Price Trumps Tech For Solar 光伏投资者重技术但更重产品价格

By newsdoug on March 13, 2012

Investors greet latest Suntech advance with yawns The days when a solar company could boost its share price by announcing its latest technological breakthrough seem firmly in the past, with the focus now squarely on sagging prices that have fallen by half or more over the last year due to huge oversupply. Industry leader Suntech (NYSE: STP) nicely illustrates this new reality with a new announcement that its latest technology has set a record for efficiency in the conversion of sunlight to electricity. Such advances are key to the long-term survival of the sector, as they will someday allow power plant operators to produce electricity more cheaply than other common methods, such as use of nuclear or fossil fuels, without the help of the government subsidies that are now required to make solar energy profitable. In a different time, perhaps a year or 2 earlier, Suntech’s announcement of its new record would have probably given the company’s stock a nice lift on Wall Street. (company announcement) According to the announcement, Suntech’s new technology, co-developed with an Australian university, can convert sunlight to electricity with a 20 percent efficiency ratio. That probably means a real conversion closer to 17-18 percent, but is still well ahead of current industry ratios of around 12-13 percent. So, how did Suntech’s shares react to the news? Investors greeted the announcement by selling Suntech shares, which sagged 4.2 percent in Monday trade on Wall Street, in step with a sector-wide downward trajectory that could soon see solar stocks revisit all-time lows reached last fall. Instead of focusing on this positive news, investors seemed to be paying more attention to comments from an executive of German solar panel maker Conergy, who warned the entire sector could see prices dropping further still as panel makers fight for the business that is still out there. (English article) Shares of all solar panel makers fell on that news, with Chinese companies the hardest hit as they not only face weak demand but also the potential loss of 2 of their largest markets — the US and European Union — which could both impose anti-dumping punitive sanctions later this year. (previous post) I’m hearing that some small consolidation deals are finally starting to take shape on the solar stage in China, which could eliminate some of the oversupply, and predict that we could finally see one or 2 sizable ones by the end of this year, especially if the current price pressure continues and either the US or Europe imposes anti-dumping tariffs. Meantime, I honestly do think the market could be overestimating the importance of these technological advances, which should are pushing the sector towards its golden moment of economic independence from government subsidies. When that happens, which could be in the next year or 2, look for the survivors of the current downturn to see a surge in business as serious construction of solar power plants begins around the world.

Bottom line: Solar cell investors are more focused on prices than technology, creating a buying opportunity for those who like the industry’s move toward freedom from government subsidies.

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