Read the latest interims.......just make sure that you are sitting down.

suspect that is the same as i mentioned in my post 269 this morning

Yes Cynic. The article trys to give a balanced view hence why I posted the link.

i thought it pretty good too ..... and, I am afraid, more than a whiff of truth

A nice start to the day:

SOLA Bid: 230p Offer: 233p Change: 7

Very low volume, though; not quite 100k traded. Spread seems designed to encourage buyers, too.

And another sunny day in SOLA-land:

SOLA Bid: 235p Offer: 239p Change: 4.5

Silicon shortage hits solar power hopes

By Leo Lewis in Tokyo

Published: November 20 2006 19:30 | Last updated: November 20 2006 19:30

The fragile economics of solar power could be thrown into jeopardy by a severe global shortage of the basic material used to convert the suns rays into electricity.

Industry experts warn that a worldwide shortage of poly-crystalline silicon will not ease in 2008, as some expect, but could continue for at least another five years.

Solar projects will either have to be abandoned, or governments will have to pay billions of additional dollars in subsidies.

The warning comes despite recent capacity expansion announcements at the worlds largest poly-silicon producers.

This week sees the start of negotiations between Japans polysilicon makers and industrial buyers around the world, with prices expected to surge.

Recent months have seen a flurry of announcements of investments in renewable energy projects as concern about global warming, associated with the burning of fossil fuels, has risen up the international agenda.

A Merrill Lynch report on the solar sector cites recent isolated polysilicon transactions at unsustainable prices of about $200 a kilogram nearly 500 per cent higher than in 2004.

Average polysilicon prices, which have doubled in the past 20 months, are expected by some to rise by about 30 per cent over each of the next three years.

Tokuyama, Japans largest producer, admitted last week that its facilities were unable to keep up with demand.

Polysilicon, used to make silicon chips and photovoltaic (solar) cells, is in short supply because of the voracious demand of the booming semi-conductor industry and the rapidly expanding solar sector.

The latter has grown rapidly through large-scale government-backed solar programmes in Germany and Japan, and solar equipment now consumes about half the polysilicon produced.

Global production of solar batteries grew by 47 per cent by volume during 2005, and the pace is believed to have quickened in 2006. One industry estimate suggests that between 2007 and 2009, the global polysilicon supply shortage will be about 9,000 tons a year, or about a fifth of current worldwide capacity.

Jeff Osborne, an analyst at CIBC World Markets, said the uncertainty of silicon supply threatened the economics of solar power for the rest of the decade, and predicted that its growth as an alternative energy source would be stunted.

Expectations that the polysilicon supply shortage will ease in 2008 are overly optimistic and we do not expect supply/demand equilibrium until after 2010, he said.

Industry observers are concerned that large solar panel makers such as Japans Sharp will be exposed to soaring prices for the material and will have to pass them on to consumers, making investment in solar panels unattractive.

Governments may similarly be forced to review subsidy programmes.

Merrill Lynch estimates that governments around the world will have to provide subsidies of up to $24bn (19bn, 13bn) by 2009 to achieve current solar panel deployment forecasts.

Newer panel-makers in promising solar markets such as India and China will probably be forced to reduce production to a small fraction of capacity or abandon expansion plans altogether.

Even when new facilities begin to ramp up at the poly-crystal silicon makers in 2008, said UBS analyst Takaaki Muramatsu, utilisation may not fall below 100 per cent; thus the product shortage could continue.

A prolonged shortage could cause what one analyst described as a substantial delay to solar powers forecast turning-point around 2018, when production costs had been forecast to fall far enough for it to be competitive with prevailing energy prices without subsidies.

Porky, I'd be interested to hear your views on what the article could mean for SOLA.

I am not an economist and would certainly be interested to hear others' opinions, but surely this situation should benefit SOLA, or at least see them coming out better than, for example, Sharp, as SOLA is one the supply side of the wafer industry, taking waste silicon from the chip manufacturers and reprocessing it as mono- and polycrystalline wafers for the solar industry.

