we will be able to meet our rising production goals."

"During the more than five years that GT Solar has been conducting business in China, we've designed manufacturing processes and supplied equipment to some of the country's largest solar wafer and cell producers, including LDK Solar," said Tom Zarrella, president and chief executive officer for GT Solar. "We look forward to continuing our work with LDK Solar, and to helping this company further its position as a leader in low cost solar wafer manufacturing."

Polysilicon is a highly purified form of silicon that is used to make both semiconductor wafers for microelectronics applications and solar wafers. The chemical vapor deposition process involved in the production of polysilicon takes place in a specialized CVD reactor using a variety of complex chemical processes."

This is great news!

Why? Well, there are Wafer Deals, and there are Poly Deals. There are Foreign Deals, and there are US Deals. This is a combination of the best two options.

Obviously, WS is perfectly capable of selling off wafer deals.

For one thing, traders are well trained by now to sell these off. Plus, with Asensio and a WAVE of short spammers on the boards, there has clearly been additional pressure to sell.

For another thing, ultimately, LDK's wafer business is completely dependent on the success of their poly prodution business. Wafers are valuable, but Poly is absolutely critical.

Therefore, this is a great deal for LDK.

No, it's not poly production, that's still coming soon, but it reinforces their intense dedication to massive quantities of Poly Production. It also reinforces the relationship between LDK Solar of China, and GT Solar of the United States. Not only is it supportive of GT's commitment to LDK, but it also reflects on GT's confidence in signing an equipment deal for valuable Technology with a Chinese Company. It speaks to the Integrity of LDK in terms of Intellectual Property.

In conclusion, a reiteration of the mutually beneficial relationship between LDK Solar and GT Solar is a very comforting bit of news.

Wednesday, September 3, 2008

The Tao and LDK.

One of the various places that I read things has a "daily tao" posting, of various chapters / translations of the "Tao te Ching."

I already associate alot of how I see China, as well as how I see this struggle between the Business of LDK vs. Short Interest, in terms of the Tao te Ching.

I just happened to actually read today's "daily tao," and thought it terribly relevant to the way Mr. Peng has been dealing with this conflict all along.

Here goes:

Whenever you advise a ruler in the way of Tao,
Counsel him not to use force to conquer the universe.
For this would only cause resistance.
Thorn bushes spring up wherever the army has passed.
Lean years follow in the wake of a great war.
Just do what needs to be done.
Never take advantage of power.

Achieve results,
But never glory in them.
Achieve results,
But never boast.
Achieve results,
But never be proud.
Achieve results,
Because this is the natural way.
Achieve results,
But not through violence.

Force is followed by loss of strength.
This is not the way of Tao.
That which goes against the Tao comes to an early end.

Somewhat depressing article behind the link.


"The way I see it, our markets are now largely out of the hands of “investors” and are mainly controlled by large trading funds, which use “black box” computers to trade the markets in a very highly-aggressive and rapid fashion. I have it on pretty good authority that there is a single hedge fund (just one) that constitutes 10% of all shares traded on any given day."

Sunday, August 31, 2008

Windfall Taxes on Big Oil.

Obama supports them, as does Palin.

Just a note on Palin's support of Windfall Taxes on Oil Companies, remember that Alaska is a very Socialist State (believe it or not). Some factoids from Wikipedia point out that Alaska has the 5th largest per capita Gross State Product of all the US States, for which Oil and Gas accounted for 80%. There is an "Alaska Permanent Fund" controlled by the State Government which pays out a dividend to all eligible Alaskans, which amounted to $1963.86 in 2000. So, it's pretty easy to keep Alaskans happy, just try to increase Oil Revenues, and thus boost the yearly Socialist Incomes. See.

So, they are both in support of Redistribution of Wealth from Big Oil.

Ok, let's look at this in a completely different way.

Per Google, Exxon alone reported $38.968 Billion in Cash and Cash Equivalents, as of the end of Q2. Other companies include, Shell at $8.990 Billion, Chevron at $8.180 Billion, and BP at $3.593 Billion. This is what they have in CASH and CASH Equivalents. This money ($60 Billion Total in just the four listed Companies) isn't even tied up in Investments. It's what they've got in the sock drawer ready to move immediately as needed.

So yeah, as a bit of an Exxon Watcher, I can tell you that they've been building up this Warchest for quite some time. What are they going to do with it? Well, IMO they are going to invest it in Alternatives, but not yet. They will wait as long as possible before showing their hand to the public.

So, Obama and many others want to put a Windfall Tax on these big Oil companies. What affect would this have on the Investing Choices made by the Managers of this Big Money?

Well, it's entirely possible for Companies like Exxon to DECREASE their overall Profits, and AVOID a Windfall Tax. They'd do this by INVESTING more of that money into a foundation for Future Growth, like in Alternatives.

Sounds great to me. As it stands, they're just sitting around cashing in on the incredibly high prices that we're currently experiencing, and by delaying future production they are directly putting continued upward pressure on those prices, which is very much sapping the strength of the entire Economy.

The Windfall Profits Tax seems like a good way to put Pressure on these Companies to Invest those Profits. They need to decide sooner, rather than later, if they are going to End their Corporate Lives as Oil Companies, or whether they are going to Continue on as Energy Companies.

EDIT: In support of my claim that Palin Supports Oil Taxation, plus an additional thought on the subject:



Her plan was to give every Alaskan $1,200 as energy cost relief, based on Oil Windfall Profits Taxes, and increased Oil Tax Increases that she supported as Governor. Geez, I wish my State had Oil.

Here's another weakness of Palin. Any Economics that she concieves of is based on a Socialist State, with a very very simple Economy. It's 80% based on Oil and Gas, and the Population is very very small. Does she understand the impacts of Presidential Decisions on Large metros, when the largest number of people that she's ever had to deal with is the Population of Alaska, which is only 670 Thousand People?

As Governor of Alaska, when has she had to closely deal with any one of the many Industries that make up the American Economy? There are no Auto Manufacturers, Major High Tech Companies, Huge and Troubled Financials; heck there isn't even very much Agriculture in Alaska.

So, expect no help for McCain on the Economic Front.

Saturday, August 30, 2008

Asensio is at it again.

Looks like Asensio is making allegations again, trying to start a new short attack on LDK.

