Shadow Cast Over Solar Stocks
The notice asserts that "a bill without the solar ITC provisions would be a tremendous lost opportunity for our industry and our country." Stephen Chin, an analyst at UBS, this morning asserted that removal of the tax credits from the energy bill "increases the likelihood that the credits could expire in 2008." He writes that "an orphaned solar ITC may not find bipartisan support during an election year, increasing the likelihood of expiration." Chin says that the current tax credit allows commercial system owners a 30% tax credit against total system costs. Expiration of the tax credit, he says, would likely reduce solar system demand among commercial customers, which accounted for 41% of 2006 solar installations. He adds that utilities may be slow to embrace solar if a provision allowing them to take the 30% tax credit isn't passed. Chin notes that Applied Materials (AMAT) could see decreased demand for solar-related equipment without the tax credit, and that there also could be a negative impact on solar-wafer producer MEMC Electronic Materials (WFR), pointing out that its largest customer, Suntech (STP), is "increasingly exposed" to the U.S. solar market. Solar stocks are suffering significant losses Monday:
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Solar stocks have been hit Monday by
news that Senate and House Democratic leaders are considering a plan to
leave renewable energy out of a pending U.S. energy bill.