While nuclear plant in Japan was damaged and radiation crisis brought global stocks down, solar and wind energy stocks gained upward momentum instead in the midst of market panic. It is believed that solar industry might be the potential beneficiary in the long run.
Although Japanese nuclear plants are faced with a devastating disaster, the world still needs nuclear power. Yet, this isolated incident may brighten prospect of the solar industry, especially of companies that are vertically integrated.
First of all, compared with other renewable energy, solar energy offers better convenience. Hydro power and wind energy bear discontinuity while bio mass requires production process.
Secondly, from the viewpoint of market development, development of bio mass is limited due to unwanted competition for land use, hydro power stations have almost saturated, and wind energy industry is experiencing severe competition.
Thirdly, since total electricity generated from solar installations is relatively smaller than that provided by other sources of renewable energy. Undoubtedly, there is more room for growth.
Solar companies that are vertically integrated are believed to be in a more advantageous position to succeed. Some upstream silicon suppliers in Japan are affected by the 311 quake, tightening the supply of silicon in the short term and pushing up the price. Midstream manufacturers that use material from Japan are also affected. Downstream markets such as Italy, which accounts for 25% of global market share, are also affected due to a series of electricity price cut implemented by the government. Therefore, vertically integrated companies are better equipped to lower market risks and to gain more competitive edge.
