It seems like every few weeks the ebb and flow of feed-in-tariff fear and optimism rolls through the solar industry with rumors fueling speculation as what it means for solar companies, particularly those that do much of their business in the German, Italian and Spanish markets.  Last week, the rumors continued…

I mentioned in a report several  days ago that the industry feared Spain would retroactively cut their solar FIT program and some even went so far as to say it would put hundreds of solar companies out of business and kill investments in the country.  With the local solar industry protesting and global investors threatening lawsuits, rumors swirled again last week that the Spanish was government was rethinking its approach on retroactive cuts.  The final decision has been delayed yet again, but they hope to have a draft ready in about a week. 

Also last week, details began to emerge about Italy’s plan for subsidy cuts.  The rumor is that the country will impose an 18% feed-in-tariff cut, but spread it out cumulatively over the year beginning in 2011.  So, a 6% cut in the first four months of the year, then 12% and finishing with up 18% in the final four months of 2011.  Solar analysts were for the most part positive since many had been expecting a cut of 25% and spreading it out eases the impact of the German cuts expected any day now.  Even with the cuts, analysts agree that Italy would still provide around 10% returns on investments.

It’s important to note that none of the cuts proposed have actually become law and implemented.  The German cuts are likely coming very soon and that has already been priced into the solar sector.  I’m sure an Italy cut has been priced in to a degree as well, but certainly news that Spain will officially retroactively cut FIT programs would be a blow to many solar stocks.  I just don’t see that coming and believe the Spanish government has more common sense than that.  Probably more important is the financial condition of European countries and spiraling Euro.  No doubt there are major headwinds in the solar space right now and it’s certainly not the time to be getting aggressive with these stocks, but there are opportunities.  A few weeks ago I put on positions in SPWRA and YGE for quick 30% and 23% gains in just a few days… I think you just have to be nimble right now and that goes for just about any stock in this current market environment.