Barclays on U.S. Clean Technology: Cleantech Insights V27: Solar Breakevens

Barclays on U.S. Clean Technology: Cleantech Insights V27: Solar Breakevens

Barclays analyst says, "Breakeven levels rising faster than prior years: 2011 breakeven levels (or the industry shipments required to cover operating and debt expenses) of select low cost solar companies are expected to increase by ~115% y/y compared to 20% y/y increase in 2010, by our estimates. Cumulative operating breakeven levels of the six Chinese solar companies (Suntech (NYSE: STP), Yingle (NYSE: YGE), Trina (NYSE: TSL), Canadian Solar (Nasdaq: CSIQ), Hanwha SolarOne (Nasdaq: HSOL), JA Solar (Nasdaq: JASO)) in 2010 were ~2.4GW, compared to ~2GW in 2009. We estimate 2011 breakeven levels to reach over 5.1GW."

"We expect breakeven levels of CSIQ, JASO and HSOL to increase at the fastest rate in 2011: CSIQ's breakeven level could increase the most in our view, with an increase of 290%, from ~375MW in 2010 to ~1.2GW in 2011. We also expect JASO and HSOL to see significant increases in breakeven levels, with an increase of ~200% and 120%, respectively...We expect the breakeven levels for STP to only increase by 55%, while breakevens for YGE and TSL are expected to increase by ~70% and ~80%, respectively."

"We believe the solar sector is about to enter another supply cycle where declining ASPs and rising opex/interest expense levels drive higher operating break-evens, which in turn drive the need for additional market share gains, in our view..."

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