If you haven't heard of him, Asensio is a low-life famous short seller, who had a hard on for LDK last year, using the same types of rumors that we see coming from him now. His arguments are crap, and he likely is a significant chunk of the Short Position that is currently trapped in LDK.

The article linked above suggests "LDK's most recent financial statements show questionable entries, including its "inventories to be processed beyond one year" numbers," as one of Asensio's "concerns." Well, the fact is that that classification of inventory relates to LDK's supply of Silicon Scrap, which is an integral part of their blending technologies, and it has been signed off on by not only the Accounting Firm KPMG, but also by a completely Independent Deloitte. This was all cleared up last year, and Asensio knows it.

As for other Accounting and Transparency issues, LDK has released equivalently detailed financial numbers as any of the other Solar Companies I've seen, including American Solar Companies, they've released a detailed Annual Report for 2007, have done detailed presentations of their Business Plans, Progress, and Technologies. In fact, we probably know more about the details of LDK's business than we do about any other Solar Company out there.

But apparently Asensio needs help from some new shorts to take the price back down for him.

He'll clearly even lie to make that happen. When he refers to the new deal with Hyundai Heavy Industries, he says "interestingly, there is no reference to the prior announcement and makes it look like a new contact." However, if you look at the actual release, you'll see that it does specifically refer to this as an "additional" agreement.

So, if I were a Short Seller following Asensio, I'd be thinking twice about whether he can be trusted, or whether he's just looking for a sucker to sell him some shares so he can get out of this action. Look at the Fundamentals of this Business and this Industry before you make a decision, and if you Really think that LDK is a sham, then go ahead and follow Asensio, but if you conclude that LDK really is what they say it is (which it is), then for your own sake, Don't Short. There comes a time in the market where Manipulation finally falls before the Truth of the matter, and that time is coming. I would suggest that you not be on the wrong side when it happens.

Friday, August 29, 2008

New LDK Contract - Hyundai Heavy Industries - 8/29/08


"LDK Solar Co., Ltd, a leading manufacturer of solar wafers, today announced that it has signed a seven-year contract to supply multicrystalline solar wafers to Republic of Korea-based Hyundai Heavy Industries Co., Ltd (HHI).

Under the terms of the agreement, LDK Solar will deliver approximately 440 MW of multicrystalline silicon solar wafers to Hyundai Heavy Industries Co., Ltd over a seven-year period, commencing in 2009 and extending through 2015. Hyundai Heavy Industries Co., Ltd will make a down payment representing a portion of the contract value to LDK Solar."

Another Prepayment.

LDK Demonstrates how they will finance their growth without turning to Dilution.

LDK Demonstrates that they will not play the Short games.

Thursday, August 28, 2008

LDK - Notes on Options - 8/28/08

This idea has been rattling around in my head for some time. Here are some thoughts. Take them as purest opinion and speculation. If they are fundamentally unsound, then give me hell.

The question is, what have the Options Writers been doing, and what are they doing now?

Well, the trend since October '07 has been that puts have been golden. LDK has nearly on every occasion dropped to or below Max Pain for options expiration.

"Max Pain" is the point of intersection between the interests of Call Writers and Put Writers.

In the case of Calls, if the Price of the stock goes above the Strike Price of the Call, then the Call Writer has to deliver 100 Shares of Stock to the Call Buyer (if they Buyer Chooses to take them). The Call Writer DOES NOT WANT the price of the shares to pass the Strike Price of the Calls that he has written and sold. Some Call Writers don't even have the shares to deliver. In the case that their calls get into the money, these guys would have to buy shares to deliver sometime after OE (or else be in possession of other Calls that were also in the money).

This puts it in the interest of Call Writers for the Price of Shares to Drop (or stay below the price of the Written Contracts, anyway). It puts Call Writers on the Short Side.

What about the writers of Puts? The Writer of Puts is somewhat the opposite of the Call Writer. The Put Writer says to the Put Buyer that if the Share Price of the Stock goes BELOW the Strike Price of the Put that has been Written and Sold, then the Put Writer will BUY 100 Shares of Stock from the Put Buyer (if the Buyer Chooses to sell them). The popular idea here, is that a person would Buy a Put in order to protect themselves in the case that the Price of the Shares Decreases. If the Price of the Shares Goes Below the Strike Price of the Put, then the Put Buyer will Sell the Shares to the Put Writer for the Higher Strike Price.

This would seem to suggest that the Put Writer would be interested in a Rising Price, and would be on the Long Side.

Now, if the Put Contract were truly the opposite of the Call Contract, then clearly, just as the Call Writer does not want their Calls to come into the money, neither does the Put Writer; i.e. where the Call Writer wants the Price Down, the Put Writer wants the Price Up.

This is the basis for Max Pain, but is it accurate? Maybe not always.

What if the Put Writer Actually Wants or Needs the Shares? They could be perfect happy to Deliver on their In the Money Put Contracts.

Consider a situation where there are very few shares to go around (Low Float, Dedicated Long Holdings), and an incredible level of Short Interest that needs to protect itself from a Squeeze. In this case, the last thing that the Short Interest wants to do is to buy Shares on the Open Market, as these Transactions would create significant Upward Pressure on the Share Price. However, in order to have control of the Price, Short Interest must have Shares to Strategically Dump.

If the Put Writer really wants those shares, then they might very well be perfectly willing to let the Puts end up In the Money and to collect the resulting Shares. They make the initial income from Selling the Put in the first place, and then on Options Expiration Day, they could collect 100 shares of Stock per Contract without undue buying pressure on the Open Market Price of the Shares.

Of course, the Buyers of the Puts would be happy with the deal, because they managed to sell their shares at a lower level of Loss (percieved).

This would be exactly what the Short Doctor Ordered; Sell Puts, Drive the Price Down, Collect Shares. It's a Win, Win, Win situation for Short Interest.

The Next month, they can then repeat the process, and use the Shares Collected in the Previous Month to Dump on the Open Market, and Drive Down the Price as Necessary to bring the Next Wave of Puts Into the Money.

It's a Vicious Circle, and could Explain why, on a couple occasions LDK Shares ended up more than $5 below the Max Pain Price.

Q2 LDK Earnings caused a failure in this Short Process.

