A few months ago oil industry executives were rubbing their hands gleefully, maybe even emitting a few evil "ha-ha-has," convinced that their political pressure to end subsidies, combined with a near-term glut in oil and gas, would stick a fork in First Solar (FSLR), the industry leader.
No such luck.
As I have written here many times, the key to the market, with solar generation costs still higher than those of grid energy, has been the buy side of the equation. Stimulating demand, generating sales, is the key to survival.
And given the current political zeitgeist you better not have any big government involvement in that.
So how does First Solar escape the trap of Mr. Oilfinger?
Bank of America (BAC), Credit Suisse and Citigroup (C) are all backing asset-backed securities valued at up to $4.6 billion over the next year. These will be used by resellers such as SunRun and SolarCity to finance residential solar builds, with the money to be paid back from the electricity the systems generate.
The re-sellers can create the securities based on existing contracts with consumers, essentially turning existing agreements into securities.
It's not just homeowners using this form of financing. WalMart (WMT) stores in California got solar panels last year, through SolarCity, and these may now be financed through such bonds.
This isn't First Solar's only bond play. Berkshire Hathaway's (BRK.A) Mid-American Energy Holding issued $850 million in bonds earlier this year to help finance construction of a $2.4 billion project that will be complete in 2015. It's a 500 Megawatt project using First Solar panels whose grid energy will be bought by Mid-American customers as "green energy."
All this is designed to bridge the gap between current technology and the next generation, which will be able to use invisible frequency bands, plastics, new installation designs and increased yield to bring generation costs below those of fossil fuels.
That will create its own demand.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.