Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Trina Solar (NYS: TSL) have plunged today by as much as 16% after news that Germany may be making monthly solar subsidy cuts.
So what: The important German solar market has been expanding so quickly that the government wants to put brakes on its rapid growth. Germany Environment Minister Norbert Roettgen said that Germany will reduce feed-in tariffs monthly instead of twice per year.
Now what: Demand has been outstripping supply so quickly due to the subsidies that the government wants to bring growth back down to a sustainable level. The news is also causing downward pressure on other solar players today, includingSuntech Power (NYS: STP) and First Solar (NAS: FSLR) . As the cost of solar installation slowly falls over time, the industry will benefit as it relies less on government subsidies, but for now subsidies continue to be critical for the technology's adoption.
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At the time thisarticle was published Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of First Solar. Motley Fool newsletter services have recommended buying shares of First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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