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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Suntech Power (NYSE: STP ) jumped as much as 12% today on news of expanded solar in Japan.
So what: Today Japan announced a new feed-in tariff rate that will begin on July 1, starting at a whopping $0.53 per kilowatt hour. This is much higher than rates in Europe or that paid by utilities in the U.S. and is expected to lead to 3.2 gigawatts, or $9.6 billion, of new capacity, according to Bloomberg New Energy Finance.
This will be a boon for solar manufacturers short-term, but I would expect solar installations to grow so fast that there may be a bust in 2013 or 2014, similar to what we've seen happen in Europe. Right now this is great, but the party may not last forever.
Now what: I'm not really sure why Suntech Power jumped while Trina Solar (NYSE: TSL ) , Canadian Solar (Nasdaq: CSIQ ) , and SunPower (Nasdaq: SPWR ) either made small gains or even dropped today. These companies have better balance sheets and SunPower is the efficiency leader, a big advantage in the space constrained Japanese market.
SunPower may be benefiting today but I think this will be a broad help to solar stocks, especially those with leading efficiency. I've placed my bets on SunPower because of efficiency and its balance sheet and would be very worried about Suntech's heavy debt load.
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