Sector Snap: Solar companies rise on Obama support
Shares of solar panel makers rally after months of declines following Obama support for sector
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The Associated Press, On Thursday October 6, 2011, 3:19 pm EDT
NEW YORK (AP) -- After months of sharp declines, shares of solar panel manufacturers jumped sharply Thursday after President Obama reiterated his support for solar energy.
Shares of First Solar Inc., SunPower Corp., Suntech Power Holdings Co., Ltd., and Trina Solar Ltd. all rose 6 percent or more in afternoon trading.
President Obama said in White House news conference that the federal government should continue to give loan guarantees to help clean energy companies compete even if the program is risky.
Obama was fighting back against Republican criticism of the program after a solar panel maker called Solyndra collapsed, even though it received a $528 million loan guarantee.
Solyndra is one of three U.S.-based solar companies to seek bankruptcy protection in the last two months. The profits of solar panel makers -- and their shares -- have been crushed in recent months as prices of solar panels have fallen sharply.
Solar panel prices have been falling for years, but a recent glut of panels has led to an especially sharp drop. The glut was caused when countries in Europe, especially Germany and Italy, cut their subsidies for solar power. Germany is by far the world's largest market for solar power.
The falling prices have cut into the profits of panel makers, even though the lower prices have also led to broader adoption of solar, especially in the U.S. Solar installations in the U.S. doubled last year and are expected to double again this year.
Shares of First Solar Inc. traded above $125 in mid-July before falling to a low of $55.68 on Tuesday. SunPower shares fell from $22.74 to $6.60 over the same period.
Obama's comments on Thursday gave investors hope that government support for solar would continue and lead to the installation of more solar systems. The federal government offers installers a subsidy equal to 30 percent of the cost of a solar system that can be taken either as a cash grant or as a tax credit. The provision that allows installers to take the subsidy as a cash grant expires at the end of this year.
