German Solar Data: The Good, The Bad & The Fearful

NEW YORK (TheStreet) -- The latest data from the German government on the level of solar installations shows a picture of solar demand that supports the current rosy scenario for 2010 solar earnings -- as well as arguments that the German rate of growth could lead to another round of political tussling in Germany over the future of feed-in tariffs.

It's a situation that allows a solar investor to pick the poison of too much growth in Germany -- if they tend to a negative 2011 outlook -- or trace a solar silver lining, if the bullish argument is preferred.

Germany had installations of 562 megawatts of solar in May -- a healthy rate of installations -- yet it's the June information from Germany's solar database that holds both the best and potentially worst case scenario for solar in Germany.

The German Federal Network Agency reported this week that a total of 3 gigawatts of solar installations are expected in the first half of 2010, ahead of the German feed-in tariff cuts that began this month.

Between January and May 2010, there were 1.7 GW of solar installed in Germany, based on 85,000 applications received by the German government during that period.

The big number is the June number alone, though, with 50,000 applications for solar projects in the month, and a rate of 1.3GW.

As has been the case in past solar feeding frenzies, applications poured into Germany ahead of the July effective date for the first round of FIT reductions. If May seemed a little light, albeit with a healthy install rate, and June seems like an overwhelming month in Germany, it's similar to what occurred at the end of 2009. Ahead of Germany's annual feed-in tariff cuts, December was a huge month for solar installations.

The high level of installations in Germany is no surprise to solar investors. Expectations for solar earnings in this quarter are roundly bullish, and the latest data supports the sold out conditions that the solar industry has been talking about, and which has led to a rally in solar shares.