Americans cry foul when gas prices rise and start looking towards Alternative Energy sources like Solar Power but get amnesia when prices drop again and funding dries up. With Gas prices hovering around $4.00 per gallon on the first day of spring and higher summer fuel prices on the horizon the rush to fund Alternative Energy in the US has not restarted while other countries like China are jumping in with both feet.
“However, not all countries have given up on alternative energy as China continues to storm ahead in this sector. While this has been welcomed news for many who are pushing for more alternative energy usage, many do not like how the country has gone about becoming the dominate player in the space.
In addition to having an undervalued currency—a factor which can help with exports—Chinese solar companies have pretty much unlimited opportunity for financing which has helped them to ramp up supply and bring marginal costs down extremely low.
This has also led to accusations of dumping, whereby Chinese companies sell their products at a loss in order to push the less subsidized American firms out of business. In fact, SolarWorld Industries America estimates dumping margins in excess of 100% while worldwide prices for panels have fallen by about 40% in 2011 alone.
Given the hurt that this has put on the domestic solar manufacturing industry, as well as the fact that this is one of the few exporting industries and it is an election year, many looked for the government to do something in order to at least partially rectify this situation. It appears that in some small way these wishes have been granted as the US Commerce Department announced that it would impose tariffs on solar panels imported from China.
However, the tariffs are quite low across the board and are unlikely to have much of an influence on the broad solar market. Duties were below 5% across the board with Trina Solar (TSL) seeing fees of 4.7%, Suntech Power (STP) having to pay 2.9%, and 3.59% for everyone else.
Industry analysts were expecting a tariff for quite some time, but few participants thought it would be this low. Those in the market took this as a great time to buy Chinese-based solar manufacturers as the two aforementioned companies and Yingli Green Energy (YGE) all added at least 7.9% on the day with YGE and STP pushing higher by more than 12%.
Meanwhile, for large U.S. manufactures like SunPower (SPWR) and First Solar (FSLR), the news wasn’t taken very well at all. SPWR fell by over 7% while FSLR tumbled by over 4% as well, suggesting that the tariffs aren’t reason enough for many to be bullish on the U.S. side of the space.
However, it should be noted that more tariffs could be coming down the pike for the space and that there is still the dumping issue to resolve. As a result, investors could see Chinese firms drop and American firms rise, assuming that the new rules turn out more favorable than the current plan has.
Impact On Solar ETFs
Unfortunately for those invested in the sector via ETFs, the move wasn’t very positive either. Both products—the Market Vectors Solar Energy ETF (KWT) and the Guggenheim Solar ETF (TAN) – only added about 1.5% in the session. This was likely due to both funds affording their top two weights to the U.S. and China, a factor that allowed the American firms’ losses to offset the Chinese gains on the day.” Read entire article Click Here
As the Chinese gain ground in the Solar Energy Market the US will have to step it up and draw a line in the sand with China. While this normally would not be the case the upcoming elections might make this a political issue. Only time will tell.