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Greenberg: Japan Quake Sparks Solar Surge

Monday, 14 Mar 2011 | 3:17 PM ET

In the wake of Japan’s nuclear crisis, solar stocks are on fire today.

Among those gaining include First Solar, Trina Solar, and, to a lesser extent, Sunpower.

Some of that may be short-covering, as investors play the solar card following headlines about nuclear uncertainties.

But Gordon Johnson of Axiom Capital—currently a solar bear—warns that quakeor no quake, once the dust settles, the issue of government-funded solar subsidies remains unclear following cutbacks in Europe.

That’s reflected in the MAC Solar Energy Index , which in recent weeks had fallen nearly 20 percent after solar-subsidy cuts in Italy and France before rising 7 percent today.

Still, PiperJaffray analyst Ahmar Zaman sliced his rating on so-called “downstream” solar companies, including Sunpower, Canadian Solar, JA Solar, and Trina, saying: “We had been counting on the Japanese market to offset any declines in Italy this year, but with a best case scenario of flat y-o-y growth in the Japanese market, we believe the risk of pricing pressure in the near term is amplified.”

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My take: With solar, perception tends to be reality. And the widespread perception, today at least, is if nuclear goes away, solar will be the salvation. Let’s be clear: Solar isn’t going away. But it still may be years before it can stand on its own two (non-subsidized) legs, Japan notwithstanding.

As Sunpower says in its 10-K, “Because our sales are into the on-grid market, the reduction, modification or elimination of government mandates and economic incentives in one or more of our customer markets would materially and adversely affect the growth of such markets or result in increased price competition, either of which could cause our revenue to decline and harm our financial results.”

Boilerplate, yes, but for solar it’s the real reality.

Questions? Comments? Write to HerbOnTheStreet@cnbc.com

Follow Herb on Twitter: @herbgreenberg

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