Nobody had any idea that LDK was going to Blow Away Expectations like they did. Many eyes moved to see LDK for the first time, and Many More have looked this way Since. The Price went from $33 to $42 in Five Days up to August OE, knocking out the $35 and $40 Strike Puts. I don't have access to an Options Chain from August, but I did record that between $30 and $40 Puts for August there was a total Open Interest of 23313 Contracts. Whether there was any possibility of taking this Stock below $30 had LDK announced mediocre results, who knows, but I think it's safe to say that the losses of the $35's and $40's unexpectedly deprived Short Interest of over a Million Shares that could have been used for Dumping in September.

This is not to mention the Calls that had been bumped into the Money, for which either Shares would have to be Delivered, or additional Calls would have to be purchased to cancel the debt. Either way there would be a cost to the Short Side.

Looking forward to September.

Well, obviously the August Share Price Movement since Earnings has been incredible. How much of this has to do with the repercussions from the August Options Scenario, is unknown. I think it's safe to say, though, that Short Interest is suffering.

August Options Losses, however, are miniscule compared to the potential Risk that the Short Side faces in September. A week ago it was looking possible that Put Writers could lose their $45 Strike Puts, and now it's looking possible for them to lose the $50's. Again, this is not even to mention the cost of Delivering Shares on In the Money Calls at these higher Strikes.

How does Short Interest Deal with this?

I have no freakin' idea! LOL!

The threat to Short Interest of Poly Production hangs over the Stock. Poly Production is the Key in the minds of a great many Investors. Jesse Pichel has said that he believes that they will FAIL. Where Earnings were worth an immediate 20% added to the Share Price, Poly Production (or even other pieces of wholly unexpected news, for that matter) could add 20% OR MORE between refeshes on the screen.

For Shorts to avoid massive Options Losses, the price has to be driven down in September. On the other hand, to do so will require the dumping of shares, which carries with it incredible additional risk based on the Timing of LDK's Poly Announcement. Even if the price could be brought back down to, say, $39, a 20% rise on News from LDK would pop it right back up to $46, bringing the 40 and 45 Strike Calls right back into play. As of today, just those two Strikes amount to almost 22 Thousand Contracts, or the equivalent of 2.2 Million Shares. So, what if Short Interest Dumps a Million or more Shares in order to save on 2.2 Million Shares, and they Fail? I'll leave that to the reader's imagination / calculation.

What can Longs do?

Not that I am advising in anyone's personal investment decisions, but I think that there are some things that could concievably be done to support the Price through this time. Call it "common sense." Remember that each potential investor is absolutely responsible for their own investing decisions, and I am not liable for any potential losses or other repurcussions from those decisions.

One, be careful. Recognize that when Short Interest buys the price up, they'll do all that they can to then sell it back down. Don't go out on a limb on Margin on a spike in the price. Emergency Selling on the Downside suits Short Interest by generating Fear and Losses from Longs. Avoid the temptation to buy on Margin by making sure that you have your desired position PRIOR to the big moves that we're looking to see as this Short Interest unwinds.

Two, don't use stops. Stops, in this case, have been consistantly used by Short Interest to trigger chain reactions of Selling. If you know the facts of this case, and are confident enough to buy shares, then great, but if you are investing with such fear of short term loss that you need to put up a stop to be triggered, then maybe you'd better go find a different Stock to buy.

Three, don't forget the Fundamentals. For a reminder, see the July Presentation Slides. These Fundamentals ultimately define the Value of LDK, and the day to day ticks are of Secondary Importance. It is these Fundamentals that give you the comfort of Confidence that your money invested in LDK is likely to grow over the long term.

Four, for Traders, having looked at the Fundamentals, as well as at the history and projected future of this Company, recognize that though buying and selling short-term dips and peaks can increase the profits of a skilled trader; missing the rapid rise of a Short Capitulation would be a damned shame. Holding a core position safe from trading might make sense.

Five, spread the word. This story, the LDK Story, the Global Solar Story, and even the Climate Change and Peak Fossil Stories are incredibly important for people to understand. Without understanding of the Problems and Solutions, is it any wonder that people are unable to properly determine the market value of the Relevant Businesses?

As usual, Comments / Questions / Disagreement is welcome.

Final Late Night Edit: LDK has just announced ANOTHER contract WITH PREPAYMENT from Hyundai Heavy Industries for 440MW of Wafers over 7 Years Starting in 2009. This even more greatly complicates the Calculations for Short Interest on LDK.

LDK has developed a clear pattern of offering Contracts for future Production, in part, based upon Immediate Partial Prepayment in support of the Growth that LDK will need to fulfill those Contracts.

This strongly supports LDK's position by not only assuring LDK a supply of Capital for Growth, but by doing so without the Need for Dilution on the part of LDK. There are clearly no new shares coming onto the Market for shorts to use in covering.

Tuesday, August 26, 2008

Sunways - LDK - GT Solar - Relationships - 8/26/08

In the news today, LDK was dominated by a statement from Sunways AG.

This clears up a couple of things about LDK's Poly Plant Plans.

For one, it clears up any confusion about the reactor make-up for the 1000 Ton Poly Plant. It had previously been unclear whether the 1000 Ton Plant was being supplied with Reactors by GT Solar, Sunways, MSA, or a combination of all three.

It now appears that the 1000 Ton Plant is solely under the perview of Sunways, and all the Reactors appear to be supplied by MSA of Germany.

Per the article, there is indication of some delays in the LDK project, due to weather-related supply disruptions. In addition to this, however, there was some added certainty as to the timing of the 1000 Ton Plant in terms of Implementation.

Per Sunways, the first two 125 Ton/Year Reactors are to be put into production in Late September to Early October. In addition, the plant is to be Completed by End of 2008 or Early January 2009. Based on this, though, I have to wonder what the present status is of the initial 2 MSA Reactors recieved from Sunways. The possibility that they are presently in "test," and producing "test" amounts of Poly is a critical one.

In other news, GT Solar has announced Q2 Earnings today. I've left some notes here. In the CC, GT stated that they had Reactors ready for Delivery to LDK, and LDK was next on the list for Delivery. They also stated that they expected to realize no revenues from poly Reactors for the remainder of the year, which suggests that per plan there will be no poly production from the LDK relationship this year. That's ok, we didn't expect any production from the Large Poly Plant this year.

