Solar stocks rallied on Wednesday as investors bet that increased Chinese interest in solar power, higher oil prices and signs of improvement in lending and financing will help spur demand for the clean energy source.
Major gainers on Wednesday afternoon included top Chinese solar panel maker Suntech Power Holdings Co Ltd, up 7 percent, Chinese wafer maker LDK Solar Co Ltd, up 19 percent, and U.S. panel maker Evergreen Solar Inc, which soared 19 percent.
Shares of U.S.-listed Chinese solar companies such as Suntech, LDK and JA Solar Holdings Co Ltd have benefited from expectations that the Chinese government is preparing to offer a feed-in tariff to encourage adoption of photovoltaic (PV) solar power.
China seems to be getting quite serious about implementing PV, said Cowen and Company analyst Rob Stone, pointing to Suntech's disclosure that it is in talks to develop a 500-megawatt project in Qinghai province.
That would be the first truly utility-scale PV project in China that's in the triple-digit MW size, Stone said, adding that a big increase in solar demand from China would go a long way toward boosting worldwide demand for solar panels, which have been in oversupply since last year.
That oversupply has caused a sharp drop in panel prices that has pressured profits at many solar companies, and Stone said a balancing out of supply and demand would help companies across the globe, including U.S.-based SunPower Corp, stabilize prices.
Investor enthusiasm for solar is also being underpinned by rising crude oil prices, which closed above $71 a barrel, both Stone and Wedbush Morgan analyst Al Kaschalk said.
Kaschalk also pointed to positive comments from several solar management teams in the two weeks since the Intersolar industry trade show in Munich, Germany.
After Munich, it was surprising how positive management teams are, Kaschalk said. The one whisper which has certainly played out further in Europe is that lending and financing activity is starting to pick up. The June quarter is going to be tough, but people think it's going to be better than they thought it was going to be.
Suntech shares were up $1.46, or 8.1 percent, at $19.46, while LDK's stock was up $2.56, or 22.4 percent, at $13.99, both on the New York Stock Exchange.
On the Nasdaq, SunPower shares were up $1.37, or 4.5 percent, at $31.92, Evergreen Solar's stock was up 42 cents, or 21.7 percent, at $2.36, and JA Solar was up 21 cents, or 3.5 percent, at $6.19.
(Reporting by Nichola Groom, editing by Matthew Lewis)