Solar: Spain Subsidy-Slashing Rumors Send Stocks Lower

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Includes: CSIQ, FSLR, HQCL, JASO, SPWR, STP, YGE
by: Eric Savitz

Many solar stocks are trading lower today on reports that Spanish officials have presented a proposal for a sharp cut in the country’s solar subsidy program. The country has been debating changes for the last few weeks, and it appears that it may choose to cap its current subsidy program at 300 megawatts, a level which Collins Stewart analyst Daniel Ries this morning describes in a research note as “the worst case scenario.”

Ries said Spanish solar trade groups were lobbying for a cap at 480 MW.

The new proposal would also cut the country’s feed-in tariff to solar systems operators by 35% to 29 Euro cents/kWh for ground-based solar installations.

Ries says he believes investors had expected the final cap to be set at 400-500 MW. He notes that 300 MW would be a huge cut: he is forecasting 2008 Spanish solar installations at 1.1 MW. Spain is the world’s second-largest solar market, following Germany. In a previous report, Ries estimated that Spain would account for 24% of global solar installations this year.

Ries writes that the latest proposal, which comes from Spanish Ministry of Industry Miguel Sebastien and General Secretary of Energy Pedro Marin, now goes to the country’s National Energy Commission, which sets electricity rates in Spain. Ries said if they approve it, the measure would go to the country’s Standing Committee of Economic Affairs, and then ultimately would be signed into law. Ries notes that the changes would go into effect on October 1, and so would not impact Q3 results.

Solar stocks, in particular those with heavy exposure to Spain, today are taking a drubbing:

  • Canadian Solar (NASDAQ:CSIQ) is down $3.12, or 8.8%, to $32.53.
  • JA Solar (NASDAQ:JASO) is off 94 cents, or 5.6%, to $15.96.
  • Yingli Green Energy (NYSE:YGE) is down 89 cents, or 5.1%, to $16.64.
  • Suntech Power (NYSE:STP) is down 65 cents, or 1.7%, to $37.04.
  • SunPower (NASDAQ:SPWR) is down $5.54, or 6.9%, to $74.61.
  • Solarfun (SOLF) is down 49 cents, to 3.1%, to $15.20.
  • First Solar (NASDAQ:FSLR) is down $6.60, or 2.3%, to $282.

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