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Solar Rally Cut Short by Europe's Tariff Moves

For a while there, it looked like 2010 might be the first banner year for solar stocks since 2007. It still could be, although this week is showing that, if solar does make a comeback this year, it’s not going to happen with out some sudden and stomach-churning setbacks.

The first week or so of a calendar year can be an interesting — if not always accurate — gauge of how investors are feeling about a sector of stocks. Some of the bigger names in solar energy saw a healthy gain in their share prices amid strong volume, signaling a renewed confidence among investors. As of the end of trading Monday, Solarfun (s solf) was up 36 percent, while Yingli Green Energy (s yge) and JA Solar (s jaso) were both up 18 percent. Overall, the Claymore/MAC Solar Energy Index (s tan) was up 11 percent after the first six days of trading, compared with a 1 percent gain in the Nasdaq.

It took only three days to give back most of those gains. The bad news came from Europe, where France said it would cut feed-in tariffs for solar installations and Germany indicated it would do the same in a few months. After trading Thursday, The Claymore/Mac Index was up 2.8 percent, just a bit above the Nasdaq’s 1.1 percent gain.

France had been paying homeowners and businesses 55 euro cents ($0.80) per kilowatt hour for rooftop solar intsallations. On Wednesday, it announced it would cut that tariff to 42 euro cents ($0.61). As Bloomberg explained:

France cut tariffs for electricity produced from rooftop solar panels by 24 percent in an overhaulFollowing a “speculative bubble” that started in November, the Energy Ministry decided it would reject any applications from generators that hadn’t already applied for grid connection, according to the statement. Others will have to re-apply under the new tariff regime.

Then on Thursday, reports emerged that Germany would also cut its solar subsidies. Such a move had been expected for some time, but Germany’s reduction was greater than many had been expecting. According to Tech Trader Daily:

In a research note, Deutsche Bank’s Germany-based analyst, Alexander Karnick, says the report, if true, would be worse than expected for the solar sector “on several levels.” He contends that the consensus was for a roughly 10% cut in the country’s feed-in tariff program in June or July; the story suggests a larger cut, and a quicker implementation. A subsidy cut of that magnitude, he thinks, could trigger a round of price cutting by the solar wafer companies.

In short, the allocation of investor money into solar during the first several days of 2010 left some stocks ripe for a round of profit taking once bad news surfaced. It didn’t take long for that bad news to arrive, and there will surely be more in an industry known for its two-steps-forward, one-step-back method of progress.

But there are other signs that solar energy is moving forward. eSolar, a solar-thermal company, signed an agreement with China’s Penglai Electric to build 2 gigawatts of solar thermal projects in China this decade. The U.S. is offering tax credits to greentech manufacturers that could generate tens of thousands of new jobs. And private investments are picking up even if some government subsidies are disappearing.

Solar bulls may have been dealt a hard blow this week, but then again 2010 has only just started.

Image courtesy of jurvetson’s photostream Flickr Creative Commons.

18 Responses to “Solar Rally Cut Short by Europe's Tariff Moves”

  1. dennis dickinson

    o.k. lets do the math
    nellis cost $100m makes $1m a year
    & a $500 panel over 20 years puts out $50 worth of electricity @ 20 cents a kw @ 120volts.
    any way “As solar prices continue to drop”
    has to drop 90%
    solar thermal works good but NOT pvs
    i think like most folks your not moving the decimal point “ohms law”
    a 100 watt 12volt panel is 10 watts at 120 volt
    hope this helps ya….

    • Bob Wallace

      My math differs…

      $500 panel, installed @$2 per watt (where the industry is headed) = 250 watts.

      Placed in a location with 6 hour average solar day = 1.5 kW per day, 547.5 kW per year.

      At $0.20 per kWh that works out to $109.50 per year. About a five year payback and decades of free power to follow.

      Current costs should not be used as a marker for where costs will be in a few more years. Unfortunately we have to invest more for today’s panels in order to provide capital and incentive for tomorrow’s panels to appear.

      Panel manufacturing cost have already broken the $1 per watt threshold and improvements in installation are happening.

