Sector Snap: Germany may cut aid to solar sector

The nation's so-called feed-in tariff obliges utilities to purchase electricity from solar sources at fixed, above-market rates for 20 years. Each year that the law--which has made Germany a world leader in development of solar power--is in effect, the size of the tariff declines.

Recently, though, some federal lawmakers have expressed concern that the tariff will cost taxpayers upward of $189 billion by 2035. Thus, among other changes, they propose that the existing 15 percent reduction in the tariff scheduled for 2010 be enlarged to 25 percent, Calyon Securities (USA) analyst George Kotzias said in a client note.

The companies with the most exposure to Germany and therefore the most at risk are, in diminishing order, First Solar, Energy Conversion and SunPower, Kotzias said.

Officials at those three companies weren't immediately available for comment.

In afternoon trading shares of First Solar fell $1.16 to $264, shares of Energy Conversion fell 37 cents to $54.97 and shares of SunPower fell $1.90, or 2.3 percent, to $80.59.

Kotzias also said the least affected stock he covers would be Evergreen Solar, shares of which rose 31 cents, or 2.9 percent, to $10.91.