This Week in Solar


It was an up-and-down week for the solar industry, and some companies took quite a dive to end the week. Yingli Green Energy dropped 12% on Friday, continuing a volatile run for the company.

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One of the reasons investors are on edge is coming earnings reports from SunPower , First Solar , and SolarCity . Those reports will tell a lot about the trajectory of solar stocks over the next quarter, and they start next week. But before we get there, here's what happened in solar this week.

SolarCity goes big
Installer SolarCity has focused its attention on the residential and commercial markets, but it may have bigger projects on its mind as well. The company announced a 15 MW project with Hawaiian Electric this week, following another 14 MW project in Hawaii.

The strategy is curious for SolarCity, which is growing leaps and bounds faster than the competition in residential solar. A move into utility-scale projects puts the company in a commodity type business and in direct competition with SunPower and First Solar, which have years of experience building these large projects.

These projects also put SolarCity's projected 2014 growth rate of up to 89% into a little more perspective. The company could easily grow that fast if it begins building utility projects, but they don't add the same value to the company as its own retained value projections. SolarCity apparently has its sights set on being more than a residential company, which complicates its value even more.

News and notes
Here are some of the important news items that may have slipped under the radar this week.

  • Yingli Green Energy announced that it will supply 59 MW of modules to China Three Gorges New Energy Co. The modules will be used to build three projects and will be delivered by the end of the year. Yingli has more than 2 GW of solar capacity, so while this is a very large solar project, it's just over a week's worth of production.

  • Canadian Solar announced that it will provide 1.78 MW of modules to Saudi Aramco's KAPSARC solar project. This is a small amount of modules for a company with 1.5 GW in capacity, but the location and customer are what's important. Saudi Arabian Oil is the world's largest oil producer and is making a big push into solar, so this could be a start of things to come.

  • Hanwha SolarOne announced this week that it has shipped 4 GW of modules and said its newest model will be Zep Compatible. Zep is the company SolarCity recently purchased, and it designed a system of attachments that make mounting solar panels to a roof more efficient. This may be a move to get Hanwha SolarOne's panels into SolarCity, so we'll have to see how that plays out.

  • NRG Energy continues to push into solar, designing freestanding canopies with solar panels on them. The canopies are anywhere from 15-by-14 feet to 27-by-27 feet. NRG is one of the utility companies trying to find ways to build and own solar, a good strategic move considering the way the solar industry is changing utilities.

Earnings preview
SunPower and First Solar kick off the solar earnings season this week. SunPower is up first on Wednesday after the market closes. Analysts are expecting $583.2 million in revenue and $0.25 per share in non-GAAP earnings. Management projected $550 million to $600 million in revenue and $0.15 to $0.35 per share in earnings, so Wall Street hasn't strayed far from that. Keep in mind that SunPower has a history of crushing its own expectations, so I wouldn't be surprised to see non-GAAP earnings per share above $0.35.

First Solar will follow with earnings on Thursday, and analysts are expecting $980.7 million in revenue and $0.95 per share in earnings. Watch for First Solar to update guidance of $3.50 to $4.00 per share in earnings for the full year, because the company should be able to predict the fourth quarter well with only two months left. Also watch backlog, which should be improving from 2.2 GW at the end of last quarter.

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Fool contributor Travis Hoium manages an account that owns shares of SunPower. He also owns shares of SunPower and has long January 2015 $5, $7, $15, $25, and $40 calls on SunPower. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

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