The content of this blog post is actually the conversation between RC and me discussing about wind and solar energy industry, now I post it here and hope more of you can share your views here.
here we go 🙂
i got here when i was researching 658. i lost some money and was thinking of getting back in at ~$10. thank you for your comment regarding direct drive technology in wind turbine now i think 658 does not worth even $5 since its tech is no longer competitive.
You seems to be quite knowledgeable regarding renewable energy. you have pointed out in an earlier post there’s so much uncertainty in solar energy it may not be a good investment theme. my view on solar is also quite dim(pun intended). it will be similar to other high tech investment (LCD panel, RAM etc) , very good for the user, bad for the investors. Why? coz it will not create consistent + cash flow for investors
high competition -> invest heavily on production method/research -> build bigger better plants -> competitors build even bigger newer plant -> supply>demand -> low margin -> invest even more in research -> build bigger better plants…
this vicious cycle will repeat again and again. The only exception I can think of is Intel, which has a dominant lead in market share thus dictates the gross margin.
hope i did not bore you.
hi RC, its my pleasure to have you leave comment here
the loop you pointed out actually is the barrier of entry for the new comers, many people know the bads of hi tech industry, but only few of them understand the goods.
from my point of view, the largest risk of a hi tech firm is how it can maintain its technology leadership. high capex is not a problem under the current economy situation as the capital cost is still quite low. if the market recognized your product or technology, the growth will be very explosive.
because of the cut-throat competition, most of the players will be eliminated when the market is well developed, few strongest players will share most of the market under a low gross profit margin. the situation i much better in the 1st tier player than the other tiers
the earlier the company join the competition, the higher the chance to become successful. because research is the thing that consume money and time, if the company has more money to spend it may require less time to achieve the same level of other competitors did. but it really takes time to make great thing. there is no fast-pass i believe.
let’s back to solar energy market, i think it is still quite young, most of the main players are just listed less than 10 years, there is still a long long way for solar to go.
one of my picks in solar stock is comtec solar (712), i believe it belongs to the first tier player in terms of its technology level and management because it can produce one of the highest conversion rate wafer in China (later when it launches n-type wafer it is getting nearer to the leadership from western, Japanese and korean firms, but their prices are not as attractive than chinese firms), also its GP beats most of the solar firms, the only firms i heard which has higher GP than 712 is GCL-poly which success is based on exceptional management and the capital from the nation.
if you believe direct-drive is the future of wind turbine tech, 2208 should be the “star of tomorrow”, because it bet heavily on that tech, and if the wind energy market performs well again, 2208 is my first choice in HK stock market
please feel free to leave your comment here RC ching
you said the earlier a company enter the market, the higher chance it become successful. I am not too sure this is how it works in the high tech market. ie. microsoft is a relative late comer, but it beats IBM and Apple in the OS market. Intel is also a late comer, it beats IBM and DEC in the PC market. Because of the excitment of “high tech” which naturally attract lots of new comers and competition and there’s high chance a disruptive breakthrough can appear.
I simply dont have enough knowledge to comment on solar tech. Where can I read more about 712 tech lead?
Direct drive is definitely the future. A electronic converter (low loss, cheaper, lighter) is far superior to mechanical device (gear), there will be no comparison. The real trouble comes from too much competition. Everybody in china wants to be big big big = low margin, high capex + blood on the street.
Why do PRC always say 「火電做規模，水電做實力，風電作秀。」?
is this the reason??
twist in demand? is this sustainable? is the same thing happening w/ solar?
Hi RC, thank you for sharing this news to us, it updates me about the wind energy market.
just simply google “IBM Microsoft”, I found this link in first page of results:
the article said Microsoft co-founder Bill Gates was approached by IBM to develop the OS for its new Personal Computer. Consider the whole history of computer, Microsoft is not as old as IBM, but when considering the Personal Computer Era, it is one of the important pioneers like Apple and Intel
intel is also younger than IBM, but I think their relationship is co-operation rather than competition (i know IBM has its own CPU but for the common PC market, IBM did not promote its CPU but choosing Intel, i dunno the reason though), the first mass
all the late comers above are actually the pioneer of their industry, if we move forward to the internet era, Google is much younger than the mentioned giants but it did create some important tech in search engine and promote cloud computing that none of these giants have achieved before.
I cannot say Intel is the new comer because there is IBM, and Microsoft is another new comer and also the Google. Actually, besides google, all of them are having over 30 years of history. They are still dominate the hi tech industry which is keep developing under fast-paces. I believe google can still maintain its leadership for another decade.
Most of the hi tech industry are originate from Laboratory, just like internet was created a few ten years ago, but the leaders of internet industry were mainly founded in these 10-20 years. Solar technology was also invented in few decades ago, but it is being extensively adopted in commercial or residential in 2000s. Therefore, from my point of view, the companies which joined the market at the beginning of the bloom i will consider it as the first group. (if the company involved in the experimental stage, i will consider it as pioneer)
about the tech lead of 712, i grab a link from the official web:http://www.comtecsolar.com/upload/712KM240311.pdf
this report discuss the development of 712′s n-type wafer, it is a new gen of high conversion rate wafer, only the developed countries possess the tech to produce it like germany and Japan, but the chinese firms plan to launch mass production this year, one of these companies is comtec solar. i believe comtec solar is not the most advance firm globally, but it should be the leader in china (or even in asia when comparing with taiwan and korea) and making good progress to refresh its tech. So, 712 able to provide hi-end wafer with a competitive price.
solar industry is totally different from wind energy in china market. solar energy still not adopt extensively in china as it is too expensive for chinese, therefore when we study the chinese solar firms we should concentrate on the europe market which shares over the half of the global market.
the largest drawback of chinese wind energy firms is they dont have the proven history of stable operation of their wind turbines. even they can produce the turbines in the lowest cost, but the reliability is also very important because the maintenance cost comprises a significant part of total cost of the lifetime operation. This is another case we can learn the advantage of early entry, goldwind has the longest history in wind turbine production compared with other main rivals in china including the largest player Sinovel, so goldwind is my first choice if i want to place my bet on chinese firm. also goldwind is the leader in direct-drive tech, it spent heavily on researching of this tech, one of my favourite bloggers “accountboy” pointed out a big advantage of direct-drive, that is the DD wind turbine can operate under low wind speed, which implies that greater area can be adopted.
another big drawback is the wind turbines cannot connect the grid effectively, thats generates a great loss, people are still looking for solution and one of their hopes is “smart-grid”, smart-grid is a big investment concept, if you have the idea let share your view here!
this is the first time i read about that twisted demand, i hope the chinese govt can amend the policy to stop that situation. it lets me thinking of HK electrical market, HK govt guarantee the profit of the electricity providers at the certain percentage of the capex they spent each year, therefore they invest at a exaggerative amount and built many unused capacity
the future of chinese wind energy firm is the global market, goldwind is the first one to attempt and also the most aggressive one
the more successful cases being operated, the faster growth of the firm, the beginning is the hardest time to face, I hope the chinese players can proof themselves with its cost as well as quality
I am not a pro in hi tech field (nor any other fields ), I just try my best to share what i know.