Gordon Johnson, the Axiom Capital Management Inc. analyst who predicted “Armageddon” for the solar industry 14 months ago, said the crash that wiped $27 billion off the value of the shares last year may be over.
Johnson raised his rating on First Solar Inc. (FSLR), the industry’s biggest company by market value, to “neutral” from the “sell” he recommended since 2008. He also upgraded Trina Solar Ltd. (TSL), Yingli Green Energy Holdings Co., Power-One Inc. and Suntech Power Holdings Co.
Solar installations in Germany and the U.K. surged in the final quarter of 2011, helping clear inventories that led to a 51 percent decline in the price of solar panels last year. China plans to double solar energy use this year and consolidate the number of companies supplying panels. The Bloomberg Large Solar Index has risen 24 percent so far this year.
“The German residential solar market is showing resilience in 2012,” New York-based Johnson said in a note to clients last night. “One large German distribution vendor informed us that the residential market is now supply-constrained (yes, you heard that right).”
The Bloomberg Global Leaders Solar Index of 37 companies rose for a third day yesterday, climbing 7.2 percent to $47.94 in New York. Energy Conversion Devices Inc.’s 39 percent increase and Hanwha SolarOne (HSOL) Co.'s 37 percent gain led the index, which has risen 16 percent this year after falling 59 percent in 2011.
Germany added a record amount of solar panels last year as developers raced to beat a subsidy cut in the world’s biggest photovoltaic market. December installations reached 3 gigawatts, the most the country has added in a single month, the grid regulator said Jan. 9. Volumes for 2011 may be the most ever at 7.5 gigawatts.
The head of China’s National Energy Administration Liu Tienan said on Jan. 10 the country plans to double the amount of solar capacity in operation by installing 3 gigawatts this year. The final number may exceed 5 gigawatts, said Aaron Chew, a Maxim Group LLC analyst in New York.
“I’m pretty bullish on demand in 2012,” Chew said in an interview. “If pricing remains the same, I see 30 gigawatts this year and 40 gigawatts next year” of new solar installations worldwide.
Solar-power stocks were hammered last year because Chinese companies such as LDK Solar Ltd. and JA Solar (JASO) ramped up production at the same time that governments from Germany to Italy slashed support for new installations.
Panel prices fell 51 percent in 2011, and polysilicon, the semiconductor that’s the raw material for most panels, sank 67 percent between March and December.
Polysilicon spot prices posted their biggest gain in 8 months in the first week of the year, rising 3 percent, according to Bloomberg New Energy Finance data.
The U.K. also saw installations surge in the final part of 2011 as the price of panels tumbled. Installations for the year rose to 762 megawatts, 10 times the previous year’s total, according to figures from the Ofgem energy regulator.
U.K. Energy Secretary Chris Huhne twice last year moved to lower the feed-in tariff introduced in April 2010, which guarantees above-market rates for solar power, sparking a legal battle with developers.
The strength of German installations will probably trigger an automatic 15 percent cut in subsidies beginning in July, the BSW-Solar lobby group said. Economy Minister Philipp Roesler said aid must fall as German taxpayers face up to the costs of the sovereign debt crisis.
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