Solar Stocks: Is The Worst Over? $STP $LDK $TSL

01/14/2012 from SustainableBusiness.com

In 2011, solar busted out all over the world, soaring 54% to 28 gigawatts (GW), driven by record installations in Germany and Italy, reports Bloomberg New Energy Finance.

“The year was on the high side of even bullish estimates,” says Jenny Chase of Bloomberg New Energy. “We think 2012 will be about flat, as European markets have overshot targets and spending caps and plan to rein back severely.”

The astounding growth came from crashing solar prices and a rush among developers to get as much solar installed before subsidy cuts in EU’s biggest markets, Germany, Italy and the UK. Governments couldn’t afford the above-market rates they offer under their feed-in (FiT) laws for such a huge number of installations.

Yesterday, we reported that investment in solar jumped 36% to $136.6 billion in 2011, outpacing the $74.9 billion put into wind power, and representing almost half of all renewable energy investment worldwide last year.

Germany installed a record at 7.5 GW in 2011. Compare that to the US, who also hit a record 1.7 GW, a rise of 88%.

Solar also led venture capital deals in terms of the amount invested.

In the UK, 762 MW of solar was added last year, a 10-fold increase from 76.8 MW in 2010. 95% of the projects were residential PV.

After the country rushed to reduce its feed-in tariffs (FiT) as the boom outpaced forecasts and budgets, cutting it by as much as 71% for commercial projects, developers turned to residential PV. The government then cut those rates as well and industry groups sued last month to slow those cuts.

UK’s government budgeted for 284 MW by mid-2013 and 832 MW by mid-2015.

Now, the uncertainly over the FiT has the industry at a standstill. A mind-numbing 230,000 solar plants have registered for the FiT since the program started, reports Bloomberg.

But Solar Stocks Could Rebound

Meanwhile, all the activity in solar reduced manufacturers’ bloated inventory levels, which led to those lower prices and their subsequent crash on the stock markets last year.

China’s plan to consolidate the number of solar companies while doubling solar installations in the country, is also good news for the solar industry.

Some analysts have raised their ratings on solar companies, including First Solar (FSLR), Trina Solar (TSL), Yingli Green Enegy (YGE), Suntech (STP), and Power-One (PWER).

After a killer year, the worst could be over for solar stocks. After falling 59% in 2011, Bloomberg’s Global Leaders Solar Index is up 16% this year.

Many solar stocks have been trading well below book value and are certainly primed to move up for that reason alone.