July 31, 2012 at 11:41 pm | Solar Blog | No comment
Turns out, a lot more can be done to chip away at the manufacturing cost. This is especially true when silicon technology companies are eager to set their products apart in a market that’s got way too many same-same solar panels.
“There is a real sense now that the crystalline silicon process flow, which has been fairly mature and undifferentiated, is headed for a change,” said Shyam Mehta, senior analyst at GTM Research, during a webinar on the photovoltaic market outlook on Tuesday.
Mehta rattled off some of the technologies that are being developed or employed: select emitters, cast monocrystalline ingot, backside passivation. Silicon wafers will become thinner than the 200-micron variety that is commonly used today. All these technologies are meant to reduce material costs and improve the amount of sunlight that solar cells can convert to electricity.
It’s not as if solar companies all of a sudden woke up and decided they needed to take risks and experiment. Some of these new materials and factory equipment have been under development for some years and are only now good enough to make their debut in the market. Others were technologies that weren’t developed as stand-alone products. Instead, their makers had intended to keep them in-house for making solar cells and panels for sale. Startups that have modified their business plans along the way included Twin Creeks Technologies (thin wafers), 1366 Technologies (low-cost wafers) and Calisolar (purified metallurgical silicon; the company changed its name to Silicor Materials).
Innovalight also morphed from a solar cell maker into silicon ink developer. It signed up a bunch of manufacturers that used the ink to improve their cells’ efficiencies. DuPont bought Innovalight last year but didn’t’ disclose the purchase price.
The troubling imbalance of supply and demand that has plagued the PV business over the past year and a half is prompting PV companies to accelerate new technology development. Or they are trying. Solar cell and panel makers who in the past used standardized equipment are all looking for ways to boost the efficiencies of their products, whether through in-house RD development or technology acquisitions. Suntech Power made a big deal about a process to create a hybrid wafer that produces more efficient cells. Canadian Solar boasts of a new technology that can collect more light, and its CEO is weighing whether to build a 700 MW factory to produce solar cells with the new technology.
The cost of making solar panels fell to around $0.96 per watt in 2011 for vertically-integrated factories in China, home to the heaviest concentration of silicon solar panel makers, GTM said. The cost will likely fall to $0.64 per watt before this year is over and reach $0.47 per watt in 2015.
Article source: http://www.renewableenergyworld.com/rea/news/article/2012/07/a-rush-to-innovate-silicon-solar-technology?cmpid=rss
Solar News
July 31, 2012 at 9:00 pm | Solar Blog | No comment
The solar-powered Seiko Astron watch has so many built-in gadgets that it would make even James Bond jealous! It has been dubbed the most “intelligent watch ever built” as it features a low-energy GPS receiver that allows it to recognize all 39 time zones on earth via a global network of GPS satellites. The watch is also powered by sunlight, which means that you’ll virtually never need to change its battery.
The Seiko Astron takes its name from the Seiko Astron of 1969, which was the world’s first quartz watch. The Japanese company has clearly resurrected the moniker because they deem this new watch to be a worthy successor to its groundbreaking predecessor.
Seiko says that the watch has “atomic clock precision” because once a day, the Seiko Astron receives the time signal automatically and, on demand, connects to four or more GPS satellites that orbit the earth. This pinpoints its position and identifies the time zone and the exact time. The hands then automatically move to the correct local time.
The Seiko Astron is also available in several configurations, with one of the three models available in high-intensity titanium, which is stronger than stainless steel but has only 60% of its weight. The other two versions are made from stainless steel. Other features of the watch include a dual time sub-dial, in-flight mode indicator and a sapphire crystal face with ‘Super-Clear Coating’.
In a statement, Seiko said their new watch “required years of painstaking and ground-breaking RD by Seiko Epson Corporation, which has resulted in no less than 100 patent applications. Only Seiko’s advanced energy-efficiency technology could invent the miniature GPS receiver that requires so little energy to receive GPS signals from four or more satellites. Only Seiko’s unrivaled skills in micro-engineering could package this technology into a watch that is just 47 mm in diameter and weighs about 135 grams. And only Seiko’s advanced IC circuitry expertise could make it possible for the watch to divide the world into one million ‘squares’ and allocate a time zone to each.”
So there you go! To see the Astron in action, check out the video from Seiko below.
+ Seiko Watches
Article source: http://inhabitat.com/the-solar-powered-seiko-astron-watch-even-boasts-a-mini-gps-receiver/
Solar News
July 31, 2012 at 6:00 pm | Solar Blog | No comment
Discovering new materials to make cheaper and more efficient solar cells is the holy grail of the photovoltaic solar industry and recent news indicate that some significant steps in that direction are being taken.
