Solar Archives


November 01, 2016

What The US Election Will Mean For The Global Solar Industry

by Paula Mints

The endless and endlessly not amusing US presidential election is thankfully wrapping up in November and there is a lot at stake for solar – globally. This is because the market for solar components and systems is global. Even the smallest installer buys imports. Even the smallest component manufacturer has the potential to ship product into any global market. A hiccup in one market (China, for example) reverberates throughout the entire global market for solar components and systems.

A hiccup in the US market for solar deployment would affect business plans and forecasts for all participants and observers – globally.

Currently the US market for commercial installations is stable. The US market for residential installations is currently less stable. Manufacturers, developers, scientists, engineers, teach-ers, insurance firms, law firms, consultants and others from around the world look to do business in the relatively stable climate for solar deployment in the US.

The following presents US solar market growth in the aggregate from 2006 through 2016.

 Aggregate US Solar PV Market Growth, 2006-2016
US Solar market growth 2006-16
In this US presidential election, one presidential candidate has tweeted that climate change is a hoax "invented by the Chinese to make U.S. manufacturers noncompetitive."

The other presidential candidate will make the climate a key part of her agenda and will follow through on many of President Obama’s mandates concerning it.

Like it or not, the 2016 presidential election is crucial to solar – and wind and other renewable electricity generating technologies – momentum in the US and elsewhere. Here are a few of the reasons why:

The Supreme Court

The Supreme Court should have nine justices, thus ensuring no tie decisions. Currently there are eight justices on the US Supreme Court, which opens the possibility of a tie instead of a majority decision. A tie is a stalemate that allows decisions rendered by lower courts to stand. The Clean Power Plan is currently being legislated in at least 24 states. The new president will appoint (or attempt to appoint) at least one justice, maybe two, to the court. As justices serve for life or until retirement the direction of the US will be affected for decades by whatever happens with the US Supreme Court. Should the Republicans lose control of the House or senate, or, should numbers tighten in the House, the current historic refusal to give President Obama’s nominee Merrick Garland a hearing would pass into painful US history, the stalemate would be broken and congress would (potentially) finally do its job. This means that the current congressional election is almost as important as the presidential election in that both affect the future of the Supreme Court.

The Clean Power Plan

Secretary Clinton has said that she will uphold the CPP. Mr. Trump has promised to repeal it. Despite filing lawsuits states are making plans to install and integrate renewables. Even if the CPP is repealed some of these plans will go forward (in California for example) though some will be scaled back and many will be scrapped.

Florida Constitutional Amendment

This is specific to Florida and so this one is on the voters. Should this constitutional amend-ment succeed look for something similar to pop up on ballots in other states. Deceptive language used for a constitutional amendment that is on the ballot in Florida backed by its biggest utilities claims to promote solar when it would actually allow utilities to raise fees on solar customers. If approved it would take effect immediately and an already underperforming market would be unlikely to become a highly performing one.

The DoE

The president appoints the Secretary of Energy. The Secretary of Energy is the head of the DoE and determines its direction. A climate change denier as head of the DoE would be disastrous for the solar budget and the budget for renewable energy technologies develop-ment and deployment.


A budget squeeze at the DoE would affect NREL’s funding and perhaps defund it altogether.


The ITC was a bipartisan agreement – not all conservatives and republicans are climate change deniers. It would take an act of congress to overturn the ITC and this is unlikely.

The Environmental Protection Agency, EPA

Mr. Trump would like to eliminate the EPA (and other consumer and climate protections). Secretary Clinton holds Obama’s view on the EPA’s direction.

Paris Climate Change Agreement

The Paris Climate Change Agreement commits countries to take action to slow the rise in global temperatures and to offer voluntary plans in this regard. The Paris Agreement relies on nations to behave in their own and the climate’s best interest and to act as though the agreement were binding – which it is not. Secretary Clinton will not only uphold the Paris Climate Agreement, she will act on it. Mr. Trump has loudly and proudly said that he will pull out of the agreement.

The US Oil, Gas and Coal Industries

A big winner if Trump is elected but likely to not suffer terribly under a Clinton administration.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here.

This article was originally published in the October31st issue of  SolarFlare, a bimonthly executive report on the solar industry, and is republished with permission.

April 30, 2016

SunEdison: Giving Optimism A Bad Name

by Paula Mints

Potentially stranding a significant number of solar development plans as well as some assets, SunEdison (SUNE) finally took the step that many expected and filed for bankruptcy. Pondering where things went wrong for the troubled firm leads to a winding road of overexpansion, debt and the traditional sidekick of highly visible companies and people, hubris.

Hubris, of course, happens quite often in the corporate world and there is a long list of companies that were swayed by it – who knows, one is probably being swayed at this very minute.

In the solar industry, hubris and desperation are often intertwined. Solar companies operate in a reality that includes aggressive pricing, push-pull incentives and subsidies and end user/government expectations that are nearly impossible to meet if maintaining a margin is important. In this environment panic, desperation and expediency can lead to poor decision making while companies that become highly visible and envied can fall victim to their own PR and end up making decisions in a vacuum. The problem with vacuum decision making is that
it is almost always divorced from reality. Ignoring reality can, well, lead to bankruptcy.

In 2015 SunEdison delayed its filings and launched an internal audit. In 2016 though the internal audit found no evidence of fraud it found problems with the company’s overly optimistic outlook and its lack of sufficient controls and procedures as well as its untimely reports to its board.

This may be the first time that poor decision making and careless processes and controls have been blamed on optimism.

Blaming mistakes on executive optimism – even by inference, could give optimism a bad name and this would be a shame because healthy optimism is a good thing. Healthy optimism has kept many an individual and even companies afloat during tough times. Healthy optimism works hard to make its vision come true while not ignoring the potential of failure. Healthy optimism does not march over a cliff because it believes it can fly.

Blaming SunEdison’s current struggles on optimism and poor processes is a glaring understatement that soft peddles breathtakingly bad executive decision making.

Many a CEO has become tone deaf to warnings referring to those bearing cautious news as naysayers while being shored up by those who are paid well to agree. After all, when you are riding high people willingly agree with you. Once you fall these same people will be the first to say they saw the cliff you were heading towards as they enjoy watching you charge over its edge.

In the wider context, it will encourage those who believe the solar industry is hiding behind industry-wide unreasonable and unreasoning optimism something to point to – just as they still point to Solyndra.

In October we covered the SunEdison situation was covered from the perspective of company behavior following SunEdison’s acquisition by MEMC.  You can find that analysis including a detailed timeline of its history here.

To that timeline we now add:
  • 2016 January: TerraForm (TERP) shareholder Appaloosa Management sues to stop SunEdison’s acquisition of Vivint (VSLR).
  • 2016 March: Vivint cancels SunEdison acquisition.
  • 2016 March: US Justice Department launches an investigation into SunEdison’s financing activities and the SEC begins investigating the company’s disclosures to investors
  • 2016 April: SunEdison’s internal audit finds no evidence of fraud but plenty wrong with internal procedures
  • 2016 April, Vivint sues SunEdison over failed merger
  • 2016 April, SunEdison files for bankruptcy.
A short and incomplete list of solar companies that have failed includes Advent Solar, SunFilm, SpectraWatt, Abound Solar, Konarka, SatCon, Solar Millennium, SolFocus, Suntech, Abengoa (ABGB), Evergreen Solar, Q-Cells and now SunEdison. Almost all Chinese solar manufacturers built their companies and maintain their businesses on a mountain of debt. Some companies emerge from bankruptcy either through acquisition (Q-Cells and Suntech) or through restructuring – potentially Abengoa and SunEdison. Recovery is not a given.

A company strategy based on underbidding to win projects, growth that relies on highly public incentives to stimulate demand, poor expansion and investment choices and reliance on debt is operating in an unhealthy ecosystem.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here.

This article was originally published in the April 30 issue of  SolarFlare, a bimonthly executive report on the solar industry, and is republished with permission.

May 23, 2015

Yingli is Tanking, but the Solar Industry Remains Vibrant

By Jeff Siegel

Solar stocks are getting a thrashing today after Yingli Green Energy (NYSE: YGE) came clean about a possible bankruptcy.

The stock tanked at the open and is still trading below $1.00 – down from yesterday's closing price of $1.70.


Of course, the writing was on the wall with this one.

Yingli's been struggling for a long time. And while I'm extremely bullish on solar, I've kept a safe distance from Yingli, as well as a lot of other China solar stocks.

That being said, even the solid, revenue-generating companies not operating out of China are in the red today, including SunPower (NASDAQ: SPWR), First Solar (NASDAQ: FSLR), SunEdison (NYSE: SUNE) and SolarCity (NASDAQ: SCTY).

Interestingly, I thought those particular stocks would get hit a bit harder today, potentially opening up an opportunity to pick up some cheap shares. That didn't happen, so those like me, who are long on these four stocks, are feeling pretty confident right now.

Still, I suspect we'll see plenty of anti-solar pieces over the next few days. This is pretty much an obligatory response anytime we see disruption in the solar space. And that's fine. At this point, none of that matters.

The growth trajectory for solar has not budged with this recent news out of the Yingli camp. The only thing that's changed is the space has rid itself of one more laggard. And that's a good thing!

Interestingly, while solar is down today, a number of our renewable energy yieldcos are up.

As of this writing, TransAlta Renewables (TSX: RNW) is up about 3 percent, Pattern Energy Group (NASDAQ: PEGI) is up just over 1 percent, and Hannon Armstrong (NASDAQ: HASI), which is technically a REIT, is up just over one percent, as well.

Man, I love renewable energy yieldcos!

Don't sleep on renewable energy ...

There's just too much money to be made here.


Jeff Siegel is Editor of Energy and Capital, where this article was first published.

January 22, 2015

Five Solar Stocks To Own In 2015

By Jeff Siegel

This past Saturday afternoon, Rick Diaz locked in another customer.

A former roofing contractor, Rick is now a sales rep and installation manager for a small roofing and solar company in Maryland. He tells me most people he talks to about solar have pretty much already made up their minds before he even walks in the door:

The investment works out for young couples who are going to be in these homes for more than ten years. But most seem more concerned about the environment than the return on investment. Either way, it's a win-win. Selling solar is probably the easiest thing I've ever done.

Diaz is part of a burgeoning workforce that has grown tremendously over the past few years. In fact, solar industry jobs are growing at 20 times the national rate.

jobcircleAccording to new census data, solar industry employment has grown by 86% over the past five years. In 2014, the solar industry represented 1.3% of all jobs created in the U.S., and today, the industry employs about 174,000 Americans.

As an interesting side note, there are now twice as many solar jobs as coal jobs.

Of course, this shouldn't come as a surprise. After all, coal loses more and more market share every day due to regulatory hurdles and dirt-cheap natural gas.

As well, while coal continues to battle a progressively hostile market, the solar industry continues to benefit immensely from the solar investment tax credit — although that tax credit is expected to expire in two years.

SolarCity (NASDAQ: SCTY) CEO Lyndon Rive has actually gone on record saying that the industry is expecting a slowdown in 2017 after the solar ITC is set to expire.

It's hard to say whether or not the ITC will be extended. Plenty of politicians in Washington have been talking a good game about cutting these types of subsidies for renewable energy.

However, there are also plenty of politicians that now rely on the solar industry to provide jobs in their respective states.

Regardless, just the threat of losing the ITC has been enough to light a fire under the industry. And this is why we're going to see a huge rush on solar development in 2015.

The window of tax credit opportunity could soon close for good — and every solar developer in the U.S. is gearing up for a very busy year.

Scraps at the Table

A few years back, we saw something similar with the wind energy industry.

With the threat of an end to its federal tax incentives, the industry grew at a tremendously rapid pace. Companies like GE (NYSE: GE), Siemens, and Vestas Wind Systems (OTCBB: VWDRY) were booming with orders, and developers raced to get their projects started before the tax credits expired.

It was definitely a great time to be a wind energy investor.

Of course, after the industry lost its federal support, wind turbine orders plummeted, and new developments began to slow.

Today, the wind energy industry is still left begging for scraps at the subsidy table, and that continues to hinder growth. However, the industry did stabilize a bit last year, and we are starting to see more interest in wind developments again, mostly due to new financing models and the rise of the yieldco.

In any event, there's little doubt that the solar ITC has helped the solar industry grow so rapidly. And just the possibility of the ITC expiring should be enough to get every energy investor off the sidelines and into the game.

Over the next two years, the industry's going to be on fire — and solar investors should do quite well.

Spectacular Growth

Now, some folks still believe that the collapsing of oil prices will hurt the solar industry. As I've written in the past, the only connection between oil prices and solar is psychological.

Oil is used primarily as a transportation fuel, while solar is used for electricity generation. In fact, with lower oil prices, solar manufacturers and installers actually benefit from cheaper input costs.

Although some continue to diffuse this oil-solar connection myth, solar companies are capitalizing on these low oil prices and expanding rapidly.

SolarCity, Vivint Solar (NYSE: VSLR), SunEdison (NYSE: SUNE), First Solar (NASDAQ: FSLR), and SunPower (NASDAQ: SPWR) are all taking full advantage of these low oil prices. Mark my words: These five companies will deliver some pretty spectacular growth over the next two years.

Invest accordingly.

To a new way of life and a new generation of wealth...


Jeff Siegel is Editor of Energy and Capital, where this article was first published.

October 03, 2014

Positive Signs For For The Chinese Solar Sector

Doug Young

Just months after tapping financial markets for nearly $250 million, solar panel maker Trina (NYSE: TSL) has just announced another plan to raise a similar amount as it tries to take advantage of improving sentiment towards its sector. Such fund-raising would have been unthinkable as recently as a year ago, when recovery of the solar panel sector was far from certain following a prolonged downturn. In a relatively positive sign, Trina’s latest fund-raising plan didn’t trigger a major sell-off in its shares, indicating investors are more confident of the company’s and the sector’s future prospects.

Meantime in other major solar news, the sector got a nice boost with word that Hong Kong-listed real estate Evergrande (HKEx: 3333) plans to get into the business of solar plant development with a major new investment. That move isn’t hugely surprising, since China’s real estate sector is now on the cusp of a major correction that is likely to crimp demand for the kinds of residential properties that Evergrande develops. In the absence of major new residential development projects, solar power stations looks like an interesting alternative to diversify the company’s business.

Both of these developments are generally positive for the solar sector, reflecting growing momentum for a new wave of solar plant building in China as Beijing offers strong incentives to encourage such construction. I’ve previously been a bit negative on developments so far, which have seen Trina and other solar panel makers personally finance much of the new plant development. But Evergrande’s decision to enter the space could mark the start of a new trend that may see more third-party developers join the movement from the real estate and other sectors where growth is stalling.

All that said, let’s begin with a look at Trina’s latest plan that will see it raise about $200 million through an offering of bonds and new American Depositary Shares (ADSs). The company will raise the money by selling $100 million in senior convertible notes (company announcement), and another 7 million ADSs that could raise more than $90 million based on the company’s latest share price. (company announcement)

The sale would follow a similar exercise that saw Trina raise about $250 million through the issue of convertible notes and ADSs back in June (previous post), bringing its total fund raising over the last 4 months to nearly half a billion dollars. The company joins rivals Canadian Solar (Nasdaq: CSIQ) and Yingli (NYSE: YGE), which have also recently returned to global capital markets after a freeze-out of more than 2 years during a prolonged sector downturn that sent major players Suntech and LDK into bankruptcy.

The most positive thing about Trina’s latest announcement is that it didn’t spark a major sell-off of the company’s shares, which fell just 2.7 percent after the news. That’s a sharp contrast from the June fund-raising announcement, which sparked a much larger drop of nearly 10 percent. Trina’s shares have gained back most of those losses since then, indicating investors are regaining confidence in the sector’s longer term growth prospects.

Meantime, Evergrande is reportedly getting set to enter the solar power development space through plans to invest a whopping 90 billion yuan ($14 billion) in 3 major solar plants over the next 3 years. (Chinese article) The investment figure looks a bit too large to me, though Evergrande does have a history of making exaggerated announcements and it’s also possible the media report isn’t completely accurate.

Regardless of the actual investment, the broader trend does look somewhat encouraging, as it indicates that some major third-party private sector players may be taking an interest in helping to fund Beijing’s ambitious plans to develop China’s solar power sector. We’ll have to wait and see if others from slowing sectors like real estate and steel manufacturing join the trend, which could provide some nice new business for solar panel makers. The big risk is that many of these companies have little or no experience in such development, which could lead to problems in both plant finance and construction.

Bottom line: Trina’s new plan to raise $200 million and Evergrande’s plan to enter solar power development are both positive signs for the sector, reflecting a more sustained return of investor confidence.

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

August 18, 2014

Hannon Armstrong's Strong Q2 Keeps It In My Top Picks

By Jeff Siegel

Hannon Armstrong (NYSE:HASI), one of my top picks for 2014, just made me very happy.

Yesterday, the company announced its Q2 Core Earnings of $4.7 million or $0.22 per share. On a GAAP basis, the Company recorded net income of $2.9 million.

Here are some other highlights. . .

  • Raised approximately $70 million in April, 2014 in a follow-on offering.
  • Increased the flexibility and expanded the capacity of its existing credit facility by $200 million.
  • Completed more than $200 million worth of transactions, including the acquisition of a $107 million portfolio of land and leases for solar and wind projects.

CEO Jefferey Eckel commented on earnings, saying. . .

April 23, 2014, marked the first anniversary of HASI's initial public offering (IPO) and we are pleased to continue our success with the accomplishments of the second quarter of 2014. Since the IPO, we have completed nearly $1 billion of transactions. For the quarter, we generated and paid a $0.22 dividend, completed a follow-on equity raise and closed more than $200 million in transactions. This includes acquiring a portfolio of long-duration lease streams for solar and wind projects as well as the rights to finance additional transactions from this new platform client. As we have demonstrated over the past few quarters, we continue to execute on high credit quality transactions that should translate well into dividend growth for our shareholders.

Opportunities for HASI continue to be robust. The recently announced Presidential initiative calling for an additional $2.0 billion of federal energy efficiency projects and the EPA proposed regulations to cut carbon emissions from existing power plants will encourage more investments in energy efficiency and clean energy throughout the country. HASI is well positioned to capitalize on these opportunities and will continue to seek projects generating attractive risk-adjusted yields.

Hannon Armstrong remains one of my top long-term picks in the alternative energy space. With top-notch management in place, continued demand for alternative energy financing, and a solid 6% dividend, this is a must-own stock for any savvy energy investor.


Jeff Siegel is Editor of Energy and Capital, where this article was first published.

April 26, 2014

Unlocking Solar Energy's Value as an Asset Class

James Montgomery

2014 is predicted to be a breakout year for solar financing, as the industry eagerly pursues finance innovations. Many of these methods aren't really new to other industries, but they are potentially game-changing when applied in the solar industry.

Not all options are ready to step into the spotlight, though. Master limited partnerships (MLP) and real estate investment trusts (REIT) promise more attractive tax treatment than securitizations or yieldcos, but they require some heavy lifting and difficult decisions at the highest levels: MLPs need an act of Congress even for an infinitesimal language tweak to remove a legislative exclusion to solar and wind, while REITs involve a touchy reclassification of assets from the IRS that could have broader and undesirable tax consequences. Yet another model gaining traction is a more institutionalized version of crowdfunding, led by Mosaic (technically they call it "crowdsourcing"), but crowdfunding is awaiting more clarity from the Securities and Exchange Commission about what rules must apply.

And so, while patiently waiting for Paleozoic movement out of Washington, the industry is turning its attention and anticipation toward ushering in two other new financing models: securitizations (converting an asset into something that is tradable, i.e., a security) and “yieldcos" (publicly traded companies created specifically around energy operating assets to produce cash flow and income). Their build-up actually began last year: in the fall SolarCity (SCTY) finally launched the first securitization of distributed-generation solar energy assets, with a pledge to do more and significantly larger ones in the coming quarters, and throughout 2013 several companies (NRG, Pattern, Transalta, Hannon Armstrong) spun off yieldcos with varying levels of renewable energy assets in their portfolios.  These were NRG Yield (NYLD), Pattern Energy Group (PEGI), TransAlta Renewables (RNW.TO), and Hannon Armstrong Sustainable Infrastructure (HASI).

Just weeks into 2014 we're already seeing an uptick in activity. While the industry awaits SolarCity's next securitization move, in the meantime the company has acquired Common Assets, which had been building up a Web-based platform for managing financial products (most especially renewable energy investments) for individual and institutional investors; the first SolarCity-backed products are expected to start rolling out by this summer. We're also hearing rumors of up to half a dozen other securitization deals working through the pipeline, referencing unidentified large players with long histories of building out projects — some names frequently invoked as potentially fitting those criteria include familiar residential-solar companies such as Vivint, Sunrun, Sungevity, and several others.

On the yieldco front, in mid-February SunEdison announced plans for its own "yieldco" IPO aimed at unlocking more value within its solar energy assets. Pricing wasn't announced at press time, but earlier reports suggested it could generate a $300 million payday. SunPower also recently has been talking about doing a yieldco in a 2015 timeframe, likely to feature its 135-MW Quinto project and possibly its 120-MW Henrietta project. Others reportedly eyeing the yieldco model include Canadian Solar, Jinko Solar, and First Solar.

What Capital Markets Can Do For Solar Companies

What's coming together to bring these two financial innovations into the arena right now? Put simply, it's the confluence of plunging PV prices and blistering installation growth which are achieving a scale and maturity that outstrips the capacity of traditional tax-equity sources -- but it also means they can now entertain large-scale financial instruments, explains Joshua M. Pearce, Associate Professor at the Michigan Technological University's Open Sustainability Technology Lab, who recently published a study of solar securitizations. Look at it from a macro level: even conservative growth estimates for U.S. solar energy capacity additions point to 20 GW coming online by the time the investment tax credit (ITC) is planned to run out in 2017, notes NREL energy analyst Travis Lowder, author of another recent report. At an average of $3/W that's $60 billion in assets, of which a third or even half could generate securitizable cash streams for solar developers. Spin that equation around: a single $100 million securitization deal could support 72 MW of residential solar assets, 100 MW of small commercial solar, or 133 MW of larger commercial/industrial projects.

Number of PV Systems (by Market Sector) Potentially Financeable Through a Single Securitization Transaction. Credit: NREL

What does that mean for individual companies? In its 3Q13 financial results SunEdison calculated its current business model of building and selling solar projects yields about $0.74/Watt, but those assets' true value could jump as high as $1.97/W if the company could find ways to lower its cost of capital, apply various underwriting assumptions, and factor in residual value in power purchase agreements. That's a startling 2.6x increase in potential value creation that SunEdison thinks it can unlock, by choosing to hang onto its projects vs. simply selling them off. In its mid-February quarterly financial update the company revealed more value-creation calculations: it captured an additional $158 million during 4Q13 through those retained assets, with a resulting metric of "retained value per watt" at $2.02/W. By applying most of the 127-MW on its balance sheet with an estimated $257 million in "retained value" to its proposed yieldco, the company says, it now has sufficient scale to unlock the true value of those solar assets.

The ability to lower the cost of capital deserves extra emphasis. SolarCity's securitization last fall had a 4.8 percent yield, only slightly higher than a 30-year fixed mortgage and with twice the payout on current 10-year treasury bonds, which is great for investors — but for the company it represented roughly half the cost of capital vs. what can be obtained currently for distributed solar PV financing, noted Rocky Mountain Institute's James Mandel.

"This trend is transformative for the solar industry" because of how it can unlock so much more value and generate more returns, explained Patrick Jobin, Clean Technology Equity Research analyst with Credit Suisse. (Disclosure: SunEdison is one of his top picks specifically for that reason.) "We're probably in the first or second inning of the public capital markets appreciating what this does for the industry."

Securitization vs. Yieldco: The Good, Bad, And Unknown

Both securitization and yieldcos increase access to lower-cost financing by pooling solar assets into an investment vehicle, separating the more reassuring elements of them (payments from operating energy assets under a power contract) from the riskier ones (project development). Both of them promise returns, though yieldcos come as dividends that vary with the company's performance while securitizations are fixed-income meaning investors get locked-in payments for a set period. And most importantly to the solar industry, they offer a lower cost-of-capital compared to the usual funding sources: debt, tax equity, and sponsor equity.

Generalized solar securitization transaction. Credit: NREL

One key difference: yieldcos own both the energy producing assets and the contracts, which means they can monetize federal investment tax credits. An equity owner can't use power-purchase agreements to create a securitization and also take the tax benefits. The real challenge, says Yuri Horwitz, CEO of boutique financial services firm Sol Systems, will be building a yieldco that has income-producing assets that create tax liability, coupled with solar projects that have tax benefits. NRG's yieldco last year did that, and he thinks they have a leg up because of it. Moreover, yieldcos will go out into the market to compete aggressively with other options such as specialty financing that offer similar returns. The hope is that as yieldcos mature and more operating assets are added in their competitiveness will improve.

Defining what assets are best securitized and best spun out into yieldcos exposes a gap that neither properly addresses. Larger projects are good candidates for yieldcos; securitizations typically involve residential solar assets. (An exception: MidAmerican used debt securities/project bonds for its 550-MW Topaz solar farm, as did NextEra (NEE) for its two 20-MW St. Clair solar projects in Canada.) In between is the commercial/industrial segment which presents a more complicated financing challenge. "[Securitizations and yieldcos] don't really work in the center," Horwitz said. A different class of securitizations, "collateralized loan obligations," are more applicable to the commercial sector where less diversity in assets means more risk in making ensuring offtakers' credit-worthiness, suggests NREL's Lowder.

Something else that successful securitizations and yieldcos have in common: the more scale and diversity the better. But that's also a limiting factor: not everyone can pool a wide distributed portfolio of solar assets to mitigate risk, or a smaller portfolio of larger ones. And the more diverse it is, the harder it is to evaluate them as a whole, value them, and get underwritten.  By definition, they require someone who can offer up a large pool of assets as de-risked and diversified as possible, and backed by a brand-name sponsor, pointed out Tim Short, VP of investment management at Capital Dynamics. "There's plenty in the wings that will never make it," he said. "There's not a whole lot of people to bring all the ingredients together."

One other factor to account for in any solar-backed financial models is the externality of policy changes. While investors appreciate the value in a solar offtake contract, but they need to factor in potential risk of any retroactive policy changes, such as is on the table in the net metering debates raging in several states. If net metering policies end up being reduced or even repealed, "solar contracts may default and reducing predicted income streams," Pearce said. "Ensuring policy stability and communicating that stability to investors will be key to the on-going attractiveness of solar assets."

The Need to Standardize

What will be critically important as more of these financing innovations emerge, and more solar companies try to take advantage of their promise, is pinpointing ways to standardize how the process works, in specific areas and as a whole. "The number-one priority is standardization, especially moving forward with vastly more distributed-generation assets coming online, said Haresh Patel, CEO of Mercatus. That's the glue that will hold these offerings together with both developers and investors — and it needs to be embedded in developers' DNA from the very beginning, so their solar assets can be evaluated and bundled repeatedly and reliably. 

Addressing the databasing of solar asset performance metrics are NREL and SunSpec with their open-source OSPARC database. One "Gordian knot" issue: who owns the data and are they willing to share it? That pathway of data ownership can get muddled because not all issuers outright own their systems, and it gets worse by adding a tax equity layer. Figuring out that chain of data ownership protection and security is hugely important., notes Mike Mendelsohn, senior financial analyst at NREL. That's part of OSPARC: anonymizing and rolling up data into a friendly fashion so it's easy for solar companies to present to investors, and for them to digest. "We need to build confidence that those issues are adhered to," he said.

Startup kWh Analytics is similarly targeting aggregation and benchmarking of information about solar asset performance, which is crucial because it tells institutional investors about the soundness of the collateral (the system and the leasee). What are individual PV panels and inverters doing compared with other options; are the customers with FICO scores in the 650-700 range paying off their bills? Developers also want to know how their chosen systems are performing comparatively — and increasingly so with the emergence of these new investment vehicles, where the developer retains those assets as a financing tool.

Mercatus, meanwhile, wants to address the whole package, assessing everything from system components to permitting. "What entities look for is consistency for which they can reduce risk," said Haresh Patel, CEO of Mercatus, which is tackling that problem with its own platform: quickly process and synthesize projects' data so they can be more easily pooled for investors -- and in the same language project after project, especially as new assets come into the pool. Establishing a mechanism to organize this on a repeatable basis is "the biggest friction point," he said.

Project summary view inside Mercatus' 2.0 “Golden Gate" platform. Credit: Mercatus

Standardizing offtake contracts "is the best place to start as this problem impacts every step in the process," Pearce suggested. "Uniform contracts facilitate comparison, reducing asset evaluation costs and promotes pooling.  They also simplify data collection and analysis. Uniform contracts will better facilitate data collection and analysis, asset comparisons and pooling, all of which means reducing costs. 

As part of SolarCity's securitization last fall, Standard & Poors (which rated it BBB+) revealed some interesting background info about the assets being offered, including an impressively high FICO score for residential system owners (and strong mostly investment-grade ratings for the nonresidential ones). There is no solar version of FICO scores, which took decades to become the standard for credit ratings and lending. Addressing this particular pain point is the truSolar Working Group, formed a year ago by 15 solar companies and organizations, trying to develop uniform standards similar to a credit score for measuring the risks associated with financing solar projects, explained Billy Parish, founder/president of Mosaic and a truSolar founding member.

"Standardization will happen much sooner than people think," Patel said. "Standards drive velocity." He invoked the efforts of the DoE-NREL multi-year project Solar Access to Public Capital (SAPC), which folds in well over a hundred organizations with activities from standardized PPAs to installation techniques, "mock pools" of solar assets to rating agencies, and collecting performance involving groups with touchpoints all along the solar energy chain from panel suppliers to banks.

Message to the Masses

As solar companies come around to how much extra value they can unlock, part of that process is coming up with new metrics to calculate that value potential, such as "net present value per watt" or "retained value per watt," and then educating investors who might persistently adhere to the traditional metrics like earnings per share. Issuers including SolarCity and SunEdison and the investment banks go out and do their part with investor roadshows, but also out in the field helping educate about solar asset-backed investments is SAPC is out pounding the pavement too, engaging both sell-side investment banks and buy-side capital market managers to get everyone more comfortable with how these vehicles will work.

"We are now in a positive feedback loop," said Michigan's Pearce. "By successfully accessing lower-cost capital, the solar industry can fund high rates of growth in the future, continuing the current momentum of eliminating antiquated and polluting conventional electricity suppliers."

Jim Montgomery is Associate Editor for, covering the solar and wind beats. He previously was news editor for Solid State Technology and Photovoltaics World, and has covered semiconductor manufacturing and related industries, renewable energy and industrial lasers since 2003. His work has earned both internal awards and an Azbee Award from the American Society of Business Press Editors. Jim has 15 years of experience in producing websites and e-Newsletters in various technology.

This article was first published on, and is reprinted with permission.

March 21, 2014

Will Outsized Solar Stock Returns Continue?

By Harris Roen

Any way you slice it, solar investing has been on a tear for the last year. Of the 69 solar stocks that the Roen Financial Report tracks, three quarters are up for the year. On average solar stocks have gained 85% for the year, with 60% of solar companies up in the double digits. What is most impressive is that the top 17 solar stocks are all up in the triple digits, and one, Canadian Solar Inc. (CSIQ), is up 903%!

This article will look at who these outsized performers are, what is going on with them, and where this highflying sector may go from here.


Top Solar Companies

Ticker Company Market Cap Location Product/Service
ALTI Altair Nanotechnologies, Inc. micro Reno, NV Energy storage


Amtech Systems, Inc. micro Tempe, AZ Semiconductor manufacturing equipment


Canadian Solar Inc. small Canada Solar cells and modules
CSUN China Sunergy Co., Ltd. micro China Crystalline silicon solar cell and modules
DQ Daqo New Energy Corp. micro China Raw polysilicon, silicon cells and PV modules


First Solar, Inc. small Tempe, AZ Thin-cell PV cells and modules
GTAT GT Advanced Technologies Inc. micro Merrimack, NH Equipment used by solar and LED manufacturers
HSOL Solarfun Power Holdings Co. micro China Vertically integrated, raw materials to finished product
JASO JA Solar Holdings Co., Ltd. small China Solar cells, modules and panels
JKS JinkoSolar Holding Co., Ltd. micro China Solar wafers, cells and modules
RGSE Real Goods Solar, Inc. micro Louisville, CO Solar installation
SCTY SolarCity Corp. micro San Mateo, CA Design, installation, financing of residential and commercial solar


ReneSola Ltd. small China PV manufacturer
SPWR SunPower Corp. small San Jose, CA PV manufacture and instillation
SUNE Sunedison Inc. small St. Peters, MO Vertically integrated PV manufacturer; project developer


Trina Solar Ltd. small China Solar cells and modules
YGE Yingli Green Energy Hold. Co. small China Integrated solar company

The top returning solar companies, listed above, perform a variety of products and services in the solar sector. Overall they are small companies as measured by market capitalization, and are all either U.S. or Chinese companies (even though CSIQ is headquartered in Canada, virtually all of its operations are in China). Returns for these top solar stocks are outstanding, averaging 302% for the past year.

Top Solar Stock Technicals and Fundamentals

What caused these stocks to shoot up over since the beginning of 2013? Part of the story is their stock prices were overly depressed in 2012. Solar stocks experienced a very strong downdraft due to large losses incurred earlier in the decade. As is typical in the stock market investors overshot, so many of these stocks are recovering from exaggerated lows.

top_solar_ROE_20140317.jpg Technical charting is one thing, but it is more instructive to look at some of the fundamentals. The graph above shows the average return on equity (ROE) for all 17 top solar stocks. ROE is a multiple that reflects how efficiently a company uses its resources to turn a profit. The numbers were dismal from 2009 through 2012, but improved markedly in 2013, led by companies like Real Goods and Trina. The column in 2014 shows ROE for the past 12 months of reported data, so it can be seen that the ROE has weakened. (Because of the wild ROE fluctuation for ReneSola, data for this company was removed for the purposes of this chart.)


top_solar_debt_20140317.jpg Debt can also be a useful measure to view how companies in a sector are faring. Debt in and of itself is not a bad thing, it is how debt is deployed that matters.

The chart above graphs two measures of debt. The blue line shows a ratio of total liabilities to total assets, which has been continually trending up. (It is interesting to note that the two smallest ratios belong to FSLR and ASYS, American companies, and the two highest, YGE and CSUN, are Chinese.) Though banks (or government in the case of China) seem willing to continue to loan to these companies, a continuing of this up trend would make me cautious.

The black line, long-term debt to total sales, is presenting a nice downtrend. This improvement is due to increasing sales for these companies. There has been a slight uptick in the most recent measure of long-term debt to total sales, so caution is advised here as well.

Average sales for these top solar stocks show a similar story. The figure above charts the average percentage change in sales from the previous quarter for the top solar companies. It is clear that sales improved markedly at the end of 2012 and beginning of 2013. Sales are still growing, but have diminished somewhat from earlier growth levels.

Where Do These Top Solar Stocks go From Here?

Considering the charts above, it is likely that these top solar stocks will back off on some of their outsized gains. Though there may be some pull back at the top level, I think the long-term trend is still up.

The last chart shows the Ardour Solar Energy IndexSM (SOLRX), illustrating that solar stocks are still way below the heady days of 2007-2008. In fact, despite the recent large gains in solar specifically, and alternative energy companies in general, solar stocks are only trading at levels they were at two and a half years ago. Though it may take decades for solar stocks to get back to the highs of 2008, and some may never get there at all, there is still plenty of room for price recovery.

In sum, the enormous gains in solar in the past year will be hard to maintain, so we expect there to be some pullback from here. Having said that, there is still much room for growth in this sector, owing to attractively low overall install costs, high levels of public interest, and continued incentives. Though a 20+% correction in this sector would not surprise me, I would take it as a good buying opportunity.


Individuals involved with the Roen Financial Report and Swiftwood Press LLC owned or controlled shares of SUNE, TSL. It is also possible that individuals may own or control shares of one or more of the underlying securities contained in the Mutual Funds or Exchange Traded Funds mentioned in this article. Any advice and/or recommendations made in this article are of a general nature and are not to be considered specific investment advice. Individuals should seek advice from their investment professional before making any important financial decisions. See Terms of Use for more information.

About the author

Harris Roen is Editor of the “ROEN FINANCIAL REPORT” by Swiftwood Press LLC, 82 Church Street, Suite 303, Burlington, VT 05401. © Copyright 2010 Swiftwood Press LLC. All rights reserved; reprinting by permission only. For reprints please contact us at POSTMASTER: Send address changes to Roen Financial Report, 82 Church Street, Suite 303, Burlington, VT 05401. Application to Mail at Periodicals Postage Prices is Pending at Burlington VT and additional Mailing offices.
Remember to always consult with your investment professional before making important financial decisions.

January 25, 2014

SolarCity's Brilliant Marketing Plan

By Jeff Siegel


SolarCity truck Well here's a sweet marketing plan. . .

In an effort to get to homeowners before they actually buy their homes, SolarCity is working with homebuilders in Oregon to offer solar to potential buyers.

Essentially, SolarCity (NASDAQ:SCTY) will be giving future homeowners the opportunity to save on their energy bills from day one without paying a single penny more for their homes. Brilliant!

SolarCity reps commented on the new plan, stating. . .

Solar power delivers distinct benefits for homebuilders and homebuyers. While many upgrades and additions to homes such as granite countertops can greatly increase the purchase price of a home, SolarCity’s solar power options can allow homeowners to start saving money on energy costs immediately without increasing their purchase price. SolarCity allows the homebuyer to install solar panels for free, and pay less for solar electricity than they pay for utility bills.

For homebuilders, solar options represent an enticing (and eco-friendly) way to attract potential buyers to their new communities and homes. In fact, about 92 percent of Americans think that the United States should develop and use more solar energy. SolarCity’s solar power options do not increase construction costs for the homebuilder.

SCTY has sold off a bit since that recent upgrade from Deutsche Bank. Fortunately, I picked up more shares before that announcement. If the stock sells off further, falling below $69, I may grab additional shares.

To a new way of life and a new generation of wealth...


Jeff Siegel is Editor of Energy and Capital, where this article was first published.

January 24, 2014

Why SolarCity is the New Solar King

And Why I Just Got Back Into This Stock

By Jeff Siegel


I'm not sure how many people realize it just yet, but something very big happened last year in the world of solar.

A small start-up called Mosaic came onto the scene offering New York and California residents the opportunity to invest in solar projects. These investments offered a 4.5% annual return, net of servicing fees, with terms of about nine years.

This is basically a crowdfunding opportunity for those looking to invest in small solar projects.

It's a pretty simple model, actually.

You see, Mosaic connects investors to solar projects that need financing. The projects generate revenue by selling the power to the customer, and that revenue is used to pay back investors — with interest.

The company has been very successful since its launch, and it often sells out its offerings within days.

Overall, the model is very attractive, as it marries the demand for solar with the funding necessary to meet that demand — although with Mosaic, the operation is still quite small.

Still, after discovering the Mosaic model, I knew it wouldn't be long before a similar model was adopted by a much larger operation — one with deeper pockets and the type of management that's known for turning pipe dreams into profitable realities...

Premature Calculations

These days, the name Elon Musk is synonymous with Tesla (NASDAQ: TSLA).

As co-founder and CEO of the electric car darling of Wall Street, Musk completely changed the entire landscape of electric car opportunities, showing the world that a new revolution in vehicle design was not only here but was very, very profitable.

As a result, anything Musk attaches his name to tends to garner a lot of attention. In fact, I would argue it's one of the reasons SolarCity (NASDAQ: SCTY) got so much love following its IPO back in December of 2012.

That company is actually run by Musk's cousin, and Musk himself serves as Chairman.

Now, I actually invested in this company shortly after it went public, and I did quite well. In fact, it was one of my most profitable picks in 2013.

However, not wanting to risk the impressive gains I had realized in such a short amount of time, I sold my shares and pocketed my winnings.

I acted too soon!

A Major Coup

Last week, SolarCity announced it's going to launch a new, web-based investment platform through which it will allow individual investors and organizations of all sizes to participate directly in solar investments that have previously only been available to financial institutions.

The project is similar to what Mosaic does; however, unlike Mosaic, the investments won't be tied to specific projects.

Now as I mentioned, Mosaic has been incredibly successful since it first debuted, raising nearly $6 million on less than 20 projects made available to the public. The yields on these investments range from 4.4% to more than 6%. That's pretty good, although I suspect SolarCity may be able to up the ante.

Here's the bottom line...

SolarCity is going to be the first major solar financing company to offer both solar financing deals to individuals and the opportunity for individual investors to get a piece of this action. With solar installations continuing to boom across the nation, this is a unique opportunity for investors and an incredibly profitable one for SolarCity.

As it is, the company has no problem raising money. In fact, a few years ago, after the company lost its federal loan guarantee, Bank of America swooped in almost instantly with $350 million so the company could complete a 300-megawatt deal it inked with the U.S. military. Since then, it has raised ridiculous amounts of capital with some pretty decent terms.

Now, add what I believe will be an avalanche of capital from individuals who want to invest in clean energy or simply want to make a less-risky investment in solar. At the end of the day, SolarCity is going to be able to raise hundreds of millions of dollars with excellent terms, all while expanding its customer reach beyond those who want to slap solar panels on their roofs.

I'm telling you right now, what SolarCity has just done is a major coup. It will go down as one of the most disruptive events to ever shake the solar market. And I'm definitely going to be a part of it.

Although I collected my winnings from SolarCity last year, I bought more after the announcement last week. There's just no way I'm sitting on the sidelines while it goes through the process of becoming what I believe will be one day prove to be one of the most profitable companies in the United States.

To a new way of life and a new generation of wealth...


Jeff Siegel is Editor of Energy and Capital, where this article was first published.

January 01, 2014

The Pros Pick Four Solar Stocks For 2014

Tom Konrad CFA

bigstock-green 2014.jpg
Green 2014 image via BigStock

With the average solar stock having doubled in 2013, it’s much harder to find bargains in the solar industry than it was a year ago.  But two of the professional green money managers think there is still value to be found.  When I asked them for their top three green stock picks for 2014, they came back with two solar picks each.  You can also read about my panel’s green income stock picks and green information technology picks the earlier articles in this series.

Shawn Kravetz 2013.jpg

Shawn Kravetz is the solar expert on my panel.  He is President of Esplanade Capital LLC, a Boston based investment management company one of whose funds is focused on solar and companies impacted by the emergence of solar.  Last year, he had the top pick of all my panelists, Amtech Systems (NASD:ASYS), which was up 160%.

This year, Kravetz says “Finding extreme values is challenging” but he still was able to find two that he considers “quite compelling.”

His first pick is Meyer Burger (Swiss:MBTN), a “Leading solar equipment manufacturer whose business has finally troughed.”

Kravetz thinks the company’s business is about to make a “substantial turn” for the better, but the stock has hardly advanced despite the large increase in price for other solar stocks.  Even after a strong 2013, Kravetz says “Global solar installations will likely grow 20% in 2014.  With demand finally nearing an equilibrium with cost efficient supply, this will drive leading players to modernize and expand.  The hangover of the solar nuclear winter and a poorly timed acquisition of competitor Roth & Rau is ending, leaving Meyer Burger extremely well positioned for 2014.”

His second pick, Renewable Energy Trade Board Corporation (OTC:EBODF) is not for the faint at heart.  He calls it the “Highest risk but highest reward of our three picks.” (The third pick was Hannon Armstrong Sustainable Infrastructure (NYSE:HASI), see here.)

The risks with EBODF are liquidity and lack of information.  Kravetz says,

It is tiny and thinly traded.  They have not reported financials recently.  With those caveats, it is actually quite a simple sum of the parts story that is likely worth nearly 5x its current stock price, if not more.  Their value stems from cash on their balance sheet and a substantial stake in a major solar project developer Goldpoly New Energy Holdings Limited (HK:686).  We believe EBODF is potentially worth at least $12.00 per share.

The other manager to pick solar stocks was Garvin Jabusch.  Jabusch is cofounder and chief investment officer of Green Alpha® Advisors, and is co-manager of the Shelton Green Alpha Fund (NEXTX), and the Sierra Club Green Alpha Portfolio. Green Alpha Advisors and I are currently putting the final touches on a fossil-free equity income strategy for separately managed accounts, which I believe will be an excellent complement to the growth-focused green strategies which are currently available.

Jabusch’s two solar picks were both strong performers in 2013, so they took me by surprise.  He says,

It might seem a little crazy, but I like First Solar, Inc. (NASD:FSLR) again in 2014.

2013 saw several developments that have laid the groundwork for accelerating medium and long term growth. By partnering with General Electric (NYSE:GE) (which had been FSLR’s only serious competitor in the thin film PV space) FSLR acquired both GE’s portfolio of thin film patents and its manufacturing capabilities. Moreover, FSLR gained access to GE’s sales channels and distribution capabilities via the deal.

Effectively, FSLR has realized a near monopoly on large-scale thin film (CdTe) PV. First Solar will also capture market share because it has very competitive costs, as low as $0.49 per watt of installed capacity, which could make it the clear leader for the utility-scale market. That might be part of the reason FSLR has a large backlog of approximately 2.2 times 2013 revenues. So the growth story is certainly still there.

On the value side, as I write this, FSLR is trading at just 3.8 times cash on the balance sheet, and the latest pullback in share price has brought the company back down to near its book value. Thus, if FSLR merely appreciates to eight times cash or to double book value, the stock could have a 100% year in 2014 on that basis alone.

Beyond 2014, FSLR looks like a good holding for the long-term. Critics will note that guidance for 2014 EPS is less than that for 2013, but this misses the long term advantage point that revenues though not EPS are expected to grow next year, and that the decline in EPS reflects additional investments back into the firm in multiple areas. This is the right approach for a firm in one of the fastest growing industries in the world, particularly if that firm, as is the case with FSLR, is carrying very little debt.

His second pick is also a well-known name: SolarCity Corporation (NASD:SCTY).  He does not consider it a “solar” pick- rather a power producer or distributed utility, since it makes its money from  power generation and electricity sales.  I agree with him that SolarCity is in a fundamentally different business than First Solar and Meyer Burger, and occupies a different place in the value chain, but I include it here because I expect most of my readers would consider it a solar stock.

Jabush has written extensively about SolarCity in his blog, and he highlights this sample:

SCTY seemed brilliant to us: not truly a solar company, but an electricity utility installing both distributed and centralized power generation capacity that, once installed, will earn ratepayer checks indefinitely with very little additional capex required on the part of the company. Think about that: what if you could build a huge coal burning plant and sell the electricity for 20 or more years, get the income from that, but never have to pay for the coal, only need a fraction of the workforce, and not have to worry about GHG or toxic emissions? The thing would just sit there and print money. SCTY is all of that, plus, they’re not exposed to the additional risks inherent in the panel manufacturing business – they just buy the best value panels they can from their preferred manufacturers. Every installation SCTY completes is a 20+ year revenue stream. So, they’re installing as fast as they can, forgoing profits now for much larger profits later. Honestly, we were a bit shocked when they IPO’d at only $8/share. And if you’re worried about their negative EPS today, don’t be; every dollar they spend installing now is going to result in a decades-long income stream. If they wanted to show positive EPS now, today, they could, simply by slowing expansion and collecting the revenue from their existing installments. But they know that’s not the way forward, and so do we.

The new piece about SolarCity is that they have managed to securitize debt financing of new solar power projects. Their new bonds are moving project financing forward, and give credibility to both SCTY and the industry. Wall St. has embraced the debt, giving the new bonds a BBB+ rating, meaning SCTY’s cost of capital can be relatively low. This innovation also means there are good new sources of income for sustainability-oriented investors and managers.

The only material risk we foresee for SCTY is the political backlash (primarily in the U.S.) caused by their success at stealing market share from traditional utilities and fossil fuels companies. Sen. Jeff Sessions’ attempts to discredit the company is one example. But his overreach in comparing SolarCity to Solyndra reveal a profound failure to understand either firm’s business model, the industry, or the energy markets in general.

He also highlights some specific risks for SolarCity in 2014.  He worries that the trends he sees may not be recognized by the markets before the end of next year.  SolarCity is “investing every dollar it can into growing market share for future profitability, it will not earn positive EPS any time soon.”  He feels the markets’ focus on positive and growing earnings per share may prevent investors from appreciating the company’s long term value.  That said, he does not know when the market will come to appreciate this value, so he thinks it’s better to buy now and hold rather than chance missing the share price breakout he expects.


Long time readers know I tend to avoid solar because I prefer sectors which get less attention and where it is easier for me to gain an informational advantage.

Keeping in mind that I’m not a solar expert, I find the arguments for Meyer Burger, Renewable Energy Trade Board, and First Solar much more convincing than that for SolarCity.  Call me old fashioned, but I’m one of those investors who likes positive earnings or a substantial discount to a company’s net assets.  I would not bet against any of these stocks, but I have to wonder if SolarCity’s break-out year was 2013.  After all, it has risen to seven times its IPO price in the last year, and over 4 times since the start of 2013.

On the other hand, Jabusch’s mutual fund (NEXTX) is up 43% from its launch in March, and I’m not the solar expert.  The final arbiter will be the market, and I’m personally hoping all these stocks are up.  If solar stocks turn in another repeat of 2013, it will be because the solar industry has once again surprised the skeptics.  That would definitely be a good thing.

