Why are solar stocks getting trounced today? Blame Spain's Secretary General for Energy Pedro Marin and his solar subsidy proposal:
- An aggregate cap for 2009 of 300MW (200MW roof-top, 100MW ground-based)
- Roof-top FIT €0.33, ground based FIT €0.29 kWh
(Don't know what those subsidy numbers mean? Here's the bottom line: they are very low. AmTech solar analyst John Hardy had previously said that a cap below 3000 MW would be a major negative.)
Hardy, however, is only slightly discouraged. This is only a proposal, not a law, so he sees no imminent threat. More importantly, several solar stocks--including First Solar (FSLR)--have low exposure to Spain:
Were this proposal to be put in place post September 2008 we would view it as very negative for poly based solar module producers, particularly those without a solidified poly outlook; reason being they would be squeezed between a tight poly sourcing environment and declining ASPs due to less favorable legislation. Companies under coverage most negatively affected would include YGE (Buy, $15.92), SOLF (Neutral, $17.50) and STP (Buy, 37.38).
That being said, it is important to realize that the proposal described above is just that, a proposal, and it is too early to tell whether or not it is likely to be adopted....
Given the relative legislative uncertainty we would be buying shares of FSLR (Buy, $272.82), SPWR (Buy 71.98) and WFR (Buy, 61.54) on this weakness.
Hardy likes these stocks because First Solar has limited Spanish exposure, SunPower has improving geographic diversity, and MEMC remains "very well positioned given the tightness in the polysilicon market."
See Also:
Latest First Solar (FSLR) News and Analysis
SunPower (SPWR): Italy Next Big European Solar Market, TSL Contract Encouraging (SPWR, TSL)
Solarfun Power (SOLF): More Polysilicon, But Balance Sheet Problems Remain (SOLF
