Suntech Power Holdings Co., Ltd. (STP), LDK Solar Co., Ltd. (LDK), JA Solar Holdings Co., Ltd. (JASO), Worldwide Energy & Manufacturing USA, Inc. (WEMU) and other Chinese solar companies are seeing increased interest as the global solar market heads towards a recovery.
A Bright Future for Solar
The solar industry’s turmoil resulted from a perfect storm of commoditization and a sharp reduction in demand due to the worldwide financial crisis. After building up capacity for several years, companies were left with rapidly declining margins and no customers left to supply. However, the industry is now beginning to turn around as margins stability and customers return.
The decline in solar demand and prices officially ended in the third quarter and now it’s a race to keep capacity up with demand, according to many solar companies. The majority of the new demand is from Germany – the world’s biggest solar market – which wants to add some three gigawatts of photovoltaic capacity this year alone.
However, solar prices are also beginning to rebound in other parts of the world as well. For example, the U.S. federal government is fast-tracking more than 2.4 gigawatts of renewable energy projects in California in order to help them qualify for stimulus funding. Meanwhile, easier credit and new technology advancements will also help drive demand in 2010.
China in particular could also see an increase in renewable energy spending following governmental plans to more than double its “environmental protection” spending through 2015 to as much as $454 billion. While not all of these funds are earmarked for solar, one of China’s largest problems is dirty energy in the form of non-clean-burning coal power plants.
New Settlements, Deals and Contracts
A number of recent deals struck within the solar sector have also helped buoy stocks lately. Solarfun Power announced that it would build a 100 megawatt solar power plant in China, while the smaller Worldwide Energy announced 23 megawatts of solar projects – worth about $46 million – to be delivered in 2010 as well.
LDK Solar shares also jumped higher Thursday after Germany’s Q-Cells – one of their largest customers – announced that it would continue its supply agreement until 2018. During amicable negotiations, the two companies resolved their differences of opinion, agreed to flexible pricing based on market levels, and relaxed the delivery schedule and terms.
