Bloody Red Sun: UK, White House News Hit FSLR, Et. Al.

By Tiernan Ray

It’s an ugly day for solar energy names following Friday’s announcement the White House has ordered a review of government assistance made to the sector in the wake of the scandal over the bankruptcy in August of government-backed panel maker Solyndra of California.

Not helping today is word that the U.K.’s Department of Energy and Climate Change released issued some suggestions for cutting the country’s feed-in-tariff in support of solar installations by up to 55%. The downgrade of First Solar FSLR this morning by Merrill Lynch is also weighing on stocks.

First Solar shares are down $4.14, or almost 8%, at $49.85, while SunPower SPWRA stock is down 54 cents, or 5%, Suntech Power Holdings STP is down 34 cents, or 11%, at $2.74, Trina Solar TSL is off $1.18, or 13%, at $8.10, and Yingli Green Energy YGE is down 71 cents, or almost 15%, at $4.07.

Axiom Capital’s Gordon Johnson this afternoon takes a stab at the implications of the White House review. Johnson thinks some “last minute” loans approved by the Department of Energy are at risk, which he writes include First Solar’s “Antelope Valley Ranch” and Desert Sunlight, which both had September 30th deadlines.

“While consensus expectations are for a significant increase in demand in the U.S. market in 2012, we see budding risk to this conclusions as indicated by the increased political pressure around U.S. solar subsidy programs like the DOE loan guarantee, and the negative implications this has for the U.S. utility market,” writes Johnson.

Johnson thinks there is a rising prospect of another U.S. recession, and he reviews the history of the Conference Board‘s index of coincident economic indicators, which appears to him to have peaked last month. But Johnson also warns the White House is probably going to seek political cover in the 2012 elections by canceling some loans.

We see the potential for the revocation of loan guarantees as a result of The White Houses review in a sense, and rather unfortunate for the solar industry given the current political environment, The White Houses review will likely provide a potential opportunity for scapegoating into an election year for the Obama administration following the troubled DOE loan guarantee program over the past several years in a word, Solyndra . And, as we noted above, in our humble view, based on discussions with our Washington contacts this morning, the projects which are the most at risk will likely be those that received approval on or immediately before the September 30 deadline.

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