The following article even though it's about Germany and Europe clearly makes the case for the Canadian government to get involve with alternative energy as of yesterday , if not the future of some of the most promising industry for the whole world will once pass us by as it did with the Arrow in the 60's .

The US will be subsudising that industry on a grand scale over the next decade and if we don't APV like all the others will have to move eithr to the US or to China in order to survive and by doing so jobs and taxes will follow there .

Right now the Buy American "slogan" is already affecting many Canadian industries and that trend will only worsen over the next couple of years , if our government does'nt get out of bed and start working to protect and support Canadian interest it won't be long before unemployment and fiscal deficit will start ballooning like in the states .

Canada must quickly react to match proportionaly it's support for Alternative Energy it's his right do so according to the free trade agreement and the only way to go since we can't accomplish anything by complaining that subsidies are going against free trade ( the US make the rules as we know from previous trade disagreement in lumberwoods and fisheries ) .

"Made in Germany" not enough for solars to prosper

Mon May 18, 2009 3:57am EDT

By Christoph Steitz - Analysis

FRANKFURT (Reuters) - German solar companies that have not yet set up U.S. and Chinese production plants are likely to lose out on significant subsidies and will struggle to bring down their production costs to the levels of their Asian peers.

Announcements of solar subsidy programs in the two countries have supported the recent surge in solar stocks around the world, with China mulling more than 3 trillion yuan ($439.6 billion) to boost renewable energy in the country by 2020.

In the United States, the Obama administration envisages lifting spending on solar energy by 83 percent, with proposed annual spending of $15 billion for renewable energy projects.

Meanwhile, solar subsidies in Europe are falling -- most notably in Spain, the world's biggest solar market, which more than halved the amount of solar capacity which qualifies for subsidies for 2009.

This is forcing solar companies from Germany, the world's second largest solar industry, out of their traditional markets and toward those that offer stronger growth prospects.

"In the long term (German solar companies) need to go to those markets where subsidies are flowing (United States, China) -- if you want to survive you will need a production site there," said Arthur Hoffmann, who manages the New Power Fund at Swiss Bank Sarasin & Cie, with about 200 million euros under management.

"Unless you actually do that -- and this includes creating jobs in those markets -- German companies are unlikely to receive any of the subsidies," he said.

HOW LONG IS TOO LONG?

The biggest players in Germany, such as Q-Cells, the world's largest maker of solar cells, and SolarWorld, which makes silicon, modules, cells and wafers, have already realized that going abroad is vital.

Q-Cells clinched a strategic deal with China's LDK Solar last month to gain a foothold in the Chinese market, while SolarWorld has set up production plants in the United States to participate in the "Obama boom."

Solar equipment manufacturer Centrotherm and Phoenix Solar also own operations in Asia.

However, German solar companies that miss the trend face a rude awakening, finding that the 'made in Germany' label may suffice at home but counts for less in a global context.

Price performance seems to underline this thesis. Shares in companies with branches abroad, such as SolarWorld, Centrotherm and Phoenix Solar, have gained about 52 percent in share price since the beginning of the year.

This compares with an average drop of 1 percent for those players that produce solely in Germany or Europe -- including Centrosolar, Conergy and S.A.G. Solarstrom AG.

"Companies that are producing very close to those target markets (United States, China) will benefit more than those who don't when logistic (respectively transport) costs will rise again," said Bjoern Glueck, fund manager at Lupus alpha, which has 1.3 billion euros ($1.76 billion) under management in European small and mid-cap stocks.

"Local manufacturing lines can decrease personnel costs that are higher for module makers, but less so for cell producers, and eventually decrease energy costs," he said.

LOWER PRICES

High production costs are becoming a problem for the makers of typically more expensive German cells and modules. Asian competitors such as Suntech Power, Sharp Corp and Kyocera are offering their products up to 15 percent cheaper than their German rivals.

"Increased competition and the global economic crisis have cast clouds upon the Western European solar energy market," U.S. consulting company Frost & Sullivan wrote in a note earlier this week.

"Falling polysilicon and solar module prices have the potential to cement China's role as a solar manufacturing hub. In terms of installed capacity, the United States is playing a greater role as more and more states are putting the renewable energy standards into existence."

This week's quarterly numbers show that the importance of markets abroad is growing at a fast pace.

Q-Cells' sales at its international unit accounted for 38 percent of first-quarter revenue -- at 85 million euros almost reaching the full-year 2008 level -- while SolarWorld said foreign revenues made up half of its revenue in the quarter.

"Germany is known for producing great quality and needs to build on that," Sarasin's Hoffmann said.

($1=.7377 Euro)

($1=6.825 Yuan)

(Reporting by Christoph Steitz; Editing by Jon Loades-Carter)

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