Solar power is in the news again. The European Commission has accused Chinese companies of “dumping” solar panels in Europe and is considering imposing trade sanctions. The outcome of this particular squabble is still unclear, but it’s been an ongoing complaint that is not going away.

If Europe does retaliate in some way, it could be a boon for American solar panel makers. One of the key companies in this field is SunPower Corp (NASDAQ:SPWR), an integrated solar products company that designs, manufactures, and delivers solar electric systems for residential, commercial, and utility-scale power plant customers.

Europe has been a huge drag for SunPower in recent years, and this may be a chance to turn that momentum around. SunPower generated a gross margin of -32 percent in Europe last quarter, compared to 32 percent in the US and 18 percent in Asia.

Solar power companies have had a tough time the last few years. The most spectacular failure was Solyndra, which filed for bankruptcy in 2011 and became the focus of political controversy as Republicans raised questions about loans the company had received from President Barack Obama’s Department of Energy.

As my colleague Chad Fraser observed in his April 11 article on First Solar (NASDAQ: FSLR), European governments have been “cutting spending to rein in their ballooning deficits—including on solar power subsidies. This all came against a glut of cheap panels—many from Chinese competitors—which cut prices and profit margins.”

SunPower started the year with a strong performance in the first quarter. “Our results reflect the benefits of our superior solar panel technology combined with strong performance from both our rooftop and ground mount teams,” said Tom Werner, SunPower president and CEO.

Solar panels manufactured in China typically use “low cost” modules that are cheaper in the initial installation than their American or European competitors. But a recent study found that SunPower offers more cost-effective solar installations if you judge by the cost of energy produced, which is the correct measure to use.

In its power plant business, the company started initial construction of a 579-megawatt (MW) Antelope Valley Solar Projects (AVSP) for MidAmerican Solar and reached 90 percent completion on the California Valley Solar Ranch (CVSR) project owned by NRG Energy.

With installation at CVSR expected to be finished by the end of the second quarter, the company is aiming for full project completion by the end of the year. Demand in the residential lease business remains solid.

Additionally, demand in Japan remains very strong, as Toshiba (OTC: TOSBF) and Sharp (OTC: SHCAY) accounted for approximately 25 percent of total first-quarter shipments.

Werner conceded that market conditions have been tough for his company, and the solar industry in general. But he sees modest improvement in industry conditions during the quarter. “We’re on track to return to profitability in the region by the end of 2013,” he concluded.

Historically, one big disincentive to installing solar power systems has been the large initial cost. While private financing is sometimes available through the solar companies, homeowners may balk if they think they will not stay in their home long enough for the investment to pay off.

But cities like Palm Desert, California and Boulder, Colorado are trying to get their respective state governments to change the laws so that solar power systems can be financed like gas lines or water lines, covered by a loan from the city and secured by property taxes.

While trying to expand its presence in the residential market, SunPower has also been adding new projects with large commercial customers.

Verizon Communications (NYSE: VZ) announced that it will invest $100 million in a solar and fuel-cell energy project that will help power 19 of its facilities in seven states across the country. When completed next year, the project will enable Verizon to annually generate more than 70 million kilowatt hours of its own green energy, enough to power more than 6,000 single-family homes a year, while eliminating more than 10,000 metric tons of carbon dioxide, enough to offset the annual CO2 emissions from more than 1 million gallons of gas.

Verizon has also signed a multiyear agreement with SunPower and is negotiating the deployment of high-efficiency rooftop- and ground-mounted solar photovoltaic systems as well as solar parking canopies at Verizon facilities in California and five other states.

The systems, which will generate approximately 8 million kilowatt hours of electricity annually, are expected to be completed this year and to reduce Verizon’s annual carbon footprint by more than 5,000 metric tons of CO2.

“Verizon and SunPower share a commitment to quality and reliability, and SunPower looks forward to working together to meet Verizon’s long-term renewable energy goals,” said Howard Wenger of SunPower. “With SunPower’s energy services and high-efficiency systems, Verizon will benefit from clean, solar power generation and cost savings at their facilities.”

Given the recent news that the budget deficit is coming down more quickly than expected, perhaps the US Energy Department will tiptoe back into the business of subsidizing the transition to solar power. Europe remains gung-ho about solar, so when national budget pictures on the Continent improve, more assistance could be forthcoming there as well.

SunPower’s share price has been on a bit of a roller coaster ride for the past 36 months, with a sharp decline in 2011 followed by doldrums in 2012 and a strong recovery so far this year. We think the stock will continue to climb.

The fact is, no one knows how big the upside is in solar power. It’s by no means a risk-free investment, but the potential for major gains is as high as in any industry you could name.

Thomas Scarlett is an investment analyst at Personal Finance and its parent website, Investing Daily.