Solar Stock Bonanza? California Aims for 33% Renewable Energy

(California renewable energy mandate story updated for Congressional vote on Chinese import tariff)

NEW YORK (TheStreet) -- California regulators voted last week to up the state's renewable energy target to 33% by 2020, a potential boon for solar stocks that have been buying up the right to sell big green energy projects to utilities.

First Solar(FSLR), SunPower(SPWRA) and MEMC Electronic Materials(WFR) have all bought big pipelines of U.S. projects, which utilities may need to buy as renewable standards are increased. Asian solar energy leader Sharp became the first non-U.S. player to buy a big North American project pipeline this week when it acquired Recurrent Energy.

>>Solar Losers in Sharp's Big U.S. Acquisition

The vote by California's Air Resources Board is a positive for all alternative energy plays in California on the surface, but it's far from a safe play to make.

Extending the renewable energy standard in California to 33%, in theory at least, provides these big solar pipelines with a captive customer base. The current California renewable standard of 20% is coming closer to being reached by some utilities. Christine Hersey, an analyst at Wedbush Securities, said that with the 20% target being reached in some cases, what companies would be lining up to buy these solar projects unless the renewable energy mandate is upped again?

Pacific Gas & Electric and Southern California Edison, for example, will each reach 18% renewable energy by the end of this year, according to Wedbush analysis.

Yet the big vote in favor of more green energy from the California Air Resources Board is just one vote of confidence in a very complicated web of California politics that is going to play out in the upcoming elections. Meg Whitman, the former eBay chief who is running for Governor of California, has stated publicly that she will suspend, at least for a year, the law which allows the renewable energy standard of 33% to be enacted.

There is a much-debated ballot initiative in this year's elections echoing Whitman's stance and asking voters to overturn the renewable energy mandate.