Wells Fargo Securities, a division of Well Fargo Corp. (NYSE: WFC) has apparently decided that the solar power industry is here to stay. The company has initiated coverage on six Chinese solar makers with no less than a ‘Market Perform’ rating on any. Three companies, Trina Solar Ltd. (NYSE: TSL), ReneSola Ltd. (NYSE: SOL), and Solarfun Power Holdings Co. Ltd. (NASDAQ: SOLF) were all started at ‘Outperform’. Canadian Solar Inc. (NASDAQ: CSIQ), SunTech Power Holdings Co. Ltd. (NYSE: STP), and Yingli Green Energy Holding Co. (NYSE: YGE) were started at ‘Market Perform’.

Trina gets the nod for its “industry-leading cost structure and growing brand recognition.” Wells Fargo puts a target price of $31-$35 on Trina shares, securely above median estimates of $31. Shares posted an intra-day 52-week high of $31.19 in mid-April, but have been unable to hold onto the gain.

ReneSola gets an ‘Outperform’ rating primarily because it is expected to benefit significantly from higher demand in 2010. The price target is $9.50-$12, substantially higher than the median target of $7.90.

Solarfun is also rated at ‘Outperform’ with a price target of $10-$12.50. The median target is $9. Wells Fargo believes that new management and better cost controls will shore up Solarfun’s earnings.

‘Market Perform’ ratings on Yingli (target price $11.50-$14.50), Canadian Solar (target price $18-$23), and Suntech (target price $11-$14) are only slightly above or below median price targets for the shares. According to Wells Fargo, Yingli needs work on its balance sheet, Canadian needs to grow revenue and margin, and Suntech needs to improve its cost structure.

Meeting these targets won’t be easy, given what’s going on in Europe. Not just Germany’s cut in feed-in tariffs, but the whole shaky financial structure of Europe will weigh on these solar makers. The difficulty arises from market fear over what is happening to the euro. Europe has been a key market for solar makers and if the euro continues its slide, every solar company will take a significant hit on currency exchanges.

And that’s not even the biggest issue. If China revalues its currency upward, the impact on these solar makers will be even more more severe because they’ll be paying for materials and labor in higher valued renminbi and selling in lower valued euros. Profits could take a pounding unless currency hedges are figured just right.

The Claymore/MAC Global Solar Energy ETF (NYSE: TAN) is off nearly 6% today amid worries over the euro. Yingli and Canadian Solar are down almost 10%, Trina is down nearly 11.5%, Solarfun and Suntech are down about 9.5%, and Renesola is down more than 6%.

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