The Long Case for Solar Energy

As we start to understand this current financial mess, it is becoming clear that deflation, not inflation, is the trigger to the periodic meltdowns we have come to know and hate for the past 30 years. And, as we have learned, you can inflate your way out of recessions.

"Why solar?" you then ask. Because the Federal Reserve will learn its lesson this time. It will learn that when US GDP growth reaches 4%, and oil reaches $100+/barrel, putting the hard brakes on always causes serious angst, and increases inevitably lead to decreases- and don't forget, Fed Funds is currently at 1.5% and headed lower, so don't think the false lesson of "easy money" will be heeded anytime soon.

Rather, as a world in need clamors for continued growth, central banks around the world will cooperate to keep rates low. This will counter deflation in some assets - housing, US wages, garage-sale t-shirts - while leading to inflation in others - oil, gold, and Chinese goods - but will also give capital a chance - with the newfound realization that central banks understand inflation can be a good thing - to get comfortable with the idea that investment in replacement technologies and increased capacity can actually provide a return.

And this is where solar comes in. The latest solar technologies promise 40% efficiencies, double the 15-18% we heard in the first oil scare. In the US southwest, solar can generate 50X the power per acre as wind most days. Moreover, transmission technologies promise low cost transport of electricity. So diversified investments in solar technology for utility-size installations over the next 30 years could pay off in tremendous profits. And ultimately less reliance on foreign oil.

Disclosure: none

Comments

[it-trade:]

What solar technologies are promising 40% efficiencies? Do you have a source for this?

2008 Oct 23 09:27 AM

[Pipo:]

In the alternative sector space maybe Global Water is the most interesting.

Jim Rogers is buying water infrastructure stocks.

jimrogers-investments..../

2008 Oct 23 10:03 AM

[NOWHEREMAN:]

TBoone is selling CLNE shares. Maybe the author means that, since the 70s, the efficiency has gone up by 40%.

Instead of thinking of Solar as a tech play, it should be a Utility play with PEs to match. The implication that this will take another 30 years however means that Solar will play a minor role in the overall electrical generation process.

2008 Oct 23 10:55 AM

[kebu77:]

39-40% in the lab. 7-19% commercially available, depending on cost...

2008 Oct 23 11:22 AM

[Tomas Martin:]

Triple-junction cells based on three different photovoltacis in a sandwich using III-V elements like Germanium instead of Silicon do regularly reach efficiencies above 40% (the record is 42.8% by DARPA, with typical commercial devices hovering around 38% at present: www.futurepundit.com/a...)

These devices are a lot more expensive however, and need the light entering the cells to be concentrated by a set of mirrors or lenses, so called 'concentrating photovoltaics' or CPV. Another concentrating tech focuses the light onto molten salt, which heats steam and drives a turbine. This Concentrated Solar Thermal (CST) technique has the advantage of storing the energy in hot salt reservoirs for 7-9 hours or longer after the sun sets, reaching close to 24 hour generation in desert areas. 400MW is currently installed but 14 times that is planned to be in place by 2013.

Photovoltaics is similarly booming. Efficiencies are as much as 23% (SunPower are I think the most efficient using normal silicon) and thin-film is at around 10-12%.

The key issue is not efficiency but cost. Solar thermal is booming because with salt storage it is already cheaper than nuclear and gas turbine plants and this price is expected to drop further. thin-film is less efficient but cost-wise is much closer to the target of $1 a watt. Some firms such as First Solar may reach that goal in the coming months.

As silicon supply increases (silicon manufacturers have made vast investments in recent years to catch up with the demand from PV) the price of PV will come rapidly down and then many analysts predict PV will really start to take off, although thin-film may become less attractive if silicon panels begin to match them in price competitiveness. Either way, Solar (which is around 7 years behind wind in growth cycles) will become a major player in the next five years.

2008 Oct 23 11:32 AM

[nakedjaybird:]

Thomas Martin - I like your solar numbers of 400mw installed now and 14x that by 2013; that's the equivalent of 5 nuc plants in the time period nucs need prior to moving dirt.

2008 Oct 23 01:38 PM

[Ahem:]

30% currently available, used in satellites now. Not your everyday usage, but it demonstrates the possibility and durability.

I'm long on the company cited:

www.emcore.com/solar_p...

They're one of the companies who are near 40% in the lab for terrestial use.

2008 Oct 23 02:01 PM

[Tomas Martin:]

jay bird - indeed, it's pretty impressive and this is a technology well under the radar as far as I can tell. Essentially aside from the molten salt and the steam turbine, all that is required is glass and steel - very simple from a construction point of view compared to nuclear. That 14x is just for solar thermal too - it doesn't include Stirling Engines, concentrating photovoltaics, thin film or silicon photovoltaics.

2008 Oct 23 03:39 PM

[NOWHEREMAN:]

Penny stock Open Energy, OEGY has been working on CSP for 5 years, this technology is not new or under the radar. SunCone.

There are other workable technologies which will wipe Solar of any stripe off the Map. How about Clean Coal, I don't mean all that expensive liquification or whatever, I mean using the current coal plants with the dirtiest coal avaiable without the release of any CO2 whatsoever, 0% emission. This will be available within 2 years. Membrane filters which work on a molecular basis and trap all CO2 molecules. Just remember to replace them.

