Solar stocks are again feeling the heat from a report that Spain plans sharp reductions in subsidies for solar power. On Friday, a number of solar stocks dropped sharply after Lehman’s Vishal Shah asserted in a research note that the country was considering sharp cuts in its solar subsidy program. Today, there were further reports on the same theme.
According to Bloomberg, the Spanish newspaper Cinco Dias reported that the Spanish industry ministry is considering cutting the electricity rate paid to photovoltaic installations by as much as 35%.
The story reports that the ministry would set a limit of 300 megawatts of new capacity for the industry for next year, 200 for roof-top installations and the rest for ground equipment. The new tariff would be 33 Euro cents per kilowatt-hour for roof installations and 29 cents for ground panels, down from about 45 cents. (Shah last week had said the proposal could be 33 cents for roof-top installations, and 25 euro cents for ground-mounted.)
Shah contends Spain could afford a more favorable incentive program, especially given its reliance on imported natural gas and given its “attractive solar radiation profile,” but that there is a risk the government could choose a less favorable program. He advises investors to take “a more selective approach toward the sector as increased volatility due to concerns about potential outcomes in Spain beyond September could continue to weight on stocks with high Spain exposure.” He lists Canadian Solar (CSIQ), Suntech (STP), SunPower (SPWR), Solarfun (SOLF) and Yingli Green Energy (YGE) as companies with high Spanish exposure. He notes that companies with lower exposure to Spain include First Solar (FSLR) and Evergreen Solar (ESLR).
In today’s trading (as of 2:20 EDT):
- Canadian Solar is down $3.57, or 8.9%, to $36.62.
- Suntech is down $3.03, or 8.1%, to $34.43.
- SunPower is down $6.22, or 8.6%, to $65.76.
- Solarfun is down $1.60, or 9.1%, to $15.90.
- Yingli is down $1.32, or 8.3%, to $14.60.
- First Solar is down $7.47, or 2.7%, to $265.35.
- Evergreen Solar is down 39 cents, or 4.1%, to $9.30.