German Tariff Decision Boosts Solar

German Tariff Decision Boosts Solar

Shares of solar power companies rose after German lawmakers reached a tentative agreement on a smaller reduction in state subsidies to solar companies than some investors feared.

Lawmakers agreed to cut the nation’s so-called feed-in tariff by 8 percent in 2009 and 2010, and 9 percent for each subsequent year. The law requires utilities to buy electricity from solar sources at fixed, above-market rates for 20 years. The subsidy has made Germany a magnet for solar energy investors.

Citi Investment Research analyst Timothy M. Arcuri liked what he heard.

“Germany is the biggest market for (photovoltaic) power systems, accounting for nearly half of installations in 2007,” Arcuri wrote in a client note. “The new tariff structure, if approved by parliament, is a little better than our and market expectations so this should be a near-term positive for the sector.”

Piper Jaffray analyst Torben Sommer told clients to “buy the sector.”

Shares of solar companies with the most exposure to the German market rose Friday. First Solar Inc. gained $15.44, or 6.1 percent, to $267.54. Energy Conversion Devices Inc. added $8.78, or 16.1 percent, to $63.48, and SunPower Corp. jumped $5.84, or 7.7 percent, to $81.84.

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