Breakthrough Solar Technology
Solar cells are devices or banks of devices that use the photovoltaic effect of semiconductors to generate electricity directly from sunlight. PV cells are made of semiconductors such as crystalline silicon or various thin-film materials.
Solar energy systems are highly reliable, require no fuel, require minimal maintenance and do not generate pollution. Applications include panels on commercial buildings generating their own power, large-scale on-grid solar farms, solar home systems for either off-grid or on-grid applications, portable solar power units, remote signaling for telecommunications and oil & gas industries, space power, and consumer products.
Solar EnerTech is working to manufacture leading edge PV solar cells and design advanced PV modules for a variety of applications. The company also intends to invest in PV cell research to develop higher efficiency cells.
Business Snapshot
The rising demand for energy will increasingly be met by clean, renewable solar power. Solar EnerTech is focused on the development and manufacture of market-leading solar cells, new applications and advanced technologies to fill this critical need.
In Q4 of 2006 Solar EnerTech made its first sale, executing a contract with Shangsheng Estate Development Co. of Shanghai to supply a building integrated 40kW solar module system worth approximately $350,000 at prevailing prices. In January of 2007 the company announced a sales contract with Fan Qie Trading for the manufacture of solar modules worth $9.2 million.
Solar EnerTech has begun production at its state-of-the-art 42,000 square foot solar cell manufacturing and research facility in Shanghai's Jinqiao Modern Science and Technology Park in China’s largest economic and transportation center. Manufacturing start-up took place on November 23, 2006 on the first of two production lines with projected production capacity of 20 Mw of solar power and $75 million in annual revenue projected per line.
With worldwide demand for energy rising, fuel prices reaching new heights, fossil fuel emissions under global scrutiny, and oil, natural gas and coal reserves set to run out, the renewable energy market is booming. Businesses, government agencies and consumers worldwide are looking for alternative sources of energy, and solar power is coming to the forefront. Solar electric energy demand has grown consistently by 25% every year for the past 15 years. Worldwide the photovoltaic (PV) solar industry generated approximately $6.5 billion in revenue in 2004 (SolarBuzz). In 2005 the market grew exponentially, reaching $11.2 billion.
Considering the growing demand for solar power, the increased economies of scale created by rising energy prices, and the cutting edge technology and production capabilities Solar EnerTech is establishing, we believe SOEN presents a major opportunity for upside potential.
Solar EnerTech has accomplished several critical objectives, significantly enhancing its ability to become a leading provider of solar photovoltaic cells in the thriving $11.2 billion solar power market. In recent months, the company successfully landed two sales contracts, began production of solar cells and modules at its new state-of-the-art manufacturing plant in Shanghai, opened a leading edge joint R&D center with Shanghai University, raised $5.6 million in funding, released a beta version of its power conditioning software, and laid the groundwork for an aggressive sales and marketing push in 2007.
Market Opportunity
Cumulative installed solar PV electricity generating capacity expanded by 39% in 2005 and now exceeds 5 Gigawatts worldwide (MarketBuzz).
In 2004 global solar industry revenues grew at a CAGR of 34.3% to $6.5 billion. The market then rocketed to $11.2 billion the next year. Industry experts are predicting revenues will reach $18.6 to $23.1 billion with annual PV installations between 3.2 and 3.9 Gigawatts in 2010.
According to the U.S. Department of Energy, worldwide demand for electricity is expected to rise from 14.3 billion megawatt hours in 2002 to 26.0 billion in 2025.
A growing number of countries have instituted incentive programs with provisions including direct subsidies to end users to offset costs, tax incentives, grants, loans, net metering laws enabling end users to sell back power, and government standards mandating minimum usage levels of renewable energy sources to encourage solar power development and adoption.
SOEN is targeting high-growth markets including Europe, where significant government incentive programs are helping to fuel the high demand for solar products. Solar EnerTech is also focused on the United States, with its federal Solar America Initiative, One Million Solar Roof incentive program for residences and businesses in California, and bi-partisan congressional resolution establishing a “25% by 2025” renewable energy goal.
In China solar energy has become a critical component of the country’s domestic long-term energy strategy for rural development. Government-subsidized programs aim at improving the efficiency of renewable energy technology applications, lowering production costs, and enlarging the contribution of renewable energy to overall energy supply. In response to a stronger Chinese Yuan, Solar Enertech has developed strategies to reduce exchange-rate risk by allocating 20-25% of its future products to the Chinese domestic market.
