It was another strong week from solar stocks. Positive results out of Europe and China continue to drive optimism in the industry.
Data out of Europe are showing that the solar market grew 18% in 2011 and hopes are that the growth continues in 2012. For the first quarter, Solarbuzz is predicting 10% growth in demand in Europe. The questions in Europe really begin after the first quarter, when feed-in tariffs will likely be cut again as the industry installs more solar than politicians anticipated.
While the European markets have held solar together recently, it's Asia where the real growth will occur in the future. And 2011 was a great start. According to Solarbuzz, Asia Pacific installed 2.8 GW in the fourth quarter and 6 GW during the full year, 165% more than last year. Estimates are that installations will grow another 40% in 2012.
There was so much solar installed in the fourth quarter that it's likely inventory will be down and production will be up across the board. This will benefit companies that were hurt most in 2011 like LDK Solar (NYSE: LDK) and Renesola (NYSE: SOL), because they'll find demand for polysilicon, cells, and even modules if top-tier suppliers sold out on such strong demand.
Around the world of solar
Besides positive macro news, there was company-specific news coming from companies around the world.
- Q-Cells, a German solar manufacturer, announced it had reached a deal with debt holders to restructure the company. The deal will leave the company mostly debt-free, a rare position in the current solar environment. The company did say 2012 would still lead to a loss despite the restructuring.
- BrightSource Energy, a company that uses solar thermal technology, was selected by Sasol in South Africa to build a development there. The country has targeted 3.7 GW of renewable energy installations by 2016 to reduce its reliance on coal.
- MiaSole is making progress on its modules, announcing its production modules have reached 14% efficiency. The company competes in the thin-film market with First Solar (Nasdaq: FSLR), which is currently making modules with 12.4% efficiency.
- At Solar Power Generation USA, the Agua Caliente project built by First Solar and now owned by NRG Energy won best PV project. This is the start of a number of giant projects by First Solar and SunPower (Nasdaq: SPWR) that will establish a new scale in the utility-scale solar market.
The China vs. U.S. battle rages on
A battle over Chinese subsidies to solar manufacturers is raging on and is starting to get political. Arizona is weighing in, saying that gridlock on the issue could cost the area more jobs. The state has established itself as a solar hub, not surprising considering the state's solar resources. Suntech Power (NYSE: STP), one of the beneficiaries of Chinese government support, has established manufacturing there, as has First Solar.
A coalition of 25 companies went against SolarWorld's initial claims of unfair practices by China, so the industry is even fighting itself on this subject. And now, a report from the Coalition for Affordable Solar Energy says that a tariff would be a bad idea for the industry as a whole.
As I said last week, the issue of Chinese subsidies and potential U.S. tariffs on Chinese solar imports is a more complex issue than it first appears. The U.S. is actually a net exporter of solar products and new tariffs could cost the industry 60,000 jobs by 2014, according to The Brattle Group.
With industry backing free trade over tariffs, I have to think the government will see good reason to put off a tariff right now. There are better ways to support the solar industry's growth.
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