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Harris Roen
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Harris Roen is a financial writer with a passion for understanding the economic activity of our interconnected world. His previous experience of over 15 years as a professional portfolio manager helps him ground-truth the hype through independent research and analysis, providing valuable... More
My company:
Swiftwood Press LLC
My blog:
Roen Financial Report
  • Investing in Solar 1 comment
    Jan 12, 2011 11:17 AM | about stocks: AMAT, ASTI, BTUI, CSIQ, CSUN, EBOD, DQ, DSTI, DUK, EMKR, ENB, ENER, ESLRQ, FSLR, HOKUQ, JASO, JKS, LDK, NEE, NRG, PEG, RGSEQ, SOL, HSOL, GTAT, SOPW, SPIR, SPWR, STP, STRI, TSL, WEST, SUNE, YGE
    In order to successfully invest in solar energy, you need to know what you are investing in. There are several important sectors within the solar industry. Also, companies reap different amounts of their income from solar operations. These sectors are outlined in the chart below.
     
    Click for larger chart 
    See full size chart here

    Equipment Manufactures for Solar Industry
    sell machinery and materials that solar factories use to make photovoltaics. Photovoltaic Production companies build the solar cells. Downstream companies produce the more basic components: raw materials, silicon ingots and silicon wafers. Upstream companies manufacture solar cells and fabricate panels. Integrated companies span several areas of production. Distribution/Instillation/Service companies are primarily involved in taking solar products and building the arrays. Utilities are selling power to the customers.
     
    Companies in the chart are sorted by market capitalization within each sector, so the largest companies are on top. Note, however, that the largest companies (JKS for example) are not always the leaders in sales. The last column shows what percentage of a company’s revenue comes from solar related activities. So for example, WFR is one of the largest silicon wafer manufacturers out there, but only about half of their business comes from solar. Also note that although the utilities listed are involved with large solar projects, solar is only a small part of their total energy portfolio (usually around 1-2%)
     
    What does this mean for investors? There is much competition in the solar manufacturing sector. It is a very crowded field that many argue are supplying more panels than there is demand for. I believe the larger, more integrated solar companies are the best long-term investment prospects - they are most likely to benefit from the utility-scale solar projects that are will be built in the years ahead. Also, I find equipment manufacturers attractive as a group, since they should benefit regardless of which solar production companies win out. 
      
    For more information on solar and other renewable energy industries, visit the Roen Financial Report website.
     
    Disclosure: Long TSL, WFR
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  • DelFairchild
    , contributor
    Comments (165) | Send Message
     
    One would think WEST would be the system to go to with their plug and go AC set up (without the need for batteries). Although my play of WEST would be considered minimal in this sector, the problem with any and all of solar power is the volume of companies getting involved, but the many differences in the products being produced.
    What the consumer needs is a good breakdown of the advantages of one solar power system over the other.
    What investors really need is some buyouts or bankruptcies to reduce the amount of companies involved so we can invest in the last ones standing. Hopefully Westinghouse can do something with WEST. It just seems the best type to use.
    27 Jan 2011, 04:16 PM Reply Like
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