Currently being grown in Labs, not public. How will Solar compete with this technology?

Or TB's wind power solution with Nat. Gas cars. Let me destroy that for you too. Would anyone in his right mind convert to natural gas cars if they could buy gasoline for under $2 with emissions so low that ethanol wasn't necessary. Public company, proprietary Tech, proven to deliver refined oil products on a $28/brl implied cost. Pilot project proven to be environmentally safe, first commercial plant under construction. Financing obtained early October. I will give you a hint, its not an american company. But the US will profit the most and the environmentalists will love it.

Good luck with Solar.

2008 Oct 23 05:18 PM

[billp37:]

Ask about HEAT RATES for solar technologies.

Not a good idea to go with any alternate electric generation scheme which violates the first and second laws of thermodynamics.

HEAT OUT = HEAT IN - HEAT LOSSES

1 Kilowatt hour = 3412.14163 BTUs.

May not be able to beat the above?

2008 Oct 23 10:14 PM

[Tomas Martin:]

As an analyst in the renewable field, I've been to a few events by carbon capture professionals in recent weeks and have come away distinctly unimpressed. Even their best case scenarios don't have plants of any meaningful size until 2015 at the earliest - and they still haven't decided which method they plan to use! There are three main ways to capture carbon from coal - remove all the nitrogen prior to burning so that most of the gas after burning is CO2(the oxy-fuel method), scrub normal gas emissions using chemicals (the post-combustion method) and to convert carbon to mostly CO2 and H2 before bruning (pre-combustion method).

Technology takes time to develop and CCS is at least ten years behind solar, in my opinion. We have so far only seen small lab demonstrations of the technology and this stage of development is where the most delays occur. By the time a few hundred MW of test CCS are installed in the middle of the next decade, solar, wind, geothermal and even marine renewables may be too established and have come down so much in price that CCS is no longer a finanically attractive option. I think a lot of dirty coal plants capable of upgrading to CCS will be built and eventually converted but in terms of actually CCS-enabled plants, I'd guess we are 8-10 years away from even early commercial installations, equivalent to where wind was in the early nineties and solar was at the turn of this century.

2008 Oct 24 05:33 AM

[NOWHEREMAN:]

I get an update weekly called EngineerLive. A couple of months ago at some University or other a Few Students were fooling around in a lab and started growing organic membranes, very cheaply. Their Instructor published their findings. These membrane Filters can be grown to any size and can filter out any molecule desired. Fitted in smokestacks, it will eliminate 100% of the CO2 emissions or whatever molecule is targeted. Since this was a Lab product, I made a note of the Effect and will wait for the IPO. This has nothing to do with Clean Coal and everything to do with isolating the emissions after burning it.

A combined proprietary process of UCG and GTL has created the world's first Diesel in Oct. of 2008, 3 weeks later the Company has received funding for a Commercial Plant which will be designed to produce 20,000 gals daily. The process has undergone rigorous testing and is environmentally safe.

Since you are an analyst in the Alt. Energy field, why don't you tell me the name of the Company.

Better yet, why don't you talk about CVA which not only receives money for hauling waste but converts it into energy selling it back into the system. 35 plants already in operation, a truly recession proof company with an impressive growth record. Or is it too mundane?

2008 Oct 24 07:20 AM

[NOWHEREMAN:]

The point is that no matter whether it is one analyst or a convention hall of them, NONE of them told anyone to get out anywhere close to the Peaks. Probably told everyone to keep buying on Pull Backs. But at this pont who has any money left?

Bulls VS Bears But Pigs get slaughtered.

We are still in Falling Knife Mode.

Back in 1987, the Friday before the Crash. The DOW was reamed. The real Crash occurred on the next trading day. I, personally, would not stick out my hand
umtil the Fed Cuts interest rates at least 50 basis points or more.

Greenspan said his approach to the Financial Markets was "Flawed"...heh, heh. Bernanke is an academic put into a position after studying Economics 101 based on the Volcker/Greenspan theorems. His approach is certainly flawed as well.

2008 Oct 24 01:32 PM

[Jay Z Joshua:]

Excellent thread guys! Has anyone hear of NanoSolar and the CIGS production of thinfilm? They claim on thier website to have achieved around 20% efficentcy at 1$ Kwh.

2008 Oct 24 03:03 PM

[NOWHEREMAN:]

Heard of both, also, CSPs.

Regarding Wind, TBoone's ads have gone by the wayside and his stock is plunging as well. Where will he be able to raise the money needed to pay for the pre-ordered $3 Billion worth of Turbines from GE? GE will not give him credit since its about to go to the Gov. for a handout to survive the Problems at its Financial Unit.

Will he use his own personal wealth, unlikely since most of his portfolio was in oil and related shares. And he has been unloading CLNE stock as well.

Buffet is Bullish on the Market? He sells some Put options on Burlington Northern, all that means is that he is willing to average down on a stake he already owns.

His company earnings were down last quarter, a quarter where he spent billions in acquiring major stakes or companies in Europe Just before the meltdown. Posco, Korean steel maker, he bought virtually at its top.

I can't wait to see Berkshire's earnings and net asset value. Did you know that Oracles are Blind?

2008 Oct 24 10:17 PM