Researchers at the U.S. Department of Energy (DOE)’s Lawrence Berkeley National Laboratory (Berkeley Lab) and the University of California (UC) Berkeley recently announced they have developed a new technology that would enable cheap, high-efficiency solar cells to be made from almost any semiconductor material, including more abundant materials such as metal oxides, sulfides and phosphides. Those materials hitherto have been considered unsuitable for solar cells because it is difficult to tailor their properties by chemical means.
Solar cells convert sunlight into electricity using semiconductor materials that exhibit the photovoltaic effect, that is, they absorb photons and release electrons that can be channeled into an electrical current. Currently photovoltaic technologies rely on scarce and expensive semiconductors, such as large crystals of silicon, or thin films of cadmium telluride or copper indium gallium selenide, that are tricky or expensive to fabricate into devices.
“It’s time we put bad materials to good use,” said physicist Alex Zettl, who led this research along with colleague Feng Wang. “Our technology allows us to sidestep the difficulty in chemically tailoring many earth abundant, non-toxic semiconductors and instead tailor these materials simply by applying an electric field.” Zettl is the corresponding author of a paper describing this work in the journal Nano Letters. The paper is titled Screening-Engineered Field-Effect Solar Cells. Co-authoring it were William Regan, Steven Byrnes, Will Gannett, Onur Ergen, Oscar Vazquez-Mena and Feng Wang.
The new technology is called screening-engineered field-effect photovoltaics (SFPV) because it utilizes the electric field effect, a well understood phenomenon by which the concentration of charge-carriers in a semiconductor is altered by the application of an electric field. With the SFPV technology, a carefully designed partially screening top electrode lets the gate electric field sufficiently penetrate the electrode and more uniformly modulate the semiconductor carrier concentration and type to induce a p-n junction. This enables the creation of high quality p-n junctions in semiconductors that are difficult if not impossible to dope by conventional chemical methods.
Under the SFPV system, the architecture of the top electrode is structured so that at least one of the electrode’s dimensions is confined. In one configuration, working with copper oxide, the Berkeley researchers shaped the electrode contact into narrow fingers; in another configuration, working with silicon, they made the top contact ultra-thin (single layer graphene) across the surface. With sufficiently narrow fingers, the gate field creates a low electrical resistance inversion layer between the fingers and a potential barrier beneath them. A uniformly thin top contact allows gate fields to penetrate and deplete/invert the underlying semiconductor. The results in both configurations are high quality p-n junctions.
“Solar technologies today face a cost-to-efficiency trade-off that has slowed widespread implementation,” added Zettl. “Our technology reduces the cost and complexity of fabricating solar cells and thereby provides what could be an important cost-effective and environmentally friendly alternative that would accelerate the usage of solar energy.”
The researchers also demonstrated the SFPV effect in a self-gating configuration, in which the gate was powered internally by the electrical activity of the cell itself.
Article by Antonio Pasolini, a Brazilian writer and video art curator based in London, UK. He holds a BA in journalism and an MA in film and television.
Article source: http://blog.cleantechies.com/2012/07/31/researchers-develop-method-to-create-photovoltaic-solar-cells-from-any-materials/
Solar News
July 31, 2012 at 6:00 pm | Solar Blog | No comment
Oman, which boasts the one of the highest solar energy densities in the world, is currently investigating the development of a 200MW solar photovoltaic (PV) and concentrating solar power (CSP) project. If the project gets the go-ahead, then the solar farm could generate the entire country’s electricity supply while covering a tiny percentage of the desert with solar collectors, dramatically reducing the state’s dependence on domestic oil.
The project, which will be overseen by the Oman Power and Water Procurement OPWP), is still awaiting approval from the nation’s Council of Ministers via the Public Authority on Electricity and Water (PAEW). However it is expected to get the green light and move forward to calling for requests for proposals soon.
The OPWP have said that they will be build a center for the development and manufacture of solar technologies as well as collecting dust monitoring data from sites in Adam and Manah, Oman. By investing in the technology, it is hoped that the OPWP will be able to create the most efficient solar power possible. The company have already stated that the relative proportions of PV and CSP technologies will depend upon “the maturity of the technology solution”.
