tom Andersen

Solar: Energy's New Growth Sector

The only thing that will make solar work is for governments to stop the massive subsidies. When Spain made a big cut prices tumbled 30 - 50 % in months. Unfortunately prices need to come down by a factor of 10 to make it really work. It could work, though - remember when a DVD player cost $500? They are $20 now. The companies that make the 'real' hardware may or may not even exist now. Super scary to invest. But unlike wind, there is actual realistic hope that it might work.

First Solar Sell-Off Is Overdone

When solar power is 10x cheaper than it is now, it will be competitive. Until then all solar exists at the mercy of govt programs. When the public wakes up to the cost, the whole thing may collapse. Why FSLR would come out of this kind of scenario alive is beyond me. Stay away.

Solar Breaks Oil Price Dependence

Look at First Solar. The market cap, 20 billion, and it will produce panels that would produce less power than a 0.06 billion dollar nat gas generation plant that you can almost order from a catalog. There are no US contracts for it, as only the Europeans have the stomach to pay $0.60 per kwh for power where nuclear and coal are about 1/10th the cost. When the global recession deepens subsidies like these will fall away long before basics like health care and defense spending. US government income will drop substantially next year across all levels of government. Solar as it exists is a bubble. This is electronic tech, though, someone may have a breakththrough - a 10x cheaper way to do it, but all the companies around today will have spent way too much money to be competitive at 5c/kwh.

Solar and Cash: The Big Boys Have an Answer - Do You?

Looks like a classical bubble. Solar costs right now about 5x what coal and nuclear costs, (Typical price for electricity is 5 - 9c for production, 5c for delivery). Hydro Quebec makes electricity for under a penny. Going to the FS website does not tell you how much it all actually costs them (ie YOU as taxpayers) to buy all this fun stuff. But look at the financials, then divide that by the total sales of panels in watts, and it starts to become clear. Don't forget that the panel output is peak on a sunny day, so divide by 4 or so for realistic power output.

2008 - '400MW' of solar panels - ie about 80MW of actual power on average, which at wholesale electrical prices, say 5c/kwh is 0.05*80000*24*365/1e6 = 36 million dollars of electricity produced by their products for stuff installed this year (being optimistic). 22 Billion in market cap to produce as much electricity as a $60 million nat gas plant.

Ok - so everyone is betting that they can reduce costs by a factor of 5? The press releases all mention single digit increases in efficiency, or modest drops in prices. Even if they figure it all out in 5 or 10 years, someone else with lower costs will come along and take all the business.

With the economy being what it is, everyone is looking for something positive. Follow it up, but don't hold on!

--Tom