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.

The 'Problem' With Solar Companies is Not Really a Problem

Solar still requires subsidies as the cost is higher than comparable fossil fuel power. The cost of fossil fuel is going up and the cost of solar is going down. Some solar uses are cost effective now. I would expect that solar subsidies will drop per unit, but not be eliminated. Even will Spain cutting back subsidies, they are not the only country. There should still be enough demand for the industry to grow rapidly for the next several years.

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.

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.