Three Solar and Wind Companies That Still Look Good

Raymond James & Associates’ alternative energy analyst Pavel Molchanov has three solar and wind plays for investors during this time when the credit crisis and the recession have combined to force many green energy projects to be postponed or cancelled. Why these three? Because, Molchanov told EnergyTechStocks.com in an exclusive interview, each has what might be considered a captive revenue stream that is helping protect it from the economic downturn.

The first of Molchanov’s three is SunPower Corp. (SPWRA) “I think (SunPower) will go up and, at a minimum, outperform its peers,” Molchanov told EnergyTechStocks. He noted that SunPower’s core competency is utility-scale solar projects and that in Europe and the U.S. there is a significant backlog of such projects. Explaining why there is a significant backlog despite the credit crisis, Molchanov noted that utilities still have access to capital and that, in the U.S., more than half the states have so-called renewable portfolio standards that continue to drive utility investment in alternative energy despite the recession.

The second of Molchanov’s investment “ideas,” as he called them, is GT Solar International Inc. (SOLR). “You might think this company would be at risk,” he said, noting that GT Solar makes equipment for the solar industry, an industry in which demand has “has fallen off the cliff,” as Molchanov put it. But the Raymond James analyst said GT Solar’s backlog is supported by prepayment of up to 40% of the purchase price. Consequently, Molchanov said, the company hasn’t experienced cancellations and its backlog is higher than it was six months ago.

Molchanov’s third investment idea is American Superconductor Corp. (AMSC), which he described as a combination wind and power grid play. Molchanov said about two thirds of the company’s revenue comes from the Chinese wind industry, which consists entirely of state enterprises whose spending is recession-resistant. Molchanov added that the other third of the company’s revenue comes from U.S. electric utilities and government research grants, two other recession-resistant sources of income.

Disclosure: no positions

Comments

[Truth Seeker:]

Steve, what do you think of ENER? And it is not just thin film - EUR 2.15 for Chinese crystalline, and EUR 2.50 for German crystalline means trouble.

Feb 23 01:32 PM

[Conan the B...:]

Aren't there any American solar manufacturers?

Incorporated Here, with Manufacturing Facilities Here.

Windmills? what do we manufacture here? Turbines, towers, power lines, Battery storage to get around the Variability of the electricity produced by wind and solar.

Bill Paul: You do not own any of these, you have not given your own opinion on any of them.

Do you even lke any of them?

Feb 23 02:48 PM

[globalview99:]

A subtle yet germaine point about the future of AMSC. Their products and proprietary technology are not just recession resistant but they will be in significant and continuous demand by several strands of the next economy: massive government spending (both China and USA) in energy efficiency, electrical infrastructure, and alternative energy.

Feb 24 04:12 AM

[ginchinchili:]

Perhaps the best green energy play is a company that isn't immediately associated with green energy and that's General Cable. No matter what kind of energy we're talking about producing it's going to have to be transferred long distances to be used, there's no getting around that. General Cable makes every kind of cable that will be needed for revamping the electrical grid and distribution of any alternative energy source. To me it seems to be the safest investment bet.

Feb 24 08:46 AM

[fireball:]

solar power and wind power seem to vulnerable to political whim. i haven't payed much attention to either in quite some time and am probably way behind. i did see an interesting report on nanosolar but when i checked it was private.
are any of them able to compete with oil or nuclear in cost effectiveness?
it looks like oil may provide a much better bang for the buck. i am behind on this and would appreciate info.

Feb 24 06:36 PM

[Greenbuck:]

Do anyone know the price for solar panels producing a substantial amount of energy? For instance 20 MW, 30MW, 50MW - are they rfeally more effective producing more energy. It would be necessary for being an alternative.
Perhaps they have to be in sunny states or countries - then take Californa as an example.

Feb 25 05:34 AM

[longtermstocks:]

What about ESLR?

Feb 26 10:56 PM

[Turtleread:]

It seems I cannot find stocks in alternative energy that hold up. They are all down. ESLR runs up and down. Wind is unreliable. The best investments seem to be the controls ABB, ENOC, etc. but sometimes they take a dive too! Even ORA has been a disappointment recently. I have AMSC and SPWRB in my group's portfolio, but no SOLR so may add it but I'm just in a funk as to what to do at this point.

