China Feed-In-Tariff Could Be 2 Years Away

By Eric Savitz
barrons.com

It could be two years or more before China adopts a national feed-in-tariff program, Hapoalim Securities analyst Gordon Johnson writes in a research note.

Johnson points out that there have been widespread expectations on the Street that China would adopt a national FIT during 2009. But he notes that an official with the Energy Research Institute at China’s National Development and Reform Commission apparently told a reporter at a conference in Shanghai that it will take at least two years to decided on a national FIT policy. Johnson refers to a Chinese-language Web story dated Tuesday; here is an English version, via Google Translate. Johnson says the comments came from Hu Runqing (you will notice that the translation garbles the name) who in fact has a Web page on the NDRC’s English language site. I’ve e-mailed her seeking comment, and will follow up with any response.

Anyway, Johnson notes that a number of solar companies – including Yingli (YGE), Suntech (STP), Canadian Solar (CSIQ), LDK Solar (LDK) and First Solar (FSLR) – have recently announced large solar projects in China that are least partially dependent on adoption of a national feed-in-tariff.  Those companies, which benefited from the announcement of their new China projects, now ought to warn investors that the projects face delays, Johnson asserts.

Johnson – a long-time bear on the solar sector – believes that this situation poses risks to the solar stocks, given that a 2-year delay for adoption of an FIT in China “contrasts with the current thinking from investors and solar companies alike.”

In today’s trading:

* Suntech is down 64 cents, or 3.7%, to $16.62.
* Canadian Solar is up 10 cents, or 0.6%, to $17.45. (See also the upgrade today from Collins Stewart.)
* LDK Solar is down 20 cents, or 2.1%, to $9.38.
* First Solar is up $4.17, or 2.8%, to $151.16. (See also the bullish comments today from Barclays.)