This article was first published on the author's blog, Green Stocks on December 20th.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

November 13, 2013

New Reports See Solar Outlook Brightening

James Montgomery
Sun and saguaro.jpg
Sun emerging behind saguaro by Tom Konrad

Scanning the new crop of reports from IHS, NPD Solarbuzz, and Navigant, here are a few key themes that emerge:

Demand Is Shifting to Asia. Global solar PV demand reached 9 GW in 3Q13, up 6 percent from the prior quarter and nearly 20 percent from a year ago, according to Solarbuzz. China's share of that 3Q demand exceeded 25 percent, compared to 10 percent just two years ago. Meanwhile, the National Energy Administration reportedly has increased its 2014 targets for solar PV capacity to 12 GW instead of 10 GW, while the State Council has said solar capacity should stay at the 10-GW/year pace through 2015, reaching 35 GW cumulatively installed by the end of 2015.

"There is a big shift in the solar PV market from Europe to Asia Pacific," said Dexter Gauntlett, senior research analyst and author of Navigant's report, which pegs solar PV capacity more than doubling from 2013-2029, from just under 36 GW to more than 73 GW. He especially points to new markets for distributed PV as prices fall; China, for example, will see more than 100 GW of solar PV deployed by the end of this decade. "We have increased our estimates for Japan, given the lucrative feed-in tariff scheme, but it is unclear for how long that scheme will be sustainable," he added.

Europe is Stabilizing. Europe dominated PV demand from 2006-2011 with nearly 80 percent of demand, but growth has fallen off consistently over the past two years, and rather precipitously in several countries. Continuing that trend, solar PV demand in Europe declined 11 percent between July-September from the previous three months, and for the year Solarbuzz sees an annual 37 percent dropoff, a four-year low and half the region's peak in demand in 2011.

Nevertheless, Europe remains overall a vast pool of end demand for solar deployment, nearly a third of global demand at 10-11 GW in 2014, with some markets offering especially attractive near-term growth. Germany, the U.K., Italy, and France will account for the vast majority of that, but there's potential in smaller markets such as Romania and Austria. NPD Solarbuzz sees overall European demand at around 2.5 GW per quarter for the next several quarters and growing slightly in the latter half of 2014. "The boom/bust phase at the major country level [e.g., Germany and Italy] is largely in the past," explained Solarbuzz vice president Finlay Colville. "We see much of Europe as stable in 2014," offered Sam Wilkinson, research manager at IHS, similarly pegging around 5 percent growth in MW installations.

Yes, there's a difference between "no more plummeting" and a "growth recovery" -- but stabilization of demand is good news. More predictable demand forecasting means lower risk and easier planning for investors and developers, Colville said: "It is very much a market that can be addressed, with more confidence now." Added Wilkinson: "Europe will remain a key region for business [and] so it will not be ignored."

Quarterly European solar PV demand. Credit: NPD Solarbuzz

Manufacturing Is Ramping Up. Stabilizing demand means an improved outlook for solar PV manufacturers, who have suffered a punishing couple of years and eagerly watch as the gulf between oversupplies and demand finally is narrowing -- something IHS sees officially happening in the next few months. "Things are looking brighter throughout the solar industry as PV demand climbs and spreads to new regions," states Jon Campos, lead PV capital spending analyst at IHS.

As a result those manufacturers are opening their wallets again: global capital spending is predicted to surge 42 percent to $3.3 billion in 2014, and another 32 percent to $4.3 billion in 2015. "The vast majority" of that growth spike will be internal production as part of a long-term strategy, as opposed to contracting out to Tier 2-3 suppliers which he says has been more of a short-term stopgap.

Global forecast of solar industry capital spending in U.S. $M. Credit: IHS

Jim Montgomery is Associate Editor for, covering the solar and wind beats. He previously was news editor for Solid State Technology and Photovoltaics World, and has covered semiconductor manufacturing and related industries, renewable energy and industrial lasers since 2003. His work has earned both internal awards and an Azbee Award from the American Society of Business Press Editors. Jim has 15 years of experience in producing websites and e-Newsletters in various technology.

This article was first published on, and is reprinted with permission.

June 21, 2013

Solar REITs Unlikely to Win Favorable IRS Ruling

by David K. Burton

In early 2013, many in the solar industry appeared to be thinking that the IRS’s blessing of a solar REIT would be provided within weeks. It is now the middle of 2013, and it appears the thinking from a few months ago was at best irrational exuberance. Three events have triggered a change in perspective on solar REITs.

First, Hannon Armstrong’s (NYSE:HASI) private letter ruling request as to its REIT status is now public. Prior to the ruling being made public, the industry scuttlebutt was that the ruling would bless rooftop solar as REIT eligible. However, Hannon Armstrong’s CEO Jeff Eckel best describes the actual substance of the ruling – “We did not ask the IRS about renewables and we did not receive anything from the IRS that mentions renewables.” The article quoting him is available here.   What the ruling actually concluded is that certain energy efficiency improvements are able to be included in Hannon Armstrong’s REIT qualification calculations as real estate. The redacted ruling is even more cryptic as to the specifics of those improvements. The redacted ruling is available here.

Second, Renewable Energy Trust Capital, Inc. submitted a private letter ruling request asking for the IRS to rule that ground-mounted solar projects are real estate for REIT purposes. Renewable Energy Trust Capital, Inc. was predicting that it would have its ruling by the end of January. It is now mid-June and that ruling has not materialized, and Renewable Energy Trust Capital, Inc. is no longer being featured in financial publications. There are no official reports, but it appears the IRS declined to issue that ruling.

Third, three public corporations disclosed that their conversion to REIT status, which was dependent upon receipt of an IRS private letter ruling is at best delayed pending study by a newly formed IRS working group as to what assets qualify as “real estate” under the REIT rules.  None of the corporations are in the solar industry. One is Iron Mountain which provides sophisticated warehouse storage for physical documents.1 The second is Lamar Advertising which owns billboards.2 The third is Equinix which owns electronic data storage centers.3

The IRS working group appears to have at least two origins. First, certain members of Congress, many of whom have Republican leanings, were concerned about the loss of revenue from public corporations converting from C-corporation status, with two layers of tax, to REIT status with effectively a single layer of tax. Second, I suspect that the IRS had trouble articulating why ground-mounted solar did not constitute “real estate” for REIT purposes in light of rulings it had issued about assets such as electric transmission systems and data storage centers. This challenge may have made the IRS question the accommodating rulings it had issued in recent years.

I believe the IRS working group will take at least six months to complete its review. In that time, any REIT eligibility rulings will be relatively plain vanilla. At the end of the review, I suspect the IRS will decide not to back track on its prior positions regarding assets like transmission, cell towers and data storage centers, but it will decline to further expand the definition of real estate for REIT purposes. Therefore, new asset classes like solar and warehouse storage for physical documents may not receive favorable rulings. Nonetheless, after the dust settles, I suspect the IRS may have a favorable view of roof-mounted solar systems that only provide power to the building on which they are mounted. 

1 Iron Mountain Incorporated, Form 8-K, June 6, 2013.

2 Lamar Advertising Company, Form 8-K, June 7, 2013.

3 Equinix, Inc., Form 8-K, June 6, 2013.

David Burton is a partner in the tax practice at Akin Gump Strauss Hauer & Feld LLP, where he advises clients on a wide range of U.S. tax matters.  He has a particular emphasis on project finance and energy transactions, and he also advises clients on tax matters regarding the formation and structuring of domestic and offshore investment funds.  Mr. Burton serves as editor of the firm’s blog, Tax Equity Telegraph.

May 07, 2013

Solar Gainers and Losers

By Harris Roen

Five solar stocks announced key updates – three show improved prospects, and two warn of danger.

Power REIT (PW)
More Info
Power REIT will acquire 100 acres of land underlying a 20 megawatt solar array to be developed. The leasee will sell electricity to Pacific Gas & Electric (PG&E) and Southern California Edison (SCE), which should then provide a steady income stream to PW shareholders. The stock price is up 11% for the year, in addition to a yield of 3.9%. Press release
Advanced Energy Industries (AEIS)
More Info
AEIS issued a respectable, though mixed, earnings report. Profits were up and net income jumped considerably, but revenues dropped slightly and EPS was down 17% from the previous quarter. Q2 2013 guidance was in line with analyst estimates, which are projected to come in 18%-30% above current levels. The stock had a nice bounce on the news, and is up 34% for the year. Reuters article
SunPower Corp (SPWR)
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A positive earnings report caused a jump in SunPower’s stock price, up 18% yesterday and 171% for the year. Revenues dropped slightly for the quarter, but were 30% higher than the same quarter one year ago. The company also announced it will supply Verizon with rooftop and ground-mounted PV systems in 6 states. Press release
GT Advanced Technologies Inc (GTAT)
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GTAT stock remains battered on a poor earnings report. The stock dropped 5% in one day on large volume, and is down 43% for the year. The company announced it sill stop offering earnings guidance going forward. SolarServer article
STR Holdings, Inc. (STRI)
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Losses continue for STRI, with revenues 30% below the previous quarter, and 64% below the same quarter last year. Profits and net income showed improvement compared to losses of the previous quarter, but still remain negative. STRI stock is down around 90% from its highs in late 2010. Press release

About the author

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January 17, 2013

Power REIT's First Solar Deal

Tom Konrad

Salisbury Solar Farm
The 5.7 MW Solar Farm in Salisbury, MA is the largest solar farm in New England. The land under if was purchased by Power REIT (NYSE:PW) in December. Photo source: Power REIT

I first wrote about Power REIT’s (NYSE:PW) plans to invest in renewable energy real estate in May 2012.  The intent was to buy the real estate underlying a solar, wind, or other renewable energy project, charging the project owners rent.  This can be done profitably because REITs often have a lower cost of capital than other businesses, such as renewable energy power producers.

At the time, I (and Power REIT’s CEO, David Lesser) thought such a deal was immanent.

Then life got in the way.

A Potentially Lucrative Distraction

Life, in this case, was a civil action between Power REIT and the lessees (Norfolk Southern Corp. (NYSE:NSC) and sub-lessee (Wheeling and Lake Erie Railroad, aka WLE)) of its only asset at the time, 112 miles of railroad track.  Although still making lease payments, WLE and NSC had failed to comply with the terms of the lease, at least in Power REIT’s interpretation.  Power REIT attempted to foreclose on the lease, and WLE and NSC filed a civil action to prevent the foreclosure.

Power REIT initiated the foreclosure attempt because WLE had failed to pay some of its legal fees, as the lease requires the lessee do for all such fees reasonably incurred in order to maintain Power REIT’s interest in the leased track.  Since the lease requires the lessee  to pay all its legal fees, Power REIT has little incentive to drop its attempt at foreclosure, as might be expected when a tiny company has to take on a much better-funded opponent in court.  In addition, the lessees could be forced to pay as much as $84 million dollars (PW’s market capitalization is currently only $16.2 million) in debt and back interest incurred since the inception of the lease in 1967.  Even if, in the worst possible case,  Power REIT loses in all counts and is unable to foreclose, the $15.9 million principal portion of this indebtedness could be written off on Power REIT’s taxes.  That write-off would allow 25 years’ worth of its current dividend to be characterized as a return of capital, and hence be tax-free to PW’s shareholders.

Investment Delays

Despite the heads-I-win-big-tails-I-still-win situation for Power REIT in court, the litigation has been a massive drain on the firm’s resources and management’s time over the last year.  While Power REIT’s legal costs are likely to be recovered through the court, WLE is not currently reimbursing them.  Meanwhile, the legal tussle with much larger companies has been making some lenders and investors wary, leading to a low stock price and making it more difficult to finance renewable energy real estate transactions.

A few months ago, I noticed that Power REIT had removed the investor presentation from its investor relations page.  This presentation had detailed its  investment plans for renewable real estate.  When I asked Lesser about this, he told me it was because so much of the firm’s focus had been on the litigation.

Proof of Concept

Salisbury Solar.png
Location of True North solar farm from Salisbury Assessor map.

As it turns out, Power REIT’s renewable plans had not been completely to the back burner.  On January 4th, the company filed an 8-K with the SEC detailing an investment in 54 acres of land under a 5.7 MW solar farm in Salisbury, MA. Given its size, location, and 54 acre site with 43 buildable acres, I identified the farm as the solar farm recently completed by Power Partners MasTec (NYSE:MTZ), and owned by True North, LLC.   The total cost to Power REIT was $1.037 million, including the assumption of a $122,000 municipal sewer financing carrying a 5% interest over 19 years.  Lesser’s investment company provided an $800,000 bridge loan at 5% for six months, to allow the transaction to close quickly.  According to Lesser, the seller wanted a quick sale.  Lesser’s statement is corroborated by this article, which states the land was listed for sale in October with a “minimum bid” of $1.75 million.  It seems unlikely that True North would have come down 42% from its asking price in just two months if there had not been some urgency to sell.  [Update: Since this was written I spoke to a Salisbury reporter who has been covering the True North solar farm since before its inception.  She confirmed that the developer of True North was under considerable financial pressure.]

The bridge loan can be extended for another six months at 8.5% interest.  In an interview, Lesser told me he believes Power REIT will be able to obtain bank financing for the property at an interest rate in the high 5% range.

True North has a 21 year lease on the property paying $80,800 annual rent, with a 1% annual escalation.  Power REIT will be responsible for paying real estate taxes on the property (but not taxes on the solar farm.)  According to the Salisbury Assessor’s website, the Fiscal 2013 Tax Rate is $11.51 per thousand dollars (1.151%) of assessed value.  The property is currently assessed at $715,100, for an annual tax bill of $8,231.  If the property is assessed at the sale price of $1 million and tax rates are unchanged, annual tax will be $11,510 in 2014.  Annual interest on the sewer financing is $6,100.

Power REIT’s revenue from the lease will be $80,800 in 2013 and $81,608 in 2014.  Between 2000 and 2010, Salisbury property taxes have increased at a 4.6% compound annual rate.  If we assume the higher property assessment and a 5% annual increase in property taxes, Power REIT will have $63,422 in annual income to cover the financing costs on the $915,000 closing price.  That means that the transaction should increase earnings per  share if Power REIT is able to obtain financing at an interest rate below 6.9%, or if they receive more than $7.25 for any shares issued to finance the deal.

Since PW stock is currently trading around $10 a share, and Lesser thinks banks will be willing to lend against the property at interest rates below 6%, the deal will likely increase PW’s earnings per share.  However, given the small size of the deal, the annual earnings increase will be less than a penny a share.  I estimate the earnings increase will be approximately 0.5 cent a share.

After the Lease

After the current lease is up, it seems likely that Power REIT will be able to extend the lease on terms at lease as favorable as the current lease.  After all, solar farms typically last longer than twenty-two years, and they are difficult to move.  Furthermore, according to Lesser, the property was assessed at twice the purchase price in 2010.  Given that assessment, Power REIT will likely  have several financially viable options for the land  when the solar farm is at the end of its useful life, or if it is not possible to extend the lease on favorable terms.

Delayed Dividend

In the same SEC filing, Power REIT declared its regular $0.10 quarterly dividend for the fourth quarter of 2012, to shareholders of record on January 14th, 2013.  The dividend was delayed because Power REIT’s low income in 2012 (caused by legal expenses) and the possibility of a tax write-off in 2013 make it more advantageous to pay the dividend in the 2013 tax year.  Power REIT still intends to pay usual $0.10 first quarter dividend as well.


The Salisbury solar transaction is likely to increase Power REIT’s earnings per share, if only in a small way.  The more important aspect of this transaction is as a proof of concept for Power REIT’s business plan.  It shows the company can increase earnings per share by investing in real estate underlying renewable energy production.   Power REIT’s strong balance sheet should make more and larger deals possible in the future, especially once the litigation with WLE and NSC is resolved.

Disclosure: Long PW

This article was first published on the author's blog, Green Stocks on January 7th.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

December 27, 2012

What Does 2013 Hold for Solar? Predictions From Four Green Money Managers

Tom Konrad

What will the New Year hold for Clean Energy?  

For the people who manage clean energy portfolios, mutual funds, and indexes the question is more than idle curiosity.  Getting the answer right means finding the stocks which will put a shine on your solar portfolio’s returns.  Getting it wrong means the competition will blow away your wind stocks.

I asked my network of green money managers what they thought, and they gave me a lot more than I expected.  This is the start of a series on the predictions and stock picks from my panel.  This first article focuses on what they had to say about trends in the solar sector.

Shawn Kravetz: Solar Reversal

Shawn Kravetz is President of Esplanade Capital LLC, a Boston based investment management company one of whose funds is focused on solar and companies impacted by the emergence of solar.

Unlike most of my panel, Kravetz is a solar specialist, so I’m giving him first billing in this article.  His prediction is also somewhat surprising in that it is not “more of the same.”  He says,

After four years of rapid growth, global solar installations will have their first roughly flat year since 2009, but paradoxically the broad solar indices will have their first profitable year after nearly four years of Olympic-sized losses.

Garvin Jabusch: Consolidation, New Models

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, or GANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog ”Green Alpha’s Next Economy.”

Jabusch expects to see continued consolidation in the solar manufacturing industry, particularly in China, and the emergence of new ways to monetize electric utility revenues from large scale solar plants.  In terms of new ways to monetize solar, one came across my desk last week, in a PR from Solar Mosaic, a company that is bringing crowd-funding large scale solar projects.

Rafael Coven: Terrible Economics, Dropping Subsidies

Rafael Coven is Managing Director at the Cleantech Group, and manager of the Cleantech index (^CTIUS) which underlies the Powershares Cleantech ETF (NYSE:PZD.)

Coven also expects “Consolidation in the wind turbine and solar PV [photovoltaic] business; there are too many players and the economics are terrible.  It reminds me of the steel industry.  Products are differentiated enough to earn price premiums, or governments play favorites with local suppliers.”

He also expects reduced subsidies for residential solar PV, especially in northern states, a trend he refers to as “a return to sanity.”

Rob Wilder: Three Potential Calalysts

Dr. Rob Wilder is Index Committee Chair for WilderHill Clean Energy Index (ECO), the first to capture and track this sector.   ECO underlies the PowerShares WilderHill Clean Energy ETF (NYSE:PBW.)

Dr. Wilder prefers not to make outright predictions, but he shared three possible trends he expects would have large impacts on the solar industry, if they emerge.   He notes “Solar hardware costs too have seen a great fall from poly to panels. But what resisted coming down are the ‘softer’ costs of solar like the permitting, balance of system in installation: we pay far more than Germany to install solar. ”  Bringing down these other costs would have a large impact on the solar industry.

He also thinks that quickening industry consolidation or increased “ subsidies in places like China and India” which could lead to “gigawatts more solar in just the next couple years.”

Bottom Line

If Kravetz is right, and 2013 will not see any growth in solar installations, this will put pressure on an industry already struggling with “too many players” and terrible economics, as Coven puts it.  Coven’s prediction of reduced subsidies also worsens the economics.  All of this could hasten the industry consolidation expected by all these experts.

Even in such a harsh climate, the current rock-bottom solar stock prices could allow solar indexes and ETFs to rally, as  companies are bought for pennies on the dollar.  Investors re-deploying the cash from buyouts into other solar stocks would only accelerate such a rally.  If last week’s extra $1.1 billion of Chinese solar subsidies is the beginning of a trend, the “return to sanity” that Coven expects in the reduction of US subsidies could be more than offset by increased “insanity” in the East.

US solar investors would do well to look beyond what is happening at home.

The solar market is a global one, and the sun rises in the East.

Disclosure: No position in the stocks or ETFs mentioned.

This article was first published on the author's blog, Green Stocks on December 17th.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

November 10, 2012

Report: Solar and Geothermal Projects Have Over 10% Returns, But Finance Remains Difficult

Ryan Hubbell

Despite healthy expected returns, finance-related challenges remain the largest barriers to renewable energy development, according to NREL's Renewable Energy Finance Tracking Initiative (REFTI).

Two recently released reports on solar and geothermal technologies show greater than 10% expected returns for both developers and tax equity investors. Yet roughly half of both geothermal and solar respondents (350 in total) reported financial issues (project economics, PPAs, creditworthiness, and raising capital) as the largest barriers to development. In light of this, only 11%-13% of respondents reported abandoning their projects.

project expected returns by

Figure 1. Expected returns on developer equity for all solar technologies and project sizes Q4 2009 – 2H 2011


Installed Costs
($/W net output)

LCOE ($/kWh)




Solar CSP



Small-Scale PV
(< 1 MW)



Large-Scale PV
(≥ 1 MW)



shows aggregate PPA term (years), PPA escalation rate and
first-year PPA price for geothermal, solar CSP,
large-scale PV and wind, Q4 2009 &ndash; 2H 2011

Figure 2. Average PPA term, escalation rate, and first-year price (measured in ¢/kWh and size of bubble) by technology, Q4 2009–2H 2011

Graph shows construction insurance, interest
during construction, debt set-up, engineering and legal
fees as a percent of total project costs for wind, small-
and large-scale PV, geothermal and biomass-electric, 2H

Figure 3. Project soft costs as a percent of total project costs by type and technology

Source: 2H 2011 REFTI data

Geothermal projects reported the highest returns among all technologies (Figure 1) with both developer and tax equity returns estimated to exceed 15% [1]. Returns were rather comparable between small- and large-scale solar, with concentrated solar power (CSP) reporting the lowest expected tax equity returns. Although some research suggests tax equity investors' returns can be much higher than developers', the rather tight spreads reported by REFTI participants indicate this may not necessarily be the case. Higher developer participation could also be influencing expected returns.

On the cost side, CSP reported lower estimated installed costs and LCOE than PV (Table 1), which could be due to a number of factors, including the timing of panel purchases, estimated nature of total CSP project costs, and storage capabilities. Prior to the second half of 2011, installed PV costs were declining faster than module prices [2], indicating balance-of-system costs were declining as well. This trend reversed in 2H 2011, however. Small PV, for example, reported a 60% increase from the prior period ($0.039 to $0.063/W). Conversely, LCOE reportedly dropped for both PV categories, but large PV is trending down and small PV is trending up over the entire timeframe. Geothermal reported the lowest LCOE, averaging $0.067/kWh from late 2009 through 2011.

In line with LCOE cost data, first-year power purchase agreement (PPA) prices for large-scale PV were also highest among the four utility-scale project sizes and technologies shown in Figure 2 (small PV excluded due to retail/wholesale price differences). Geothermal reported the longest PPA terms and second-highest year one PPA price at $0.098/kW. This is likely due, in large part, to its high capacity factor and dispatchability compared to wind and solar.

Additional insight into balance-of-system (or "soft") costs was gained from the most recent REFTI questionnaire, which asked participants to report various soft costs based on their percentage of total project costs. As illustrated in Figure 3, geothermal reported the largest total percentage of soft costs at 15%. Both PV scales reported lower soft costs with wind recording the lowest—at 4.5%. Combined, engineering and interest costs during construction accounted for the largest portion, ranging between 45% and 67%.

See these links for the reports:

Renewable Energy Finance Tracking Initiative (REFTI) Solar Trend Analysis

Renewable Energy Finance Tracking Initiative (REFTI): Snapshot of Recent Geothermal Financing Terms, Fourth Quarter 2009 – Second Half 2011

This article was first published on NREL's Renewable Energy Project Finance blog, and is reprinted with permission.


[1] Until 2H 2011, "N/A" was not an answer choice, creating a response that could slightly alter the weighted average calculations. For example, if respondents answered 0 – 6% when in fact there was no tax equity being utilized, a 3% value would be used in calculating the weighted average. Effects should be minimal, as approximately only 13% of PV respondents reported 0%-6% over the REFTI timeframe and it's likely only a fraction of those actually had no tax equity.

[2] Module prices as reported by SEIA / GTM's U.S. Solar Market Insights Reports, 2010 – 2011

October 25, 2012

Siemens Bows Out of Solar, Announces Renewed Focus on Wind and Hydro Power

Vince Font[1].jpg
Siemiens wind turbines at the Gunfleet Sands Offshore Wind Farm 4 km from Gunfleet Sand, Essex, Great Britain. Siemens AG is selling its solar business, and will focus its renewable energy efforts on hydro power and wind energy.  Siemens is an established “clear market leader for offshore wind power” according to Managing Board member Michael Süß
Photo credit: Ashley Dace
Citing slow growth, low profit and high cost, Siemens AG (NYSE:SI) announced that it would be selling its solar energy business as part of a larger strategy to reorganize the company's overall stake in renewable energy. According to Bloomberg, Siemens also plans to end its involvement in DESERTEC, a joint venture it entered into in late 2011, which would build an immense network of solar farms in the Sahara desert.

“Due to the changed framework conditions, lower growth and strong price pressure in the solar markets,” Siemens said in a statement, “the company’s expectations for its solar energy activities have not been met.”

Already in talks with prospective buyers, Siemens unveiled a plan earlier in October to develop an optimized infrastructure through cost reduction and the strengthening of its core activities. Indicating the company’s continued commitment to the pursuit of renewable energy, Siemens said it plans to push further into developments in wind and hydro power, which have so far proven more profitable for the company.

Michael Süß, member of the Managing Board of Siemens AG and CEO of its Energy Sector, said, “the importance of renewable energies in the global power mix will continue to grow and hydro power and wind energy will remain the major renewable contributors. Our renewable energy activities will be focused on these two areas.” Süß added that Siemens is an established “clear market leader for offshore wind power farms” and said the company is “making good progress in onshore business.”

Despite the intended dissolution of its solar division, Siemens said it would continue to manufacture products for solar thermal and photovoltaic power plants. These products will include generators, steam turbines, control systems, and grid technology. Siemens has also pledged to continue operations of its solar thermal energy and photovoltaic business units until both have been sold, ensuring continuity of business for its existing contractual obligations.

Ingo-Martin Schachel, an analyst with Commerzbank AG in Frankfurt, told Bloomberg that the reasoning behind the decision by Siemens to divest its solar business activities was “obvious” and added: “Solar is no core business and no core competency of Siemens. The growth prospects for these markets have deteriorated such that there is really no reason to remain active here.”

Calling solar thermal energy “a hard sell,” head of solar research for Bloomberg New Energy Finance Jenny Chase said, “This is more evidence that there is no such thing as too big to fail at the solar industry.”

Siemens acquired Israeli company Solel Solar Systems and Italian company Archimede Solar Energy in 2009, but operating profits in its renewable energy division within the last year have plummeted 34 percent. Siemens presently employs 680 employees in its solar business, but its wind power division employs over 7,000.

The move by Siemens will not be seen as a surprise by many solar industry analysts. Shyam Mehta, Senior Solar Analyst with GTM Research recently told that he expects many diversied firms will abandon solar in the next year. “I would say we would see a lot more market exits in terms of plant closures or in terms of divestment from PV from diversified firms or insolvencies,” Mehta said. “We expect a lot more over the next year.”

Vince Font is a professional freelance writer specializing in the fields of renewable energy, high tech, travel, and entertainment. Read his blog at or follow him on Twitter @vincefont.

This article was originally published on, and is republished with permission.

July 06, 2012

The Next Trend: Integrating PV with Solar Thermal

Tom Konrad CFA

The Once Bright Future of CSP

Solúcar PS10 solar tower. Photo by afloresm via Flickr

Since before I started writing about investing in clean energy in 2006, I’ve been fascinated by Concentrating Solar Thermal Power (CSP.)  CSP held the promise of much cheaper energy than was then available from photovoltiac (PV) solar, combined with thermal storage, which eliminated the variability problems of PV.  Unlike other renewable energy able to produce baseload power (geothermal, biomass, and hydro), CSP is scaleable: The solar resource in areas appropriate for CSP is large enough to easily meet the  world’s energy needs.

Moderately priced, carbon-free, scaleable power with integrated storage?  CSP seemed likely to become a core clean energy solution.

The Darker Present

Today, things don’t look as good for CSP.  Large, central CSP power plants take years to permit and connect to the grid.  They work best in areas with low cloud cover, mostly deserts.  The least expensive CSP plants also require water for cooling (air cooling is possible, but reduces efficiency and so increases the cost of power.)

The large scale of CSP projects also makes it harder and slower to arrange financing.  The loss of the US Department of Energy loan guarantees last year dealt a harsh blow to the industry.  Once-successful CSP developer Solar Millennium, which had been granted a conditional commitment under the program, declared bankruptcy when they could not finance a project within the DOE-imposed deadline.

Slow permitting and financing means that only a few CSP plants have yet been built.  Meanwhile, distributed PV installations have been growing rapidly, giving manufacturers and installers valuable experience, leading to rapid cost cutting.  As a result, the world will install 27 GW of PV in 2012.  Total installed CSP capacity is about 3 GW.

The accelerated learning curve has allowed PV shoot past CSP in cost per kilowatt of power generated.  While CSP was plodding down the cost curve, PV dove off the cost cliff.  As I wrote in November, many planned CSP projects are being displaced by PV or being canceled.

Friend or Foe?

All is not lost for CSP.  While PV is ahead on price, CSP still has one valuable asset PV can’t match: cheap storage.  Micheal Whalen, CFO of CSP company Solar Reserve, said the idea of integrating CSP with PV was “of interest” at the Renewable Energy Finance Forum- Wall Street in response to an audience question.  This might make sense for large scale solar farms, since the integration of PV would allow the overall price of power to be lower than CSP alone, while CSP would be able to compensate for the rapid output changes from PV that occur whenever a cloud passes over, as well as producing power at night, or shifting it ot peak afternoon periods.

CSP/PV hybrid farms might be particularly appropriate in places like Saudi Arabia, which has recently committed itself to large solar investments.  While the low water use and cost of PV will appeal in the desert kingdom, the fact that solar will be displacing power generated from oil means that even CSP based power will produce cost reductions.  Large solar installations like what Saudi Arabia is contemplating could easily destabilize the grid if they were to consist entirely of variable PV.  Mixing in dispatchable CSP power would help maintain the stability of the whole system.

As Mr. Whalen said, “There is a place for CSP even when PV is cheap, if it differentiates itself [with storage].”  The best markets for CSP will be places like Saudi Arabia and South Africa where “they do not have robust grid connections.”  Without robust grid connections, PV’s variability can easily destabilize the grid, giving CSP a role in grid stabilization.

This article was first published on the author's blog, Green Stocks.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

May 25, 2012

A Solar Light at the End of the Tunnel...

...but it may take another year to get there

by Clean Energy Intel
Light at the End of the Tunnel photo via BigStock

Suntech Power’s (STP) first quarter earnings report provided some supportive insight into the process of consolidation currently underway in the solar industry. The financial numbers were of course less than constructive, though much as expected as pricing pressures continue to make life difficult for the sector.

Perhaps of more interest were the company’s insights into the inroads being made in the industry regarding the over supply situation and their own progress on reducing production costs. Both of these factors point to a process which will eventually right the industry, leaving a bright future for those competitive producers who survive the current turmoil. Light at the end of the tunnel. However, the tunnel still seems to be about 6 to 12 months long. Given the market’s general lack of ability to be significantly forward-looking in the current difficult environment that probably means that any hopes for sustained rally are premature for now.

Suntech's Numbers

On the financial numbers themselves, much as expected the company reported a seasonally weak first quarter. Shipments were down 26.9% on the quarter and 22.1% on the year. Revenues came in at $409.5m, down 53% on the year. Gross profit collapsed to a mere $2.4m and the gross margin came in at only 0.6%. However, this largely reflected a preliminary provision for US countervailing and anti-dumping duties of $19.2m, or 4.7% of revenues. Excluding this provision, the gross margin was at the high end of the company’s 3-6% guidance.

The net loss came in at $133m or 74 cents per diluted ADS. This was 26 cents worse than the 50 cents expected by the consensus.

From a big picture perspective, these numbers are not particularly exciting in either direction. The ‘surprise’ against the consensus was the company’s decision to take a provision on the tariff issue. However, the company also made it clear that there will be no need for further US duty-related charges in following quarters – mainly as a result of the fact that they have been able to adjust their global supply chain to ensure that their product going into the US is sourced from outside of China.

Indeed, in the earnings call, Chief Commercial Officer Andrew Beebe offered the following:

“We made a transition to globally sourced cells, not just Taiwan, but globally sourced cells as timely and as quickly as we thought was prudent from a product standpoint. ….. from this point forward, there will be no products going to the US that will have any tariffs applied to them”.

Meanwhile, CFO David King added the company’s view that “…the accounting charge may get reversed at the final decision level”.

Solar Demand

Outside, of the financial numbers themselves, the real interest was on the company’s view of the consolidation process underway both at STP and in the industry as a whole. Given STP’s leading position in the industry their insight is of course both valuable and instructive. Amongst all the detailed analysis, there were basically three clear takeaways from the earnings call. 

Firstly, the company remains optimistic about overall demand, guiding towards a 20% increase in shipments in Q2. Moreover, they continue to see shipments for the year as a whole of some 2.1 to 2.5 GWs, a range straddling their total capacity of some 2.4 GWs. In regional terms, they are still seeing good demand out of Europe and the Americas. And of course going forward countries like Japan, China and Saudi Arabia now have significant programs in place. China is now a 4-5 GW market and that number is likely to rise to 10 GW in coming years. Meanwhile, Saudi Arabia has just announced a plan to put 40 GW in place by 2032 and a meaningful level of orders is likely to be seen in 2013.

Genuine consolidation taking place

Secondly, the company clearly sees consolidation particularly within China as already helping to reduce the excess supply situation in the industry. In the Q&A session CEO Zhengrong Shi offered the following insight:

“In China, certainly there is a lot of idle capacity here. And currently as we know is oversupply situation and every player has to optimize their cost structure and always minimize spend structure. So, I think production and rationalization is very reasonable. I think most companies are doing that here in China”.

Clearly, the major problem for the solar industry has been that Chinese companies in particular were too aggressive in building out capacity in the past, leading to massive over supply. Indeed until the fourth quarter of last year the industry saw very little action to reign in capacity plans. The bottom line is that it seems reasonable to suggest that there now appears to be clear evidence that genuine consolidation is taking place. STP itself intends to hold their global cell capacity at 2.4 GW, with intended capex expenditures due solely to continuing costs related to previous projects. Moreover, insolvencies in Germany and elsewhere of course only add to the necessary process of consolidation in the industry. Together with demand expansion in markets like China and Saudi Arabia this will eventually lead to a more positive supply demand situation for solar as whole.

Cost Reduction

Lastly, STP itself is looking at solid progress on costs over the year. The company indicated that their own total production costs fell by 6% in Q1 over the previous quarter and they expect total module costs to be around 90 to 95 cents per watt in Q2. Moreover, during the earnings call, the company indicated that they have a high degree of confidence that they will be able to get poly to module conversion costs down to 60 cents per watt by year end – ten cents less than previously discussed. Given their expected average poly costs that should see total module costs fall to below 75 cents.

These cost developments are of course what is required to continue to drive the industry towards grid parity and also to help the most competitive players deal with falling average selling prices. Trina solar (TSL) has indicated that they are already at poly to module conversion costs of 58 cents and expect those costs to fall to 50 cents or below by year end – ten cents below STP’s target. That represents a significant degree of competition for STP and is certainly supportive of Trina. At the same time, STP is generally seen to provide higher end product and as a result generates higher ASPs over their product range. It is highly likely that the solar market has room for all of the tier one vertically-integrated Chinese players such as STP and Trina. The pain is likely to fall largely on tier two and three players alongside thin film players such as First Solar (FSLR) who will find it very difficult to compete with the falling cost structures being delivered by the most competitive poly-based players. 


Having taken advantage of the rally in solar at the beginning of the year (see here), I recommended taking profits on February 10th (see here) – which pretty much proved to be the high of the year for solar. From those highs at time of writing STP is now down -53%, whilst Trina is down -43%, Yingli (YGE) is down -51% and the overall Guggenheim Solar ETF (TAN) is down -50%. With solar so heavily beaten up and with a good amount of straws in the wind pointing to a positive process of consolidation, one might be tempted to look for a good trading rally from here if the overall market was in a forward-looking mode. 

However, the overall market and investor sentiment is weak, with the situation in Europe a major uncertainty. This suggests that the market is likely to be defensive and short-term orientated for now. Meanwhile, even STP’s best guess is that industry profitability is 6 to 12 months away. The bottom line is that it continues to seem reasonable to keep your powder dry and wait for a buy opportunity further down the line.

Disclosure: I have no positions in the stocks discussed.

About the Author: Clean Energy Intel offers free insight and is produced by a retired hedge fund strategist. You can read more at

May 23, 2012

Tariffs on Chinese Solar Are Bad for Us All

Garvin Jabusch

Trade War
Trade War photo via Bigstock

The United States Department of Commerce Thursday, and of all things at the behest of a German-owned company, SolarWorld AG (SRWRF.PK), imposed extreme tariffs on China-made solar panels and modules of between 31% and 250%, making them much less affordable for U.S. consumers. Commerce took the additional extraordinary step of making the tariffs retroactive for 90 days to prevent U.S businesses and homeowners from getting a decent price on the basis that their local dealer/installer bought panels before the date of their decision. Solar in this country just got a lot more expensive and the 100,000 domestic solar industry jobs (mostly installing and servicing) created over the last five years are now at risk. Also, oil, coal and gas suddenly can remain price competitive with solar in the U.S. for far longer than market forces would otherwise dictate. Longer term, it could make the U.S. may the last dirty, expensive, fossil-fuels based economic backwater economy in the developed world.  Jesse Pichel, Managing Director and Senior Equity Research Analyst covering Clean Technology companies at Jefferies has clearly summarized the situation:

Environmentalists and the unemployed should be equally disappointed with this decision because lower cost solar panels make solar more competitive with dirty fossil fuels. It should be clear by now that there are more U.S. jobs on the installation side of the solar business than on manufacturing. These cases have a chilling effect on business and it will linger for a long time. It’s unfortunate that SolarWorld has taken this scorched Earth approach and that they are distracting from the growth of U.S. jobs and affordable solar energy.

Slowing down solar development is undesirable in general. Remember, solar at scale represents almost limitless power at a zero cost of fuel, meaning it has the power to emancipate us from hundreds of billions spent every year of fossil fuels. I find it sad and funny that we think a few billion in tax cuts will stimulate the economy and lubricate the recovery, but we fail to see that limitless, nearly free energy would have that same effect, but at many times the scale and all while creating hundreds of thousands of new, quality jobs. So it’s not surprising that many American solar companies oppose the decision. As reported in the New York Times:

“Many solar panel installers in the United States have opposed tariffs on Chinese panels, contending that inexpensive imports have helped spur many homeowners and businesses to put solar panels on their rooftops. Opponents of the tariffs say that the United States benefits from cheap Chinese production. They point out that Chinese companies often turn to American companies to buy the factory equipment and polysilicon they need to make solar panels, and installers hire local American workers to set up and service rooftop systems.”

Let us not forget that the U.S. exports raw polysilicon to China, and that business will now be at retaliatory risk as “the Chinese industry would file a trade case at the Chinese commerce ministry against American exports of polysilicon.”  The ‘American made factory equipment’ and ‘local American workers’ also stand to suffer.

In addition, tariffs by definition are inflationary. A customer who now has to pay significantly more for his or her preferred brand of panel is experiencing inflation, but so too is the customer buying the American made panel that now is free to cost far more than it did yesterday due to the absence of tough competition. With panels of all kinds going up in price, so does the cost of electricity they produce, meaning the portion of the grid they supply will get more  expensive, making the blended grid electricity rates go up, in turn driving up the costs of every home and business that use electricity.  Inflation all around, then.   

The problem isn’t, as claimed by Commerce, that China has been dumping unfairly priced solar panels on the U.S., it’s that our domestic solar industry as a whole has not remained competitive in the face of fierce global competition. China’s panels are competitive because "[t]hey've figured out that clean-energy manufacturing will be an area of major growth and are investing vastly more than we are to support it." In the U.S., we’ve invested a fraction as much as China into solar and other clean energy sources, so naturally, we’re behind them on the cost curve. Commerce’s decision will do little to slow the growth and technological progress of solar globally; it will just mean the U.S. won’t be competing in this key piece of powering the future economies.

There are of course American firms, such as New Hampshire based GT Advanced Technologies (GTAT), who have managed to compete very well with Chinese solar without Commerce’s protectionism.  Tom Gutierrez, CEO of GT Advanced Technologies, recently had this to say on the opinion page of the Boston Globe:

I look at the time and energy invested in this investigation and wonder: Why, and what for? This is counterproductive to the primary objective of the US solar industry: Getting solar to grid parity. Tariffs, charges of dumping, possible trade tensions — these only enable high-cost manufacturing to continue, resulting in higher solar costs for US consumers. In the end, such moves negatively impact the growth of high-quality solar jobs in the United States.

Instead of carrying water for foreign-owned businesses, we should reward the traits that ensure success in the global marketplace: Business adaptability and commitment to innovation. To win in this race, it’s really about hard work and figuring out how to survive and thrive against highly-motivated competition. We need to be fostering real innovation — not rewarding inefficient businesses that seek government handouts.  GT and many other US-based companies have proven that we can compete against fierce Asian competitors and win. We just have to run better businesses.

Right. Or as I said in a previous post back in January 2011, “we should try competing instead of complaining.” And Gutierrez makes another interesting point, if these tariffs are disliked by many of the U.S. companies they’re meant to protect, who are they really for? What’s their real purpose?  It’s difficult not to notice, as Susan Wise, spokeswoman for SunRun, told Forbes, that “[i]f finalized, this decision would move us backward in the effort to make solar affordable for Americans,”. “It would make prices higher at the exact moment when solar power is starting to become competitive with fossil fuels in more markets.” [Italics mine.]

Germany’s SolarWorld AG, which brought the case to the Commerce Department, does not have the best record of defending its own industry.  In Germany, they have long lobbied to lower solar feed-in tariffs, meaning, effectively, they’ve been trying to stop receiving free money. What sane business does that?  I’m sure SolarWorld’s shareholders are stymied by the company’s anti-profit attitude.  Both efforts, to reduce subsidies in Germany and to start a solar trade war between China and the U.S., point to a company that does not have its industry’s best interests in mind. It may be worth remembering that a large part of SolarWorld AG used to be Shell Oil’s “crystalline silicon” division.  Shares of SolarWorld AG are up “as much as 18 percent” the morning after the tariff announcement, but U.S. based manufacturer First Solar (FSLR) has been off by as much as 5.8 percent this morning.

In Saudi Arabia, they must be laughing. Commerce’s handout, to let U.S. solar manufacturers run inefficient operations that produce solar modules too expensive for many domestic consumers, ensures we’ll be dependent on Saudi oil and other fossil fuels for a long time to come. Meanwhile, the Saudis are installing $109 billion worth of solar capacity to power their own domestic economy. They want to stop powering their own country with oil so they can sell every drop they can find and pump to us, which should be easy if we have a lot less solar to displace their costly crude.  Too bad we just ceded the advantage in getting Saudi’s solar business to Chinese firms. 

Commerce is expected to issue its final order making Chinese solar tariffs permanent in July or August. Let’s hope by then that they can be persuaded to allow free markets to reign.  

GAA Logo Blog (1)Disclosure: Green Alpha is long GTAT, but has no positions in other companies mentioned

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, or GANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."

May 08, 2012

SolarCity Files for IPO under Cloak of Secrecy

Debra Fiakas CFA

Image by Olga Palma via Wikimedia Commons
On the first word of an initial public offering investors flock to the Securities Exchange Commission website to get financial details on the heretofore private company.  Earlier this week solar energy solutions provider SolarCity Corporation announced its IPO plans, but investors will have to wait a while to get a look behind the SolarCity curtain.  The company is among the first to take advantage of a new “confidential” registration for emerging growth companies.

The process is provided for by The Jumpstart Our Business Startups Act (JOBS Act) signed into law by President Obama in early April 2012.  Any emerging growth company that has never had an IPO date is allowed to submit a registration statement to the SEC for a non-public review.  The filing must be nearly complete so there is no skimping on lawyers to draft the document or auditors to tote up the numbers.

SolarCity will have to file a public document before heading out for the first roadshow.  So eventually we will learn how much revenue SolarCity makes from helping businesses and homeowners install solar panels on their roofs and whether there is any profit in it  -  just not this week.

One thing we might know already is that SolarCity has some cash in the bank.  Earlier this year SolarCity raised $81 million through a private offering.  Venture investors Silver Lake Kraftwerk and Valor Equity Partners led the deal.  That money was slated for a sales and marketing program and possible acquisitions.

I think it will be worthwhile to stay tuned for the SolarCity deal.  BrightSource Energy scrapped its plans for a public offering, but I believe SolarCity will come through.   Its venture partners are well connected in the capital markets. Not to mention that Chairman Elon Musk and CEO Lyndon Rive have the right experience and plenty of financial incentive to see an IPO through to the end.

Just between you and me, BrightSource’s concentrating solar technology seems a great deal more exciting than SolarCity’s rooftop panels and assorted energy savings ideas.  Without the benefit of financial metrics from either of them, I am guessing that SolarCity is much closer to turning a tidy profit.  That means SolarCity shares might be quicker to trade against real earnings.
Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

May 03, 2012

Big Solar Out; Distributed Solar In: Brightsource & Solar City IPOs

Jennifer Runyon

On the heels of Brightsource Energy's announcement last month that it was canceling its plans to go public, SolarCity on Monday announced that it plans to conduct a registered initial public offering (IPO) of its common stock.

The IPO will begin after the Securities and Exchange Commission completes the review process that SolarCity initiated on April 26. No further information about the IPO — such as when and at what price shares will be available — is available at this time.

SolarCity has been in the residential solar PV leasing space since 2006 and expanded into the energy efficiency market soon after that. The company installs, operates, monitors and maintains PV and energy efficiency systems for customers in 15 states with planned expansion into many more states across the U.S. Customers receive a discounted utility bill that reflects the costs savings they have achieved through the energy efficiency improvements or PV systems installed.

Brightsource, which develops large-scale concentrating solar power plants, canceled its IPO on April 12 due to “adverse market conditions.” CSP developers have struggled with costs due to very low PV panel prices. But those very same low PV panel prices have increased demand for solar PV, which is a boon for leasing companies like SolarCity.

Jennifer Runyon is managing editor of and Renewable Energy World North America magazine.

April 29, 2012

Next Move After the Solar Sell-off

by Debra Fiakas CFA
opel solar concentrator.png
Image: Opel Technologies
After a string of high profile bankruptcies, solar cell producers have taken some material hits in recent months.  Out of a group of three dozen public solar cell and module producers listed and trading in the U.S. only three reported profits.  The group is trading on average at 29% of 52-week highs.  This looks like a corrected sector to me!  What is the next move?

Crystal Equity Research has a buy recommendation on GT Advanced Technologies, Inc. (GTAT:   Nasdaq)  -  one of the three in the group to consistently report profits.  GTAT shares are trading at 5.8 times trailing earnings, while the average of the three profitable solar producers is 7.8 times earnings.  GTAT is also trading off its own average price-earnings multiple of 8.8 times established over the four years since the company achieved profitability.

Maybe you are one of those “glass half empty” investors who believe even a strong company like GT Advanced Technology is not impervious to the stresses of falling prices, oversupply and competitive pressures that hang over the solar cell industry. I thought it might be interesting to consider the other side of solar energy  -  solar concentrating energy  -  to see if its unique economics has sheltered the group from the sell off that has plagued photovoltaic producers.

Concentrated solar applications avoid the high costs of photovoltaic cells.  In the least, use of concentrated sunlight reduces the cost of solar power by requiring fewer photovoltaic cells to generate a given amount of electricity.  A concentrator makes use of relatively inexpensive materials, such as plastic lenses and metal housings, to capture the solar energy shining on a fairly large area and focus that energy onto a smaller area, where the solar cell is.   Solar concentrators can also be used for thermal solar applications for ambient air or water heating.

The solar concentrating group is not large it is not certain that the group has been spared the solar sell off.  One in the group, Opel Technologies, Inc. (OPL: TSX) is located in Ontario, Canada where solar technologies still benefit from considerable government support and consumer interest.  The Canada Solar Industry Association (CanSIA) has forecast double digit growth in solar thermal units.  By 2020, when solar thermal has become mainstream, the group has forecast 500,000 square meters will be added per year.  This compares to about 120 square meters per year in the four years ending 2011.  CanSIA has also forecast that the Canadian solar photovoltaic market will grow steadily increasing from less than 500 MW per year between 2011 and 2015 to up to 1,000 MW per year 2016 to 2020.

Opel has a customer following, but has yet to report a profit.  Management recently secured a $5.0 million revolving line of credit to help support operations as sales ramp.  Working capital had been an issue in recent quarters as Opel struggled to ship its historic largest order of 4.6 MW of its TF-850 solar trackers to Global Energy Service USA.  That order was completed in the March 2012 quarter.

As the solar industry struggles to reduce costs, it stands to reason that the more successful in the group will turn to lower-cost solar concentrating technologies   -  even as simple as such technology might seem in comparison to solar cells.  It makes sense to include solar concentration properties like patent-rich Opel Technologies in a solar portfolio. 

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries. 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. OPL is included in the Solar Concentrating Group in Crystal Equity Research’s Beach Boys Index.

April 16, 2012

Here comes the sun….not

Marc Gunther


Germany, once the world’s leading market for solar power, is pulling back its subsidies.

Q Cells (QCLSF.PK), once the world’s largest solar company, just went bankrupt.

