Wednesday, May 27, 2009

LDK Solar - GaAs Wafer Doping.

From LDK's recent Q1 Earnings Conference Call Transcript.

We have also successfully produced Gallium Arsenide doped monocrystalline silicon wafers for customer evaluation during this quarter.

This isn't very much information to go on at all, but it's interesting nonetheless. Here's a brief introduction to GaAs Solar Cells from Sandia Labs.

Researchers are exploring two approaches to lowering the cost of GaAs devices. The first approach is to fabricate GaAs cells on cheaper substrates like silicon or germanium, rather than on the more expensive GaAs substrates.

Well, this certainly seems to be suggestive of what LDK is working on here. Now, whether they are actually in some way doping their Silicon Wafers, whether they are doing as the Sandia article suggests and laying down a buffer layer of GaAs on top of their Silicon Wafers in preparation for the Cellmaker to deposit the active GaAs Cell, or whether they are doing something entirely different, is unknown. The future potential, though, is attractive, particularly since GaAs Cells can achieve 25% and up in Conversion Efficiency, and are largely Temperature Independent. Gallium, however, is very limited in abundance, and quite expensive, so the key will be to use very little of it.

This will be an interesting one to watch unfold. Who are the customers? What kind of scale are they talking about? I look forward to some of these answers.

Spire Solar - Nanophotovoltaic Device Patent.

Spire Receives U.S. Patent for Nanophotovoltaic Devices

This patent is for nanophotovoltaic devices formed from silicon or gallium arsenide having sizes in a range of about 50 nanometers to about 5 microns, and method of their fabrication.

Although there are a number of applications, the patent describes one application which is to inject nanophotovoltaic devices into diseased tissue, e.g., cancerous tissue, and activate these cells by the use of suitable radiation. These cells will generate electric fields in the tissue, causing a disruption of the cancerous cells.

Another day, another neat Solar Tech Announcement.

Spire is an interesting company. They don't seem to get much notice, but they've been around for a very long time. The present CEO, Roger G. Little, founded the company in 1969. He's a Physicist / Ironman Triathlete, and is surely tough as nails by the fact that he's stuck with a business like Solar Energy for so long; through so many years of very unfriendly market conditions. In addition to Solar, Spire has several Medical and Semiconductor Technologies that they produce, and so this new patent seems like a nice little fit between the several divisions of the Company.

Tuesday, May 26, 2009

Ascent Solar - Bye Aerospace

CIGS gets airborne: Bye Aerospace to incorporate Ascent Solar thin-film PV in unmanned aircraft

Ascent Solar's flexible CIGS thin-film photovoltaic modules will be designed into the development of a hybrid unmanned aerial vehicle (H-UAV) called the Silent Sentinel, developed by Bye Aerospace. The two companies signed a memorandum of understanding in April and have now agreed to proceed with the joint effort.

I'm no fan of Military hardware as a general rule. Sure, I've watched my share of Discovery Channel Military Documentaries, but when 70% or so of a Nation's R&D comes in the form of trying to implement more effective destruction, I'd say that there must be some misplaced priorities in the mix.

As for this project, though, it's a great demonstration of a potentially very valuable application for Solar Energy, and for Ascent Solar, in particular, it will be a great demonstration of their product, and of the breadth of the Solar niche that they inhabit. Since Norsk Hydro bought up a big chunk of ASTI some time ago, it seemed clear that Ascent really did have a product, and IMO they're thinking about their niche in exactly the right way.

I have a hard time believing that thin film is going to dominate the large scale Farm-style installation. With the cost of Silicon-based Solar to come down as it is expected to, until thin-film makes very significant strides in Conversion Efficiency, I don't think that it will compete well in this niche in the mid-term.

ASTI, however, isn't competing directly with the Silicon Juggernaut. They are in the "shapes" business, where Silicon is naturally "flat." With Norsk pushing their Building Integrated Application, and in this case an Aerospace Application, I'd say that ASTI's has a pretty good shot of carving themselves out a nice chunk of this vast future Industry.

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Monday, May 25, 2009

How does a Solar Cell Work?

I wrote this up about a month ago.

It's a basic description of the workings of a Solar Cell in my own words (and with help from various sources (listed on the pdf)).

I'll go out on a limb and suggest that it's reasonably correct on a conceptual level, as far as it goes. It doesn't go into mathematical detail, though, or extend to such things as reverse bias, bypass diodes, valence / conduction bands, etc.

How does a Solar Cell Work

Thursday, May 21, 2009

LDK Solar Q1 Conference Call - 5/21/09

The Conference Call Transcript for LDK's Q1 Results is available.

Though the tape has been painted negatively, and the immediate financial reports were not optimistic, the key points, in my estimation, had to do with the status of the Polysilicon Plant, and they were HIGHLY optimistic.