Well, that's the news for today, and now it's bedtime. :)

Monday, August 25, 2008

Sent to my CEO just now - Peak Oil.

Hi D,

I'm going to pass this around to some others, but I thought I'd pass yours along with a short personal note.

We haven't talked in quite some time, but if you remember, I have a particular interest in Energy Issues. I couldn't go into too much detail on all of the aspects without turning this into a book, so I'll keep it short. :)

Linked, you'll find a 18 minute long video, which puts the concept of "Peak Oil" into sharp relief, and I hope that you can find the time to watch it.

As you've probably noted, discussion of Energy Issues have increased in volume over the last year or so, and with very good reason. Of all of the reasons that are typically mentioned, however, Peak Oil is not one of the more common items mentioned, though it is arguably the most critical.

In terms of a specific relationship to and ; in brief, the wellbeing of a Company and Economy has no greater dependence than to the sources of Energy that allow for the functioning of all of its parts. Consider just the incredible feat of staffing a Company with hundreds of Employees who must travel regularly to work from all parts of a City, or County, or Country, or even the World.

Maybe this doesn't seem like so much of a miracle to you; but it can certainly be said that such a possibility has not ever been had in any historical setting prior to about the middle of the last century, and it was Fossil Energy that has made it possible.

So, without further adieu, here is the video: http://www.chrismartenson.com/peak_oil .

FYI, the creator of this video is very credible, and his facts are sound. The remainder of the videos at the site are also excellent primers for understanding of the Economic Challenges that we find ourselves in at the moment, from the basics on money creation, debt, inflation, etc. I go out on a limb and suggest that you surely have a strong basis in Economics, but I'll also suggest that you may have never seen many of these concepts presented in such a way as in these presentations.

Anyway, I hope that you enjoy the video, and I hope you don't mind the intrusion into your day. Also know that if you have any questions on this issue, please don't hesitate to ask.


LDK Announces 1GW Annualized Capacity!

Also, Preliminary Financial Outlook for 2009

Saturday, August 23, 2008

Must See Video - Peak Oil - TheEndofMoney.com


This is a great video, and there are many other videos on the same site.

Please take a few minutes and watch it.

My thoughts in brief:

So far, the market itself is doing a shitty job of preparing us for the physical realities that we're about to face. Entrenched Energy interests are suppressing potential competitors (Solar, Wind, etc.) in various ways (both in the Private Sector and in Government). The valuations assigned to things by the market, as dependent on the decisions of its participants; is dependent on the level of information had by those participants. Americans are NOT informed on Energy Issues, and particularly they're not informed on just how critical these issues are in comparison to just about every other issue.

I'd like to see the market do the trick here, and in some way's it is getting started, but its opponents have an incredible amount of power to manipulate the Markets. At the very least, I think they're waiting till November before accepting the fact that things are changing, and the time for massive investment has arrived.

Thursday, August 21, 2008

Wednesday, August 20, 2008

ADR REPORT: Potential Chinese Stimulus Plan Boosts Shares

ADR REPORT: Potential Chinese Stimulus Plan Boosts Shares

"The Asian index ended up 1.5% at $136.80, buoyed by a claim that China is considering an economic stimulus package of up to CNY400 billion ($58.4 billion). Among the companies that rose in China were China Life Insurance Co. Ltd. (LFC), up 5% to $53.25, Yingli Green Energy Holding Co. Ltd. (YGE), up 9.7% to $16.02, and Baidu.com Inc. (BIDU), up 4% to $321.22.

Also in China Suntech Power Holdings Co. Ltd. (STP) jumped 12% to $41.75 after it reported a 58% increase in second-quarter net income as demand continues to be strong for solar power. The Chinese producer of photovoltaic panels - the world's largest by revenue terms - also raised its full-year revenue guidance and sees current-quarter sales above analysts' forecasts."

A Note on Convertable Bonds.

Form F-3ASR

I think I figured it out in the shower this morning (nothing like a good shower for clarity of thought).

Crackhead has mentioned several scenarios involving the CBs, and the point I've been trying to make has to do with the fact that the redeemer does not get to choose whether they will recieve actual shares, or a fair cash value.

So, yeah, these ain't your Granpappy's Convertable Bonds.

These are Chinese Short Trap Bonds.

Ok, so with a normal CB, the buyer has the right to redeem the bond for shares. So, a short that holds a normal CB doesn't care if the price goes from $30 to $200, because that bond will make them even when it gets redeemed.

With these ones, the short buyer doesn't know whether they'll get Shares or Cash. It's a roll of the die as far as they're concerned.

Ok, so the question: Well, what if they do only get cash? They recieve a fair value for the shares in cash and they can just buy shares, right?




Um. What happens when you buy shares, and there are few to be had? You drive up the price, of course!

Also, the calculation of fair value for the shares is an average based on some number of days of PAST performance, so while various shorts are taking that cash and buying up shares and driving up the price, later short redeemers are recieving payment for the bonds that is LESS THAN THE CURRENT PRICE OF SHARES.

They lose money and drive up the price of shares at the same time!

What say you all?

My only real question is whether anyone has ever seen such a Convertable Bond Setup before. Anyone? Anyone? I'm pretty sure that this isn't standard.

Saturday, August 16, 2008

WSJ - Feb '08 - Asia Coal Issues.

China Spurs Coal-Price Surge

This goes well with my still incomplete comparison between Solar and Coal.

Incredible Paper on the Economic Inviability of Nuclear Power.

The Nuclear Illusion

Here's the Author before Congress.

I could fill pages upon pages with the data that struck me very strongly, but I won't bother. Just read the whole thing. :)

Last, by random chance, an Article on Yahoo's front page gives some support to the challenges of Nuclear.

Friday, August 15, 2008

IPO Note: Changing World Technologies

Changing World Technologies IPO

I remember these guys from way back, and at the time I was excited for their technology.

In fact, I've stated that when I die I'd like to be converted into useable Energy by their process (as a joke, of course). :)

We'll have to see what the details look like.

They could be explosive if their technology is efficient, though it's another case of an Energy / Food tradeoff, as if they weren't turning those turkeys into Energy, they carcasses would otherwise become Fertilizer or possibly Livestock Feed.