If the solar farm is constructed, then Oman will be able to reduce its domestic usage of oil, allowing it to increase exports and boost revenues. However it will also improve the country’s green image and bolster foreign tourism. For a country will such a large level of sunlight, Oman shockingly still relies almost exclusively on fossil fuels. Hopefully, this solar project will show the benefits of renewable energy and inspire the sultanate to diversify its energy supplies even further.
+ Oman Power and Water Procurement
via Solar Server/Clean Technica
Images: USFWS Mountain Prairie andJD | Photography
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Article source: http://inhabitat.com/oman-plans-construction-of-massive-200-mw-desert-solar-farm/
Solar News
July 31, 2012 at 6:00 pm | Solar Blog | No comment
Oman, which boasts the one of the highest solar energy densities in the world, is currently investigating the development of a 200MW solar photovoltaic (PV) and concentrating solar power (CSP) project. If the project gets the go-ahead, then the solar farm could generate the entire country’s electricity supply while covering a tiny percentage of the desert with solar collectors, dramatically reducing the state’s dependence on domestic oil.
The project, which will be overseen by the Oman Power and Water Procurement OPWP), is still awaiting approval from the nation’s Council of Ministers via the Public Authority on Electricity and Water (PAEW). However it is expected to get the green light and move forward to calling for requests for proposals soon.
The OPWP have said that they will be build a center for the development and manufacture of solar technologies as well as collecting dust monitoring data from sites in Adam and Manah, Oman. By investing in the technology, it is hoped that the OPWP will be able to create the most efficient solar power possible. The company have already stated that the relative proportions of PV and CSP technologies will depend upon “the maturity of the technology solution”.
If the solar farm is constructed, then Oman will be able to reduce its domestic usage of oil, allowing it to increase exports and boost revenues. However it will also improve the country’s green image and bolster foreign tourism. For a country will such a large level of sunlight, Oman shockingly still relies almost exclusively on fossil fuels. Hopefully, this solar project will show the benefits of renewable energy and inspire the sultanate to diversify its energy supplies even further.
+ Oman Power and Water Procurement
via Solar Server/Clean Technica
Images: USFWS Mountain Prairie andJD | Photography
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Solar News
July 31, 2012 at 5:00 pm | Solar Blog | No comment
U-M Solar Car Team wins a record-breaking 2012 American Solar Challenge
ANN ARBOR, Mich.-Despite being challenged by bad weather conditions along the way, the University of Michigan Solar Car Team won the 2012 American Solar Challenge with their car Quantum for a fourth consecutive American title, breaking a national record for margin of victory.
The University of Michigan Solar Car Team, with its car Quantum, crosses the finish line at 2:30pm on July 21, 2012 at the American Solar Car Challenge in St Paul, Minn.. The team won its fourth consecutive national championship with this event (and 7th overall), and broke the national record, winning by 10 hours and 18 minutes over its nearest competitor.
The eight-day, biennial 1,650-mile competition for solar-powered vehicles started July 14 in Rochester, N.Y., and ended July 21 in St. Paul, Minn. The U-M car crossed the finish line at about 2:30 p.m. CDT for a final time of 44 hours, 36 minutes and 21 seconds-10 hours and 18 minutes ahead of second-place Iowa State University, breaking the national record set by U-M in 2008 with its car Continuum.
This is the seventh North American title for the U-M team, which won the inaugural event in 1990 with its first car, the Sunrunner.It is exciting and a relief,” said crew chief and recent electrical engineering grad Ryan Mazur. “We have proven that Quantum is a great car and made all our alumni proud.”
The racers encountered some bad weather conditions on the route, including intense rain on the second and last day of racing. U-M took advantage of the weather on day two, acquiring a two-hour lead as other teams hampered by the rain were forced to drive slower to preserve their energy.
Their lead continued to increase throughout the race. However, a bad storm on the last day of racing forced U-M to pull over a few times to adjust the vehicle in the rain, once for “irregular rotation of the vehicle.”
“We’ve tested the car extensively in the rain, and each of our drivers has practiced in the rain, so that really gave us an advantage,” said mechanical engineering student and 2012 lead strategist A.J. Trublowksi. “While our overall strategy stayed mostly the same, we definitely had to make some adjustments to adverse weather conditions.”
Racing in bad weather is always a challenge. According to 2011 race manager Rachel Kramer, the teams’ strategy units will usually take the lead on speed and tactics, but safety is always a concern.
“You need a lot of experience and talented people in bad weather, and a lot of communication between the driver and the rest of the team,” she said.”Ultimately, it’s up to the driver-it’s their call when safety is an issue.”
