A global credit crisis and a steep slide in prices of solar panels has sent makers of the clean energy source reeling, but the damage done to share prices presents an opening for investors to buy into the stronger players.
Investors have fled the burgeoning solar sector in the past three weeks, sped along by a global financial crisis and warnings from sector heavyweight SunPower Corp (SPWRA: Quote) and China's JA Solar (JASO: Quote) that the declining euro would weigh on revenue and profits.
Chinese solar cell and module makers are the most exposed to a downturn, analysts and investors said, since they sell much of their product to Europe, have some of the highest costs, and some of the least differentiated products.
"You have two almost entirely different industries ... the valuations that some of the Asian cell manufacturers are trading at now are basically implying that people don't think they are going to survive," said Edward Guinness, co-manager of the Guinness Atkinson Alternative Energy Fund in London.
Shares of Chinese solar companies JA Solar, LDK Solar (LDK: Quote), Canadian Solar Inc (CSIQ: Quote), Trina Solar Ltd (TSL: Quote) and Suntech Power Holdings Co Ltd (STP: Quote) all trade at less than 4 times 2009 earnings estimates, compared with multiples of 9.5 and 17 for U.S. firms SunPower and First Solar Inc (FSLR: Quote), respectively....MORE
From the International Herald Tribune:
Billionaire oilman T. Boone Pickens put his massive wind farm plans on hold in Texas. A Maryland solar plant project has been scrapped. And the second-largest U.S. ethanol company is under bankruptcy protection.
The alternative energy sector has run smack into a credit crisis, probably a recession as well, and almost all industry experts think the fourth quarter is going to be worse.
Yet many believe it could emerge from the economic turmoil scarred but stronger. The International Energy Agency in Paris this week predicting green energy will be the second largest source of global electricity generation before 2015.
"We're in a moment now where people are taking a deep breath and really challenging their business models and really making sure that they'll be able to sort of weather the storm," said Joseph Muscat, Ernst & Young's Americas director of cleantech and venture capital.
"I think we need confidence to return to the overall markets. People have to get a perspective on what will this recession look like," he said....MORE