Suntech (NYSE: STP) was the world's largest module vendor in 2011, shipping 2,096 megawatts in 2011, and was also the first vendor to ship over 2 gigawatts in a year. I spoke with John Lefebvre, President of Suntech America, earlier this week, touching on a few salient topics.
The expiration of the 1603 tax grant
The expiry of 1603 "limits access to financing," according to Lefebvre. "Instead of dozens and dozens" of equity sources, there will only be a dozen. It will increase cost and limit the number of projects in the U.S., he added.
"2012 will still be a good market in the U.S., with 2.5 gigawatts to 3 gigawatts installed. But 2013 is uncertain -- there are a lot of utility-scale projects in the pipeline, but the distributed generation space will be limited by tax equity players." Lefebvre suggested that corporations could play a bigger role and named Intel, Apple, Microsoft, and Google as candidates.
Duties, Dumping, and Tariffs
"The tariff outcome ended up being as we expected; the outcome was no surprise to us," said Lefebvre. "We feel confident in our practices as a company."
He noted that Suntech's Goodyear, Arizona factory provides some flexibility on supply chain in the U.S., but cautioned that there would be cost pressures. "Ultimately, it comes down to polysilicon production, and there will continue to be incremental improvement in that," he said, adding, "We'll see stabilization of pricing instead of the rapid improvement we've seen."
A recent theme in this publication has been the emergence of the South and Central American renewable markets. "There's significant demand in South America, because the region is driven by oil and electricity based on fuels," said Lefebvre. He said that there is a place for solar to offset peak electricity costs and noted that there is an increase in political will for renewables and that solar has a role to play in adding to the region's "diversity of supply." He sees South America starting to look at net energy metering and renewable auction mechanisms as part of their policy plans.
New technologies and the flight to quality
Lefebvre sees a "flight to quality in the market" as in any maturing market and noted that Suntech has delivered a cumulative 5 gigawatts to 80 countries.
Suntech's "cast mono" and high-efficiency Pluto cells are the incremental technology changes occurring at the firm. Lefebvre notes that considerable improvements have been made in yield in the last six months.
The Pluto design is based on the PERL (passivated emitter with rear locally diffused) technology developed at Australia's University of New South Wales, where efficiencies of 25 percent have been achieved in the laboratory. Unique texturing technology with lower reflectivity ensures more sunlight can be absorbed throughout the day, even without direct solar radiation.
Pluto cell technology achieved a 20.3 percent efficiency for a production cell using commercial-grade p-type silicon wafers. Pluto technology is a combination of different elements which combine to improve cell efficiency, with 21 percent efficiency targeted within the next year. These incremental improvements include surface patterning, improved metallization, improved front metal contact dimensions, changes in dopant concentration at the emitter, and improved high-temperature performance. None of these processes come cheap. Plus, the new product has not exactly replaced Suntech's existing lines -- it appears to remain a premium product at premium prices.
Suntech shipped about 120 megawatts of Pluto product in 2011.
Central America and South America are seeing increased interest from both solar and wind developers, due to generous resources and improving regulatory regimes. GTM's upcoming Solar Summit will have a session delving into the details of this emerging region. Suntech's John Lefebvre will be speaking at the Summit as well.