Clean Energy Winners: Tax Cut Trades

NEW YORK (TheStreet) -- If there were every any doubt about how important the cash-grant program for renewable energy projects was to big U.S. solar companies, just look at trading in shares of SunPower(SPWRA) and First Solar(FSLR) on Friday.

Shares of SunPower are up more than 7% and its average daily volume of trading was hit at the midday mark.

Shares of First Solar are up 3.5%.

While First Solar also announced that NRG Energy(NRG) had signed a deal for a 20 megawatt solar project on Friday morning, the real mover was the inclusion of the Treasury cash grant program in the massive tax cut package.

SunPower was receiving more of a bump than First Solar, arguably because it has a greater number of smaller projects spread out across the U.S., whereas First Solar is more concentrated in large-scale utility projects. SunPower has a higher level of overall sales in the U.S. than First Solar, also.

SunPower has projects in the commercial sector that can be as small as a few hundred kilowatts, and it is at the level of the small developers, the "mom and pop" shops, where the loss of the cash grant program would have caused the greatest pain in terms of a fall-off in solar project development.

>>Solar, Wind Ride Tax Cut Tailwind

"First Solar and SunPower are both big beneficiaries of the cash grant being extended for one year," said Christine Hersey, analyst at Wedbush Securities.

First Solar, though, may have a more important catalyst on which investors are waiting. It will provide its 2011 outlook next Tuesday after the market close in a conference call, and many are expecting an EPS outlook that is higher than previously anticipated.