Solar Shares Drop, Following Oil and Gas Prices Lower

Shares of solar power companies including Solarworld AG and Q-Cells AG slumped as falling prices for natural gas and crude oil reduced incentives to invest in alternative energy companies.

Solarworld stock lost 2.31 euros, or 5.7 percent, to 38.34 euros. Competitor Q-Cells AG fell 3.8 percent and Conergy AG dropped 2 percent.

Oil and gas have fallen this week, with the price of crude 21 percent lower than its record price on July 14. Bonn-based Solarworld’s shares have dropped 22 percent since the beginning of July after gaining 74 percent in the first half.

“In the past three months solar stocks have tracked oil and gas prices fairly well,” said Michael McNamara, an analyst at Jefferies International Ltd. who has a “buy” rating on Solarworld stock. “We have seen the oil price coming off and that’s detracted from investor sentiment.”

Solar companies outside Europe have also fallen this week. Evergreen Solar Inc. in the U.S. dropped 3.9 percent yesterday, its fourth consecutive day of losses. American depositary receipts of China’s Suntech Power Holdings Co., which represent one ordinary share and trade in the U.S., fell 1.5 percent yesterday after dropping 4.4 percent a day earlier.

The price of natural gas traded in Europe has fallen 15 percent this week, leading some investors to believe the fuel will remain more attractive than solar power. Gas-burning power plants compete with solar cells in power production and benefit as the price of the commodity falls.