According to FBR Capital Markets analyst Mehdi Hosseini, who just returned from China, China will implement FIT (feed-in-tariff) in the next 1-2 months. This is not a surprise as the country welcomes 2010 World EXPO in Shanghai at the end of April. The topic of this year's EXPO is green energy. This may be the most important milestone for the solar industry and the rest of the renewable energy industry.
The following numbers give us some idea how China is consuming energy and materials these days. According to CNBC, China consumes 45% of world coal, 30% of world oil, and steel production is over 50% of the world total. China is finally heading towards the renewable energy industry. Our sources also indicate that the central government is working on a plan to materialize the green energy push in that country. Over the last two decades, China has been able to set a goal and deliver it. This new energy target is no exception.
The solar PV market in China has been heating up ahead of the FIT announcement. Solar farms and wind farms have been announced lately, and the small scale rooftop projects are also ramping up quickly. JA Solar (NASDAQ:JASO) has seen gaining market share in the domestic market. Its high-efficiency crystalline based PV cells are gaining customer recognition overseas, and the company reported the best Q4 earnings among the solar companies in terms of year over year revenue growth and profit margin. We believe JA Solar is well positioned to gain momentum in 2010. On a relative basis, most Chinese solar and Japanese solar companies should do better than American and European peers because the Chinese market demand has been rising significantly in the last few months. Companies such as Suntech Power (NYSE:STP), Solarfun (SOLF), Sharp (OTCPK:SHCAY) and Sanyo (OTC:SANYY).
Disclosure: Long FSLR