This isn’t happy news. If the country that birthed the Green Party cannot sustain its support for solar, what does that tell the rest of us?

It should tell us that it’s time (actually way past time) to get serious about energy and climate policy.

This week, as I followed the news from Germany, I talked with a couple of energy-policy experts who I respect–Jesse Jenkins of the Breakthrough Institute and Gernot Wagner of the Environmental Defense Fund. I also watched an interview (below) with Bill Gates from the Wall Street Journal’s Eco-nomics conference. They disagree about some specifics, but they all agree that the US needs to get a lot smarter about how to drive a transition to low-carbon energy. So let’s try to see what we can learn from Germany, and the rest of Europe.

Perhaps the most obvious takeaway is that we should not place expensive bets on any one solution. That’s what the Germans did, with generous subsidies in the form of a feed-in tariff for solar. Even though the costs of solar have dropped dramatically, the subsidies were not sustainable. Remember when people said nuclear was too cheap to meter. Solar PV is too costly to subsidize on a scale that matters.

Here’s how The Guardian reported the story last month:

You can have too much of a good thing, it turns out. The German government has said it has been forced to cut subsidies for solar panels, because demand was so high it could no longer afford to support the green technology.

In other words, the Germans are cutting back on solar subsidies not because they didn’t work but because they did. The government wants to drive down solar installations to less than half of the 7.5 gigawatts (27% of the world’s total) that it installed last year.

It’s not just Germany, either. The Spanish market went from being the largest in the world, at 2.7 GW, in 2008 to installing 17 megawatts — a drop of 99 percent — after subsidies were slashed and a cap on new installations was imposed, according to ClimateWire [subscription required]. Italy, which was the world’s top market in 2011, is also talking about cutting back.

All this, mind you, is happening in Europe, where there is a broad political consensus that climate change is serious business.

Jesse Jenkins and Gernot Wagner agree that this points to the limits of a clean energy policy that relies on subsidies for deployment. That’s essentially what we have in the US, in the form of tax credits for solar and wind power, and state renewable portfolio standards that require utility companies to generate a percentage of their electricity from renewable sources. Certainly there are benefits to policies that drive deployment–they achieve immediate reductions in CO2 emissions, and they can help get infant industries, like wind and solar, off the ground.

But  by themselves, policies focused on deployment won’t drive a radical transition to a low-carbon economy, which is what we need.

Says Gernot: “Public money is not enough to finance the transition to a green economy. Spending a couple of billion here and there is not going to revolutionize the world.”

Jesse agrees: “The financial burdens of the subsidy will eventually exceed the public tolerance…We need to deploy these technologies, but we need to deploy them in a way that drives the price down as rapidly as possible. We need smarter subsidies.” The Breakthrough Institute, with Brookings and the World Resources Institute, have a report coming out this month that will recommend new approaches–essentially, ways that subsidies can be tied to cost reductions.

What’s more, subsidies can be wasteful.  If I were to install solar panels on the roof of my tree-shaded house in Bethesda, US taxpayers would pay 30% of the costs. That’s unwise and unjust, although not nearly as unwise as given many billions of dollars to oil and gas companies to help them heat up the planet.

So what should we do? Gernot, Jesse and Bill Gates all agree that  we need breakthrough innovation to head off potentially catastrophic global warming. Today’s low-carbon energy sources — wind, solar, biofuels, electric cars, batteries–are still too expensive.

Given the government’s ability to finance renewable energy is limited, more of it should be spent on R&D where it will drive innovation and less should be spent deploying mature or wasteful technologies, like corn ethanol. This requires thinking long term, as Gates explains, because the climate crisis can’t be solved right away:

People underestimate how hard it is to make these changes. That is, they look at intermittent energy sources, they don’t think about storage and transmission. They look at things that are deeply subsidized, and they forget that they are deeply subsidized. They look just at the rich world, and they don’t look at where all the energy increase is taking place, which is in middle and low-income areas. I think the problem is way harder than many observers think.

But I also think, to counterbalance that a little bit…that the potential for innovation, not innovation in the next ten years, because you have to invent in this next ten years, but innovations that will start to be rolled out in say the 20 year time-frame, means that we can be in terms of the first derivative, in terms of the rate of change, we can be pretty dramatic. And so if you took a period like 75 years, if we really fund basic research at a reasonable level, which the U.S. does not, other countries do not, if we have policies to encourage experimentation, which just take any one of the things – nuclear, carbon capture – we’re not doing a good job on that – transmission, storage. If you do the right things, there is a chance to meet very aggressive goals in a 75-year time-frame.

Two final thoughts. As Gernot argues in his book, But Will the Planet Notice? a carbon tax or a cap on carbon emissions is the single best way to drive innovation, deployment and efficiency. Gates says pretty much the same thing:

A serious carbon tax…is the most important thing to do….that’s the greatest failure in our energy policy.

How to change politics to make a carbon tax possible is a topic for another day. I’m skeptical that we will be able to do so rapidly enough to forestall serious global warming impacts, which is why I wrote about the need to research geoengineering and air capture of CO2 (they’re not the same thing) in my short ebook, Suck It Up: How capturing carbon from the air can help solve the climate crisis. In the book, I write about Gates’ finding for research into geoengineering and and his support for a startup company called Carbon Engineering.

His talk is well worth watching, If you prefer, you can download download a transcript [PDF].

Marc Gunther writer for Fortune, GreenBiz and Sustainable Business Forum co-chair, Fortune Brainstorm Green 2012 and a blogger at  His book, Suck It Up: How capturing carbon from the air can help solve the climate crisis, has been published as an Amazon Kindle Single. You can buy it here for $1.99.

April 05, 2012

Solar ETFs Breaking Support

Steve Sollheiser

KWT Breaks Support

KWT Chart

There is very interesting price-action in the Market Vectors Solar Energy ETF (KWT) in the last trading day. We can see that price has closed below the support level of $3.40 which is a bearish signal. We can also see that the breakout price was touching an ascending resistance line twice - which creates this a Descending Broadening chart pattern.

We would expect price to continue downwards with target at approximately $2.00. If price opens above the level it will be a sign that the support is still strong, and if price opens below the $3.40 level it is a sign of continuation of the bearish move.

If price pulls back to the $3.40 (re-test the level from below) we will enter a short trade with stop loss right above $3.40 and target at $2.00. This trade should have very little risk and relatively high reward.

TAN May Soon Break Support

TAN Chart

The Guggenheim Solar ETF (TAN) is showing the same signals as the KWT, which reenforces our analysis. When two correlated stocks show different signals one can conclude that the signal is weak - however in this case the same thing happened: price has closed very close to the $23.00, without breaking it.

In case price opens below this level, we will expect a continuation of the bearish move. In case price opens above it (we expect a gap to occur, as price stopped near a very psychologically-charged level), it will be a signal that the level is still strong.

In this case, we will still trade the pullback to the $23.00 level from below, with target at exactly $10.00. Note that that this chart pattern has 80% win rate, and the percentage of chart patterns that meet the projected target is 68%. So we will trade it, however if price reaches only half the target we will still take our profits and close the trade.


If price breaks the support level and re-tests it from below, we will enter a sell trade on both TAN and KWT. In case of a gap upwards we will wait for price to touch the resistance trend line before reacting.

Disclosure: No Position.

Steve Sollheiser is a trader and a writer with experience in trading stock chart patterns and trading Forex. In his site he shares his insight about chart trading and trading psychology.

April 03, 2012

Solar Struggles Continue: Q-Cells to File for Bankruptcy

Steve Leone

Germany's Q-Cells, a solar industry giant that helped usher in a new era of solar energy, announced Monday that it will file for bankruptcy, but that it will continue to work to restructure.

In a statement released by the company, “the Executive Board and the preliminary insolvency administrator will work together to secure the continuity of the company within the insolvency proceedings.”

The move follows an unrelated higher court ruling on Friday that Q-Cells says limits its ability to move ahead with a debt restructuring plan.

The filing is the most prominent to date in the recent shake-out hitting the solar industry. The drastic drop in photovoltaic module pricing, the oversupply that has remained a drag on the industry and drastic subsidy cuts in Europe and beyond continue to put extreme pressure on solar manufacturers. Nowhere, perhaps, has this confluence of factors been felt greater than the headquarters of Q-Cells, which was the world’s biggest solar manufacturer in 2007 and 2008 before being overtaken during the rise of powerhouses coming mostly from China.

The company had worked to broaden its services in recent years. In addition to cell making, the company sells both silicon-based and CIGS PV modules. It also has moved toward project development, and in an earnings report the company said that that move has in fact boosted its economic health.

In 2011, Q-Cell’s production reached 783 MW, 717 of which came from solar cell production. The production of thin-film CIGS modules at German subsidiary Solibro accounted for 66 MW. That figure was down from just over 1 gigawatt produced in 2010. But unlike in 2010 when it was able to turn a profit, the company lost EUR 845 million in 2011. In March, the company said it expected 2012 to be another year of losses, but projected that it would return to positive earnings by 2013.

The company stock price, which hovered around $150 a share in early 2008, tumbled 50 percent to $0.16 per share on Monday.

Since August of last year, several solar companies, including Solon, Solar Millennium, Solyndra, Evergreen Solar and SpectraWatt, have filed for bankruptcy.

Steve Leone is an Associate Editor at  He has been a journalist for more than 15 years and has worked for news organizations in Rhode Island, Maine, New Hampshire, Virginia and California.

March 13, 2012

More Pain Ahead for Solar Stocks

Tom Konrad CFA

CETrends 2012.png Clean Edge's Clean Energy Trends 2012 contains some disturbing predictions for solar stock investors.

Clean Energy Trends 2012, the annual report from Clean Edge by Ron Pernick, Clint Wilder, and Trevor Winnie, was released today. On the surface, it seems like good news for the solar sector.  Although headlines in 2011 featured much bad press for Solar PV, the industry has not been "withering on the vine."

Here are some key points in the report:
  •   Combined global revenue for PV increased from $71.2 billion in 2010 to $91.6 billion in 2011, a 29% increase.
  • Installations in 2011 leaped 69% to 26 GW from 15.6 GW in 2010.  The higher growth in installations compared to revenue are a consequence of rapid price declines in crystalline modules.
  • Clean Edge predicts continued rapid growth in installations, with global revenues of $131 Billion in 2021.
  • At a total installed system price of $1.28 per watt (compared to $3.47 per watt in 2011), they expect more than 102 GW of PV installations in 2021.

Reading Between the Lines

Sounds like good news to you?  Then you're probably a consumer of solar electricity, not a company involved in the solar sector.

From 2007 to 2011, solar industry revenues grew at a compound annual rate of 46% (from $20 Billion in 2007 to $92 Billion in 2011.  Solar installations grew even faster, at a compound annual rate of 75% (from 2.8 GW to 26.4 GW.)  Despite the more than nine-fold growth in volumes, and the nearly five-fold growth in revenues between 2007 and 2011, the solar stocks were pummeled. 

The two industry ETFs, TAN and KWT are a good proxy for solar stocks over the period.  Both were launched in 2008, and they've fallen 89% (TAN) and 71% (KWT) since then.

Why the horrible stock performance?  You can't make up for lousy margins with volume.  The following chart shows how industry Revenues, GW installed, and prices have changed each year since 2007, along with Clean Edge's annualized expected change over the next decade.  Also shown are the performance of the solar ETFs from July of one year to July of the next.  For 2007-8, I used two prominent solar stocks, First Solar (FSLR) and Sunpower (SPWR) as proxies for the industry instead.

CE Trends 2012.png
As you can see, the solar installations have grown robustly (by at least 50%) every year since 2007, but the only year this translated into good stock performance was 2007-8.  The most notable difference between that year and the last three was that solar prices fell only 3%, while installations grew 50%.  According to Ron Pernick, one of the authors of the report, the small decline in solar prices "was due to the fact that the global silicon shortage was still having a significant impact on pricing."

The industry had been rapidly growing volumes at nearly stable prices.  This sent profits at many solar companies skyrocketing.  The reason First Solar did so much better than Sunpower was that First Solar's panels do not use silicon, so the company was able to keep much of the rising revenues for itself, while Sunpower's reliance on expensive silicon meant that most of the rapidly rising revenues from the panels it sold had to be passed on to its silicon suppliers, like MEMC Electronic Materials (WFR). 

Incidentally, one of the very first articles I wrote about investing in clean energy was about the solar silicon industry in July 2006.  At the time I wrote, "I expect all polysilicon manufacturers to be very profitable through 2007, with prices beginning to subside (and perhaps crash) in 2008-9."  WFR went public a couple months later in September 2006, rose 140% to hit its all time high in December of 2008, and lost 85% from that high by the end of 2009.  Today WFR is down 96% from its high.

As a less self-congratulatory aside, the great solar stock performance in 2007 led to a reliable contrarian indicator for the solar sector in 2008: the launch of two sector funds, the solar ETFs mentioned above.

After the financial crisis, demand weakened, and solar companies had to drop prices in order to keep demand growing rapidly.  Demand did grow a blistering compound annual rate of 84% over the next three years, but at the price of rapidly eroding margins at solar companies, causing stock prices to also fall even more rapidly (at a 35% annual rate.)

The Future

Going forward, Clean Edge expects solar prices to continue to decline fairly rapidly over the next decade, at an average annualized pace of 9.5%.  Meanwhile, they expect solar installation growth will be only a fraction of the current pace at 14%, and that solar industry revenue growth will slow to crawl at only 3.6% per year.  In fact, they predict that the revenue growth over the entire next decade will be less than the annual growth rate over the last ten years (at 42% and 43%.) 

I personally think the Clean Energy Trends growth estimates are low... 42% growth over the next two to four years (as opposed to a decade) makes more sense to me.  But that does not change my rather pessimistic conclusion: The stalled revenue growth and continued erosion of solar prices will almost certainly continue to undermine the profitability of the solar sector for years to come. 

Solar stocks may look cheap now, but as every dedicated bargain-hunter knows, it's a lot easier to find something cheap than to find a great value.  Solar stocks may be attractive for traders, but long term investors will continue to do well by staying away.


DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

March 12, 2012

Buffet Bet Comes Out for Solar

by Sean Kidney

Warren Buffet is a famous proponent of value investing and he surely received a sign of the value in solar investments over fossil fuels last week. The MidAmerican Energy $850m Topaz solar project bond we mentioned a couple of weeks ago was so successful that a second tranche is expected to cover the remaining debt of the project. The offer was oversubscribed by $400m which would have mopped up the total $1.2bn of debt in the project; Buffet's Berkshire Hathaway (BRK-A) controls MidAmerican.

In contrast, Buffet’s investment in $2bn of bonds from gas company Energy Future Holdings is taking a hit due to low gas prices in US. The market value of the investment is already at $878m with further write downs expected.

It’s interesting to note that the expansion of drilling in the US rewrites the script on the increased policy risk of renewable investments over fossil fuels. It seems investors are beginning to recognise the steady fixed returns on renewables over the volatility of fossil fuel prices. Topaz is the latest in several large solar bonds offered including Desert Sunlight ($595m) and NextEra Genesis ($562m) both at AAA tranches due to loan guarantees. Topaz and the secondary tranches of the other two projects were both rated at BBB-/A-.

Sean Kidney is Chair of the Climate Bonds Initiative, an "investor-focused" not-for-profit promoting long-term debt models to fund a rapid, global transition to a low-carbon economy. 

February 12, 2012

Solar Stocks Double from Lows

L. Myron Clark

A two-day surge on Feb. 8-9 took at least thirteen solar energy stocks more than twice their recent lows.  These names represent about half the publicly traded companies in the industry (on an unweighted basis). 

The "two-bagger" stocks follow somewhat different patterns, as indicated in the two graphs below.  Several of them hit their 52-week lows in late September or early October 2011, close to the bottom in the broad market.  Those lows ranged from 80% (YGE) to 86% (JKS) below the respective 52-week highs.  The companies include: Jinkosolar Holding Co (JKS), LDK Solar Co (LDK), Suntech Power Holdings Co (STP), Trina Solar Ltd (TSL), and Yingli Green Energy Holding Co (YGE).

Early lows

Note: prices through Feb 9th; shaded area in chart is for comparison to SPX

Others in this group bottomed in November or December, when portfolio purging hit the out-of-favor solar sector. Their lows were even more extreme, ranging from 88% (CSIQ) to 91% (HSOL) below the respective 52-week highs.  The companies include: Canadian Solar Inc (CSIQ), Daqo New Energy Corp (DQ), Hanwha Solarone Co Ltd (HSOL), and Renesola Ltd (SOL).

Later lows

Note: prices through Feb 9th; shaded area in chart is for comparison to TAN, the Guggenheim Solar ETF, as an industry benchmark

If you squint, you can find even bigger bounces off the lows among stocks categorized as "Deficient" for failing to meet NASDAQ Continued Listing Requirements.  (You could call this the Icarus category, except that hardly any company in the industry can evade that label after the plummet of 2011.)  These include: Ascent Solar Technologies Inc (ASTI), Daystar Technologies Inc (DSTI), Energy Conversion Devices Inc (ENER), and Westinghouse Solar Inc (WEST)
     A backhanded honorable mention goes to Evergreen Solar Inc (ESLRQ) , which is operating under bankruptcy.  The stock is up about 700% from its low: that is, from 1 cent to 8 cents.

The recent outperformance of many smaller stocks, after they had gone down longer and farther, indicates that investors in this sector have switched abruptly to a "risk-on" mode.  While it's a bit unseemly for speculative fervor to follow so closely on the heels of mordant despair, the shift in sentiment is not as dangerous as wild-eyed buying would be at the top of the market.  However, an unsettling tug-of-war appears to be shaping up between momentum-fueled optimism and fundamental-based skepticism.  This portends a lengthy spell of volatility until the solar industry undergoes further consolidation and pricing firms. 
    In my previous posting following the January spike in solar stocks, I predicted a partial repeat of the pullback that followed the sector's bounce off the bottom in October 2011.  That was fairly accurate for about two weeks, in contrast to the 2-month decline through late 2011.  Another iteration seems like a reasonable guess.  Short-covering rallies tend to have sharp reversals, so Part 2 of this analysis will examine short positions in these stocks.


L. Myron Clark is an independent industry analyst based in the Boston area.  He previously covered the technology services industry as an analyst with Gartner Inc.  He has an undergraduate degree from Cornell and also pursued postgraduate studies there.  Mr. Clark has traveled extensively and has a broad range of interests in energy and environmental topics.

February 11, 2012

Developments in the Solar Corporate Bond Market

by Corporate Bonder

The global bond market is huge. Data from the Bank for International Settlements shows that the total size of the global debt securities market (domestic and international securities) was $99.5 trillion as at June 2011, of which $89.9 trillion were notes and bonds. Governments accounted for $43.7 trillion of outstanding debt securities, financial organizations $43.8 trillion, corporations $11.0 trillion and international organizations $1.0 trillion.

Against that, Bloomberg has estimated that there are $230bn outstanding of fixed-interest securities that meet their “green bonds” definition. And of course the IEA talks of $1 trillion of investment a year needed for the global shift to a low-carbon economy.

The Solar Corporate Bond Market

There’s been a lot commentary on the collapse in the solar market and the accompanying share prices of solar companies. In this first of what we plan will be a quarterly market update we’ll have a look at the bond market for the solar industry and how it has been affected by market developments.

To illustrate the state of the market we found three solar companies that have issued corporate bonds and another five with convertible bonds outstanding. The bonds are listed below; they show that the market is clearly distressed, with yields on a number of bonds greater than 20%, despite a significant rally in solar convertible bonds during January. Credit spreads of greater than 1000 are typically thought of as being at distressed levels. The pricing data is as at February 7th 2012 (Bloomberg).

Table: List of bonds (convertible and conventional) issued by solar companies. Market prices trading at distressed levels.
Bond Price Yield Credit Spread
WFR (MEMC) 7.75 19 USD 84.3 11.0 950
SOLARW 6.375 16 EUR 61.5 22.4 1884
SOLARW 6.125 17 EUR 58.5 20.6 1855
REC 11% 14 NOK 97.9 12.9 912
REC 0% 16 (FRN) NOK 77 14.3 1162
REC 9.75% 18 NOK 71.8 18.2 1428
REC 6.5% 14 EUR CONVERT 60.9 38.2 2949
SPWR 4.75 14 USD CONVERT 91.8 9.0 842
SPWR 4.5 15 USD CONVERT 87 9.4 876
TSL 4 13 USD CONVERT 87.7 13.7 1289
STP 3 13 USD CONVERT 73 34.6 3356
JASO 4.5 13 USD CONVERT 84.8 18.6 1761
SOL 4.125 18 USD CONVERT 67.8 12.0 1405

REC Case Study

REC (RNWEF.PK) is a useful case study as it has publicly listed senior debt, subordinated convertible debt and listed equity which we can use to compare the performance of different parts of the capital structure. The chart illustrates the total return (rebased to 100 at 15 April 2011 when the longer bonds were issued) for all listed instruments in the capital structure.

The senior bonds have exhibited less volatility and a smaller fall in market price due to their lower risk profile than the convertible bond and the equity. Nevertheless, having lost less will be of little comfort to investors that bought the longer dated senior bonds at or around the issue price of 100, as they are now priced in the 70s. The fall in the price of the bonds reflects a substantial increase in the market’s perception of the risk in the sector and uncertainty regarding the value of solar assets. This does not bode well for solar companies looking to raise finance in the debt markets at present as the required yields are simply too high to make the businesses viable. The lowest risk solar companies in the market may be able to access markets but most companies will have to wait until yields come down and investor appetite improves before they can issue bonds.

Implications for Other Renewable Energy Companies

Corporations with solar activities amongst a much larger set of businesses (eg. integrated utilities or industrial conglomerates) are better placed to raise corporate finance for solar activities as the interest rates the market requires on these more diversified businesses are currently significantly lower.

While the solar market’s woes are unhelpful to the broader renewable energy market, many of the issues are specific to the industry and therefore should not inhibit the borrowing ability of corporations operating in other renewable energy activities. The current sovereign and financial sector malaise is a much more serious issue for broader renewable energy financing at the present time.

REC bond spreads
REC bond spreads

Bryn Jones, manager of the Rathbone Ethical Bond Fund commented: “the solar market continues to suffer from a number of headwinds, however senior bonds with higher coupons or structured debt can outperform equity in more stressed conditions. As a result this could support the view for more Structured Bonds issuance within the renewable energy space.”

Corporate Bonder is a corporate bond fund manager in the London. This article first appeared on the Climate Bonds Initiative blog.

January 25, 2012

Dark Clouds Threaten German Clean Energy Ambitions

John Petersen

During the fourteen years that I've lived in Switzerland, the Germans have been the world's staunchest supporters of green power and alternative energy. Their aggressive development of wind power was breathtaking, as was their warm embrace of photovoltaic power. Over the last few weeks, however, there has been an ominous change in the mainstream German media's tone as the political class finally comes to grips with the unpleasant reality that rooftop solar panels are worthless on short, grey winter days and "For weeks now, the 1.1 million solar power systems in Germany have generated almost no electricity." Three recent and highly negative articles from Der Spiegel Online include:
As recently as last year, articles like these would have been unthinkable. Today they're viewed as reasonable discussions of critical issues as the laws of thermodynamics and economic gravity assert their absolute primacy.

The Germans have been trailblazers in all things green since the emergence of the Green Party in the 1980s. In fact, it's hard to name an alternative energy technology that Germany hasn't welcomed with open arms. When it comes to green power and alternative energy, the Germans have been on the far left of the technology adoption curve for a very long time.

1.24.12 Tech Lifecycle.png

If the tone of the recent Der Spiegel articles is a reasonable indicator of public sentiment, the innovators are getting ready to throw in the towel on green panacea solutions and get down to the serious work of conserving energy instead. They're weighing the costs and benefits, and reaching an entirely predictable conclusion that it's impossible to depend on variable and inherently unreliable power sources as the backbone of an industrial economy. As Germany goes, so goes the world.

If the world's standard-bearer for green power and alternative energy abandons the quest and chooses a more sensible path of conservation and energy efficiency, the backlash against the solar power industry will be immense and risks to the wind power industry will skyrocket. After all, it's hard to argue the merits of "One for the Price of Two" power solutions; which is exactly what you get when wind and solar power have to be fully backed up by conventional power plants. If the solar and wind power dominoes fall, they'll almost certainly take out the emerging electric vehicle industry that demands huge amounts of money and natural resources to simply substitute one fuel source for another.

Currently all eyes are on Germany as the epicenter of European efforts to restore fiscal balance in an age of profligate and unsustainable government spending. The apparent German surrender on green power and alternative energy may just be an unfortunate victim of that broader effort. Until the dark clouds dissipate and we have a clearer view of the landscape, I'd minimize my exposure to solar, wind and electric drive and focus instead on less costly energy efficiency technologies that work with the laws of thermodynamics and economic gravity instead of fighting them.

Disclosure: None

December 24, 2011

Solar: One Chart That Highlights The Adjustment In The Industry

by Clean Energy Intel
Source: NPD SolarBuzz, SolarBuzz Quarterly.

New survey-based data from SolarBuzz points very clearly to a very much needed ongoing adjustment to manufacturers planned module shipments. The chart above illustrates the issue very succinctly. In SolarBuzz´s survey conducted in Q2 of the current year, manufacturers were still planning on shipping just over 8 GW of modules in Q3 of this year and almost 9 GW in Q4. The somewhat obvious result was oversupply, a continued inventory build and falling module prices.

However, in the latest SolarBuzz survey, conducted at the end of Q3, those numbers have fallen to just over 6GW for Q3 and a tad over 5 GW for the final quarter of the year. This level of adjustment is precisely what is required to finally bring the industry back towards balance during the course of 2012.

Recently, we have pointed to growing evidence that such a process is clearly at work:

  • On the demand side, the rest of the world has been making up for slack demand out of Europe. In particular, the latest data points to blistering demand in the US - more detail here
  • Likewise, China and Asia are showing extremely strong demand growth - see our article on the issue here
  • And most importantly, on the supply side, the major Chinese players have drawn a halt to their excessively aggressive capacity expansion plans - more detail here. The data above of course simply highlights this new realism on the production and capacity side of the equation.

Taken together, these factors should allow the supply-demand imbalance currently facing the industry to be eroded as 2012 progresses. And of course, this new realism should eventually bring a better business environment. As Craig Stevens, President of NPD SolarBuzz states:

“While market share growth was the predominant corporate strategy at the beginning of the year, companies must now improve their financial viability, or they risk not being able to participate in the strong growth expected by grid parity now being established in key markets,”

Indeed, on the basis of the manufacturers survey from SolarBuzz, global module inventories are now expected to stand at 7.3 GW at the end of this year, not insignificant but certainly less than the survey´s previous indication of 8.6 GW.

For 2012, global demand is expected to grow by some 6% - with 43% growth in the rest of the world making up for a continued contraction out of Europe. That moderate growth should allow manufacturers to further reduce inventory levels as they tightly control capacity and production levels.
Calling a bottom in a dustressed market is never easy. Moreover, pressures on inventories, prices and margins are likely to continue into Q1 of next year. However, at current valuations this has to be largely priced in. The question is one of how forward-looking the market is prepared to be. Much of that may in fact be determnined by global conditions in the overall stock market.
Barring a global bear market is stocks, it seems reasonable to suggest that six to nine months from now, we will look back and see that somewhere around here will have been a turning point for the top tier solar companies at least.
A key point is that during such a period of adjustment the higher cost, second tier players will tend to be pushed out and come under considerable pressure. There could well be further bankruptcies in the sector. However, such a process of creative destruction will of course also help the sector to re-balance.
This point is also illustrated clearly once again by the latest margin data from SolarBuzz:
'Gross margins for vertically-integrated Chinese tier 1 cell and module manufacturers decreased two percentage points Q/Q in Q3’11, while Western and Japanese manufacturers dealt with negative margins for the second quarter in a row. Margins for Chinese tier 2 and other Asian producers tracked by NPD Solarbuzz are also negative now'.

In response to these pressures resulting from over-supply in the industry we had previously been recommending staying away from solar stocks until very recently. However, recently we decided to test the water with a basket of tier one Chinese players, for anyone willing to hold through what is likely to continue to be a volatile period.

Consequently, since late November we have been recommending specifically being long a basket of Suntech Power (STP), Yingli Green Energy (YGE) and Trina Solar (TSL). More recently, we added First Solar (FSLR) to that list. We continue to believe that this basket makes sense from a long-term buy and hold perspective.

I have no positions in the stocks discussed.

About the Author: Clean Energy Intel is a free investment advisory service (available at, produced by a retired hedge fund strategist who also manages his own money inside a clean energy investment fund.

December 22, 2011

Buffett Buys Into Another Solar Project - Expect More To Follow

by Clean Energy Intel

Warren Buffett-controlled MidAmerican Energy Holdings on Friday acquired an interest in a second solar project. In the latest deal, the company has acquired 49% of NRG Energy´s $1.8bn Agua Caliente project.This follows the company´s acquisition of 100% of First Solar´s $2bn Topaz Solar Farm less than two weeks ago.

As was the case with the first Topaz deal, we know little of the arithmetic faced by MidAmerican holdings in this latest agreement. However, what we do know is the following -

  • Agua Caliente is a $1.8bn project owned by NRG Energy (NRG) in Yuma County, Arizona.
  • The project is supported by a $967m DoE Loan Guarantee.
  • First Solar (FSLR) is responsible for the construction of the project, which is scheduled to be finished in 2014.
  • The project also has a 25 year power purchase agreement (PPA) in place with Pacific Gas and Electric for all of the power generated
  • As was the case with the Topaz deal, Mr Buffett is effectively buying into the future income stream which will accrue from the PPA with PG&E.
  • The project should displace 5.5 million metric tons of CO2 over the 25 years of the power purchase agreement.

Clearly, Buffett´s group is not buying into exposure to solar manufacturing. However, these two deals do show a belief that such utility scale solar projects represent good value, low risk investments. And there lies the bullish factor for the industry. There is currently a 24 GW project pipeline in the US utility-scale sector and it needs to be financed. This latest deal is not quite as bullish as the Topaz deal, since there is a DoE Loan Guarantee associated with the Agua Caliente project. That was not the case with the Topaz project. However, we are nevertheless seeing commitment to this part of the industry and this is positive from the perspective that it increases the level of confidence the market can have on the private sector´s ability to respond to the very large utility scale project pipeline which is currently in place.

This is particularly the case given that MidAmerican appears to be suggesting that further deals should be expected. From this perspective, the following quote from the press statement announcing the deal is particularly interesting. Greg Abel, Chairman, President and CEO of MidAmerican Energy Holdings Company is quoting as saying:

'We are aggressively pursuing opportunities to expand our presence in the renewable energy sector, and the Agua Caliente project is another important step toward that goal.... We look forward to partnering with NRG Energy on this exciting project'.

MidAmerican is already the number one owner of wind-powered projects among rate regulated utilities and the company has said that 28% of its total generation capacity will come from renewable and non-carbon sources at the end of 2011.

It sounds like we should expect more deals from MidAmerican in the solar sector.

I have no positions in the stocks discussed.

About the Author: Clean Energy Intel is a free investment advisory service (available at, produced by a retired hedge fund strategist who also manages his own money inside a clean energy investment fund.

December 09, 2011

Cheap Photovoltaics Are Eating Solar Thermal's Lunch

Tom Konrad CFA

The falling price of photovoltaic (PV) solar is undermining the case for Concentrated Solar Thermal Power (CSP). 

According to a recent report from Pike Research, of the 6886 MW of CSP projects awarded in the United States since 2004, 36% have been replaced with PV.  That's more than the number which are actually under construction (1,532 MW, or 21% of announced projects), and all of those required the backing of the US DOE loan guarantee program.

Pike CSP Construction.png

With this recent track record, and no prospect for new approvals under the program since September 30th, it seems likely that less than half of 3400 MW of projects in the pipeline will actually be built as CSP projects.  In the worst-case scenario for CSP, DOE loan guarantees will prove to have been essential, and the entire CSP pipeline vanish or be replaced by PV.

It Wasn't Supposed to be This Way

Many renewable energy advocates (myself included) have long seen CSP as core to the decarbonization of the electric grid.  That's because CSP has something relatively unique among renewable power technologies: with the addition of relatively inexpensive thermal storage, it can be dispatchable.  Dispatchable power, usually provided by natural gas turbines on the current electric grid, is what allows utilities to match supply and demand.  The addition of variable sources of supply such as PV and wind only makes dispatchable resources more important.

CSP held the promise of squaring the circle: scalable, potentially inexpensive, dispatchable zero-carbon power.  Even PV advocates such as Ken Zweibel, now head of the GW Solar Institute, but then the President of thin film PV start-up PrimeStar Solar co-authored a "Solar Grand Plan" for Scientific American which relied on CSP as a key component in his vision of a solar powered North America.

What Happened

The difference between the grand visions and today's reality are legion.  First, as the Pike study points out,
The biggest threat to resumed growth in CSP is the dropping prices of PV modules. PV module prices continue to drop beyond 50% of their peak in mid-2008. In addition, the established track record of PV is more attractive to financial backers.
but the authors hold out hope that
CSP may overcome competition from PV by reducing costs as the result of bigger scale and two technology propositions that increase operating revenue and profits: hybridization with fossil fuel plants through a process called Integrated Solar Combined Cycle (ISCC) and utility-sized energy storage capabilities.
I'm less sanguine.  I now see four other difficulties for CSP going forward:
  1. Dispatchable carbon-free power may be essential to a carbon-free electric grid, but today we are at much lower penetrations. 
  2. Dispatchable natural gas generation is widely available and cheap to operate with today's low gas prices and the absence of any price on carbon. 
  3. Dispatchable generation is most useful for balancing load if there is a robust transmission link between the generation and the load in question.  Since CSP requires direct sunlight and considerable land areas, it is confined to remote parts of the arid Southwest, typically far from population.  Given the difficulty and long time lines required to build new transmission in the US, CSP's potential dispatchability remains limited. 
  4. Smart grid technologies such as Demand Response (DR) are advancing rapidly, and are, in many cases, able to match demand to supply at much lower cost than CSP.  Lithium-Ion and Lead-Acid battery technologies are also angling for a slice of the grid stabilization pie, especially in conjunction with better load forecasting techniques.  While DR and batteries have difficulty matching CSP for cheap mass energy storage, they have a competitive advantage when it comes to supplying power for short term grid stabilization


As long as there is cheap natural gas available for long term storage, and smart grid techniques filling in the short term gaps, CSP's high-energy thermal storage is a solution looking for a problem. This is especially true given that the "problem" (mismatch between supply and demand) occurs at the source of demand (population centers), not in the uninhabited desert where CSP plants are invariably located.

The Pike report forecasts that CSP construction will rebound by the end of the decade.  I'm not so sure.  Technologies improve and get cheaper as they are deployed.  With CSP deployment stalling, and smart grid and PV deployment accelerating, why should be assume that CSP will ever catch up?

If CSP development does stall, it will be a tragedy, because smart grid technologies will be less able to compensate for the variability of PV and wind as they reach high grid penetration.  At that point, mass energy storage such as that available with CSP will become essential, and if we have not been developing CSP technology along the way, mass energy storage may be much harder to implement than we would hope.

NOTE: This article was first published on I also added some thoughts on what it might mean for electricity generation in general on my blog at Clean Energy Wonk.

October 26, 2011

The Pending Solar Apocalypse -- Not!

Garvin Jabusch

The hysterics around recent solar industry announcements that in general profit margins are narrowing are, as usual with all things solar recently, completely overblown. "Is This A Death Spiral for Solar Companies?" might be my favorite histrionic headline.

White Dwarf Spiral.jpg
Artist's depiction of death spiral in binary star system J0806 with two white dwarfs destined to merge.  Image Source: NASA/Tod Strohmayer (GSFC)/Dana Berry (Chandra X-Ray Observatory)  

Yes, narrowing margins are making life difficult for smaller, higher cost producers. But this is and has always been a standard part of the evolution of any industry from niche to growth to mainstream. An undervalued name we own and that I’ve used as an industry representative example before, Canadian Solar (CSIQ), announced October 17 that, due to the rapid growth in the solar industry and emerging commoditization of some components, their overall profit margin is expected to shrink to 12% by year end 2011. Meanwhile, their industry is growing at 10 times the rate of the overall U.S. economy and will far more than make up in volume what it loses in margins. This is the normal progression with any new technology, and is usually considered a good thing. In fact, most mature industries operate -- profitably -- at or below 12%. Here's the Fortune/CNN 2009 list of profit margins by industry:

Issue date: May 4, 2009

As you can see, solar, even with its newly revised, lower, 12% margins would still rank 6th of 53 on this list (if it were included). And the truth is, as solar grows and grows, and panels become cheaper and cheaper, margins will continue to drop to 10% and below. But, again, the industry is maturing into a high-volume business wherein scale will more than compensate for this narrowing just as occurred in most of the above industries.  Yet when was the last time you heard a pundit claim that most of these industries was in a “death spiral?”  I would argue that with its booming growth, solar is a better long term investment than any of these "stalwart" industries that currently operate between 1% and 10% margin rates.

Also bear in mind that as panels become ever cheaper and margins narrow, solar is fast becoming the cheapest source of electricity of any kind. Extrapolation of current trends shows that solar will be the cheapest electricity in the world by 2018, latest. What happens to industry growth as that day approaches?

After CSIQ's announcement, its shares dropped another 13% to $3.00, which is less than one-fifth of their $16.03 per share in cash. Ridiculous. CSIQ was already priced at one-quarter of cash, like a company hemorrhaging money, not making it. So the reduction in margin announcement should hardly have had the effect that it did, so what the further decline represents for me is a buying opportunity.

Bear in mind that China has made a $313 billion commitment to green energy, primarily solar, over just the next four years (the U.S. commitment is trivial by comparison, no doubt thanks in part to some dangerously misguided calls for America to give up on solar altogether). The favored Chinese manufacturers of solar PV will thus have no problem maintaining liquidity much less solvency as the industry, predictably, matures and consolidates. This kind of large, rapid investment in solar PV manufacturing has resulted in global supply outpacing demand at the moment, which is one of the factors causing shrinking industry margins. However, we believe this is a temporary imbalance because we’re observing aggressive solar scaling, utility-scale and rooftop, in nations worldwide. More on that in a later post. 

As an aside, we disagree with current U.S. based efforts to sue China for solar panel price dumping. Dumping, which is defined as selling a product under production cost to capture market share, is not the same as out-competing, which has the same effect. If China has invested so much more in its solar capability that its cost of production is significantly lower than ours, so be it; the appropriate response is to invest in our domestic industry to make it more competitive. It will be interesting to see what the WTO concludes, but I don’t think the dumping case is necessarily clear. In any event, winning the case will allow the U.S. to apply tariffs to foreign solar panels, thus raising the cost for consumers, prolonging our dependence on fossil fuels (although that may be the point) and keeping energy prices higher overall.  

Again, solar is a booming growth industry that is adding jobs, revenue and profits worldwide (including here in America), that is going to keep growing, and fast, for years if not decades: how many of us are aware that already, solar employs 100,237 people in the United States and is booming, compared to coal's 80,600 and shrinking jobs? [Note: the coal jobs figure is from the U.S. BLS. The BLS does not keep track of solar jobs, but refers interested parties to The Solar Foundation’s “National Solar Jobs Census,” cited above.]

The trick for investors is to find the low cost manufacturers with access to capital and with already profitable business models. Solar as an industry is here to stay; investors who own the best solar companies now will be very pleased in the long run.

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, or GANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."

October 24, 2011

Politics Likely to Continue to Cast Shadow Over Solar

by Clean Energy Intel

Solar stocks have clearly been heavily affected by the political fall out following the Solyndra affair - and unfortunately the political debacle only looks likely to get worse. The Hill now reports that the Republicans on the House Energy and Commerce Committee are deeply focused on attempting to prove that the Obama Administration broke the law in restructuring the $535m loan guarantee it had granted to Solyndra.

Clearly, this is largely politically motivated and as such is only likely to remain so as we move deeper into the election season. However, from an investment perspective, the rights and wrongs of the situation are not so important as the simple fact that financing in this arena has now become heavily politicized.

As I have argued in previous articles, this cannot be good. In particular, one of the last areas of support for solar is the 24 GW US utility scale pipeline. This needs to be financed and on historical numbers each 1 GW requires as much as $4bn in loan guarantees, although not all projects are reliant on financing support. Nevertheless, the politicization of the required financing funnel is a real concern - for a more detailed discussion of the issues see my previous articles here and here,

This really has become a daily political pantomine and there is little point in going over every cut and thrust of the debate. However, a very clear statement made to The Hill by Rep. Cliff Stearns (R-Fla.), chairman of the House Energy and Commerce Committee’s investigative panel, should be taken as a clear warning to continue to be cautious with regard to this sector:

“Once we establish clearly that DOE broke the law, that will send a very strong message....... The next step after that is to see why [Energy Secretary Steven Chu] did it, and [whether it is] tied to the White House and President Obama’s inner circle,” Stearns said, referring to Chu’s decision to approve the restructuring agreement.”

Those quotes speak for themselves - expect more political fireworks.

Over the long-term, I have no doubt that significant growth in the solar industry is both likely and necessary if energy policy is to deal in any way with the multitude of pressures which it now faces. However, two clear concerns look likely to continue to cast a shadow over the sector in the immediate future:
  •     The obvious political fall-out from the Solyndra affair, as discussed above
  •     Oversupply and an inventory problem, which will take quite some time to unwind. The recent continued decline in polysilicon, solar wafer and solar module prices is clearly indicative of this continued problem - for more detail see here.

Solar players such as First Solar (FSLR), Sunpower (SPWRA) and SunTech Power (STP) are clearly undervalued.  However, given the difficulties created by the issues discussed above, they may well remain undervalued for quite some time. As I have argued in the past, this is a time to keep your powder dry and invest another day.

Disclosure: I have no positions in the stocks discussed.

About the Author: Clean Energy Intel is a free investment advisory service (available at, produced by a retired hedge fund strategist who also manages his own money inside a clean energy investment fund.

October 06, 2011

Solar: DoE Ends Loan Guarantee Program with Final $4.7bn in Approvals

by Clean Energy Intel

This past Friday, the 30th September, was the final day for approvals under the Department of Energy's 1705 Loan Guarantee Program. This was of course set up as part of the 2009 stimulus law and extended an existing Energy Department loan guarantee program.

Activity at the DoE under the program has also now of course become a highly political issue in the aftermath of the move by Solyndra into Chapter 11 - leaving the program exposed on its $535m loan guarantee, extended to the company in September of 2009.

In particular, Republican members of Congress have expressed concerns that the DoE, having allegedly failed to do proper due diligence on the Solyndra loan guarantee, would now rush through some final loan guarantee approvals before the Friday expiry of the program. You can read my original article on the likely negative affects of this political wrangle on solar stocks here.

Indeed, in the aftermath of the Solyndra announcement the DoE failed to move forward on two large loan guarantee applications:
  • On Wednesday the 21st, First Solar Inc (FSLR) said that their application for a $1.9bn loan guarantee for their 550 MW Topaz project would not complete the application process in time to beat the deadline.
  • On Friday the 23rd, a similar fate befell SolarCity's application for a $275m loan guarantee. The DoE blamed increased paperwork resulting from the Congressional investigation into the Solyndra decision. SolarCity's project, SolarStrong, would have put solar panels on the roofs of 160,000 military family homes.

However, despite the ongoing political debate the DoE earlier last week approved two new loan guarantees:
  • On Wednesday the 28th, the DoE approved a $727m loan guarantee for a 110 MW solar project sponsored by Tonopah Solar in Nye County, Nevada.
  • The same day, they also announced the finalization of a separate $337m loan guarantee for a Sempra Energy 150 MW project in Arizona.

Finally, on Friday the 30th, the DoE approved a final batch of loan guarantees or partial loan guarantees for solar projects for a total of $4.7bn:
  • Sunpower (SPWRA) was awarded a $1.237 bn loan guarantee for the company's California Valley Solar Ranch project in San Luis Obispo, California.
  • First Solar Inc (FSLR) received a $646 m loan guarantee for the company's Antelope solar generation plant in Lancaster, California.
  • First Solar Inc (FSLR) also received a partial guarantee on $1.46 bn for the company's Desert Sunlight project in Riverside County, California.
  • Prologis received a partial loan guarantee on $1.4 bn for Project Amp, which will put 752 MW of solar power on 750 existing rooftops across 28 states.
You can read the full details of all of these projects on the DoE's website for the loan guarantee program here.
These approvals are undoubtedly supportive for the companies concerned. However, the politics surrounding support mechanisms for renewable energy looks likely to intensify. In particular, as I discussed in a recent article here, Republican members of the House Energy and Commerce Committee are now pushing for Energy secretary Chu to testify personally before the committee.
Given that next year is a Presidential election year, it is very unlikely that this issue will calm anytime soon. Most importantly, the financing funnel for solar projects has also been supported by the Section 1603 Treasury Program, which is set to expire at the end of this year. The extension of the program now looks set to become a major election issue. Not a good sign.
The worrying point is simply that the 24 GW project pipeline in the US utility scale sector is one of the most significant remaining sources of support for solar demand in the aftermath of the pullback in Europe. There must be a concern that financing these projects is going to become more difficult as room for any further government support mechanisms dwindles. For a fuller discussion, see my original article on the issue here.
All of this suggests that it remains a good time to keep your powder dry and stay on the sidelines.
Disclosure: I have no positions in the stocks discussed.

About the Author: Clean Energy Intel is a free investment advisory service (available at, produced by a retired hedge fund strategist who also manages his own money inside a clean energy investment fund.

October 03, 2011

Inverter Stocks: A Value BOS Play on Solar

Tom Konrad CFA

Think low solar panel prices drive a renewed boom in solar installations? Consider inverter companies as a way to play it.

I don't usually follow solar stocks because I think solar is just a little too cool, and the space is too well covered by other analysts for me to feel like I can offer new insights.  Nevertheless, the sharp decline in solar stocks this year has been tempting me to dip my toe in the golden stuff.  Since I'm no solar stock expert, I've been flirting with buying other people's picks. 

Garvin Jabusch of Green Alpha Advisors has been making the case that the solar sell off is irrational on this blog since June, but his consistent bullish stance on solar has made me nervous of his recently disclosed solar holdings in the Sierra Club Green Alpha portfolio CSIQ, FSLR, JKS, LDK, WFR, and YGE. With that many different stocks, I'd be tempted to take the simpler approach of buying a solar ETF such as Guggenheim Solar ETF (TAN) instead. 

Another way I've been tempted to invest would be to try the industry's low cost leader, First Solar (FSLR), an idea I talked about with Jeff Siegel of Green Chip Stocks at the Modern Energy Forum in Denver earlier this month.  Last Monday, Siegel put his thoughts on First Solar in writing, calling it "basically a $125 stock trading at $70."  (On Sept 30, FSLR closed at $63.21, basically half of Siegel's valuation.)

But I have not bought any of those solar stocks or ETFs.  Instead, I decided to sneak in the "back door of the solar market" by taking a couple of small positions in inverter stocks.

 Inverter Stocks

I first made the case for inverter companies as a way to avoid the hype in solar in 2007.  At the time I held Satcon (SATC), Xantrex, and Sustainable Energy Technologies (STGYF.PK).  I did well selling Satcon and Xantrex over the next year (Xantrex was bought out by Schneider Electric (SBGDF.PK)) and I think I sold Sustainable Energy at a loss when I was rationalizing my holdings during the 2008 financial crisis.

My past success with this "Balance of System" (BOS) approach made me look at the graphs of the current crop of inverter companies, now including market leader SMA Solar Technology (S92.DE/SMTGF.PK) which went public in 2008, and rivals Advanced Energy Industries (AEIS) and Power-One (PWER) which entered the inverter market more recently, in addition to the now-struggling SatCon.

The logic behind the BOS approach to solar is the theory that declining module prices will drive increased\ numbers of installations, while relatively inexpensive but essential components such as the inverter may benefit from the increased volumes without having to give up so much in terms of margins. The chart below, taken from the LBNL report Tracking the Sun IV, shows that inverter prices indeed held up well from 2007 to 2010, staying at a near constant 50 to 60 cents per watt for behind-the-meter systems.
  Behind the meter {V.png
Times are still hard for inverter companies, however, with Advanced Energy announcing that it will cut staff and shift some inverter manufacturing to China to reduce costs, and SMA cutting its outlook for 2011.  Nevertheless, SMA stuck to its operating profit margin target of between 21 and 25 percent, but down from historic margins of 30%. 


The negative announcement from SMA has dragged SMA, Power-One, and Satcon down 30%, 34%, and 42% respectively over the last two weeks while the S&P 500 has fallen 7%, with Advanced Energy falling only 20% after taking earlier losses due to their own announcement referenced above.  Despite all this recent decline, only Satcon has fallen faster than the solar industry as a whole, as represented by the Guggenheim Solar ETF (TAN) over the last 6 months.

A Closer Look

The valuations were looking very attractive, so I decided to take a closer look at the stocks. Rafael Coven, manager of the Cleantech Index behind the Powershares Cleantech Portfolio (PZD) told me,
While I like the BOS play especially Back of Panel the overall plunge in the solar market is not good.  Moreover, PWER doesn't have, as far as I know, anything particularly outstanding or proprietary about its products.  I'm much more comfortable with SMA despite its big plunge.  SMA is the market and technology leader so I'd rather go with that since capacity and cost issues are key.  I’m not saying that any of them are great investments, just that SMA is a better company.
My initial preference was for Power-One, because of the much greater ease of buying the US-listed company, but I decided to take a close look at SMA as well because of Coven's comment.  I'm happy I did.

