NEW YORK (Trefis) -- The U.K. solar industry could add as much as 600 megawatts of solar capacity by next April despite government cuts in subsidies and other limitations imposed on utility scale plants.Solar companies are using a decade-old renewable energy incentive program to sidestep a 5-megawatt cap on solar plants that rely on feed in tariff subsidies. The latest rush to build new solar plants comes despite government efforts to limit installations by cutting tariff subsidies last year. Dropping costs for setting up utility scale solar plants has encouraged investors to use Renewable Obligation Certificates (ROCs). Although the returns through the program are lower than through other programs, their use allows utility scale developers to override the 5-megawatt limit of solar farms that is currently in place. Increased installations in the U.K. through 2012 could have a positive impact on the global sales of SunPower ( SPWR). We have a
Lower demand from such markets as Germany is forcing SunPower and its competitors to target other markets. Utility and power plant component sales contribute to about 20% of our price estimate for the company. Another major factor that will influence the addition of new products is the steep decline in the cost of solar equipment. The cost of constructing utility plants has dropped by half over the past year, according to some estimates. Falling panel prices are largely responsible for the drop in the cost of producing solar energy. Governments have been forced to cut subsidies many times over the past couple of years to rein in installations, and experts say the U.K. could impose restrictions on the use of ROCs for solar power if installations jumped rapidly. Click here to find out how a company's products impact its stock price at Trefis. Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.