China has increased its solar installations target for 2015 by 40% to 21 GW in a move that could boost its struggling local solar industry.  The National Energy Administration increased the target from 15 GW last year to 21 GW, taking into account the drop in the cost of solar energy. In comparison, Germany, the leader in solar installations, had a total 28 GW in solar installations as of June 2012. The move is set to boost sales of local manufacturers such as Trina Solar (NYSE:TSL), which have been hit by falling panel prices and tariffs in markets such as the U.S.
We have a $6.20 price estimate for Trina Solar, which is at a 25% premium to its current market price.
Trina Solar and other Chinese players are betting on strong growth in installations in the local market to driver sales in H2 2012. Industry players have said that China could install as much as 5 GW of solar capacity in 2012 and become the largest market for solar panels by 2013. (See: Trina Solar Shines To $8 As Demand Shifts East) The local demand will come as welcome relief for these companies as major markets cut back on subsidies and look to impose tariffs on Chinese imports. Trina Solar reported a 10.6% sequential decline in module shipments because of falling global demand for panels and posted operating loss of $39.9 million in the period.
Overall, Trina has said that it expects to ship around 2 GW of panels in 2012. A large percentage of the sales are expected to come from China and other emerging markets. The country’s latest increase in targets could result in higher sales overall and increase the company’s guidance for the year. Sales are also expected to rise in Japan, where the government has announced major subsidies for solar energy to reduce its reliance on nuclear power. Module shipments to these markets should improve Trina Solar’s outlook over the next few years.Notes: