Sunning on Rooftops at Energy Conversion Devices

• The Company: Energy Conversion Devices, a provider of thin-film flexible solar laminate products for the building integrated and commercial rooftop markets.
• The Filing: Form 10-K filed with the SEC on August 28, 2008.
• The Finding: Energy Conversion Devices, which builds solar cells right into its roofing materials (UNI-SOLAR), is capitalizing on opportunities provided by feed-in-tariffs in the European Union for building integrated photovoltaic applications. Solar laminate product sales increased by 155 percent year-on-year to $232 million for fiscal 2008 ended June 30.

Management believes that its UNI-SOLAR rooftop solar laminates can offer its customers about a 10 percent to 20 percent installation cost advantage and significant energy savings by employing their unused rooftop space to reduce the reliance on the electrical grid. This approach to energy -- which is called distributed power -- generates electricity at the location of use. Unlike traditional solar firms, such applications do not burden the transmission lines and do not require the use of valuable land.

As of June 30, Energy Conversion Devices had a backlog of more than $1.8 billion, with about 70 percent of growth coming from Europe (France, Italy, Germany, and Spain) and about 20 percent of installation sales in the United States.

To meet growing demand for its products, the company will need to aggressively ramp-up new capacity. Manufacturing plans call for an expansion of current nameplate capacity of 118-megawatts to an expected one-gigawatt by 2012.

The Question: What effect will a failure to extend the Investment Tax Credit in the United States beyond December 2008 have on North American sales going forward?