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What the Masdar Deal Means For Suntech

By Chris Morrison, January 22nd, 2009

Chinese solar panel maker Suntech received a reputation boost this week with the announcement that it would join thin-film solar firm First Solar in providing half of the first 10 megawatts of power for Masdar City, a zero-carbon community under development in Abu Dhabi.  Although some reports have suggested that Masdar has just “broken ground” on the 10MW plant, having seen it several days ago I can attest that the work is nearly complete. Workers for installer Enviromena Power Systems are currently putting up First Solar’s panels; the Suntech portion looks complete. The builders say it’s at 70 percent.

But with the bottom falling out of the solar photovoltaic industry, a relatively puny five megawatts (it’s the largest project yet in the Middle East, but I’m speaking here in terms of Suntech’s production capacity) shouldn’t be enough to get the company’s backers excited. What’s needed is some assurance that Suntech will weather the recession and come out as one of the industry’s stronger players.

Judging from comments by some of the head honchos at Masdar, their project may be able to provide that reassurance, too. The 10MW, you see, is just a start for Masdar. Before planning more, the honchos wanted to complete a test of 41 solar systems, which they’re running elsewhere on the site. The test is intended to weed out the underperformers, and push the best solar panels to the forefront.

The Suntech / First Solar project was begun before that test was completed, but a remark by the chief tester suggested that early data from the solar field went into the selection of the silicon panels used in the 10MW field. Suntech must have fared well. It also must compared favorably against other options in price; according to one of the project leads, the total price tag for the 10MW project came in below estimates at 185 million dirhams, or around $50 million dollars.

That low price was probably in part because First Solar’s panels are cheap, and in part because photovoltaic panel prices (meaning Suntech’s, in this case) are dropping. Of course, that downward price trajectory is bad for margins, but on the flipside, it should help others decide to invest in solar during the downturn.

Finally, Masdar has given strong indication that there’s more to come. Abu Dhabi, which Masdar will lie at the borders of, has said it will build out 1,500 megawatts of solar by 2020. Of that amount, 240MW will be in and around Masdar. The ground installations will tend toward thin film, but photovoltaics will dominate on rooftops. That’s good news, because initial building designs show that the entire development will be layered in solar cells. Five megawatts may just be the first taste.