Compared with previous routes, the 2012 path cut through more cities and towns, allowing for more encounters with fans, but also increasing the difficulty for the teams.
“This was a very interesting and difficult route,” Mazur said. “The varying places we were driving made things a challenge from a navigation standpoint. We had to deal with heavy traffic and dangerous drivers on busy roads often.”
Quantum, U-M’s lightest-ever vehicle, finished third in the World Solar Challenge in Australia last fall. It weighs a full 200 pounds less than its most recent predecessor, and it is 30 percent more aerodynamic.
The U-M Solar Car Team has finished third in the World Solar Challenge five times, most recently in 2011. With more than 100 students from schools and colleges across the university, U-M Solar Car is one of the largest student organizations on campus.
“The atmosphere on solar car is unlike anything I have ever experienced before,” said race manager Jordan Feight, an atmospheric and oceanic space sciences student. “The dedication and commitment to push beyond what was previously possible is simply amazing. There has been no class that has come to close to paralleling the knowledge I have picked up being on the solar car team.”
Major sponsors of the U-M Solar Car team include IMRA America, Michigan Engineering, Ford and General Motors.
Article source: http://green.autoblog.com/2012/07/31/university-of-michigan-wins-solar-challenge-fourth-time-in-a-row/
Solar News
July 31, 2012 at 4:39 pm | Solar Blog | No comment
Suntech and the other Chinese manufacturers that dominate the industry have focused almost exclusively on panel sales, exposing themselves to the brunt of a 47 percent plunge in prices in the past year. Ahearn has insulated First Solar by cutting production and expanding sales of the PV power plants, said Sanjay Shrestha, an analyst at Lazard Capital Markets. Buffett and NextEra are among the company’s best customers.
“Their strong project pipeline is helping them weather the storm that everyone else is caught in,” Shrestha said in an interview. “That’s buying them time while the rest of the industry scrambles for the next panel sale.”
First Solar will report net income of 60.1 cents a share in the second quarter, according to the average estimate of nine analysts surveyed by Bloomberg. It’s due to report earnings after trading finishes tomorrow in New York. Suntech and its rivals, mainly Chinese companies listed in New York, are due to report later in August. Yesterday, Suntech said it may delay its earnings due to a suspected fraud.
Shares Underperform
Investors aren’t giving Ahearn credit for the shift yet. First Solar’s shares have fallen 88 percent in the past year, sharper than the 75 percent decline in the Large Solar index. Ted Meyer, a First Solar spokesman, declined to comment, citing a quiet period before its results.
“The big risk is that they won’t be able to replace the pipeline as existing projects are completed,” said Rob Stone, an analyst at Cowen Co. in New York who has a neutral rating on the stock. Many of First Solar’s projects relied on government backing to make them profitable, and those programs have expired. “How much longer can their profitability last?”
MidAmerican Energy Holdings Co., a unit of Buffett’s Berkshire Hathaway Inc., agreed on Dec. 7 to buy the Topaz Solar Farm in California developed by First Solar. The project’s development budget is $2.5 billion and may generate 550 megawatts of power starting in 2015, making it one of the world’s largest PV plants.
NextEra Deal
NextEra, the biggest U.S. generator of power from solar and wind plants, joined a unit of General Electric Co. to buy the 550-megawatt Desert Sunlight project in California and in March completed the purchase of 40 megawatts of in Ontario.
First Solar typically sells its projects to an energy company once it’s received permits, arranged financing and completed a deal with a utility to buy the electricity. It receives an upfront payment for the sale that’s usually confidential and is typically a small fraction of the total development budget. Then it continues to receive revenue during construction, for labor and for supplying the panels.
Ahearn accelerated First Solar’s transition to project development in October, when he replaced Rob Gillette after a two-year break from leading the company. By the end of 2011, Ahearn had delayed completion of a factory in Vietnam and shut a California RD unit.
Ahearn’s Strategy
In April, he announced measures to cut 30 percent of the workforce, idle four production lines in Indonesia and shut a flagship plant in Frankfurt an der Oder, Germany.
The moves were part of First Solar’s “strategy to pursue utility-scale solar opportunities in sustainable markets,” Chief Financial Officer Mark Widmar said on a conference call to discuss the restructuring on April 17.
The goal “is to align our business to a demand profile that is highly reliable and predictable, which largely is our captive pipeline” of solar farms the company is developing, he said. “Our pipeline is a competitive advantage.”
About 53 percent of First Solar’s $497 million in first quarter sales came from developing and selling solar farms. That was up from 30 percent the prior quarter, and it was the first time panel sales weren’t the top driver for results.
