Suntech Jumps as Hopes Rise of Asian Demand for Solar Products
Solar panels manufacturer Suntech Power (NYSE:STP) saw its shares rise by almost 7% on Thursday as Norwegian industry player Renewable Energy Corp. said that rising demand for solar panels from Asia and the U.S. would boost industry sales. [1] The growth in demand for solar technology from China could ease the oversupply condition in the industry as traditional markets in Europe look to cut down subsidies enjoyed by renewable sources. Trina Solar (NYSE:TSL) also posted a rise in its share price.
We have a $4.40 price estimate for Suntech Power, which is at a 20% premium to its current market price.
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Growing markets
European markets such as Germany, Italy and Spain have dominated the solar PV market over the past few years, commanding a major share of the global market for solar installations. Over the past year, governments in Europe have started cutting subsidies to curtail spending and to reign in installations. Solar manufacturers have started looking at the U.S. and emerging countries in Asia to replace falling sales in Europe. These efforts have been helped by falling panel prices that have made solar more cost competitive. The U.S. and China are now the main growth markets for solar panel manufacturers. Estimates suggest that China may double its installations in 2012 to 4 GW. [1]
According to polysilicon producer Renewable Energy, the move by the Chinese government to set up preferential tariffs to boost cleaner energy sources could herald the shift in demand for solar panels from Europe to Asia and the U.S. Some optimistic estimates suggest that China may add as much as 7 GW this year, which is roughly equal the capacity added in Germany in 2011. The market could grow to about 10 GW each year for the next five years if the government continues to support the sector. [1] China is home to many of the world’s largest solar PV manufacturing firms.
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Notes:- Suntech Leads N.Y. Stock Advance on Solar Power Demand: China Overnight, Bloomberg [↩] [↩] [↩]