Solar Stocks Shunned by Spain

Shares of Yingli Green Energy Holding Co. (NYSE: YGE), LDK Solar Co. (NYSE: LDK), and JA Solar Holdings Co. (NASDAQ: JASO) are all under pressure today as Spain cuts its subsidies to solar power by 30%.

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(247WallSt.com) The government of Spain has officially cut its subsidies to the solar power industries by 30% in a move that is expected to save the government about $970 million. The decision has caused an angry reaction among investors in the country’s solar projects, who argue that the cut could cause loan defaults that would exacerbate the problems facing many European banks.

But investors should have seen this coming. Last year the Spanish government pulled back on its subsidies and placed a cap on the amount of solar power that would be subsidized. Companies like Yingli Green Energy Holding Co. (NYSE: YGE), LDK Solar Co. (NYSE: LDK), and JA Solar Holdings Co. (NASDAQ: JASO) saw revenues and profits fall as a result of the government’s decision.

As Spain continues to try to get out of its financial predicament, it only makes sense that the government would try to cut subsidies on solar power projects. The country’s subsidies caused a boom in solar construction that now gives the country some 3,200 megawatts of solar capacity, more than six times the amount the government had planned on by the end of 2010, according to The Wall Street Journal.

Read more: Spain & Solar Subsidy Cuts Meet the Grinch (YGE, LDK, JASO, FSLR) - 24/7 Wall St. http://247wallst.com/2010/12/27/spain-solar-subsidy-cuts-meet-the-grinch-yge-ldk-jaso-fslr/#ixzz19LjqKDBe