Solar stocks stopped their recent slide this week as news started leaking out that the first quarter may not be too bad after all. First Solar's (Nasdaq: FSLR) shares jumped on Wednesday, after inverter manufacturer Satcon Technology announced that bookings were up significantly over the fourth quarter.
It'll be a few weeks before we hear how earnings were, but news from solar's biggest markets isn't too bad for now.
Germany's solar demand hanging in
The cloud hanging over solar this year has been in large part due to Germany's feed-in tariff cuts that were expected to take place in the first quarter. A 3 GW boom in installations during December had politicians concerned that solar was growing too quickly for the country.
Planned cuts aren't coming together as anticipated, and that's put more solar power in the field than the industry probably expected. Solarbuzz recently said that Germany probably installed more watts of solar in the first quarter than half of 2011. That would mean installations approached and maybe exceeded 4 GW in the quarter, which would be great for manufacturers. A slowdown in Germany was the biggest threat in the first half of 2012 and should be mitigated by increased demand in the U.S., China, and India in the second half of the year.
Polysilicon makers wave the white flag
The biggest driver of the falling cost of solar modules in the past few years has been the falling price of polysilicon, which has accounted for a large portion of a module's cost. This drop in prices has been great for the industry, but the underlying reason for the drop has left manufacturers of polysilicon holding the bag. A massive amount of oversupply has left carnage across the industry that makes the number of solar bankruptcies look paltry.
Greentech Media estimates that only six or seven polysilicon manufacturers are left in China, down from more than 40. Renesola (NYSE: SOL) and LDK Solar (NYSE: LDK) are two of the survivors, for now, but their financial situations have gotten worse over recent quarters. But this may provide an opportunity.
China is increasingly supporting large manufacturers and may be looking for consolidation in the industry to combat oversupply. If the number of competitors falls, it may bring polysilicon prices to a level where manufacturers don't have to sell at a loss. It's a path that may be the next step for solar manufacturers, so I'll keep an eye on how China handles the polysilicon industry.
Solar IPOs hit a glitch
After Enphase's (Nasdaq: ENPH) IPO hit the market a few weeks ago at lower-than-expected levels, it became apparent that the appetite for green IPOs isn't strong this year. This week, the market chewed up and spit out BrightSource's potential IPO.
The company makes utility scale concentrated solar power (CSP) plants that use mirrors to heat oil and eventually run a turbine, making 24-hour solar power generation possible. But the industry has been moving away from CSP to PV plants because costs haven't remained competitive. Maybe this isn't a good year for solar companies to hit the public markets after all.
Other news and notes
Here are some other highlights from around the world.
- First Solar began installing solar modules on Australia's largest PV power project this week. The 10 MW system will have 150,000 First Solar modules when complete, and the minister for energy hopes that it will lead to further utility-scale developments in the country.
- The military's move to expand solar-power generation continued this week as Suntech Power (NYSE: STP) supplied 3.4 MW of modules to an installation at Edwards Air Force Base. The plant was financed by Borrego Solar and had no upfront cost to the base.
- LDK Solar announced that it's delaying the release of its fourth-quarter earnings report from April 12 to April 30. The change was blamed on a delay in determining writedowns in inventory and long-lived assets and should raise flags for investors. LDK is already late in reporting earnings, and delays are never a good sign.
That's all for this week. Until next time, check out our free report highlighting the only energy stock you need. Just get your free access, pour yourself a cup of hot coffee, and enjoy.