Therefore, the implication of the above article for SOLA is surely that demand will be very strong, prices buoyant and SOLA's business secure.

Or have I missed something subtle? The only potential fly in the ointment is that prices of waste silicon feedstock may increase, but SOLA claims to have long-term supply contracts in place covering their forward-sold production. Of course, this being China, they could find that their suppliers sell out to the highest bidder in spite of the contracts, but other than that, the picture looks fairly rosy, unless the whole industry is likely to implode.

Any views??

As stated on the Renesola website:
"Renesola currently processes 20 tons of scrap wafer and polysilicon per month. Output will grow to around 50 tons per month during the second half of 2006. This will make Renesola the largest producer of poly-silicon feedstock in the Chinese solar PV industry."
I am not an expert, so I may have misunderstood, but don't believe SOLA buy poly-silicon from raw matierial suppliers, but source it as a waste product from industry, in particular the waste which is generated from the manufacture of semi-conductors, which they then re-work.
It is my understanding that it is this fact which makes Renesola very competitive as it is not at the mercy of world poly-silicon pricing.

That's my view too, Harry. As long as SOLA can get the waste material, they can make the wafers.

Posted on another BB:



http://news.yahoo.com/s/afp/20061121/sc_afp/chinaenergyenvironmentsolar


Tue Nov 21, 5:36 AM ET



SHANGHAI (AFP) - China intends to build one of the world's biggest solar power stations at a cost of 765 million dollars, state press have reported.


The 100-megawatt facility, to be built in Dunhuang, an oasis town in northwest China's Gansu province, will be a collaborative effort between the local government and Beijing's Zhonghao New Energy Investment, Xinhua news said Tuesday.

The project will take five-years to construct, it added.

The report followed plans announced by Australia last month to build the world's biggest solar power station, a 154 megawatt behemoth, which the builder said could reduce greenhouse gas emissions by about 400,000 tonnes a year.

Australia, like the United States, has refused to sign the Kyoto Protocol on climate change, and the station is part of Australia's rethink on national environmental policies that are under sharp criticism at home and abroad.

China for its part, which signed the Kyoto accord in 1998, is the world's second-largest emitter of climate change gases after the United States and the world's largest coal burner.

About 70 percent of China's energy comes from burning the fossil fuel and hundreds more coal-fired power plants are being built every year.

China has set goals for renewable energy to account for 16 percent of its overall energy production by 2020 and to increase energy efficiency per unit of gross domestic product ( GDP) by 20 percent over the next four years.

But already there are signs that those targets are being missed, with energy per unit of GDP rising by 0.8 percent in the first half of the year, according to government figures.

If China intends to proceed with that sort of project on a regular basis, then it doesn't seem like SOLA's future is in any doubt.

However, all IMO, PDYOR, WDIK, etc!!

Sold my trading holding today at a nice profit, in order to diversify my risks (SOLA had grown to over 40% of my portfolio - definitely time to de-risk!!). Bought some GNG and OSG and will possibly add to my QTI.

Harrycat, you asked about my exit strategy, and I think I shall be doing the following: holding my core until around the end of the calendar year, possibly until the full-year financials come out and then cutting down to leave just the free-carried stock as an investment for the future. I have decided to be a little mor cautious in view of concerns over China, plus the fact that failure to take profits in the past has often cost me dear! Will keep you posted!

Morning all!

just sold more SOLA to leave only my rather respectable free carry - a profit of around 36%! SOLA is still about 13% of my portfolio, which is probably enough.

Trend line is still up & the end of year figures in early feb '07 may well strengthen the sp.
I do not really share cynic's view of the chinese market, as many businesses are prepared to ignore slightly dubious practices in order to take advantage of cheaper products & labour. In my experience, lead times are short (often better than sourcing in Europe), the product quality is made to spec (cheap / medium / good) & they are good at allowing changes in production. I do not think that that demand will diminish in the medium term. Sure, be cautious, but SOLA still has value left in it, imo.

