China solar stocks surge on subsidy plans
Solar stocks surged today on the news that Beijing will implement a subsidy of $3 per watt for large solar installations.
The annoucement was posted on the Ministry of Finance website on the 26th March. U.S.-listed Chinese solar stocks rose by as much as 42 percent overnight. In London Renesola (LON:SOLA) rose 20 percent as the markets closed yesterday.
Solar projects with at least 50 kilowatt peak capacity will receive the subsidy, which may cover over 60 percent of their installation costs. Other requirements include efficiency of at least 16 percent for monocrystalline photovoltaic solar modules and at least 14 percent for polycrystalline ones.
The government subsidy is aimed at helping boost domestic demand for solar power equipment and helping the industry through the financial crisis. As the world’s third-largest producer of solar products, China has a production capacity of 3000 megawatts of photovoltaic solar cells. The country plans to raise its solar power capacity to 300,000 kilowatts from 70,000 kilowatts by 2010.
Chinese solar companies however have been highly dependent on overseas orders because without subsidies their products have remained too expensive for the Chinese market. Most companies have been experiencing financial difficulties as overseas demand has withered in the crisis.
Over a dozen solar-related stocks surged to the 10 percent trading cap, including Baoding Tianwei Baobian Electric Co (SH:600550), Shandong Jinjing Science & Technology Stock Co (SH:600586) and Wuhan Linuo Solar Energy Group Co (SH:600885). Solargiga Energy Holdings (HK:0757) surged 21.90 percent in Hong Kong.
Chinese solar shares listed in US also surged on Thurday. Suntech Power Holdings (NYSE: STP) climbed 42 percent, Trina Solar (NYSE: TSL) rose 42 percent and JA Solar Holdings Co (NASDAQ: JASO) surged 38 percent.
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