REC Falls as Germany Speeds Up Solar Subsidy Cuts: Oslo Mover
February 23, 2012, 9:25 AM ESTBy Stephen Treloar
Feb. 23 (Bloomberg) -- Renewable Energy Corp ASA, a Norwegian maker of solar energy components, was the biggest loser in the benchmark OBX index as Germany accelerated cuts in subsidies for solar energy facilities.
The shares fell as much as 8.7 percent, and were down 8.2 percent, the biggest drop in the OBX, to 4.38 kroner as of 14:50 p.m. in the Norwegian capital. It was the largest decliner today in the Bloomberg Global Large Solar Energy - Principal Business Index.
Germany will reduce rates paid for solar power to between 0.195 euros and 0.135 euros per kilowatt hour from March 9 and cut them each month starting in May, Environment Minister Norbert Roettgen said today. Subsidies to plants bigger than 10 megawatts will stop after July 1. Germany is the world’s biggest market for solar power.
Investors were “cautious ahead of that and are afraid it will impact demand from Germany,” Haakon Levy, an analyst with DNB Markets, said before the announcement. REC’s exposure to changes in demand has become more pronounced as it sells more of its polysilicon output on the spot market, he said.
REC and competitors such as Solarworld AG and Q-Cells SE have cut production amid over supply as demand shrinks in Europe after Germany, France and Italy have reduced subsidies to cap booming solar installations.
Germany’s feed-in tariff system ensures solar power providers receive above market rates for the energy they supply in order to encourage investment in renewable energy sources as the country seeks to substitute its nuclear reactors.
--With assistance by Brian Parkin and Marc Roca, Editor: Jonas Bergman
To contact the reporter on this story: Stephen Treloar at streloar1@bloomberg.net
To contact the editor responsible for this story: Christian Wienberg at cwienberg@bloomberg.net
