Analysis of Investments in PV Manufacturing (US DOE Section 1705 Loan Guarantees)
Advisory Services
The Situation
The US Department of Energy sought independent market expert reports to support the evaluation of potential investments in new commercially viable technologies related to the manufacturing of photovolatics. The market report is one component of the extensive review and evaluation of repayment risk associated with the applicant’s request for a federal loan guarantee.
NERA's Role
NERA advised the DOE on a number of projects related to innovative technologies associated with polysilicon production, production of c-Si based cells and modules, and CdTe modules. Our work involved four major areas of investigation. The first area of analysis was the development of long-term forecasts of: the global demand for solar cells and polysilicon, the supply of polysilicon and PV modules, and prices. We also analyzed the markets, and price trends associated with key materials required in the manufacturing process. The second area of analysis was a review of the competitive position of the applicant including the identification of major competitors, the market share of different technologies, and the potential for new disruptive technologies to dramatically alter the cost or supply chain. The third area of our analysis involved the review of the financial pro-formas and forecasts of operating margins supplied by the applicant based upon our forecasts of key material costs and average selling prices. The fourth area of our analysis involved review of the applicant’s business plan with regards to their ability to execute the plan, the nature of their supply and sales contracts, and the likelihood of achieving the forecast sales goals.
The Result
NERA developed individual market reports for the different applicants in which we provided our perspective on the long-term markets and the risks associated with the individual applicant’s business plan and projections of free cash flow. Note: Some, but not all, of the applicants ultimately received loan guarantees but NERA was not involved in the actual decision-making process.
