The planned 40 MW solar generating park in eastern Germany will occupy a space equal to 200 soccer fields and feature 550,000 PV thin-film modules. Construction on the project is expected to be completed by 2009.
Credit: juwi group, source
By the way, Germany is experiencing its own economic problems and I wouldn't expect those government subsidies to last with energy prices soaring (making solar more competitive). In the very least they could reduce the subsidies now that the market has provided an increased incentive via higher energy prices. As it turns out, recently the German ministry of economics released a report stating that "subsidies for the [solar] industry are too high and need to be reduced drastically." In fact, Germany's ruling party proposed on Monday to follow the advice of this report and slash subsidies by 30%. I haven't done the homework to know exactly how much of First Solar's sales are due to Germany, but I know its a very large portion. Maybe a reader can help me out with this. I think this is clearly a new downside risk to the stock and yet another reason to watch the FSLR bubble.
Recent FSLR chart here.
Disclosure: I own FSLR puts
5 comments:
The idea that the German economy is somehow suffering needs to be taken in context. Yes there are major problems at some of the public banks and they will probably be bailed out with taxpayers Euros.
But otherwise this economy is doing just fine. There is strong job growth, with unemployment numbers hitting post-reunification record lows.
These re-employed people are fueling consumer spending and because of our 19% sales tax government revenue is doing just fine.
These people are also paying income taxes, and paying for their own health insurance, which is helping the public insurance funds immensely. Those rates didn't go up this year either.
Sorry for the rant, but our economy is not the finance based system such as exists in America. Companies here don't generally provide financing in order to sell the products they make.
And German banks would never lend to a "sub-prime" or "Alt-A" home buyer here. Which is why everyone is wondering why in hell the government owned state banks were effectively lending to American home buyers. The political fall out over that, has just started.
Yeah, it sounds like the German economy isn't necessarily in trouble, but the state owned German banks are hurting for capital. If their financial system is in need of cash then throwing money at solar energy (in a place that isn't even very sunny) seems wasteful. I know its all about the rate of change and direction but the unemployment rate is nothing to be proud of:
"Germany's unemployment rate sank to 8.4 percent in March, down from 8.6 percent in February"
I am definitely straying into waters that I have no clue about when talking about the German economy though. My main observation here is that FSLR does the large majority (like 90%) of their biz in Germany due to the high subsides there. For whatever reason, it appears someone over there figured out that they were encouraging the industry a little too much. Now that there may be a cut in incentives that could certainly hurt the growth forecasts for FSLR and in the least raise the level of uncertainty going forward.
Since that news broke FSLR is up so either the market hasn't priced it in yet (which may be a possibility because I haven't seen any headlines about it on yahoo) or the market does not care about a measly -30% (unlikely).
I know its all about the rate of change and direction but the unemployment rate is nothing to be proud of:
"Germany's unemployment rate sank to 8.4 percent in March, down from 8.6 percent in February"
You are absolutely right, but if you look at the over all direction and apply a longer time frame you'll see a dramatic improvement. It was only a couple of years ago that there were over 5 million unemployed. Now were down to 3.5 million unemployed, and that's what is driving the economy here.
Now compare that to the job losses in the USA, combined with the fact that the American economy needs 150,000 new jobs just to keep up with population growth and you can see that America is at the start of an economic disaster.
Germany's population is actually declining, making it a lot easier for school graduates to find jobs.
I really ought to write a full post on this topic.
As I mentioned, in chat I think, German subsidies to this sector are going to be cut, and the news is getting around.
Sector Snap: Germany may cut aid to solar sector
Well the subsidies were cut but less than had been anticipated:
http://biz.yahoo.com/ap/080530/solar_sector_snap.html?.v=1
Whether or not the market acknowledges it, this reduces growth going forward for FSLR more than any other solar company.
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