Solar Energy In Business

Today energy crises is increasing day by day, specially the countries like Pakistan.

With the growth in the number of plants being built and the increasing cost competitiveness, 2011 looks like solar energy could start to come into its own in the U.S.

Even with the entrance of a Republican-controlled Congress, some see a reasonably bright future for solar in the U.S., as many of the subsidies are "baked in" to existing programs, many of which are at the state level, says Joel Silver man of Arete Research Services. State-level programs are less vulnerable to changes in Congress.

The big swing factor, he says, isn't going to be direct subsidies to the industry as much as the growth rates of installations. In Germany, he says, the growth of photovoltaic installed capacity was far more than anyone expected - and more than policymakers really wanted. "There could be a crippling oversupply there," he said.

But even with the dangers of a small-scale asset bubble, there are a number of companies that have shown they can do well. He cites that First Solar as one that built a business model that kept costs down, as it sells to solar project developers. Now if we will not work on this lines then the day may come when this world will again go into the stone age.

In its earnings forecast, the company said it expects 2011 sales ranging from $3.7 billion to $3.9 billion and earnings of $8.75 to $9.50 a share. First Solar also agreed to sell a 290-megawatt solar farm it plans to build in Arizona to NRG Energy Inc.

Adam Krop, analyst at Ardour Capital Investments, says that in 2010 there was 900 megawatts of installed solar power capacity - largely photovoltaics - in the U.S. he estimates that will double in 2011. It's still a small part of the total power market - renewables of any kind were only 4.2 percent of the generation capacity, according to the U.S. Energy Information Administration, and solar would account for less than that. Even with the small capacity, though, the growth is healthy, Krop says, and that bodes well for solar's longer-term future.

According to data from the Solar Electric Power Association, an industry group, of the top 25 solar photovoltaic projects, 13 were completed in 2010. That includes the largest currently running plant to date, the Copper Mountain Solar Facility in Colorado. That adds up to 141.6 megawatts. In 2009, only four of the top 25 were completed.

There are currently seven solar plants that will be in the hundreds of megawatts planned in the United States. The 200-megawatt California Valley Solar Ranch (CVSR), which will sell power to Pacific Gas & Electric, is the only one that is planned for completion in 2011. But there are several smaller projects in the under-100 megawatt range that should start generating power by the beginning of 2012. As everybody is aware of this power crises but only few countries are seriously working on this alternate source of energy.

Solar Export By China

European and U.S. manufacturers -- seem to be weathering the storm so far. Chinese and Asian manufacturers, which have lower cost structures, are actually the ones with excess manufacturing capacity. Now the question may arise why the reversal?

Bank ability, it turns out, played a larger role in the market than expected. Solar developers need credit and banks have favored projects built with European panels over Asian panels.

"Essentially, the bank ability factor has restricted the field of available producers to a much smaller pool; those firms that are not considered bankable are effectively shut out of the market," he wrote. "There is no shortage of module capacity, but rather of bankable module capacity."

The situation, though, will likely change, and the change will not come, I believe, because of a change of heart among U.S. bankers. It will come because Beijing and Shanghai say so.

The history of technology and industry is best understood as a government project. The electronics industries in Japan, Taiwan, and South Korea all came out of efforts to boost exports driven by governments working closely with entrepreneurs. In Taiwan, for instance, the tax credits given to chip makers are so generous that in many years, profitable companies see an increase in their profits after taxes because of accumulated credits. In one country, an executive told me that the government initiated a publicized probe of Microsoft (Nasdaq: MSFT) after tech companies complained about being busted for using pirated copies of Windows. I never found solid evidence of that, but the fact that high-ranking, respected execs talked that way said something. In South Korea, LCD and memory manufacturers have found friends in bureaucrats in lean times.

Similarly, China's alternative energy program exists to boost exports. China will plant solar panels and wind turbines in its territories, but will reduce those goals if it can export the products first.

To that end, the government already works with banks to move internationally. A-Power Technologies (Nasdaq: APWR), a turbine maker, is building a factory in Nevada and a massive wind farm in Texas in a joint venture funded by a Chinese bank.

Coda Automotive, a Sino-U.S. car company, will get batteries from a joint venture funded by a bank that itself was prompted to invest by the government. The battery factory will be built in Ohio. The battery is very important part in a solar system. Customer needs a durable and cheap one.

These same techniques could easily be used to accelerate the solar industry. In fact, plans may already be underway. Duke Energy (NYSE: DUK) has formed an alliance with ENN to build solar power plants in the U.S. Who is ENN? It started as a car rental agency -- its first car sits in the corporate headquarters' lobby, according to sources -- but now, it is a sprawling conglomerate with a solar division. It is located in China.

