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) - Get Report 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) - Get Report

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.

The size of the overall U.S. solar market stands to be revised upward by Street firms as a result of the cash grant extension. Ardour Capital's 2011 forecast of 1.75 gigawatts for the U.S. solar market assumed the grant is not available, for example.

SatCon, the solar inverter company with a large focus on the U.S. market, was up by a similar 3.5% as First Solar on Friday.

First Solar has worked its way back all the way near the $140 mark, after falling as low as $122 at the beginning of the month. It looks like the Walton family of


(WMT) - Get Report

fame, which has been steadily selling First Solar shares around $140, but recently sold First Solar shares in the range of $122, finally mis-timed a First Solar trade.

The climb in the price of oil may have benefited solar trading in the past two weeks also.

If there was a big loser among the tax cut sweepstakes from an energy perspective, it was the failure of the T. Boone Pickens-endorsed plan to double the existing incentive for the purchase of natural gas vehicles. In fact, the existing incentive isn't even being extended, let alone doubled.

Natural gas vehicle stocks, including

Westport Innovations

(WPRT) - Get Report


Clean Energy Fuels

(CLNE) - Get Report

have traded wildly all year based on the outlook for the doubling of the natural gas vehicle extension.

The failure of the natural gas vehicle lobbying effort, championed by the CEO of Clean Energy Fuels, Andrew Littlefair, might make it hard to understand why Clean Energy Fuels is up 6% on Friday after the failure of the natural gas vehicle industry's legislative dream.

The Senate rejected the natural gas vehicle incentive extension, and doubling, but it did throw in a sweetener for natural gas vehicle stocks that directly benefits Clean Energy Fuels. A natural gas excise tax credit of 50 cents per gallon, which had expired at the end of 2009, is being brought back in the tax cut package. In 2009, that natural gas excise tax credit represented 15% of Clean Energy Fuels revenue. "This goes straight to their bottom line," said one clean tech analyst.

Westport shares were down 1% on Friday morning, and that's no surprise since its bottom line does not directly benefit from the return of the excise tax credit. "In the case of Westport, the excise tax is good since it's generally supportive of natural gas vehicles, and hopefully they will see some more as a result. But there's no straight line from the excise tax to Westport," the clean tech analyst said. Westport shares have also been trading within range of the stock's 52-week high.

Shawn Severson, an analyst at ThinkEquity, said that in the final analysis it's only the vehicle tax incentive that will drive adoption rates of natural gas vehicles. "If nothing gets done very early in the new Congressional session, I would think there would be a sink hole in terms of vehicle sales until a new bill is passed," the ThinkEquity analyst wrote in an email to



Severson noted that there now could be a surge of purchases at year's end to take advantage of the existing incentives for the purchase of natural gas vehicles before they expire, but then a major drop-off in the first quarter of the year. Then again, throughout 2010 the argument was made that fleet vehicle purchasers were waiting for the incentive to be doubled before making purchases, and that could again linger in the form of hopes for legislation being enacted in 2011.

After all the failed attempts to find a piece of legislation on which to tack the natural gas vehicle incentives, alternative transportation analysts are left scratching their heads as to how the legislative strategy plays out in 2011.

-- Written by Eric Rosenbaum from New York.


>>Solar, Wind Ride Tax Cut Tailwind

>>Solar, Wind Cash Grants: Not Dead Yet

>>Renewable Energy: Beggars at the Tax Cut Ball

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