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Here's something you can safely say about China: They get things done.
That point was driven home to me a few years ago by a former Southern Company nuclear engineer who was consulting on building nuclear reactors in China.
"There are two things you can say about the Chinese way of doing things," he said admiringly, "one, once they decide to build a facility, it gets built and two, they bring it in on time."
He also noted that the builders took great pride in their work and if they say the cement was going to be laid by a certain date, the crew worked overtime and weekends to bring it in on time-all without overtime pay.
And the one thing a command economy like China has going for it is once they site a project, it gets built. There are no environmental impact studies, no legal issues, no historical impact hearings, and no worries about displaced families who may have lived on the land for centuries.
I bring it up because now it looks like the Chinese are back in the renewable energy business leading to a bull stampede into Chinese solar stocks.
China's Renewed Drive Into Green Energy
In early January, government officials announced at a national energy conference that they intend to add 10 gigawatts (GW) of installed solar power capacity this year, up from 7 GW at the end of last year.
The goal for 2013 will put China within easy reach of its stated target of 21 GW of installed solar power capacity by 2015.
That followed an announcement in December that China was going to provide $2 billion in subsidies for the country's solar industry.
And now the green energy community around the world is very excited that at least one major nation is willing to step up and stand behind its renewables industries and offer some incentives.
It is bit of a turnaround for an industry that had fallen on some hard times.
Over the past year in the United States, we saw what happened with some of the best intentioned government-driven green energy programs.
Can anyone say "Solyndra"? Or, "once bitten, twice shy"?
Then Germans pulled their solar and wind tax credits and subsidies. And now with the country's economy headed into recession, it's unlikely the Germans will be back on the renewables bandwagon anytime soon.
So will China's renewed push into renewables create a new boom for solar and wind stocks?
Here's what to expect.
The Truth About Chinese Solar Stocks
Even if China hits its 2013 production goals, it's solar production is about as big as Germany's 2011 production capacity. It would also be smaller than the U.S., the EU, and well, you get the picture.
What's more, if you look at China's generation capacity per capita it's an even smaller portion of its energy mix.
So while China will no doubt meet those production goals, in the bigger picture China's commitment won't be enough to turn the entire industry around.
In fact, my take on the solar statement is that China is trying to keep its domestic renewables energy industry alive because global conditions aren't exactly conducive to these companies surviving and the government doesn't want to rely on other nations to build their power infrastructure.
And if they attract some dumb international investing money into their markets or their stocks in 2013, so be it, all for the better.
"Trina Solar (NYSE: TSL) is "headed toward a near-term insolvency," according to analyst Richard Pearson.
Pearson cited an array of market analysts (Raymond James, Barclays, RBC, Roth, Credit Suisse, Macquarie, China International Capital Corp, Maxim and Axiom) who saw the stock price, now at over $5.00, dipping to $3.00 or lower."
Keep in mind, those comments came on the heels of this "major" announcement by the Chinese.
Yingli Green Energy Holding Co (NYSE: YGE) has also had a pretty solid run so far this year, and it may be a beneficiary. It's a well-run company with solid management.
But the truth is if you want to buy into green energy, you need to stick to U.S. companies that have better backing and a lot more transparency.
Investing in Green Energy in 2013
My favorite green energy investments for investing in 2013 include:
- SolarCity Corp. (Nasdaq: SCTY): If you want to go solar, this recently IPO'ed company is your best bet. It's a good long-term play on the industry and if solar catches on SCTY will benefit.
- General Electric (NYSE: GE): Granted it's not sexy but GE is a player in all the renewables as well as nuclear. As a big safe diversified play it can't be beat.
- Clean Energy Fuels (NYSE: CLNE): On the natural gas side of things there CLNE. It's a T Boone Pickens enterprise that is strategically vertically integrated throughout the natural gas sector.
- Spire Corp (Nasdaq: SPIR): Here's the one long shot. This company has a unique niche and may be an acquisition target for a Chinese or Indian (or US) firm at some point.
As for investing in Chinese solar stocks, don't believe the hype.
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