Another Solar Blow: Spain May Cut Its Incentive Program

Spain’s government is considering a proposal which would significantly cut the incentives built into the company’s solar subsidy program, Lehman’s Vishal Shah asserted in a research note this morning.

Shah says the latest proposal being discussed by the Spanish government would call for an annual cap of 300 MW in 2009 with a maximum of 2MW for ground-mounted installations. The proposal would cut incentives to 25 euro cents/kilowatt-hour for ground-mounted and 33 cents for rooftop installations, he writes. The current level is 42 cents.

That proposal, Shah says, would be “clearly below market expectations,” although he notes that it is not an official proposal, and discussions continue.

Shah notes, though, that companies with high exposure to the Spanish solar market could be under pressure if Spain were to reduce subsidies. He cites Canadian Solar (CSIQ), Suntech (STP), SolarFun (SOLF) and Yingle Green Energy (YGE) as companies with significant exposure to the Spanish market.

In today’s trading:

• Canadian Solar is down $2.64, or 6.2%, to $40.25.
• Suntech is down $2.25, or 5.9%, to $36.20.
• Solarfun is down $1.01, or 5.3%, to $18.21.
• Yingli is down $1.38, or 7.8%, to $16.40.

Comments

[mjg1231:]

Well, solar stocks are getting hammered. The cost per kW of solar continues to decline whereas oil continues to rise. Maybe Spain sees that intersection where solar achieves parity more clearly than others. Maybe the ITC will not pass in the US, solar subsidies will go away, and the oil lobby will notch another tactical win on their belt. Meanwhile we will hear more whining from folks tired of paying todays price of gas and they will rail against the speculators and continue to claim there is plenty of oil if it were not for those damned environmentalists.

If I have not offered up enough with the above to take umbrage at something then let me offer this...I truly look forward to $7/gal for gas. My house is almost paid for. I have a nice garden and a solar array connected with enough $ and shogun shells to last a few years...neighbors are welcome - you know me well.

2008 Jun 27 11:52 PM

[aquaculture:]

As of april 1, 2008 the Netherlands has INTRODUCED incentives for solar panels. Total subsidies amount to 0,56 Euro/kWh for a period of 15 years for 600Wp-3500Wp installations.
Netherlands is EU's most densely populated state with some 7 million homes and an additional .5 million recreational residences and some 700.000 businesses. Since april, 18 MW has been signed in.

Another great succes in the EU is the solar panel lease constructions of business roof space.
Overall the total EU market will continue to grow fast especially since the entire mediterranean has recently reached grid-parity.
Wealth redistribution to the eastern and south-eastern states means that another solar market is opening with some 200 million people (eg Solarvalue AG opening a large silicon facility in Slovenia).
The price of natural gas is rising rapidly. Coal faces environmental concerns.
Another thing to remember here is that the EU and the states adjacent to it are increasingly becoming totally dependent on Russia for energy. And a lot of people will be uneasy about that.

At the present the market only wants to see bad news. Thats a good buying opportunity in Chinese growth stocks such as CSIQ, YGE, and TSL.
(disclosure: long CSIQ)

2008 Jun 28 08:57 AM

[Augustus:]

Pretty interesting to see the amount of the subsidies. 0.50 Euro / kWh would be about $0.75 or so. Most of the US can probably get power for less than $0.15. My personal rate, taxes and all, is about $0.10. So the EU countries will pay a SUBSIDY of seven times my electricity rate. And the consumer will still be paying on to of that. So, what is a final total cost for this solar power - maybe $1 a kWh? That is a good deal and makes economic sense for whom? Seems to me it is only the equipment suppliers. Then the consumers are still left with the eventual expensive cost of disposal of these things with all the HazMat component.

2008 Jun 28 10:55 AM

[MarineCorpsVet:]

Uh-oh, Augustus. Now you went and did it. You pulled the curtain aside and found the little man behind it. There is a real cost to all this hot air. One that has not been reckoned with is shade pollution. All the eco-freaks act like all they are covering up with their acres of arrays is non-productive land. After all, we're not raising corn for ethanol on it. (another of their feel-good, loser ideas)

2008 Jun 28 01:00 PM

[chinooking:]

sure sounds like Lehman is yelling fire again,the whole solar industries is being manipulated and heavily shorted by by the new york specialist's and they're hedge fund bosses,solar is a needed tech in this world,it will evolve to better techniques and less expensive processes ,also the price of silicon for it's panel's will decrease as production ramp's up.the company's that are able to change with the technology are the one's that will survive and prosper, no matter the short term manipulation of the current market

2008 Jun 28 01:03 PM

[aquaculture:]