Competitors Suntech, JinkoSolar Holding Co. and Yingli Green Energy Holding Co. get at least 90 percent of their revenue from selling solar panels, either directly or through distributors. All will probably lose money every quarter this year, according to Bloomberg data based on analyst forecasts. They’re all listed in New York and report later in August.
China’s Losses
Jinko is expected to lose $7.51 an American depositary receipt this quarter, the worst performance within the Large Solar index. Suntech, the world’s biggest panel maker, may lose as much as 45 cents an ADR and isn’t expected to report a profit until 2014. Analysts expect Yingli to lose 28 cents.
Solar panel prices fell by half last year, which has “killed profitability in module manufacturing,” said Mark Bachman, an analyst at Boston-based Avian Securities. “First Solar puts up more profit over the next year than all the other companies combined.”
Ahearn’s plan to build up project development dates to 2007, when First Solar bought the construction and engineering company Turner Renewable Energy LLC for $34 million. That was followed by 2009 purchase of the closely held developer OptiSolar Inc. for $400 million in stock, and the 2010 acquisition of NextLight Renewable Power LLC for $285 million.
‘Logical Step’
“Adding these resources, along with their development team, to First Solar, is our next logical step,” Ahearn said when announcing the OptiSolar deal on March 2, 2009.
Those acquisitions came with several utility-scale solar farms already under development. OptiSolar brought the 550- megawatt Desert Sunlight project, which First Solar sold to NextEra Energy Inc. in September and is scheduled to be complete in 2015. Also in the purchase was the 550-megawatt Topaz plant that MidAmerican Energy Holdings bought in December, expected to be finished in 2014.
First Solar had cash and cash equivalents of $610 million at the end of the first quarter, up 72 percent from a year earlier. Their current ratio, which measures the ability to repay short-term debt, was 2.48, or 51 percent higher than the average for the 17 companies in the Bloomberg Industry Large Solar Energy index.
Contracts Ahead
First Solar had contracts to build 2.7 gigawatts of power plants as of May 23, according to slides executives showed to analysts along with the first-quarter earnings.
First Solar’s anticipated profit this quarter will be followed by earnings of $1.34 a share for the current quarter and $1.69 in the final three months of 2012, analysts predict. That won’t be enough to counter a $5.20 loss in the first quarter, largely due to a $413 million restructuring charge that came along with Ahearn’s strategy shift. For the whole of 2012, analysts expect loss of $1.46, according to the median of 24 forecasts collected by Bloomberg.
Even if First Solar arranges as much as 600 megawatts of new contracts annually, its factory utilization will drop to about 70 percent by the end of 2014, Stone said. That may force additional charges and closures that would cut profitability.
“They’ve got some nice projects and nice prices right now, but any new projects they win will come at much lower margins,” Stone said. He has a neutral rating on the stock.
First Solar’s production cost averaged 69 cents a watt in the first quarter. Prices for standard, polysilicon based panels were 76 cents a watt at the start of July, according to Bloomberg New Energy Finance.
“For anyone following First Solar it’s always been a game of ‘What’s the next negative to hit?’” said Lazard’s Shrestha. “But they keep forgetting about the strong project pipeline.”
Copyright 2012 Bloomberg
Lead Image: Road to Profits via Shutterstock.
Article source: http://www.renewableenergyworld.com/rea/news/article/2012/07/first-solar-road-to-profits-amid-red-for-global-industry?cmpid=rss
Solar News
July 31, 2012 at 4:00 pm | Solar Blog | No comment
Udall’s approach is equal parts steady ascent and unflagging determination. His base camp is the Senate floor and from there he plans — to critics, annoyingly so — to make the extension of the PTC a daily topic of discussion. In a town notorious for the filibuster, the Democrat’s approach is slightly different in that he’s scheduled time each morning for when Congress is in session. And so it will be that every morning from now through the August recess, Udall will remind his colleagues why the PTC has gained widespread bipartisan support across much of the country, and why Congress should extend the soon-to-expire tax credit soon enough to keep the industry from contracting — and taking jobs with it.
This is the same refrain that has echoed through the halls of Congress and numerous statehouses since the end of last year. The industry’s growth, which is expected to surpass 10 GW of new installations through the end of this year, is closely aligned with the PTC, which pays out 2.2 US cents per kWh generated. That credit has helped to make wind energy a lucrative and worthwhile pursuit for developers and utilities alike, and its relative stability over recent years has allowed projects to move ahead with confidence. That strong pipeline has in turn ushered in a new era of US manufacturing, which has sprouted up across much of the country — all to support the growing industry.
