The Solyndra collapse in the US has damaged investor sentiment throughout the solar industry. In an unrelated move, the UK Government has backtracked on its policy to provide feed-in-tariffs (FiTs) for the solar sector. The UK Government’s argument is that the prices of solar modules have fallen substantially since the policy was first put in place, and that the FiT subsidy now permits solar installers to make an unjustifiable return on their investments.In some respects, the Government has a case. However, backtracking on a policy which was providing a major boost to the UK solar industry at such short notice is a highly damaging move. The policy may have been ill conceived to begin with - but transparency is crucial for both consumers and for investors.
A host of funds have been set up to roll out solar installations across the UK, including funds such as VCTs with tax breaks for certain investors. The reversal of policy is damaging confidence amongst investors in all forms of renewable energies.
Government policy in this industry needs to take a long term perspective, preferably playing a role in helping to develop the technology. In the case of solar, the good news is that price declines in the industry will inevitably lead to widerspread adoption globally - which will benefit those companies able to survive the current difficult conditions.
There will no doubt be further losers amongst the quoted solar stocks - but there will also be winners. At current deflated share prices, there would appear to be opportunities out there for investors prepared to take a plunge - if they can identify which companies will be the winners.