This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Solar Losers: Evergreen Solar U.S. Plant Shuttered

Stocks in this article: ESLRTSLYGE

(Evergreen Solar plant closure story updated for analyst commentary, plant closure details)

NEW YORK ( TheStreet) -- Evergreen Solar (ESLR) announced after the close on Tuesday that it was closing down its Devens, Massachusetts solar manufacturing plant.

While the handwriting may have been on the wall that all was not well in Devens, ever since Evergreen Solar decided to move a large portion of its wafer manufacturing to China, the reasons behind the Evergreen shutdown may be a negative data point for the entire solar sector.

Evergreen Solar said in a statement, "Although production costs at our Devens facility have steadily decreased, and are now below originally planned levels and lower than most western manufacturers, they are still much higher than those of our low cost competitors in China. We have consistently stated during quarterly conference calls throughout 2010 that we would continue to manufacture in Devens as long as it was economically feasible. During the month of December, we experienced a 10% decrease in average selling prices from the beginning of the fourth quarter. As industry selling prices continue their rapid declines into 2011, panel manufacturing in Devens, either fully or partially, is no longer economically feasible."

While the fact that Evergreen was falling behind the Chinese manufacturers in solar was long ago a given -- and precipitated the company's move to China -- solar analysts read the Evergreen move as another negative data point about pricing pressure across the solar module market at the outset of 2011.

Sam Dubinsky, analyst at Wells Fargo, wrote in a note on Tuesday afternoon that the Evergreen Solar plant shuttering was the beginning of the industry shakeout in 2011, a process that will favor low-cost Chinese module leaders like Trina Solar (TSL) and Yingli Green Energy (YGE) as a loose supply and demand dynamic takes hold.

The recent ASP declines were "the final straw" for Evergreen, and it's a sign of what's going on throughout the solar industry, according to some analysts.

LDK Solar (LDK) released an aggressive expansion plan, shipment guidance and revenue target for 2011 on Monday, leading to a big rally for solar.





By Tuesday, ever-skeptical analyst Gordon Johnson of Axiom Capital was writing that even module ASPs among the top tier Chinese were falling faster than expected, and there was no way that LDK could aggressively expand in line with its bullish guidance in 2011.

After Evergreen announced the shuttering of its plant, Wedbush analyst Christine Hersey agreed that the Evergreen comment about pricing declines of 10% in module ASPs is a negative data point for the whole solar industry. Evergreen Solar had 64% of its sales in Germany in the third quarter, and the slowdown in Germany is one of the largest pressure points in the solar supply/demand debate for 2011.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,806.50 -8.44 -0.05%
S&P 500 2,069.36 +2.33 0.11%
NASDAQ 4,774.5350 +16.2830 0.34%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs