As the Germans come closer to an agreement regarding their feed-in tariff (which is a subsidy for renewable energies like solar), the attention has now switched to Spain as the country revises its own energy policy. AmTech believes that changes to this policy could significantly hurt solar vendors with large exposures to Spain.
AmTech believes it is possible that Spain will both significantly reduce its solar subsidies (which encourage adoption) AND implement a restrictive cap on how many watts can be subsidized per user. If the cap is below 3 giga-watts per user, this would be very negative.
If the [per-user wattage] cap is below 3GW or is capped in terms of annual installations this could be major negative. Italy, France, and others are not mature enough yet to take up the slack. Wildcard in the demand picture is new geographies gaining traction in 2H08 and beyond as lower ASPs in Spain allow them to grow. Right now the fact that Spain is receiving full allocation of modules is hindering Italy and others in my opinion.
At this time we would not wager a guess on the actual FIT reduction and cap until further discussions, but that is where we place the bogies.
Either way we see Spain slowing down in the 2H08 and as a result ASPs coming down.
Lehman, Credit Suisse and AmTech all agree that First Solar (FSLR) has the least exposure in Spain and would be hurt least by an unfavorable decision. Credit Suisse believes SunPower (SPWR), Yingli Green Energy (YGE), and Suntech Power (STP) have the most exposure.
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