Solar players fatten up in 2010, fear lean 2011

Solar companies in both the US and Asia enjoyed a bumper second quarter, according to results released erlier this week, but many remain nervous about their prospects for next year.

Chinese solar firm JA Solar led the way, turning the $28.5m loss recorded during the second quarter of last year into $28.9m in net income for the second quarter of 2010. Meanwhile, revenue for the period quadrupled year-on-year to $351m, prompting the company to up its yearly financial forecast.

Things were equally positive on the other side of the Pacific as US-based SunPower published better-than-expected financial results and announced plans to build a new 15MW PV solar plant in Arizona.
The company said it would build the plant for Arizona Public Service, a subsidiary of Pinnacle West, a holding company with various energy-producing divisions around the Western United States.

Second quarter revenue at SunPower climbed from $299.3m a year ago to $384.2m, this year. Net losses reached $6.2m, compared to a $14.3m profit a year ago, but non-GAAP net income per share stood at 15 cents, compared to nine cents in the second quarter of 2009. The profit disparity between its GAAP and non-GAAP figures is due largely to a 50 cent per share tax expense, including expenses associated with discontinued operations, the company said.

However, despite the upbeat results leading solar companies are warning that business might flatten next year, if subsidy cuts in Germany go ahead.

The country, which has been a mainstay market for European solar sales, has pledged to cut feed-in tariffs for rooftop solar by 16 per cent, and to slash solar installations on open-field sites by 15 per cent. Feed-in tariffs for solar sites on agricultural land would be removed altogether.

Germany recently voted to introduce the cuts in a two-phase process throughout the rest of 2010.
Solar firms are concerned that customers in Germany are buying panels now to take advantage of existing subsidies, and as a result the market will dry up substantially next year following the cuts.

The challenge is particularly acute for German solar cell manufacturers, such as the world's fourth largest solar manufacturer Q-Cells which this week posted its first quarterly net profit since late 2008 and upped its outlook for the rest of the year.

The company's chief executive Nedim Cen welcomed the strong performance, but expressed scepticism that the market will remain as buoyant through 2011.

"I believe that 2010 was a year of extraordinary growth," he said. "But will we see the same situation in 2011? I don't think so."

Similar concerns are being voiced in Spain and Italy where the governments are also planning to scale back incentives for solar installations.

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