JA Solar Holdings Co. Ltd. (JASO) has completed the supply of 9.5 megawatt (“MW”) of PV modules for Volkswagen Solar Park, located in the vicinity of the Volkswagen manufacturing plant at Chattanooga, Tennessee. JA Solar delivered 33,600 high-performance multi-crystalline silicon PV modules that are spread across 33 acres of land.
To date, this will be the biggest solar park in the state of Tennessee. Owned by Silicon Ranch Corp, the solar park is designed and constructed by Phoenix Solar Inc. On an annual basis, the facility is expected to produce 13.1 GWh of electricity.
Per a 20-year power purchase agreement, the electricity generated by the solar park will be sold to Volkswagen. Volkswagen’s Chattanooga manufacturing plant will utilize 100% of the electricity produced. The solar park has a capacity to meet 12.5% of the electricity needs of the manufacturing plant during its peak production period and 100% of the needs during non-production periods.
Since 2011, Phoenix and Silicon Ranch have been working together for the development and implementation of photovoltaic (“PV”) plants in southeast US. In Feb 2012, both had entered into a partnership to build a 200-kilowatt solar system on the roof of the Second Harvest Food Bank of Middle Tennessee.
The US is one of the fastest growing markets in the global solar industry. Many a US energy company is showing a keen interest in solar products in order to meet their renewable energy standards required by the Environmental Protection Agency. For example, in Aug 2012, ReneSola Ltd. (SOL) entered into an agreement with Solar Planet Power Inc. to sell 4.6 MW of its high-quality, high-efficiency 255 watt (“W”) poly modules. Solar Planet Power Inc. is a US company specialized in photovoltaic system solutions.
This trend is not confined to the US alone. To meet the increasing demand for power there has been a worldwide interest in solar energy. In Dec 2012, Suntech Power Holdings Co., Ltd. (STP) collaborated with SunSystem S.p.A. for two solar projects. SunSystem S.p.A. is a leading Italian solar engineering, procurement and construction company. The projects will utilize Suntech’s solar panels and are expected to come online by the end of this year.
Based in Ningjin, in the People’s Republic of China, JA Solar Holdings Company manufactures high-performance solar cells. JA Solar caters to an increasingly geographically diversified pan-continental customer base, which spans Germany, Italy, the US, Spain, India, Korea, China and Japan. The company also effectively uses its locational advantage in China, with Chinese low-cost solar module manufacturers contributing a substantial revenue stream.
However, given the industry-wide high inventory level, we believe margins will decline moving forward. In addition, tepid module demand in Europe, rising competition, wafer dependency, the financial stability of its customers and the oversupply of solar cells in the market may adversely impact the performance in the near term. The company presently retains a short-term Zacks Rank #4 (Sell).
In the near term, we would rather advise investors to accumulate the short-term Zacks Rank #1 (Strong Buy rating) stock Yingli Green Energy Holding Co. Ltd. (YGE).
JA SOLAR HOLDGS (JASO): Free Stock Analysis Report
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