alpha24seven

Solar Shorts Keep On Rising Even As Oil Surprises

Don't short solars on hope/hype/oil or any of that. Short solars on their exposure and complete reliance on subsidy. The subsidies are faltering around the world and if they crack further, solar will be beat into oblivion. That is a good thing because only after the artificial high priced PV environment will plummet and -- finally -- we can get on with the energy revolution. It's called solar 2.0.

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

Well you presented the "problem" without even knowing it. The entire solar industry is predicated with success using subsidies. When these companies start flashing big numbers in their 10k/q then the subsidies will end -- hard.

Ever see a heroin junky go clean? Not pretty...

Contradictions in the Solar Market

There will be a huge oversupply of everything from Si to finished panels. It is a fact. The "huge demand" someone above mentioned is predicated upon a government subsidy somewhere. Problem is the subsidies will only subsidize a portion of total output. The global subsidy spend is flat contrary to what the media and this industry would have you believe. There is not a new Germany out there to absorb the massive new flow of product. Solar is far too expensive to sell without a subsidy. So what of the excess product? Glut leads to margin compression leads to share collapse leads to company failures leads to no interest in external funding. Solar has always been boom and bust. This time it's the mother of all busts.

A few other considerations. Solar 2.0 (I termed that phrase) will include new technologies such as Nanosolar and other innovations that aren't that far off. They will orphan both Si and thin film and makes us say "remember those big ugly panels". Not today but not ten years from now either.

Profit Taking Could Dim Solar Plays

And I'll add.

1) Overcapacity and slacking demand. The overall ouput in MW's far exceeds all global subsidies by at least 50% going forward. Solar never sells without a subsidy. Who will pay for it? And YES demand is slacking. For example, Germany is soft and the California program is struggling. Subsidies are slipping as in Germany where they are starting to favor wind and witness the latest lack of support for solar in the US energy bill.

2) The housing debacle. The residential solar market is terrible. Who puts a +$20k (after subsidy) solar array on a home losing value? This is putting pressure on the commercial side to absorb the excess and it isn't happening -- yet. And this just isn't the US. Spain is in a tailspin and England is knocking on the door.

3) Recession. If we have one it will definitely impact solar sales. No question. It is not immune by any stretch of means. Many say we are already in recession.

Forget all the multi year projections from the solar industry. Recognize what is happening at the street level today.

US Energy Bill: Solar Stocks Will Feel All the Heat

This piece is quite accurate. The solars will all get pounded but not before the "blow off top" which I would bet is what we are seeing here.

The irony is that what is left of the solar industry will be much stronger and be able to carry us to where we need to be. Of course much pain and lamenting until then. Ultimately the solar (surviving) companies will by then have learned how to function without subsidies which is in fact the real reason the solar industry has not been able to deliver a true consumer product. Subsidies are just like crack cocaine to this industry and breaking the addiction will be ugly. We are about to see it.

You don't recommend shorting any of these names but I sure as hell will. I know this industry very well and some serious shorting is in order to reel some of these cowboys in. Hint: Solar companies are not necessarily your friend...

And to Iconoclast421. You seriously have no idea how this industry works. It is clearly evident in your myopic, acerbic and distorted view of the solar industry viewed through the lens of the incredible (nearly Disney like proportions) projections on how this industry has 200 years of backlog and 3,000% yoy growth. It simply isn't true. When people like you are forced to deal with the economic realities of the solar industry, it is a quick and unintelligent leap over to the "if only George Bush were able to pull his ass out of the Bible and put down that liquor bottle. But not before he calls his Middle Eastern buddies to sell of a big chunk of America" preposterous camp.

Good piece. It is great to know others see the forest for the trees.

Signed, many year solar industry veteran.

Shadow Cast Over Solar Stocks

"could be a negative impact on solar-wafer producer MEMC Electronic Materials (WFR), pointing out that its largest customer, Suntech (STP), is “increasingly exposed” to the U.S. solar market."

All solar is exposed to the US market. It is fungible as we've seen in the last rush to ship all domestic product to Germany during their rush to subsidize. This is a fluid global market and their is no safe havens from market turn downs.

Solar Energy Stocks: The Good, The Bad and the Ugly

Thanks Faisal -- good analysis in my opinion.

Two things to also consider.

1) Domestic US solar uptake is predicated by a strong housing market. We all know how that's going. I've yet to see one credible look at the impact of this.

2) Solar is so outrageously expensive that it is dead without a near 50% subsidy coming from some government entity. It needs to be a mass market product instead of a niche "upwardly mobile" product. The lurking danger here is nuclear. Nobody seems to want nuclear (especially me) but you can see the "creep" of new acceptance coming nearly every day. If nuclear gets traction again, solar will be dead with pricing at these exorbitant prices. The argument will be amount of energy delivered with zero GH gasses driven to price per kWh of nuclear versus nuclear / solar. Solar will get killed. Never mind the costs to build a nuclear plant. It will be conveniently (or lobbied) away in long term amortization schedules. The prices need to come WAY down immediately or the solar industry just might lose the war from a battle they are choosing to ignore.