THURSDAY, FEBRUARY 19, 2009
INVESTORS' SOAPBOX PM
The Lighter Side of Solar
Credit Suisse likes the prospects for SunPower and Energy Conversion.
WE ARE RAISING OUR DEMAND estimates for solar following the passage of the stimulus bill earlier in the week.
For calendar 2009, we are raising our demand estimate from 400 megawatts to 725 megawatts -- break up as follows: (i) Residential unchanged at 150 megawatts; (ii) Commercial from 250 megawatts to 300 megawatts; (iii) Utility rooftop from zero megawatts to 75 megawatts; (iv) Federal buildings from zero megawatts to 175 megawatts; and (v) Utility-ground mount from zero megawatts to 25 megawatts.
For calendar 2010, we are raising our demand estimate from 1,000 megawatts to 1,925 megawatts -- break up as follows: (i) Residential unchanged at 250 megawatts; (ii) Commercial from 400 megawatts to 500 megawatts; (iii) Utility rooftop from 50 megawatts to 125 megawatts; (iv) Federal buildings from zero to 700 megawatts; and (v) Utility-ground mount from 300 megawatts to 350 megawatts.
Prior to these changes our global demand was pointing to up 15%-20% year over year for calendar 2009. With these changes our global demand is up 23% year over year for calendar 2009.
We think that it would take at least about three months before the provisions of the new bill take effect. That said, we would not be surprised if there is some demand even as early as second-quarter 2009 from federal procurement, and shipments into the dealer channel for the commercial segment, ahead of the actual demand ramp from third-quarter 2009.
We think the residential market should remain relatively less impacted. The refundability and loan guarantees are a clear positive longer term for the large-scale ground-mount utility market, but note that besides incentives, there are other gating factors like siting, transmission, signing power purchase agreements (PPAs) and financing for the utility market -- these are long-cycle events.
However, we think the incentives are immediately positive for the large-scale commercial rooftop market. We think relative to impact on model -- SunPower (ticker: SPWRA) is best positioned to benefit from this channel; Energy Conversion Devices (ENER) is next.
We do think First Solar (FSLR) will get a meaningful share of the roof top market -- particularly from utilities -- however, we think that given First Solar's size -- the overall credit markets and European markets matter a lot more in 2009. We think opening up of utility-scale ground-mount photovoltaic market in the U.S. should move the needle from 2010 for First Solar.
-- Satya Kumar
-- Adrien Bommelaer
-- Karsten Iltgen
-- Darryl Cheng
-- Viswanath Valluri
-- Gaurav Mehta
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