Solar shares rally on new Chinese subsidy plan
NEW YORK, March 26 (Reuters) - Shares of solar companies rallied sharply on Thursday on reports that the Chinese government would launch a generous new subsidy for the clean energy systems.
Chinese-based companies were the biggest gainers, with Trina Solar Ltd (TSL.N) up 48 percent at $12.85 per share, followed by Suntech Power Holdings (STP.N), up 47 percent at $11.56, LDK Solar Co (LDK.N), up 39 percent at $8.19, Yingli Green Energy (YGE.N) up 35 percent at $5.62, Solarfun Power Holdings (SOLF.O) up 25 percent at $4.48 and Canadian Solar (CSIQ.O), up 23 percent at $5.95.
Those shares had been hard hit so far this year as financing for new solar projects dried up, but the news that China may move to support the industry spurred hopes that the government could open up its huge market for the industry.
The move by the Chinese Treasury department was for a temporary subsidy for 2009 that offers about $2.90 per watt financial incentives for systems larger than 50 kilowatts, Barclays Capital said in a research note.
"We believe meaningful upside potential exists if government support for domestic solar sector continues," Barclays wrote in the note, adding the move could boost Chinese demand by about 200 megawatts starting in the second half of 2009, a nearly four-fold increase from Barclays' projection for this year.
Still, one analyst said while the news was positive for the solar sector, many details on a plan had yet to emerge.
"Although the subsidy may cover about 60 percent-plus of the cost of installation, it is unclear how much the energy generated from the system will be valued," Piper Jaffray analyst Jesse Pichel said in a note to investors.
The news also boosted shares of U.S. companies First Solar Inc (FSLR.O) by 14 percent to $152.96 per share and SunPower Corp (SPWRA.O) by 15 percent to $27.66. (Reporting by Matt Daily, editing by Matthew Lewis)