Without promises of an extension, development plans have skidded to a halt, orders have dried up and large manufacturers are plotting their escape — or at least a scaled-back presence. At stake, according to a recent Navigant study, are as many as 37,000 jobs, a staggering number for an industry that currently employs about 75,000 workers. And extension, meanwhile, would add 17,000 jobs, according to the same study.
The industry has been down this path before, but the last time the PTC was allowed to expire the only real victim was project development. That was in 2004 and at that time about three quarters of the industry’s supply chain came from imports. Now, the US wind industry boasts about 500 manufacturing facilities, many of which are centered in places like the Southeast, where wind energy is a rare find, but where wind manufacturing is seen as one of the few bright spots for an economy that’s struggling to find traction.
Ideologically, the wind industry may find its broadest support among Democrats. But wind generation remains strongest in staunch conservative pockets like the Midwest, where turbines line farms across Texas and Iowa. And in states like Oklahoma and Kansas, the industry is ramping up to become a political force.
That’s why the PTC is a rarity. It’s a political hot potato, yet it’s one with wide support that has prominent Republicans and Democrats calling for its extension. Most agree that the tax credit is worth the $4 billion–$5 billion bill that comes with a one-year extension. According to PTC supporter Senator Charles Grassley, Republican of Iowa, members of his party are reluctant to move ahead with legislation until they can find budget savings to offset that expense. So far, the support has produced lots of nods and handshakes, but not enough legislators willing to jump into the hot seat and vote for its extension. The hot seat, of course, is boiling at the moment because of a perfect political storm. The general election is just months away and a centerpiece of the criticism is President Obama’s pursuit of a clean energy policy. And nipping at its heels is the growing reality that fundamental tax reform will follow the election. That has industry insiders and analysts trying to read Washington’s swaying tea leaves. How will tax reform come together? Will any type of tax policy receive a long-term extension in this political landscape? And how does wind differentiate itself amid the coming fray?
The Timetable
At Windpower 2012, the American Wind Energy Association (AWEA)’s annual conference in Atlanta in June, Republican strategist Karl Rove told those in attendance that the worst thing that happened for the wind industry was when Obama put the PTC extension on a Congressional ‘to-do list’ ahead of its August recess. Republicans say it won’t happen because Obama is failing to show leadership on the issue, and that the ultimatum proves their point. Democrats contend that there’s no way House Republicans especially will give Obama a political victory on the eve of the November election. Either way, few are giving a pre-election agreement much hope, even if Udall does succeed in giving the issue mainstream prominence each and every day.
That pushes the real political horse-trading into the tight window between the end of the election in early November and the new Congress in mid-January. By then, the PTC will be one of many cutthroat issues on the agenda, and it could get lost in the fray as the Bush tax cuts, the payroll tax holiday and the potential raising of the debt ceiling take precedence.
According to Tim Kemper of the Reznick Group, the PTC’s best bet is that it gets passed early in the lame-duck session (taking place after the election for the next Congress has been held, but before the current Congress has reached the end of its constitutional term).
If that happens, the industry may have enough deals waiting on the sidelines to retain some of that 2012 momentum. The later a deal is struck, the more difficult it will be to salvage 2013, which according to Bloomberg New Energy Finance could see as little as 500 MW of new installations. IHS Emerging Energy Research, meanwhile, has projected the market could drop from 11 GW in 2012 to just over 2 GW in 2013.
This small window of opportunity comes as America debates the future size of its government, and ultimately what role taxpayers will play in energy investment. The recent economic downturn has paved the way for fundamental tax reform, and programmes like the PTC could get caught in the line of fire.
The last big tax reform came in 1986, and it was the type of divisive, laborious process that makes rewriting the tax code in 2013 a long shot. That realisation could, perhaps, bode well for a one-year extension, but that would really put pressure on the industry to secure something longer term.
Article source: http://www.renewableenergyworld.com/rea/news/article/2012/07/on-the-edge-of-the-subsidy-cliff-will-the-us-ptc-expire?cmpid=rss
Solar News
July 31, 2012 at 4:00 pm | Solar Blog | No comment
Toxic Note and Warrant Financing
On May 11th, A123 announced that it had closed a $50 million offering of convertible notes and warrants. The principal was payable in 26 semi-monthly installments commencing on July 1, 2012 and could, at the company’s option, be settled with cash or with shares of A123′s common stock valued at the lesser of $1.18 per share, or 82% of the volume weighted average price, or “VWAP,” of the common stock for the five trading days immediately preceding a settlement date, but in no event greater than the VWAP of the common stock on the last trading day before the settlement date.