They've reiterated that the first 5000 Ton Plant would be "mechanically complete" by the end of Q2, and that the second line would be complete by the end of Q3.

More importantly, they've stated for the record that ALL of the Reactors for the first line are on-site and installed.

Per Nick Sarno:

"We have completed the installation of all 20 reactors in the first train, 10 converters have also been installed. Off gas recovery has been turned over to LDK and the TCS train one are being finalized."

This is an critical. We know from the GT Solar CC just a week ago that they claimed to be delivering a batch of Reactors to LDK at the end of June and first week of July. I had hoped, but wasn't sure, that this must be the set of Reactors for the Second Train. This now seems to be confirmed.

So, LDK has ALL of the GT Reactors for the First Train, and deliveries of the Second Train Reactors are upcoming. Just as hoped.

We have also found out that the Reactors are paid for, and LDK will now be able to scale back their Capital Expenditures. They're commissioning this line at the moment, per Sarno, which essentially suggests that the overall structure of the Plant is also significantly near completion. What I mean by this is that the overall Plant, which is made up of Three separate Production Lines, shares components between all three Lines. Any number of missing Central Components could make production from any one of the Lines impossible. So, if LDK is confirming that Production for Line one is set to begin soon, it indicates also that Critical Components for Lines two and three are also effectively ready for Production.

Other odds and ends include the fact that LDK has submitted three new patent applications, as well as have been very active in advancing the technology of wafermaking by way of improved equipment and chemical techniques.

As a final note for this entry, thanks to Jesse Pichel, who just might have gotten the ball rolling for LDK to release some new Poly Plant Images in the near future.

Sunday, May 17, 2009

Calculation Central.

One of the fun things that I have been enjoying doing for this blog is to run various calculations that in some way apply to Solar Energy, or Energy in general. Since these things tend to get lost down the blog history, so I've decided to keep a reference to them here.

Note: I would consider all of these to be rough. Since I am typically looking at very general cases, I make assumptions. As much as possible, I try to point out the assumptions in the detail of the article.

Also, I'm typically choosing some specific variable or variables to focus on, so I am probably not calculating exactly what you are looking to know. However, hopefully that doesn't mean that my work isn't some value in giving direction in possible ways to look at a problem and to work out a reasonable solution.

Selected Calculations:

So, you want to buy a solar plant, part 2.

Description: Extends Part 1 by correcting for panel degradation and inverter losses.

So, you want to buy a solar plant.

Description: A rough start at a look of Calculating a Levelized Cost of Energy (LCOE) for Solar.

Part II : Percentage Land Area required for 100% Replacement of 2006 Energy Demand.

Description: State-by-State comparison of Total Land Area required in order to replace 100% of that State's Electricity Consumption.

Percentage Land Area required for 100% Replacement of 2006 Energy Demand.

Description: State-by-State comparison of Total Land Area required in order to replace 100% of that State's Energy Consumption.

For the Survivalists: How much gasoline is one Solar Panel worth?

Description: Comparison between the energy output of typical modern Solar Panels to the energy contained in a Gallon of Gas.

How much is 1% in efficiency worth in Solar?

Description: Discussion of Diminishing Returns in Increasing Conversion Efficiency.

Does Solar Tracking make sense?

Description: Comparison between a Stationary and a Tracking Installation, discussion of potential advantage of tracking in Energy Output.

Real World Estimation of Land Use per Watt - Sunpower

Description: Land Use Scenario using Tracked Sunpower Modules. Expands upon Solar vs Coal, Land Area Comparison, below.

Solar vs Coal, Land Area Comparison, below.

Description: Comparison between Kentucky Coal Output to potential Kentyucky Solar Resource. Ideal Situation. Expanded on in Real World Estimation of Land Use per Watt - Sunpower , above.

A Note on Units of Energy and Insolation.

Description: Description of the concept of Insolation, and description of a rough way to use Insolation as a basis for Annual Solar Energy Output.

Looking forward to 2020.

Description: Scenario for 2020 making assumptions based on 15% replacement of Fossils by Renewables by 2020. Assumptions are very optimistic.

Coal / Solar Cost Comparison - Final Draft.

Description: Comparison between Coal and Solar Costs over the long term, assuming various rates of Inflation. Written prior to Economic Crash, so certain Assumptions should be reworked.

Wednesday, May 13, 2009

Idle Speculation... Counterparties, Derivatives, and Hedging.

I work with a fellow, incredibly sharp, and very well versed on finance with a focus on hedging.

Today we were talking.

He talks about how basically everybody is hedged in all of these ways, so that they'll be assured of returns within some particular range. For instance, a bank doesn't care about whether you pick a fixed or a variable interest rate, because as soon as they make the deal, they're going to hedge it with derivative deals designed to make sure that returns over the period of the loan are within an acceptable percentage range, irrespective of what happens to actual interest rates over that time. Well, it seems that everything works out great as long as none of the hedging Counterparties go under. At that point, you have to have another layer of hedge to insure you against counterparty bankruptcy. Soon enough, it becomes a pretty ugly web of dependent hedging relationships.