Cramer - Mad Money - 8/13/08

Cramer - Mad Money - 8/13/08

"How do you buy the stock of a great company, AFTER it's reported a monumental earnings blowout and gone so high.

Thats the question I'm answering for you this week. In order to try and help you make money, off of companies that reported the biggest beats during earnings season, because that means that they will likely outperform the rest of the market.


The reason we're focusing on ORB is the fabulous quarter ...unclear... July 17th when the company reported 35 cents a shares. You know, that was actually 12 cents higher than the 23 cent consensus estimate, ...unclear... 52 percent beat.

ORB also raised it's full year guidance from 84 to 89 cent range to 93 to 97 cents. It's a wholesale reevaluation of this company. It booked $425 million in new orders, $4.2 billion backlog. This is a business with a market cap of just $1.5 bill. It's backlog is 2.5 % of the entire company.

Now every time we've seen that it has either produced a takeover or major move, whenever the backlog is that much bigger."


Side Note:

LDK's Market Cap is 4.33B, and their backlog is 12,482 MW over the next 10 years. Even assuming a low average ASP over that time of, say, $1 / Watt, gives a backlog of $12,482 Billion, or 2.88 times the Market Cap.

Oh, and they beat by so much more.

How's that sound to ya', Cramer?

Thursday, August 14, 2008

Good News from the States! 800MW in California.

Two Large Solar Plants Planned in California

"Companies will build two solar power plants in California that together will put out more than 12 times as much electricity as the largest such plant today, the latest indication that solar energy is starting to achieve significant scale.

The plants will cover 12.5 square miles of central California with solar panels, and in the middle of a sunny day will generate about 800 megawatts of power, roughly equal to the size of a large coal-burning power plant or a small nuclear plant. A megawatt is enough power to run a large Wal-Mart store."

Wednesday, August 13, 2008

LDK Factoids - 08/13/08

PE = 15.5

Jesse Pichel has Upgraded to Neutral.

New Investor's Presentation containing the following update, "1,000 MT polysilicon plant will commence production shortly."

LDK has surpassed REC as the Number One Solar Wafer Manufacturer in the World!

Excellent Article from "Gaming the Market."

Who is Gaming the Solar Market?

Breaking News - New LDK Contract w/ XL Telecom of India.

300MW with Prepayments.

"LDK Solar Co., Ltd, a leading manufacturer of solar wafers, today announced that it has signed a five-year contract to supply multicrystalline solar wafers to India-based XL Telecom & Energy Limited.

Under the terms of the agreement, LDK Solar will deliver approximately 300 MW of multicrystalline silicon solar wafers to XL Telecom & Energy Limited over a five-year period, commencing in the first quarter of 2009 and extending through 2013. XL Telecom & Energy Limited will make a down payment representing a portion of the contract value to LDK Solar."

Very nice!

Remember, these prepayments aren't just going to pay for the Poly Plant. They are going toward expansion in Wafering Capacity, which as we've just seen, is bringing in record profits.

LDK is growing faster than you can conceive of.

What other Companies are able to get Customers to pay UP FRONT so that that company can build the capacity to meet the customer's demand? These customers are paying up big, because they know that LDK is doing something that they can't do themselves.

Looking back, here's some basics on LDK for any who haven't seen it. When looking at the pics of the progress, keep in mind that the flattening of the surrounding land was only just completed at the end of November last year, and the ground was just broken in August of 2007.

Monday, August 11, 2008

Saturday, August 9, 2008

Coal / Solar Cost Comparison - Final Draft

Note: This article is under revision, considering current fluctuations in price. The Concept is sound (IMO) as a way to make rough comparisons in cost, but the Prices are presently off.

Also note, the 33% Insolation that is used as a basis for comparison, is very high for a stationary system, but well within the range of a tracking system. For more information on Insolation, see "A Note on Units of Energy and Insolation."

I'll set up two equivalent scenarios using Coal and Solar, and will then make comparisons.

Note: I make numerous assumptions, and will mention these where appropriate.

For this thought experiment, we'll imagine that both of these industries are starting from scratch with equal Energy Production Capacities. In reality, of course, Coal has tremendous existing Scale Advantage over Solar.

This will be a demonstration of how fuel costs could affect the long term comparative cost of the Coal Energy vs. Solar Energy.

First, imagine two industries; Solar and Coal. The goal of both of these industries is to produce Energy.

Now, divide each of the industries into three groups.

Group One:

Group One is made up of those segments of the Industries that produce the actual Electrical Generation Facilities.

In the case of Coal, this is the industry that produces the actual Power Plant. It would include everything from the ground up, like the steelworks that made the metal, to the quarries that produced the Concrete. It would include the Engineers, Managers, and Laborers for the Plant Construction, as well as the Lawyers and Lobbyists required to work with the Government and Public to support the plant's construction.

In the case of Solar, this would include all of the players from TCS, Wafers, Crucibles, and Modules, through the final Solar Power Plant Installation. Once again, it would include all of the extraneous support required for the project.

Group Two:

This group is made up of everyone associated with supplying the fuel for the Power Plants that were produced by Group One, above.

- For Coal, this would include everything from the actual Mining of the Coal; the engineers, geologists, equipment operators, supervisors, etc. This group would also include the Transportation of the Coal to the Power Plant.

- For Solar, there is no Second Group. There is no Delivery of fuel to the Solar Plant.

Group Three:

This is all of those involved in the upkeep over time of the power plants. I'll ignore this group, and give Coal a freebie. I think it's safe to say that Solar will beat Coal on Upkeep Costs over time.

Notes and Assumptions:

Note: The Solar Plant is going to have to be rather larger in peak rating than the Coal Plant, since Sunlight isn't constant. 33% is a fair conversion for a very sunny place, so our Solar Plant has to be three times the rated output of the Coal Plant (Say, 350MW Coal = 1050MW Solar). Whatever actual output we settle on, we just want the total yearly output of Energy from both plants to be the same for comparison purposes.

Note: Solar does not provide a base load like Coal. We're just looking at total Energy Output, not the convenience or timing of the final product. Ultimately, for future base-loads, we'll need a heck of a grid, plus some other provider like Sequestered Coal, Geothermal, or something else like that.

