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What Japan crisis means for solar sector

Solar-energy stocks have been climbing in recent sessions on speculation that the Japanese nuclear disaster will spur business for the sector, but the bigger picture remains murky.

The latest boost for the industry came yesterday after German Chancellor Angela Merkel suffered a big electoral defeat because of her support for nuclear energy. That seems to have spurred some call activity in JA Solar yesterday and has buyers driving up ReneSola today.

However, there continues to be a trend of falling subsidies because governments around the world are running out of money. Whether it's in European countries such as Spain and Italy or U.S. states such as New Jersey, politicians have been cutting support for the industry over the last year. Consider these examples:

  • In February, the Netherlands cut subsidies for solar and wind projects and gave the green light for the first nuclear plant in decades. That's a big deal because Holland is one of the richer states in Europe, and was previously a leader on green energy.
  • Earlier in March, Italy decided to cut subsidies to new solar projects and passed restrictions on big photovoltaic arrays in the countryside.
  • On March 18, the U.K.'s Department of Energy and Climate Change said it may cut so-called feed-in-tariffs because big companies rather than homeowners and small businesses were benefitting from them.
  • There were more bad developments in December when Spain cut support for wind projects, France announced a freeze on new solar projects, and Germany said it may end favorable tariffs for solar-generated electricity.

So investors looking to wade into this sector should be aware that the Japanese nuclear crisis is not a clear-cut positive catalyst for solar stocks. Over the longer term, the greater beneficiaries may prove to be natural-gas companies and coal miners.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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