Image above is of the largest photovoltaic solar power plant in the United States at Nellis Air Force Base producing 15 megawatts of power.
On Friday, two Chinese companies announced plans to build a solar power plant in northwestern China that could one day be the largest photovoltaic solar project in the world. The project will combine thin-film and traditional photovoltaic technologies. It was also announced that the Chinese government is beginning to offer more incentives for solar power projects.
China Technology Development Group Corp and privately held Qinghai New Energy Group will begin building a 30 megawatt solar power station in China’s Qaidam Basin this year with an initial investment of $150 million, they said in a joint statement. While 30 MW is not particularly big the project will ultimately produce 1 gigawatt!
This news, plus higher oil prices, started a rally in shares of solar power companies that was also bolstered by a strong rise in the stock market.
Investors in solar power companies will be happy at the news, after share have been hard hit by a lack of funding for new projects, a drop in prices on solar panels as supplies have jumped and a dramatic drop in oil prices that has tempered investor appetite for renewable energy.
China Technology Development shares rose 29 percent to $2.61 on Nasdaq following the announcement.
The rally extended across the industry, with U.S. solar equipment maker GT Solar International Inc (SOLR.O) up 24.6 percent at $3.60, Chinese solar cell maker JA Solar Holdings Co Ltd (JASO.O) up 12.6 percent at $4.92, U.S. cell maker SunPower Corp (SPWRA.O) up 12.8 percent at $41.74, and China’s Yingli Green Energy Holding Co Ltd (YGE.N) up 13.1 percent at $6.90.
A jump in the price of crude oil to over $46 a barrel and a 2 percent rise in Wall Street’s main indexes also boosted solar stocks.
The solar rally came despite a downward revision by Piper Jaffray analyst Jesse Pichel to five solar companies’ earnings estimates. Pichel lowered his estimates on GT Solar, Canadian Solar Inc (CSIQ.O), Evergreen Solar Inc (ESLR.O), LDK Solar Co Ltd (LDK.N) and Renesola Ltd (SOLA.L).
“We cautiously assume Q1 will be the industry shipment trough,” Pichel wrote, adding that solar “stocks could trade higher in the next 12 months depending on credit and the extent renewables play in the Obama recovery package.”