  • Satcon looks like a poor investment because it is the only one of the four with any debt to speak of, and it is unlikely to become profitable until 2012 at the earliest. 
  • Advanced Energy looks attractive on trailing earnings and a Price/Book ratio of 0.9, but the Book value may have to be written down because of the company's current restructuring, earnings are likely to fall significantly next year, and Free Cash Flow (FCF) seems low even compared to reduced earnings expectations.
  • Power-One looks very attractive based on current and consensus estimates of earnings, but the low FCF is a potential warning sign.
  • SMA Solar has slightly lower but still attractive trailing earnings, and even my 2011 estimate at the low end of the company's guidance is respectable.  Better yet, these earnings are supported by very strong Free Cash Flow, and the company recently paid a very healthy 3 Euro dividend, which, if maintained, would lead to a juicy 7.6% annual yield. 
  Inverter co stats.png

SMA Solar (S92.DE/SMTGF.PK) looks like an attractive income stock at current valuations, with the benefit of a large potential upside if PV modules prices continue to fall and lead to a new PV installation boom despite the recent incentive cuts in Germany and Italy.  Such a boom would be much more sustainable than previous solar booms, because it would be driven by solar prices approaching the price of retail grid electricity, and would hence be much less dependent on government subsidies.

As a potential downside, there is the possibility of new entrants into the inverter space adding to competition and eroding margins.  The advent of Micro Inverters, which Coven referenced in his "Back of Panel" comment is an opportunity for the inverter industry to maintain prices by adding more value, but they may also be an opportunity for new entrants (such as private EnPhase) to gain market share and increase overall competition.  The Chinese may soon decide that they want a home-grown inverter industry, and this possibility poses an ongoing risk to the current market leaders.  SMA has 40% of the solar inverter market for the same reason that German module makers used to dominate that part of the industry.  Could the inverter industry follow the PV module industry East?

For investors uncomfortable with purchasing foreign stocks, or unable to make a large enough purchase to be practical, Power-One (PWER) is the next best option.  I now have stakes in both companies.


DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

August 24, 2011

Rough Patch For Owners of Solar Stocks

Mark Henwood

This sector defines investment risk.   Not only has Evergreen Solar, Inc. [ESLR]  filed for bankruptcy, investors in another high visibility solar developer have been saddled with a 72% loss over the last week.   In a massive shift that has to shake confidence in the company, Germany’s Solar Millennium AG [S2M.DE] announced on Thursday said it will convert the first 500 megawatts of its 1,000 MW Blythe solar power plant in the Mojave desert to PV. It will decide what technology to use for the second half of the project at a later date.  Nor has it revealed the charge it will need to take due to the shift.

It’s not just these companies.  The two solar sector specific ETFs [KWT and TAN] have lost 36.8% and 33.2% respectively this year.  This is about double the loss broad-based market indices have suffered and lead the losses across all the clean energy ETFs and mutual funds.    In fact these losses have depressed the size of the sector specific ETFs for wind, solar, and smart grid to where only the Guggenheim Solar ETF  [TAN] has a market cap greater than $100 million.  The other four ETFs market caps are below a rule of thumb $70 million threshold required for the ETF sponsor to make money.   So I wouldn’t be surprised to see some of these ETFs shut down like the clean transportation ETF [PTRP] did last December.

That said, solar companies may be great technologists with good products.   With falling panel prices it looks like PV is on track to wipe out solar thermal projects and is making progress on being grid competitive.   Of course, in the US with natural gas prices constrained by the technological breakthrough that brought about shale gas, the bar for solar PV is being raised.  Whether solar can reach parity (and without the support of creative ratemaking that turns $4/mmBtu gas into 20 cents/kWh power in the summer) is still not answered.  But if so, solar companies with depressed stock prices may turn into good investments.

Disclosures:  none

Mark Henwood founded and directs New Energy View. This site grew out of the experience gained in developing Camino Energy and retains many of Camino Energy's functions.  Mark is the CEO of Henwood Associates (a Sustainable Energy Business), serves on the board of PLEXOS Solutions LLC., and manages a diversified portfolio of equities and fixed income. Mark was a board member and advisor to PowerLytix, LLC until April 2008 when it sold to Barclays Capital. He is also active in promoting sustainable energy businesses in Sacramento, CA through his involvement with CleanStart where he is Vice Chairman and with start-ups as a venture partner at Velocity Ventures LLC.

July 11, 2011

Saviors and Saboteurs in Alternative Energy

John Petersen

Last week Societe Generale published a thematic research report titled "A new world order, when demand overtakes supply" which examines the macro-economic and demographic trends that will transform the global economy over the next 20 years. It mirrored the theme of Jeremy Grantham's April 2011 quarterly letter titled "Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever" and did a great job of summarizing an issue I touched on in "How PHEVs and EVs Will Sabotage America's Drive For Energy Independence."

In the words of Societe Generale:

"So, while up until now less than one billion people have accounted for three-quarters of global consumption, over the course of the next two decades, the new Chinese, Indian, Indonesian, Latin American and African middle classes will bring an additional two billion consumers with similar needs and aspirations as today's North American, European and Japanese consumers." (Page 12)

"Beyond growth in demand for finished products, the most spectacular effect likely to be brought about by the stronger development of the emerging economies will be the enormous rise in demand for raw materials." (Page 14)

"A structural increase in raw materials prices is in fact an inevitable consequence of chronic resource insufficiencies, whether we're talking about industrial, energy or agricultural resources." (Page 19)

The following table from Mr. Grantham's quarterly letter summarizes China's current consumption of key energy, industrial and agricultural commodities as a percentage of total global consumption and drives the point home with the subtle clarity of a sledge-hammer.

7.10.11 China.png

If we've seen this kind of demand dislocation as a result of a few decades of growth in China, what's going to happen when the surging middle class populations of India, Indonesia, Latin America and Africa decide to show up for the dinner party? The answer, of course, is that we'll be thoroughly screwed unless we stop wasting time, money and materials on pipe dreams, toys and panacea solutions, and focus instead on finding relevant scale solutions to persistent global shortages of water, energy, food and every commodity you can imagine. We all face a clear, present and persistent danger that can’t even be addressed until we accept the entire ugly reality with all its vulgar implications!

One of the most disturbing conclusions in the Societe Generale report is that while per capita energy demand in advanced economies will remain stable at 5,463 kg of oil equivalent, or maybe even decline to 5,000 kg per person by 2030, global average demand will increase from current levels of 1,818 kg per person to 3,312 kg per person in the low case and 4,228 kg per person in the high case. All of the increased demand will come from emerging and developing economies.

Our fundamental problem is that per capita global production of energy resources is 100 to 200 times greater than per capita global production of the technology metals that underlie all alternative energy schemes. To make things worse, all of those metal resources have critical competing uses that cannot be set aside or ignored in the name of advocacy. At a recent grid-based energy storage conference in Brussels I used the following table to emphasize the point. The orange highlight quantifies available energy resources while the green highlight quantifies technology metal resources.

7.10.11 Energy vs Metals.png

The mathematically challenged optimists in our midst earnestly believe we can solve our energy problems with cool toys like wind turbines, solar panels, electric cars and other materials intensive energy schemes that fire the imagination but can never be sustainable. These aren’t solutions! They’re the energy and transportation equivalent of graphic novels and just a half-step removed from warp drive. In the final analysis, the dreamers who want to waste metals and other natural resources in the name of conserving coal, oil and natural gas are not saviors. They're unwitting saboteurs who can only make the problems worse!

Whether we like it or not, the only technology that has a prayer of generating enough new energy to satisfy even a small fraction of anticipated global demand is nuclear, a point that was forcibly driven home by Bill Gates in a recent interview at the WIRED Business Conference 2011. The naive idea that we can cut hydrocarbon consumption for the laudable goal of saving the planet is sophistry. Given a choice between freezing in the dark and burning hydrocarbons human beings will always choose the later because immediate personal need will always trump long term societal goals, especially fuzzy green goals.

I'm an unrelenting critic of obscene raw materials users like Tesla Motors (TSLA), A123 Systems (AONE), Ener1 (HEV) and Valence Technologies (VLNC) that want to build a future out of making toys for our emerging eco-royalty because I've read about the French Revolution and remember how 'Madame Le Guillotine' put a uniquely sharp edge on popular discontent over conspicuous consumption. These business models are doomed to fail because they're diametrically opposed the needs of society.

The only alternative energy investments that stand a chance of survival, much less profitability, are basic efficiency technologies that slash waste and deliver real savings for every ounce of natural resource inputs. Nuclear power, idle elimination, fuel efficiency, demand response, building efficiency, ebikes, recycling and a host of other technologies that do more with less are the only possible future. Wind turbines, solar panels, electric cars and all of the other feel-good graphic novel schemes are merely pleasant distractions, a bit like Nero's fiddle.

Disclosure: Author is a former director of Axion Power International (AXPW.OB) and holds a substantial long position in its common stock because Axion's disruptive third generation lead-acid-carbon battery technology uses 30% less lead to deliver impressive gains in power, cycle-life, charge acceptance and overall real world utility.

June 19, 2011

Wall Street's Irrational, Dangerous Hatred of Solar Stocks

Garvin Jabusch

For most of 2011, the stocks of solar power companies of all kinds, from providers of raw polysilicon to developers of finished utility scale plants, have been taking a beating on world and U.S. stock markets, partly because solar has been the industry most singled out for attack by bearish short sellers. I can’t describe this phenomenon any better than did Roberto Pedone in a recent column for

Besides the banking sector post-2008 financial crisis, I can't think of a group that's as hated and despised as solar stocks…For whatever reason, this entire complex has become a favorite target of short-sellers. There are so many names in the solar sector that are heavily shorted that it's hard to find a name the bears aren't leaning all over. One famous and successful short-seller, Jim Chanos, has even made it publicly clear that he thinks the wind and solar stocks are a bunch of "hot air." 

"For whatever reason" indeed. Solar is hated in spite of being the fastest growing energy sector in the U.S. (67% 2010 growth; 66% growth just in the first quarter of 2011) and in the world (70% 2010 growth), and also despite its shares trading at very low valuations already.  Take for example Green Alpha ® Advisors' holding and China-based solar company LDK Solar (LDK). The company's shares have fallen from US$14.49 per share in February to $6.94 as of this writing. I can find no good fundamental reason for the decline: LDK's latest quarterly earnings came in at $.95 per share where consensus analyst expectations were $.86; the company has year-on-year sales growth of 202%, has a price-to-earnings ratio of only 2.22, plenty of cash on the balance sheet, and a price-to-book ratio of just .91. That's right, even if the company were closed and its assets liquidated, the cash generated at the yard sale would be greater than the current market cap, though the earnings should have value. LDK is the very definition of a "value" stock. Or, inversely, shorting any company this cheap, that's this fundamentally solid, and that's growing this fast is the very definition of "irrational." LDK happens to be one of our favorites, but it's easy to find similar valuation stories throughout the industry today. This trend would be odd enough on its own, but, simultaneously, other events in the story of global energy are unfolding.

While solar companies are being beaten up, the fossil fuels side of the energy supply is having a more fundamental, structural problem: oil demand has run ahead of our apparent capacity for production. Image 1, below, shows that total world oil reserves have declined significantly over the last two years (an exception being the U.S. strategic reserve, but that too may soon be tapped), which can only mean that the world is using oil faster than it's being pumped.

It's difficult to overstate how economically dangerous this is, since, see image 2 below, oil price spikes have preceded all recessions since 1970. Environment aside, this is why we need to bring more renewables online, to lessen our ridiculous economic vulnerability to oil prices. Referring to his chart (image 1) below, economist Gregor Macdonald writes: "[f]rom the latest IEA Paris Oil Market Report, you can see that starting in mid-year, total OECD inventories started a new decline. Moreover, the histograms in the below chart also show the difference to the five year average, which also illustrates the global stocks drawdown. This coincided by the way with a resurgent, mid-year advance in the price of oil from a low of $69 to $92 by [2010] year end."

  Green Alpha Advisors 1

Image 1: decreasing oil reserves since 2009 (Source: economist Gregor Macdonald from his blog

Macdonald concludes, "Unable to meaningfully increase global oil production to meet demand, the world ate through inventories. You have been warned."

Again, the drawdown in inventories and evidence of peak oil is alarming because spikes in oil prices crush economies. We've written about this many times, but this chart (image 2), compiled by Stuart Staniford, says it all: "since 1970, every single recession has been preceded by a runup in energy prices."

  Green Alpha Advisors 2

Image 2: price of oil relative to recession onset (Source: scientist Stuart Staniford from his blog

Oil is expensive to the point that it is threatening the economic recovery, and due to demand exceeding supply, its price will most likely continue to increase, except, maybe, during oil-caused recessions. 

Meanwhile, on the electricity side, solar is quietly becoming competitive with average grid price (especially in sunnier climates) and is rapidly getting cheaper still. "Price per watt of solar modules (not counting installation) [have] drop[ed] from $22 dollars in 1980 down to under $3 today," according to Ramez Naam, in a great piece for Scientific American. And, as this trend continues, "in 2030, solar electricity is likely to cost half what coal electricity does today." I personally believe that solar's scale is increasing rapidly enough that Naam’s 2030 prediction will occur much sooner, by 2020 or so (the Institute of Electrical and Electronics Engineers says "within 10 years"), but whenever it happens, as solar comes into its full potential, it will become so cheap and plentiful that any type of fossil fuel will seem foolishly expensive by comparison, at least where electricity is the energy of choice.

  Green Alpha Advisors 3

Image 3: Historic and forecast price of solar electricity vs. US grid price averages (source: Ramez Naam in his blog for Scientific American)

But behind these macroeconomic realities, Wall Street's consensus opinion of solar stocks looms large. And, so far this year, the consensus has been extremely negative. Does Wall Street to some degree answer to the huge buckets of money represented by Big Oil? Yes. Is there therefore some effort underway to delay the inevitable solar powered future? Possibly, but suffice it to say that Wall Street at least has enabled a culture that, against all economic and climactic evidence, loves fossil fuels and still views renewables as “alternative.” (Anecdotal but interesting on this point, on May 4, 2011 CNBC reported on-air that Arizona's First Solar, Inc. (FSLR, a Green Alpha holding) missed their first quarter earnings, when in fact the company's earnings had beat expectations by 15%; the stock plunged 10%.)

Meanwhile, other folks are beginning to embrace the Next Economy. Smart oil money in Saudi Arabia is converting itself to massive amounts of exportable solar. "Converting" as in Saudi Arabia is hoping to develop the same quantity of solar electricity exports that it now enjoys via oil exports. As I discussed in my previous post, "Saudi Arabia exports about 2.7 billion barrels of oil per year, each containing the equivalent of 1,700 Kilowatt hours (kWh) of electricity for a total of 4.59 × 1012 kWh [or 49,500 GWh] per year, or the equal of about one quarter or the world's annual electricity demand." Using a standard PV average of 30 square kilometers per gigawatt hour (GWh) year, this means the Saudis would need 1.377 million km2 of solar panels to achieve their goal solely with PV. This is well over half the country’s total size of 2.218 km2! Now of course this is an extreme goal that the Saudis are unlikely to reach, and their efforts will no doubt also include concentrated solar thermal, but even a small fraction of this goal would provide every solar manufacturer on earth with years of order backlog. It’s worth noting that the Saudis are likely pursuing this policy to replace lost revenues as they deplete their oil reserves (and they’re using foreign petro dollars to do it). 

Elsewhere in the world, China has recently doubled down on its goal of 5 GW of installed solar capacity by 2015 to a new 10 GW goal. In Germany, they’re halting their solar subsidies repeal in order to meet their plan of replacing nuclear power with renewables (the end of German/European solar subsidies has been one of the short sellers’ chief arguments. Italy has just voted to scrap new nuclear plans as well, so they may also feel the need to keep their solar incentives; more broadly, the twilight of nuclear in general may have arrived). In Japan, a “proposed feed-in tariff would create guaranteed demand for all of the output from renewable energy projects” and companies are planning projects accordingly. Adding up the world’s PV solar plans in his “Plan B” review, Lester Brown reckons that “cumulative PV installations could reach 1.5 million megawatts (1,500 gigawatts) in 2020,” and goes on to say that “[a]lthough this estimate may seem overly ambitious, it could in fact be conservative, because if most of the 1.5 billion people who lack electricity today get it by 2020, it will likely be because they have installed home solar systems.” (Brown’s estimate could indeed be conservative; he was writing before the Saudis’ announcement).

Viewed simply in terms of potential growth as a slice of the world energy market, solar again appears set for massive growth. The Economist reported this week that as of 2010 "non-hydro renewables still check in at only 1.3% of global energy consumption." Since many local, regional and even a few national governments have set mid-term goals of 20% or more from renewables, it seems likely that solutions such as solar and wind have potential to grow 10 fold or more on policy basis alone.

You get the point by now. Aggregate solar power demand in the global economy is huge and growing.  Any way you slice it, the solar industry is currently very undervalued by analysts and traders, even though overdependence on oil is threatening to return us to recession. 

So, how do we judge Wall Street's treatment of solar stocks? Irrational? Obviously. Dangerous? Only if you fear for the economy. 

Garvin Jabusch is the cofounder of Green Alpha Advisors, LLC and manages The Sierra Club Green Alpha Portfolio -- a unique blend of Green Alpha Advisors' Next Economy universe and the Sierra Club's proprietary green-investment guidelines.

June 09, 2011

Saudi Arabia to Become the Saudi Arabia of Solar Electricity

by Garvin Jabusch

A couple days ago Bloomberg reported the following: "Saudi Arabia plans to generate solar electricity equaling the amount of its energy from crude exports, Oil Minister Ali Al-Naimi said." Wait, what? That sounds like a ridiculous quantity of solar electricity. The article doesn't say quantitatively how much energy that is, so I did a quick check. Saudi Arabia exports about 2.7 billion barrels of oil per year, each containing the equivalent of 1,700 Kilowatt hours of electricity for a total of 4.59 × 1012 KwH per year, or the equal of about one quarter or the world's annual electricity demand.

Okay, so obviously solar electricity equal to the energy in all of Saudi Arabia's crude exports is far more than the Saudis could ever use, so maybe I'm misunderstanding the Oil Minister's meaning. Except, Bloomberg goes on to report that "Saudi Arabia, the world's largest oil exporter, has the potential by 2020 to produce enough solar power to meet more than four times global demand for electricity, al-Naimi said." Okay, so it appears they really are planning to ramp up huge. World leading huge. Region-or-more powering huge. A development plan this ambitious can only mean that Saudi Arabia intends to become a huge source of exportable electricity. 

Why would the world's largest oil producer wish to so quickly become the world's largest solar electricity exporter?  I'm sure the Saudi leaders, looking around their country, had a conversation that started with, "so, apart from our rapidly depleting oil reserves, what natural resource do we have that could be exploited on an equally massive scale?" The Saudis of course realize the only answer is sunlight. And knowing better than anyone that easy-to-retrieve oil is getting scarce, they have made the strategic decision to begin replacing it with their only other form of exportable energy, the only other source they can produce in abundance as massive, solar electricity. Saudi is making what in the medium to long term is the state-saving, obvious transition to the Next Economy. And they're doing it now while they're awash in enough oil capital to make it happen.

If I'm right about their plan to export ridiculous quantities of solar electricity, one of the next things we should see is investments into transmission capability (there are signs of this already, such as the huge new General Electric (NYSE:GE) power equipment plant, and plans for underwater power cables to Egypt). Is a quarter of global electricity demand within feasible transmission range of Saudi Arabia? The Saudis would seem to think so. Other things we'll begin to see are contracts with solar providers and rising demand for materials all along solar industry verticals. Solar stock short sellers: watch your backs. 

Garvin Jabusch is the cofounder of Green Alpha Advisors, LLC and manages The Sierra Club Green Alpha Portfolio -- a unique blend of Green Alpha Advisors' Next Economy universe and the Sierra Club's proprietary green-investment guidelines.

March 18, 2011

Epic Changes Are Coming in the Electric Power, Transportation and Energy Storage Sectors

John Petersen

Epic is the only word I can use to describe an evolving tragedy that killed tens of thousands of people, inflicted hundreds of billions in property damage, destroyed 3.5% of Japan's base-load power generating capacity in a heartbeat and will cause recurring aftershocks in the global electric power, transportation and energy storage sectors for decades. While I'd love to believe the worst is behind us, I fear the times of trouble have just begun.

Since it's clear that Japan will have to turn inward and serve the urgent needs of its own population first, the following direct and immediate impacts seem all but certain:
  • Lost electric power from Japan's ruined nuclear plants must be replaced with oil, natural gas and coal because alternative energy technologies like wind and solar can't possibly take up the slack;
  • Cleanup and reconstruction must increase total Japanese demand for liquid motor fuels;
  • Japanese demand for industrial metals and construction materials must skyrocket; and
  • Crushing limitations on Japan's base-load power generating capacity must:
    • complicate supply chains for equipment, components and materials from Japan;
    • increase the cost of Japanese exports;
    • increase demand for all types of electric efficiency technologies;
    • increase demand for HEVs and other fuel efficiency technologies;
    • increase demand for grid-based energy storage systems; and
    • force utilities to shed non-essential loads and abandon their support for plug-in vehicles.
Some years from now, I expect to see rows of headstones in the EV graveyard that read "Lost to the Tsunami."

While I'm still trying to puzzle my way through the primary, secondary and tertiary impacts, it's a virtual certainty that nuclear power will be immensely unpopular even if things go spectacularly well in Japan. Switzerland has suspended pending applications for two planned nuclear plants and anti-nuclear activists are on the offensive in France. Germany just declared a moratorium on nuclear power and ordered the "temporary" cessation of operations at seven reactors that were built before 1980. Other jurisdictions, including earthquake prone California, can expect immense public pressure to follow suit. In time things will stabilize at a new normal, but that new normal will be very different from the normal that existed two weeks ago.

Some readers will be offended by my offhand dismissal of wind and solar as viable solutions. Others will be enraged by the suggestion that utilities will abandon their support for distributed and inherently unpredictable power demand from plug-in vehicles. All I can say is that reality is inconvenient that way. Japan just lost 7.6 gigawatts of base-load capacity. The German moratorium slashed their base-load capacity by 8.3 gigawatts. As the nuclear dominoes continue to fall, the strain on power grids everywhere will get far worse than any of us can begin to imagine. The last thing the world needs in times of plummeting base-load capacity is rapid expansion of demand. We simply can't have it both ways.

Nuclear power plants typically operate at 90% of nameplate capacity while wind and solar operate at something closer to 25% of nameplate.  The nuclear reactors that have recently gone off-line in Japan and Germany accounted for roughly 125 TWh of electricity production last year. In comparison, global electricity production from wind and solar power in 2009 was 269 TWh and 21 TWh, respectively. In other words, we just lost base-load power that represents 43% of the world's renewable electricity output. The gap cannot possibly be filled by new wind and solar power facilities.

There is no question that Japan will be forced to use conventional fossil fuels to replace its destroyed nuclear plants and unless its residents choose to endure extreme hardship for the sake of principle, Germany will be forced to do the same. Comparable power shortages will arise in every industrialized country that decides the risks of vintage nuclear plants outweigh their benefits. When you start stripping base-load power out of the grid, plug-in vehicles become wildly extravagant. My cynical side is tickled that Armageddon Entrepreneurs will finally be forced to choose between stoking fears over (A) imported oil and turmoil in the middle east; (B) global warming; and (C) nuclear power plants. My practical side foresees an immensely difficult time when reality finally sinks in and people are forced to come to grips with their own wasteful behavior. The panacea possibilities were washed away in the tsunami. Now we have to get serious about conservation and abandon the childish notion that we can waste one class of natural resource in the name of conserving another.

Over the last few months the mainstream media has been abuzz with stories about high-profile demonstration projects that will use battery-based systems to help stabilize the grid and smooth power output from wind and solar installations. As usual, the mainstream is getting it wrong and creating expectations the energy storage industry can't possibly meet.

A classic example of overblown media hype is Southern California Edison's plans to spend $55 million to demonstrate a battery-based solution from A123 Systems (AONE) that will provide 32 MW of power and 8 MWh of energy to smooth power output from the Tehachapi wind complex. The following graph from the California ISO highlights the variability issue that's the bane of alternative energy facilities everywhere.
3.16.11 Wind.png
While the new energy storage system will probably do a fine job of smoothing minute-to-minute variability, it will be absolutely worthless in the context of Tehachapi's average daily power production swing of over 200 MW. Tehachapi needs several gigawatt hours of storage, not a few megawatt hours.

I'm convinced that grid-based energy storage is an immense opportunity, but it won't be in the form of the headline grabbing projects the media is fixated on today. Two weeks ago the Pacific Northwest National Laboratory published a review of "Electrochemical Energy Storage for Green Grid" that describes the need for grid-based storage, identifies the leading storage technologies and explains the baseline economic requirements. Copies of the PNNL review are available from the American Chemical Society for $35. If you own stock in a battery company or are thinking about investing in one, it's the best $35 you'll ever spend.

In their discussion of storage economics, the authors said:

"Cost is probably the most important and fundamental issue of EES for a broad market penetration. Among the most important factors are capital cost and life-cycle cost. The capital cost is typically expressed in terms of the unit cost of power ($/kW) for power applications (e.g., frequency regulation) or the unit cost of energy capacity ($/kWh) for energy applications (e.g., load leveling). The life-cycle cost is the unit cost of energy or power per cycle over the lifetime of the unit.

...  In the authors' opinion, the cost of electricity storage probably needs to be comparable to the cost of generating electricity, such as from natural gas turbines at a cost as low as 8-10 ¢/kWh per cycle. Thus, to be competitive, the capital cost of storage technologies for energy applications should be comparable or lower than $250/kWh, assuming a life cycle of 15 years or 3900 cycles (5 cycles per week), an 80% round trip efficiency, and “zero” maintenance. A capital cost of $1,250/kW or less is desired if the technology can last 5 h at name-tag power. ..."

A123's demonstration project at Tehachapi will cost $1,720 per kW and $6,880 per kWh for a 15 minute solution. It's a highly profitable project for A123, but light-years from cost-effective. The same is true of another high profile project where Ener1 (HEV) will sell power quality systems with a combined capacity of 3 MW and 5 MWh to the Russian Federal Grid for $40 million, or $13,300 per kW and $8,000 per kWh. These projects are great headline events, but they'll never be the basis for a sustainable business.

In February and March of last year I wrote a series of articles that focused on grid-based storage. The first summarized a study titled "Energy Storage for the Electricity Grid: Benefits and Market Potential Assessment Guide" that was commissioned by the DOE's Energy Storage Systems Program and conducted by Jim Eyer and Garth Corey. For that article, I calculated an average economic benefit for each of the 17 grid-scale storage applications discussed in the report and then used those averages to calculate the potential demand in MWh, the potential economic benefit per kWh and the potential revenue opportunity for storage system manufacturers. The following table summarizes my results.

The color coding is simply my attempt to separate high-value applications that need objectively cool technologies like flywheels, supercapacitors and lithium ion batteries from low-value applications that need objectively cheap solutions like flow batteries, lead-acid batteries, compressed air and pumped hydro. The bottom line is that revenue opportunities in grid-based storage will be 90% cheap, 8% cool and 2% in-between. Any way you cut it, the lion's share of the revenue opportunity will flow to companies that manufacture objectively cheap storage solutions. There will be niche markets in the $1 billion to $6 billion range for cool technologies like flywheels, supercapacitors and lithium ion batteries, but those niche markets will pale in comparison to the opportunities for cheap energy storage.

Until last week, I believed global demand for grid-based storage would ramp slowly over the course of a decade. Today it's beginning to look like grid-scale storage will rapidly eclipse all other potential markets. The universe of companies that can effectively respond to urgent global needs for large-scale storage is very small. It includes General Electric (GE), Enersys (ENS), Exide Technologies (XIDE), and C&D Technologies (CHHPD.PK)  in the established manufacturer ranks, and Axion Power International (AXPW.OB) and ZBB Energy (ZBB) in the emerging technology ranks. Companies like A123, Ener1, Active Power (ACPW), Beacon Power (BCON) and Altair Nanotechnologies (ALTI) will undoubtedly have exciting revenue opportunities, but the cost of their products will exclude them from the competitive mainstream.

In November of 2008 I wrote, "what I initially described as a rising tide is now looking more like an investment tsunami as a handful of micro-cap and small-cap companies gear up to compete for $50 to $70 billion of rapidly developing annual demand for large format energy storage systems." While it took a real tsunami to bring things to a head, I'm more convinced than ever that every company that brings a cost-effective energy storage product to market over the next few years will have more demand than it can possibly handle. EVs may be dead men walking but grid-scale storage looks like the opportunity of a lifetime.

Disclosure: Author is a former director of Axion Power International (AXPW.OB) and holds a substantial long position in its common stock.

February 18, 2011

Where are Solar Stocks Headed in 2011?

By J. Peter Lynch, Financial Anaylst

A new series that offers a quick snapshot of the most recent solar stock performance. This week, the current market signals: Investor Caution.

Talk about the Million Dollar Question. Wouldn't we all like to know the answer to 'Where is the Market Headed in 2011?' Unfortunately, as we all know – no one knows the answer to this question.

But we can look at history and find some fairly interesting data (from the Stock Traders Almanac). While it's not perfect, it certainly has a far above-average accuracy.

The Dow Industrial Average [DJIA] managed its best month of January since 1997 with a return of 2.7%, while the S&P 500 [SPX] fared nearly as well with gains of 2.3%.

There is an old stock market saying, first coined by legendary market historian Yale Hirsch, "As January goes, so goes the year,"

The average return, based upon data since 1970, for the rest of the year after an up January is 12.2% for the S&P 500. Following down January returns the S&P 500 has averaged 11-mo returns of -2.1% until the end of the year.

Does this mean that the market will be up over 12% for 2011? There is no way to know.

But it is certainly interesting to look back at history and see that a positive January certainly bodes well for a positive stock market for 2011 as a whole.

On the other hand, currently the market is very overbought and will likely have at least a 10% correction along the way.

Take a look below for an overall summary and table that offers a current snapshot of the "technical picture" of my selected solar stocks. I plan to update this series weekly and/or whenever there are any significant changes.


Note: At this time there is a general market comment advising caution to perspective buyers.

A number of the stocks I follow have seen their monthly momentum turn negative in the last week or two. The sector finally seemed to be showing signs of life again after a terrible 2010, but in the past few weeks a number of our stocks dropped below their 50 day MA - a short term negative for the stock.

At this time the strongest stocks are: JKS, LDK, SOL, SOLR, TSL and First Solar (FSLR). Two of what I call my "solar seven" (JASO and SOLF) have had their rating reduced from Strong "S" to Neutral "N."

Critical levels for the weakest "solar seven"

JASO - starting to show some strength. If stock closes below $7.00 it is a further sign of weakness, if the stock closes above $8.25 it is a sign that the stock has regained its upside strength.

SOLF - SOLF is at a critical long term support level. A close below $8.00 it would trigger a sell signal.

Other Stock Comments

SPWRA - starting to show some real strength for the first time in quite a while. Looks like the next candidate to move up to a "S" strong rating.

Market Comment - Caution Advised

Currently the market has two potentially serious "red flags" warning investors to be cautious:
  •  Investor Sentiment
      Investor sentiment is considered to be a contrary indicator and when too many investors or investment newsletters are Bullish – it is a time to be cautious.
      At the current time BOTH the American Association of Individual Investors (AAII) poll of its members and the Investors Intelligence poll of investment newsletters are above their danger zones of 50%.
      There is no guarantee of anything in the stock market, as we all know. But levels of sentiment so extremely bullish would historically indicate at least the potential for a market correction of 10% to 15%.
  • Stocks are very overextended
      On the technical side the market is very overbought above its 200 day moving average. In fact, the current overbought condition is more extreme than any important market top in the last 10 years – certainly another significant reason to be very cautious at this juncture in the market.

Solar Stock Review as of the close on Friday 12 February 2011
Symbol Recent Price 50 day MA
Weekly momentum
# of weeks
Sig Rating
ASTI 3.31 3.468 - Neg 1 Buy W
CSIQ 14.37 13.588 - Pos 5 Sell W
CSUN 4.45 4.442 - Neg 0 Sell N
DSTI 1.37 1.6 - Neg 1 Sell W
EMKR 2.3 1.449 - Pos 3 Buy S
ENER 4.09 4.582 - Neg 5 Sell W
ESLR 2.2 3.231 - Neg 13 Sell W
FSLR 166.11 141.726 + Pos 8 Buy S
JASO 7.73 7.191 + Pos 5 Buy N
JKS 28.58 24.628 + Pos 5 Buy S
LDK 12.92 11.576 + Pos 5 Buy S
RSOL 2.73 2.64 - Pos 7 Sell W
SOL 11.38 9.73 + Pos 6 Buy S
SOLF 8.79 8.68 + Pos 8 Buy N
SOLR 11.2 9.939 + Neg 1 Buy S
SPIR 5.74 5.175 + Pos 1 Sell W
SPWRA 16.04 13.846 - Pos 8 Sell N
STP 8.91 8.596 - Pos 9 Sell N
TSL 27.37 25.248 + Pos 7 Buy S
WEST 0.53 0.51 - Neg 0 Sell N
WFR 13.73 11.793 + Pos 5 Sell N
YGE 12.14 10.843 - Pos 6 Sell W

Table Keys:

50 Day Moving Average (MA) - this is a short term measure of a stock's current technical picture. If the current price is above the 50 day MA it is a positive indication and if it is below the 50 Day MA it is a negative indication.

Overall Trend - this is the overall longer term trend of the stock (Positive+ or Negative -). When solar stocks were badly underperforming the market almost all our solar stocks were in negative trends - the stocks that turn to a positive trend first are usually the strongest stocks relative to the group as a whole.

Weekly Momentum (Mom.) and Number of weeks positive or negative - this is a measure of the short term momentum of a stock. It is derived by comparing the one week moving average (MA) of the stock to the five week moving average. When the one week MA goes ABOVE the 5 week MA the weekly momentum turns positive, when it goes BELOW the 5 week MA the weekly momentum turns negative. Momentum, on average, stays positive or negative for between 6 and 8 weeks. So a stock that has been negative for 1 or 2 weeks will usually have at least a few more weeks of negative action to come. This would be useful, for example, if someone wanted to buy a particular stock and its momentum just shifted to negative, they will likely be able to buy the stock lower if they are patient and wait for a pullback in the price of the stock.

Relative Strength - this is a measure of the strength of an individual stock relative to a widely followed index - in this case the Standard and Poor's 500 (S&P 500). If the relative strength is “buy” this means that the individual stock is stronger relative to the index and vice versa.

Rating - this a my technical rating on each of the solar stocks after reviewing the technical indicators (momentum and trend) plus a number of additional indicators (monthly momentum, strength relative to the S&P 500 stock index, overbought/oversold status etc.) to arrive at a comparative rating as to how each stock stands technically. N = neutral, W = weak and S = strong.

Background Notes

Keep in mind that there are two basic types of equity (stock) analysis. Below is a brief description of each and its primary purpose:

Fundamental Analysis - this is the analysis of the fundamental financial condition of the company and will identify which stocks are stocks you may want to buy when the timing is right. This form of analysis will give you NO indication of the best time to buy the stock.

Technical Analysis - this form of analysis will tell you "when" to buy a stock. It will do this by showing you (in chart format) the basic interaction of supply and demand and when the two change and shift which will indicate a time to buy or a time to sell.

Mr. Lynch has worked, for 34 years as a Wall Street security analyst, an independent security analyst and private investor in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977 and is regarded as an expert in this field. He was the contributing editor for 17 years to the Photovoltaic Insider Report, an early publication in PV that was directed at industrial subscribers, such as major energy companies, utilities and governments around the world. He is currently a private investor and has from time to time been a financial/technology consultant to a number of companies. He can be reached via e-mail Please visit his website for the promotion of solar energy –

This article was originally published by and was reprinted with permission.

January 18, 2011

Analyzing Solar Stocks With False Assumptions

Dana Blankenhorn

The lessons of technology investing also apply to solar investing.

The decision by Evergreen Solar (ESLR) to move to China has some analysts saying "ha-ha" over solar energy. But in fact it reveals a basic fallacy in the way solar power, and solar power stocks, are analyzed by Wall Street.

It's a manufacturing assumption. Solar panels are said to be a manufacturing business. So if prices are going down, that's bad. If governments are no longer seeing solar as just good PR, if they're treating it as a real industry that has to make its own way, that's bad too.

Here's the simple truth. Solar is a technology business. Not only that, it's a new technology business.

Evergreen Solar never understood that, and we're all paying the price for it.  So is the state of Massachusetts, which seems to have thought that luring a solar manufacturing plant was the same thing as luring a car plant.

It's not. It's a risk.

In fact, all solar stocks are a risk. What they require is risk capital.

There are many directions in which solar technology can improve. Systems can become more durable. They can become more efficient. They can use heat and ultraviolet radiation, not just visible light. And the fact that technology becomes cheaper over time is a feature, not a bug. We should assume it and cheer it, not fear it.

As a practical matter, this means that while the capital advantages of Chinese producers are impressive, they're not the whole story. They are not the end game. When it comes to solar technology, this is the era of Fairchild, not of Intel. There are still too many breakthroughs ahead to know who is going to become Intel.

Another warning. There is a basic misconception in technology investing. We say, “had you put $100 into semiconductors in 1970 you'd have a bazillion-gazillion dollars today” or we say the same about Intel or Apple. But it's never that simple or easy. I know people who lost money on Apple, and Intel, because they bet on it at the wrong time. If you put your money into Intel a decade ago, it's gone nowhere since.

So it's a dart board. Even investing through an ETF is no guarantee. For instance, the Chinese market leaders are now looking to develop projects, not just make equipment .

This is what early chip companies tried to do. They tried to make computers because Moore's Law was constantly on their tail. How did it work out? Not too well. Because they're different businesses. And there's a big difference between being a producer of panels and an owner of production capacity. Best of all (for Americans) neither business is where the future lies.

It lies with technology. It lies in the lab.

So I'm going to end this piece with a name, PVT

You can't buy it right now, it's privately held. Their relatively simple idea is to use both the heat and light on a solar panel to generate power, transferring the latter through an Energy Transfer system linked to a home's water heater.  Lots of people already have solar hot water heaters, just as an increasing number of people have solar panels for electricity. This just combines the two.

How long will this remain competitive, before other breakthroughs make it obsolete? I don't know. I only know that will happen.

The only lesson is to not look at solar power stocks the way you would look at utilities or manufacturing. Look at them the way you look at technology stocks. Which means you're buying the story, you're buying the sizzle, you're buying tomorrow, and you better be ready to get burned several times before your portfolio is warmed.

Dana Blankenhorn first covered the energy industries in 1978 with the Houston Business Journal. He returned last month after a short 29 year hiatus because it's the best business story of our time. In between he covered PCs, the Internet, e-commerce, open source, the Internet of Things and Moore's Law. It's the application of the last to harvesting the energy all around us he's most excited about. He lives in Atlanta.

January 10, 2011

Solar Energy Scam Season

Dana Blankenhorn

Any hot investment field is ripe for scams. It's that time for solar energy.

Sun Energy of Australia says it has been making “solar inverters”  since 1987. Its directors appear to all be legitimate businesspeople.

But look a little more closely. What is a stock photo of the old Merrill Lynch bull doing there? A flower? The Earth, seen from space? And click the “language” icons on the home page. They don't lead anywhere.

The Australian Securities and Investments Commission has told the Sydney Morning Herald it suspects stock fraud, adding the same outfit may have tried to pull the same trick  in South Africa. It's an old story -- hype your prospects, sell stock in it, skip town and do it again.

Most directors contacted by the Herald were quick to deny any involvement in Sun Energy of Australia. Only one of the faces on that directors' page turns out to be a real director. His name is John Price (pictured right), and while you can't right-click his picture on the company's Web site for some reason, I was able to work around that.

Mr. Price claims to have been an Australian Entrepreneur of the Year. Funny thing about that. Ernst & Young, which gives out that award, doesn't list him among the winners. A collection of big corporate names are listed on Price's Sunenergy bio as sponsors of the award – only Qantas is currently.

Mr. Price also claims to be a graduate of the Harvard Business School. Hard to check on from Australia. Not so hard from Atlanta.

There is a John R. Price who is a graduate of Harvard Business School. He's a banker in Pittsburgh. Note that the Pittsburgh Price uses his middle initial. That's a good hint for anyone with a common name, if you want people to find you easily.

Linkedin lists 24 people named John Price in Australia. This John Price is not one of them. The Harvard Business School alumni directory is closed to outsiders. I contacted the registrar, there, who has no record of Australia's John Price.

It's unclear what exactly is going on here; investigations are underway. It may be a serious fraud. Unfortunately, that's to be expected in this burgeoning industry where investors are looking for big returns while brandishing their green credentials.

Consumers, business leaders and financiers need to be on guard against this type of behavior. When fraud hits renewable energy, every honest person in the space is a victim.

Dana Blankenhorn first covered the energy industries in 1978 with the Houston Business Journal. He returned last month after a short 29 year hiatus because it's the best business story of our time. In between he covered PCs, the Internet, e-commerce, open source, the Internet of Things and Moore's Law. It's the application of the last to harvesting the energy all around us he's most excited about. He lives in Atlanta.

November 29, 2010

Time To Buy Solar Stocks?

Tom Konrad CFA

Renewable Energy stocks have been suffering for over a year. but the sector's poster-child has also been the whipping boy.  While the S&P 500 has risen 8% percent in 2010, the broader alternative energy sector is down 10% and solar has fared even worse.  Solar is down 27% for the year, with a 17% drop in the last 2 weeks (see chart.)


Ian Tharp - CIBC World Markets

These numbers were brought home to me by a presentation by Ian S. Tharp, CFA, an Executive Director and Cleantech and Renewable Energy Analyst at CIBC World Markets.  He was speaking at The Future of Energy Investing Conference last Thursday.  The sharp down move in recent weeks made me wonder if this might be a sign of capitulation.  I don't follow the solar sector closely, but given its historic volatility, I think there is a lot of potential for astute traders to make money in the sector. 

I asked Mr. Tharp if he thought the sector showed signs of bottoming.  He said "Yes" and gave the following reasons (some of this may be slightly garbled because I'm working from memory)
  • 2010 installed capacity is double what it was in 2009.  This may not be what the industry hoped for, but it's still impressive growth.
  • Silicon prices have stabilized.
  • Solar module prices have also stabilized.
With that background and current low prices for solar stocks, the stage may be set for a strong rally.

The Motley Fool

Travis Holum at the Motley Fool also thinks Solar stocks are ready to rally
, and he quotes management of several solar companies as evidence of continued strong demand:
  • First Solar (NASDAQ: FSLR) said the majority of its production has already been sold for 2011.
  • JA Solar (NASDAQ: JASO) has agreements and received prepayments from customers for 1.2 GW of its 1.35 GW to 1.45 GW of capacity for next year.
  • At Sunpower (NASDAQ: SPWRA) the CEO Tom Werner says "demand is greater than the supply" and the North American commercial business is "70% booked for 2011."
  • This week, Suntech Power (NYSE: STP) said analysis of customer demand saw "it was 30% above our ability to supply for the entire year."
  • Solarfun (NASDAQ: SOLF) sees "healthy market demand" going forward and is adding capacity accordingly.
It seems like there is a good case for a solar rally, so I sent off a couple quick emails to a couple other solar stock experts, asking them the same question. 

J Peter Lynch

J Peter Lynch is an investment banker with a focus on the solar sector at Salem Financial, which he tracks closely.  He says:
I think solar stocks are poised at a critical point.  19 of the 22 stocks I follow have positive momentum (longer term indicator), 20 of 22 stocks have negative weekly momentum (short term indicator) and 21 of 22 stocks are oversold an average of 30.9%.  I think we may see a short term bounce and possibly the continuation of the longer term positive trend indicated by the overwhelming positive monthly momentum.
So the technicals seem good for a rally, although there's some question about how long it might endure.

Jeffrey Cianci

Jeffery Cianci is Chief Investment Officer at Green Science Partners, a hedge fund that invests in both public stocks and private equity.  I wrote about him in my roundup of the cleantech experts at the most recent San Francisco MoneyShow.  Mr. Cianci uses a combination of fundamental and technical analysis, and clearly has a depth of understanding of the stocks he trades.  He is more cautious:
I'm not sure if stocks have bottomed yet.  There needs to be some constraint on the building cycle.  Until then, with European problems possibly limiting the demand side, as well as FIT [Feed-In-Tariff] reductions, there will be 2H11 oversupply worries, and may take time to disprove a negative.  I would feel safer with the solar cap equipment names, not as sensitive to pricing:  GT Solar [SOLR], Amtech Systems [ASYS], and STR Holdings [STRI] the faves, as well as solar inverters, Power-One [PWER] and SatCon [SATC].  The ETF’s are too concentrated on the module guys, so I would avoid them.
I found Mr. Cianci's critique of the Solar ETFs (TAN and KWT) particularly interesting because it parallels my own critique of the general alternative energy ETFs: they tend to be over concentrated in particular sectors.


I tend not to be a short term trader, and the opinions of the experts above are mixed, with even the more bullish hedging their opinions.  Based on the above, I'm not ready to jump into solar stocks, but if I were, I'd be looking at the capital equipment manufacturers Mr. Cianci likes.

DISCLOSURE: No Positions.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

July 19, 2010

Metrics for Thin Film Solar CIGS Company Comparisons

Joseph McCabe

Many people ask me, “which CIGS company is going to emerge as winner in the race towards high efficiency thin film PV’s? To provide an enlightened perspective to the question, some historical perspectives are needed.

First Solar (FSLR) has helped the Thin Film PV Industry by proving that respectable solar to electric area efficiencies can be achieved in a low cost manufacturing processes, with respectable performance over time. First Solar’s technology is cadmium telluride (CdTe) on glass. Previously, amorphous silicon was the thin film leader, with the highest commercially available thin film area efficiencies; currently they have a challenge in today’s low cost, higher efficiency, crystalline PV market. CIGS (copper, indium, gallium and selenium) currently holds the world efficiency record for a single layer thin film PV deposition in a laboratory setting. The promise of CIGS is that it can surpass the commercial manufacturing efficiency of the other thin film technologies in the near term.

In a recent presentation at Intersolar in San Francisco by David Eaglesham of First Solar showed their CapEx (the capital expense for the plant and manufacturing equipment) at $0.75/W, roadmapping (RM, future expected levels) to $0.65/W; manufacturing (mfg) costs (including depreciation and recycling) currently at $0.81/W, RM to $0.52/W; and current area efficiencies at 11%, RM to 14%. So a CIGS-on-glass company will need to compete with these current and future benchmarks to be at least competitive with First Solar. Flexible CIGS might have some greater market opportunities discussed below.

A second order performance factor in the PV technology race is temperature correction. PV is a direct energy conversion technology, which works better at lower temperatures. As PV modules are integrated into conventional building materials such as single ply roofing, standing seam metal roofing, or automobile surfaces, the modules will become hotter, and thus perform less than rack mounted PV modules which have air movement on the back sides. The moral of the finer system level details is that annual performance can vary with the various manufacturers’ module technology and should be a consideration when comparing various companies and technologies. Perhaps this can be a topic of a future altenergystocks article.

There is an additional economic metric which is required of PV systems, called balance of systems costs (BOS). Most PV on glass has similar BOS, between $1 and $3 a watt system level installation costs. The lower the module efficiency, the higher the area related BOS costs. Comparing 10% and 20% efficient modules both with area BOS of $2/W, the lower efficiency module has twice the costs because it uses twice the area. As the price of modules is reduced, the BOS becomes a more dominant factor in the installed system costs. A Deutsche Bank (DB) report expresses the concepts better than can be accomplished here. {July 9, 2007, DB “Technology and economics; thin films and crystalline silicon”} The costs are no longer valid, but the technology discussions are valuable. All manufacturers are being judged on their products utilization in a system that provides long term performance, expressed in the levelized cost of energy from the lifetime costs of the system.

From the previously mentioned DB report: “CIGS on flexible substrates offers a potential low cost, higher conversion efficiency modules, but has yet to enter commercial production.” And “We believe that flexible substrate CIGS based modules could have excellent applicability for building integrated PV (BIPV) applications as well as other applications like consumer electronics, and portable devices.” Be looking for the flexible CIGS products which have both TUV and UL certifications indicating successful completion of both long-term performance and safety testing.

Some CIGS on glass companies have been around for a long time, for example Solar Frontiers (Formerly Showa Shell, formally Shell, formally Siemens…). They make a beautiful, monolithic black glass modules with respectable performance, perfect for a vertical building integration application. Other companies are newer, some deposit CIGS on glass and others have flexible products and one coats the inside of glass tubes with CIGS. For CIGS, there is an inherent CapEx embedded in the deposition process. Current and RM CapEx should be considered for the various sputtering, electrodepositing, co-evaporation-in-vacuum or sintering processes used in CIGS manufacturing when comparing the various company technologies.

