Spanish companies lead the CSP industry with ownership interests in almost three-quarters of the CSP capacity deployed around the world. As of early 2013, Abengoa Solar had the world’s largest portfolio of plants in operation or under construction. Behind Abengoa, the top CSP companies were the Spanish companies Acciona (OTC: ACXIF), ACS Cobra (Madrid: ACS), and Torresol Energy; and the US companies Brightsource and Solar Reserve.

The global installed capacity of CSP in 2013 was 3.4 GW. The US Department of Energy estimates the current levelized cost of producing CSP at $0.13 per kilowatt hour (kWh) (versus $0.112/kWh for solar PV), but expects that cost to fall to $0.06/kWh by 2020.

The solar PV market is much larger than the CSP one, with a global installed capacity of 139 GW last year. Solar PV uses materials such as various types of silicon or cadmium telluride that are capable of producing electricity when struck by solar radiation. Most commercial solar PV cells convert solar radiation into electricity at efficiencies ranging from 10% to 15%.

As a result of generous government incentives, Germany has led the world in solar power consumption since 2006. In 2013 Germany’s 30 terawatt-hours (TWh) of solar power consumption was 24 percent of the world’s total. Behind Germany the rest of the top five solar consumers were Italy (22.4 TWh), Spain (13.1 TWh), China (11.9 TWh) and Japan (10.7 TWh). The US was sixth globally, but the 114 percent increase in US solar consumption over 2012 was largest gain among the top 20 global consumers of solar power.

Asia accounts for nearly 90 percent of global production of solar PV modules, with China producing 67 percent of the world total. The top five solar PV manufacturers globally are Yingli Green Energy (NYSE: YGE) in China, rival Chinese producer Trina Solar (NYSE: TSL), Canadian Solar (NASDAQ: CSIQ), JinkoSolar (NYSE: JKS; China), and ReneSola (NYSE: SOL; China). The US share of global solar PV manufacturing is 2.6 percent. The largest US solar PV manufacturer is First Solar (NASDAQ: FSLR).

A recent Bloomberg News story noted that solar PV installations are expected to grow by as much as 29% this year, and by more than 50% over the next two years. This is expected to reverse a glut of solar PV manufacturing capacity that has persisted for the past two years. In fact, the solar PV industry is expecting a possible shortage of panels for the first time since 2006, which will benefit the bottom lines of the largest solar PV makers.

Conclusions

The solar power industry is booming and is expected to continue to grow rapidly in the near term as technological improvements drive down costs. In 2013, new capacity additions of solar PV surpassed wind power capacity additions for the first time in history. I expect this trend to continue, and for solar to be the best long-term bet in the renewable energy space.

We have profitably recommended three solar power companies in The Energy Strategist, including First Solar, which is up more than 91% since we made the case for it a year ago this week. We’ve added two more names in recent months that are performing strongly, and hope you will join us as we continue to evaluate outstanding opportunities in the sector.

(Follow Robert Rapier on Twitter, LinkedIn, or Facebook.)

Portfolio Update

JinkoSolar’s Sunny Forecast

JinkoSolar (NYSE: JKS) was the most recent of our three current solar power portfolio picks and it hasn’t wasted time, advancing almost 12% since the July 10 recommendation.

Last week’s quarterly results confirmed the company’s status as the low-cost technology leader in a rapidly growing industry, exceeding analysts’ estimates as revenue rose 38% year-over-year and 21% sequentially. Adjusted diluted earnings per share jumped 47% in a year’s time.

There were, of course, quibbles. While the 22.6% gross margin was up from 17.7% a year earlier, that was down from 24% in the first quarter and management indicated it could go as low as 20% or so during the current quarter given the current margin weakness in the Chinese producer’s home market.

The recently proposed anti-dumping US duties on photovoltaics imports from China would crimp the company in a key and perhaps the fastest-growing market for distributed solar power. Their immediate effect, however, was to spur a rush of last-minute orders ahead from the expected imposition of the higher tariffs next year.

On the other hand, JinkoSolar is rapidly diversifying into such promising markets as South America, South Africa and India, and has secured reliable financing for its operated projects. This higher-margin “downstream” power generation business is now expected to add at least 50% more capacity than previously forecast this year, consuming roughly 20% of JinkoSolar’s module shipments.

The company expects shipments in the current third fiscal quarter to grow 25% from those it has just reported, and for fourth-quarter shipments to increase another 19% from the third-quarter base.

The downstream business could eventually be spun off into a yieldco, similar to the transactions that have proven so beneficial to several other sponsors of these tax-deferred income vehicles.

In the meantime, JinkoSolar’s American depositary receipts (shares) still trade at 10 times the past quarter’s annualized net income and 6.6 times next year’s consensus earnings estimate.

The stock remains well off its early-year peak of $37, but has just reclaimed its 200-day moving average. This year’s corrective action must also be seen in the context of the surge from $9 as recently as July 2013.

With photovoltaics production capacity constrained by the after-effects of the last cyclical bust and demand now booming, the outlook for the next year at least remains bright. Buy JKS below $32.  

— Igor Greenwald