China Solars Slump Amid Plans to Shift Subsidies Allotment (STP) (LDK) (SOL)
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Chinese solars are lower on the session amid reports that China might move to realign its spending on projects.
According to Bloomberg, China may restructure is solar spending to smaller projects rather than larger ones. One rep for Beijing-based China Renewable Energy Society commented that the move would abolish one-time subsidies, though a separate subsidy based on power production would go to low-voltage plants which don't typically supply utilities.
The move by China would encourage plants to be built in areas with power shortages.
Criticisms have come that manufacturers are being given generous capital expenditures before installation, giving manufacturers little incentive to produce higher-performing modules.
Capacity in the segment is also still high, leading many to take margin hits amid operating in a $75 billion industry. The latest example of the trials and tribulations is Suntech Power (NYSE: STP) which said Monday that it would default on a $541 million convertible note payment.
Current subsidies for manufacturers selected by the Chinese government can recoup 88 cents (5.5 yuan) per watt under certain programs, pending completion of work by certain deadlines. There's also a feed-in tariff for distributed solar power projects, which pays 1 yuan per kilowatt-hour everyone except in in Tibet, where it is 1.15 yuan.
Installed capacity in China was 6.5-gigawatts (GW) last year and at least the same amount is expected this year. That will turn China into the number one solar market, ousting Germany from the spot.
China plans to cut the feed-in subsidy to 0.35 yuan per kilowatt-hour, while also setting a goal for installations to hit 35-GW by 2015.
Lower on the session today include Suntech, LDK Solar (NYSE: LDK), and ReneSola Ltd. (NYSE: SOL), while others like Yingli Green Energy (NYSE: YGE) and Trina Solar (NYSE: TSL) are on watch.
According to Bloomberg, China may restructure is solar spending to smaller projects rather than larger ones. One rep for Beijing-based China Renewable Energy Society commented that the move would abolish one-time subsidies, though a separate subsidy based on power production would go to low-voltage plants which don't typically supply utilities.
The move by China would encourage plants to be built in areas with power shortages.
Criticisms have come that manufacturers are being given generous capital expenditures before installation, giving manufacturers little incentive to produce higher-performing modules.
Capacity in the segment is also still high, leading many to take margin hits amid operating in a $75 billion industry. The latest example of the trials and tribulations is Suntech Power (NYSE: STP) which said Monday that it would default on a $541 million convertible note payment.
Current subsidies for manufacturers selected by the Chinese government can recoup 88 cents (5.5 yuan) per watt under certain programs, pending completion of work by certain deadlines. There's also a feed-in tariff for distributed solar power projects, which pays 1 yuan per kilowatt-hour everyone except in in Tibet, where it is 1.15 yuan.
Installed capacity in China was 6.5-gigawatts (GW) last year and at least the same amount is expected this year. That will turn China into the number one solar market, ousting Germany from the spot.
China plans to cut the feed-in subsidy to 0.35 yuan per kilowatt-hour, while also setting a goal for installations to hit 35-GW by 2015.
Lower on the session today include Suntech, LDK Solar (NYSE: LDK), and ReneSola Ltd. (NYSE: SOL), while others like Yingli Green Energy (NYSE: YGE) and Trina Solar (NYSE: TSL) are on watch.
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