Shares on Solar Companies up on German tariff cut
Associated Press/May 30, 2008
Source: Forbes.ciom/
http://www.forbes.com/feeds/ap/2008/05/30/ap5064578.html
Shares of solar power companies rose Friday after German lawmakers reached a tentative agreement on a milder reduction in state subsidies than some investors had feared. Before dawn Friday, lawmakers agreed to cut the nation’s so-called feed-in tariff that obliges utilities to buy electricity from solar sources at fixed, above-market rates for 20 years. The subsidy has made Germany a magnet for solar energy investors.
Members of Germany’s ruling coalition agreed to cut the feed-in tariff on roof-mounted solar panels by 8 percent in 2009 and 2010 and 9 percent for each subsequent year. That pre-empted efforts by fiscal conservatives who wanted cuts of more than 25 percent beginning next year.
Parliament is expected to approve the ruling coalition’s agreement.
Citi Investment Research analyst Timothy M. Arcuri praised the development.
“Germany is the biggest market for (photovoltaic) power systems, accounting for nearly half of installations in 2007,” Arcuri wrote in a client note. “As mentioned earlier, the new tariff structure, if approved by parliament, is a little better than our and market expectations so this should be a near-term positive for the sector.”
Piper Jaffray (nyse: PJC – news – people ) analyst Torben Sommer responded by urging clients to “buy the sector.”
And Thomas Weisel Partners analyst Jeff Osborne said, “The increasing clarity in rates should ease some concerns of a massive cut creating visibility for investors.”
In midday trading, shares of solar companies with the most exposure to the German market rose: First Solar Inc. rose $20.68, 8.2 percent, to $272.78; Energy Conversion Devices Inc. (nasdaq: ENER – news – people ) rose $6.40, or 11.8 percent, to $61.10; and SunPower Corp. (nasdaq: SPWR – news – people ) rose $5.25, or 6.9 percent, to $81.25.