In summary, look for low manufacturing and capital equipment costs for a high efficiency CIGS technology which can reduce balance of systems costs. The winner in the race towards higher efficiency CIGS thin film PV systems will be the company that can provide long term confidence in their product, at system level costs similar or lower than First Solar, and solid business plan execution.

Joseph McCabe is a solar industry veteran with over 20 years in the business. He is an American Solar Energy Society Fellow, a Professional Engineer, and is internationally recognized as an expert in thin film PV, BIPV and Photovoltaic/Thermal solar industry activities. Joe can be reached at energy [no space] ideas at gmail dotcom.

May 04, 2010

Solar Parking Developer Envision Solar Now Public (OTCBB:EVSI)

Tom Konrad, CFA

One of the best things about Solar Photovoltaics (PV) is that they can be installed close to load but need not take up open space.  Now public company Envision specializes on solar shading for parking lots that not only produces power, but also shade where it's needed most.

I lived in Tucson, Arizona for two years in the early 2000s.  Like everyone who lives in the desert Southwest for any length of time, I became very aware of what would happen if I left my car in an open parking lot for more than ten minutes: it would get very, very hot.   Without a windscreen sunshade, you were liable to burn your hands on the steering wheel if you were not wearing gloves, but even with it, the car interior would feel like an oven.  It would take 5-10 minutes of the air conditioner running at full blast just to bring the temperature down to a bearable 90° F (32C).  If you don't consider 90 degrees bearable, don't move to Tucson, or get used to only going outdoors before the sun is up, at least in the summer.

Needless to say, Tuscon residents become adept at spotting one bit of shade in a parking lot from a scraggly mesquite or palo verde.  These spots of shade are at a premium because such desert trees are small and usually only cast enough shade for a single parking spot at most.

With that experience in mind, the value of Envision Solar's (EVSI.OB) photovoltaic parking lot structures is quite clear.

Envision Park Solar

Solar Trees

When it comes to solar, I much prefer developers to solar manufacturers.  Solar manufacturers face the prospect of ever declining prices for their product and a constant need for technological innovation to keep up in a fierce competitive landscape.  Solar project developers, on the other hand, have strong public support and interest in their product, combined with rising prices for the electricity they sell and declining prices for the solar panels they buy.  They also have much lower fixed costs, meaning that while the threat of new entrants will keep them from ever becoming wildly profitable, they also do not have huge capital investments that can lock them in if building solar installations becomes unprofitable.

The low barriers to entry for solar developers mean that strong product differentiation is valuable. 

Envision has developed parking lot structures they call "Solar Trees" for attractively shading parking lots while producing solar electricity.  The company promotes their products as "addressing the unused millions of acres of parking spaces."  I there's actually more too it than that, because in the sunnier parts of the country, there is value in both the electricity and in the shade.  In an extremely sunny city such as Tucson, Phoenix, or Las Vegas, I would expect that most shoppers would be more interested in visiting a store where they expected to get a shaded parking space, since almost all shady parking spaces in Tucson are almost always already taken.

The idea of solar on parking lot shades is not a new one.  I remember seeing one in the parking lot of an Austin Library Branch in 2000.  But earlier parking lot solar arrays were bespoke designs created anew for each individual project.  With a small number of flexible designs, Envision can not only keep engineering costs down, but also talk with some credibility about the cost and performance of previous arrays they have installed over nine MW of projects for clients such as Dell.  They've also teamed up with Bright Automotive to combine the solar parking structures (which require electric service) with electric vehicle charging stations. Along with the ready-to-build, relatively attractive designs, partners and previous clients like these could establish Envision as the go-to firm for parking lot solar.

EVSI Stock

Envision Solar International, Inc. stock started trading on the Over the Counter market under the symbol OTCBB:EVSI on May 3 through a reverse merger with shell company Casita Enterprises.

I usually like to wait a year or two for a newly listed company to develop a track record as a public company to help me assess the company's financial strength and management effectiveness.  Envision has not yet begun publishing financial statements as the newly merged entity.   I took a few minutes to look over their electronic investor kit, in the hope of finding some hard numbers.  Unfortunately, all the kit contains is an investor presentation without any hard numbers as to assets, revenues, debt, and income.  Until such information is available, I can't say if the stock is worth $0.04, $0.365 (the price it closed at on May 3), or $3.65. 

It's an interesting company, and I'll probably take another look at it when there is more to go on.  For now, the stock is a pig in a poke.

DISCLOSURE: No position.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

April 29, 2010

Stock Market Advice for Solar Energy Investors

J. Peter Lynch

I have been reading your articles for years and always thought your stock market related insight was interesting and helpful for me as an investor. At the current time I am worried about the market and am wondering where you think the market is currently, given the major run up we have had in the past year. I would also be curious about your view on solar stocks and what you see for them.

-- Claude M., France.

Claude, great questions.  You are really going to make me think about this one. Sorry for the long answer but the question really got me going.

Every step of the way since April of 2009 we have heard the popular financial press and the frenetic cable pundits tell us a litany of things to worry about - foreclosures, unemployment, the growing deficit etc. and it still continues today.

However, all along this troubled path the market has steadily moved up, climbing a classic “wall of worry” with all the major averages advancing significantly from the March 2009 lows - S&P 500 +77%, Dow Jones +68% and Nasdaq + 94%.

These are very strong numbers, by any historical measure and the logical conclusion to draw is that the market must be close to a top. I certainly understand that and in fact, personally “feel” (read that as “emotion”) that this is the case. But what is important to understand is not your or my emotions or what we think “should” be, but what is. Sounds simple and obvious, but believe me, it is not.

As I stated on 3-17-2009, a few days after the market bottomed and this bull market started:

I have been a student of the market since 1975 and I can assure you that there is plenty of FEAR out there now. Nothing is 100% for sure, as we all know. But I think we are either at a significant bottom or very close to it. Everything is so “oversold” at this time, that I think the worst case is that we get a significant rally in what could still be a bear market.

Once again, sounds obvious with all the historical data available. But how many people recognized this and had the courage and discipline to jump in at that time?

Currently the market is performing in a very orderly manner and the underlying technical measurements are sound and are still pointing to a higher market with the major longer term uptrend still intact, despite all of the worries and other concerns.  It is also true that the market is currently at a HIGHER relative level of risk (overbought short term) and things could change quickly.  But the market has done this before – back in late 2003 and early 2004 the market stayed at a comparable high level of risk for extended periods of time climbing another classic “wall of worry.”

At this time, some additional relevant historical data is worth considering. Since the beginning of this new bull market (March 2009) the stock market has had two meaningful corrections of greater than 5% and less than 10% (June – July 2009 and January-February 2010) and no corrections more than 10%.  This situation is historically a sign of a healthy unfolding stock market.   A market that goes “straight” up with no corrections is a dangerous situation not a healthy situation. 

As I said, the market has not had a correction of 10% or greater since March of 2009.  Why is that significant?  It is significant because there has never been a bull market in the last 80 years that has not had at least one 10% correction before it topped out (Credit: Invest Tech Research). As a result, it is likely (from an historical statistical point of view) that we will have at least one 10% correction and then another move upward before the end of this bull market.  Historically a lot of money has been left on the table after the first 10% correction, if you sold out too soon and did not give the market a chance to run its course.

Where we are now?  Somewhere toward the end of Stage 2!

I always think that a picture can tell a better story than hundreds (or thousands) of words, so take a look at the diagram below.  This is a snap shot of the classic stock market pattern, how it “usually” unfolds and where I think we are now on the curve.

These stages are the four classic stages of a typical market cycle that generally moves from fear to greed and back.

Stage 1 - Capitulation:  This was late 2008 and early 2009. The world as we know it is ending and all was lost. If you go back and look at the “headline hysteria” back then this would not seem far from the truth and the general consensus at the time.

Stage 2 – Doubt and Skepticism:  This is the period we are in currently, climbing a wall of worry. The market has been moving up for over a year and still most people do not believe that this can be real. This psychological fact is reflected in the various measures of investor sentiment according to the American Association of Individual Investors, which are currently approaching levels that are historically seen at correction or market tops. It is a scary time, but the main trend is still intact and can remain intact for quite some time, even at these levels. But a watchful eye is necessary at this time. Risk is higher, but opportunity may still be around until we see indications of entering stage 3.

Stage 3 – Euphoria:  Here is where the greed factor and fear of being left behind starts to come into play and usually after one last correction the market takes off on its last glorious run up, taking the general public with it. This always ends the same way. After this last run up there are no more buyers, the professionals are sellers and the public is left holding the bag with only hope to cling to. During this stage you will start to see very positive headlines and the pundits pointing to a bright future.

Stage 4 – Hope followed by Fear:  As the market begins to roll over and start down the slopes of hope investors keeping hoping that it will come back. Despite the clearly deteriorating underlying technical factors, people just do not want to believe (i.e. emotional decision) that it is happening.  They seem to think “this time it will be different.”  But alas, that is very seldom, if ever, true and the hope gives way to fear and finally to capitulation when investors dump all the rest of their stock (Feb-March 2009).

My advice to you is do not lose heart. I have been an investor for over 35 years and I know all of the above perfectly. But that does not mean that I do what I say and what I know from experience.  It is a constant battle and the best you can do is be aware of it, learn from it and try to develop an unemotional method to deal with it. It is an amazing 4-stage phenomenon (cycle) and the good news is that it has consistently repeated over the years and I would expect will continue to do so. If you are NOT invested now, I would not start now and I would at least wait for a pullback from current over-bought conditions.

Solar Stocks

Solar stocks did great for the first 12 months of the current bull market (3/09 – 3/10) — up an average of 124%. But as I mentioned in an earlier article the vast majority of that gain was centered in a 8 Chinese stocks — CSIG, CSUN, JASO, LDK, SOLF, STP, TSL and YGE — which were up an amazing 267.96% on average, certainly the major reason that the group as a whole was up 124%. Without the Chinese companies the solar group would have actually underperformed the major averages for that 12-month period.

 Looking a bit deeper, more than 50% of the 267.96% gain was from 2 stocks — CSIG and TSL.  This is an extreme case of narrowing (2 of 21) leadership in a sector and is usually a bad sign for the sector. Also the fact that all of these leaders were Chinese companies indicates to me that the trend is clearly to lowest cost.  Good for the Chinese companies, maybe not so good for U.S. and European companies.

Looking at the first quarter of 2010 the numbers reflect this narrowing with solar sector underperforming the general market significantly.

Solar Stock Performance  First Quarter 2010






All Solar Stocks Average







Dow Jones




S&P 500












So what does this mean for the investor interested in the solar market sector?

 It means that the industry is starting another transition phase in its long-term growth.  This is a period of “lowest cost wins” and of industry wide profit margin compression. It means that because of these factors and probably a host of other factors (lower natural gas prices, uncertainly of government policy etc.) that the solar segment has been a lagging market sector and probably not one that is optimal at this time for new investment. Especially given the higher risk level that the general market is at now.

It also means, in my opinion, that the U.S. has to wake up and start to move forward now (instead of our usual approach of thinking about having a meeting to discuss planning to do something maybe sometime in the future when all the stars are perfectly aligned i.e. all talk and very little action of any significance) with a strategy to compete with our lower cost Chinese friends. I do not think we can beat them at their own game – lowest cost via cheap labor.

What the U.S has to do now is to do what we do best — innovate.  This is the time for investment and focus on new technologies and “out of the box” thinking. This is a time to increase focus, investment and activity rather than slow down and wait for someone else to do something that we have historically always been the best at doing. The ball is in our court.

Mr. Lynch has worked, for 33 years as a Wall Street security analyst, an independent security analyst an investment banker and private investor in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977 and is regarded as an expert in this field. He was the contributing editor for 17 years to the Photovoltaic Insider Report, the leading publication in PV that was directed at industrial subscribers, such as major energy companies, utilities and governments around the world. He is currently a private investor and advisor to a number of companies. He can be reached via e-mail at: Please visit his website for the promotion of solar energy –

March 13, 2010

Solar Headwinds, Part II

Tom Konrad, CFA

Prospective investors in solar manufacturers should consider the competitive forces that constrain the industry's long-term profitability.

In the first part of this series, I showed how a competitive analysis of the corn ethanol industry in early 2007 illuminated the forces that soon caused ethanol company stock prices to collapse in late 2007.  I also implied that the solar cell manufacturers, including industry leaders such as Sunpower (SPWRA) and First Solar (FSLR) are vulnerable to these forces and may not be able to maintain high returns on capital over the long term.

I'm not predicting that solar stocks will collapse later this year, as happened with ethanol stocks in 2007.  The dramatic timing of my article on ethanol companies with the quick collapse of ethanol stocks was coincidental.  Competitive analysis of an industry can illuminate long term trends, but short term stock prices often have very little to do with long term trends or underlying economics.  Given that solar stocks have fallen considerably over the last two years (see chart), a further drastic decline seems unlikely.
Solar ETFs vs. S&P and Nasdaq
Solar ETFs KWT and TAN compared to market indexes Mar 2008 to Feb 2010.
Yet a recovery in solar stock prices that might bring solar indexes back into line with general market indexes is also unlikely, because the intense competition in the sector restrains the underlying profitability relative to companies in sectors with average levels of competition.

Returning to Micheal Porter's classic competitive forces model, each of the five forces are each composed of a number of factors.  The more of these factors are above average, the greater the overall competitive contribution of that force.  In the table below, I list above-average factors which contribute to competitiveness, and below average factors, which reduce competitiveness, and the resulting overall competition for each force.

Factors increasing competition
Factors decreasing competition
Overall Competition
Industry rivalry
Large number of firms, High fixed costs, low switching costs, low product differentiation, specialized equipment, diverse companies
High market growth, nonperishable product
Threat of Substitutes
Electricity can be produced in may ways, and is usually more conveniently and cheaply available through the grid
Government requirements or subsidies for solar power
Buyer Power
Product is standardized
Many diverse buyers
Supplier Power
Suppliers are concentrated (but becoming less so)
Commodity inputs, customers weak
Average to Low
Threat of new entrants
Constant innovation in solar technology, ability to purchase standardized manufacturing equipment, globally traded product, low minimum economy of scale, little brand franchise
Asset specificity
Very high

The key factors keeping competition high are the strong threat of substitutes and rapid innovation bringing new entrants into the industry.  Electricity from other sources such as fossil fuels or other renewable generation is functionally indistinguishable from solar electricity, and may be available at night or on cloudy days.  Hence there are not only readily available substitutes to solar panels, they are often more convenient to use.

I brought up the specter of innovation in solar technology as a risk factor for solar stocks in my recent article on risks for alternative energy investors.  The great hope for the solar industry is that constant innovation will quickly bring down costs to the point where solar power is cost-competitive with electricity from the grid, or grid parity.  But that same innovation, if it comes from outside the current industry, will undermine the economics of manufacturers using current technology.  The advent of First Solar (FSLR) is a case in point.  Because First Solar can produce its CdTe technology at much lower cost per peak watt than conventional silicon manufacturers are able to match, First Solar is able to expand its market share at the expense of other manufacturers while maintaining strong profitability. 

But First Solar may only be in its current privileged position for a few years: other thin-film technologies such as Copper-Indium-Galium-diSelenide (Ascent (ASTI), DayStar (DSTI), and many private companies) or amorphous Silicon (Applied Materials (AMAT), Sharp (SHCAY.PK) and many others.)  Beyond these up and coming thin-film technologies, there is a constant stream of new innovations such as organic PV and PV from abundant materials (IBM) that could potentially be manufactured at much lower cost than current thin film technologies.

There are also non-photovoltaic competitors.  Bloom Energy is trying to present itself as an alternative to solar, but not very credibly.  Concentrating Solar Thermal Power (CSP) has long had a cost advantage for large scale farms, and has the additional advantage of producing on-demand power because it is simple to integrate with inexpensive thermal storage.  PV is not safe from encroaching thermal technologies even at the residential level.  One potential challenger is startup Cool Energy.  Cool Energy's combined heat and power system uses an array of evacuated solar thermal collectors to provide space heating in cold months, and then uses a Stirling engine to convert excess heat in warmer months into baseload or on-demand electricity. 


Because of rapidly falling costs and a vast solar resource, solar PV is likely to produce a significant and growing portion of our electricity in years to come.  But this growth trend is an industry trend, and the growth could easily come from new competitors at the expense of current solar stocks. 


DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

March 11, 2010

Solar Headwinds, Part I

How Solar PV is like Ethanol

Tom Konrad, CFA

High levels of competition in the the solar photovoltaic (PV) industry mean that buy-and-hold investors should look elsewhere.

In May 2007, I published a competitive analysis of the corn Ethanol industry based on Michael Porter's classic Five Competitive Forces model.  At the time, Ethanol stocks were flying high, but my conclusion was that "the prospective ethanol investor should be very careful about investing in corn ethanol producers at random."  If anything, I understated the case.Ethanol Stocks

This chart shows three ethanol stocks that have survived since 2007.  As survivors, they are among the best performers in the industry; several others declared bankruptcy.

Corn ethanol is not a great business to be in; it's too competitive.  If you buy assets at the right price, you can do well, but it's all about timing.  A passive buy-and-hold strategy will  under-perform the same type of strategy in a less competitive industry.  Companies in less competitive industries can maintain higher returns on capital for longer periods.

Solar Manufacturers

It's not a secret that I'm no fan of investing in solar stocks, although I understand why enthusiasts are seduced by the sector.  Unlike corn ethanol, solar PV will likely be a significant part of any future sustainable energy mix, but that is not the same thing as saying that today's solar stocks will be good long-term investments.  Americans watch more television today than ever before, but were network television stations a good investment over the last 20 years?  No, because new entrants came in and stole their audience: the industry has become much more competitive than it was 20 years ago.

Thinking that todays solar stocks will do poorly over the long term is not the same as thinking that the solar industry will flop.  Rather, it is the belief that increased competition will drive down returns at existing companies.  This will be great for buyers of PV panels, but not so great for owners of PV stocks.

Porter's five competitive forces model of competion bears this out, just as it did when I analyzed the corn Ethaonol Industry in 2007.  The next article in this series will take a look at the five forces, and how they apply to solar PV manufacturers.


DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

October 28, 2009

Why Do Green Energy Experts Buy Solar Stocks? 

Green energy experts accept that solar panels are one of the least cost effective ways to reduce your carbon footprint.  Nevertheless, many buy solar stocks.  They should rethink their investment strategies.

I recently spoke on "Stock Selection in the Era of Peak Oil and Climate Change" at the ASPO 2009 International Peak Oil Conference.  Whenever green energy enthusiasts find out that I analyze green energy stocks professionally, they react in one of two ways.  Many want to know my top stock pick in general (New Flyer Industries NFI-UN.TO/NFYIF.PK) or in their favorite sector (see below.)    Others tell me about their own green energy investments.  

My guess is that the latter group hopes I will stamp some sort of stock guru seal of approval on their portfolio.  If so, they usually go away disappointed.  This is not only because I have not yet been issued with a special seal by the stock guru union.  It's also because, even if I had such a stamp of approval, I would seldom need to use it. 

I find that even industry experts who know more than I do about green energy fail to apply that knowledge when it comes to investing.  Enthusiastic amateurs are often worse.  The typical green stock holdings of a brilliant cleantech engineer are a couple solar stocks, like First Solar (FSLR) and Sunpower (SPWR.)  People who will lecture tirelessly on the need to improve the efficiency of buildings before slapping solar on the roof don't walk the walk when it comes to their investment portfolios.  Instead, they take whatever portfolio they have, slap on a couple solar companies.  They forget all about the efficiency stocks and other, more cost-effective renewable options such as wind, geothermal, and biomass that they would recommend if they were asked about what we needed to decarbonize the economy.

Invest In What You Know, Use What You Know

To be fair, none of these people are professional investors. They cannot be expected to make the same sort of decisions that a professional would.  On the other hand, many are extremely knowledgeable when it comes to green energy.  The old adage "Invest in what you know" does not mean that a pilot should buy airlines.  It means that that a pilot will have more knowledge of the airline industry than an industry outsider, and my be able to use this knowledge to either choose between well-run and poorly run companies, or to have a better understanding of industry cycles, and buy when industry fortunes are on the upswing, and sell before a decline in profitability.  The key to successful investing is not depth of knowledge, but knowledge that other market participants lack.

Likewise, an energy rater will know that efficiency improvements will deliver much faster paybacks than solar PV.  Yet, based on my informal survey, energy raters are more likely to own a solar stock than an energy efficiency stock  Dedicated greens know taking mass transit or biking to work is much greener than any private car, even an electric one.  Yet these same greens are more likely to have investments in electric vehicles or battery stocks than investments in mass transit or bicycle companies.

"But I Don't Know any Energy Efficiency Stocks"

When I ask these people why their portfolios don't match their lives, they usually tell me they don't know what stocks to buy.  Ignoring the fact that people who aren't willing to do several hours of research for every stock they own should not be venturing into the Wild West of individual stock investing (don't say I didn't warn you) here are a few of my favorite investments in each of the major green energy sectors.

Sector Investments Related Articles
Energy Efficiency Waterfurnace, Cree, Flir Heat Pumps, LEDs, Infrared
Clean Transportation PTRP, New Flyer ETFs, New Flyer
Wind FAN Wind ETF, ETFs,
Transmission/Grid Quanta Services, ABB, General Cable Transmission shopping list
Batteries / Energy Storage Enersys, Exide, A123 Irrational Battery Investments
Solar Solar Millennium, Satcon Solar Shopping List
Geothermal Ormat Geothermal & the ARRA
Smart Grid Echelon, Telvent Smart Grid Shopping List
Biomass/Biofuel Aracruz, Plum Creek, Potlatch Forestry Stocks and ETFs

Note that this is not intended as a list of companies to buy now.  I currently consider most stocks to be overvalued, and am waiting for a market decline before buying again.  But, if you have an urge to buy a glamorous solar stock today, or are reading this article after the market has descended to more reasonable valuations, I hope you'll use this list to buy stocks in the sectors you know are greener, even if they're not as sexy.

The Right Questions

Using your knowledge from the real world to help choose your investments is another variation on the theme of Asking the Right Investment Questions I recently discussed.  The easiest way to gain an advantage over other market participants is to zig when emotional investors zag.  Solar has a lot of appeal because it lets anyone with a rooftop generate electricity, and emotional green energy investors tend to buy solar stocks.

It's difficult to underestimate the emotional appeal of the personal energy independence photovoltaics seem to promise.  Nevertheless, few rooftop solar installations do add to our personal energy security: They are grid-tied, and stop producing power whenever the grid goes down.  While solar panels can be a good investments with sufficient subsidies and tax breaks, or where electricity is extremely expensive, government subsidies and small markets with expensive electricity are not good foundations for the explosive growth that solar stock speculators are betting on.  

Financial modeling shows that solar will only be a significant part of the most effective carbon mitigation strategies if prices fall quickly and dramatically.  Such cost improvements are possible, but will come with the risk of extreme disruption for the current crop of solar stocks.

Investors swept up in the emotional appeal of solar stocks are providing those of us who pay close attention to the economics of green energy an opportunity to profit at their expense.  Taking advantage of the opportunity is not only likely to benefit the investor, it will also help the companies we do invest in raise capital.


DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

October 20, 2009

What Shouldn't Be in a Green Energy Portfolio

The London Accord took a look at what portfolio theory would suggest as the most effective ways to address Climate Change.  Knowing which technologies don't make the cut is at least as useful as knowing which technologies do.

I recently looked at a paper from the London Accord which used portfolio theory to recommend the best mixes of technologies to deliver different levels of carbon abatement.  The most useful technologies to achieve the needed levels of carbon abatement were Forestry, Hydropower, Biofuels, Wind, Efficiency, and Geothermal. I suggested stocks that investors might consider to invest in each of these sectors.

abatement portfolios.bmpOther technologies played on bit parts in the abatement portfolios (left) the report found are likely to achieve the needed levels of climate reduction most efficienctly.  

If we were to assume intelligent political policies, these bit-part technologies should be avoided by investors.  The assumption of intelligent political policy is unlikely to be realistic, however:  Some of these technologies will turn out to be good for investors, even if they fail to achieve the desired goals for the climate.  

Below, I try to imagine the political decisions which would lead to each of these also-ran technologies rewarding investors. 


Nuclear power plays a large role in abatement portfolio 1, shown to the left.  This portfolio delivers about 3 gigatons of worldwide CO2 equivalent (Gt CO2e) abatement per year, at a cost of $25B annually.  Given that necessary level of abatement is at least 5 times that amount, portfolio 1 represents a vastly inadequate policy response to climate change.  We could get such an inadequate policy response if opponents manage to convince decision makers that an adequate response to climate change will do unacceptable harm to the economy.

Such policies would sad for humanity, ibut good for investors in suppliers of nuclear equipment.

Nuclear does not play a big role in the larger mitigation portfolios simply because it's potential for carbon mitigation is limited.  Nuclear plants take a very long time to build, and concerns about the disposal of waste and the desire of most people not to live anywhere near a nuclear plant are not likely to go away.  Furthermore, nuclear power and other baseload technologies which are difficult to stop and start quickly are somewhat incompatible with variable renewable energy such as wind and solar.  If wind is to meet its much larger potential for climate carbon mitigation, nuclear will have to play an even smaller role. abatement cost.GIF


Solar only plays a significant role in the most aggressive portfolios, 4-6.   As you can see in the chart above, portfolios 5 and 6 do not produce much extra carbon savings even though they cost two and three times what portfolio 4 does.  The implication is that solar will do best if society decides that action against climate change is worthwhile regardless of the cost (scenarios 5 and 6,) or in a scenario where we decide that we need to be very aggressive about dealing with climate change, but should keep an eye on costs.

One significant caveat here is that the above abatement portfolios are based on the 2007 IPCC Working Group report, "Mitigation of Climate Change."  This report may have had much too conservative assumptions for cost reductions in solar technology (right).sarasin abatement.PNG

With Sarasin's more optimistic assumptions about cost reductions for solar technology, it plays a large role in all mitigation portfolios on the efficient frontier.  Here "solar" refers to solar photovoltaic (PV) and Concentrating Solar Thermal Power (CSP): solar thermal collectors were not modeled.

Stock market investments in solar make sense so long as you believe that you are investing in a company which is capable of drastically reducing the cost of the technology, and will be able to cut solar costs more quickly than its rivals, including those which are yet to emerge.

Carbon Capture and Storage

Carbon Capture and Storage (CCS), the enabling technology for so-called "Clean Coal" does not play a role  in any of the mitigation portfolios which achieve less than 15 Gt CO2e (portfolios 1-3) and only small roles in portfolios 4-6.  This is very similar to solar under the 2007 IPCC Working Group assumptions.  However, CCS differs from solar in that all the believable cost estimates I've come across (even those originating from CCS proponents) expect it to remain very expensive.

Coal with CCS also has the same problem as nuclear: because it is difficult to ramp such "Clean Coal" plants up and down, they are relatively incompatible with large penetrations of wind.  If CCS does take its place as part of an efficient carbon abatement portfolio, it will probably be CCS used in conjunction with natural gas turbines, rather than coal. 

Hence, it would only be reasonable to make stock market investments in CCS technology if you expect significant spending on the technology by governments with little regard to cost.  Given the power of the coal lobby, such a scenario is a real, if unappealing, prospect.


I do not include any of these technologies in green investment strategy.  Even though I believe that the optimistic case for quick reductions in the cost of solar technology makes sense, I do not think that I have the skills necessary to pick a company today which will be able to survive the rapid industry upheaval a technological revolution in PV technology would entail.

All three technologies have the potential to receive large amounts of government largesse, even if the economic case for such help is weak.  However, I am not confident that I can predict the direction of such largess, and more deserving green technologies with better economic prospects seem just as likely to receive government money than these three.  Given my uncertainty about the future direction of government support, I think it makes more sense to invest in forestry stocks, building and industrial efficiency stocks, transport efficiency stocks, and geothermal stocks, than it does to invest in nuclear, carbon capture and storage, or solar stocks.


DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

October 14, 2009

Oil & Alt Energy Redux

Charles Morand

Last week, I conducted an analysis showing the lack of evidence supporting claims that oil and alt energy returns are strongly correlated (claims that sometimes come from outfits as reputable as Bank of America Merrill Lynch).    

I don't want to belabor this topic but I thought I would post the results of another, similar analysis I conducted following comments I received on how to improve the first one. In a nutshell, the comments suggested I do the following:

1) Look at daily correlations or even smaller periods, as "common knowledge" market movements can often dominate over the real relationship in the short and very short run

2) Look at absolute (price) correlations as well as relative (return) correlations (my first analysis looked only at relative movements)

3) Look at directionality (i.e. what % of the time do assets X and Y move in the same direction regardless of the size of the move)

4) Extent your analysis to five years or greater

New Analysis, Same Difference

The three sets of tables below show daily return correlation coefficients, daily price correlation coefficients and daily directionality statistics (% of days that the assets close Up, Down or No Movement together) for oil, nat gas, the S&P 500 and alt energy stocks.

The time periods have been extended from three to five years or since inception. The oldest alt energy ETF available is PBW that was listed on March 03, 2005 - not quite 5 years but a decent chunk of time nonetheless. The other 3 ETFs (sector specific) were all listed in the 2nd half of 2008.

Correl Returns Oct 14-09_3.bmp

Correl Prices Oct 14-09.bmp

Correl Returns Oct 14-09_2.bmp

The first set of tables show that returns on oil are not particularly useful at explaining returns on alt energy stocks on a daily basis (let's say that we enter useful territory at 0.5 and above), although the results for PBW show the relationship strengthening somewhat in the last year (which has been anything but a normal year for the markets). These results are in line with those from my previous analysis which looked at weekly returns.

As far as absolute prices go (the second set of tables), correlation coefficients for oil and alt energy are high, but they are just as high if not higher for alt energy and the S&P 500. PBW shows the relationship strengthening over time, but it strengthened even more between oil and the S&P 500, something Tom opined might be the case a few months ago.

I don't find absolute price correlations all that useful. In the medium and long terms, returns matter far more than absolute prices. If a $1 movement in oil consistently results in a $1 movement in an alt energy ETF over the long run, the high coefficient could obscure a divergence trend between the returns on both assets as their prices rise.

Finally, the directionality tables (note that assets appear in a different order) show a fair bit of co-directionality between oil and alt energy (with the exception of PTRP [alternative transportation], something Tom and I discussed last week). But here again, the S&P 500 emerges as the stronger predictor.


I did not go any more granular than daily data: anything beyond that becomes relevant only to traders.

Once again, the general conclusion that emerges from this analysis is that oil - whether in terms of returns, prices or directionality - is not a particularly useful indicator to go by when investing in alt energy stocks, especially when compared to equity markets in general (i.e. the S&P 500).

The implication for investors is that they should not invest in alt energy as a hedge against or a play on rising oil prices. If anything, what little relationship does exist will probably tend to disappear overtime as alt energy and cleantech stocks respond more to core business fundamentals than to seemingly logical yet unproven narratives about external drivers.  


October 07, 2009

Crude Oil & Alt Energy: The Non-Relationship That Just Won't Go Away

Charles Morand

The relationship - or lack thereof - between oil prices and the performance of alt energy stocks has been a long-time interest of mine. I discussed it last in late March when I looked at correlations between the daily returns of alt energy and fossil energy ETFs. At the time, I found that only a weak relationship existed between the two and that if someone wanted to make a thematic investment play on Peak Oil, alt energy ETFs were not an ideal way to do so. 

Seeing as the popular press and countless "experts" continue to claim, whenever they get a chance, that the fortunes of alternative energy stocks are closely tied to the price of oil, I figured I would revisit the topic.

Fossil & Alternative Energy: The Relationship That Isn't There

This time around, I took a slightly different approach for my analysis: I correlated the weekly returns for US oil and US natural gas directly (as opposed to through an ETF) with returns for the S&P 500 and four alt energy ETFs. For US Oil and Nat Gas, I used price data provided by the Energy Information Administration here (Spot Price FOB Weighted by Estimated Export Volume) and here (Contract 1), respectively. I got ETF and S&P 500 price and index value data from Google Finance.

For the ETFs, I picked the Claymore/Mac Global Solar Index ETF (TAN) as the solar sector representative, because I took a position in it in March (which I liquidated last week even though I initially claimed I would hang on to it for 18 to 24 months. I have now grown more worried about downside risk than I am optimistic about upside prospects over that time horizon, so I took my money out).     

The other ETFs were: the First Trust Global Wind Energy Index (FAN) for wind, because it represents a more direct play on the sector than the alternative; the PowerShares Clean Energy (PBW) ETF for alt energy other than solar and wind, as an analysis I conducted earlier this year indicated it is the best way to access other sectors; and the Powershares Global Progressive Transport (PTRP) ETF, as it provides the only proxy I know of for returns on a basket of stocks with exposure to alternative modes of transportation.          

The graph below displays returns for all four ETFs, Oil, Nat Gas and the S&P 500 between Jan. 1, 2007 and Sep. 25, 2009 (click on the image for a large view).             

Oct 7-09 Chart 1_2.bmp

The table below shows returns and volatility for all seven assets over the same time interval but broken down into sub-periods. Seeing as 2009 and the post-Lehman collapse period have been eventful times to say the least, I thought it would make sense to create a few distinct sub-periods for analytical purposes.

What jumped out at me from this table is the relatively strong performance of the Powershares Global Progressive Transport (PTRP) ETF, even after adjusting for volatility. As the correlation analysis below demonstrates, this performance is not due to a rise in oil prices.

My going theory is that there is a Green Stimulus Effect at work given how much of global stimulus dollars have gone to transportation programs. This would be something worth exploring further but it certainly seems in line, at least on the surface, with a prediction I made nearly one year ago. 

Oct 7-09 Fig 1_2.bmp

The following three tables contain the real meat of my analysis. They are fairly self-explanatory: they show correlation coefficients between US Oil, US Nat Gas and the S&P 500 with all other assets. The correlations are for the periods outlined in the tables or since inception in the case of PTRP (Sep. 19, 2008), TAN (Apr. 18, 2008) and FAN (Jun. 20, 2008). The correlation coefficients above 0.5 are highlighted.

Oct 7-09 Fig 2.bmp

These results are, once again, in line with my expectations: there is little reason to believe that there is a strong relationship between changes in the price of oil and the performance of alt energy stocks. Even for natural gas, where one could expect a correlation with wind and solar given that all three fuels are used in power generation (or load abatement), there does not seem to be a strong relationship.

TAN and FAN have not yet been around for long enough to analyze returns going very far back into the past, but PBW has. Although the correlation between PBW's returns and oil's returns seems to have strengthened somewhat in the past year, it certainly does not qualify as strong.

I must admit that I was fairly surprised to find such a low correlation between the returns on oil and those on the PTRP ETF. My guess is that this ETF hasn't been around long enough, and that a relationship might emerge under an extreme Peak Oil scenario. That said, spending on public transportation is heavily dependent on the fiscal health of various levels of government, and we've just been moved from the emergency room to the critical care unit.    

On the other hand, I was not particularly surprised to see that returns for all four alt energy ETFs are strongly correlated with returns for the S&P 500 - that seems intuitive enough given that they all belong to the same asset class. 


It doesn't really matter how one slices and dices the data: there just does not appear to be a strong relationship between returns on oil and returns on alt energy stocks, including alternative modes of transportation.

That's not going to matter to a great many commentators who will continue to claim in newspaper and magazine articles, on blogs and on TV that the success of alt energy stocks is closely tied to the price of crude, even though that's mostly untrue.

Those who invest in alt energy should, however, pay close attention. These results suggest that there are far more important factors than oil prices, most notably returns in equity markets in general and regulatory incentives by governments.

There is a good chance that equity returns and returns on oil will diverge in the next couple of years as oil prices climb and equities stagnate or decline. If such a scenario materializes, those who have the relationship backwards could be in for unpleasant surprises.   

September 10, 2009

Book Review: Investment Opportunities for a Low Carbon World (Wind + Solar)

Charles Morand

Tom and I recently received complimentary copies of a new book called "Investment Opportunities for a Low Carbon World", edited FTSE Group's Director of Responsible Investment Will Oulton*. 

Sep 10-09 book review.bmp

The book is a compendium of articles by 31 different authors broken down into three main categories: (1) environmental and low-carbon technologies; (2) investment approaches, products and markets; and (3) regulation, incentives, investor and company case studies.

While Tom will provide a comprehensive review of the book once he's finished reading it in its entirety, I will instead review a few selected chapters over the course of the next couple of weeks.

I decided on this approach as that is how I generally use such a resource; I select the chapters and authors that I am interested in and I read only what I selected. That said, the majority of chapters in this book were of interest to me and I ended up selecting 19 out of 27 that I'm going to read (I won't be reviewing them all!) Truth be told, reviewing the contents section made me feel like a kid in a candy store and I suspect that most alt energy investing aficionados would feel the same. If I like what I read, I will most likely finish the book.    

This first post provides reviews of Chapters 1 and 2 on the wind and solar sectors.

Wind Power

By Mark Thompson, Tiptree Investments ltd

I tend to consider myself pretty well-versed in all things wind power, and so I was especially eager to read this chapter. Overall, I was very pleasantly surprised.

The author provides a good review of the wind turbine and wind turbine component industries. I especially enjoyed the technical discussion on turbine size and optimizing turbine output, which will become a critical competitive element for turbine makers.

For instance, we learn that because of the relationship between diameter and surface area for a circle, the power of one machine can be increased to match that of several smaller machines by simply lengthening the blades, thus lowering requirements for a range of other components and materials (for instance, two turbines with rotor diameters of 40 meters will have a power output of about 1000 kW, whereas one turbine with a rotor diameter of 80 meters can power 2500 kW.) Because of the mathematics of this, power output increases acheived through longer blades should further improve the economics of wind, so this is definitely a trend worth keeping an eye on.  

We also learn that while the turbine market has been chronically under supplied for the past few years, conferring the incumbents an appreciable amount of market power - the author estimates that the top six makers hold a combined 84% market share -, barriers to entry remain high and very difficult to surmount for would-be suppliers. Concerns over quality, durability, track-record and the strength of the balance sheet to support warranties are all factors that make it very difficult to secure funding for projects using a newcomer's technology. It is fair to say that Thompson is bearish on new market entrants.

Finally, we learn that the trend toward turbine makers internalizing sub-component design and manufacturing is restricting investment opportunities in pure-play supply chain opportunities.

However, what I enjoyed the most about this chapter was the detailed overview of how wind projects are built and what factors make them successful. When it comes to wind power, investment commentators tend to focus on turbines and turbine components, even though very interesting opportunities exist in the project development and operation space. In the author's words: "the development process offers some of the best returns in the sector [...]."

One key point made by the author in that regard is that headline figures about the size of various developers' portfolios are rarely - if ever - comparable given the various developments stages involved in bringing a project into operation. The risk-return profile for pure-play wind power developers is far more driven by the quality of the projects than by the size of the portfolio. However, disclosure tends to be weak in that regard, making it difficult for small investors to gauge the real value of a portfolio.

Overall, I thoroughly enjoyed this chapter. In my view, the information would be most useful to a fundamentally-driven investor looking to really understand how wind power and the wind power industry really work. While the chapter does not answer every question an investor might have, it nonetheless provides the right balance of technical and business information to set someone on the right path. It is a reference to which I will go back.  

Those looking primarily for stock picks, however, will be disappointed. The lack of stock picks is probably the chapter's weakest point, especially given that the book is purportedly about investment opportunities. Having said that, investment ideas abound on the Internet these days and books focused too heavily on providing stock picks at the expense of more general information risk having very short shelf-lives.

Solar Power          

By Matthias Fawer, Bank Sarasin

Writing a book or a book chapter on solar power, especially solar PV, is always a risky endeavor as the information could be outdated 12 months after publication. I thus salute the effort of those who undertake to do it, but in my view this sector is best left to specialist consultancies and sell-side analysts because they can easily update their analysis when conditions change, something that happens frequently in the world of solar PV.

Matthias Fawer's chapter does, in a lot of ways, read like a sell-side report. It covers three broad sub-sectors of solar: (1) solar photovoltaic; (b) solar thermal; and (c) solar collectors. Other than for solar thermal, the way in which the chapter is written assumes the reader already has a fair bit of solar knowledge. For instance, unlike your typical generalist piece on solar PV, few if any details are provided on what the main solar PV cell technologies are, how they compare in terms of price and performance and which company makes them.

The advantage of this approach is that it allows the author to jump straight into industry-level dynamics and not waste precious space explaining what many people already know. For instance, we learn fairly early on that Bank Sarasin sees silicon cell production appreciably outpacing module production until about 2012, potentially providing module makers with a margin expansion opportunity. We also learn that the plant engineering firms that had done so well when every cell manufacturer and their grandmother was adding production capacity during 2007 and 2008 could underperform in the next few years.

Of course the drawback from not providing a lot of technical background is that it makes the chapter a lot less useful for the novice solar investor, or even for the investor who knows a little bit but does not follow the industry closely. The author does, however, provide a ranking of the "strategic positioning" of 27 solar PV firms based on a proprietary model, with his top pick being Q-Cells (QCLSF.PK) from Germany.

The section on solar thermal, also known as concentrating solar power (CSP), contains more basic information on the technology, and provides an overall very good introduction to the sector. Unfortunately, there is a dearth of CSP investment options, and this sector is thus effectively off-limit to most retail investors.

The section I liked the most in the chapter was the one on solar collectors for building and water heating, an industry I knew about but had never researched. I learned, much to my amazement, that by the end of 2008 there was 142 GW of solar collector capacity installed worldwide, versus 12 GW of solar PV and 1.3 GW of CSP.

China is by far the largest market for solar collectors and, unlike in other industries, it absorbs, according to the author, 90% of its own production. Fawer expects annual growth to be about 25% until 2011 and to settle at 18% between 2011 and 2020. However, the much larger installed base currently means that the absolute level of new installations could be quite massive. Although the section on solar collector does not provide stock picks, it most definitely poked my interest and convinced me to look further into this.

Overall, while I was a bit underwhelmed by the solar PV section, I found the CSP section useful and the section on solar collectors very interesting. A greater technical focus would have strengthened the chapter given how technologically complex solar is, and more stock picks would have been appreciated. However, I will definitely go back to the chapter when I do research on solar collectors and even CSP.


* We are always interested in reviewing books and reports in the areas of alternative energy, cleantech or other environmental industries, especially where they add value to the investment decision-making process. If your organization would like a new book or report reviewed, please contact us    

August 11, 2009

The Performance Of Solar PV Systems

Aug 11-09 Solar PV Charles Morand

A couple of weeks ago, I noted the importance of examining parameters other than module costs when gauging the economic competitiveness of solar PV energy. I noted how multiple factors influence the levelized cost of energy produced by solar PV systems, and thus its relative cost position on the grid. Nothing new here.  

However, besides standard test conditions (STC) conversion efficiency, or nameplate conversion efficiency, public data on parameters other than cost per watt-peak is not always easy to come by. That's why I found reading "Potential of photovoltaic systems in countries with high solar irradiation", a paper about to be published in the journal Renewable and Sustainable Energy Reviews, particularly interesting.

The Study

In the authors' own words, the paper reports the results of the following study (funded by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)): 

Thirteen grid-connected PV systems of nominal power 1 kWp each have been installed in Nicosia, Cyprus and Stuttgart, Germany [...] providing the opportunity for direct comparisons under the different climatic conditions of the two countries.

More specifically, the installed PV technologies [...] consist of twelve fixed plate mounted systems, a two-axis tracking system and a flatcon concentrator system. The systems range from monocrystalline, multi-crystalline silicon to amorphous silicon, CdTe, CIGS, HIT-cell and other solar cell technologies from a range of manufacturers such as Atersa, BP Solar, Mitsubishi, Sanyo, Solon, SunPower, etc.

The PV modules are mounted on mounting racks at the optimal inclination to provide maximum annual yield for each respective location.

This study thus examines the performance of the main commercially-available solar PV cell technologies under the same real-world conditions, rather than in the lab. The annual solar irradiation measured on-site at the ideal inclination was 1997 kWh/m2 in Cyprus and 1460 kWh/m2 in Germany. This equates to roughly 5.5 kWh/m2/day and 4.0 kWh/m2/day, respectively. The NREL Photovoltaic Solar Resource map provides a rough guide to equivalent US locations, while Solar4Power's global maps do the same for the rest of the globe.    

The systems were initially deployed in June 2006 and the data reported is for the first year of operation, so until June 2007.

The systems under study are as follows:

Manufacturer (Ticker) Technology System Power (Wp) Size (m2) Nameplate Module Efficiency (%)
Atersa (uses Q-Cells cells, QCLSF.PK)   Mono-crystalline silicon (tracker) 1020 7.90 12.9
Atersa (uses Q-Cells cells, QCLSF.PK) Mono-crystalline silicon 1020 7.90 12.9
BP Solar (BP) Mono-crystalline silicon (Saturn-cell) 1110 7.52 14.8
Sanyo (SANYY.PK) Mono-crystalline silicon (HIT-cell) 1025 6.26 16.4
Suntechnics (Uses Sunpower cells, SPWRA) Mono-crystalline silicon
(back contact-cell)
1000 6.22 16.1
Schott Solar (Private) Multi-crystalline silicon (MAIN-cell) 1020 7.87 13.0
Schott Solar (Private) Multi-crystalline EFG silicon 1000 8.58 11.7
SolarWorld (SRWRF.PK) Multi-crystalline silicon 990 7.82 12.7
Solon AG (SGFRF.PK) Multi-crystalline silicon 1540 11.50 13.4
Mitsubishi (MIELY.PK) Amorphous silicon (single cell) 1000 15.74 6.4
Schott Solar (Private) Amorphous silicon (tandem cell) 960 18.00 5.4
First Solar (FSLR) Cadmium Telluride 1080 12.96 8.3
Wurth (Private) Copper–Indium–Gallium–
900 8.75 10.3

The study uses energy yield - kWh produced divided by nameplate kWp - to directly compare the performance of each system. Theoretically, this should normalize out conversion efficiency differences between the various systems and, because other key factors such as inclination are kept equal, the performances of the systems should be roughly equal.

The figure below displays the annual energy yield for the Cyprus location. Ignoring the tracker-equipped system, we note some non-trivial differences in AC energy yields between the various systems, with the Suntechnics (SunPower), Wurth, Sanyo and First Solar systems performing best, and the BP Solar and Schott a-Si systems performing worst.    
Fig 1 - energy yield by system cyprus.bmp

The figure below depicts the energy yield by season for the Cyprus location. As can be noted, the thin-film technologies (a-Si, CIGS and CdTe) tend to have higher energy yields in the summer months than most crystalline technologies, but perform in roughly similar fashions or even slightly worse in winter months.

Fig 2 - energy yield by season cyprus.bmp

The seemingly wider variations between summer and winter months for thin-film systems are not actually due to the properties of thin-film materials, but rather to the properties of crystalline materials. The table below displays deviation from the average AC energy yield across all systems, as well as the MPP power temperature coefficient. The latter metric shows the drop in system power per one kelvin increase in temperature.

As can be noted, overall, the crystalline technologies tend to experience much greater performance declines under warmer conditions than do their thin-film brethrens. The authors note that the technologies with the lowest MPP power temperature coefficients showed the highest average energy yields during the summer period. 

Fig 3 - deviation and temperature.bmp

The phenomenon discussed above is perhaps best captured by the graph below, which displays seasonal module efficiency for the Cyprus systems. Once again, by-and-large, thin-film technologies tend to experience much lower drops in efficiency with higher temperatures than do crystalline technologies, with the First Solar CdTe system showing the most stability.

The authors note that the systems installed in Cyprus showed a lower average measured performance ratio than those installed in Germany because of higher temperatures.

Fig 4 - pv module efficiency.bmp


A couple of fairly obvious insights emerge from this article.

First, at least for the time being, crystalline technologies retain an edge over thin-film for applications where available space is an issue. Lower efficiencies in thin-film are forcing much larger system sizes, as depicted in the first table above. The urban roof-top market thus remains crystalline technologies' domain.

However, and far more interestingly in my opinion, thin-film technologies' relative performance stability in warm weathers, as demonstrated by lower MPP power temperature coefficients, makes them superior alternatives for areas where temperatures between seasons range from very hot to hot, and where module temperatures are likely to be fairly high year-round. In Cyprus, according to data in the study, average monthly temperatures stood near or below 15 degrees Celsius (~60 degrees Fahrenheit) during six months out of the whole year. Several potenially large markets will show much higher temperatures throughout the year.    

Incidentally, such regions could become, because of their solar irradiation regimes, very attractive solar PV markets. Areas such as India, North Africa, the Middle East and Australia all come to mind (the scale shows kWh/m2/day).

India recently announced it would be targeting 20 GW installed by 2020, and it was reported that it would institute a production-based incentive, which generally takes the form of a production tax credit or a feed-in tariff. In regions of Southern India with very hot summers and hot winters, thin-film technologies would probably offer the best alternative for ground-mounted installations, which will likely spring up in fields across the region if the incentive is generous enough.

DISCLOSURE: None                   

July 29, 2009

India Joins The Solar PV Club

Charles Morand

One of the - if not THE - most popular debates in solar PV circles is about when exactly the electricity produced by solar PV systems will reach "grid-parity", or become competitive with like-generation fuels (i.e. non-baseload) on a stand-alone basis (i.e. no feed-in tariffs, mandates or rebates).

