The Future of CdTe

Considering First Solar (NASDAQ: FSLR) accounts for about 70% of 5NPlus’ revenue, it shouldn’t be a surprise that this deal is in theworks…

With the solar power market pushing for cheaper ways to utilize the sun’s energy, thin film panels are making their way into the spotlight and First Solar is currently the king of this industry.

A key ingredient in the production of these thin film solar panels is cadmium telluride (CdTe), whose biggest supplier is 5N Plus (TO: VNP).  

The connection is obvious, but let’s sum it up — First Solar is thebiggest producer of thin-film panels that use CdTe, and 5N Plus is thebiggest supplier of CdTe…

So, the objective of this deal is for First Solar to secure its supply of CdTe. But why the need for security…?

Well, there is typically around 400-500 metric tons of tellurium (CdTe’s tin-colored component and copper industry by product)
available every year and First Solar will need over half of that soon.And with minimal suppliers of CdTe, (The others being Apollo Solar andVital Chemicals, PPM Materials, Nikko Metals, and Honeywell ElectronicMaterials) a looming supply crunch is drving First Solar to act.

Obviously this deal and the future of CdTe are serious. Global demand for CdTe will reach about 260 metric tons by the end of this year andcould touch 800 metric tons by 2013.

But First Solar isn’t the only one with their eye on the CdTe market. GE (NYSE: GE), Q-Cells (XETRA: QCE), and Abound Solar are also in themix.

With GE’s plans to build 30 MW in 2011 and Abound Solar’s securedgrant to build over 840 MW by 2014, both are viable competitors forFirst Solar.

Look for deals like these to act as a catalyst in First Solar’spurchase of the Canadian-based 5N Plus, which at a 60% premium isestimated at C$450 million.

5N Plus is in the driver’s seat in the CdTe supply market – they hold the fuel to everyone’s cheaper solar fire.  This looming deal hasshowed a steady increase in 5N Plus stock price — a smart investor could utilize this deal and the CdTe supply crunch to their advantage. 

– Michael Boytano

Thin Film Solar’s Influence on Future Solar Market originally appeared in Green Chip Stocks. Green Chip Review is a free 2x-per-week newsletter, is the firstadvisory to focus exclusively on investments in alternative andrenewable energies.


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