With solar stocks at a very low valuation average, one has to wonder if they are not now set for a rebound. We have technology stocks like First Solar priced at only 10 times this year’s projected earnings. Its a sign of the concern over government reactions to solar subsidy reduction as a trend. With the costs so low, I frankly agree with the governments that the subsidies should be reduced, yet many people not involved in the industry see this as a tipping point which shows the lack of enthusiasm at government level when there are so man other things (debt reductions, government liabilities, job creation) which become the focus.
In an American election year, we can expect the Democrats to take a lower profile approach to funding of green initiatives while Republicans beat their chests about new oil drilling in Alaska to combat the questionable sourcing of oil from countries like Iran or Venezuela. Rather than produce clean, green power, they will choose the source which has about $100million spent on lobbyists on the hill each year…big oil.
So I expect that solar company values have reached near bottom yet only a few will begin to rise up again this year. The ones who have lower cost bases to start with and good balance sheets will win. The smaller players will either have to adopt nimble, niche-market strategies, or they will perish. Doesn’t leave much room for those caught in between.
And at the top end of the value chain, the installers who once could be less efficient and effective in their sales pitches…well they’d best beware too, because with falling prices, consumers will begin shopping solar systems just like they shop for everything else.
Sass