Alternative Energy Watch: Suntech Misses EPS, Revenue Estimates; More Solar Happenings; Google Invests in More Wind; US Grid Upgrade to Cost Half a Trillion (STP, TSL, YGE, SFTBF, SHCAY, GOOG, ED)

Today’s alternative energy news leads off with the exceedingly lackluster earnings report from the world’s largest producer of solar modules. We’ve also got more items on solar and wind power, plus an estimate of how much it will cost to upgrade the US electricity grid.

Suntech Power Holdings Co. Ltd. (NYSE: STP) reported first quarter EPS of $0.17, up more than 54% from the same period a year ago, but far short of estimates of $0.36. Revenue rose 49% year-over-year, to $877 million compared with a consensus estimate of about $865 million. Sequentially, revenue fell from $945 million or about -7%. Suntech also lowered its revenue guidance for the full-year from $3.4-$3.6 billion to $3.3-$3.5 billion. The company still expects to ship 2,200 megawatts of modules in 2011.

Amazingly, the company’s gross margins increased from 16.2% in the fourth quarter of 2010 to 19% in the first quarter. Suntech managed to achieve that by increasing its silicon wafer production and avoiding purchases from third-party suppliers.

The company expects second quarter gross margins to be flat. Other Chinese solar PV makers like Trina Solar Ltd. (NYSE: TSL) and Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) expect margins to fall over the next year. The difference is that both Trina and Yingli start from higher margins than Suntech posted for this quarter. Both expect margins greater than 20%, although on smaller volume. Suntech’s secret, of course, is lots of shipments.

Suntech’s shares are down about -3%, at $7.43, approaching the bottom of the stock’s 52-week range of $7.05-$11.41.

Japan’s Softbank Corp. (OTC: SFTBF) has said that it will put up nearly $100 million of its own money to build 10 solar PV plants in eastern Japan. Softbank’s goal is to help push the country away from its heavy reliance on nuclear power and toward solar, wind, and geothermal power. Each of the plants is expected to cost about $97 million, of which Softbank will contribute 10% with the rest coming from local authorities and Softbank borrowing.

Softbank, a telecom company, could form a partnership with Sharp Corp. (OTC: SHCAY) to use Sharp’s modules. The Japanese company is following in the footsteps of Google Inc. (NASDAQ: GOOG) which has pumped more than $400 million into several alt energy projects in the US.

The search giant has now agreed to join with Citibank to inject $110 million into the fourth phase of the Alta Wind Energy project in southern California. Alta currently generates about 720 megawatts and is expected to generate 1,500 megawatts of power when it is completed. Google and Citi will buy the fourth of five phases and lease the completed installation back to the developer over a long-term contract.

New York utility Consolidated Edison, Inc. (NYSE: ED) is fighting a proposed state rule that would require it to buy back solar-generated energy at rates that would be higher than those for either gas- or coal-fired generation. The company profited from regulations governing solar energy installations in New Jersey, where renewable energy credits that can be sold attracted more than 137 megawatts of new solar installation in 2010, the second-highest total in the US after California’s 259 megawatts.

Finally, the Electric Power Research Institute (EPRI) has estimated that it would cost about $476 billion over the next 20 years to modernize the US electricity grid. That’s the bad news. The good news is that the rejuvenated grid will deliver some $2 trillion in customer benefits. EPRI estimates that by 2050 a typical electricity bill will rise by 50% if the changes are made, and by nearly 400% if they are not.

Paul Ausick