The solar power industry may be about to deliver investors some bad news. Analysts at two big banks say leading solar companies may miss expectations when they announce profits and could lower their forecasts for the rest of the year. Leading to the disappointment are rapidly falling prices for photovoltaic systems amid fierce competition for customers during the recession as well as scarce financing for new projects.
SunPower ( SPWR - news - people ) illustrates the industry's woes. The San Jose, Calif. firm can afford to charge more than competitors because its solar cells produce more electricity from the same amount of sunlight than rivals'. Nevertheless, SunPower's prices fell 10% in the first three months of the year and sales dropped 50%. Both declines are smaller than the industry's as a whole, notes O'Rourke, who rates the company a "Hold." He thinks the firm could lower its 2009 forecast.
Analyst Timothy Arcuri of Citigroup isn't as optimistic. He rates SunPower a "Sell" in a recent report, explaining that falling prices will likely whittle away the premium prices the firm currently charges customers. If this bearish thesis is correct, it could spell bad news and downward revisions for First Solar ( FSLR - news - people ), Evergreen Solar ( ESLR - news - people ) and Suntech Power Holdings ( STP - news - people ) as well.
To be clear, SunPower's solar products are regarded as top-notch compared to its competitors because its solar cells produce more electricity from the same amount of sunlight than rivals'.
Nevertheless, SunPower's prices fell 10% in the first three months of the year and sales dropped 50%. Both declines are smaller than the industry's as a whole, notes Steve O'Rourke, of Deutsche Bank who rates the company a "Hold." He thinks the firm could lower its 2009 forecast.
Forbes concludes thus:
One possible bright spot for the industry is the American Recovery and Reinvestment Act, signed into law in February. The bill includes grants for renewable energy projects, including solar, and reimburses buyers for 30% of their total cost. Last week the government announced guidelines for applications and reimbursements could go out later this year. The Energy Department estimates it will disburse perhaps $3 billion of such grants, boosting investment by $10 billion to $14 billion, notes O'Rourke. Citigroup ( C - news - people )'s Timothy Arcuri, however, cites "widespread skepticism" that the program will bring new investors.
This brings me to the question of how Malaysia's economic managers and planners conduct their feasibility studies when evaluating which FDIs are deserving of "soft" loans to the tune of RM1,000,000,000-00 and, which ones do not.
I also wonder how much of the "soft" loan has been disbursed to date.
And, I wonder how the SunPower project in Malaysia will pan out in the coming years.
Can anyone enlighten me and the rest of the taxpaying Malaysians?