Note: I have Silicon-based Photovoltaic Solar in mind in writing this.

Note: PV Solar lends itself to a decentralized solution. Therefore, when talking about a 1050 MW Installation, we don't have to assume that some company has bought 1050 MW worth of Panels and Installed them as a single project. Instead, we can talk about a total of 1050 MW of Panels installed anywhere, in any distribution. Whether Centralized, or not, a Watt of Solar Energy offsets a Watt of Fossil-based Production.

Note: The referred-to Spreadsheet is likely not entirely clear to anyone but myself. I did try to add descriptions to help, but there are a lot of numbers involved. Feel free to counter my numbers with your own if you think that I'm off on anything.

Assumption: I've worked out several Cost scenarios involving guesses on future Inflation / Coal Price Increases. Of course there's no telling how the price of Coal will vary over the next 25 Years. There are numerous reasons to suggest, however, that the price of Coal will not remain static, particularly in the face of Peak Fossil and US Dollar Depreciation. Even if Coal is not near Peak, Peak Oil will put increasing upward price pressure on Fuel to support Coal Deliveries. Nearly all of the price pressures in the foreseeable future point towards a continued Increase in the Price of Coal, particularly in the price of non-local Coal that requires long distance transport.

Assumption: No cost factors related to future Climate Change Regulations are included in this Document. This gives a huge Freebie to Coal, as Sequestration and Carbon Credits will add greatly to the cost of Energy Production from Coal Sources over the next 25 Years.

Assumption: No cost factors related to Increased Healthcare Costs due to the Burning of Coal. This is another Freebie for Coal as far as this paper is concerned.

Assumption: I assume for the initial calculations that the lifespan of the Coal Plant and the Solar Plant are equal to 25 Years. The lifespan of either a Coal Plant or a Solar Plant is certainly greater than 25 Years. I'll look back at this in a later section.

Assumption: I assume for the initial calculations that the Conversion Efficiency of the Solar Panels stay constant throughout the life of the plant. Again, I'll look back at this in a later section.

Imagine both a Coal Industry and a Solar Industry, each capable of producing a single Power Plant per year (or arbitrary unit of time, really).

Year One: Both a Coal and a Solar Plant are built.

By the end of year One, both the Coal Plant and the Solar Plant have produced one Yearly Energy Unit. The Coal Plant has consumed it's required yearly supply of Coal.

Year Two: Both a Coal and a Solar Plant are built.

By the end of this year, the Plants that were built last year, each produce their total yearly capacity in Energy. In addition, the new plants being constructed this year have each produced a Yearly Energy Unit. The two Coal Plants consume a total of 2 Units of Coal for the year.

The Total Amount of Coal burned since the first Year is 3 Units.

Year Three: Both a Coal and a Solar Plant are built.

By the end of this year, the Plants that were built in the two previous years, each produce their total yearly capacities in Energy, for a total of 2 Units of Energy from Solar and Coal Plants. In addition, the new plants from this year have each produced a Yearly Energy Unit. The three Coal Plants consume a total of 3 Units of Coal for the year.

The Total Amount of Coal burned since the first Year is 6 Units.

Now, to make some Comparisons between Coal and Solar based on the above setup.

Comparison One: Side-by-Side – Energy Output

Take a look at this spreadsheet, I'll take it out 25 Years.

See Sheet 1.

This first set just shows that over 25 years, the total Energy Output of both our Coal and Our Solar Industries are the same. Easy enough, that was part of the basic assumption.

Comparison Two: Side-by-Side – Feedstock Demand

This next set shows how the total demand for Coal Feedstock grows over time.

See Sheet 2.

Per Plant, of course, it's linear; just One Unit of Coal Fuel per Year per Plant; however, as the number of plants increases, the Total Yearly Demand for Coal for the Industry increases exponentially based on the rate of increase of demand. This is a recipe for increased cost of that fuel over time, particularly since the Coal is utterly destroyed in the process of burning; there is no recycling or conservation of raw materials.

In fact, over the first 25 years of the scenario, the yearly demand for Coal from the Power Plants has increased 25 times. Unless supply increases similarly, prices will have to increase due to the additional demand.

This is where our assumption that the Coal Industry isn't actually a behemoth in comparison to Solar comes in. Of course, the Industry is so large that an extra 25 Plants worth of Demand isn't going to stress out the Suppliers too much. However, the ability of the Coal Industry to increase supply to meet demand is not infinite, particularly since, once the coal is gone from a site, it's gone and the total production from that site has to be replaced by production from a new site. Finding new sites gets more difficult over time, particularly as International Politics and Dependence on Support from Sovereign Governments creates Long Term Complications and various forms of Blowback.

Looking at some actual Coal Consumption Numbers (See P.35), we see that in 10 years between '97 and '07, consumption of Coal increased from 2317 to 3177 (Millions of Tons of Oil Equivalent), or by 37%. According to The World Coal Institute, "at current production levels coal will be available for at least the next 147 years." They specify at "current production rates," which says to me that they are not taking into account increases in Demand / Production, as production rates would either have to increase to meet demand, or else price would have to go through the roof to take into account the discrepancy. Oddly enough, at the beginning of the writing of this paper, the World Coal Institute estimation was that we had 155 years worth of Coal remaining, but now, having confirmed my links, I see that they've updated this number to 147 Years, which means that in about two weeks of time, the World Coal Institute revised their estimate down by eight years*. For a counter opinion on the timing of Peak Coal, see this article which concludes that it could be in as soon as 15 years.

Comparison Three: Costs – Inflation Scenarios

Looking at a specific example, I'll take a look at some samples of Coal Plants, to see how much coal they each go through in a year. I've grabbed a couple of examples from the web, which gives some idea of how much coal a plant will go through, compared to its rated power output. It looks like Milliken Station on Cayuga Lake is quoted as the most efficient plant of the four that I found (in Energy per ton of Coal), so I'll use that plant as an example, and support it as within a reasonable estimation with some averages from www.powerofcoal.com.

See Sheet 3.