Since the number of shares issuable upon conversion of the notes and exercise of the warrants exceeded the limits of A123′s Certificate of Incorporation and the transaction required formal shareholder approval under Nasdaq listing rules, $30 million of the offering proceeds were deposited in a segregated bank account pending:
- Stockholder approval of the note and warrant transaction;
- Stockholder approval of an increase in the company’s authorized shares; and
- Effectiveness of a resale registration for the common shares underlying the notes warrants.
The necessary stockholder approvals were received on June 29, 2012 and the resale registration statement was declared effective as of 4:00 p.m. on July 5th. By the time the registration statement was declared effective, the payment terms had been modified slightly to increase the number of installments to 29 and increase the amount payable in each of the first three installments to 1-2/3 the base amount, but the other terms remained unchanged. The segregated funds were promptly released to the company.
The notes are a classic example of “death spiral financing” where payments are made with discounted shares of common stock and the number of shares required for a payment increases as the stock price declines. At an assumed stock price of $1.30 a share, A123 would be able to make a $2 million installment payment by issuing 1,876,173 new shares of common stock. At an assumed stock price of $0.65 a share, it would take 3,752,345 new shares of common stock to make the same $2 million payment. In both cases, the market value of the stock used to make the payment would be about $2.4 million, but only if the noteholder who received stock instead of cash sold quickly enough to capture the current market price.
Toxic Equity Financing
On July 6th A123 announced that it had signed agreements to sell 7,692,308 shares of its common stock, together with warrants to purchase additional shares of common stock, for gross proceeds of $10.0 million. While the press release had the look and feel of an ordinary financing transaction, I was troubled by a sentence that said, “The number of shares of Common Stock issuable upon exercise of the warrants (which have a nominal exercise price) is based on a fixed 18% discount to the volume-weighted average price, or VWAP, of our common stock on specified trading days during two measurement periods over the next three weeks.” Since I was surprised that the offering went off without an obvious discount to the previous day’s closing price, I decided to dig a little deeper in an effort to better understand what the “real deal” was.
I found my answers in the SEC registration statement for the equity offering, which included copies of the Prospectus and the associated warrant agreement.
When I read the Prospectus I learned that the “nominal exercise price” of the warrants was $.001 and the structure included an automatic cashless exercise for the warrants. So the investors were effectively buying 7.7 million shares on day one and expecting to receive two additional tranches of “free shares” on the 12th and the 30th of July.
Using the formulas in the Prospectus and warrant agreement, I calculated that 843,628 additional shares would be issued in each tranche if the market price remained stable at $1.30 per share through the exercise dates. By the time I accounted for the warrants, it was clear the original deal would result in the issuance of 9,379,564 shares for gross proceeds of $10 million, or an effective price of $1.07 per share.
In light of A123′s recent troubles, I didn’t find a discount of 18% from the market price particularly troubling. I was, however, concerned that the terms might create an incentive for aggressive investor behavior, so I made a mental note to re-run the numbers at the end of the month to see how it all worked out.
The outcome was a textbook example of what can happen when the number of shares to be issued in the future is contingent on the future market price of the underlying stock.
During the period between the closing date and the first warrant exercise date, A123′s price fell to $0.88. So the VWAP used to calculate the number of free shares issuable to warrantholders was approximately $0.9167 instead of $1.30. When I ran that VWAP value through the calculations specified in the Prospectus and warrant agreement, I got to a net cashless issuance of 2.8 million shares, compared to the 843,628 shares that would have been issued if the price had stayed stable.
By the second warrant exercise date, A123′s price had fallen to $0.49. So the VWAP used to calculate the number of free shares issuable to warrantholders was approximately $0.5367 instead of $1.30. When I ran that VWAP value through the calculations specified in the Prospectus and Warrant Agreement, I got to a net cashless issuance of 7.5 million shares, compared to the 843,628 shares that would have been issued if the price had stayed stable.
Between the original issuance and the two warrant tranches, A123 ultimately sold 18 million shares of common stock for gross proceeds of $10 million, or an effective price of $0.56 per share. The market did not respond well to the rapid increase in the number of shares in the hands of willing sellers.
An Excel spreadsheet with the key Prospectus disclosures and important warrant agreement terms, along with market price data and detailed exercise price calculations can be downloaded from my Dropbox.