Feb 27 02:07 AM

[frflyer:]

fireball

Wind energy is at about 7-8 cents/kWh, making it competitive now.

PV solar is much more expensive now, but prices are falling rapidly, as they have been over the past 20 years. PV should be at grid parity with fossil fuels nationwide in 10 years.
In five years it should be at grid parity in about 40% of the country. It is already competitive for peak energy in some more expensive energy markets like California.
First Solar is close to or at grid parity. Nanosolar says they can build solar systems cheaper than coal plants. And they don't have the costs of coal or cleaning up pollutants and CO2.

By comparison, prices for energy from new nuclear plants will be at least 12-17 cents/kWh
and similar prices for new coal with carbon capture.

Solar thermal is about 12-14 cents/kWh now. That is expected to fall below 10 cents/kWh in five years or less and to 5-8 cents/kWh when industry is up to scale in 10 years or less.

Overall, solar and wind should be cheaper than new coal or nuclear in a relatively short time, and competitive with traditional fossil fuel plants.

Oil only produces about 1.6% of U.S. electric energy.

Having said all that, you also have to consider the hidden or externalized costs of fossil fuels. Health, environment, damage to infrastructure like buildings from acid rain, military protection of oil, etc. These costs are huge and can no longer be ignored.

Half our coal plants are nearing the end of their lifespan, and are too old to qualify for carbon capture and sequestration, so should be phased out.

Another big advantage of solar and wind is the speed that they can be built, much faster than nuclear and "clean coal". Solar and wind are also more proven and ready to deploy than new nuclear technology or carbon capture.
Solar thermal pilot plants have been running in the Mojave Desert since the late 80s for example.
Besides that, they are very low tech compared with most other sources of energy.
And solar thermal or concentrating solar (CSP)
can store heat energy and run day and night.
Unfortunately there are no solar thermal stocks yet in the U.S.

There is also concentrating PV solar (CPV), which could prove to be cost effective since the efficiency of the cells is greatly increased and sunlight is amplified by 1000 fold. Emcore makes triple junction cells for CPV.

Solar thermal needs to be in areas of intense sunlight, such as the American southwest, and is much more cost effective in large installations of hundreds of MW. CPV can be effective over a wider area and is more applicable for small utility scale systems close to the end user.

An Israeli company, Zenith Solar has a new twist on CPV. They capture the heat from cooling water used to keep the cells efficient. Thus their systems provide electricity and hot water. They claim to be getting overall efficiency of 75% as a result.

Turtleread

You say wind is unreliable. Actually, wind has a higher capacity factor than solar PV. Wind is 35%, PV is 25%
I don't know what CPV would have for a capacity factor, but concentrating solar thermal(CSP) with heat storage should be able to approach that of coal and nuclear.
CSP plants are being built now with 6-8 hours of molten salt heat storage for nighttime generation. 12-14 hours of heat storage is feasable.

In the U.S., wind energy grew by 50% or 8.3 GW last year. Given the 35% capacity factor, that's the equivalent of building 3 nuclear power plants of 1 GW each, in one year. It would take at least ten years to build three nukes.
It's also the equivalent of 5-6 coal plants of 600 MW each.
Wind is the greenest of all and has the lowest land impact of all. It only uses about 2 1/2% of the land where it's sited, because turbines have to be spread out to not interfere with each other's wind. That means it can co-exist with agriculture and conceivably could share land with solar farms.

The reason you can't find alternative energy stocks that hold up is the economy and market in general. Lack of credit mainly.
We have to think long term.
It looks to me like you've made some good stock picks.
I'm looking to pick up something in wind, probably APWR and Vesta. My approach to solar is having a small basket of them. CSIQ EMKR ESLR TSL STP LDK YGE

I would also pay attention to some of the companies that are still private, like NanoSolar, Heliovolt and the solar thermal companies. One way to play solar thermal now is through FPL, though it's not a pure play.

Mar 10 02:45 PM