The fate of companies in the solar industry have always been closely tied to government stimulus. Since solar power is more expensive than energy generated by conventional sources like coal and natural gas, solar providers rely on government subsidies and tax breaks to remain competitive. Even with the widespread effects that socio-economic conditions can have on the industry, I don’t think there is any question that there is a part for solar in the world’s future energy grid. Furthermore, I believe that no other solar company stands to capitalize more in this market over the next several years than First Solar (FSLR).
The Obama effect
The political conditions resulting from President Obama’s reelection should create a foundational market climate conducive to First Solar’s success. The President has long championed renewable energy and instituted policies and programs designed to bolster its value. Consider that during his first term in office, the Obama administration spent over $90 billion on the renewable energy sector through the 2009 economic stimulus plan. Consequently, solar installations in the United States rose from 1.6 GW to 4.4 GW by the end of 2011. During that same time frame, employment in the solar industry tripled, sparked in part by the government’s investment tax credit which allows for a 30% tax rebate on the installation of solar equipment — a credit that has also since been renewed through 2016. While I’m sure prospective investors are probably happy to hear that the Obama administration is maintaining status quo, I’m also willing to bet that readers are well aware that these benefits did little to alleviate First Solar’s widely publicized struggles. To continue reading, click here.