Global Warming Examiner

Solar Breaks Oil Price Dependence

The price of oil should not directly affect the demand for solar cells. Solar creates electricity while oil is used for transportation. Solar will be more affected by the ability of utilities to burn more coal, cost of natural gas (alternative to solar assuming you can't burn coal), price and availability of wind power.
Tax credits for solar power are currently the biggest factor in demand. Due to governments indecisive nature on future credits, solar stocks can have very large price swings as expectations change with political fortune. US government will be deciding on extending credits that expire the end of this year.

Solar's Warm, But Not Hot - Barron's

Subsidies to renewable energy, including solar, is one thing that congress agrees on.

Is There Value in Silicon Solar PV?

All of the silicon solar companies are growing capacity rapidly. Some analysts seem to think that this growth will eventually push the group off a cliff as governments remove or reduce incentives for solar systems. This assumption is based on the fact that as production increases, solar incentives will become more costly for governments to fund.
What is most likely to happen is that governments will reduce solar system incentives. This is not a problem for the industry as the costs of solar are decreasing. The cost of alternatives to solar like natural gas are increasing. That means governments can still get solar power to grow in the future with smaller incentives. Other uses like solar panels on electric cars could create additional demand. Hopefully solar will reach a point where it will grow without incentives.
There are a lot of companies that are researching and even producing solar from thin-film technology. But they can not meet all of the demand from the market so silicon based solar still has tremendous room to grow. Many of the solar companies are sold out into next year. Article on my web site: "Solar Cell Manufacturers Have Room To Grow" shows how small a contribution solar is currently making to world electric production. Shorting these companies, especially the ones that have raised guidance is very dangerous. I am long CSIQ and TSL.

Solar Shorts Keep On Rising Even As Oil Surprises

When you compare the cost of solar to other energy sources, solar used to be compared to the cost of coal. Since it will be very difficult to build a new coal-fired power plant now due to global warming considerations, the cost of solar should now be compared to the cost of natural gas. Maybe this is why solar seems to track with oil prices. New solar electric production will displace natural gas electric production. The cost of natural gas is rising while the cost of solar is dropping.

There are also new applications for solar that could add to demand over the years. Toyota is planning to put solar panels on its Prius in 2010. This could be a developing trend with all electric and hybrid electric cars. As I discussed on my website, solar on a car is cost effective. The solar energy is displacing more expensive gasoline so the electricity produced on a car is worth 31.5 cents per Kwh based on $4.00 gasoline. At $5.00 gasoline the electricity produced is worth 40 cents per Kwh.

Which Are the Bargains In Solar Stocks?

Update on SOLF - The Earnings projection for SOLF in my chart is apparently incorrect. Newstar - appreciate your pointing it out. I posted the projected 2009 earnings number after checking with a couple of sources. Today one of my sources has reduced the number to $1.34. Newstar got a $1.16 number. At $1.34 the 2009 P/E would be 15. Remember these are estimates. I don't trust the 5 year growth estimate for SOLF, but the PEG would be higher than the 1.03 number listed in the chart. SOLF is a stock that doesn't have as good a visibility as the other solar stocks and as such I consider it to be very high risk. Sorry for the incorrect data.

Solar Cell Manufacturers Have Room to Grow

Robert - Let me try to explain my math. 3.8 GW (billion watts) is the total combined output of all the solar cells produced. This is the amount of electricity that can be produced at any one time. This is the equivalent to the output of 4 nuclear plants. If the cells produce power for 7 hours per day, then the amount of power you get in one day is 3.8 GW x 8 hours or 26.6 GW hours. Multiply by 365 days and you get the annual production of 9,709 GW hours that will be produced each year by the solar cells manufactured in 2007. The 12.4 GW of capacity is the sum of all solar cells produced before and through 2007. Since solar cells last a long time, each year the world solar capacity will increase by the amount of solar cells produced in that year. Currently the demand for electric power is growing faster each year than the worlds manufacturing capacity for producing solar cells. Manufacturing capacity is growing at an exponential rate, but even with that rapid growth, it will be several years before manufacturing capacity will provide a meaningful amount of new solar cells each year to meet demand. Hope this helps.

Solar Cell Manufacturers Have Room to Grow

Jack - You are correct that only a part of the world is enjoying subsidies for solar cells. The manufacturers are maxed out on production right now anyway. My analysis was very rough to show only the substantial room left to grow in the market. Over the next couple of years the production capacity is likely to grow and new data will allow for a more exacting analysis of when capacity catches up to demand. There are a lot of unknowns now, such as how much, if any, fossil fuel energy production will be removed and replace with renewable energy. How big will future subsidies be? How much will costs for solar cells go down? Still for now I believe solar companies will be expanding production and this should drive their stock prices higher. If they also start to enjoy expanding multiples, the stock prices have the potential to go very much higher.

Those Bubbling Solar Stocks

The amount of annual production for all the solar stocks is only on the order of a couple of Giga Watts (GW) per year. That is about 2 nuclear plants. The world could use 10 times or more capacity easily as long a governments are going to provide incentives to buyers. These stocks could easily all grow production at 100% or multiple rates for several years before they reach a level of production that saturates demand.

Solar Power Will Be Transformational in the Next Decade

I am long on CSIQ and TSL because I believe the industry is currently capacity constrained. The shortage of polysilicone is abating and these companies could grow production volume at some very impressive rates for several years. All of the solar producers can make money, I just favor the ones with the lower P/E ratios.

Solar Power Will Be Transformational in the Next Decade

I looked at a 2KW installation for my home and the price, after rebates and credits was about $17,000. The full price was closer to $30,000 without incentives. Assuming 6 hours of full, direct, sunlight per day producing at full power and cost of $0.125 per KWh is $1.50 per day. That's $548 per year (assuming no cloudy days). That is a rate of return on investment of 3.2% per year or a payback time of 31 years.

It is getting closer to being a reasonable investment after credits and rebates. Things that would make the equation more favorable: If power companies would switch to time of day pricing, they would buy peak power for a higher price. Establish low cost loan programs with government guarantees to reduce the cost of borrowing. Raise the price of coal and other fossil fuels. Reduce the cost of solar panels and inverters.

Bottom Line: the subsidies that the solar energy is currently enjoying is creating artificial demand. This demand is important to drive the price of solar systems down so that eventually we will reach the price where solar power is economical on its own merits.

Solar Stocks: Nine That Will Shine in a Bull Market

Amazing set of comments - most about nuclear.

The most expensive cost of nuclear - the one that makes it prohibitive - is the cost of the lawsuits. Go read Public Citizen.

Without the lawsuits it is as cheap or cheaper than coal plants.

Good point that coal has uranium in it and does release a very small amount of radioactivity. (GEE! We are all going to die from years of radioactive exposure from coal plants! lmao!) The other pollutants form coal, like mercury, are much more dangerous.

Have a problem with water? Why not put the plant near the ocean, which is also where most of the population lives and where most of electricity is consumed.

When Will Solar Achieve Grid Parity? We're Already There!

Nuclear is only expensive in this country due to the lawsuits. Serial lawsuits can effectively keep a nuclear plant from being built indefinitely without an act of congress.

France generates over 80% of their electricity from nuclear power. They have not only the lowest cost of electricity in Europe but also the cleanest air. They also recycle their nuclear fuel so they don't have a disposal problem.