A lot of the time, these discussions slip into arcane sub-debates about module costs, as expressed on a dollar per watt basis, and how far they need to fall for solar PV to be competitive. But module costs are only one part of the equation; inverter, installation and other balance-of-plant costs can make up to 50% of the installed cost of a system, and the local solar regimes, cell efficiency, interest rates and system orientation can all impact the levelized cost of the power produced, and thus its relative cost position on the grid.

While such discussions are most definitely intellectually stimulating, the fact remains that the solar PV industry is, by-and-large, heavily dependent on regulatory incentives for growth. Recent figures by REN21 (p. 24 of the PDF document) demonstrate the extent of this dependency. In 2005, Japan accounted for ~24% of new installations and ~35% of total installed capacity for grid-tied solar PV globally, while for Spain the numbers were ~2% and ~2%, respectively. By the end of 2008, Japan made up ~5% of new installations and ~15% of installed capacity, whereas Spain accounted for ~48% and ~26%, respectively. What changed in those three years? Japan canned its residential incentive in 2006 and Spain implemented its feed-in tariff in 2004. Now, both countries have made 180-degree turns, with Spain canning and Japan re-instating. I expect investment flows to reverse. 

Reaching grid parity in certain regions with high wholesale power prices is not going to change that situation overnight - last year, McKinsey & Co published a forecast in which they estimate that economic demand for solar PV will begin outpacing policy-driven demand by about 2015. By 2020, the authors believe, policy-driven demand will still account for a little under a third of total global demand. Regulatory incentives are thus going to account for a substantial portion of installed solar PV capacity for at least the next decade.

That is why solar PV investors should be elated that India has finally decided to join the solar club by planning to have its own targets and incentives announced by September. Early information points to a non-trivial target of 20 GW installed by 2020 (Germany had about 5.4 in 2008), with 1 to 1.5 GW installed by 2012. The scope for solar PV growth in India is massive, especially growth in distributed solar as over 600 million people - mostly in rural areas - currently don't have access to electricity.

As of yet, few details have been made public on the upcoming policy so it is difficult to gauge what this will mean for the solar PV sector. However, if India's solar ambitions turn out to be as big as their IT ambitions, this could prove a welcomed boost for the industry.  

I am finding it difficult to pick stocks in the solar PV sector for three reasons: (1) the intense sell-side focus - exemplified by the fact that every shop on the Street now has a solar PV analyst - makes it very difficult to gain and exploit an informational advantage; (2) stocks tend to be highly volatile, with the success stories trading at astronomical multiples (e.g. First Solar) and the firms experiencing difficulties getting destroyed (e.g. Timminco); and (3) the industry remains relatively young, with new entrants and emerging technologies continually threatening established market positions.

My favorite way to play this sector and macro events like the India announcement thus remains through one of the two solar power ETFs: the Claymore/Mac Global Solar Index ETF (TAN) or the Market Vectors/Van Eck Global Solar Energy ETF (KWT) . While volatility and high multiples remain a factor for the ETFs, they nonetheless eliminate much of the firm-level risk.

I took a long position in TAN in early March, and this has done quite well for me so far. My time line there was 18 to 24 months and that remains the case today. However, the announcement by the Indian government in September could provide near-term momentum for these two ETFs, especially if the program is to be implemented sooner rather than later.

DISCLOSURE: Author is long TAN       

July 20, 2009

Grid-Based Energy Storage; Notes, Questions and Heresies from Storage Week

John Petersen

Last week I had the pleasure of participating as a panelist in Infocast’s Storage Week and attending four days of presentations by industry executives, national thought leaders and policymakers. While most of the presentations were too detailed and specific for a blog about energy storage stocks, there were a few high-level discussions that may be interesting to readers and while I'll never qualify as a journalist I can at least share some of the thoughts I jotted down.

Storage for Integration of Renewables

Two of the most important presentations came from Dr. Imre Gyuk, the DOE's Program Manager for Energy Storage Research, who explained that the unbuffered grid is vulnerable to collapse, noted that power outages cost American business an estimated $79 billion per year in lost productivity, and described grid-based energy storage as "a disruptive technology that will induce a paradigm shift in the utility industry." He further explained that storage has become a national priority as an integral subset of the smart grid program because of the multiple benefit streams it offers utilities in the form of frequency regulation, peak shaving, energy management, and transmission and distribution system upgrade deferral.

In his presentation, Dr. Gyuk specifically asked participants to support S. 1091, the Wyden Bill, which will provide a 20% investment tax credit for grid connected storage facilities that have at least 2 MW of capacity and can deliver 500 kWh for a period of 4 hours; makes utility-owned storage facilities eligible for clean renewable energy bonds; and provides a 30% investment tax credit for residential energy storage equipment. When the new subsidies are coupled with existing provisions that provide investment tax credits for storage system manufacturing facilities; ultra-rapid depreciation on eligible projects; and a short-term program that will offer cash subsidies to renewable energy storage projects in lieu of tax credits, the potential impact is massive.

In his discussion of the challenges associated with integrating intermittent renewables into the power grid, Dr. Gyuk explained that the peak-efficiency hours for both wind and solar do not mesh well with periods of peak demand for electric power. In the case of wind, the peak efficiency is usually at night when customer demand is lowest. In the case of solar, peak efficiency is usually around noon. Since peak demand typically occurs at about 4 P.M., Dr. Gyuk explained that short-term storage to shift power availability from off-peak to peak hours significantly increases both the usefulness of intermittent power sources to utilities and the economic returns to owners of those generating assets.

Community Energy Storage

Another important presentation came from Ali Nourai, AEP's manager of distributed energy resources who provided an overview of AEP's new Community Energy Storage (CES) program. In discussing the CES program, Dr. Nourai explained that the concept is "technology neutral" and emphasized that system reliability and "commodity priced batteries" would be critical drivers. He also noted that if PHEVs and EVs follow their expected development path, the batteries used in CES installations would likely be the same batteries used for automotive applications because widespread adoption in the auto industry would drive battery prices down to a level where they would likely be attractive to utilities. The key factors that Dr. Nourai stressed as critical for the CES program were:

  • Improved safety and security;
  • Increased customer reliability and value;
  • Optimized realization of multiple value streams;
  • Simplified integration of distributed power generation;
  • Simplified budgeting for smaller neighborhood projects; and
  • Simplified purchasing decisions by lower-level personnel.

Since the CES proposal contemplates installing batteries in a standard sized transformer box and assumes that Li-ion batteries will become a dominant technology for PHEVs and EVs, it clearly gives a short-term advantage to Li-ion battery developers who can make products that will fit in a limited volume. I remain skeptical about whether Li-ion battery technology will ever be robust enough or cheap enough for widespread adoption in the automotive industry and I wouldn't be surprised to see the volume constraints relaxed over time to facilitate the substitution of flow batteries and advanced lead-acid batteries. Seriously, does anyone really care whether the ugly green box hiding behind the shrubs is 3' by 3' instead of 4' by 4'? For the time being, the CES program favors Li-ion technology by imposing size constraints that have nothing to do with performance. It will be interesting to see how the program evolves as the cost and performance profiles for various battery technologies become clearer.

Energy Storage Heretic

On the third day I had an opportunity to play devil's advocate during a presentation by Mark Peters, the Deputy Associate Laboratory Director for the Li-ion battery development program at Argonne National Laboratories. During the question and answer session, I explained that for several months I've been suggesting that the inflection point for Li-ion batteries seems to be when you put a plug on a car because until you get to an all-electric drive train, the weight and volume differences don't justify the additional cost. Mr. Peter's response came as a pleasant surprise to me because he basically said "While there are members of my staff who would probably disagree with you, I tend to personally believe that your assessment is reasonable and the sweet spot for Li-ion batteries arrives when you add a plug."

By the afternoon of the fourth day, I had lapsed into full heretic mode for a panel discussion on the future of vehicle to grid technology. I think it came as a bit of a shock when I said "I don't believe V2G will happen because I don't believe PHEVs and EVs will happen in anything that even remotely resembles current plans." I then laid out the simple case against PHEVs and EVs as follows:

  • The principal goal of the smart grid is the minimization of waste in the electric power industry;
  • The most wasteful activity I personally engage in is using gasoline to power 4,000 pounds of car and 300 pounds of passengers at highway speed;
  • The only activity I can imagine that would be more wasteful is using batteries to power 4,000 pounds of car and 300 pounds of passengers at highway speed;
  • While most of the conference participants can afford the $40,000 cost of an eco-bling PHEV or EV, that option is not available to over 90% of the car buying public who need to worry about things like budgets and car payments;
  • There are 6 billion people who live in crushing poverty and for the first time in history most of them understand that there is more to life than subsistence farming;
  • As the 6 billion become consumers, our biggest challenges will be finding relevant scale solutions to shortages of water, food, energy and virtually every commodity you can imagine;
  • Last year 23 million electric bikes and scooters were sold in China and those E2Ws used the same battery capacity that one million American style PHEVs would have required;
  • From the perspective of a foreign government planner, providing mobility for a million wasteful Americans is not as important as providing mobility for 23 million locals who have more reasonable demands and aspirations; and
  • From the perspective of raw economics, a purchaser who needs a small battery pack can afford to pay a higher price per watt-hour than a purchaser who needs a large battery pack, which will leave PHEVs, EVs and grid-connected applications at the bottom of the food chain rather than at the top.
I wonder if they'll invite me back as a panelist for next year's conference.

July 19, 2009

Clean Energy Stocks Shopping List: Solar Stocks

The market correction I've been expecting seems to have begun.  If it continues, I will start buying again.  Here are five solar (and solar balance of system) stocks I'd buy at the right price.

Tom Konrad, Ph.D., CFA

This article continues my Clean Energy Stocks Shopping List series.  So far I've brought you:

Long-time readers will know that I don't focus on solar because I feel that too many other analysts cover the sector, and so it is much more difficult to gain an informational advantage.  I expect the price drops in the cost of photovoltaic modules, caused by efficiency gains from thin film producers such as Ascent Solar Technologies Inc (ASTI) and First Solar Inc (FSLR) and from increased solar grade silicon supply continue.  For instance, LDK Solar (LDK) is having trouble with decreasing revenues despite increased demand.  This trend should benefit sellers of balance of system components, such as inverters, something which many investors considering solar plays are unlikely to consider.

I'm also a long time fan of Concentrating Solar Power (CSP), mainly because it is the only dispatchable form of renewable electricity that has no practical limitations on scale.  My optimism is fueled by the Department of the Interior's recent move to speed solar development on public lands, something which has been a major roadblock to CSP.

#1 Solar Millennium AG (SMLNF.PK) is a proven project developer, having completed two 50 MW CSP plants with 8 hours of thermal storage in Spain.  When I wrote about Solar Millennium in May, the stock was trading at $18.  I didn't buy, because I was already becoming bearish about the short term market outlook, but readers who did have seen 80% gains, due to a deal with Southern California Edison to build two 242 MW CSP plants, and the growing momentum of the Desertec initiative.  I still like the company, but I don't like the price, so I'm waiting on the sidelines.

If Solar Millennium's stock does not drop to a point where I again feel comfortable, I can continue to participate in CSP through the back door with my Electricity Transmission picks. More than any other form of renewable electricity, CSP will need a massive investment in transmission infrastructure.  The best solar resources for CSP are in deserts, mostly far from the large electric load centers (with the exception of the desert Southwest and Southern California.  In order to achieve its potential of balancing fluctuations from other renewable energy sources, we will need continent-wide networks of powerful electricity transmission, as envisioned by the Desertec initiative, and North American grand solar plans.  Such plans typically call for High Voltage Direct Current transmission, in which Siemens (SI) and ABB Ltd. (ABB) lead.

#2 SatCon Technology (SATC) is a leading supplier of inverters for large scale Photovoltaic and Wind farms.  The company is not currently profitable, although analysts currently expect profitability in 2010.  Between then and now, Satcon needed to find the money to fund at least another year of operating cash losses, which amounted to $10M in 2008.  On July 3, the company raised $25M in additional preferred and common equity capital, which is enough to give the company a comfortable cushion.  

The stock seems reasonably valued at the current $1.70, but a market decline will probably knock SatCon back with everything else.

#3 Power-One, Inc. (PWER) is far more diversified than SatCon, producing a wide range of power conversion products in addition to renewable energy conversion. They serve both commercial and residential markets with their inverters, and their power converters for electronics are ubiquitous. 

They are also not currently profitable, but they have substantial cash and recently raised more through a private offering, so they should only need to raise further cash if it comes on favorable terms.  

Renewable energy is still only a small slice of their business (only part of the 16% of revenues in their "other" segment), and so Power-One is still mostly a bet on the IT market.  But the strong balance sheet makes this one worth watching.  I especially like the fact that two of the directors have been buying shares.

#4 Sustainable Energy Technologies (STG.V) is a development stage company working to use a massively parallel approach in order to achieve a higher electricity output from PV farms, with their technology especially targeted towards the fastest growing segment of PV, thin film.  The company is not particularly well capitalized, with less than a year's worth of operating cash on the balance sheet, and the stock could easily be knocked down if they are forced to raise capital on unfavorable terms.  However, an investor who uses such an opportunity to buy shares on the cheap will have bought a low-cost, highly leveraged thin film solar play.

#5 Advanced Energy Industries (AEIS) is another diversified electronics play, which not only does power conversion for the solar market, but also power conversion for PV manufacturing.  They also sell liquid and gas control systems and thermal instruments.  The solar market accounts for about 20% of their sales.  

Their solar inverters (introduced only in 2007) are particularly efficient, having achieved record ratings from the California Energy Commission, an advantage which should enable them to gain market share.  With positive cash flow and a strong balance sheet, AEI seems to be the safest way to play the solar Balance of System.

DISCLOSURE: Tom Konrad and/or his clients own SI, ABB, SATC, STG.

DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

July 09, 2009

$3 Billion For Cleantech & Alt Energy

Charles Morand

The DOE made public earlier today the amount of money that will awarded to clean power projects in lieu of the usual tax breaks: $3 billion.

This will allow project proponents to receive a direct cash grant now instead of a Production Tax Credit or an Investment Tax Credit later on. The guidance document notes the following:

"Section 1603 of the Act’s tax title, the American Recovery and Reinvestment Tax Act, appropriates funds for payments to persons who place in service specified energy property during 2009 or 2010 or after 2010 if construction began on the property during 2009 or 2010 and the property is placed in service by a certain date known as the credit termination date (described more fully below in the Property and Payment Eligibility section). Treasury will make Section 1603 payments to qualified applicants in an amount generally equal to 10% or 30% of the basis of the property, depending on the type of property."
This is the cherry on a sundae of cash handouts announced over the past few months for the alt energy and cleantech industries. Solar and wind installations - which account for the lion's share of alt energy investments - have yet to come back to life in any significant way. It is hoped by both government and industry people that this new measure will provide sufficient impetus in the near term to carry the sector through the remainder of the recession.

To be continued... 

May 26, 2009

Doing Solar Incentives Right

Different solar incentives encourage different types and locations of solar installations.  Better solar installations will result if we first decide what we want from solar, and then choose the solar incentives we use to match.

Tom Konrad, Ph.D.

Choosing Carefully

This article is based on a presentation I gave at Solar 2009 [11.7 MB].  As with wind, the current incentives for Solar photovoltaics are good for encouraging more solar, but they are less effective at encouraging better solar.  Jigar Shah, founder of SunEdison and Jigar Shah Consulting, told the audience that they should be very careful in calling for a Feed-in-Tariff for solar, saying that "Pigs get fed, hogs get slaughtered," in his keynote address at that same conference.  He was concerned that Germany might become the market of last resort for solar PV because of the supply glut in 2009, and that their government might decide to put a hard cap on the total installations under Germany's Feed-in-Tariff in response.

What do We Want?

Before we advocate for a solar incentive we should look at what we want the incentive to accomplish.  I don't mean the obvious facetious answer "more solar."  James Groelinger, the former President and CEO of EPV Solar, speaking on a panel on investment opportunities in solar, said, "What counts is not modules, systems, megawatts, or capacity; it's energy.... in America we've been rewarding watts installed, while Germany is rewarding kWh produced.  Germany gets approximately 50% more kWh per watt installed than the US, after adjusting for the lower solar resource."

I agree that the relatively low energy production on US systems is probably an indicator of perverse incentives, but Solar should not be considered as solely an energy resource.  For instance, the correlation of PV output with demand is valuable in its own right, and the greater that correlation, the more valuable the energy produced will be, even if greater correlation comes at the expense of slightly lower output.

 We should look at what we want from solar.  We should ask, "What are solar PV's benefits and weaknesses compared to other technologies?"  How important these benefits and disadvantages are greatly depends on how solar is installed.

Benefits of Photovoltaics

Problems with Photovoltaics

Price Stability Current high cost
No Carbon Emissions High Embodied Energy
Timing: Correlated with demand Cloud Transients
Distributed: can be used to defer T&D upgrades Distributed: May result in stranded T&D assets
Timing: Good complement to Wind
Can be installed on low-value surfaces (roofs, and BIPV)

A look at current incentives show that more could be done to take advantage of more of these incentives.

Incentives for energy production

Many incentives for solar involve direct payments per kWh produced.  These include Renewable Energy Credits (RECs) which consumers often use to buy green power, Renewable Electricity Standards (RES), Feed-in-Tariffs (FIT), such as the one just passed by Ontario and the one in Germany which James Groelinger credits for the higher energy output of German solar farms.   Such incentives clearly encourage production of more energy (kWh), but by not differentiating between when or where the energy is produced, they can lead to perverse incentives.  Energy production incentives typically lead to:

  1. South-oriented panels which produce more, but often lower-value, electricity than panels oriented to the southwest.  
  2. Large clustered farms which may have quick fluctuations in output when a cloud passes over (cloud transients.)  A recent study, Quantifying PV Power Output Variability presented by Tom Hoff  on the same panel where I presented showed that, if a cluster of PV installation  is sufficiently dispersed (relative to cloud speeds), the variability of solar output from cloud transients will be reduced by a factor of approximately the square root of the number of installations.
  3. Installations may cluster on the wrong distribution feeders.  If a local electric substation is nearing its capacity at peak times, placing PV on the distribution system of that substation can allow the utility to delay a very expensive substation upgrade.  On the other hand, most new substation are likely to have significant extra capacity, and placing PV in the areas served by that substation will force the utility to pay back the investment on that substation over a smaller number of kWh, a problem referred to as stranded assets. 
  4. The carbon intensity of the electricity displaced by power from PV will vary with time, and, if cloud transients mean that gas turbines must ramp up and down quickly, that will also decrease turbine efficiency and change the carbon intensity of displaced electricity.

From an economic perspective, it makes sense to subsidize peak power production which can help delay a substation upgrade more than pure kWh production, especially if it is from an installation which might strand transmission and distribution (T&D) assets.

Net Metering

Net metering, or allowing the PV owner to sell electricity back to the grid at the same price he pays for it, is also a subsidy.  Net metering may not compensate the utility for the cost of making sure that the power is always there, depending on the tariff.  This is especially true on typical flat-rate residential tariffs, where payments are typically a fixed price per (net) kWh used, and produces incentives very much like the Energy Production incentives discussed above.

A Time-of-Use (TOU) tariff, where a kWh produced when demand is high receives a much higher value than one produced when demand is low, is much better for compensating the utility for the demands a user places on (or removes from) the system.  

In contrast, a typical commercial or industrial tariff, which is based on a low charge per kWh, but a large demand charge payment based on the highest 15 minutes of demand in any given month, can produce very perverse incentives.  Because of cloud transients, PV systems seldom will do much to reduce demand charges, and the low energy payment does little if anything to compensate for the PV investment.  This means that many otherwise ideal spaces on commercial properties are not economically viable for PV installations.  Ron Binz, the Chairman of the Colorado Public Utilities Commission, uses the example of the corners of square farm fields which are irrigated by rotating sprinkler irrigation.  Since farms are normally on demand charges in Colorado, these large areas of otherwise unused, flat space near electric distribution infrastructure are unavailable for PV installations.

Creative tariff structures might be used with net metering to help distribute solar where it could do the most good in helping to defer T&D upgrades.  This could be done with higher per kWh charges for T&D in areas which might soon need T&D upgrades, but probably is not politically possible because of concerns about fairness.

Incentives to Reduce Carbon

If the goal for solar is to reduce global warming pollution, then the best way to do it will be to put a price on Carbon.  This will not only mean that a solar installation which displaces high-carbon electricity (such as coal or inefficient natural gas peaking turbines) will receive a higher incentive than an installation which displaces low-carbon electricity (such as efficient natural gas combined cycle turbines or nuclear,) but it will also take into account the high embodied energy of crystalline silicon PV (if produced using fossil fuels) relative to the lower embodied energy of thin-film technologies.

One weakness of pure carbon pricing (at least from the perspective of solar advocates) is that it does more to encourage less expensive technologies that have quicker energy paybacks.  But if the goal is to reduce overall carbon emissions, that is precisely the result we want.  To take into account the other benefits of solar, other types of incentives will need to be used in conjunction with a carbon price.

Incentives for Investment

Incentives for investment, such as the Investment Tax Credit (ITC) and accelerated depreciation, help with the high cost of PV, but if used alone, without other incentives to reduce carbon or produce peak power, may lead to many installations which don't do much of anything, as highlighted by James Groelinger above.  They are simply an incentive to spend more on solar installations, even if the energy produced has very little value.

By reducing the effective cost of PV, they also blunt some normal market incentives.  Solar manufacturers and installers have less incentive than they otherwise would to cut costs, because their customers are only picking up a fraction of the bill.  Part of any incentive for spending on solar will go to the installer and manufacturers in the form of higher prices.  While this may be a good thing if the goal is to grow the solar industry, a large solar industry is only as useful as the solar installations it provides.

Overall, incentives for investment do not produce many distortions to incentives, and can be an effective way of reducing the cost of solar, so long as they are used in conjunction with other incentives which will assure that the solar installations produce valuable power.


If we want to encourage solar,  we can, and there are many potential benefits to society.  By understanding those benefits, and by not being blind to the drawbacks of solar, we can design incentives which encourage just those benefits we want at relatively low cost, both in terms of price and in terms of the costs that the electric system must bear to integrate solar.

Ask for solar, but be careful how you ask.

May 25, 2009

From Solar 2009: Investment Opportunities in Solar Stocks: Solar Millennium (SMLNF.PK)

Tom Konrad, Ph.D.

This is the third in a series of entries on opportunities in solar stocks, based on a panel at Solar 2009.  The the first article introduced the panelists, and took a look at the solar sector as a whole.  The second was about First Solar.

Allen Goodman  on Solar Millennium (SMLNF.PK)

"Project developers [such as Solar Millennium] stand out because of their ability to have a relationship with the customer."

Peter Lynch on Solar Millennium (SMLNF.PK)

"I liked Solar Millennium before it ran up to $90 last year, I liked it at $90, and I like it today at $16."

Investment Action

Solar Millennium closed on May 15 at $17.75.  That's over $16, but a lot lower than $90.  If you're looking to buy a solar stock despite the scary market conditions I discussed in the first part of this series, Solar Millennium should be at the top of your list.  Since it's a Concentrating Solar Thermal Power (CSP) developer, an exciting technology I recently highlighted for its ability to produce dispatchable power.  It's one of the rare developers that has show it can build real plants (that differentiating factor Allen Goodman spoke of.)


DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.


May 20, 2009

From Solar 2009: Removing The $2,000 ITC Cap

Charles Morand

Like Tom, I attended part of the Solar 2009 conference last week. One of the most interesting presentations I heard was by Andy Black, CEO of OnGrid Solar, on the potential impact on residential solar installations of removing the $2,000 ITC limit (link to the actual paper). Prior to changes in October 2008, ITC tax credits for rooftop solar PV installations were capped at $2,000. In the author's own words:

This paper presents revised and expanded financial analyses of residential cases [...]. It will look at Internal Rate of Return (IRR) only (for simplicity of cross comparison) [...] accounting for the increase in the ITC and brought up-to-date with current electric tariffs, incentives (federal, state & local) and, as applicable, Solar Renewable Energy Certificate (SREC) values. The paper then expands coverage to additional US states (NJ, NC, CT, AZ, HI, CO), and also performs a couple of “what if” scenarios to illustrate the effects of changes in individual variables.

The following two tables sum up the author's findings.

There are certain caveats to these results that are discussed in the paper. But if Andy Black is within a 100 basis points of IRR in most cases, we're looking at some very interesting numbers. Residential installations currently account for about 35% of installed solar capacity in the US so this segment is material to the industry.

Ground-mounted and commercial installations will most likely account for the majority of incremental capacity added over the next few years. Credit difficulties, however, are hitting both segments particularly hard (especially ground-mounted). Residential might thus represent a glimmer of hope for the solar PV industry, especially given that module prices are falling rapidly (see the second table).

With the meltdown in equities that occurred in the wake of Lehman Brothers' failure last fall, resulting in a "lost decade" (read: flat for those who bought and held) for the S&P 500 and the Dow, many households are seriously rethinking the wisdom behind putting one's savings in equities. Cash is a lousy asset class, especially in a world where the price of energy will drive crippling inflation, and bonds often provide mediocre real returns. This kind of thinking by German households, prompted by generous government incentives, drove massive amounts of capital into the solar PV industry in that nation.

If households, because of aggressive incentives, are able to generate pre-tax IRRs of upwards of 10% for 10 to 20 years in a nearly riskless venture, I wouldn't be surprised to see some serious money flow into this area. The states covered in this analysis account for about 23% of total US population, an appreciable number. Local governments and utilities have already, in some cases, scaled back incentives following the removal of the $2,000 cap, but even after these reductions households are still be looking at double-digit or near double-digit returns in certain cases.

A surge in demand driven by the residential sector would benefit primarily the silicon-oriented firms with their higher efficiencies, especially in a context where less generous local and utility incentives are counterbalanced by falling module prices.


From Solar 2009: Investment Opportunities in Solar Stocks: First Solar (FSLR)

Tom Konrad, Ph.D.

This continues a series of entries on opportunities in solar stocks, based on a panel at Solar 2009.  The first article introduced the panelists, and took a look at the solar sector as a whole.  The others focus on individual companies.

Pradeep Haldar

  • Investors remain bullish on thin film technologies such as CdTe (First Solar's technology.)
  • CdTe currently has the lowest cost, but it may not have long term sustainability.

Peter Lynch on First Solar (FSLR)

  • If First Solar ever stumbles, gravity will take over. They could fall 50% in a day.
  • They are up too high with the P/E's, which is why they are difficult to invest in.
  • They have a differentiating factor- the lowest cost- and investors like that.

Investment Action

If you decided to short a solar stock after reading part 1, First Solar should be up on your list.  The next entry will be a solar stock the panel liked. (Link broken until published.)


DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.


May 15, 2009

From Solar 2009: Investment Opportunities in Solar Stocks, Part 1

Tom Konrad, Ph.D.

The last panel I attended at Solar 2009 focused on investment opportunities in Solar.  This is the first of several entries with ideas from the speakers.   They were:

Each had perspectives on the solar (mostly photovoltaic (PV) industry, and struck me as very knowledgeable in the field.  The caliber of the industry and investment knowledge on display impressed me, so I'll share with readers some of the panelists thoughts.

Peter Lynch on the Solar Sector

  • Wall Street likes “techie glitz” of PV because it means they really don’t have to focus too much on reality.
  • In the last 8 weeks, solar stocks have gained 72% on average.  This is unsustainable.
  • Solar Stocks have a very bright future, but you'd better be a trader.
  • All stocks took off in early march.  When stocks move the good ones move first, and others get swept up.  I believe that the Solar stocks were ones that got swept up. 

Allen Goodman on the Solar Sector

  • There are lots of claims [of low-priced PV modules.]  If they can [produce them at that price], that's great, but the challenge is on the companies.
  • The key to picking profitable solar companies is to look for ones with key differentiating factors.  For developers, this may be the ability to have a relationship with a customer, obtain financing, and do permitting.  The other end of the spectrum is to have an edge with technology.

Investment Action

I agree with Lynch that if you're going to make money in Solar stocks today, you have to do it as a trader.  I also agree that the current move is unstainable (I recently called it a bear market rally.)  So if you are a trader, the trade today should be on the short side.  Future articles in this series will have a couple stocks that the panel panned, or you can short the sector as a whole, with either of the Solar ETFsTAN or KWT.


DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

April 19, 2009


Tom Konrad, Ph.D.

When Solaren announced they are seeking PUC approval for a power purchase agreement (PPA) with PG&E (NYSE:PCG) for solar power from outer space, I wasn't too surprised.   California utilities signing deals for large solar projects which quite likely may never be built is something of an industry trend. 

At a Concentrating Solar Power (CSP) conference last fall, John White, the Executive Director of, said that competitive solicitations for power supplies in California are becoming a sideshow, and that the "Process lacks credibility among the most serious and qualified developers." 

Rainier Aringhoff, the president of one of those serious and qualified developers, Solar Millennium (SMLNF.PK), agreed.  "Building CSP plants with storage is only with in the reach of a few companies," he said, "and these companies require regulatory certainty."  If the PUC is approving renewable projects that are unlikely to be built, how likely are they to enforce California's RPS if utilities fail to meet them because of developers' failing to deliver?

Sun, Sun Everywhere, But Not a Gigawatt Built

There are more than technical and financial barriers to development of large CSP projects.  According to Aringhoff, the transmission regulatory bodies FERC and CAISO need to sort through all the interconnection applications and determine which are for otherwise viable projects. They should also create land use corridors along main transmission trunks throughout the western electrical system which can be more easily permitted for renewable energy.  A full 5,000 MW of renewable energy projects are waiting on transmission upgrades.

Land use rules are also important.  One of the best areas for solar development would be the Mojave Desert, given its high insolation and proximity to California's population centers.  Unfortunately, the West Mojave Plan actively hinders renewable development, with only one percent of the land area set aside for renewable development.  Five percent is dedicated to off road vehicle recreation.  

As John White said, "It’s amazing that we can take a disturbed piece of ground where there is development across the street and the Mojave Desert commission will say 'No, we have to protect the Mojave ground squirrel.'"

Given these barriers, it's less surprising that PG&E is looking to space, where there are no endangered ground squirrels.

I'm not a space exploration expert, but solar from space seems fraught with technical risk, and Solaren seems to be planning to start with a commercial scale project (200 MW, to be scaled up to 1700 MW.)  If the technical problems were solved, it would still be at risk of destruction by space debris and any country with a functioning space program.  Assuming such a satellite could collect about ten times as much energy per acre as a ground-based plant, it would still need to cover 100 acres of increasingly cluttered space in order to produce 200 MW, or 850 acres for 1700 MW, making it likely to suffer regular impacts.

Would investors in any climate be willing to fund such an essentially unknowable venture? Perhaps they would if some deep-pocketed entity decided to take on much of the risk, as United Technologies Corp (UTX) is doing with Solar Reserve.  But, according to Jonathan Marshall, a PG&E spokesman, "There is no risk to PG&E ratepayers for this."  If there is no risk for ratepayers, there is no protection (at least from PG&E) for Solaren investors.

Of the companies that have signed PPAs with California utilities, Stirling Energy Systems' 1750 MW of projects have been most often cited to me as unlikely to be built.  They have signed PPAs with San Diego Gas & Electric and Southern California Edison, but if these projects do not get built, they will probably not be alone in that.

Strategic Shifts

In contrast, Ausra, with their innovative Compact Linear Fresnel Reflector (CLFR) geometry, has not been signing PPAs they won't be able to fill.  Seeing the harsh financial climate, they took the logical step and decided not to develop their own plants, but rather to sell equipment into the process heat market.  I recently wrote skeptically about this while pondering the future of Concentrating Solar Power, but not because the move is foolish.  The question in my mind is if the move will be enough.  Can a CSP equipment manufacturer be able to ride out the storm by selling equipment to power generators or industrial customers with other, less capital intensive options that work around the clock?

Other solar developers think so.  They are following this path and choosing to reduce their financial risk and need for capital by becoming equipment suppliers.  Skyfuel has always been a technology and equipment provider, rather than a developer.  The recent announcement from GreenVolts shows a similar shift in emphasis to selling equipment (although GreenVolts is not quite comparable to Ausra and Skyfuel, being a CPV startup that sells electricity (not heat) producing equipment.)  

In addition to the financial crisis, these shifts may have been encouraged by a recent change in the Investment Tax Credit rules which allows utilities to own projects and still gain the tax benefits.  But unless someone is willing to take on technical and regulatory risk, we're going to see a lot fewer of these projects built than we would like. 

If we can't build new transmission, and allocate more than 1% of the Mojave to renewable development, we may just have to hope for solar electricity from space.  Unfortunately, as Brett Steenbarger said in a recent interview "Hope is comforting, but ultimately is not a particularly effective coping strategy."  

Hope's not a good coping strategy for climate change, either.

DISCLOSURE: The author has a long position in UTX.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

April 16, 2009

The Future Shape of CSP

Parabolic Troughs have dominated Concentrating Solar Power (CSP) until recently, but several companies are vying to replace them. Will the upstarts succeed, or will incumbency and improvements to trough technology ward off the competition?

Dr. Arnold Leitner, CEO of Skyfuel, Inc., thinks the battle for dominance of CSP will be "winner-take-all."

The technology which can deliver power when it is needed at a reasonable price should triumph. Photovoltaic (PV) technologies are rapidly producing price reductions, and can be used almost anywhere, but only produce power when the sun is shining. In contrast, CSP is still cheaper than PV enables inexpensive thermal storage, with the promise of dispatchable power to compensate for the variability of other renewable power sources and demand. Dispatchability assures CSP with storage a place in the eventual energy mix.

Heat Transfer Fluids

The ability and efficiency of a technology to accommodate thermal storage (and provide dispatchability) is a function of the heat transfer fluid and working temperature.

Three heat transfer fluids have been demonstrated to date: Steam (in power towers and troughs) mineral oil (in most parabolic trough plants,) and molten nitrate salts (in power towers.) The working temperature for steam is limited by the potential for corrosion. Molten salts and oil break down at high temperatures, with molten salt and steam capable of achieving the highest temperatures (about 565° C for nitrate salts.)

Companies such as BrightSource and eSolar are currently working to commercialize supercritical steam in power towers.

Lower temperature steam is also the working fluid for Ausra, a company working to commercialize the Compact Linear Fresnel Reflector (CLFR) geometry. CLFR breaks up a trough into a series of narrow, nearly flat, reflectors saving on the high cost of carefully focused troughs.  Ausra recently announced that they were refocusing on becoming a technology and materials provider, rather than building solar farms on their own.  An industry observer who prefers to remain anonymous thinks that this will mean the end of the company for practical purposes, since the process heat market is very difficult to sell into, and few companies are willing to back expensive, untried technology, especially from a third party vendor. Ausra is hardly alone in grappling with scarce financing in a capital-intensive industry, and the same could be said about several competitors.

Oil is commonly used as the heat transfer fluid in parabolic trough systems because it does not freeze at night (nitrate salts freeze at 220° C) and operates at lower pressure than steam. According to Bill Gould, Chief Technical Officer of Solar Reserve, such systems have peak operating temperatures of 375°C.  Solar Reserve is working to commercialize the nitrate salt/power tower combination which was demonstrated at DOE's Solar Two in the late 1990s, for which Bill Gould was the project manager.

Nitrate Salt


60% NaNO3 and 40% KNO3 by weight.

Melting Point

221 °C

Boiling Point

Has very low vapor pressure, but begins to decompose around 600 °C


$90-$160/kWe (trough); $30-$55/kWe (tower)

Other uses


Thermal Storage

The best established thermal storage system is two-tank molten salt, according to Greg Glatzmaier, a Senior Engineer II on the National Renewable Energy Laboratory's (NREL) CSP research team. Pressurized steam or oil have also been used, but at higher cost per kWh.  Pressurized steam is only practical for short term buffer storage, according to Greg Kolb, a Distinguished Member of Technical Staff National Solar Thermal Test Facility.

Commercial projects using oil as a heat transfer fluid and molten salt for thermal storage include Nevada Solar One and Solar Millennium's (SMLNF.PK) Andesol parabolic trough plants. Solar Millennium is currently the only pure-play publicly traded CSP company I'm aware of.) 

According to Gould and Glatzmaier, the thermal storage systems systems at the Andesol plants suffer 7%-10% round-trip energy losses in heat exchange. If molten salt is also used as the heat transfer fluid, then there is no need for heat exchangers, and no such heat loss. The lower working temperature of these plants also requires much more salt and larger tanks to effectively store the same amount of electricity as for a power tower, once the lower temperatures and  efficiency losses are taken into account..

Gould calculates that a trough plant will require three times as much molten salt (along with larger tanks to store it) as a power tower to store an equivalent amount of energy. With additional information from Glatzmaier, I calculate that, to store the equivalent of 1 kWh of electricity at a trough plant requires approximately $90-160 of capital cost, compared to about $30-$55 at a tower, with the variability arising from the commodity price of salt, which is mainly used as fertilizer.

The Shape of Things to Come

In terms of configuration, many experts see long term advantages in power towers. Nate Blair, a Senior Analyst at NREL says the underlying efficiency advantage of towers arising from higher working temperatures will lead to more power from a similar investment in hardware. A Rankin cycle turbine will operate at about 37% efficiency for troughs, or 41% for a tower, meaning a tower can produce approximately 8% more electricity from the same amount of heat.

The combination of energy storage using molten salt, no heat transfer losses, and the thermal efficiency of power towers, point to power towers with molten salts as the working fluid as the long-term favorite.

There are challenges. Only parabolic troughs are a proven, bankable technology. Dr. Leitner estimates that it will cost between $500-$700 million to commercialize a new technology. Solar Reserve plans to overcome this barrier with a performance guarantee from United Technologies (NYSE:UTX) up to the value of the contract, or $200 million, but in the current financial climate financing remains difficult.

SkyFuel has plans to use the innovative reflective film ReflecTech in a hybrid of parabolic trough and CLFR configuration called a Linear Power Tower (LPT). By increasing the diameter of the receiver they hope to reduce heat loss and allow the salt to stay molten for longer periods. ReflecTech enables relatively inexpensive, large parabolic mirrors to be used in the CLFR configuration, with 10 mirrors, each about 3 meters wide focused on each receiver. This should achieve 85x magnification, sufficient to reach temperatures comparable to those in a power tower.

SkyFuel hopes to commercialize the LPT incrementally, by first testing it as part of existing parabolic trough plants using oil as the heat transfer fluid. Might the parabolic trough triumph by incorporating the advantages of power towers?

Tom Konrad, Ph.D.  

DISCLOSURE: The author has a long position in UTX.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

April 08, 2009

Why CSP Should Not Try to be Coal

Joe Romm, at the influential Climate Progress blog, has hit on a formula for countering the coal industry's claims that we need baseload power sources.  Since Concentrating Solar Power (CSP) in conjunction with thermal storage can be used to generate 24/7 or baseload power Joe has renamed it "Solar Baseload."   This is win-the-battle-lose-the-war thinking.  While it does neatly counter the argument we need coal or nuclear, since there are renewable power sources which can produce baseload, such as CSP, Geothermal, and Biomass.  I fell into this coal-industry trap myself in a 2007 article about Geothermal, as did AltEnergyStocks Editor Charles Morand in an article on CSP.

Dispatchable Solar, not Solar Baseload.

Continuous power from solar energy was first demonstrated at the Department of Energy's (DOE) Solar Two project in the late 1990s. I recently interviewed Bill Gould, CTO of CSP company Solar Reserve.  Solar Reserve is now working to commercialize the molten salt thermal storage and solar receiver technology demonstrated at Solar Two, where Bill Gould served as project manager.  

According to Gould, DOE's intent at the Solar Two project was to demonstrate dispatchable power, not baseload power.  Dispatchable power is power that can be called on when needed, in contrast to baseload power, which is essentially always on.  As a demonstration, Gould's team throttled back the output from Solar Two to 10% of capacity, and this allowed the plant to produce power continuously for a couple weeks until it was interrupted by several consecutive days of cloudiness.  But, in essence, it was a stunt: baseload power is far less valuable than dispatchable power.

The coal industry says that we need baseload power because our refrigerators still come on in the middle of the night.  This is like saying we should have the water running constantly in the kitchen sink because we may get thirsty at any time and want a drink.  Put in these terms, the assertion that we need baseload power is clearly nuts: what we need is controllable power that's there when we need it, but is not wasted when the lights are off and the fridge is not running.  

The Problem With Baseload

Last spring, I discussed one of the problems with baseload power.  The more baseload power you have, the harder it is to use variable generation such as photovolatic (PV) solar and wind power.  Or, from the baseload generator's perspective, the more variable generation on the grid, the less baseload power can be added.    This fact has not been lost on the UK's nuclear industry, which is fighting to get wind targets lowered.

To illustrate the incompatibility of baseload and variable energy sources, I downloaded 4 days of real demand data (January 1-4, 2008) from ERCOT's website.  I then simulated production curves for two variable sources, one designed to mimic solar PV (only on during the day, with some variability due to clouds) and a more random type of generation to simulate wind.  I then fixed the amount of baseload power at 25,000 MW (68% of demand) and 5,000 MW (14% of demand) in each of two scenarios, and saw how much wind and PV the remaining demand could accommodate with the constraint that total generation could not exceed demand.



As you can see, when I dropped baseload power from 68% to 14% of demand, I was able to increase the power of variable sources from 10% to 36% of demand.  Almost half of the drop in baseload power was filled by variable power sources, with the balance requiring an increase in dispatchable generation.  If you'd like to try your own scenarios, you can download my Excel spreadsheet here.

Better than Baseload

It should be clear that  dispatchable generation is a truly premium power source.  Dispatchable generation, like energy storage, long distance transmission, and demand response, all allow the grid to accommodate more variation in both power supplies and in demand.  In a carbon-constrained world, where we want to use as much variable generation such as wind and PV as possible, zero carbon, dispatchable power from CSP can do far more to help us decarbonize the grid than CSP baseload.

Baseload power is part of the problem; it's not the solution.  We should not denigrate CSP by pretending it is only a substitute for coal or nuclear.

Concentrating Solar Power is much better than baseload.

Tom Konrad, Ph.D.

March 28, 2009

Do You Need To Invest In Oil To Benefit From Expensive Oil?

Two months ago, Tom told us how he'd dipped a toe into the black stuff (i.e. bought the OIL etf) on grounds that current supply destruction related to the depressed price of crude oil would eventually lead to the same kind of supply-demand crunch that led oil to spike during the 2004 to mid-2008 period.

If you need evidence that the current price of crude is wreaking havoc in the world of oil & gas exploration, look no further than Alberta and its oil sands. The oil sands contain the second largest oil reserves in the world after Saudi Arabia, but more importantly will account for the lion's share of incremental supply as conventional oil production continues to decline. The province's economy, which had been growing at a breakneck pace for the past five years, has come to a grinding halt: employment insurance claims grew by twice the Canadian average over the past year; personal bankruptcies jumped by 61%; and home foreclosures are on the rise. This is the result of significant project cancellations that will no-doubt limit Alberta's ability to ramp-up output once prices climb back again.

It is thus no surprise that Cambridge Energy Research Associates and others are warning about the economic hazards of curtailing investments into conventional and alternative energy.  

Alt Energy & Fossil Energy

Oil being the most followed of the energy commodities, it is no surprise that it is receiving most of the media attention. Arguably, natural gas and coal prices should matter more to alt energy investors than oil prices: according to REN21, of the $71 billion invested in renewable energy in 2007, 47% went into wind and 30% into solar PV. Both technologies are used for power generation (investments into transportation alternatives are comparatively small) and, in the US, coal and natural gas are the dominant fuels in power production. The relentless focus of the popular press and other pundits on the the economic case for alternative energy being closely tied to the price of crude oil is thus mostly misplaced.

Case in point, last November, a reader wrote me with a correlation analysis conducted over a 5-year period (or, where there wasn't five years' worth of data, since inception). The correlation coefficients between the returns on crude oil and those on alt energy securities were as follows: GEX, 0.19; PBW, 0.14; TAN, 0.18; and the index underlying FAN, 0.19. These are, by most measures, pretty low correlation coefficients. Given the reader's reputation, I trusted the numbers. 

Nevertheless, in alt energy investing as in life, perception is often reality. Given the many signs pointing toward a rapid escalation in crude prices - demand can and will rebound far quicker than supply - I decided to re-explore the relationship between fossil and alt energies. If a strong positive correlation can be found between alt energy investments and crude oil, natural gas and coal investments, there may not be a need to dip a toe into the black (or colorless) stuff at all - one can focus on alt energy alone and still enjoy the ride up.

In order to verify this, I ran a basic correlation analysis with the daily returns on the KOL (coal), OIL (crude) and UNG (nat gas) ETFs/ETN on the one end, and the daily returns on the alt energy ETFs on the other. I got the return data from Yahoo Finance using the Adjusted Close prices that include dividends and splits. Given the results above from our reader's analysis, I only went back six months to see if the (lack of a) relationship still held.   

OIL and UNG track the prices of futures contracts in the underlying commodities, so they are pretty decent securities to use to estimate the returns on crude and nat gas investments. KOL, on the other hand, tracks a basket of coal company stocks. It's the closest thing I could find but it's not ideal as stock returns don't necessarily track commodity returns. For instance, large mining firms will often sell a high proportion of their output through fixed-price contracts, preventing them from benefiting from sudden surges in spot prices. 

The boxes delineate general alt energy ETFs (ICLN to GEX), the solar ETFs (TAN, KWT) and the wind ETFs (FAN, PWND). There aren't any notable differences between the ETF categories, with the most significant differences being between the fossil fuel ETFs/ETN and the alt energy ETFs.   

The relationship between alt energy stocks and coal stocks appears relatively strong. However, in the absence of return data on coal, it's hard to tell whether investing in alt energy stocks (or coal stocks for that matter) is an optimal way of playing increasing coal prices. Given the structure of the coal market, with significantly less involvement by purely financial actors than in oil or natural gas markets, this is a hard one to play for retail investors, although data appears to suggest there is a play.

Though the correlation appears to have strengthened somewhat between crude oil and alt energy investments in the last six months, it remains weak enough that if someone wants to play a return to expensive oil they are still better off dipping a toe (or even an entire foot!) in the black stuff. The same holds for nat gas.

This quick and dirty analysis wouldn't withstand close methodological scrutiny. My only intent here was to see whether these relationships were worth exploring further - they are not. If you want to benefit from crude oil and nat gas price increases and have no ethical qualms about it, invest in them directly!

DISCLOSURE: Charles Morand has a long position in TAN.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

March 03, 2009

Dipping a Toe in the Golden Stuff

And I'm not talking about gold, but I liked the play on this title. Last December, I wrote about a report that claimed that solar stocks were the best play on the cleantech revolution. In that article, I analyzed the two solar ETFs: the Claymore/Mac Global Solar Index ETF (TAN) and the Market Vectors/Van Eck Global Solar Energy ETF (KWT).

At the end of the article, I said I had an open buy order on TAN. That buy order expired unfilled in January as the suckers rally progressed, but TAN then dropped to the kinds of levels I was looking for on Monday so I took a position at $5.

As I said in the December article, this is long-term. I don't expect this investment to realize its full potential for another 18 to 24 months, so patience is of essence. Of course, certain catalysts, such as a rapid rise in oil prices, could push this ETF up before then, and I would be more than happy to take a little profit if that happened (I haven't been taking a lot of that recently...). But my time horizon is two years plus here - this a play on the thesis put forth in the report that in the long run solar stocks have significant capital appreciation potential.

DISCLOSURE: Charles Morand has long position in TAN.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

December 23, 2008

Solar Stocks As the Best Play On The Cleantech Revolution? (Part II)

A couple of weeks ago, I wrote about a recent report claiming that solar PV was going to be at the fore of the "cleantech revolution." I've never doubted solar PV's potential. What I like most about it, besides the fact that it's the most abundant energy form on Earth, is the ability for solar technologies to be deployed either through the building stock as a load-abatement measure or in large arrays of panels as solar parks. No other power generation technology can be scaled simultaneously through these two routes.

Besides investments in Energy Conversion Devices (ENER) and Suntech Power (STP) in 2006, I've largely stayed away from solar PV stocks in the past two years. For one thing, the onslaught of coverage initiation from the sell-side has made it difficult to gain a real informational edge for a retail investor such as myself. Throw on top of that the onslaught of retail investor interest in the sector, and you're starting to have a very unattractive asset class as far as I go. Investing in solar has become, over the past three years, either about momentum trading or the belief that incredibly rich valuations will endure for a while.

There's no doubt that the bashing of solar stocks that has taken over the past few months has rekindled many people's interest in the sector, including my own. Although from a fundamental point of view the ugliest is probably still to come for solar, there is no doubt that the space is looking a lot cheaper than it did six short months ago. With the overall market seeming like it's begun the process of finding a bottom, is now a good time to consider entering the solar PV space for the long-run (>18 months)? Even though I do think solar will probably continue to underperform for a few more months, I have been thinking about re-entering the space as a long-term play since I mostly share the perspective put forth in the report. Moreover, since I'm a lousy market-timer, now seems like a good time to get in and I'd prefer to sit through a bit more downside than to let upside escape me because I haven't timed my entry appropriately.  

Since I haven't been following the space closely over the past couple of years, and because there is a good deal of uncertainty out there, my preferred approach is to go with one of the two solar ETFs: the Claymore/Mac Global Solar Index ETF (TAN) or the Market Vectors/Van Eck Global Solar Energy ETF (KWT). This approach allows me not to have to do a detailed analysis of any one company in particular, a process which can be very time consuming for someone not intimately familiar with the sector. Moreover, the portfolio approach inherent to ETF investing allows for a spreading of risks. I've therefore conducted an analysis somewhat similar to the one I did for wind ETFs a few months ago.