On August 21st the Million Solar Roofs bill, SB 1, was signed into law. SB 1 complements the California Solar Initiative established by the Public Utilities Commission in January and puts California on track toward building a million solar roofs in the next ten years. It is the largest solar program in the country and aims to build 3,000 MW of solar power -- the equivalent of 6 large power plants -- on homes, businesses, farms, and schools throughout the state.
"Government tax credits, utility rebates and the soaring price of oil have created a tipping point where residential solar power makes economic sense," said Joyce Mason, Vice President of Pardee Homes.
Solar EnerTech applauds the recent passing into law of H.R. 6111, which extends the US Federal Solar Energy Tax Credit through 2008. The company remarked: “This bill emphasizes a solar growth policy, and provides a time window for solar projects in the 12- to 18-month pipeline. It is clear recognition by Congress that solar energy is indispensable to our clean energy future. It can turbo-power our immediate sales to the State of California and elsewhere throughout the US and it will ensure the solar industry will continue to grow at record rates in 2007 and 2008."
Production Capacity & Projected Revenue
With one production line active and construction of a second underway at Solar EnerTech’s leading edge solar cell manufacturing and research plant, the company is working diligently to achieve aggressive growth and production targets.
Solar sales are measured in megawatts of power. The company reports that the projected production capacity for its facility is estimated at an output of 20 Mw per production line. As the industry has experienced recent price increases, the company currently estimates that each 10 Mw of production translates into roughly $37.5 million in annual revenue. The first 20Mw production line is expected to generate an estimated $75 million in annual revenue with a second under construction and projected to come online this year.
The company estimates it could potentially produce 60 Mw of manufactured output, which equates to approximately $225 million dollars in projected annual revenue, as early as 2008. Solar EnerTech plans to produce 120 Mw in total annual output in 2009. Achieving these milestones would secure Solar EnerTech’s position as a clear market leader.
The company is taking a global approach to sales and marketing, leveraging China’s favorable policies and cost-effective labor force to manufacture quality solar cells and systems for global applications, operating a marketing and sales arm in Southern California’s Silicon Valley, and forming a strategic relationship with a US-based power system component manufacturing and supply firm.
The company recently sent a team of senior managers to California to analyze the regional and national solar industry marketplace, contact industry leaders, observe existing installations and showcase Solar EnerTech's ability to supply solar cells and modules. The company is initiating a major sales push to claim a significant share of this growing market.
Achieving another major milestone, Solar EnerTech began production of solar cells and modules at its leading edge manufacturing plant in Shanghai. The company began its solar cell and solar module production tests on November 23, 2006 as the first batch of solar modules rolled off its newly assembled production line. CEO Leo S. Young unveiled two dozen solar modules at the end of the Company's first production line. Each high conversion module represents 170 watts of quality-built solar electric power generating capability ready for delivery.
Securing Supply to Meet Demand
A challenge facing the solar industry is a shortage of and corresponding price hike in silicon materials used to make cells. SOEN is focused on addressing this need by entering into agreements to secure silicon feedstock from Inner Mongolia as well as establishing breakthrough R&D into silicon alternatives.
Solar EnerTech has executed a Letter of Intent with PAIS Industries Group whereby PAIS would supply the company with 1,200 metric tons of solar grade silicon ingots for a duration of three years. The intent of the LOI is to supply Solar EnerTech with silicon feedstock needed to manufacture its leading edge solar cells and ensure access to affordable materials regardless of industry-wide shortages or price shifts.
The company has also executed a Memorandum of Understanding regarding a joint venture to acquire a 15% interest in a silicon processing operation in the silicon-rich Inner Mongolia Autonomous Region.
Investment Conclusion
Solar EnerTech has the technological expertise, growth strategy, manufacturing infrastructure, R&D team and vision to become a leader in solar energy technology. At its current price of $.86, SOEN stock looks to be extremely undervalued with significant upside potential.
Led by a team of seasoned business and technology experts including one of the solar industry's top scientists, Solar EnerTech is working to capitalize on the rising global demand for solar energy, maximize production of its breakthrough manufacturing and R&D center, leverage the global reach of its sales and marketing arm, and become a top solar cell producer.
Solar EnerTech has achieved manufacturing start-up at the first of two production lines designed to produce high quality solar cells and applications. Projected yearly revenue for each line at current solar energy prices is $75 million and the company has begun a sales push that is already paying with two major sales contracts worth more than $9 million. 2007 could prove to be a year of rapid growth, innovation, and major revenue for SOEN.
(?) 2006 AnalystStockReport.com All Rights Reserved. Disclaimer.
E-mail:
info@analyststockreport.com