Augustus: The dollar has fallen way below price parity so its difficult to compare. The subsidy is for 33 eurocents/kWh to offset the investment cost and 23 eurocents/kWh as a feed-inn tariff. Electricity costs 23 eurocents/kWh but this includes taxes for grid investments and environmental pollution control which in return reduces healthcare costs.
Netherlands has one of the most reliable grids and this attracts int'l business.
One of the additional underestimated benefits of solar panels (besides the above mentioned energy security at fixed costs into the future) is that it reduces transmission congestion, off-sets PEAK loads, reduces the need for storage and/or additional powerplants operating at low capacity utilization, preventing blackouts and brownouts in hot summer months.
The august 2003 blackout in the U.S. and parts of Canada cost at least $10 billion in lost economic activity. And that is just one event. Watch again this summer as a lot of businesses and org's will reduce operations or shut down.
I dont know who, in the end, will pick up the tab for all this and the rest of the grid maintenance backlog, but at 10 $cents/kWh: it aint you.
Silicon panels contain no haz. mat. and the si-recycling value more than offsets costs of removal.

2008 Jun 28 04:07 PM

[Stockguy456:]

now the energy is expensive the free market will work in solars favor

2008 Jun 28 05:23 PM

[CLH:]

Yes solar may be helpful but if so it doesnt the gov. "incentitives". hopefully the US will do the same. Nuclear is MUCH cheaper.

2008 Jun 28 05:53 PM

[hvc--- (h...:]

Oil lacks a solution to an ongoing growth
problem that has no end . What's obvious is non stop higher costs. Plus, the damage to the planet will only increase . Oil's future is murky at best

Solar is nowhere near its end game. Nanotech \will help decimate the cost of K/W which will continually attract more users. The infrastructure cost of wind and nuclear
may be sligshtly cheaper than solar, but they can't offer as big a payoff as solar.


Spain, like the rest of the EU is in the misted of economic
downturn. Subsidies may get cut , as a current expedient.
Its hard to imagine Spain seriously cutting solar.

hvc

2008 Jun 28 06:34 PM

[gebby:]

these stocks are still buys. the growth in solar installatoins is worldwide. and six months away from us sponsorship when the republicans get blown out. 10 points downside,,,,,50 upside in next 2 years.

2008 Jun 28 11:00 PM

[10Q Detective:]

Eric:

I am surprised Vishal Shah did not mention Sunpower (SPWR), which derived 52% of total sales from Spanish customers in the quarter ended March 31.

industry.bnet.com/ener.../

My Best-
David J Phillips, Publisher
10Q Detective

2008 Jun 28 11:23 PM

[mkreisel:]

Those who suffer the most from high oil prices are SUV/pickup drivers living in suburbs, traditionally the most loyal GOP voters.

Those types are also the ones who only want more tax cuts and consume, consume and consume...

2008 Jun 29 12:03 AM

[User 219798:]

why do you post on barron's and seeking alpha? are you a short? Spain prime minister just cut nuclear program and for alternative energy
like solar and wind announced on sunday, why don't you post some update regarding this?
news.yahoo.com/s/afp/2...;_ylt=AjSRzGwQ5HVxVg54...

2008 Jun 30 12:09 PM

[tessant:]

this just hasnt been a good year for solar thus far. and articles like this dont help.

scott
solarfeeds

2008 Jul 01 12:36 PM

[akapital:]

I agree wholeheartedly with you Daniel.

Regarding "Lehman is yelling fire again,the whole solar industries is being manipulated and heavily shorted by by the new york specialist's and they're hedge fund bosses"

Some speculate that illegal naked short selling is behind some of the manipulation of solar and alternative energy stocks by traditional brokerage houses and hedges...they're not quite embracing the future...and it's obvious why, they're deep in oil.

Everyone knows Subsidies are not what are currently driving the solar or alternative energy market right now. Certainly this was the case for many years but it is evident now that higher traditional energy is the prime mover. Thus, these observations are anachronistic.

Interest in alt energy is being driven by the prohibitive cost of oil and other traditional energies. In addition, alt energies are cleaner and have less geopolitical impact as well.

But traditional analysts and investors alike are slow to change...even worse, enemies to it...


On Jun 28 01:03 PM daniel hext wrote:

> sure sounds like Lehman is yelling fire again,the whole solar industries
> is being manipulated and heavily shorted by by the new york specialist's
> and they're hedge fund bosses,solar is a needed tech in this world,it
> will evolve to better techniques and less expensive processes ,also
> the price of silicon for it's panel's will decrease as production
> ramp's up.the company's that are able to change with the technology
> are the one's that will survive and prosper, no matter the short
> term manipulation of the current market

2008 Jul 02 05:54 AM