Solar power just cannot get a break. The age of austerity is drilling holes in the solar economic viability business model. Today’s negative news flow stems out of Italy, where the nation is reportedly going to cut or kill tax breaks on power generation from solar power.
The move is just adding insult to injury for many of the key solar players. With all of the austerity that has been announced and knowing that only more and more austerity measures are coming down the pipe, solar incentives are still at risk for the future.
Shares of First Solar, Inc. (NASDAQ: FSLR) are down almost 5% at $24.85 and even the broader ETF called the Guggenheim Solar ETF (NYSE: TAN) is down over 3% at $25.19. SunPower Corporation (NASDAQ: SPWR) is down 2.3% at $6.49 and MEMC Electronic Materials, Inc. (NYSE: WFR) is down over 5.1% at $3.69.
If these solar companies cannot make money without direct subsidies and if they cannot get by without DOE loan guarantees in the U.s. while fighting sub-cost solar panels being dumped by China with its subsidies, what is the business model? Solar companies may need to form green charities to raise funding through green donors.
Oil prices may be high, but solar automobiles are not ever likely going to be the dominant threat in future automobiles. Solar is also fighting the pressure of lower natural gas prices as power companies have incredibly cheap input costs for nat-gas powered plants.
Another hard day for solar stocks… with no reason to believe that this is the last hard day. Solyndra was likely not the end of the bad news for solar investors, nor for U.S. taxpayers paying for money-losing operations.
JON C. OGG