Nothing seems to be working to get the China solar stocks off the ground, not even the announcement of China’s first nationwide solar FIT (Feed-In Tariff) program. Rumors have been swirling for a few days and it was announced that the government will provide developers payment of RMB 1.15 (.18 kw/hr) if approved by July 1st or completed by the end of the year and RMB 1/kWh if approved after July 1st.
Analysts are disagreeing about just how profitable solar projects would be under the new tariffs, but it would certainly spur demand worldwide for solar products. It should be noted that the tariffs won’t be awarded to projects with a competitive bidding process. By some estimates, the tariffs could double the previous estimates for 2011 solar capacity.
Many were surprised that it happened so soon, but pressure from the solar community, declining subsidies in Europe and missed solar targets in China likely pushed the government into offering it sooner. The government likely feels that if it’s going to hit its target of 50GW by 2020, national subsidies are needed sooner rather than later.
It’s great news for the solar industry and the China players in particular, but the stocks aren’t moving on the news. Some of that has do with the pressure in the overall market over the past couple weeks and some of it has to do with the lack of confidence in China ADR’s, but perhaps earnings season could be the catalyst for these stocks to move. We shall see.