Auriga sent out a note this morning regarding the solar sector as a whole and believes the incentives uncertainty is now priced in for the most part and that solar stocks will see some recovery from here.  I tend to agree with that evaluation and still think this pull back on fears of an Italy installations cap and a few less than stellar earnings reports will lead to some buying opportunities.

Auriga also notes that based on a news report on Il Messaggero that while Italy will initiate feed in tariff reductions around June, they will not institute an 8GW cap on solar as had previously been rumored.  However, exactly how the incentives will change aren’t clear at this point which could continue to weigh on solar shares.

Auriga also points out that while Italy reached its solar installation goals 10 years earlier than planned, the EU is behind in its 2020 goals.  I’ll also point out that growth in other markets will pick up the slack particularly in the US and China.  India is rarely discussed when it comes to renewable energy, but let’s not forget the potential there too.

Taking a look at the Guggenheim Solar ETF (TAN), it finished about flat today.  If you look at the pull back across the solar space, it’s quite normal given the run that solar stocks had in Dec/Jan/February.  Many solar stocks are now testing key support levels, which as mentioned above could provide outstanding entry points.