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How Will Solar PV Businesses Benefit From The New Incentives?

The Claymore MAC Global Solar Energy Index ETF, TAN, had fallen 78% over the past years, but they’re back. Most listed solar companies had fallen from 50% to 87% over that period, but a bright spark however, was the passed economic stimulus bill which started boosting demand once again. With the extension of the Federal 30% tax credit and the removal of the $2000 cap, home owners will see the price of solar PV get much more affordable.

And, for commercial developers of solar facilities the new bill has provisions that would allow them to take the 30% tax credit as a grant instead. Some of the companies best positioned to ride out the challenges of this year are the big market leading companies with adequate cash in hand. US manufacturer First Solar is one of these companies.

Notice how their stock price collapse is far less than any of the other solar companies. First Solar also benefits because its panels are made from cheaper cadmium telluride rather than silicon. Also look at the other second generation solar companies I mentioned in my article of Jan 6, 2009. But even First Solar said last week that it would begin reducing prices on some of its panels to keep its competitive edge when it enters new markets.Other well positioned companies include SunPower Corp, because its highly-efficient modules command a price premium.

Now that SunPower also installs the systems they have the maneuverability to adjust their margins between the different parts of the business. Also look at Energy Conversion Devices, makers of Uni-Solar amorphous silicone panels. They were the innovators of lightweight flexible roll out modules that can be directly adhered to roof tops, also known as building integrated PV.
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Suntech too has bought into the installation and finance business since its acquisition last October of El Solutions, and its joint venture with MMA Renewable Ventures called Gemini Solar Development. Gemini plans to finance, develop and operate solar power plants of 10 megawatts or more. XsunX (OTCBB: XSNX) is another thin film innovator using amorphous silicon who, while at an earlier stage, shows promise.

The company’s dual layer amorphous thin film design is cheaper to make and out performs other technologies in most climates. In a recent comparative study the company’s module design was shown to deliver the lowest levelized cost of all solar photovoltaic cell technologies. They have so far gained sales contracts for 19 MW deliverable through 2010. And they recently announced a prudent decision to reduce the capacity of their planned manufacturing facility in Oregon to approximately 13 MW which closely matches their commitments and saves the company roughly 25 million.