      • dennis dickinson

        YES AT 12 VOLTS!!!!
        “Placed in a location with 6 hour average solar day = 1.5 kW per day, 547.5 kW per year.”

        so at 120 volts that is 54.75 kw !!!! it’s a ohms law thing.
        or $10.95 worth of juice,,,, a day.
        with About a FIFTY year payback and decades of free power to follow.

        and hence the problem nobody is doing the real math
        you can’t run a 120 volt 100watt any thing with a 100w 12 volt panel.

        but you could run a 10 watt 120 volt night light for how ever many hours of light.
        BUT WAIT it gets worse
        -10% for the inverter
        & -20% for charging of the batterys

        so realy you could only run a 7 watt 120 volt night light, with your $500 panel
        not smart or green

  2. At least you guys got a buyback scheme that side. No such luck in South Africa!

    I get the argument about solar, but the energy doesn’t necessarily have to come from solar, water turbines are hugely effective, and there is always wind turbines, which you can actually construct yourself in a easily. Ideal for modest systems, esp in the boondocks.

    Here in South Africa we have suffered huge electricity shortages, and our the only incentive our electricity provider is offering rebates on solar geysers that are proving to be very popular, but the cheap ones everybody are installing aren’t covered by the rebates :-(

  3. dennis dickinson

    o.k by your numbers “90 years”
    you’ld break even, NOT smart
    not including -10% for the inverter & -20% for charging of the batterys
    & PVs on trackers, like nellis “cash cows” last about 20 years
    trackers & concentrators void the warranty that is by the way 20 years on most panels.
    i’v been off the grid since 92
    wins at 1/10 the cost is far superior for us.

    • Bob Wallace

      And I’ve been off the grid since 1989. I’m not sure why that matters….

      There are no batteries involved in grid solar. And most installations do not use active trackers. As solar prices continue to drop it’s cheaper to install more panels than to install trackers. (Trackers only pay if you’re closer to the equator, even at $5 a watt.)

      Solar produces when demand is highest – during the day. The power produced gets sucked right up and used.

      Having solar on the daytime grid means that it won’t be necessary to build extra expensive 24/365 plants that will not be useful during off peak hours.

      If the solar panels exceed needs demand then expensive to fuel natural gas turbines can be turned off and/or hydro facilities can be shut down, saving the water for when the sun isn’t shining.

      And, remember, nighttime winds are often stronger than daytime winds. Solar and wind tend to produce at different times of day. Southern CA solar is going to work nicely with Wyoming wind which tends to start up right before sundown, PST. Move the power back and forth on the existing Intermountain Interie, the HVDC line that stretches from SoCal to Utah and is in process of being extended further north.

      Solar prices are going to continue to fall. Because solar can be distributed to rooftops and over parking lots the cost of transmission is eliminated. Maintenance is low, lifetimes are long.

      The final grid solution will almost certainly include a vast array of generation technologies (wind, solar, concentrated thermal solar, geothermal, tidal, hydro, etc.) along with a variety of storage solutions (pump-up hydro, industrial scale batteries, flywheels, CAES) to create a grid that supplies power when we want it.

  4. R. Paul Pokorny

    Dennis Dickson please get some facts. PV solar systems, in most USA incentive programs, require a manufacturers warranty to produce 85% of new panel power rating. Grueling application on ocean navigation buoys off Oregon Coast installed in early 1960’s were tested in the early 1990’s during rebuild of the buoy structure. The panels tested 95% of new after 30 years. That is 90 years to get to the warranty specification. Most oil fields producing today will be gone in 90 years. Most fuels that are alternatives to the light and warmth of the sun will be running very low in 90 years.

    Many computer users have ink jet printers. You can get one for $100 US. In 5 years the ink costs are at least triple that. A solar system is like buying an ink jet printer and never having to buy ink.

    Policy makers, investors, and energy users must think about energy decisions that are way out past our fingertips.

  5. dennis dickinson

    there sould not be any subsidy for PVS.
    solar power is a cash cow. like nellis afb
    it’s just a bad investment like nellis cost $100m to make $1m worth of electricity.
    buy the way, the panles last 20 years that’s a loss of $80m. labor to run the scheem ie. the labor for monitoring & matinance, say 9 people @ $45k ayear?
    a 100watt 12volt panel over it’s life puts out $50 worth of power but cost $500 for that panel
    if it was viable, if at all, it would stand on its own acord.
    pluss that panel also carries the berden of about 314 kilograms of CO2.actualy more then that heat not included.
    thats1400 deg C + 750 deg C to make the silicon for the panels
    not smart or green

  6. oats leaks beans

    But system prices are falling very rapidly. So incentives can fall in tandem – while the return on investment should remain about the same. What am I missing? Yes, incentive reductions will occur in a step fashion. But this should be expected.