Solar Manufacturers Battle

A few weeks ago, I highlighted three important factors investors need to understand about solar companies. They were cost per watt, efficiency, and bankability. In the past, I've looked at how cost per watt affects a company's competitive position, but today I'd like to take a deeper look into efficiency.

Efficiency plays an important role in analyzing solar investments for a couple of reasons. First, a more efficient panel will allow a developer to spend less on land, installation, and electrical components -- also known as the balance-of-system. But what might be more important, especially when analyzing Chinese competitors, is efficiency, which can tell us whether a company has any sort of technological advantage.

Most Chinese competitors are more or less the same company with slightly different capabilities and cost structures. Unlike U.S.-based First Solar (Nasdaq: FSLR  ) and SunPower (Nasdaq: SPWRA  ) , customers don't differentiate them much. I've compiled a list of some of the larger Chinese manufacturers and their highest efficiency monocrystalline modules and multicrystalline modules to show how they stack up.

Company

Monocrystalline Module Efficiency

Multicrystalline Module Efficiency

Trina Solar

16.4%

14.7%

Yingli Green Energy (NYSE: YGE  )

N/A

14.4%

Hanwha SolarOne (Nasdaq: HSOL  )

15.3%

14.7%

Suntech (NYSE: STP  )

14.9%

14.4%

LDK Solar (NYSE: LDK  )

14.4%

14.7%

JinkoSolar (NYSE: JKS  )

15.7%

15.0%

Among these companies, Trina Solar can make the most efficient monocrystalline module, while JinkoSolar has a slight edge for multicrystalline modules. But overall, these companies' modules don't vary much in terms of efficiency. And none come close to the 19.6% efficiency module that SunPower makes.

Keep that in mind when analyzing solar stocks. As costs fall, efficiency is becoming more important and could be the most important differentiator for manufacturers going forward.

Interested in reading more about solar? Add your favorite solar stocks to My Watchlist, which will find all of our Foolish analysis on those stocks.

Fool contributor Travis Hoium is long First Solar and SunPower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

First Solar is a Motley Fool Rule Breakers pick. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 06, 2011, at 7:21 PM, makinmoves wrote:

    Actually, LDK is at 16.9%. Please see their investor presentation from March 16th.

    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9N...

  • Report this Comment On April 06, 2011, at 10:13 PM, semiconcious wrote:

    None of these numbers are close to accurate - and LDK certainly is not at 16.9% - despite their investor report. Try asking LDK about all of the cell manufactureres that have disqualified them as a wafer supplier because of poor efficiency, breakage, and defects. Of course they will deny it, but as someone dealing directly in the wafer and cell business, I can assure you they are going downhill fast.

  • Report this Comment On April 06, 2011, at 10:32 PM, soycapital wrote:

    semi, how about some more information on the solar companies? Care to share? I own SOLR, I'm sure you know about them. I will never again touch a chinese stock. Would like to own a solar stock elsewhere long term.

  • Report this Comment On April 07, 2011, at 8:18 AM, zwordser wrote:

    Are these number based on standard testing conditions? JASO recently announced 18.2% efficiency for their "Maple" multicrystalline panels (under "large-volume factory conditions"):

    http://finance.yahoo.com/news/JA-Solar-Unveils-182-pz-694182...

  • Report this Comment On April 07, 2011, at 11:32 AM, TMFFlushDraw wrote:

    @makinmoves

    You're quoting cell efficiency, not module efficiency. There's a big difference. Every manufacturer's cell efficiency will be much higher than their module efficiency.

    @zwordser

    These numbers are based on company published data sheets.

    Again you are looking at an 18.2% cell efficiency, not module efficiency. 18.2% sounds nice but module efficiency will only be ~15-15.5%.

    Travis Hoium

  • Report this Comment On April 07, 2011, at 5:32 PM, zwordser wrote:

    True enough, Travis, but note that the maple is a multicrystalline panel, so if true that the module efficiency is 15 to 15.5% as you mentioned, that still beats the module efficiency of all the other multicrystalline modules mentioned in your article.

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