In fact, it appears that the fuel cost that I derive for Milliken Station is slightly above the average in the Industry. Per PowerofCoal. Working out the Cost per Watt from Milliken Station over 25 Years at $100 / ton gives $6.26/Watt*25 Years. This compares to the National Average, which works out to $5.18/Watt*25 Years. Note that since this “PowerofCoal” reference was dated, most Coal Prices have increased quite dramatically, so the national average costs have probably increased by 25% or more.

Note: Per “Checking my Numbers,” below, it appears that Milliken Station is very close to the theoretical maximum in terms of Energy Production / Ton of Coal. Therefore the PowerofCoal Numbers are likely skewed in some way, likely due to the Particularly large amount of easily recoverable Coal in the Powder River Basin in Wyoming, and possibly also due to Government incentives at some stage of the Coal Energy Production Cycle.

Over the first 25 years of this plant's life, it costs a total of around $2.6 Billion in initial Construction Costs and Yearly Deliveries of Coal Fuel. Of course, this assumes that the price of Coal doesn't increase over this 25 years, and it assumes that the plant costs nothing in maintenance. As shown on Sheet 3, if Inflationary factors are considered, total cost for this near average plant over 25 years could actually approach $6+ Billion.

For Fuel Cost Estimation for other Coal Plants, see Sheet 4.

Ok, now to look at an equivalent Solar Installation (1050MW @ 33% of Peak in Total Energy Output). There are alot of different ways to work out sample prices for equivalent Solar Installations. The first, and ugliest example would be to use the retail price data from Solarbuzz.

According to Solarbuzz, the average US Retail Price for Panels is $4.82 Watt, and the Total Cost of the Project is about Twice the cost of the PV Modules. Using this method arrives at an end resulting cost of between about 2 and 5 times the cost of an equivalent Coal Plant over 25 years (Depending on Future Inflation). At this price, the total cost of the Installation would be $4.82/W * 1MillionW/MW * 1050MW * 2 = $10.12 Billion (compared to $2-$6 Billion for an equivalent Coal Plant). Wow! Ok, but this number reflects the many inefficiencies of small-scale retail distribution and installation. It also represents the current high demand / low supply that we see in the World PV Market, reflected among other things by a cost of Polysilicon of 5-10 times (or more) the cost of its production (Polysilicon costs are around 40% of the total cost of producing Solar Panels at this time).

So, with a 25 Year window, it's tough to compare the Best-case scenario for Coal to the Worst-case scenario for Solar at present Solar Prices. We'll get back to this one a bit later.

Instead, I'll try to gauge the cost of some existing large scale PV Solar Installations. Attached you'll see a few price references to indicate the Cost / Peak Power that is currently available for mid-size Installation sizes.

See Sheet 5.

This spreadsheet shows some examples of Solar Power Plants in the real World, their output, and their projected costs. Remember, that I've chosen a 1050MW Solar Plant to be equivalent to a 350MW Coal Plant in annual Energy Output.

The Price per Watt ranges from $5.33 -$8.05. So, using this range of prices to construct a theoretical Solar Plant of 1050MW would give us costs ranging from $5.8-$8.5 Billion. Remember, this is compared to a cost for coal of my just slightly above US average Coal Power Production Costs of $2.6-$6.5 Billion.

Personally, I think that assuming future inflation to be zero is ludicrous, and can't help but think that the much safer bet is that Coal Fuel Prices will increase significantly faster in the near and mid-term future than we're used to thinking about. If this is the case, then there are cases in this scenario in which Solar Installation would be the best economic choice for installation RIGHT NOW.

Comparison Three A: Costs – Inflation Scenarios – Extended to 50 Years

We know that a Coal Plant Lifespan isn't limited to 25 Years. We know that Solar Panels are typically warranted out to 25 Years. We also know, however, that Solar Panels can last significantly longer than 25 Years. Sheet 7 gives some idea of what kind of useful lifespan we are looking at as far as Solar Panels, based on a .5% degradation in output per Year. Considering this degradation would certainly throw off the previous Calculations, so I'll consider it for this scenario. I'll also cut down the total output of the Panels by 5% due to Inverter Losses, and by 10% for High Temperature Loss. In addition, I'll take into account the Panel Output loss over that 50 Years using the Chart on Sheet 7 by reducing the overall Output by an extra 12.5%. All of this means that now, instead of needing 1050MW to equal the 350MW Coal Plant, we're going to need a 1364MW Solar Plant.

As before, using Solarbuzz, $4.82/W * 1MillionW/MW * 1364MW * 2 = $13.15 Billion for the entire Solar Installation.

Now, for the Coal Plant, we'll figure out the cost over 50 Years assuming some inflation rate. This time I'll assume a rate of 4%. See Sheet 8. It seems that assuming 4% Inflation in the price of Coal over these 50 Years, even with all of the negative offsets that I've just added to the cost of the Solar Installation, the Coal Plant LOSES with a total fuel cost of $13.4 Billion.

Remember, Solarbuzz Numbers are Retail. How much money can we save for a utility-scale operation by buying bulk? I'm going to take a wild guess.

In the real World, Trina Solar recently reported an ASP, or Average Selling Price, of $3.85 / Watt, which is relatively high relative to other Solar Manufacturers, but well below Retail. Given a direct relationship with a Modulemaker such as Trina, and the ability to buy at around $3.85 / Watt, brings the cost of our 1364MW Solar Plant cost down by $2.6 Billion to $10.50 Billion.

We can do more. Solarbuzz says that the total cost of the Installation is twice the cost of the Modules. Well, clearly this reflects the cost of Installation on the Retail Level, which will certainly be higher than the cost of Installation on a Utility Scale. It is much more challenging to do thousands of Individual Installations on unique rooftops all over a region, than it is to take a piece of land and set up a large scale array of panels. Another Efficiency factor to be found in Large-scale installations will be the savings due to an efficiently engineered wiring and electrical design. For instance, a large scale system won't need the vast number of small inverters that would be required for an equally powered Residential Distribution. I think it's pretty safe to assume that 20% in efficiencies could be found in this situation, so we work out a Installation cost per Watt of $3.85, or $2.6 Billion Dollars off of the cost of the 1364MW Installation, leading to a total cost of $7.9 Billion Dollars.