Another example would be in the case where you might write, say, 1000 Naked Call Option Contracts on some company. You don't have the shares, but you've just offered to sell 100,000 shares to the Call Buyers IF the price of the stock is above a particular "strike price." At the Option's Expiration Date, if the Calls ended "in the money," then you'd have to buy and deliver a huge number of shares, and you'd take a very large loss on the deal. Well, to protect from losses, you can simply buy a swap from a counterparty, which basically insures you against loss in the case that you had to deliver shares. Having just paid a premium to a counterparty, however, and by putting THEM on the hook for your potential losses, you are giving that counterparty incentive to support your interest in whatever way they can; to keep your calls "out of the money." Of course, your counterparty isn't going to just go on the hook for your losses without a hedge, so they might very well bring another counterparty in on the deal, and so on. In such a way, there could potentially be incredible amounts of money riding on the success or failure of even a small public company, and nobody outside of the loop would have any way of knowing about it. These side deals would all be private arrangements, and they wouldn't leave a tick on a chart.

Well, my first impulse was to suggest that in such a situation, a share price could not move freely because of all the pressure put on it by its associated Derivatives, but my friend corrected me, and suggested that, no, the shares could move to reflect fundamentals IF the Derivatives were in balance in both directions. Of course, normally there would be Financial interests sitting on the other (long) side of the deal. Some of these interests would be the same ones that were placing the original short bets, and long interest could be used as a hedge in and of itself. However, it's not the normal case that I'm worried about. The case that I'd be worried about would be one in which a significant chunk of Wall Street were on one side of a trade, and they eventually had to take their losses and test the fitness of their counterparties. Really, it wouldn't have to be Call Options in particular, it could be the Derivative Hedging of Short Sales, or Naked Short Sales of a target company, that could create a systematic counterparty risk in the case of a big, unexpected price movement.

Last, imagine that you are at a company involved in Investment in the Stock Market, and you are involved with various and sundry counterparties in hedging deals. Imagine that you look at a stock or industry that seems like a promising prospect for future growth. What would you do if you found that your counterparties would take big losses if you went and did something to drive up the price and profit from the long side? Well, at the very least you'd think very carefully about whether it would be worth it to blow up your own counterparties by buying those shares.

I don't know... it's just Idle Speculation.

CC Tidbit - GT Solar, LDK.

From the GT Solar Conference Call:

Jessie Pichel:

Question: And can you give us what efficiency you're targeting for multi?
Answer: we're looking get at least a percent at over what we're seeing today.

Question: And are you seeing at all, given the wider availability of poly, an increased focus on mono vs multi? Is that affecting your business?
Answer: Actually we're kinda seeing some of it go the other way, with virgin poly in our machines, some of our customers are seeing some pretty nice increases in conversion efficiency, and they're moving to run more multi than mono.


So, GT has turned this one around on Jessie. LDK is primarily a Multicrystalline shop, whereas a company like Renesola focuses on Mono. This point goes to LDK.

Monday, May 11, 2009

Earnings Incoming - May 21st - LDK Solar, Suntech power.

Two of the heaviest hitters in the Solar Industry out of China will announce Earnings on May 21st. Expectations are low on grounds of continued Polysilicon Writedowns, but Surprises are possible. Will enthusiasm for Green Energy take them up for Options Expiration this week? We know that business was still very slow in the first half of Q1, but improvements were seen as the Quarter went on. The Chinese Market is a wildcard, as we know that China has been taking Solar Development very seriously, and a large portion of their early Stimulus Package was dedicated to Green Energy, and Solar in Particular. Whether this will have any affect on Q1 results remains to be seen.

Wednesday, May 6, 2009 - Must See Video.

Previously, I've mentioned Naked Short Selling. In further explanation of the process, here's a video just out by Deep Capture is an organization run by Patrick Byrne, the CEO of that researches and activates against Naked Short Selling.

Take a watch.

Naked short selling - redefining systemic risk from Judd Bagley on Vimeo.

Future speculation - LDK - 5/6/09

Of course, any time you're investing money in a company, you're going to want to look at the downside risk. This is particularly true in developing industries like Solar Energy. Over time I've seen alot of claims of downside risk for LDK, and I've strongly concluded that that risk is outweighed by the upside potential. I am therefore, long LDK.

Here's one particular point that I thought I'd draw on from past debates and post here for posterity (lightly edited).

