Some good news out of The Netherlands. They started (or better said, re-introduced) subsidies for the installation of solar panels for citizens and businesses alike. On April first (no joke). The month is not yet over, and the bottom of those subsidies are already in sight.
That’s a pretty dramatic uptake, we would say. The Netherlands is not known for its sunny climate, one might argue, but that is not terribly relevant, as solar panels work even on a cloudy day.
What is demonstrated by this little snippet of info is that solar energy companies are really faced with a terrific market opportunity. Presently, Germany constitutes almost half the demand for world solar energy, with Spain adding another good 20% or so.
Those countries had relatively generous subsidies in place for considerable time already. Others, like The Netherlands, are following.
A couple of favourable long-term trends are developing at the same time, providing this huge opportunity:
- The price of fossil fuels has skyrocketed making energy from solar an ever more viable competitive
- Worries about global warming have added to the allure of alternative energy sources like solar
- Solar efficiencies are increasing at about 4% a year, the grinding long-term force taking it ever closer to being competitive versus fossil fuels. This development will receive a one-time big boost when the prices of the raw material, polysilicon, will crash due to a bout of new supply coming on-line in 2009 (there is a hot debate on when this will happen, but there seems to be little doubt about that it will)
- Demand for solar energy is concentrated in a few places, this will not remain, US and China in particular will probably be the next big markets for solar energy.
There is a good opportunity for investors alike. We like Trina (TSL) the most still, although since we first called it a little over a week ago, it had quite a run already (from the low thirties to the mid fourties). Some consolidation seems in order, but a year from now, it should be a lot higher still.