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German Solar Investing

Investor Safe Haven

Written by Justin Williams
Posted April 2, 2013 at 7:24PM

It seems that despite European economic woes and its continued recession, a silver lining just may be found in Germany’s solar industry.

European investors are in fear as uncertainty looms over the continued crisis in Cyprus, where banks just re-opened their doors after shutting down on March 16. The ripple effect created by this crisis has compounded Europe’s already troubled economy.

Cyprus is scrambling to stabilize its economy, while Europeans fear to use banks they feel are not secure. The European Union proposed a 10 billion-euro bailout of Cyprus at the onset of the March 16 closings. The only catch: it would force losses upon its bank depositors.

The bailout was inevitably rejected by the Cyprus parliament, but in a revised agreement, even greater losses would be incurred to depositors who were uninsured. This created protests and political unrest throughout the whole of Europe.

solar installAs citizens lashed out in uproar, Germany was forced to initiate a 4 ½-year-old pledge that would guarantee the safety of all bank deposits made last week; though this was still not a very comforting notion coming from a bank that should act as a safety net.

Solar Investing Safe Haven

But there is hope. Investors are turning to clean energy plants that have proven resilient during down times; the German solar industry in particular has continually seen returns in recent years and has the largest installed capacity in all of Europe.

According to Bloomberg, Berlin-based company Milk the Sun GmbH, which links buyers and sellers of solar projects, had the most inquiries in a year on March 26 as Germans sought to invest, said Chief Executive Officer Felix Krause. That day, Cyprus prepared to impose capital controls and a tax on bank deposits of more than 100,000 euros ($128,000).

Investors need to seek out material assets that will work for their money instead of leaving them high and dry.

From Bloomberg:

“Germans with savings of more than 100,000 euros are increasingly concerned because of Cyprus,” Krause said in an interview. “They’d rather put their money in a renewable plant with guaranteed returns than leave it in the bank or invest in stocks.”

Naturally, with Cyprus in economic turmoil, the euro has taken yet another hit, and that’s especially true in Germany – the European Union’s most populous state and one of its leading economic powers.

Germany’s solar just may be the only industry strong enough to lift investors’ hopes up. But despite its strength in relation to the rest of the world, it, too, has tapered off recently.

But at the onset of the proposed Cyprus bank bailout and fears that bank accounts are unsafe, investment options became increasingly limited and money might now be flying right back into the hands of solar and other material assets.

Upcoming Solar Projects

SMA Solar (OTC: SMTGF) is a good indication of the general performance of Germany’s solar companies. It was reporting losses in 2012, but it ended the year on a high note and came out on top as it announced last Wednesday a net profit of 75.1 million euros ($95.9 million) for 2012, according to German website DW.

Those figures are still a reflection of a 55 percent drop in annual earnings for the biggest German solar company, reports DW, which shows the effect of overcapacity and depleting prices for solar components.

Despite the downturn, SMA executives are hopeful and have weathered the storm that saw many of its competitors deep in the red or insolvent, including – most recently – China’s Suntech (NYSE: STP).

SMA is moving forward and focusing on the reduction of costs. It will invest heavily in research and developmental projects.

One such effort is a team project with Gehrlicher Solar, which will construct a 5.3MWp solar park in a German conservation area. According to PV Tech, it will have a total of 27,720 Sunowe solar modules and six inverters made by SMA.

Germany’s solar industry may not be booming like it once was, and it probably will never see the exaggerated returns that it once did, but it’s still a safe investment.

The industry is still investing in advancements and development, and it’s still putting up large scale projects like the Gehrlicher solar park. And while other countries are cutting back on government subsidies as the economy suffers, Germany continues to provide rewards for turning to solar power.

Electricity prices continually increase, making it all the more attractive as an alternative, and because of this, solar products like cells, panels, and power plants are all seeing replenished activity.

The European economy is struggling, but with a little faith in German solar, at least your money is in a safe place.

 

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