Solar Power in Germany: A Shining Future

by: Martin Peter Roth

Germany is a solar energy powerhouse and the undisputed global leader. At the end of 2010, it had an installed solar capacity of 17,193 MW. For comparison, Spain, in second place, had just 3,784 MW, with Japan third at 3,622 MW.

During 2010 Germany added 7,408 MW, more than three times as much as Italy, which was in second place.

With solar power system prices continuing to fall in Germany, the prospect is for continued strong growth, despite a reduction in the country's solar feed-in tariffs.

In May this year the German government announced that it will shut down by 2022 all the country's nuclear power plants. As a result, renewables, which were responsible for about 17 per cent of the country's electricity in 2010, should soar to a ratio of around 35 per cent by 2020.

Before the announcement that nuclear plants are to close, the 's target was for 34,279 MW of installed solar capacity by 2015 and 51,000 MW by 2020. However, these figures are now likely to be easily surpassed.

Numerous German companies, large and small, have an involvement in solar energy. Many are listed on stock markets. However, three giant corporations dominate, and these are the stocks that investors interested in this long-term theme should first investigate.

SMA Solar Technology AG (OTCPK:SMTGF) is Germany's largest solar company and the world's largest producer of solar inverters - devices that convert the direct current generated by solar cells into alternating current suitable for a power grid - with a global market share estimated at around 40 per cent.

Among other products, the company also makes a range of monitoring systems for photovoltaic applications.

The company has recently been seeing an easing of demand domestically. However, it is seeing greatly enhanced overseas demand, thanks to a strong reputation abroad, and a network of 17 foreign subsidiaries.

In its March 2011 first quarter, exports comprised 66.4 per cent of sales, compared to 38.8 per cent in the 2010 first quarter. The prime markets were Italy, the US, Canada, Australia and France.

SolarWorld AG (OTCPK:SRWRY) is one of the world's largest producers of photovoltaic products, with a full range extending from wafers, cells and modules through to turn-key solar power generating systems.

The company has photovoltaic production facilities around the world, including two major plants in the US. It also has a module production site in South Korea.

It is growing rapidly. During 2010 it boosted its solar module production capacity from 500 MW to 940 MW, and it plans to expand this further to 1,400 MW during 2011.

As the German government cuts back on its very generous subsidy program for solar energy, the company is working to boost overseas sales, which now comprise more than 70 percent of total turnover.

It is seeing particularly strong growth in the U.S., thanks to a strong production and marketing position there, with early indications that sales there will double in 2011 from the previous year.

In January 2010 a German newspaper rated SolarWorld as one of the top-performing German stocks of the 21st century.

Centrotherm Photovoltaics AG (OTC:CPHVF) is one of the world's leading suppliers of technology and equipment to the global photovoltaic industry. A key rival is U.S. company Applied Materials (NASDAQ:AMAT).

It operates across the spectrum of solar production, with a core business in the development and supply of production equipment for the manufacture of solar cells.

More than 90 per cent of its sales are generated abroad, and the company is working to boost overseas sales, with new moves into the U..S, China, India and the Middle East.

Thanks to its strong global presence the company is enjoying booming business, with sales up more than 20 per cent in 2010 and with the company on course for further solid growth in 2011.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.