So, the results of this scenario show that over 50 Years, our 1364W Installation should compare very favorably with Coal. The Total Installation Cost of $7.9 Billion is much lower than the Coal Plant's 50 Year Cost of $13.4 Billion assuming a low low inflation rate of 4%. Is fact, just considering a low 4% Inflation Rate, the Solar Plant breaks even with the Coal Plant at 39 Years. Anything beyond this time is Icing.

A Note on Scale

So far I've been assuming that 1050MW or 1364MW of Solar panels could be even bought on the Open Market. This is a questionable assumption.

According to the Chart on Sheet 5, the total annual installation for 2007 was 2.2 GW. However, as can be seen on the same chart, the rate of increase of installation capacity (limited by production capacity) is taking off, and is expected to increase by Eighteen Hundred Percent, to 37GW Annually, in the next Four Years.

This is when things will start to get interesting, because Utility-scale Developers will for the first time ever, have the opportunity to supply large-scale plants with decreasing lead times, and at the prices that I have talked about in this document, or less.


Well, so far, what I've shown is that there is overlap in the long term price of a Solar Installation and Coal Installations. Much depends on the future rate of Inflation, or at least Inflation in terms of increased Price of Coal. However, given that Future Inflation is not knowable, but in today's World Economic Climate could be explosive, Solar, even at today's high prices, fills a lucrative Energy Niche as a hedge against increasing Coal prices.

As it is, Solar Producers have more than enough Customers to easily sell all the product that they can make at today's prices. Industry Production Capacity is increasing incredibly fast, though, and will likely soon outstrip demand. However, long term Coal Generation costs would indicate that a price bottom for Solar Products will arrive as defined by projections of long-term production costs from Fossil Fuels similar to what I've shown above.

In a future Post I will look at Comparisons between Solar and Natural Gas Electricity Production, which is really a much closer fit to the particular niche that Solar fills, but in this first case I wanted to compare the costs to Coal, which is typically acknowledged as the cheapest current source of Electricity.

Checking my Numbers

Energy Capacity per Ton of Coal:

Is it reasonable to assume that a Coal Plant like Milliken Station actually consumes 876000 Tons of Coal per Year in order to produce its 350MW of Power?

Per Wikipedia, Coal Plants produce approx. 2KW*Hour/KG of Coal.

I want to solve the equation (2KW*Hour/KG)*X Tons of Coal Burned / Year = 350 MW * Year.

I'll convert to Years because because I want the Annual Average to make Comparisons to. As for the Mass, I want Long Tons, which are equal to 1016 KG, and for Power I want Megawatts.

So, X Tons / Year = (350MW * Year)/(2KW*Hour/KG)

Then, X Tons / Year = (350MW * Year)/(2KW*Hour/KG*1MW/1000KW*1Year/8760Hours*1016KG/1Ton)

Finally, X Tons / Year = (350MW * Year)/(.000232MW*Year/Ton) = 1.5 Million Tons of Coal / Year. Wow, this is rather a lot higher than my estimated Coal Fuel Demand for a 350MW Plant, which makes the Solar Plant considerably cheaper in Comparison.

Let's try another estimation. A physicist friend of mine, who works in Coal, estimated for me that a Ton of Thermal Coal, when burned, produces 26 GJ of Energy (Wikipedia has it at 24 GJ/Ton (after some conversions)). Using an Online Converter, 26 GJ works out to 7.22 MW*Hour. Not all of that Energy is converted into Electricity at the Coal Plant, only between 30%-35% is typically converted with a theoretical limit at about 45%.

Using 35% Efficiency would put the Energy / Ton of Coal at 9.1 GJ/Ton, or 2.52 MW*Hour/Ton.

Using the same process as above, for a 350 MW Power Plant, this works out to 1.22 Million Tons of Coal / Year, also higher than my earlier Estimation for Milliken Station.

Let's go one step better for Coal. I've seen reference to 30 GJ per Ton and 42% Conversion Efficiency at a particular plant. I'll work out the Tons of Coal / Year for a 350MW Coal Plant under these Conditions.

30 GJ per Ton = 8.33 MW*Hour/Ton.

At 42% Efficiency in converting this energy to Electricity at a Coal Plant, we get 3.5 MW*Hour/Ton.

Calculating as above, at this incredibly efficient example we come up with Total Tons per Year = (350MW * Year)/(3.5 MW*Hour/Ton*1Year/8760Hours) = 877,000 Tons per Year. This almost exactly matches our estimation for Milliken Station. Nice!

PowerofCoal Data Check:

PowerofCoal Claim: The Average Cost of Production of all US Coal Plants (as of Jan '08) = $23.68 per MW*Hour

In Comparison Three I used this number to calculate a Cost / Watt over 25 Years of $5.18/Watt*25 Years. To do this, I did the following conversion:

Average Cost / Watt*Year = ($23.68/MW*Hour)(1MW/1,000,000W)(365Days/1Year)(24Hours/1Day) = $0.20 / Watt*Year = $5.18 / W*25Years or $10.36 / W*50Years.

Note: These numbers for PowerofCoal.com include all of the cost of production, including presumably, maintenance and upkeep. So, they should be slightly more representative of the actual costs to produce Energy with Coal in the US, however, as shown above, Milliken Station is close to the peak of Efficiency in terms of Energy Output to Coal Consumed, so in order to arrive at a lower average cost than Milliken Station, the average cost of Coal to these US Coal Plants must be much lower than $100 / Ton, or else the cost to produce Coal Energy in the US must be Subsidized. We can see from the Chart that the US does indeed have access to very cheap Coal from Powder River Basin, though from the same Chart we can also see that other Coal Sources are increasing their prices dramatically.

Using the above numbers as a starting place, and then calculating in 4% in Inflation Increases per year, gives $8.63 / W*25Years or $31.63 / W*50Years.

Additional References

Commodity Price Data (Pink Sheets)

PV Costs to Decrease 40% by 2010

China Spurs Coal-Price Surge -WSJ

* Note on World Coal Institute Archives. Based on Archived Reports :

2008 Estimated Reserves: 147 Years
2007 Estimated Reserves: 147 Years
2006 Estimated Reserves: 155 Years
2005 Estimated Reserves: 164 Years
2004 Estimated Reserves: 190 Years
2003 Estimated Reserves: 200 Years
2001 Estimated Reserves: 200 Years

Conclusion, since 2001, we've used 53 Years worth of Coal. LOL!