Jack Yetiv

Game Changer in Solar Energy: PG&E Inks Deal

User, I still believe that TSL and SOL offer the best value in the solar space, and have not sold any of my shares in either one. I bought my considerable position in TSL in the low 40's about maybe 3 months ago, so I am way underwater on those. SOL I bought about 3 weeks ago at $13.54, so I'm good on those.

But keep in mind this has been a very fickle, anti-solar, anti-oil market, and even though I thought FSLR and CSIQ announced very well, their stocks really haven't gone anywhere, unlike at any time in the past. Part of this is due to the perceived connection between dropping oil prices and a lower attraction to solar, and part of this is due to negative press on the solar companies and ITC expiration concerns.

TSL is by far the PE leader, trading at what I believe to be a 2008 PE of under 9 (I am projecting income at about $3.50 for 2008), while SOL is at about 11-12 PE, but SOL is much more loved by analysts and the investment community.

TSL announces tomorrow and SOL on Tues. In the past, I would have said that if they blow out their numbers, they will go up 30-40%, but having observed FSLR and CSIQ, I'm not as sure this time around. But the solar stocks have shown some strength recently, so maybe we will get a nice run if these companies report very well. LDK absolutely demolished estimates, and last quarter, probably would have run close to 100%, but only ran about 30% this time.

But since I am not a daytrader, I can wait for the market to recognize the value in these names.

Jack

Game Changer in Solar Energy: PG&E Inks Deal

Don't know much about Optisolar except that it's a private company based in Hayward, CA, where I used to take helo flying lessons! I have often seen it listed as a minor, start-up thin-film producer, but clearly, 550MW is no start-up (to give you a metric--550MW is in the range of what either SPWR, TSL or CSIQ will make in 2009--total company production). Do keep in mind that these contracts won't begin to be realistically performed for at least 6 months, probably closer to a year, and much can change in a year.

My guess (and it is only that) is that Optisolar's efficiency is today in the ballpark of FSLR, which is about 11%. SPWR has laboratory 23.6% efficiency, and I expect their production panels in 2010 will probably be around 25%.

As to McCain and Obama, to my knowledge, neither has come out and stated a position on the ITC, but both have included "renewable energy" as something we ought to do. But even forgetting the two candidates, there is a growing groundswell of support for renewables in this country, and Boone has helped put renewables/wind on the map. Just like poll results will push Obama not to oppose drilling the OCS/ANWR, I believe the same will happen with renewables.

Watch for this topic to become front and center during the debates.

Also, it's entirely possible that this issue will come up when Congress returns from its recess in a couple of weeks. Remember, the states are way ahead of the federal govt on this issue (30 states now have RPS's, Renewable Portfolio Standards), which will also generate pressure on Congress to do something. Finally, as the economy slows, and unemployment increases, extending the ITC will be sold as a "jobs creation" plan--which of course, it will be.

One way or another--and for so many reasons--this country HAS to support renewables. And, I believe that although we'll be late to the party (compared to Europe), once we get to the party, we'll be the heaviest drinkers.

Jack

Game Changer in Solar Energy: PG&E Inks Deal

I wrote a series of articles on solar on this site several months ago, so, to avoid repetition, my comments here will be brief:

1) It was actually another Calif utility--Southern Calif Edison--that launched meaningful utility-scale solar in the US with its 250 MW announcement on March 27 of this year. SCE's is a distributed model, where they will rent large commercial rooftops on which they will install dozens if not hundreds of panels. Therefore, solar on distributed rooftops will continue to grow and prosper, especially in new construction (as noted above) and via BIPV (building-integrated photovoltaics).

2) The distributed model has both cost advantages and disadvantages. The disadvantage is that it's easier to install 10,000 panels in one site than to install 100 panels in 100 different sites. However, the advantages probably overcome this--no need to buy land, no need for new transmission (a real issue in many parts of Calif and elsewhere), and minimal transmission losses, which routinely exceed 10-15% of power produced in a power plant.

3) One of my articles argued that in proper locations, we have essentially reached grid parity. SCE's, and now, PGE's deals, prove this to be true. Why is this true? To briefly recap points in my previous series of articles:

a) Solar's power-production profile better suits peak load (although trackers can achieve close to full power for 12 hours, as my own domestic tracking-PV system has now proved for 4 years), making solar KWH's much more valuable than wind's or conventional power plants.

b) The cost of coal and nat gas have increased a lot in the past year (even taking the recent falls into account), making "conventionally-produc... power much more expensive than it used to be.

c) Utilities and their financiers are starting to take carbon production into account, and once you do that, solar becomes very competitive as well.

d) Cost of making solar panels has dropped and will drop even more in 2009 and 2010. Note that the panels for the PGE project won't be getting made until 2009 at the earliest, and more likely in 2010, by which time many solar manufacturers believe their cost of making the panels will be 30% less than it was last year.

Finally, although on the surface of it, this project appears to be "contingent" on extension of the ITC, the reality is that this announcement was meant to put pressure on Congress to do exactly that. I consider it extremely unlikely--especially in the face of this announcement (and I predict you will see other big projects also announced which will be contingent on extension of the ITC)--that Congress will not extend the ITC.

Remember, we also have the likes of Boone Pickens lobbying (and putting pressure on) Congress to act in favor of renewable energy.

Jack

Cleantech "Power 10" Ranking (Vol. I)

Problems with wind versus solar:

(1) I guarantee you that wind towers and turbines will be more expensive to build in 5 years from now (and even 1 year from now, probably, unless commodities really crash). On the other hand, I also guarantee that solar will be HALF its present cost in 5 years.

(2) Wind requires (in most cases) significant transmission and distribution facilities (NIMBY as to big turbines where people can see them), whereas solar can be invisibly installed in a distributed fashion on flattish rooftops on commercial buildings (as Southern California Edison announced on March 27). This will get solar to parity with wind probably within two years.

(3) In many places, solar helps balance the load because when the sun is hottest and causing the most air-conditioning load--it is also generating the most power. In most places, this is not true for wind.

In summary, solar is better than wind in every way but one--cost.

But the cost differences will evaporate by 2010.

Of course, certain places have a great wind resource and a poor solar one. In those places, wind will continue to be cheaper than solar for some time to come, and there is such great need for renewably-generated electricity that both solar and wind will grow tremendously in the next decade.

But in most places, I predict that within 2-3 years, given increasing cost of wind and decreasing cost of solar, solar will offer the price advantage.

Jack Yetiv