Market Overview

Everything You Missed From Roth Capital's Solar Conference


After the ITC extension, many thought some 2016 utility scale projects in the U.S. could get pushed into 2017. However, it appears most projects are on track, according to Roth Capital which just wrapped up its solar conference.

Meanwhile, the brokerage said cash/loan sales appear to be gaining traction, potentially impacting lease/PPA (power purchase agreement) volumes. The MA SREC II program is currently oversubscribed for the commercial market in Massachusetts and may soon run out for the residential market.

Within the next week, the Department of Energy Resources (DOER) could coordinate an emergency extension of the SREC II program with the governor to extend the program by 90 days.

"U.S. ASPs are currently in a range of 62-64c/W, but could decline as new tariff-free capacity is ramped up through 2016," Roth Capital wrote in a note to clients.

Following are some of the key company-specific takeaways from the 2016 ROTH Capital Partners solar conference.

Canadian Solar Inc. (NASDAQ: CSIQ)

CSIQ indicated its pipeline of downstream projects, estimated at over 10GW on its fourth quarter call, does not fully take into the account the potential opportunity in the U.S. market as a result of the ITC. Management believes it could grow its 2GW late-stage U.S. pipeline rapidly to 4-5GW.

In a build and sell model, CSIQ believes margins for incremental utility scale volumes post ITC extension are likely to remain in a range of 10-15 percent.

Enphase Energy Inc (NASDAQ: ENPH)

Roth Capital said with ENPH's recent price cuts, it appears the company has been able to win back some customers and add new customers. The second quarter volumes could potentially improve from the first as shipments to new customers ramp up.

Management indicated the company is on track to reduce its cost structure by 50% over the next two years with the introduction of its Gen5 v2 product in the fourth quarter 2016 followed by its Gen5 v3 product in 2017.

"Despite ENPH's introduction of its commercial specific inverter product, penetration of the market may be challenging as the customers may be more price sensitive and ENPH indicated it has been difficult to win share," the brokerage wrote in a client note.

JinkoSolar Holding Co., Ltd. (NYSE: JKS)

JKS sees growth of 70 percent year-over-year in the U.S. market in 2016 with shipments increasing from 1GW in 2015 to 1.7GW in 2016. The company is evaluating two options to monetize its downstream asset portfolio including either a publicly listed spinoff or monetization of the assets through project sales.

Management expects ASPs to be stable in the first half of 2016, with the potential for a 3-5 percent decline in the second half of 2016.

Sunrun Inc (NASDAQ: RUN)

RUN said near-term financing sources will likely come from lenders that appear to have further room to upsize agg/warehouse facilities, while ABS is likely off the table for now.

Management highlighted that the company generally uses two times as much tax equity financing as debt financing for each project and has sufficient tax equity to meet its needs through November 2016.

Solaredge Technologies Inc (NASDAQ: SEDG)

SEDG sees strong growth ahead and believes the company can continue to outpace the growth of the market. The company has seen more aggressive pricing from peers, but does not feel the need to follow with across the board pricing changes beyond previously expected ASP (average selling price) erosion.

The commercial business appears to be a source of strength for SEDG as the company sees its commercial mix increasing to 30-35 percent in 2016 from 25 percent in 2015. Three years from now the commercial residential mix could reach 50/50.

Daqo New Energy Corp (NYSE: DQ)

DQ sees poly pricing rising further as limited polysilicon capacity expansion is expected for 2016, while wafer capacity is expected to ramp up in the second half and drive increased demand for polysilicon.

DQ is increasing the company's wafer production from about 6 million per month in 2015 to 7-8 million pieces per month and could see margins of 20 percent or higher at current wafer pricing. The company continues to expect all-in costs of <$10/kg in 2016 and sees cash costs of $7.50-8/kg.

Latest Ratings for CSIQ

Apr 2019AssumesNeutral
Feb 2019UpgradesSellNeutral
Jan 2019UpgradesNeutralBuy

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