This past week was a surprisingly active week in the solar industry as earnings season continued, records were broken, and a trade dispute took some interesting turns.

There's no question that conditions are improving in the industry and expectations for future deployments are going up. But for investors, there's uncertainty about which companies are going to be winners and which will be left in the dust. Here are some clues from the week in solar. 

A rooftop solar system in the daylight.

Image source: SunPower.

Earnings season continues

Many of the U.S.-based solar companies have released their first-quarter 2017 results, but we're starting to get a trickle out of China. This week, JA Solar (NASDAQ: JASO) and Hanwha Q Cells (NASDAQ:HQCL) released results. 

JA Solar said total shipments were 1,392.7 MW, driven by a 44.1% increase in module shipments, to 1,325.1 MW. But revenue increased just 6.4% from a year ago, as solar-module prices plunged around the world. That also drove a 490-basis-point decrease in gross margin, to 11.7%, and net income of just $1.2 million for the quarter.

Hanwha Q Cells' revenue plunged 16.1% from a year ago, to $432.0 million, gross margin was 13.8%, and net income was $17.6 million. For the year, management expects to ship 5.5 GW to 5.7 GW, which is the same as the company's previous guidance.

For commodity solar manufacturers, operations are dangerously close to losing money, which isn't a great sign in an age where competitors are upgrading equipment to produce more efficient solar modules at lower costs. Revenue per watt and margins will likely fall from here, and that puts companies like JA Solar and Hanwha Q Cells in tough positions. 

A trade gets another backer

Last week, I covered a brewing trade battle that pits bankrupt Suniva with essentially the rest of the solar industry (I went in more depth here). In a surprise move, the recently insolvent (equivalent of bankruptcy in Europe) SolarWorld will join Suniva's trade petition, giving it a little more life. On top of that, SolarWorld may shut down its Oregon manufacturing plant after giving Worker Adjustment and Retraining Notifications (WARN) to its employees.

Investors should probably start taking this potentially massively disruptive trade dispute more seriously. And if it goes through as Suniva wants, it could serolsy hamper solar in the U.S. for the next few years. 

Solar records continue

There were also some positive solar records this week. Tucson Electric Power signed a contract with an affiliate of NextEra Energy (NYSE:NEE) to buy electricity from a 100 MW power plant for less than $0.03 per kWh. This is a price that's competitive with all fossil fuels, and may even be cheaper than wind in some parts of the country. If this kind of pricing continues, it would be a game changer for solar.

California's independent electricity-system operator said in a report this week that, on May 13, renewable energy produced 80.7% of the grid's electricity at one point. With more solar going in, the state is creating a cleaner electricity environment, but will need to install more energy storage to operate the grid adequately in the morning and evening hours, when solar resources come online or go offline. This is the state to watch in the fight for more renewable-energy resources.

News and notes

Here are a few other notable items from the week in solar. 

  • Schneider Electric (OTC:SBGSF) and Neoen signed a framework agreement that will have Schneider supplying 750 MW of inverters, switchgear, transformers, and monitoring and control solutions to the solar developer. 
  • JinkoSolar (NYSE:JKS) finalized a contract in Abu Dhabi that will see the company install 1.17 GW of solar -- a massive investment in the region. This locks up nearly a quarter of the company's capacity per year, and the project is expected to be completed in April 2019.
  • SunPower (NASDAQ:SPWR) broke ground this week on a 28 MW project at Vandenberg Air Force Base in California that will be the largest behind the meter solar system in the Air Force. In other words, this electricity isn't going into the grid -- it's being used on-site, a growing trend for the U.S. military in its effort to ensure energy for its operations.

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