What It Means for Stockholders
My first, last and only experience with a price linked conversion formula was in the late 80s when one of my clients sold a preferred stock that was convertible into common stock for 75% of the market price on the conversion date. The investor that provided the financing proved to be far less friendly than management expected. A few months after the offering the investor grew disenchanted with the way things were going. Instead of selling its preferred stock, it began to aggressively sell common stock into the market, which drove the price down to a very distressed level. It then converted the preferred stock into common stock for 75% of a bargain basement price. By the time the smoke cleared, the investor was my client’s biggest stockholder and management was seeking new employment.
I’ve seen dozens of comparable proposals since then and my clients have wisely rejected them all.
The big problem with price linked conversion ratios is that aggressive selling behavior has no negative consequences for the investor. If aggressive selling drives the price down, the investor simply gets more shares at an even lower price. The outcomes aren’t always catastrophic for existing stockholders, but they’re invariably painful.
Over the last couple months, A123′s financing activities have created two scenarios that are likely to result in a year of market problems. While the worst may be over from the equity offering, it’s impossible to tell whether the warrantholders have already sold the 7.5 million shares that will be credited to their accounts on Monday. While the equity offering was a problem because it created two discrete opportunities for aggressive selling, the debt offering created 26 opportunities that will come along every other week for the next year.
I’m usually bullish on stocks that have been beaten down to unreasonably low levels by misfortune and unforeseen events. In A123′s case, however, the financing structures the company put in place to help it overcome its business problems have created a toxic supply overhang that virtually guarantees significant future price erosion.
Under the circumstances, I believe A123 is not a suitable investment for anybody but professionals.
Disclosure: None
This article was originally published on AltEnergy Stocks and was republished with permission.
Lead image: Toxic symbol via Shutterstock
Article source: http://www.renewableenergyworld.com/rea/news/article/2012/07/a123-systems-an-object-lesson-in-toxic-financing?cmpid=rss
Solar News
July 31, 2012 at 4:00 pm | Solar Blog | No comment
Staff at the GSA Boston office had been evaluating the wind energy opportunity since 2001. The combination of the remote Jackman, Maine, LPOE upgrade and the availability of ARRA [American Recovery and Reinvestment Act] funds led Roman Piaskoski, Chief of the Energy, Utilities Environment Branch, to implement a distributed wind generation pilot project consisting of two Northern Power Systems 100-kW units. The turbines were installed in September 2010 but were not interconnected and on line with Hydro-Quebec (H-Q) until April 2011. With a measured wind speed of 6.1 mps (13.7 mph) at their 37-m (121-ft) hub height, the two units are expected to produce 400,000 kWh per year. The project goal was for the turbines to supply 50 percent of the Jackman LPOE’s annual electricity.
The permitting was relatively straightforward as the site is GSA property and not close to residential areas. It received Federal Aviation Administration and Maine Department of Environmental Protection approvals, with no public resistance.
However, as can happen with first ventures, the project faced challenges, even with proven equipment. H-Q had existing net metering regulations for generators 60 kW and 1 MW, and so the 100-kW turbines landed in H-Q’s “blind spot.” GSA had initially considered 10-kW units until the Jackman LPOE was dramatically upgraded, and H-Q assumed that GSA proceeded with the original turbine capacity. With the two 100-kW units, H-Q required the installation of a remote shutdown system with a dedicated phone line. Factor in the language differences and less-than-ideal communications, and the result was a six-month delay between installation and operation. In addition, the installer implemented a special ice-melt system, which failed, caused frequent system shutdowns and eventually resulted in the need for a new set of blades. (Northern Power did not endorse the system.)
Since resolving these issues, the Energy, Utilities Environmental Branch has been pleased with the turbines’ performance and Northern Power’s technical assistance and maintenance. Piaskoski believes that the pilot successfully demonstrates that wind energy can contribute to GSA’s energy and environmental goals through application to LPOEs in windy locations. He recently presented the project at the GovEnergy conference as a successful wind pilot project. While the decreasing GSA budget may not be sufficient to expand the number of LPOEs, an opportunity remains for wind to participate in the upgrading and greening of existing facilities.
This article was originally published in AWEA’s Wind Energy Weekly and was republished with permission. It is one in a series of case studies included in AWEA’s recently published Small Wind Turbine Market Report Year End 2011.
Lead image: Boston skyline via Shutterstock
Article source: http://www.renewableenergyworld.com/rea/news/article/2012/07/small-wind-profile-two-wind-turbines-supply-electricity-to-u-s-border-station?cmpid=rss
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