CleanTech – Nearing a bottom?
In the late 1990s, and again around 2005, Wall Street Research eliminated most of its steel analysts, and consolidated the chemical ‘space’ into one per firm. While not a cause, the moves served as a leading and contrary indicator, as the US steel and chemical industries rebounded – sharply, as cyclical sectors often do.
Well, during early February, three cleantech analysts ‘left the building, ’ almost on cue. Meanwhile, poly prices have rebounded, about 30%, from December’s “liquidation low,’ 2012 solar forecast are surprisingly robust, and new markets continue to emerge for solar and wind. Profits may be another matter, as European incentive programs are due for a haircut, likely forcing module pricing ‘ever lower’ to allow projects to earn returns. Meanwhile, solar is economic with the grid in Italy and neighboring markets, absent subsidies, and we note additional anecdotes about Middle Eastern projects in size (see last month’s note). Inventories are still an overhang, but first tier module makers seem to be in relatively better shape.
This is still plenty of hangover in the US from the oversupply and subsidy pressure. Contract terms on new utility projects in the US Southwest effectively price solar at around a dime a kilowatt hour – over a third below current installations (generally tied to 2008-9 negotiations).
Wind activity has accelerated in the US this year, ahead of another expiration of production tax credits at year end. Orders collapsed (80%) the last time the US PTC expired.