Think Tanks Push For Overhaul Of U.S. Solar Subsidy Policies

by Trefis Team
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Several think tanks in the U.S. are pushing for an overhaul of the subsidy programs which provide incentives for solar and other clean energy initiatives. The proposal, which is getting support from Republican lawmakers and some industry groups, calls for only temporary support for the solar industry. [1]

The subsidy program aims to push companies to reduce costs over time and make the technologies competitive. The U.S. is becoming an important market for solar energy and installations are expected to show robust growth in 2012. The country accounts for a significant portion of revenues for Trina Solar (NYSE:TSL) and Yingli Green Energy (NYSE:YGE).

We have a $9.85 price estimate for Trina Solar, which is about 45% ahead of its current market price.

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Targeted subsidies

The U.S. government has tried to boost the clean energy industry with tax incentives and subsidized loans for companies. The new plan proposed by the Breakthrough Institute and two other think tanks is pushing for a change in the methods of administering that support. [1] With many of the present support programs set to be phased out in the near future, the proposed plan may gain political support. The plan calls for subsidies that will force companies to develop more efficient technologies and lower costs over time. It proposes reducing subsidies over time as technology improves.

European countries like Germany already have a sliding scale system that reduces support based on the capacity that comes online. Despite this, falling panel prices have resulted in excessive installations in these nations, prompting one-time reductions and measures to increase the frequency of subsidy reductions. With European governments pulling back support for solar, many players are looking to the U.S. as the next important market for solar equipment. Changes to the subsidy policies in he U.S. could have a major impact on the sales of panel manufacturers like Trina Solar.

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Notes:
  1. Subsidies for Clean Energy Get Fresh Look, WSJ [] []
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  • commented 1 years ago
  • tags: YGE FSLR TSL STP
  • The investment community at large still has no reason to divest some capital out of hydrocarbon assets until they see sufficient reasons to do so. it is entirely up to us to make the determination to start switching toward altenrate energy programs as sensibily as we need to. We are not supposed to follow what the investment community lead ..
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  • commented 1 years ago
  • tags: YGE FSLR TSL STP
  • Think tanks has to take into considerations like excessive capital being invested into hydrocarbon assets and service related assets around hydrocarbon production. They are already multi trillons of dollars invested in form of stocks and bonds to name a few. Hydrocarbons are still claimed to be still the most competitve form of energy resources despite recent doubling of oil prices in past ten years. Natural gas prices is just a temporary aberration probably intentionally so with inside subsidy from oil production at artifically higher prices through speculation. I doubt natural gas will last long at low prices as we know it.. at $2 from all time highs of $14. So, what the think tanks also have to take into consideration is that alternate energy had gone to great lenghts to blunt so many various misgivings related to hydrocarbons that producers suddenly came forward with recent major developments of new hydrocarbons like shale rock and oil tar sands. In spite of this, the think tanks simply cannot escape the real costs in intangible prices of the enviromental impacts that is already occuring at the recent developments of new hydrocarbon reserves that already are costly to begin with not to mention the ecological horrors that is still under wraps from the gazing eyes of the media. Our government is so deep in deficits and debts already that it is fast becoming politically irrespoinsible to tap into scarcely available funds originally earmarked for old standing programs like Social Security and Medicare and even our defense programs as well. The only remaining viable means of continuing the subsidization of our alternate energy program as whole is directly through the self determined consumption of hydrocarbons in any manner and fashion that maintian the ideals of liberty and pursuits of happiness. If it quacks like a tax on hydrocarbon, so be it.. Be sure to keep the duck safe and alive .There is no other way around it that I could think of. The only remaining question is to determine which ones are the best candidates for the subsidies coming out of the pockets of consumers who purchase hydrocarbon products.. What are the hydrocarbon products? I mean everything even including cigarette lighter known as butane or even kerosene and charcoal lighter fluid as well. You know about gasoline, coal, natural gas , diesel among others obviously. We must remove the lead feet on the pedal as far as our energy policy is considerd right now! No question about it!