MEMC makes major investment in downstream solar projects with Q-Cells

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MEMC Electronic Materials and Q-Cells International, a subsidiary of Q-Cells SE that specialises in building and operating PV power plants, have established a joint venture that will see MEMC partner with an investment of US$100 million in solar power plants. The first project is a massive 50MWp solar park in Strasskirchen, Bavaria, using crystalline solar cell-based modules. MEMC will have a 50% stake in the project. Upon completion, the partners said they would sell the park to a third party.

“Our investment is enabling one or more [solar park] projects to precede that have stalled due to lack of financing,” noted Ahmad Chatila President and CEO of MEMC in its quarterly financial conference call.

Q-Cells recently announced reduction expected in revenue for 2009, due in part to solar projects being delayed because of continued difficulties in raising funds from banks to finance projects due to the credit crisis.

The new joint venture would seem to differ from Q-Cells previously announced partnership with LDK Solar, which did not include any financial commitment by LDK in relation to collaboration on solar projects in China and Europe.

“As MEMC sells wafers to Q-Cells, the revenue from those sales will be recognized consistent with the MEMC’s revenue recognition policy, and the cost associated with those wafers will be included in cost of goods sold,” noted Ken Hannah, SVP and CFO at MEMC during its quarterly financial analyst conference call.

MEMC’s Hannah also noted that the company had already started shipping wafers to Q-Cells to be processed into solar cells for the new solar park.

“I believe that we can capture more value by taking an active role in downstream solar projects. MEMC has a strong brand, a reputation for high-quality products, a 50-year history, significant international property and technology resources, and has a very strong financial position,” commented Chatila during the conference call. “Very few companies in the solar space are as well-qualified in my opinion to take a leading role and unlock or cancel downstream values. In the short-term, much of the current slowdown in the market is due to the lack of attractive projects enhancing.”

MEMC is able to invest such sums required due to its US$1.2 billion in cash and short-term investments and trades with almost no debt. China-based LDK is highly leveraged and does not have the capital to invest in the same way as MEMC.

The majority of utility-scale PV power plant projects in Germany have recently become dominated by thin-film technologies, in particular First Solar’s CdTe modules. This latest news would indicate that conventional crystalline PV manufacturers and silicon wafer suppliers are willing to invest significant amounts of money in high consumption projects to compete with thin film.

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