Solar Stocks Rebounding, Is It Time to Buy?

I continue to pine after a solar company...I just don’t know which one, and I sure don’t know when. After reading SunPower’s white paper on “levelized” electricity theory, I am a believer in the viability of solar as a key alternative energy.

But remember the big bounce the industry saw right after the election? I do, and realized at the time that downside catalysts outnumbered the positive ones. For example, I’ve seen estimates of total megawatts produced in 2007 anywhere from 2900-3700 mw, and every major producer has been investing in massive capacity upgrades in the past year.

Polysilicon continues to be headed towards a supply gut, highlighted by news that Dow Corning (GLW) would be investing about $3 billion to add 30,000 metric tonnes of capacity on line, which will add about 25% to the total expected global capacity by 2010.

Here’s a look at how the big solar names have done since November 4, the last time speculative interest in solar stocks peaked out:

click to enlarge

The top two lines on this relative performance chart are SunPower (SPWRA) and First Solar (FSLR), reflecting their leadership in technology and innovation. SunPower should become the dominant U.S. producer and could be the first to $1/w, while First Solar is the leader in thin-film production, which could supplant the bulk of current industry production within five years.

So is it time yet? I don’t feel any particular rush, but that said valuations are still compelling (if you believe in viability) and balance sheets are generally strong industry-wide. A friend in the White House certainly adds to the medium-term catalysts, but I wonder if direct subsidies are not an option while other stimulus measures get the most of the Administration’s early attention.

Disclosure: Author does not hold positions in the companies mentioned.

Comments

[jbde:]

LDK - SPWRA is their largest customer and produces bifacial cells and modules. Wafers will still be around and produce much more power in intense sunlight than amorphous thinfilm. Thinfilm is good for typically cloudy areas as it is good at converting diffuse light.

2008 Dec 18 08:34 AM

[gebby:]

the investment thesis for solar is compelling. you can emphasize the negative or the positive, the positives far outweigh the negatives, i sense a general shift to more positive in most commentaries. the positives have always been there. now they may be emphasized again.

2008 Dec 18 11:16 AM

[frflyer:]

"First Solar is the leader in thin-film production, which could supplant the bulk of current industry production within five years."

I don't believe this. Thin film, being less efficient, is not the best choice where square footage is at a premium. If you are putting panels on your roof, you're going to want as many watts as you can get.

"but I wonder if direct subsidies are not an option while other stimulus measures get the most of the Administration’s early attention."

The tax credits included in the bank bailout already benefit solar.

Investing in clean energy IS what will revive the economy.
4 birds with one stone---energy, economy, environment, national security. It would be shortsighted not to use this tool.

What you're going to see is something along the lines of the Google energy plan or Repower America plan. Anything less is suicide for humans.

This will entail building 250 gigawatts of solar by 2030, in the US. alone. - PV and solar thermal. That's a pretty big market

Wind too. The NREL estimated that we could build 660 gigawatts of windpower in the U.S. by 2030. The Google plan shoots for 380 gWt.
We now have 313 gWt nameplate capacity from coal.
Solar thermal can replace all of that with base load power.

Yesterday it was reported at the AGU meeting, that the Arctic sea ice is disappearing 15 years ahead of what was predicted just a few years ago. It's time to end the disinformation campaign of the deniers ( who don't have a scientific leg to stand on) and solve the problem.
I strongly advise reading the book -
"The Heat Is On" by Ross Gelbspan. Then you will understand how one of the biggest and best funded disinformation campaigns in history has sought to confuse the American public about climate change. Parties to this crime have been recorded, saying that they knew the science was "closing in on them" and getting stronger, but that they should continue with the propaganda to confuse the public. They knew there was a small sliver of doubt about the conclusiveness of the science in the public's mind.
And that's where they aimed their PR campaign to widen that gap.
All paid for by the fossil fuel industry and the big 3 auto makers.

We still have the VP of GM talking about the completely discredited and debunked Oregon Petition with it's phony list of 19,000 "leading scientists" who are supposed to be skeptics.
It was a hoax perpetrated by a group on a farm in Oregon that doesn't include any climate scientists. They used forged National Academy of Science stationary to trick some scientists into signing it. Their leader believes pumping more and more CO2 into the atmosphere will create a garden of eden on earth.
If you believe that, you are not smarter than a fifth grader.

Same thing for Sen Inhofe's phony list of 413, (now he claims 650) "prominent scientist" skeptics. This has also been completely discredited and debunked as a padded list.
Included in Inhofe's list are:
20 economists
44 television weathermen,
84 scientists who have either accepted money from, or are otherwise connected to, the fossil fuel industry or likeminded think tanks
70 scientists with no expertise in the subject,
Ray Kurzweill inventor -- not a climate scientist
Coleman -founder of Weather Channel- not a climate scientist

Here's Exxon funded Heartland Institute's list of skeptic "experts" from Texas. They couldn't get one climate scientist on the list, despite the fact that there are dozens if not hundreds of climate scientists working in Texas.
They named four "experts"
and energy expert
a policy analyst
a petroleum engineer
an emergency physician
That's it.

I'm pointing this out, because I know the deniers will jump all over my warning about the consequences of inaction.

2008 Dec 18 01:05 PM

[frflyer:]

The non climate scientists I show from Sen Inhofe's list, is from his first claim of 413.

2008 Dec 18 01:29 PM

[NOWHEREMAN:]

Apparently some solar firms in Spain have fraudulently increased their sales figures. The panels are sold to friends and family, then stored in wharehouses.

Who will bear the brunt is currently unclear. An investigation is ongoing.

2008 Dec 18 05:39 PM

[smlcap:]

The author asks..."So is it time yet? I don’t feel any particular rush"
I thought it was time about 5 or 6 weeks ago and I bought SPWRA. No regrets. What are you waiting for? Christmas? That's only a week away.

2008 Dec 19 12:32 AM

[p m:]

While I am holding many solar shares, it would be wise to use all of mother natures resources so we can reduce the foreign oil aka Opec drain. We should look for balance in life & keep the inovations coming...Plus if we can reduce our waste, like we have reduced the need for foreign oil, it will be a win-win for the USA and others who do likewise. What if: the earth's center is similar to a car engine and will explode because we are taking too much oil and water out??? Has anyone thought about the excesses that the USA just takes for granted? We are smart people with an integration of cultural genius from the different educational systems...IF ONLY WE WOULD UNITE FOR PEACE, THE WORLD WOULD BE A WONDERFUL PLACE and it will probably last longer. Look what GREED got all the Madoff investors... they are crying about how much they lost now but if they had invested over 9 years with him, they already were in a profit position.

2008 Dec 19 02:41 PM