Rumors circulate that Yingli is creating a fund to bankroll the construction of solar plants with its panels, sort of the way GE (NYSE: GE) and GM fund equipment and car purchases.

The Chinese government also likes solar. It was the main investor in Suntech Power Holdings (NYSE: STP).

U.S. companies, meanwhile, will also ally with Chinese solar makers to boost their own interests. Innovalight has already signed two Chinese deals. So will U.S. politicians. A-Power's U.S. move showed how well it understood the U.S. Initially, it just planned to build a 1.1. gigawatt wind farm and export turbines. Then U.S. senators complained about jobs going overseas, so the company decided to build a turbine factory in Harry Reid's home state. The complaining stopped. Suntech and other Chinese module makers also have plans to construct U.S. manufacturing facilities. As a result, Chinese companies have in a short time become a significant driver of new factory jobs for Americans. Point that out to a U.S. executive when they start to complain about high wages and foreign competition.

And with all due respect to U.S. banks, Chinese financial institutions can probably do what you do -- loan out money on projects guaranteed to generate revenue and accept checks in return -- with far less pomposity and overhead.

In short, look for names like Shenyang and Bank of Tianjin. They will be changing the U.S. solar industry soon. The energy resources are decreasing day by day, solar is a good alternative.

Global Car Business and China

In the current scenario China is striving its best to improve its industry. The Chinese government has become more aggressive about buying foreign assets. In may industrial items China has shown a good progress. Chinese leaders recently said they would begin to make investments in Europe through their sovereign wealth fund. The country has capital available to buy assets driven down by the recession.

Chinalco, China's huge metals company, recently spent $19.5 billion buying into global mining giant Rio Tinto (RTP). Rio needed the money to decrease its debt. There is speculation that China wanted to secure access to minerals. To that extent, the investment was a "strategic" one on China's part. The Australian government considered blocking the deal but did not. Perhaps debt-laden Rio made the case that it needed the money too much to help it through the economic downturn. In a move that may be even more important to the long-term interests of the mainland, the China Development Bank agreed to loan Brazil's oil giant Petrobras (PBR) $10 billion for exploration projects.
The South American oil company also apparently agreed to sell China-controlled oil company Sinopec (SNP) crude supplies for the balance of the year. It does not take detective work to come to the conclusion that the two arrangements were related. In late 2007, Petrobras said it had discovered new fields far off its coast that contain as much as 8 billion barrels of oil and gas, which would make it one of the largest reserves in the world. China will need a substantial part of that oil for its internal use over the next two or three decades. Brazil needed the capital now. China then has the oil to provide fuel for automobiles, the metal to build them and the country seems to be ready to shop for car companies.
According to Reuters, the chief of China's large Chongqing Changan Auto Co. is prepared to take a vulture-fund approach to buying assets. He said, "The longer the crisis lasts, the bigger the chance of failure or a scale-down of some American and European automakers." It is a brutal but honest assessment of the industry, and a clear and public sign that China believe that "money talks." China can afford to be in any business for the long haul if it is convinced that it is in its national interest. That cannot be said about any other nation in the world, especially the United States. The American government is putting its money to work trying to save the financial system and millions of jobs. Japanese companies were able to aggressively move into the U.S. and European car markets in the 1970s and 1980s to a large extent because of their low labor costs. The Japanese auto firms created brands, instead of acquiring them. Toyota (TM) and Honda (HMC) developed reputations for quality and service that often eclipsed those of their competition in the West. China plans to compress the decades that Japanese companies needed to build large branded auto firms. It plans to complete the process in a year or two by simply acquiring existing, well-known brands.


Chinese Car Firms and Government
There is no reason that a Chinese car firm cannot use government money to bid for Chrysler's assets if it is forced into bankruptcy. In France, Citroen and Peugeot are facing financial problems that could get much worse if car sales remain anemic. GM's (GM) Opel unit in Europe needs immediate capital and may be sold at a loss for the No.1 U.S. car company. The Chinese could pick up brands, manufacturing assets, product-development personnel and dealer networks on both sides of the Atlantic.
Hurdle In The Way of China's Interest
The only hurdle that stands in the way of China's interest in buying car-company assets in the West is the potential desire of governments in the U.S. and E.U. to block buyouts. That could cause trade friction, but it raises a much greater issue. When there is not enough money to go around, which assets will be protected? The economy has created a situation where many critical industries will have to suffer a substantial number of bankruptcies unless their governments step in. Or their governments can let the Chinese buy them which would likely preserve jobs and the tax income from the businesses. They are doing their best to win over the hearts of people.