Solar Stocks Beaten on German Subsidy Cut Headlines

Solar stocks have been beaten in recent months. Within the last year, the Claymore/MAC Global Solar Index [ETF] (NYSE: TAN) is down more than 65%.Us as consumers can even get a 30% Federal tax credit though December 2016 if you install solar panels on your roof. However, sadly, consumers will not create the demand needed to fuel the industry themselves; the solar industry needs major corporations to join in.As we stand currently, the solar industry depends largely on government subsidies in order to operate, even though input costs, mainly the solar modules, are coming down in price.To add insult to injury to an already beaten industry, a headline crossed today saying that Germany will likely cut solar subsidies by 30% in 2012.Shares of First Solar (NASDAQ: FSLR), and other solar names are trading lower on the session after the headline crossed saying that Germany would cut solar subsidies further.However, just last week, Digitimes published an article saying that the global solar market will grow by 11.9% to 26.9GW in 2012. According to the article, the industry had oversupply issues last year, which led to price drops, but the rapid decline in the cost PV systems boosted new demand.Most solar names, particularly First Solar has lost approximately 70% of its market cap since January 2011.Benzinga contacted Adam Krop, solar analyst at Ardour Capital, for his take on the industry."In regards to German solar subsidies, they are set up to digress every year," Krop said. "Germany lowers its solar subsidy program every year by a certain percentage, depending on industry demand.""We don't expect solar sector equities to bottom until 2H12," Krop continued. "We currently are forecasting over 22 gigawatts of demand in 2012, versus supply of about 40 or more gigawatts. So we believe the sector will remain under pressure for a little while longer."He concluded, “The European market peaked in 2010 and is no longer the volume growth driver for the solar industry. We look for China, India, Japan and US to be the growth drivers going forward.”
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