30.03.09 New Energy Finance Review
It is going to be a tough year. If anyone in the clean energy sector doubted that, then the events of the first quarter should have put them right. New Energy Finance’s figures for new investment in Q1 2009 will be released later this week and will show a big fall in deal volumes compared to the same quarter in 2008.
However stock market pundits point out that share prices do not rally when the news is good, they rally when the news is bad – but not getting any worse. Someone seems to have fed this message through to the solar energy sector in recent days.
Stalwarts such as Renewable Energy Corporation, Solarworld, Q-Cells, First Solar and Suntech Power Holdings have all seen their shares rally by between 25% and 110% since hitting lows in the first week of March.
The question for investors is whether this is a “dead cat bounce”, or a signal that sentiment is turning in arguably the fastest moving and most innovative sub-sector of clean energy. On the side of the dead cat theory is the fact that debt finance for renewable energy, including solar, projects remains as scarce as white heather on both sides of the Atlantic.
PV Crystalox, the solar ingot and wafer manufacturer with operations in Germany and the UK, said last week that its customers have “very little visibility” on likely demand for the rest of this year. It added: “It is generally expected that the dramatic contraction in the PV market in Spain coupled with the effects of the global economic crisis will result at best in flat market demand in 2009.”
However there is a glass-half-full way of looking at this. German cell, module and inverter supplier Sunways said that although it expected PV market demand to “decline in the current year as a result of the economic situation”, trading in March had been much better than in January or February.
Fellow German company SolarWorld was more bullish, saying that after hitting sales of EUR 900m (USD 1.2bn) in 2008, it had set “EUR 1bn as the next-stage goal”. It also predicted further solar market growth in the US in 2009 as a result of the stimulus package driven through by the Obama administration.
The most important positive development of the week however came in China, where the government introduced a subsidy of up to CNY 20 per Watt (USD 2.9/W) for BIPV projects over 50kW.
Eligible projects for the subsidy have to be commissioned after 23 March 2009, and are required to have a module efficiency of over 16% for monocrystalline PV modules, 14% for multicrystalline PV modules and 6% for a-Si thin-film modules. Grid-connected and public building will be given preference.
The subsidy is regarded as generous, although it is scheduled to last for just one year and chances of its continuance will depend on market conditions. The most likely beneficiaries according to New Energy Finance analysis are installations at large commercial and public buildings.
Such was the positive reception for this policy development that shares in Chinese solar firms Suntech, Yingli Green, Canadian Solar, LDK and ReneSola all surged by between 30% and 50% on the same day as the announcement.
With G20 leaders gathering in London on Thursday to discuss action to drag the world economy out of recession, the hope is that the meeting might push other countries into taking similarly decisive moves to trigger investment in clean energy.
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