Japan: Land of the Rising Solar 日本：太阳能行业上升
China’s battered solar sector is finally getting a rare piece of good news from next door, with word that new incentives from Japan could provide a much-needed boost for this field of money-losing companies. (English article) The news that Japan will provide some of the strongest incentives to date for makers of solar cells is having a decidedly mixed effect on solar shares, with only Suntech (NYSE: STP) receiving a big boost in Monday trade, perhaps indicating that the biggest names are most likely to benefit from this new development.
Suntech shares rose nearly 10 percent after Japan set new prices that will force power companies to buy all the electricity that solar power makers generate for three times the price that they pay for power from traditional sources like oil and coal. That kind of incentive is designed to encourage construction of more solar power plants, and one foreign media report estimates that such high electricity rates could help to generate up to $9.6 billion in new sales for solar panel makers, helping Japan to move past Germany and Italy to become the world’s second largest solar market.
I have no doubt that this new policy is being driven in large part by the Japanese public’s deep distrust of nuclear energy, following the disaster at the Fukushima power generating complex after last year’s major earthquake and tsunami off north Japan. That distrust has led Japan to turn off all its nuclear power plants for inspection, leading to major power shortages for the world’s second largest economy.
Restarting the nuclear plants has been equally problematic, as many Japanese have indicated they would rather suffer from short-term energy shortages than restart idled nuclear power plants and risk another major accident. This new move by the Japanese government seems clearly aimed at tapping public sentiment that would tolerate higher power prices in exchange for better safety.
Such attractive prices for solar power generators could quickly fuel major new construction of solar power plants, helping to solve Japan’s energy problems with a form of energy that is cleaner and safer than both nuclear power and traditional power sources, even if it is still significantly more expensive to produce.
While Suntech shares rose sharply in Monday trade, other big names like Yingli (NYSE: YGE) and Trina (NYSE: TSL) were largely unchanged, while Canadian Solar (Nasdaq: CSIQ) was up a moderate 4.3 percent.
Perhaps the news needs more time to be absorbed by investors, but to me it looks like a very positive development for a sector that has otherwise suffered one setback after another, starting with a massive supply glut and more recent with unfriendly policy moves in the US and Europe. Look for all of these shares to rally somewhat as the market realizes the strong upside potential of this new move in Japan, and also as China itself takes steps to build more solar power plants at home.
Bottom line: Strong new incentives from Japan should help to boost China’s solar panel sector, providing fuel for a moderate longer-term rally of their shares over the next 2-3 months.
Related postings 相关文章:
◙ IKEA Leads New China Solar Charge 宜家引领新的中国太阳能发电
◙ Solar Shares: De-listings Ahead? 太阳能股票：未来会退市？
◙ Solar Storm Heats Up in US, China 中美太阳能产品征税之争升温