Solar ETFs              

Solar ETFs: Basic Metrics

Expense ratio 0.65% 0.65%
# securities in portfolio 25 35
Weighted avg. PE 34.5 (Sep. 30) 33.97 (Oct. 31)
NAV/closing pr (12/12) 0.987 1.008

As can be noted from the table above, the PE figures available are a bit outdated and are therefore not particularly useful. For the NAV/closing price, large discrepancies can provide interesting long (NAV>closing prices) or short (NAV<closing price) opportunities. In this case, neither shows a huge difference between asset value per unit and closing price. Both ETFs have the exact same expense ratio. 

One of the key differences between these two securities is the number of stocks within each and the relative concentration of risk. For TAN with 25 stocks, the average holding accounts for 4.00% of total fund value, whereas for KWT with 35 the average holding accounts for 2.86% of total fund value. However, the top ten holdings make up about 64% of fund value for KWT versus roughly 58% for TAN - risk is therefore more concentrated at the top for KWT than it is for TAN. Top-ten holdings for both ETFs are as follows:

Solar ETFs: Top-10 Holdings
TAN Weight KWT Weight
First Solar Inc. 11.21% First Solar Inc. 13.68%
Renewable Energy Corp AS 6.95% SolarWorld AG 9.85%
MEMC Electronic Materials Inc. 6.46% Q-Cells S.E. 7.85%
Solarworld AG 5.66% Suntech Power Holdings Co. Ltd. ADR 5.94%
SunPower Corporation 5.09% Renewable Energy Corp. ASA 5.06%
Q-Cells AG 4.89% Evergreen Solar Inc. 5.01%
Energy Conversion Devices, Inc. 4.60% SunPower Corp. Cl A 4.57%
Evergreen Solar, Inc. 4.42% PV Crystalox Solar PLC 4.52%
Yingli Green Energy Holding Co. Ltd. ADR 4.27% Energy Conversion Devices Inc. 3.95%
LDK Solar Co. Ltd. ADR 4.20% Yingli Green Energy Holding Co. Ltd. ADR 3.86%





The main thing I really wanted to examine was relative exposure to the various segments of the solar supply chain. At a broad level, my preference is for the ETF with the greatest exposure to the wafer, silicon cell and thin-film segments, all of which have higher barriers to entry because of larger technological requirements. I want to stay away from heavier weightings into the silicon end of the market because of the commodity nature of it, and the modules and installation ends of the market because of the low barriers to entry and relative labor-intensity. I thus classified stocks in the two ETFs into the following categories: silicon, wafer, cells, thin-film, module, installation, solar thermal, integrated and other. I created categories to account for the companies that span two segments, and companies that spanned three or more segments are considered integrated. "Other" is made up mostly of firms providing manufacturing technologies for solar firms.

Solar ETFs: Segment Allocation
Segment TAN (% fund value) KWT (% fund value)
Silicon 0.00% 0.00%
Wafers 16.62% 9.47%
Cells 11.61% 14.11%
Thin-film 15.81% 17.87%
Modules 2.64% 3.44%
Installation 0.00% 3.20%
Cells & Modules 10.63% 8.66%
Modules & Installation 4.66% 5.25%
Integrated 28.51% 30.36%
Solar Thermal 0.00% 1.85%
Other 9.53% 5.82%
TOTAL 100% 100%

Unsurprisingly, both firms have First Solar (FSLR), the recent poster boy for the solar PV sector's success, as their top holding. Also unsurprisingly, the largest category for both is "Integrated", as more and more firms try to extend their reach up and down the supply chain. Both ETFs are overall quite heavily tilted toward pure-play solar stocks with little in the way of indirect plays. These two ETFs don't provide as clear-cut an alternative to one another as do the wind ETFs. KWT has a slightly higher weighting in stocks in the "Modules" and "Installation" ends of the supply chain. Coupled with the higher concentration of fund value (i.e. risk) toward the top-ten holdings, that makes me lean toward TAN.    


As someone who hasn't followed the solar sector closely and am not intimately familiar with many of the companies, I'm hoping taking a position in one of the solar ETFs is a good way to benefit from the upside associated with solar's long-term potential. These two ETFs are relatively similar in terms of supply chain segment allocation, and are likely to perform in a roughly similar fashion. As I said above, I'm leaning toward TAN and have put in a buy order for it. Barring a major recovery of the solar sector in 2009 that would make me want to take profit - something I believe has a small probability of occurring - my time horizon is at least 18 months. I'll provide an update then.  


DISCLOSURE: Charles Morand does not have a position in any of the ETFs discussed above, but has an open buy order on TAN.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

October 05, 2008

Concentrated Solar Power and the New ITC

When the financial turmoil began, I sold my riskiest stocks.  Even a successful bailout bill is unlikely to return us to the heady days of 2006 and 2007.  Yet there is a bright side for clean energy investors.  Despite the recent evidence to the contrary, a financial crisis is likely to convince legislators of the importance of getting the economy going again, and of doing so with the least amount of public money possible.

Concentrating Solar Power

It was with this thought in mind that I attended CSP Today's Second Annual CSP Summit US in San FranciscoCSP, or Concentrated Solar Power, is a proven technology.  Several CSP plants have been operating reliably in the California desert since the late 1970s.  The technology uses mirrors to concentrate the sun's heat, and that heat is used to create steam to run a turbine, just as the heat from fossil fuels is used to create steam to run a turbine in a conventional gas or coal fired power plant.

What do utilities like about CSP?

  • Steam and turbines are familiar technologies.  It's hard to underestimate the attraction of the familiar, especially in a conservative industry like electric utilities..
  • The generation profile of CSP is an excellent match for load shape, especially in the sunny locations where CSP works best.  In this aspect, CSP is a better match for load shape than even photovoltaic solar power, because the thermal latency of the system means that, even without storage (see below), CSP tends not to be subject to temporary losses of power each time a cloud passes over (cloud transients.)
  • Thermal Storage.  Unlike chemical storage (batteries) which degrade when charged and discharged, thermal storage such as the commonly used molten salts are unchanged when they are heated and then cooled.  While these salts (a mixture of ammonium nitrate and potassium nitrate, both also used as fertilizer) are expensive in the quantities used in CSP, expanding storage capacity on a CSP plant is just a matter of building bigger insulated storage tanks and buying more fertilizer.  This means that a CSP plant can be built to be a nearly perfect match for a utility's load, and even used for voltage support and load following.
  • Price.  According to California's Renewable Energy Transmission Initiative (RETI) report [.pdf], referenced by Mark Rawson of the Sacramento Municipal Utility District as an accurate analysis of cost figures, the levelized cost per MWh for CSP varies from $140 to $190 per MWh (or 14 to 19 cents per kWh.)  This makes CSP price competitive with natural gas peaking turbines, and although these prices are more than twice the prices usually quoted for wind power, this is not a barrier for power which fits a utility's load.  Hal LaFlash of PG&E  mentioned that the most recent RFP from San Diego Gas and Electric was offering four times the price for power produced in the afternoon compared to power produced at night.  In markets like that, firm, dispatchable, on peak power at three times the price can easily out compete power from wind, which tends to be anticorrelated with load.

As with all new energy, there are barriers.

  • Incentives.  The nearly  universal refrain at the conference was that CSP needs an 8 year extension of the Investment Tax Credit (ITC.)  The complex permitting issues, transmission connection times, the large size of the plants, and wait times for the turbines mean CSP has a longer development cycle than most other renewables, hence the need for the 8 year extension of the ITC.   Since an 8-year ITC extension for solar was included in the financial "rescue" package which was just signed by President Bush, and this bill also makes the ITC exempt from the Alternative Minimum Tax (ITC), CSP was a big winner from the delay of the rescue package.   The first version of this bill did not contain the tax credit extension.
  • Transmission.  CSP is not a distributed technology, and it relies on direct ray radiation, and project sizes running into the hundreds of MW.  We currently have no national transmission planning, and only a few states have gone through a process of locating renewable energy resource zones and have a plan to get the transmission to where the power is needed.
  • CSP, like all thermal electric technologies, uses water for cooling, unless designed for dry cooling.  But dry cooling comes with a penalty of about 15% higher capital costs and about 9% lower efficiency of power production.  Despite the efficiency hit and added costs, most CSP projects in California are looking at dry cooling.
  • CSP is land intensive, producing only 4 to 6 acres per MW (according to Michael DeAngelis of SMUD).   According to Rainer Aringhoff of Solar Millennium, the current West Mojave Plan strongly hinders CSP development.  Even though the Mojave Desert has the highest direct ray radiation in California (and the world), the West Mojave Plan allocates only 1% of the land area to renewable energy... less even than the 5% allocated to off-road recreation.  This is only dramatic one of the many environmental barriers to CSP development, but the consensus at the conference is that CSP faces a regulatory thicket which must be dealt if CA will be able to bring on the 800 MW of CSP a year it needs to meet its recently passed goals in AB 32.  (Numbers also according to Rainer Aringhoff.)
  • Financing.  Especially for newer technologies, banks are uncomfortable financing a project they are not certain will work.  The companies which will have an advantage getting financing will be the ones with technology that banks and tax investors can be confident the power plant will continue to operate long enough to pay off their investment.

The Light at the Other End of the Tunnel is the Sun

Overall, CSP is likely to be a relatively calm place for investors during the coming years.  The financial rescue package is not going to make the underlying problems which cause the current financial turmoil go away... it will simply smooth the current market and probably avoid the collapse due to loss of liquidity of many financial institutions.  But this does not change the fact that Concentrating Solar Thermal Power is the only renewable energy resource that is can deliver dispatchable, firm power and also has the scale to meet a large percentage of our electricity needs.  In the Southwest US, which does not have the wind resource of the Great Plains, solar is the only renewable option which states can use to meet renewable portfolio standards once they get into the double digits.  Since CSP costs considerably less than PV solar technologies, and can match local peak demand with just a few hours of storage, CSP is likely to be a large share of it.

Investing in a Shifting Landscape

All Renewable technologies are likely to benefit from the ITC and PTC extensions in the recent bailout bill. But the big winner is Solar, and specifically large scale CSP.  The scale, permitting, environmental, and interconnection issues of these giant plants mean that without the long term certainty that the 8 year extension of the ITC, the plants would have had trouble getting financing.  

The good news for CSP does not stop there.  With the ITC exemption came two changes to the current ITC.  First, the tax credit has received an AMT exemption, which, according to Michael Bernier, and attorney at Ernst & Young, this allows a much broader class of investors to invest in CSP for the tax benefits, and allows existing investors to invest more.  This new source of funds will be critical for CSP given the gigantic capital costs for the projects.  Where previously the only major tax credit investors were investment banks and General Electric (NYSE:GE), new investors such as Property and Casualty insurers will become interested.

The second change in how the ITC work was the lifting of the "Public Utility exemption."  Previously, a utility could not own a solar plant and take advantage of the ITC.  Now they can.  Since many utilities would prefer to own generation so that it can be incorporated in the rate-base and earn a return on equity, vendors of CSP technology and developers who can sell a turnkey plant to the utilities will gain an advantage over developers who want to own the plants and only sell the power to the utilities.

The changes also mean that developers with proven technology, who already had an advantage getting financing, have an even greater advantage because the new tax investors will not know the industry as well as the current investors.  This means that developers will need to spend more time assuring investors that their technology is reliable, and a long track record will be an advantage in doing so.

For public company investors, the options for CSP investments are still slim.  Acciona (ACXIF.PK) is a diversified Spanish renewable energy company with a strong presence in CSP, and United Technologies (NYSE:UTX) has a small exposure to solar thermal through their investment in solar tower vendor Solar Reserve.  On the bright side, both of these companies have what it takes to reassure a new crop of tax credit investors.  Acciona built the only recent full scale CSP plant in the United States, Nevada Solar One, while Solar Reserve's less proven but more efficient power tower technology was demonstrated by the same engineers now working for Solar Reserve demonstrated the technology (and thermal storage with molten salts) at Solar Two in the Mojave desert in the late 1990s.

For investors willing to take a less direct approach, we can be certain that a large build out of CSP plants will have to be preceded by a large build-out (or at least upgrading) of transmission lines in the desert Southwest.  I discuss several transmission stocks which should benefit in this entry on renewable energy and transmission.

DISCLOSURE: Tom Konrad  and/or his clients have long positions in GE, UTX, ACXIF.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

July 27, 2008

Equus: A Solar Inverter Play For Free!

Equus Total Return (NYSE: EQS) is a closed-end fund that trades at a 42% discount to its net asset value (NAV). The fund invests primarily in both debt and equity instruments of small-caps and private companies. Each quarter, management must report the fair value of its net assets, but the stock market value of Equus is much lower than that of its net assets. Here's a chart showing Equus' discount to its net assets for the last five years:

As we can see, Equus is used to trading at a discount to its NAV, but recent negativity across the US market has taken it to even newer lows relative to what it owns.

One of Equus' key holdings (in fact, it makes up almost one third of its portfolio) is an equity position in Infinia Corporation. Infinia is a company aspiring to mass produce a low-cost solar power converter. The fair value of one of Equus' investments in Infinia (based on follow-up venture capital investments) recently jumped from $3 million to over $20 million, as the company demonstrated a prototype late last year that converts solar energy into electricity at twice the efficiency and at a lower cost than existing products.

One way to look at a purchase of Equus' stock at this discount level is that for the price of one share at $6.90, you're getting all of its other assets (which are worth about $8.30/sh) for a slight discount, and on top of that you're getting the investment in Infinia (valued at $3.50/sh) for free! Of course, before jumping in blindly you'll want to make sure you read Equus' latest reports along with its financial statements and their notes, as we've discussed here.

In reading these reports, I found that Equus does carry some debt on its balance sheet, which is somewhat rare for a fund. This has the effect of amplifying any changes in the values of their investments, both to the upside and the downside (the effect of leverage).

Furthermore, most of the investments are in companies that aren't public, and therefore Equus is not as liquid as those funds that invest only in the stock market (undoubtedly, this liquidity premium contributes to the larger than average historical discount we see in the chart above). The lack of market quotations also makes it more difficult for management to value each of it's holdings. Infinia is one such example, as it doesn't trade on the stock market and so it's not available for an individual investor to buy. Although the drawback is that Equus' investments are illiquid, it provides an investor the opportunity to get into a company like Infinia when it would otherwise be limited to venture capital firms.

The discount is a bonus that makes this an intriguing play from a value investing point of view.

Saj Karsan is a guest contributor on Saj is a value investor at Barel-Karsan, and can be regularly found writing for Barel-Karsan's blog.

DISCLOSURE: The author does not have a position in EQS

DISCLAIMER: The author is not a registered investment advisor. The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

June 08, 2008

Bosch Acquires Ersol Solar, Large Industrials Moving Into Solar Sector

Subject line

The recent announcement on June 2, 2008 , that Robert Bosche GmbH (privately-held) plans to buy German-based Ersol Solar Energy AG (FRA:ES6) provides another example of how global industrial conglomerates are carefully watching for opportunities in the fast-growing solar sector. 

 Bosch bought a majority stake in Ersol for 546 million euros from Ventizz Capital Partners at a 63% premium to Ersol’s closing price on May 30.  Bosch plans to make a public tender offer for the remaining 50.45% of the company, according to Bloomberg News.  Ersol’s stock rallied 63% on June 2 in response to the takeover news and has since remained near that level, indicating market confidence that the takeover will be completed.

 Ersol Solar Energy AG is a diversified solar player that has a scrap silicon recycling operation and produces polysilicon, silicon wafers, silicon solar cells, and thin-film solar cells and modules.  Ersol has about 1,000 employees.  Revenues in Q1-2008 roughly doubled year-on-year to 52.4 million euros and net income was 3.2 million euros.  Ersol’s management expects to have 180 megawatts of wafer production capacity and 220 megawatts of crystalline solar cell production capacity by the end of 2008.  Ersol has provided guidance for 300-320 million euros of revenue in 2008 and 70-80 million euros of operating profit.  Ersol said that its production output for 2008 is already completely sold out.

 What is one of the world’s largest automotive component part maker, with 46 billion euros in sales, doing buying into the solar sector?  The simple answer is diversification into the promising solar sector and away from the low-margin automotive components industry.

 The solar industry has grown at a 47% average annual rate in the past six years and is poised to grow at an annual rate of about 40% for at least the next several years.  The solar industry has reached mass production stage with about $30 billion in sales in 2007, according to Photon International.  The upside for solar is truly massive since solar power accounts for only 0.06% of world electricity generation at present (according to Photon Consulting), meaning the sector has room to grow at double-digit rates for literally decades without hitting saturation levels.

 There are a handful of large industrial conglomerates that have already been in the solar business for years.  Several Japanese-based conglomerates were pioneers in the industry and have long ranked in the top 20 global solar cell/module producers.  In 2007, Sharp (SHCAY (ADR), TSE:6753) ranked as the second largest solar cell/module producer (behind Q-Cells FRA:QCE in first place), Kyocera (NYSE:KYO ) as fourth, Sanyo (SANYY.PK,TYO:6764) as seventh, and Mitsubishi Electric Corp (TYO:6503) as twelfth, according to PV News’s 2007 rankings ( 

 Other global conglomerates have also been players in solar for years including BP, General Electric and Boeing’s Spectrolab.  Two large companies, Swiss-based OC Oerlikon AG (VTX:OERL) and U.S.-based Applied Materials (NASDAQ: AMAT ) have quickly become the two leading players in producing turn-key thin-film solar module fabrication lines that other companies can buy to produce solar modules in their own factories.  Large utilities and construction companies have also entered into the business of developing solar photovoltaic or solar thermal projects, including (among others) Spain-based Acciona (MCE: ANA , ACXIF.PK), Spain-based Iberdrola SA (MCE:IBE) and its recent spin-off off its Iberdrola Renovables unit (MCE:IBR), and FPL Group (NYSE: FPL ).

In another example of large companies moving into solar, Moser Baer India Limited (BOM:517140), the world’s second largest manufacturer of optical storage media, has entered the solar sector in a big way with both crystalline silicon cell technology and thin-film technology.  Moser Baer plans to use its world-class manufacturing know-how to drive down the costs of solar cell production and become a major global player.

 What’s going on here?  Simply put, the solar industry is growing up.  The solar industry is simply following the tried-and-true industry model where small, specialized players blaze the way with revolutionary technology and a big dose of risk-taking and fortitude.  Then the large players in the sector snap up the winners after they prove their technology and sales traction.  This is akin to the old adage of letting the pioneers in the industry get shot in the back with arrows and then buying up the ones that are ultimately successful.  The solar industry has now reached a level of maturity where there are likely to be more cases of large industrial companies buying up mid- to larger-tier solar companies.


By Richard Asplund, investment analyst and author of Profiting From Clean Energy: A Complete Guide to Trading Green in the Solar, Wind, Ethanol, Fuel Cell, Carbon Credit Industries, and more.

Disclosure: Richard Asplund does not have positions in any of the stocks mentioned in this report.


March 13, 2008

Edison International Says Solar is the Great Untapped Resource

Cleantech Blog had a conversation last year with Stuart Hemphill, now the newly appointed Vice President for Renewables and Alternative Energy at Southern California Edison, a subsidiary of Edison International (NYSE:EIX), one of the largest purchasers of renewable power in the US. We caught up with him again today in a lively discussion around his predictions for the renewable sector.

Today they are announcing their sixth competitive solicitation for renewable energy. On peak delivery from the Tehachapi region is preferred, as they are currently building a massive transmission line to tap into the 4,500 MW of wind potential. But wind produces only 35% of the time. This major pipeline needs to be balanced. So they are looking for creative proposals from developers to fill up the rest of that transmission line with on peak power deliveries.

Renewable and alternative energy are still top goals for Edison. Stuart says his promotion is part a reflection of the business’ expanding interest in leadership in renewables in the US.

Prediction Number 1 - The next 10 years are going to be a wild, wild west in the solar industry. Companies around the globe are exploring new solar technologies of every variety. Stuart thinks it’s way too early to tell which ones are going to be successful. But he considers solar to be the great untapped resource in California and elsewhere.

So I asked him if by that he meant solar thermal or photovoltaics. The answer is “Yes”. Stuart responded that in the past couple of years we have seen incredible amounts of venture capital investment going into solar firms, and PV is only part of that equation.

When I pushed Stuart to predict a winner between conventional solar parabolic trough and other types of solar thermal technologies, Stuart refused, suggesting that it is still too early to tell which technologies will be the winners. That’s what makes it exciting to watch, in his opinion. As an example, he stated that we are now seeing renewed interest power tower technologies with pretty high efficiencies. The challenge is to see which ones get done.

When it comes to what’s important to SoCal Edison itself, it is really important that they sign PPA contracts with viable companies and viable technologies. He sees a wide spectrum of proposals in terms of viability, and is always looking for at least some sort of demonstration plant to prove it up and a significant level of backing for the companies before they can get involved.

Prediction Number 2 - I did ask him what his take on run of river hydro is. He responded that he hopes to be wrong, as he likes run of river hydro, but doesn’t see any major increases in the resource coming in California. Hydro in California in general has a very a limited resource potential left to be developed and lots of stakeholder concerns to be addressed in each case, so while he is hopeful, he is not predicting any great increases.

Prediction Number 3 - US Offshore Wind – We will not see much from offshore wind in California, as the limitations both from physical layout of shoreline as well as policy and consumer concerns.

We then switched to what the industry challenges are. Stuart nailed two big ones, transmission and interconnection.

He believes that transmission is getting even more challenging than last time we spoke. What’s interesting to Stuart is that most people agree and are in support of renewables in California, but very few people support the way that the goals need to be attained, ie, significantly increase transmission infrastructure. There tends to be lots of local opposition, or federal agencies that aren’t always in support of particular local goals. This makes sense, as transmission by its nature always touches a lot of different land and communities in its path, meaning lots of different stakeholders need to be involved.

Interconnection queue bottlenecks are the real next challenge in California and in the Midwest according to Stuart. This is a challenge that is addressable and there are proposals into FERC to do so. But currently it is a first come first serve system, and easy to get into the queue. Getting in the queue starts a study process based on FERC rules, including a feasibility study, then a system impact study and a facility study. The bottleneck arises because according to the current rules, if your facility is further back in the queue, your studies assume that the facilities ahead of you are up and running, but if at any point in time someone ahead of you drops out, your studies need to be effectively redone. Because it is relatively easy to get into the queue, nonviable projects that do not end up coming online as planned have been upsetting the applecart, causing all the projects behind them to go back to the drawing board as far as the study process is concerned. Since 2002, we’ve seen a steep ramp up to a level that is just unmanageable given that dynamic. CAL ISO has a proposal in with FERC to change this, so Stuart believes a solution is coming, just not here yet.

As usual, SoCal Edison is pushing forward aggressively on renewables, and we were excited to see the new solicitation and changes they are making. As we have said before, let’s just get it done.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of, and a blogger for CNET's Cleantech blog.

September 30, 2007

A Solar Technology for Every Application

Acciona's financing of Nevada Solar One, and a recent series of a financing, a prominent hire, and a big announcement from Concentrating Linear Fresnel Reflector (CLFR) developer Ausra has been keeping long-underappreciated Concentrating Solar Power (CSP) technology in the news recently.  I consider this great news, because the potential for cheap thermal storage of CSP and the gigantic size of the available resource means that CSP is likely to provide the backbone of reliability for any future decarbonized electric grid [Word Doc] where the clear skies which it requires to operate properly and sufficient transmission are available.

But CSP is only one of a broad range of Solar technologies, and here I will outline the framework which helps me understand and predict which ones are likely to be most successful.

To understand the future of any technology, you first need to understand its applications, which will lead to an understanding of the characteristics necessary to meet them.  Broadly, solar power is used to produce heat for climate control and process heat, and for electricity, both on the grid and off.


The oldest solar application is daylighting, the use of windows and other means allowing indirect sunlight to provide effective internal illumination inside buildings.  For individual homes, window and skylights are usually sufficient for the job, but there also exist architectural features such as light shelves and even active sun tracking systems which combine with fiber optics or mirrors [pdf]  to provide light to the interior of large buildings.  Such systems can provide significant energy and maintenance cost savings, as well as increase worker productivity.  They are particularly popular in schools because of studies which show enhanced student learning under natural light.

Thermal Applications

Solar thermal, when used for space heating is needed mostly in the winter in cold and temperate climates.  Because of the fact that it is only useful for part of the year, it needs to be simple and inexpensive to be practical.  Here, passive solar design and proper orientation of buildings is the hands down winner, because passive solar measures are inexpensive to free, with one of the most expensive steps being adding extra thermal mass, something which greatly enhances performance where daily temperature swings are large, and tends to remain fairly inexpensive given its low tech nature.   Passive solar design is almost certain to be a long term winner, although it is unlikely to be a big winner for investors because it does not require special products or materials.   Active solar thermal systems are typically too expensive to economically be used for only the part of the year when the heat is necessary, although when the heat from the system can be switched between multiple applications, such as domestic hot water or electricity generation, it can be economic for an active solar thermal system for at least part of a building's space heating load.  

For process heat, which includes solar domestic hot water, as well as heat for industrial processes [pdf], the active solar thermal systems shine because year round usage can make these still relatively inexpensive systems easily economic.  These systems tend to be either flat plate collector systems, which circulate a working fluid under a black heat collector, or evacuated tube systems, which are somewhat more expensive, but can reach higher temperatures because the heat collector is a solid wire, which avoids problems with boiling the working fluid.  Solar parabolic trough systems are also sometimes used in large scale, high temperature industrial applications.

Electricity Generation

With electricity generation, both time and location become important.   Electric transmission is constrained by infrastructure, and and electric storage is often more expensive than the power being stored, leading to large price premiums for power delivered where and when it's needed most.

The right place

For off-grid applications flat plate photovoltaic (PV) panels, which can be either thin-film or the more traditional crystalline silicon with a battery backup tend to be suitable despite the relatively high cost of power because of the scalability, relative simplicity, lack of moving parts, and low maintenance of the systems.  Concentrating photovoltaic (CPV) is seldome used in off grid homes to reduce up-front costs, because it tends not to work as well as flat plate collectors when there are clouds, and the need for a solar tracking system adds to maintenance costs which can be especially critical in the remote locations where off grid power is usually needed. Another form of practical off grid application is small scale power for lighting or equipment in areas where the grid is available but where the savings from avoided wiring make an investment in PV and a battery pack economical.  A common example of this are the now ubiquitous solar garden lights.

Photovoltaic technologies also have an advantage in distributed generation: placing the power source at the point of use.  The main advantage here is in their simplicity (which allows for low maintenance) and scalability, allowing the sizing of the power source to fit the need.  For instance, an electric utility might place west-facing PV on a transmission base station which is near capacity during times of peak load, thereby meeting a portion of that load and avoiding an expensive upgrade to the base station.

The right time

Since electricity typically requires expensive batteries for storage, technologies which can have inexpensive, built in storage have a cost advantage over ones that only produce power when the sun is shining.  Most solar electric technologies conveniently produce power on sunny summer afternoons, a time which normally corresponds to peak load in climates where air conditioning drives peak load.  This effect can often be enhanced by orienting the panels towards the west or southwest so that they are producing their greatest output in the afternoon.  This produces intermediate power, which is available when electric demand is high, but is also often available at non peak times, such as during the day in the winter.  Although such power is more valuable than other forms of intermittent power generation, which often have no correlation with the load profile, they also cannot be relied on to be available when needed, and are less valued by utilities which are responsible for providing power whenever customers want it. 

Dispatchable power is the most valuable form of generation (per kWh) on the electric grid, because the utility can use it only when demand is high and cannot be met with cheaper resources, while utilities also value base load power, which is almost always available and can be relied on at any time.  Since the sun is not always shining, these forms of power require some form of storage, and this means that they are best met with Concentrating Solar Power, which can be built with thermal storage, a much less expensive way to store power than batteries and other forms of electric storage (with the possible exception of Pumped Hydro, which is limited in its available capacity and location.)

Thin film vs. CPV

The incumbent photovoltaic technology, crystalline silicon is typically very expensive per watt, and there are two approaches currently being taken to cut costs: thin film and concentrating PV.  Thin film is another form of flat plate PV that requires much less and less specialized materials but typically has lower conversion efficiencies and durability than crystalline PV, which makes it inappropriate for applications that require a large amount of power generation in a small area, while concentrating photovoltaic (CPV) uses lenses or mirrors in to focus sunlight on small but very high efficiency cells to generate power at a lower cost.  CPV usually requires the ability to track the sun and few clouds, which means that it is unlikely to be as economic in distributed applications, although some companies are working to overcome these limitations.

Central Power Generation

For central power generation, the main factor in choosing between technologies is cost.  Here, the concentrating technologies (CSP and Concentrating PV) tend to have the advantage, and the ability to use transmission to bring the power to the point of use means that the generation can be placed in areas with a lot of sun and very few clouds where these technologies perform best.  The need for additional maintenance for solar trackers is less of an issue at a central solar plant, and this also give and advantage to the concentrating technologies.

Concentrating Parabolic Trough plants, Solar Tower, and Concentrating Linear Fresnel Reflector generators need large scale (in the hundreds of megawatts) to achieve their superior economics, while Dish Stirling and Concentrating photovoltaic (CPV) technologies achieve their economies of scale at less than a megawatt.  The superior scalability of Dish Stirling and CPV is largely negated by the cheap thermal storage (referenced earlier) available with the first three technologies which is not available with Dish Stirling or CPV.


Whenever a company announces a new technology with higher efficiency, lower cost, or better storage, it's easy to get carried away and think that that one technology is destined to win out over all the others.  I hope you now appreciate that there are as many or more applications as there are technologies, and which technology has the upper hand will depend on the intended use.  When evaluating companies, it's most important to consider the target market, and compare the technology to its true competitors.  This article and the following tables should provide a useful cheat-sheet when you do so.

National Solar Tour LogoIf You Want to See it in Action

Next Saturday (October 6) is the National Solar Tour in the US.  Click here to find a tour near you and see many of these technologies in people's homes.

Application Table

Application Category Dominant/Best Technology Other Technologies
Daylighting Lighting Windows, Skylights Light Shelves, Active systems
Space Heating Thermal Passive Solar Design Active solar thermal, especially if also used for other applications such as water heating.
Process heat/ Water heating Thermal Active Solar Thermal flat plate or evacuated tube
Distributed generation Electric Photovoltaic technologies   
Off Grid Electric Non-tracking PV with battery backup  
Central Power Generation Electric Concentrating Solar Power Concentrating PV, Flat plate PV
Dispatchable Power Electric CSP with thermal storage Others w/ battery backup
Intermediate Generation Electric All technologies, should be tracking or west-facing to make production align most closely to peak load.
Base load Generation Electric CSP with thermal storage Others w/ Battery backup

Electric Generation Technology Table

Technology Best uses Strengths Weaknesses
    Flat Plate Distributed, off grid Simplicity, Scalability Cost
       Crystalline Distributed Low maintenance, high durability Cost
       Thin Film Distributed, off grid Low cost; scalability  Low efficiency
    Concentrating PV Sunny areas, Central installations Low cost Higher maintenance
Concentrating Solar Power (CSP)      
     Solar Trough, CLFR, Solar tower Central Generation; peaking and intermediate power; base load capable. Thermal Storage, Cost Large Scale
     Dish Stirling Sunny areas, Central installations Low cost; can be hybridized with natural gas; Scalability Higher maintenance

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

March 20, 2007

Solar Power on Wallstrip is running a video segment on solar power as part of its Wallstrip series. The segment's date is 03/20/2007.

If you're a long-term solar follower you definitely won't learn too much here. Nevertheless, the vid does a good job of outlining governmental efforts to boost the growth of solar in the US. Short and interesting.

The segment is especially positive on: FirstSolar [NASDAQ:FSLR] and Trina Solar [NYSE:TSL].

Positive on: Canadian Solar [NASDAQ:CSIQ], Ascent Solar [NASDAQ:ASTI] and Suntech Power [NYSE:STP].

Negative on: Sunpower Corp [NASDAQ:SPWR].

February 05, 2007

A Great Day For Solar Stocks, But Beware The Volatility!

Is it the unprecedented amount of media attention climate change is currently getting? Is it the State of the Union Address? Is it the price of oil? Or is it a combination of factors? In the end, it doesn't really matter; it's this time of year again and the value of the solar sector is heading north.

Today was a great day for solar stocks, while the market as a whole was mainly flat.

I remember this period last year very well. I was long Suntech Power [NYSE:STP] and Energy Conversion Devices [NASDAQ:ENER], acquired respectively for $22.25 on December 21, 2005, and $28 and change on August 23, 2005.

I got out of STP at $35.65 on March 17, 2006 (I've since re-entered and partly re-exited it). As for ENER, I exited it on January 12, 2006, at $50, and never bought it again. In both cases, the stocks were trading at very high multiples, driven mostly by speculation.

The point of this little tale is to highlight the fact that several solar stocks experienced big runs at around this time of year last year, followed by equally big falls as momentum investors moved on. Let's look at a few token solar stocks that were publicly-traded at the time.

Sure, much of the market corrected somewhat during the same period that these stocks did - but for this asset class, the fall from grace was quite pronounced.

Last year should serve as a cautionary tale going into this year: most of the companies in the solar sector are not yet profitable, solar is not yet competitive with conventional electricity generation technologies without government support, and the sector remains very volatile.

If you were able to scoop up some of those solar stocks before they began rising again in the late fall/early winter, it might be a good a idea to take some off the table soon. I purchased part of my current STP position (long) on June 15 at $24.29, as I found the valuation pretty attractive at that level. I got out of the June 15 portion of my position this past Friday at $36, after the company updated its Q4 guidance with weaker-than-expected results for the MSK side of the business (although they revised overall results upwards). Turns out I did that a tad too hastily...but I'm not too concerned - 48% over a 7.5-month period is fine with me.

Suntech Power is a solid long-term story, as are some of its sector peers like Energy Conversion Devices and Sunpower. But beware the volatility! I'm still long STP, but will not hesitate to liquidate all of my position if the price is right (or wrong, depending on how you look at it).

As much as I have faith in STP (and other solar stocks) in the long run, I have no doubt that when the market corrects - and it will eventually correct - this sector's value will deflate appreciably. Look out for good buying opportunities then!


DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

December 15, 2006

Solar Stocks and the Tax Credit Extension

The US Congress voted on Monday December 11 to extend, by 1 year, a 30% tax credit for the solar industry. This federal incentive is essential in allowing solar to be competitive with conventional energy sources.

How have investors reacted to this announcement so far? Let’s have a quick look at 5 high-profile solar stocks to see whether this news has impacted the trading patterns of solar investors. The stocks are: Suntech Power [NYSE:STP], Energy Conversion Devices [NASDAQ:ENER], DayStar Tech [NASDAQ:DSTI], Evergreen

The results are not especially conclusive, to say the least. SunPower and Energy Conversion Devices both had nice pops on the news but, by the end of Thursday, both stocks had shed some of the gain. Evergreen has effectively gone nowhere since mid-August and this did nothing rectify the situation. SunTech actually began correcting half-way through Monday after enjoying a 23% run to the upside over the previous 30 days, probably on profit taking. By the end of Tuesday, Suntech was down 8% on its Friday closing price – its steepest 2-day slump in over a month. Finally, DayStar Tech, unhindered by the announcement, continued its long journey south from its 52-week high of $15.75 to close at $4.27 on Thursday, flirting with its 52-week low of $4.25.

The announcement likely had no lasting effect on solar stocks because the extension is for 1 year. The only 2 companies turning a profit so far are Suntech Power and SunPower, and this is the 1st year SunPower does so. Most investors and project financiers’ time horizons are longer than 1 year, especially for capital-intensive endeavors like solar farms, and it is thus far from clear whether this decision on its own will spur any significant investment in the solar space if there is a risk that the tax credit isn’t renewed in 2007.

To be sure, the prospects for solar being able to compete with other energy sources without government support are improving rapidly. Too many uncertainties, however, remain, and it is highly improbable that this industry will be able to thrive on its own in the next couple of years, thus calls by industry insiders for 5 or even 10-year tax credits.

(DISCLOSURE: The author owns Suntech Power)

October 18, 2006

Google and Solar Power

Yesterday, I came across an article about Google planning to intsall the largest corporate solar project.

Here is a summary:

  • 9,200 solar panels will be placed on six buildings at its Mountain View headquarters by next spring
  • this will produce up to 1.6 megawatts of electricity - enough to supply 30 percent of the campus' electricity on a hot summer day
  • a company spokesman said that concern about the environment as well as the rising price of electricity motivated the company to go solar
  • company spokesman also made the comment: "'If we can dispel the myth along the way that you can't be green and profitable at the same time, that's another benefit.'
  • The company has also installed motion sensors in rooms to turn lights on and off; serves only organic foods in its cafeterias and provides a commuter shuttle that removes hundreds of cars from the road each day

    I applaud this move and think this is great. I believe Google is doing this to help the enviroment and of course, the perception that they are doing something on this front never hurts. The article ends on an intersting note:

    "Radcliffe declined to say how much the solar installation would cost, but added that the energy would pay for itself after 10 years"

    I am glad they are doing this but a 10 year pay-back period suggests to me this is more about doing the right thing than the economical thing.

  • June 08, 2006

    Hoku Scientific Announces Plan to Enter Into Solar Module and Polysilicon Markets

    hoku_logo.gifHoku Scientific, Inc. (HOKU) announced that it plans to diversify its product offerings by manufacturing and selling solar modules, in addition to manufacturing polysilicon, a key material used in the production of solar modules. Hoku anticipates that the costs to establish such facilities will be approximately $250 million, which the company will seek to fund through the issuance of debt and from potential customers' cash down payments for future supply of polysilicon and modules. Hoku will explore basing these manufacturing operations in Singapore. [ more ]

    May 26, 2006

    Xantrex solar inverters to be installed in 450-unit housing development

    Xantrex Technology Inc. (XTX.TO) will install 450 Xantrex GT Series inverters in conjunction with its SunTile solar electric panels to support the electrical needs of the homes. The solar electrical systems will offer homeowners a solution to reduce electrical costs and at the same time reduce emissions from fossil fuel electrical generation.

    Developers are seeing an increase in demand for renewable power solutions and are responding by seamlessly integrating solar power systems when building new homes. Home owners can now move into a new home with an established solar power solution eligible for applicable federal and state incentives, to make this clean power system more cost effective. [ more ]

    May 23, 2006

    WorldWater & Power Signs Contracts Worth $160,540 for Residential Solar Systems in New Jersey and California

    Worldwater Corp (WWAT) announced the signing of contracts with homeowners in New Jersey and California to build photovoltaic solar electric systems to power their residences in parallel with their present electric utility company. The contract value of the systems in New Jersey and California is $160,540. [ more ]

    May 19, 2006

    GiraSolar Group Completes Cell Delivery to German Industry Partner and Completes First Shipment to Spain

    GIRASOLAR INC (GRSR.PK) is pleased to announce its subsidiary DutchSolar BV has completed a 1MWp cells supply obligation to a major German solar industry partner. DutchSolar BV overachieved on its projected supply of 1MWp with 16% in surplus of its obligations. Supply had initially begun with delays in December 05 and was expected to take well into H2 of 2006. The revenue value now exceeds well over 3M$ and payments have been received in full. It is expected that DutchSolar will continue the supply of cells to German counterparts and further cooperation will be sought.

    DutchSolar BV has also completed the first supply of two containers with solar products to Spain, following a previously announced supply contract with a strategic Spanish solar industry partner. The revenue value of this first supply equals approximately 10% of the total contract value of 6M$. The supply of materials to this project will continue as planned by DutchSolar BV. [ more ]

    May 17, 2006

    WorldWater & Power Awarded $4.9 Million Contract to Build Solar Systems for Hightstown, New Jersey

    Worldwater Corp (WWAT) announced the signing of a contract with the Borough of Hightstown in Central New Jersey to build two solar power systems on water facilities, subject to financing. One installation will serve a water treatment plant and public works garage, while the other will power a wastewater treatment facility. Construction value of the complete project is $4.9 million. [ more ]

    May 12, 2006

    SatCon Announces Delivery of 100 kW Solar Inverter for the European Market

    satcon_logo.gifSatCon Technology Corporation (SATC) nnounced the completion and delivery of the 100 kW solar inverter for the European market. The significance of this delivery is that SatCon is well positioned to participate in the largest market for solar inverters.

    SatCon has delivered over 17MW of commercial grade inverters over the past two years and is poised for significant growth as indicated by the pending solar projects in California on the Pacific Gas and Electric website. [ more ]

    May 11, 2006

    XsunX Under Pressure

    xsnx_logo.gifShares of XSUNX Inc. (XSNX) are currently under pressure and are currently down over 50% since the start of the month. The stock is now accelerating down this morning and the shares are currently down another 13% this morning. There was some nice support at the $1 level and the stock is currently trading down below this level.


    There may be many causes for this sharp decline. It could be the general market weakness is causing people to look for ways to take profits. This stock has been up more than 200% in the past year and I personally sold half of my position several months ago. There also maybe something fundamentally wrong with the company. There have been many questioning the validity of this company.

    XsunX is still an early stage company that still hasn't produced any revenues and has a product that is still very much in beta. I knew this when I purchased the stock back in November of '05. I figured the company would be dead money until they actually started to produce some products and get sales. The sharp rise of the stock over the past year was a nice suprise, but I fully expected it to come back down to reality. I would not be suprised if the stock traded back down to the $0.50 range in the near future. I think the company is fairly valued at that price and I'm still planning on holding onto my remaining shares.

    Update: I'm not able to type this post fast enough for the markets, the stock is now currently down more than 15% at 10AM.

    Update 2: At 10:20AM the stock seems to have found some support at $0.94.


    Update 3: Shares of XsunX have now turned positive at mid-day and the bounce off the support of $0.94 seems to have taken hold.


    Update 4: What a day in XsunX. From the low today to the close represents a 30% move and a nice bounce off the $0.94 level.


    DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

    May 05, 2006

    SatCon Announces 3.2 Megawatts in Orders for Photovoltaic Inverters

    satcon_logo.gifSatCon Technology Corporation (SATC) announced that it has received multiple purchase orders from four new customers for 13 commercial grade inverters equaling 2.3 megawatts (MW), including an order from one of the largest photovoltaic integrators in North America. In addition, a customer that has been operating a trial unit issued a follow-on purchase order for 3 commercial grade inverters totaling 0.9 MW. These photovoltaic inverters trade named PowerGate(TM) are scheduled for delivery prior to the end of the current fiscal year. [ more ]

    Spire Offers Gallium Arsenide Concentrator Solar Cells

    Spire Corp (SPIR) announced that Bandwidth Semiconductor LLC, its wholly owned subsidiary, now offers custom gallium arsenide (GaAs) concentrator solar cells for terrestrial applications.

    These GaAs-based solar cells are based on Spire's space and terrestrial solar cell technology developed over 25 years, during which record high cell efficiencies for terrestrial applications were produced. Higher efficiency means lower cost of electricity. [ more ]

    May 04, 2006

    Spire Commissions Photovoltaic Module Manufacturing Line for Unison in Korea

    Spire Corp (SPIR) announced that it has completed installation and commissioning of a SPI-Line(TM) turnkey photovoltaic (PV) module assembly line for Unison Co., Ltd. (Unison) of Chonan-City, Korea.

    Spire's advanced PV module manufacturing equipment and process technology will enable Unison to manufacture state-of-the-art PV modules from solar cells to address the growing Korean and Asian solar PV market. [ more ]

    May 01, 2006

    Ormat Technologies Announces Completion of First US Solar Trough Power Plant in Arizona Using Ormat(R) Energy Converter

    Ormat Technologies (ORA) announced that they have completed the construction of a 1 MW rated Ormat® Energy Converter (OEC) for the APS Saguaro Solar Facility. Arizona Public Service Company (APS) is Arizona's largest and longest-serving electric utility, serves more than one million customers in 11 of the state's 15 counties. [ more ]

    The plant's process consists of the sun's energy being concentrated by parabolic mirrors in a trough formation to receivers. This concentrated solar energy heats up thermal oil, which then transfers its heat to the OEC power unit working fluid. Use of Organic Rankine Cycle technology facilitates generation of power even with fluctuating and low temperature heat.

    WorldWater & Power Corp. and Saint Joseph of the Palisades High School Sign Contract for $1.3 Million Rooftop Solar System

    Worldwater Corp (WWAT) announced that Saint Joseph of the Palisades High School of West New York, N.J., part of the Archdiocese of Newark, has contracted with WorldWater to purchase electrical energy for 10 years generated by a solar electric system. The solar panel array will be installed on the school's roof. Under WorldWater's Alternative Clean Energy Services (ACES) plan, St. Joseph's will not incur any start-up costs for the installation and the school will receives a 10% discount on their cost for power compared to their electric rate. The installation of the solar energy system at the school guarantees that the school will save money on electric costs immediately and on a long-term basis. The construction value of the project is $1.3 million. [ more ]

    April 27, 2006

    WorldWater & Power Corp. Signs Contract with Eagle Academy for Solar Power Installation for Arboretum Enhancement Project

    Worldwater Corp (WWAT) announced the signing of a contract with the Eagle Academy of Egg Harbor Township, New Jersey. The contract calls for WorldWater to provide engineering, materials and supervision to assist at-risk youths in building a solar powered water pump to supply drinking water and irrigation at a 14-acre arboretum preservation site in Egg Harbor Township. This project is being funded by a grant from the New Jersey Board of Public Utilities, which provides grants for solar energy projects in New Jersey. [ more ]

    Magnetek Establishes Solar Power Distribution Network in Emerging Italian and Spanish Markets

    MAG_logo.gifMagnetek Inc. (MAG) announced that it has secured distribution agreements for its Aurora(TM) solar photovoltaic (PV) power inverters with channel partners in Italy and Spain valued at more than $3 million in sales during calendar 2006, subject to demand and availability. Italy and Spain each have adopted aggressive incentive programs aimed at installing up to 100-megawatts (MW) of new solar capacity, thus emerging as the fourth and fifth largest potential solar power markets in the world. [ more ]

    Evergreen Solar Begins Volume Shipments From New Plant in Germany

    evergreen_logo.gifEvergreen Solar Inc (ESLR) announced that the new EverQ manufacturing plant in Thalheim, Germany, has begun making volume shipments of finished solar modules to the Company's customers.

    The Thalheim plant manufactures Evergreen Solar's new, more powerful Spruce Line(TM) of photovoltaic panels. The Spruce line includes panels up to 190W. Products fabricated at the EverQ plant use Evergreen Solar's patented String Ribbon manufacturing process. String Ribbon is substantially more efficient in the use of silicon than conventional sliced crystalline technologies. [ more ]

    XsunX Power Glass Developer Begins Marketing Phase

    xsnx_logo.gifXSUNX Inc. (XSNX) will present the benefits of the company's thin-film solar technology systems for use in the development and delivery of an array of new power sources this week in Washington, D.C. at the 2006 National Energy Restructuring Conference sponsored by the National Energy Marketers Association. During the conference, which will take place April 25th and 26th at the Marriott at Metro Center, XsunX Chief Operating Officer Mr. Joseph Grimes will provide potential licensees information about the company's flexible thin-film photovoltaic capabilities, including Power Glass(tm), an innovative thin-film solar technology that is intended to allow glass windows to produce electricity from the power of the sun. [ more ]

    April 25, 2006

    WorldWater & Power Corp. Signs $295,000 Contract to Provide Solar Technology to Voorhees Township Public Schools

    Worldwater Corp (WWAT) announced the signing of a $295,301 contract to provide design, engineering and solar equipment for the Voorhees Township Public Schools in Voorhees, New Jersey. The primary contractor for the project is Ray Angelini, Inc. (RAI) of Sewell, New Jersey. Construction will begin immediately for the installation of photovoltaic panel array on the roof of the Voorhees Middle School on Hollyoak Drive. WorldWater's patented electronics will automatically control power delivery to the school and manage the net metering of surplus electricity back to the utility to earn renewable energy credits. [ more ]

    April 24, 2006

    Magnetek Aurora(TM) Inverters Complete Manhattan's Largest Building Integrated Solar Power System

    MAG_logo.gifMagnetek Inc. (MAG) announced that Manhattan's largest functioning Building Integrated Photovoltaic (BIPV) power system recently began harvesting energy from the sun. [ more ]

    April 19, 2006

    Spire to Provide Prisolartec GmbH with Solar Module Production Line

    Spire Corp (SPIR) announced that it has entered into a contract with J.v.G. Thoma GmbH, Spire's sales and service representative in Germany, to provide Prisolartec GmbH of Perleberg, Germany, with Spire's multi-megawatt entry level, turnkey photovoltaic (PV) module manufacturing production line. The production line includes equipment for solar cell stringing and lay-up, lamination, framing, and module testing. Prisolartec selected Spire Corporation as their equipment supplier based on Spire's superior experience, the quality of its equipment, Spire's competitive offering, and its proven ability to provide training assistance to establish their operations. [ more ]

    April 18, 2006

    Suntech Power Chosen to Provide Solar Energy System for Beijing Olympics

    Suntech Power Holdings Co. Ltd. (STP) announced an exclusive contract to supply a 130KW solar energy system for Beijing's Bird's Nest Stadium, the main stadium for the 2008 Beijing Olympic Games. The world-class solar energy system will be installed at 12 entrances of the Bird's Nest Stadium. [ more ]

    MEMC Announces LOI for $1.6 Billion Solar Wafer Supply Agreement

    MEMC Electronic Materials Inc. (WFR) announced that it has signed a non-binding Letter of Intent ("LOI") with Motech Industries, one of the top producers of solar cells in the world today, for the supply of solar wafers to Motech.

