This Week in Solar

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Hey, solar fans. It was a busy week in this corner of the market, so let's get right to it.

There was a flurry of small deals on Monday. American Electric Power (NYSE: AEP) took its first small commercial solar footstep, which I like much better than the dung deal it cut two years ago. The utility will purchase the power generated by a 10-megawatt facility powered by First Solar (Nasdaq: FSLR) panels.

Other deals included a First Solar tie-up with Australia's Lend Lease, a frame agreement and sales contract between China Sunergy (Nasdaq: CSUN) and an Italian module maker, and some new Chinese contracts for Yingli Green Energy (NYSE: YGE).

Yingli also took the opportunity to update investors on its expectations for the current quarter. Shipments should rise about 70% from their depressed first-quarter levels, and gross margins should come in at a relatively rich 18% to 20%, as it said in previous guidance. The company also launched a fair-sized equity offering, which is all the rage these days.

The biggest surprise may have been Canadian Solar's (Nasdaq: CSIQ) announcement that it's expanding module production capacity from 620 MW to 800 MW by the end of August. The company had put an expansion plan on ice and spoke of maintaining the current level as recently as the first-quarter report in late May. This is quite a turn, given the prevailing caution displayed by competitors like Suntech Power (NYSE: STP) since the fall crack-up.

Canadian Solar isn't the only one experiencing green shoots. UBS analysts just released a bullish solar report, which seems to be giving the sector a lift late in the week. The duo of Robin Cheng and Stephen Chin see stimulus cash and lower prices for modules translating to a strong back half of 2009 for both Chinese players like Yingli and U.S. shops like SunPower (Nasdaq: SPWRA). I've recently been of a mind that cutthroat pricing for modules would hurt folks like SunPower, but that's probably more of a short-term issue as everyone works off their overstuffed inventories. Beyond that point, easier-to-find financing and price-driven demand could very well overcome these negative effects.