Harry, you're dead right. However, I have failed to take profits in the past and regretted it, so am trying to reduce my greed and hopefully increase my returns.

I certainly wouldn't have wanted to get caught out with a huge holding in something that then halved on some surprise piece of bad news.

Hopefully, however, SOLA will continue as it has started and will fulfil our expectations.

Decent recovery today:

SOLA Bid: 227p Offer: 231p Change: 7

Yeeehaaaah!!!

SOLA Bid: 255p Offer: 262p Change: 29.5

Obviously this has happened because I cut my holding drastically over the last few days. Grrrr . . . .

And there's more: SOLA Bid: 257p Offer: 263p Change: 31

Aha, the reason for the rising (finally unearthed on another BB).

2007 Production Capacity Expansion

RENESOLA LTD

PRODUCTION CAPACITY EXPANSION UPDATE


ReneSola Ltd ("ReneSola" or the "Company") (AIM: SOLA), a leading manufacturer
of solar wafers for the photovoltaic industry, is pleased to announce a
significant uplift to its planned 2007 production capacity expansion.

2007 Production Capacity Expansion Revision

On 10 October 2006 the Company announced that the planned production capacity
for the end of 2007 had been increased from 125 MW to 180 MW through the
addition of multicrystalline furnaces and wire saws.

Since that time, ReneSola has received letters of intent, primarily from
existing customers, to purchase additional monocrystalline wafers that far
exceed the existing monocrystalline wafer production capacity. In order to
meet this demand, the Company has increased the planned 2007 capacity expansion
with the addition of a further 85 MW of monocrystalline furnaces. Total
production capacity by the end of 2007 is therefore now planned to be 265 MW.

ReneSola has commenced the negotiation of sales contracts with customers for
the delivery of the anticipated output of approximately 50 MW of wafers during
2007 from the additional monocrystalline furnaces. The Directors expect that
approximately 75 per cent. of these sales will be effected under tolling
arrangements where the customer supplies the silicon feedstock to ReneSola for
processing into solar wafers. This will significantly reduce the Company's
working capital requirement.

ReneSola has signed a contract and paid a deposit for the purchase of the first
batch of 48 monocrystalline furnaces from Beijing Oriental Keyun Crystal
Technologies Co. Ltd., which supplied all of the Company's existing
monocrystalline furnaces. These furnaces are expected to be delivered in
February and March 2007. The remaining 48 furnaces are planned to be delivered
during the second quarter of 2007.

In tandem with the planned addition of monocrystalline furnaces, the Company
has signed a contract with NTC of Japan to purchase a further 25 wire saws,
which are scheduled to be delivered during the first half of 2007.

The facility of 10,400m2 currently under construction adjacent to existing
facilities will be used to house the new monocrystalline furnaces and wire
saws. The facility is expected to be finished in early February 2007. The new
multicrystalline furnaces purchased from ALD Vacuum Technologies GmbH of
Germany and the wire saws purchased from Meyer Burger AG of Switzerland will be
located in the next phase of facilities on which construction is expected to
begin before the end of 2006.

The Company is currently in negotiations with a Chinese bank which has
indicated that it will provide facilities consisting of a term loan to finance
the instalment payments of the capital expenditure and a revolving credit line
to finance the working capital requirements.


For further information, please contact:



In China:

Charles Bai, CFO
ReneSola Ltd
Tel: +86 573 477 3061, +86 573 477 3058
Email: charles.bai@renesola.com

In the UK:

Charles Ryland/Suzanne Brocks/Catherine Breen
Buchanan Communications
Tel: +44 20 7466 5000

Tim Feather
Hanson Westhouse LLP
Tel: +44 113 246 2610
Email: tim.feather@hansonwesthouse.com





END

"Total production capacity by the end of 2007 is therefore now planned to be 265 MW." !!!!!!!

This is more than double original planned capacity and almost 50% more than the 180MW announced a month or two ago.

The future looks bright!

PDYOR, etc.