CHINA STIM STIMS CHINA SUN

Solar Company Shares Jump On Chinese Energy Subsidy
Shara Tibken, March 26, 2009 (Dow Jones Newswire via Wall Street Journal)

"Shares of solar companies soared Thursday after the Chinese Ministry of Finance said on its Web site that it will offer a subsidy for solar energy…[that] will provide RMB20 ($2.93) per watt for projects over 50 kilowatts…Raymond James analyst Pavel Molchanov said the subsidy is comparable to what California is paying as part of its solar-rebate program.

"Analysts called the subsidy generous and some estimated it could cover more than half the cost of a solar panel… [But one analyst] believes the market reaction is overdone because the subsidy's impact on demand for solar projects is going to be relatively minor."

In rural China, solar energy provides for necessities. (click to enlarge)

"Chinese-based solar companies gained the most…[because they] stand to benefit the most from any Chinese subsidies…Suntech Power Holdings Co. Ltd. (STP) soared 47% to $11.50, and Yingli Green Energy Holding Co. Ltd. (YGE) rose 44% to $5.98. LDK Solar Co. Ltd. (LDK) jumped 40% to $8.25, and Trina Solar Ltd. (TSL) rose 46% to $12.65. China Sunergy Co. Ltd. (CSUN) climbed 34% to $3.35, and JA Solar Holdings Co. Ltd. (JASO) gained 43% to $3.79…

"Non-Chinese companies also traded higher, though they are less likely to benefit from the subsidies…First Solar Inc. (FSLR) gained 13% to $151.43, while SunPower Corp. (SPWRA) rose 16% to $27.95. Both are U.S. companies."

Who WOULDN'T subsidize this kind of growth? (click to enlarge)

"Analysts at Piper Jaffray said the Chinese subsidy is a long-term positive…[But] some analysts expressed caution over how much the subsidy would help the companies…[I]t's unclear whether the subsidy is restricted to building-integrated PV, or BIPV, cells - which means the modules have to be an element of the building structure - or whether it could also be used for retrofit modules, which are less expensive and can be put on an existing building…BIPV solar panels are a small niche market in China and account for only about 2% to 3% of solar demand.

"Barclays Capital analyst Vishal Shah said in a note the program is applicable for both BIPV and regular solar module applications, but analysts at Piper Jaffray said in a note only building owners and manufacturers of PV products can take advantage of it. In addition, analysts at both Piper Jaffray and Barclays said the new subsidy program likely won't be capped."