The original comment:

"Upgrading manufacturing in industries that are in rapid technological ferment is extraordinarily expensive, and the reality is we don't know if LDK has the sustainable cash flow or ability to raise capital to keep up with rapid innovation over time. The market demand must be stable enough that you can pay back the costs of building your plants. Technology changes too quickly, and today's cost leader becomes tomorrow's dinosaur, and as far as economies of scale go, LDK is still very small fish in the big scheme of things."

My response:

This isn't computer software, where an entrepreneur can write a revolutionary piece of software, and deliver it instantly to millions of customers around the world. This is Solar Energy. 1000 Watts per Meter Squared is coming in from the Sun (give or take), and impacting on semiconductor material to produce power. It's not like somebody is going to come up with some amazing technology that will allow them to bypass the massive scale required to be a significant player in the industry, no matter WHAT technology they end up developing. You could build 100% efficient devices, but you'd better be ready to build an incredibly big factory to manufacture them in, because you're still only going to get 1000W / m2 from them in ideal conditions. Building that capacity not only take time, it takes money; and in this case, it requires technology that doesn't exist yet.

Are you going to bet on technology that doesn't yet exist? Are you going to bet on technology that even if invented, will take YEARS to get to market in any significant amount? You're betting, by waiting for that ideal, while companies like LDK are building massive capacity RIGHT NOW.

Let's look at Polysilicon. It's great stuff. It's the second-most common element in the crust of the earth. LDK has a 20 Million Ton Mountain of it in their back yard. The trick is, though, that you have to process it, and that costs money, and is very technically challenging. On the other hand, we'll never run out of it like we could Indium and Tellurium. The price is going to come down to about $20-$30 per KG in the next couple years, at least for those that can produce their own supply, and even though there are numerous technologies on the verge of increasing its efficiency well above the current 15-22% efficiency, . As for Poly Production equipment, the cat is out of the bag. No longer do the "Incumbent" producers have total control of the supply and the technology. There are 3 companies out there that will build you a poly plant if you want one, yet if you ordered one today, LDK would still be EASILY two years ahead of you, and in the end, you'll be selling poly for almost no profit, while LDK will be using their poly to generate profits on their wafers.

"as far as economies of scale go, LDK is still very small fish in the big scheme of things."

In the biggest scheme of things, yes, this is true. In Solar, however, LDK is the Worlds Largest Wafermaker, and including LDK's Customer Base of cell and modulemakers, LDK's "line" of products is the largest of any other solar Company (1.46GW annualized capacity as of the end of 2008).

Monday, May 4, 2009

Letter to the SEC on Naked Short Selling.

To Whom it may Concern,

Should Naked Shorting be banned? Absolutely. Strict Regulations and Serious Consequences Must be Established by the US Government to End the practice of Naked Short Selling.

It's called a "Market" for a Reason.

Some years ago, I began a process of learning about Markets, and nowhere did I ever learn that a fundamental property of a functioning market was the capacity for a seller to take a buyer's money, and NOT deliver the "product." The very concept of Naked Short Selling is contrary to Basic Market Philosophy.

The SEC, itself, has made the following quite definitive statement; "in addition, where a seller of securities fails to deliver securities on settlement date, in effect the seller unilaterally converts a securities contract (which is expected to settle within the standard three-day settlement period) into an undated futures-type contract, to which the buyer might not have agreed, or that might have been priced differently." By this definition, Naked Short Selling of stocks is certainly akin to Fraud. The buyer in this case has not agreed to the purchase of an undated futures contract. The buyer has agreed to pay for a share of Stock, which is not received.

Just because the shares are digital, and the buyer won't actually notice that no delivery has taken place, DOES NOT make it right to refuse to deliver and account for those digital shares.

It's simple; how can the market possibly function as designed, if the supply of shares is allowed to be inflated arbitrarily, and in secret, by Elite Market Gamers? I ask you, where did the basic Laws of Supply and Demand go, when the supply of shares of a company is allowed to be diluted at will (by way of introduction of undated futures contracts) by Brokers and Hedge Funds?

As an Investor, I cannot expect to make money if I make wrong decisions. However, I should be able to expect the following things.

One: If I buy a share of stock, then that stock will be delivered to my account within an appropriate timeframe. If that share is borrowed from me for a Short Sale, then that is arranged-for within the contract that I've agreed to with my Broker. Brokers MUST be held to high standards in how they treat my shares.

Two: If I buy a share of stock in a Company, I should be able to expect that the number of Shares in circulation is constrained upon the basis of the number of Shares Outstanding of the Company, itself. How else am I, the Investor, able to appropriately gauge the Value per Share, if I am unable to determine with significant certainty how many Shares are actually floating.

I can only hope that the Obama SEC is taking this situation with the utmost seriousness, particularly considering the ugly possibility that in Bankruptcy, Naked Short Sellers have the capacity to permanently infect the system with never-to-be-delivered shares. It is Capitalism, itself, that is at great risk.

D Pickard