News of stronger-than-expect​ed demand for solar panels in Europe has helped push up Trina Solar (TSL) and other solar stocks.

Competitor First Solar (FSLR) has announced it will increase planned production in its German facilities in 2012 to meet demand from European markets, raising hopes that the market for panels in the region will be more robust than previously anticipated.

First Solar had plans to close down its German facilities by the end of the year, but will now delay the closure to meet the unexpected spike in demand. Europe is a major market for Chinese panel manufactures like Trina Solar, which have taken a major hit since last year because of falling government support for solar power.

We have a $8 price estimate for Trina Solar, which is at a 20% premium over its current stock price.

European demand

According to a GTM research report, Germany added better-than-expected​ 1,830 megawatts of solar capacity in the first quarter of the year. Demand could have been boosted by installers looking to beat the sharp cuts in subsidies for solar PV that the German government implemented on April 1. Germany is looking to limit annual installations to about 3 gigawatts. Last year the country added about 7.5 gigawatts of solar-power-generati​ng capacity. Drastic cuts in government support in Germany and other countries pushed First Solar to announce the closure of its facilities in Europe. However, because of an unexpected surge in demand from these markets, First Solar has decided that it will delay the planned closure.

The announcement has raised hopes that panel sales in Europe -- the largest market for solar equipment -- will remain robust for the rest of the year. Countries such as Germany, Italy and Spain account for a major portion of Trina Solar's global sales. Although countries are slashing subsidies, dropping costs of solar energy are making installations increasingly feasible. Higher demand for panels could come as a welcome relief for the struggling solar industry.

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