Tom Konrad CFA
|Solar Eclipse at Sunrise photo via Bigstock|
Solar module prices have fallen 50% in the last six months. This is great news for solar consumers, but has meant deep pain for solar manufacturers. Just last week, GE Energy (NYSE:GE) laid off workers and put expansion plans at their Colorado factory on hold for at least 18 months while they try to improve the Cadmium Telluride (CdTe) thin film solar technology they plan to produce there. That move followed the bankruptcy of another thin film producer in Colorado, Abound Solar, by just a week. And the list goes on.
With pressure on solar manufactures’ margins likely to continue at least through 2013, now is too early to jump in to solar stocks looking for a revival. But there may be a way to play the turn around. The falling prices are forcing all manufacturers to put more effort into improving their manufacturing technology and module efficiency in order to get back ahead of the rapidly declining cost curve. That’s exactly why GE has delayed their plant construction, and rapid technology improvement is part of the plan for virtually every solar manufacturer hoping to survive the industry shakeout.
While it’s too early to buy solar stocks, it may be time to buy into the business of helping solar firms improve their technology.
A month ago, First Solar (NASD:FSLR) announced the first licensing agreement with Intermolecular, Inc. (NASD:IMI) by a solar company. That agreement allows First Solar to use Inermolecular’s High Productivity Combinatorial (HPC) platform to advance its manufacturing technology and the efficiency of its solar cells. As I wrote at the time, solar technology leader First Solar’s move served as a large vote of confidence in the HPC platform.
Today, Intermolecular announced an ongoing project with King Abdullah University of Science and Technology (KAUST) in Saudi Arabia for the enhancement of copper-indium-gallium-diselenide (CIGS) thin film solar manufacturing technology. While work with an academic institution will serve as less of a vote of confidence for stock market investors, the fact that IMI is working to improve both CdTe and CIGS shows the flexibility of Intermolecular’s technology. I would not be surprised if more licensing agreements with both CdTe and CIGS manufacturers follow soon.
If more such deals are announced, IMI’s investors may have found a truly rare opportunity: a profitable way to invest in solar stocks while the prices of the industry’s products are plummeting.
Of course, plummeting solar prices open up a much easier way to profitably invest in solar: install a system on your roof.
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