In conjunction with the deal to help supply solar power to Beijing's Bird Nest Stadium for the 2008 Summer Olympics, this announcement is another sign that SunTech is continuing to gain traction in China. This is good news, because there is neither a shortage of new building projects in the country nor a possibility that the demand for low-cost, clean energy solutions will lessen any time in the foreseeable future.
But while the deal is good new for SunTech Power and its shareholders, the company, which prides itself on offering the lowest cost per-watt solar solutions on the market today, is going to have to keep developing advances -- such as the one it announced earlier this month regarding "semiconductor fingers" -- if it wants to stay ahead of the pack. (The advance reportedly increases the efficiency of monocrystalline PV cells from 15% to 18%.)
I say this is because on the same day SunTech announced its deal, Sharp also announced that it had developed the know-how to mass-produce more efficient thin-film silicon solar cells. Meanwhile, First Solar (NASDAQ:FSLR) issued a press release indicating that it is expanding its production capacity in Malaysia with a new four-line solar module manufacturing plant that is expected to have a capacity of 100 megawatts.
The Sharp announcement, which it said increased the efficiency of its thin-film solar cells from 8.6% to 10%, will benefit the company by reducing its silicon costs and making its products more attractive in the marketplace; and First Solar's deal is simply an indication that the market for solar cells -- especially in Asia -- continues to grow more competitive.
To keep ahead of the pack, SunTech will need to continue announcing new customers, keep increasing the efficiency of its solar cells, and explain how it intends to ramp up its production capacity in Asia. If it does all this, it should have no problem continuing to fly high.
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Fool contributor Jack Uldrich owns stock in SunTech Power. The Fool has a strict disclosure policy.