    Under the terms outlined in the LOI, MEMC will supply solar wafers to Motech over an 8-year period, with pre-determined pricing, on a take or pay basis. Sales of the wafers over the 8-year period would generate at least $1.6 billion in revenue to MEMC. [ more ]

    Shares of WFR are trading up over 4% in pre-market activity. I have been looking to add this stock to my portfolio and have been waiting for a pullback to enter the stock. It looks like that pullback is not going to materialize anytime soon.

    EPOD to Build Five Megawatt Solar Panel Factory

    EPOD INTL INC (EPOI.OB) announced that they intend to construct a solar panel manufacturing facility in Kelowna, B.C. An estimated two megawatts of production capacity is anticipated to be available within six months, with the annual capacity of the plant projected to be five megawatts upon completion. [ more ]

    April 12, 2006

    FPL Selects Sarasota Location For Largest Solar Facility in Florida

    fpl_logo.gifFPL Group Inc (FPL) announced that through its Sunshine Energy® program it has selected Rothenbach Park in Sarasota as the site for its first solar array.

    The 250-kilowatt (kW) solar array will be known as the FPL Solar Array at Rothenbach Park. The new solar facility will be the largest solar array in Florida and one of the largest in the southeast. The solar project is part of FPL's commitment to develop new solar facilities as a result of customer participation in the Sunshine Energy program. The facility at Rothenbach Park is the first solar project to be announced as a result of the Sunshine Energy program. [ more ]

    WorldWater & Power to Build Solar Electric System for California's Valley Car Wash

    Worldwater Corp (WWAT) announced that it has obtained requisite financing and all applicable rebates for the solar electric system to be installed at Valley Car Wash, Inc. of Van Nuys, California.

    Construction will begin within weeks on the $676,000 project. Located on Van Nuys Boulevard in the heart of the San Fernando Valley, the rooftop photovoltaic (PV) installation will substantially reduce the car wash's electrical costs. Valley recently received approval of a 42% rebate of the full installation cost by Southern California Gas Company through the California Public Utilities Commission's Self Generation Incentive Program (SGIP). [ more ]

    April 10, 2006

    Spire Manufactures BIPV Modules for Kyocera

    Spire Corp (SPIR) announced that the Company is using its own SPI-LINE(TM) photovoltaic module production line to fabricate large-format, building-integrated photovoltaic (BIPV) modules for Kyocera Solar, Inc., demonstrating the capabilities of Spire's versatile manufacturing equipment. In 2005, Spire produced BIPV modules for Kyocera's Solar Grove installation in San Diego, California. [ more ]

    April 03, 2006

    WorldWater & Power Corp. Wins $1.9 Million Bid from Liberty Science Center for Two Solar Electric Systems

    Worldwater Corp (WWAT) announced that it has won a $1.9 million dollar bid award to design and install two solar electric systems at the Liberty Science Center, the most visited science museum in New Jersey.

    One photovoltaic installation, a 122 kW unit, is to be mounted on the roof of the newly expanded Liberty Science Center facility and will face the Statue of Liberty as a symbol of clean, renewable energy. The other, a 105 kW installation, is a "Solar Walkway" that will lead from the bus parking lot to the center's main entrance. Here, overhead solar panels will serve double-duty as a canopy to protect visitors from the elements while generating electric power from the sun. Both units are expected to substantially reduce the Liberty Science Center's utility costs. [ more ]

    March 30, 2006

    GiraSolar Receives Sales Contract for $9 Million

    Legend Investment Corp. (LVCP.PK) announced that it has received a sales contract and partial payment for approximately $9 million worth of solar modules. The company has confirmed an order for 2MW of modules.

    The modules will be supplied to the customer from Q2/06 into Q4/06. The solar modules are part of a large grid-connected solar energy system which will generate returns from high feed-in tariffs for solar electricity. The system is located in Spain. [ more ]

    March 28, 2006

    Spire to Provide $6.75 Million Solar Cell Production Line

    Spire Corp (SPIR) announced that on March 16, 2006, Spire entered into a Turn-Key Project Agreement to provide a privately owned solar firm, located in Europe, a commercially sized, multi-megawatt, turn-key Photovoltaic Cell Manufacturing Line for $6.75 million. The new cell line will be integrated with an existing production line. Solar cells are one of the key components used in manufacturing solar modules. [ more ]

    March 24, 2006

    ECD Ovonics Selects Site for Its 50-Megawatt Solar Cell Manufacturing Plant

    ecd_logo.gifEnergy Conversion Devices Inc (ENER) has announced plans to build a third solar cell manufacturing plant to be located in Greenville, Michigan.

    In February the comapny approved plans to expand United Solar Ovonic's module manufacturing capacity to 300 megawatts (MW) by 2010. The first phase of the expansion plan includes the construction of the Greenville manufacturing facility with an annual capacity of 50MW, which is expected to be operational in calendar year 2007. United Solar Ovonic's existing 25MW production facility is located in Auburn Hills, Mich. In July 2005, United Solar Ovonic broke ground for a second 25MW production facility also located in Auburn Hills. [ more ]

    March 22, 2006

    GiraSolar Secures Contract Estimated at $65m and Approves Forward Stock Split

    Legend Investment Corp. (LVCP.PK) announced that it has secured a four-year supply contract for critical components allowing the company to sell an additional $16.5 million of GiraSolar branded modules based on current pricing in each of the next four years.

    This contract with a major European cell manufacturer represents an anticipated total revenue value of approximately $65 million for the company over the contract period which extends from Q4 2006 into Q4 2010 and should enable the group to market almost 4MWp per year extra of its own GiraSolar brand of modules. The total revenue of $65M represents yearly revenue of approximately 16.5M$ per year for a period of 4 consecutive years starting in October 2006. [ more ]

    The board also announced a reverse 5 for 2 stock split that will be implemented as soon as possible.

    Spire Corporation Reports Increased Revenues Driven By Strong Solar Equipment Sales

    Spire Corp (SPIR) reported revenues for the year ended December 31, 2005 of $22,422,000, a 30% increase from $17,278,000 for 2004, not including $6,320,000 and $3,000,000, respectively, of gains recorded in 2005 and 2004 from the sales of licenses. Net income for 2005, including the gain on the sales of licenses in both 2005 and 2004, was $44,000 or $0.01 per share, compared with a net loss of $4,120,000 or $0.60 per share for 2004. [ more ]

    Evergreen Solar Silicon Supply Woes

    evergreen_logo.gifEvergreen Solar Inc (ESLR) shares were down 9% on Monday after their primary supplier of raw materials pulled out of a contract.

    Evergreen Solar relies on granular silicon to make cells for solar panels. This silicon was supplied in part by MEMC Electronic Materials Inc. (WFR). MEMC previously agreed to supply Evergreen with 90 metric tons of granular silicon, but in January said it did not intend to ship most of the remaining balance of 53 metric tons. Evergreen plans to used its own crush chunks of silicon, but said it has not fully tested the process at commercial scale. [ more ]

    WorldWater & Power Announces Significant Construction Milestone for California Project

    Worldwater Corp (WWAT) announced that a major solar project had received inspection approval to begin generating full solar electric power - one of two irrigation systems being installed at a tree farm in Borrego Springs, California.

    The tree farm project uses the patented AquaMax(TM) variable frequency drive (VFD) to power a 250 horsepower well pump. A second irrigation system, scheduled to be completed by the end of March, will drive a similar pump. Once fully operational, the entire $1.8 million project is expected to save an estimated 70% of the farm's electrical bills. [ more ]

    March 16, 2006

    Is XsunX (XSNX) Being Manipulated?

    xsnx_logo.gifHans Deuel at Clearfish Research presents some very good concerns about the possible manipulation of the shares of XSUNX Inc. (XSNX).

    I've received a number of comments about XsunX, all from the same person. I decided to look into them. They are working on transparent solar cells, have a weird history, and a weird structure. The only technological information I can find on them is all paid advertising (from IPODesktop and others) masquerading as research. Each of their press releases are misleading. They offer one key statement, and then go on about intentions. For example, the latest one has the phrase "...has begun the construction of a mass production system...". That seems to imply, and is likely intended to give the impression, that commercialization and mass production is around the corner. But all that it really says is that they broke ground on a new building or something. They made some statements in 2004 about technological developments (4% conversion efficiency), but nothing technological since then. By the way, what they claim to mean by "4% efficiency" is "4...Watts of direct current...per square foot of PowerGlass film" [here, page 5], which is not the definition of efficiency, which is always a measure of power out versus power in. [ more ]

    If you are a current investor in XSUNX you would be well served to read Han's blog entry and consider his research as part of your buy/hold/sell decisions about this company.

    Back on November 11th I purchased shares of XSUNX for my personal portfolio. At that time I wrote the following entry.

    XsunX is a development stage company that I have profiled in the past. Since I started following this company I have seen many other people pick up on their story as well. This stock is a penny stock and we will not see some serious stock appreciation until they finish the development of Power Glass. You should consider this one highly risky if you want to add it to your own portfolio. I see the purchase of this stock as a nice gamble for a long term hold. The big win is once they finish development of Power Glass and either go into production or are acquired by a larger company. I don’t see this happening for several years. [ more ]

    As I said when I purchased shares, this company (and stock) is highly risky. Penny stocks have a habit of going bad quickly so you need to be careful.

    Since then my holdings are now up over 500%. I sold half of my holdings at the 200% gain mark so right now all I have left in this company is the house money.

    I was fully expecting this stock to be dead money until they start producing some products. However, the stock has been moving steadily higher on the promise of what is to come. As Hans states, this is risky territory. I will continue to hold for now.

    March 15, 2006

    Evergreen Solar Announces $125 Million Distribution Agreement With Donauer Solartechnik

    evergreen_logo.gifEvergreen Solar Inc (ESLR) announced that it has entered into a multi-year supply contract with Donauer Solartechnik, a German-based solar power distributor. The agreement calls for Evergreen Solar to ship approximately $125 million of photovoltaic modules to Donauer over the next four years, based on current exchange rates. [ more ]

    The German solar market is currently the largest market in the world and these types of partnerships are critical to getting a foothold into that marketplace. The shares of ESLR are currently trading up over 3% today on the news.

    NAI Global and WorldWater & Power Team to Provide Building Owners with Cost-Saving Solar Energy Services

    Worldwater Corp (WWAT) and NAI Global have signed an agreement to introduce their solar energy technology to the NAI Global network of commercial property managers and clients.

    NAI Global will work with WorldWater & Power to identify prospects for the purchase of equipment, electric power or services from WorldWater & Power, a developer and marketer of proprietary high-powered solar systems. In addition, NAI Global may aid in purchase negotiations and governmental approvals necessary for the construction of projects. [ more ]

    Spire's solar cell manufacturing line rolling for Italian firm

    Spire Corp (SPIR) announced that it has delivered and installed a multi-megawatt, turnkey photovoltaic (PV) module assembly line for PA. SOL Italia S.p.A. of Varallo Pombia, Italy. The assembly line has been commissioned and is now producing PV modules.

    The advanced PV module manufacturing production line from Spire includes automated equipment for solar cell stringing and lay-up, lamination, and module testing. [ more ]

    March 06, 2006

    Worldwater & Power Corp. to Provide Solar Electric System for Richard Stockton College of New Jersey

    Worldwater Corp (WWAT) announced the signing of an agreement to install a solar electric power system on the campus of Richard Stockton College of New Jersey in Pomona.

    The project involves the installation of the photovoltaic system on the roof of a new building that houses faculty offices and academic space. The project is a collaborative effort between WorldWater & Power Corp. and Eastern Energy Services of Southampton, N.J. WorldWater & Power will provide engineering, materials and equipment required to complete the project in accordance with the proposal. [ more ]

    EPOD Announces 100 Kilowatt Solar Install Has Begun

    EPOD INTL INC (EPOI.OB) announces that construction of the 100-kilowatt solar power installation previously announced on September 13, 2005, has begun. Phase-One of the turn-key, solar power system for a German agricultural client is projected to be completed within the next two weeks. The system will begin generating renewable energy for sale to the local electric utility under a 20-year power purchase agreement immediately upon completion, and has an estimated lifespan of a minimum of 40 years. The power purchase agreement is part of a federal government energy program whereby residential, commercial, and industrial power users are encouraged to utilize renewable energy to reduce, and ultimately eliminate, Germany's dependence on fossil fuel-based and non-renewable power. As both electric power demand and prices continue to increase, it is Management's opinion that demand for EPOD's solar power systems will grow correspondingly. [ more ]

    February 27, 2006

    WorldWater & Power and NAI Global Sign Agreement for Solar Energy Services

    Worldwater Corp (WWAT) announced the signing of an agreement to introduce WorldWater & Power's solar energy and technology to the NAI Global network of commercial property managers and clients.

    According to the terms of the agreement, NAI will help to identify prospects for the purchase of equipment, electric power or services from WorldWater & Power. In addition, NAI may assist in negotiating such purchases and in obtaining governmental approvals necessary for the construction of projects designed by WorldWater & Power that NAI has been instrumental in arranging. [ more ]

    February 22, 2006

    E.On Launches $34.72B All-Cash Endesa Bid

    German utility E.On AG launched a 29.1 billion euro ($34.72 billion) all-cash bid for ENDESA (ELE) on Tuesday, topping a previous offer from Gas Natural by more than 30 percent and threatening to disrupt carefully laid plans for Spanish power-market consolidation.

    Endesa said in a statement that the E.On offer was "clearly" the better of the two, but added that it still did not adequately reflect Endesa's true value. [ more ]

    Shares of Endesa were up 15% in yesterday's trading.

    EMCORE Corporation Awarded DARPA Very High Efficiency Solar Cell Program Subcontract

    EMCORE Corp. (EMKR) announced that it has signed a subcontract to participate in the Defense Research Projects Agency (DARPA) Very High Efficiency Solar Cell (VHSEC) program to more than double the efficiency of terrestrial solar cells within the next 50 months. EMCORE's Photovoltaic division was selected by the University of Delaware, the prime contractor for the DARPA VHSEC program, to develop advanced III-V multi-junction solar cells in Phase I of the program effort. In later phases, EMCORE expects to develop a technology roadmap for enabling significantly lower fabrication costs for the very high efficiency solar cells. [ more ]

    Evergreen Solar Announces $100 Million Sales Agreement with S.A.G. Solarstrom AG

    evergreen_logo.gifEvergreen Solar Inc (ESLR) announced that it has entered into a four-year supply contract with S.A.G. Solarstrom AG (S.A.G.), based in Freiburg, Germany. The agreement calls for Evergreen Solar to ship approximately $100 million of photovoltaic modules to S.A.G. over the next four years.

    S.A.G. builds and operates solar power stations, and sells the generated energy to corporations and utility companies. S.A.G. plans to use Evergreen Solar's products to help satisfy the growing demand from those organizations. These products will be manufactured at Evergreen Solar's plant in Massachusetts and at EverQ's new 30-megawatt facility in Thalheim, Germany. EverQ is a strategic partnership between Evergreen Solar, Q-Cells AG of Germany and Renewable Energy Corporation ASA (REC) of Norway. [ more ]

    February 07, 2006

    Active Power Receives Order from Leading Solar Energy Company

    acwp_logo.gifActive Power Inc (ACPW) announced that it has received an order for its new CoolAir DC product from one of the leading producers of photovoltaic modules in Europe.

    CoolAir DC uses thermal energy and compressed air to provide power, can be cycled regularly without a loss in performance and is environmentally friendly. By using solar energy to heat the thermal storage unit (TSU) and compress air in the storage tanks, energy can be captured and used at a later time. [ more ]

    The share price of ACPW has recently retested the trendline and I will be adding to my position in the Marketocracy mutual fund this morning.


    February 03, 2006

    SatCon Technology Corporation Announces Order from Sun Edison

    satcon_logo.gifSatCon Technology Corporation (SATC) nnounced that it has entered into a strategic supply agreement and has received a purchase order from New Vision Technologies, an affiliate of Sun Edison, LLC, to initially deliver up to 10 megawatts of PowerGate(TM) photovoltaic inverters through the end of the year. Sun Edison has multiple photovoltaic projects around the U.S. already under contract and the 500kW inverter, recently unveiled by SatCon, is a particularly good fit to meet their demands for high efficiency power conversion. [ more ]

    Solarworld Buys Solar Power Unit From Shell

    Solarworld AG (SWV.DE) will buy businesses from Shell to take over as the top maker of solar power equipment in the United States. The news prompted a leap in Solarworld shares, already buoyed by President Bush's pledge to promote new technology to make the United States less dependent on imported oil.

    The agreement covered Shell factories in Germany and the U.S. and sales operations in Germany, Singapore and South Africa. The price of the deal was not released and is still waiting for regulatory approval. [ more ]

    February 01, 2006

    Bush's State of the Union

    "America is addicted to oil, which is often imported from unstable parts of the world"

    Thanks to Mr. Bush's state of the union address last night, we should see some nice gains across the board in the Alternative Energy sector.

    Some of the big winners may be the Ethanol companies like Archer Daniels Midland (ADM) and Pacific Ethanol, Inc. (PEIX).

    The has a nice write up on the potential for ADM. [ more ] has a nice summary of the important parts of the speech.

    In his State of the Union 2006 address, President Bush announced the Advanced Energy Initiative�a 22% increase in clean-energy research at the Department of Energy (DOE).

    The Initiative is intended to focus on providing breakthroughs in two areas: power for homes and businesses; and transportation. [ more ]

    Update: Well the market is now open and shares of ADM and PEIX are trading down. But shares of Fuel Cells and Solar companies are up.

    Aqua Dyne To Test Solar Powered Water Desalination

    Aqua Dyne Inc. (AQDY.OB) and the Australian, Commonwealth Scientific and Industry Research Organisation (CSIRO), the Federal Government's Premier Research Organisation will be advancing the study and use of Solar Energy in thermal water desalination for the Coal Mining Industry.

    Aqua Dyne has received approval to deploy component modules of the JetWater Thermal Desalination system to a site adjacent to Lake Liddell in the Upper Hunter region of New South Wales, Australia. The JetWater Thermal module will be tested and monitored over a three month trial program. The module will be connected to a solar energy system developed and supplied by Solar Heat & Power Pty Ltd of Singleton, NSW Australia. [ more ]

    Aqua Dyne is an interesting company and I have been following it on my other stock blog. I haven't officially launched this new webiste yet, but I guess I'm giving you a Beta look at it now :-)

    So if your interested in stocks that track Water, please check out my other stock blog:

    January 27, 2006

    WorldWater & Power Corp. Signs Contract to Provide Solar Power to Quest Environmental Facility

    Worldwater Corp (WWAT) announced that it has signed a $109,824 contract to build and install a solar electric power generation system for Quest Environmental & Engineering Services, headquartered in Clinton, New Jersey. The photovoltaic (PV) system will provide electricity for the company, and is expected to substantially reduce electrical usage costs for the facility. [ more ]

    January 26, 2006

    SunPower Narrows 4Q Loss, Shares Jump

    spwr_logo.gifSunPower Corp. (SPWR) announced that revenue for the fourth quarter ended December 31, 2005, was $29.3 million, up 34% from the prior quarter's revenue of $21.9 million and up 523% from the year-ago fourth quarter combined(1) revenue of $4.7 million. The Company's fiscal 2005 revenue was $78.7 million. [ more ]

    These 4th quarter earnings have narrowed the companies losses and they expect significant quarter-on-quarter top line revenue increases to between $38 - $40 million. The stock gapped up 8% this morning on the news and is starting to give back most of these gains. It is currently trading with a gain of 3.8%.

    Update: Shares of SunPower closed the day with a nice 17% gain. Ya gotta love that.

    January 25, 2006

    Penn State Titania Nanotube Arrays Harness Solar Energy

    Penn State researchers are finding new ways to harness the power of the sun using highly-ordered arrays of titania nanotubes for hydrogen production and increased solar cell efficiency. [ more ]


    January 20, 2006

    Tyler's Elk Conference Call Notes

    Tyler at Clean Break was able to listen in on the Elk Corp (ELK) earnings conference call this morning. Elk has had a multiple year partnership with ATS Automation (ATA.TO) solar division Spheral Solar. The two companies have been planning a commercial release of solar-integrated roofing and building material products.

    Elk Roofing chairman and CEO Tom Karol, responding to questions from MacMurray Whale from Sprott Securities, said the Spheral Solar roofing product is still in alpha testing but the company hopes to move into beta testing -- i.e. put it on real rooftops in the marketplace -- in about 60 days. After the results of the beta are analysed, and assuming all goes well, the product will be fully commercialized in the first quarter of 2007.

    Read more at Tyler's site. [ more ]

    January 18, 2006

    Universal Communication Systems, Inc. Announces Formation of New PV Solar Business Segment

    Universal Communication Systems Inc (UCSY) announced that the company is set to make a major new investment and plans to open a new office in Los Angeles, California from which to market PV Solar Panels and PV Solar Energy Systems throughout the state. This follows the recent announcement by the State of California that it was to enact a Major Incentive Program which is the largest solar energy policy ever enacted in the United States: an 11-year, $3.2 billion incentive program aimed at spurring installation of PV Solar Panels / Systems. [ more ]

    SatCon Launches Largest Photovoltaic Inverter in the Industry

    satcon_logo.gifSatCon Technology Corporation (SATC) announced that it has successfully launched its 500kW PowerGate(TM) inverter. The release of the PowerGate(TM) 500kW inverter was one of SatCon's major R&D milestones for 2006, and positions SatCon as the leading provider of high efficiency inverters for the rapidly growing solar markets.

    The 500kW AE-500-60-PV-A utility-grade PV inverter was successfully listed to the UL 1741 Standard and also received approval from the California Energy Commission (CEC). The acceptance of this inverter by the various agencies not only gives SatCon the largest commercial PV inverter in North America, it also gives SatCon the broadest product line in the commercial photovoltaic inverter market - ranging from 30kW to 500kW - with 13 designs now approved and listed by the CEC. [ more ]

    January 17, 2006

    WorldWater & Power Corp.'s Quantum Energy Group Completes 400 Kw California Solar Project

    Worldwater Corp (WWAT) announced the completion and commissioning of a nearly 400 kilowatt photovoltaic system project by Quantum Energy Group, the construction and engineering subsidiary it acquired in 2005. The new photovoltaic (PV) system provides solar power to offset electric utility consumption at a complex of four tenant-occupied buildings in Menlo Park, California, south of San Francisco. [ more ]

    Solar Tech Companies Up on California Solar-Power Measure

    Shares of solar-energy technology companies rose sharply Thursday, with several chalking up 52-week highs, as California regulators approved a solar-energy package. The plan is the largest solar energy policy ever enacted in the United States: an 11-year, $3.2 billion incentive program aimed at spurring installation of solar panels. [ more ]

    January 11, 2006

    XsunX Begins Manufacture of Mass Production System

    xsnx_logo.gifXSUNX Inc. (XSNX) announced that it has begun the construction of a mass production system for the manufacture of the Company's proprietary thin film solar cell designs.

    As the manufacture of this first system and its thin films development evolves, the Company anticipates that it may begin marketing efforts of this system as early as this coming spring. [ more ]

    January 06, 2006

    Evergreen Solar Introduces Higher-Power Solar Panel

    evergreen_logo.gifEvergreen Solar Inc (ESLR) introduced the new EC-120 is the latest in Evergreen Solar's Cedar Line(TM) of photovoltaic panels. With the same physical dimensions as the Company's current 110-watt and 115-watt panels, the new product delivers increased power from the same area. Through its patented String Ribbon technology, Evergreen Solar produces its panels using significantly less silicon than conventional production methods. [ more ]

    December 27, 2005

    Solar and the long tail

    Rob Day over at Cleantech Investing has started a series of "Year End Thoughts" on various cleantech investing topics. His first one deals with Solar and is great read. [ more ]

    December 22, 2005

    Shares of Carmanah Purchased

    Wouldn't you know it, right after I posted about this company and complained that I couldn't buy it, I checked my brokerage account to see if there was any movement to my open market order. Well the IntraWeb gods must have been smiling on me, I got a partial fill in my personal account.

    So I now have a small stake in Carmanah Tech Corp (CMH.V) at a price of $3.0525.

    Maybe I should post my complaints more often :-)

    DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

    Carmanah Awarded $1 Million Contract to Build Canada's Largest Solar Power System

    Carmanah Tech Corp (CMH.V) announced that the Company has received a letter of intent confirming a forth-coming contract in the amount of $1,000,196 from the City of Toronto for a 100 kW solar power system to be installed on the roof of the Horse Palace at Exhibition Place.

    Carmanah will install a state-of-the-art 100 kW solar power system on Exhibition Place that is tied to the conventional electricity grid. The system uses high efficiency solar modules and a unique penetrationless racking system. An educational display in the lobby will show the public how much power is being produced, environmental conditions as well as historical system performance data. It is estimated this system will reduce the annual carbon dioxide emissions of this facility by approximately 94.7 tonnes per year. [ more ]

    Tyler at Clean Break was able to interview the company for a Toronto Star article and has more details at his website. [ more ]

    When you read Tyler's post you will notice he loves this company. What's not to love when you find a small company like this that is making money and showing profits. I would love to own this company as well.

    I have been trying off and on for a couple of months to buy the stock here in the US. The stock trades locally as a pink sheet ( CMHXF.PK ) but has zero volume. I have called my broker and they will be willing to purchase the stock via the Vancouver exchange, but at a cost that is prohibitive.

    The good news is that the company is making plans to move to a major Canadian exchange soon which may help increase the ability to purchase the stock.

    WorldWater & Power Corp. Signs $1.145 Million Contract to Provide Solar Power for California Embroidery Plant

    Worldwater Corp (WWAT) announced that it has signed a $1,145,800 contract to build and install a solar electric power generation system for Quality Embroidery in Los Angeles, California. The photovoltaic (PV) system will provide electricity for the company, and is expected to substantially reduce electrical usage costs for the facility.

    With the signing of this contract, on top of its earlier announced 2005 contract backlog of $23 million, the Company issued Revenue Guidance for 2006, projecting Revenue of $25 million to $35 million. [ more ]

    I have tracked World Water for a while and I recently received a question about my thoughts on this company. The good about this company is that I like the businesses they are in (both Water and Solar.) They have created a nice niche for themselves in selling solar powered pumps to the agricultural industries. They are also trying to branch out into pure solar installations as well, as referenced in the press release above. Another plus is that they appear to be a fully SEC reporting company. This helps a great deal when your doing due diligence on these small companies.

    This company should be considered very risky and is a true penny stock. They have a very negative trend when it comes to profits and the losses have been growing each year. A quick check of the insider transactions shows that there is nothing but selling. This is never a good sign.

    The biggest problem I have with this company is that its very popular with many of the penny stock pump-n-dumpers. You will frequently see this name on various spam e-mails touting the stock when it gets down into the 10-20 cent range. It will quickly rise up and then sell off again.

    If you are a trader, this maybe one of those times that you can play this stock since it is at the lower end of this cycle.

    Like I said, I like the business model but for me personally, I'm staying away from this company until they change their loosing direction.


    December 20, 2005

    Honda to mass-produce solar cells

    honda_logo.gifHonda Motor Co (HMC) plans to start mass-producing solar cells in 2007, eyeing growing demand for environmentally friendly energy sources. They will build a new factory for thin-film solar cells on the site of a car plant in Kumamoto. The company aims to generate annual sales of $40 million to $70 million from solar cells once the factory's output reaches full annual capacity of 27.5 megawatts, enough to power about 8,000 households. [ more ] &mdash via Clean Break

    December 16, 2005

    SunPower Announces $330 Million Global Solar Supply Agreement with PowerLight

    SunPower Corporation (SPWR) announced its largest ever product supply contract. The supply agreement with PowerLight Corp., a global solar systems provider, calls for the delivery of $330 million of solar panels from 2005 through 2009. SunPower's industry-leading products will be incorporated into PowerLight's advanced solar power systems for commercial, government and new home residential customers worldwide. [ more ]

    SunPower is trading up over 6% today on the news.

    December 15, 2005

    Suntech Power Holdings IPO Starts Trading

    Shares of Suntech Power Holdings Co. Ltd. (STP) started trading yesterday and the stock closed with a 34% gain on the day. Suntech is a solar PV manufacture based in China's Jiangsu Province. They plan on using this cash infusion to expand manufacturing capacity and to research ways of lowering the cost of producing silicon solar cells.

    This stock is one way to purchase shares in two hot areas right now (Solar and China.)

    I'm not able to purchase shares in this company yet for the mutual fund since Marketocracy doesn't list this company yet. I'm currently heavily weighted in solar shares in my personal portfolio and I am holding off on purchasing this company for now.

    December 14, 2005

    FPL Group in Talks to Buy Constellation Energy Group

    fpl_logo.gifFPL Group Inc (FPL) is currently in the advanced stages of negotiations to acquire Constellation Energy Group (CEG). An FPL-Constellation merger would create a giant East Coast-based utility with a market capitalization, based on Tuesday's closing stock prices, of $26.97 billion - $16.93 billion for FPL and $10.04 billion for Constellation.

    Constellation Energy Group is based out of Baltimore Maryland and is the holding company for Baltimore Gas and Electric. They also have an extensive presence in the wholesale power supply and generation business. The Power Generation Division currently uses 4.6% alternative sources for power generation.


    FPL has a strong commitment to alternative energy generation and is one of the largest utilities in the US utilizing extensive wind farms. CEG has a large footprint in Nuclear power generation and the combination of these two companies would make a top-tier producer of power generation for the East coast markets and a potential of 30,000 megawatts of power generation. CEG also gives FPL the ability to enter the wholesale supply side of the power generation business.

    Typically you would see shares of the acquiring company down and shares of the acquired company up with this type of announcement. The market is liking this potential merger and CEG is up over 7% and FPL is also trading up 0.6% this morning.

    December 13, 2005

    XsunX, Inc. Secures $5 Million Financing

    xsnx_logo.gifXSUNX Inc. (XSNX) announced that it has accepted $5,000,000 in financing from Cornell Capital Partners, LP to help drive the continued development and growth of the Company.

    Under the terms of the new financing, the Company would begin receiving the influx of growth capital immediately allowing for a more rapid acceleration of R&D and the initiation of business development efforts. [ more ]

    December 05, 2005

    United Solar Ovonic to Supply Solar Products for the World's Largest Solar-Powered Residential Community

    ecd_logo.gifEnergy Conversion Devices Inc (ENER) announced that it has signed an agreement with Actus Lend Lease to supply 7MW of photovoltaic (PV) products. The solar network will pump clean energy into the Army's power grid and is designed to reduce dependence on fossil fuels by 30 percent for the entire complex of 7,894 new and renovated homes that Actus Lend Lease plans for Army families on Oahu. The captured energy also will help power 11 community centers and maintenance offices that will be built among the new and renovated homes. [ more ]

    The stock is trading up over 5% today on this news.

    December 02, 2005

    XsunX Adds New Manufacturers to Products Development Program

    xsnx_logo.gifXSUNX Inc. (XSNX) is working with current manufactures of glass and thin-film products so that they can incorporate their PowerGlass technology into future R&D plans for the manufactures.

    The Company is providing these manufacturers with samples of Power Glass thin films and plans to adapt the on-going results of these working relationships into its manufacturing process line to meet the needs of its future licensees. [ more ]

    XsunX has been getting a great deal of press recently and it looks like the PR engine is going full steam. They are also featured in a Business 2.0 article about their technology. [ more ]

    What we are not seeing is news about the next phase of development, or even news of prototype production. This is why the stock is still sitting at its current price range. I still think the stock is fairly priced at this level and may consider adding a second third down here.

    November 30, 2005

    Evergreen Solar Shares Dip on Partnership

    evergreen_logo.gifEvergreen Solar Inc (ESLR) shares were down yesterday since an SG Cowen analyst said that the Evergreen partnership deal announced this week will reduce the expected profits for 2006. The analyst diluted his estimates for per-share losses in 2006 by a penny to 18 cents and reduced his 2007 earnings estimate by 6 cents to 19 cents per share. Many of the analysts still think this partnership deal is very positive for the company, they just expect that it will postpone profitability out another year.

    The stock was down over 5% yesterday and it is trading lower this morning in pre-market trading. I have been looking for a good entry point to start a position in this stock and it looks I will be getting there soon. This is where patience is key when your trying to get a good entry price on a stock.

    The stock has been a strong mover up for the last couple of months and when you look at the RSI indicator, it is still showing a slight over-bought condition. I fully expect that this downward pressure will take the stock down to the $10 level soon and roughly a 50 on the RSI. I would be a buyer of an initial position in the stock at this level. A move down to the firm support at $8 is also possible and the RSI would definitely be in an oversold position. I would load up on this stock if it got to these levels.


    November 28, 2005

    Evergreen Solar and Q-Cells Announce Partnership with REC

    evergreen_logo.gifEvergreen Solar Inc (ESLR) and Q-Cells AG (QCE.DE), the world's largest independent manufacturer of crystalline silicon solar cells, today announced a partnership with Renewable Energy Corporation ASA (REC), based in Hovik, Norway. The world's largest manufacturer of solar-grade silicon and multicrystalline wafers, REC is joining EverQ, a strategic partnership between Evergreen Solar and Q-Cells that is currently building a 30-megawatt solar wafer, cell and module manufacturing plant in Thalheim, Germany. [ more ]

    This is another piece of good news and the market seems to think so as well. Shares of ESLR are trading up almost 3% this morning compared to the market which is trading down on the day. I have been waiting to purchase Evergreen for the mutual fund on any sign of a pullback. That pullback just hasn't materialized and now I'm thinking I should just jump on board with a 1/3 position.

    November 22, 2005

    Xantrex receives funding from NREL for high power solar inverter development

    Xantrex Technology Inc. (XTX.TO) has been awarded US $873,000 from the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) under its Photovoltaics Manufacturing Research and Development Initiative. Xantrex will match the funding from NREL during the course of the project for a total budget of $1.74 Million. This program will take place at the Xantrex facility in Livermore, California.

    Xantrex PV inverters are America's leading choice for large-scale solar installations. Presently, utility-interactive, three-phase inverters are available in models ranging from 10 kW to 225 kW, and multiple inverters can be paralleled for larger power installations. [ more ]

    Xantrex is one of my favorite companies in the power inverter space. The stock is also acting very well right now and is close to what technicians call a "Golden Cross" with the 50 day MA crossing over the 200 day MA. This is typically a very bullish stock pattern. I would be a buyer of this stock now, but I'm not able to purchase the stock since in only trades on the Toronto exchange.


    SatCon's Powergate(R) Inverters Power New Jersey 502 KW Ground Mounted Solar Electric Power System

    satcon_logo.gifSatCon Technology Corporation (SATC) announced that two of its utility grade Powergate® solar inverters are being utilized as the power conditioning units for the new 502-kilowatt solar electric system installed at New Jersey American Water's Canal Road Water Treatment Plant located in Somerset, NJ. [ more ]

    I have been taking a close look at SatCon recently for a possible addition to my portfolio. The stock price has been under pressure recently and seems to be retesting the lows of the last six months. The news of some sales and installations above and also some recent work they are doing with the Navy on propulsion are giving me an indication that they might be ready to bounce off this low.


    November 18, 2005

    Shares of Sun Power Purchased

    SPWR_20051117.jpgAs I mentioned yesterday I had a limit order to purchase SunPower Corporation (SPWR). The stock was scheduled to start the day at $18 and I expected that the stock would be up big in the morning, so I set a limit order at $20. Well when the stock started trading it opened up at over $27. Mid-day the stock seemed to rest around the $25 level and that is when I entered the stock with a 1/3 position in my personal portfolio at a price of $25.70. The stock is not available for purchase at Marketocracy, so it will have to wait to be added to the mutual fund.

    Sunpower is the solar division of Cypress Semiconductor. Cypress still owns 52% of the new Sunpower stock. They plan to use up to $55 million of the new IPO money to triple their manufacturing capacity and will still have plenty of cash left over to fund R&D and continue operations.

    I also mentioned yesterday that I was feeling under the weather. I'm on the mend today fueled by Diet Coke and decongestants.

    DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

    November 17, 2005

    Sunpower Corp IPO Prices at $18

    SunPower Corporation (SPWR) announced its initial public offering of 7,700,000 shares of its Common Stock at $18 per share and the stock will begin trading today. I currently have a limit order sitting in my personal account waiting for the stock to open. I will not be able to buy the stock in the mutual fund since Marketocracy doesn't list the stock yet.

    Right now I'm staying home sick waiting for the stock to open, once I get a fill, I'm heading back to bed.

    November 16, 2005

    Endesa Reports 52 Percent Rise in Profit

    ENDESA (ELE) reported a 52 percent increase in third-quarter profit Wednesday and said it will distribute almost 2.12 billion euros ($2.48 million) in dividends for the year. The company said it will pay out nearly 2 euros ($2.34) a share in dividends for 2005. [ more ]

    The increased dividend is an attempt to ward off a hostile takeover attempt by Gas Natural. The stock way paying an almost 4% dividend yield and this move takes the divendend up near 12% with the special payout.

    Today I purchased the second third of my planned holdings for ELE in the mutual fund.

    November 15, 2005

    SunPower raises IPO price to $16-$18 per share

    Solar power equipment maker SunPower Corp., a unit of Cypress Semiconductor Corp. (CY) raised the expected price of its planned initial public offering to between $16 and $18 per share from a previous range of $12 to $14. The company expects to list its stock on the Nasdaq under the symbol "SPWR" sometime this week.

    I have always found the website helpful tracking this type of information down. [ more ]

    You can also find a great deal of info at as well for new IPO's. [ more ]

    November 11, 2005

    Shares in XsunX Inc. Purchased

    xsnx_logo.gifYou may have noticed that I'm starting to buy again. Well I also purchased shares in XSUNX Inc. (XSNX) this morning for my personal portfolio. Marketocracy will not allow me to purchase this stock in the mutual fund since it trades over the counter as a penny stock. The stock has been a strong mover since early September and I have been waiting for a pull back that has never materialized. I decided to purchase a 1/3 position here at this point.

    XsunX is a development stage company that I have profiled in the past. Since I started following this company I have seen many other people pick up on their story as well. This stock is a penny stock and we will not see some serious stock appreciation until they finish the development of Power Glass. You should consider this one highly risky if you want to add it to your own portfolio. I see the purchase of this stock as a nice gamble for a long term hold. The big win is once they finish development of Power Glass and either go into production or are acquired by a larger company. I don’t see this happening for several years.

    Shares were purchased for my personal portfolio at an average price of $0.38.

    DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

    Shares in Altair Nanotechnologies Purchased

    I purchased shares in
    Altair Nanomaterials (ALTI) this morning for both my personal portfolio and also the mutual fund. ALTI is a holding company that specializes in nanomaterials and also contains a life sciences division. The materials company has research in high performance batteries, fuel cells, and photovoltaics.

    Altair announced earnings today and the stock is up on the morning trading.

    Revenue Increases 68 Percent for Third Quarter and 230 Percent for Nine-Month Period
    "An increase in revenue of 230 percent for the first three quarters of 2005 is representative of the significant progress Altair has made over the last nine months," said Altair Nanotechnologies Chief Executive Officer and President Alan J. Gotcher, Ph.D. "We are experiencing solid business development progress and opportunities in both our Performance Material and Life Sciences divisions in several target markets. We expect these opportunities to mature and to produce recurring and sustainable revenues." [ more ]

    Today they reported a net loss of $0.04 which is compared to a net loss of $0.03 for the comparable quarter. The increase in this loss is attributed to an increase in investments for new contract R&D projects. The company has been performing well and the number of these new R&D contracts has been increasing.

    I started a 1/3 position in ALTI today with an average purchase price of $2.54.

    DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

    November 10, 2005

    Congress to Fund $2.5 Million in Energy and Water Development Appropriations for Altair Nanotechnologies' Nanoscience Research

    Altair Nanomaterials (ALTI) has been designated to receive an additional $2.5 million in Federal grant funding during 2006-2007 for the continued development of nanotechnology, nanosensors, and nanomaterials research, development and deployment. The $2.5 million funding was included in the Congressional Energy and Water Development Appropriation for Fiscal Year 2006, which was passed by the U.S. Senate and the U.S. House of Representatives on November 8, 2005. We anticipate the appropriation will be signed by the President within the next week. [ more ]

    ALTI had a nice 10% jump in the price yesterday on this news.

    November 04, 2005

    Evergreen Solar Announces $70 Million Sales Agreement with PowerLight Corporation

    evergreen_logo.gifEvergreen Solar Inc (ESLR) announced its largest sales agreement to date. Evergreen Solar and PowerLight Corporation have entered into a definitive agreement for a guaranteed contract which calls for Evergreen Solar to ship a minimum of $70 million of photovoltaic (PV) modules to PowerLight over the next four years. There are defined options which could increase the value of the shipments in the contract to approximately $170 million. Shipments to PowerLight are scheduled to commence during the first half of 2006. [ more ]

    The stock has gapped up over 14% this morning on this news. Cramer from CNBC has been talking about this stock recently as well, which has also generated some interest in the stock. I spent sometime preparing for the trading day today and took a quick glance at this stock last night. It has a solid uptrend but I felt that it was reaching the top of the current trading range so decided to hold off and wait for it to cycle near the trading range lows to enter the stock.


    Today's news has completely blown past that trading range top. So I will just have to see if it’s too late to jump into this name. The RSI is telling me it’s not currently overbought, but with todays large up move, we are certainly heading into overbought territory.

    Evergreen will also be announcing their quarterly earnings today at 10AM. You can hear the announcement via the conference call page.

    Update: ESLR reports a net loss of $0.07 per share, compared with a net loss of $0.10 per share for the third quarter of 2004.

    October 26, 2005

    DayStar Technologies Receives Technology Innovation of the Year Award in the CIGS Photovoltaic Cells Market

    DayStar Technologies Inc (DSTI) was awared the 2005 Technology Innovation of the Year Award in the field of copper-indium-gallium-diselenide (CIGS) photovoltaic cells.

    Each year this Award is given to a company that has carried out new research, which has resulted in innovations that have brought, or are expected to bring, significant contributions to the industry in terms of adoption, change and competitive posture. This Award recognizes the quality and depth of a company's research and development program along with vision and risk-taking efforts that enabled it to undertake such an endeavor. [ more ]

    It's nice to see that the stock has been holding up here and is now back above $10 again and above the 200 day moving average. I'm seriously considering adding more of DSTI to the mutual fund at this level. I don't think the stock is going to be running away to the upside at this point due to general market weakness, so I'm not going to be jumping in right now. I will watch it carefully over the next couple of days.

    For those that are interested in the general market trends, you may want to take a look at one person I trust and often agree with. Lock and Load

    October 25, 2005

    XsunX Developing New Nano-Crystalline Opaque Solar Cell

    xsnx_logo.gifXSUNX Inc. (XSNX) announced that it has expanded its business opportunities to include the product development of a new opaque solar cell device. This unique four-terminal solar cell design uses a combination of thin film transparent cell technology, derived from the company's Power Glass initiative, with that of a nano-crystalline solar cell. XsunX believes that the combination of these two technologies into a single device holds a promising opportunity to deliver low cost, high efficiency, flexible, and light weight solar cells providing performance characteristics commonly found only in various forms of expensive crystalline wafer technologies.

    The decision to diversify the company's product base to include opaque solar cell designs was fueled by what the company sees as explosive international growth in the demand for opaque solar cell products and applications. In countries such as China, Japan, Germany, and in the U.S., there is a growing trend supporting the increased use of green building designs promoting the use of integrated solar technologies within building materials. XsunX anticipates that the development of a stable, high-efficiency, thin film solar cell could provide building material manufacturers with a preferred alternative to the use of lower efficiency multi-junction thin films and the more costly multi-crystalline solutions. [ more ]

    October 17, 2005

    Growth of Solar

    Here are some additional notes I took from the Solar Energy conference. I was meaning to post this one earlier, but life and time got away from me. This session dealt with the Growth of Solar. It was not one of the more interesting sessions, but some of the people on the roundtable were very interesting.

    The first person to speak was Edwin Hill, President of the International Brotherhood of Electrical Workers.

    His major focus for the reason why he and the IBEW was attending the conference is to state that they want to be a partner in the Solar industry. There were a few rolled eyes in the audience and I don't have a full understanding of the complete back story. I understand that most Union and Business relations tend to be strained. There was also a mention that the IBEW may have been one of the major factors in killing the "Million Solar Roofs" initiative in California. So with all that background he had to make a compelling case as to why he was there and why the IBEW should be part of the solar industry.

    Here were some highlighted notes from his presentation:

    The union shares the commitment for renewable energy and they wants to be part of the solution. They have already formed an excellent partnership with the Sharp Solar manufacturing facility in Tennessee and are proud to be part of their success story. They are prepared to forge this type of relationship with the other manufactures.

    The IBEW can also provide their expertise with all the various coding standards for the various jurisdictions. They have already made a substatial commitment to alternative energy technologies and have taken the steps to encourage the IBEW members to gain additional training and certification in solar technologies. The new International headquarters has also installed solar panels on the roof of the building. Many of their local union offices have also taken the step to install solar and wind turbines to supply energy to those buildings as well. A key asset they can also bring to the solar industry is a long history of political action. They have a significant voice in the energy issues discussed in the public policy debate. They have already started to encourage the politicians to look at net metering and also increased rebates for alternative energy installations.

    He understands that the IBEW was painted as the villain with regard to the fate of SB1 in California. The prevailing wage issues are often brought up as the cause to the demise of this bill. However, our stance on the prevailing wage rate was dropped. The major sticking point is the requirement for licensed electricians only are able to get the solar work. Now is the time to resolve the differences so they can work together in the future. They want growth and feel that they can be an ally to the industry. Work with us. Talk with us. This could be the beginning of a beautiful friendship.

    There were a few laughs at that last statement by Mr. Hill. Since I'm not in the industry, I don't know the entire history of that relationship. But I get the distinct impression there is History.

    The next speaker was Edward Mazaria, a founding partner with Mazria Odems Dzurec. He was there representing the architecture and building community.

    His presentation dealt mainly with green house gases, global warming argument, and the reason why we need to seek carbon neutral solutions to provide our energy needs. He had a very extensive slide presentation and the notes and data are too numerous to mention here. I will be receiving the powerpoint slides sometime in November and I will see if I can reproduce that data here for those that are interested.

    The most interesting aspect of his presentation is one that is not commonly presented when you discuss green house gas emissions. Many people look at the transportation industry as a way to combat green house emissions. However, his focus as being an architect is that the largest portion of green house gases generated is used to produce energy for all the millions of homes and buildings in the world. If energy efficiency was a mandated part of all new and reconstruction, we can make a serious dent in the power required for these buildings. In the next 30 years, over 50% of all the buildings in the United States will be turned over either to new construction or renovation. If there was a government standard that all of these buildings be made to fit a zero emissions standard of being carbon neutral by 2030, global warming will be history. He also feels that we should start to train the future students of construction and architecture now to meet this goal.

    The next presenter was Kathleen McGinty, Secretary of the Pennsylvania Department of Environmental Protection.

    Hands down, I felt she was the most engaged and motivating speaker of the entire conference. She was highly energetic and actually got me excited about the plans that PA has with regards to alternative energy. I only live about an hour south of the PA border and have visited that state frequently. I may just have to visit some more. Here are the notes from this session.

    The reality has changed for Pennsylvania. It is not the first place you think of when you think of clean energy. It is always thought of as the dirty steel industry and coal state. PA was also the home of the first commercial oil well. I'm here to tell you that we are thinking differently and to tell everyone in the green energy business that Pennsylvania is open for business. In the last 2.5 years in office here is what has happened. PA is now second to California in the number of LEED certified green buildings. 2 of the 6 mining offices are now LEED gold certified and are powered by solar and wind. The recycling industry has also become a $23 billion business in PA.

    PA also has the largest farmland preservation program in the US. They also host the largest deployment of wind farms East of the Mississippi. They also have a very large interest in the fuel cell industry and Hydrogen generation. PA was the dirtiest and their goal is to become the cleanest.

    The first question everyone here may want to know, what are we doing with solar in PA? We have a wonderful success with Abera Solar. They are reclaiming abandoned brown fields for mixed zone use to make walkable communities. Half of the homes will we zero energy emissions and make extensive use of solar. They are also making solar a cornerstone in homeland security preparedness. They are taking a intensive look at the energy component of government continuance. This aspect is often overlooked in many disaster plans.

    The big new thing for PA is an extensive alternative energy portfolio standard. They have create a market set aside specific for solar guarantees. Currently they have 1 megawatt of solar installed. With the new law they need to have 680 megawatts of solar installed in PA. It is now a law and they have a mission to fulfill this requirement. PA is almost 2 months away from net metering rules at the state level. There is also a great deal of money set aside to meet their green goals. PA is committed to green technologies and is putting their money to good use with tax free bond investments, a $1 billion setaside for clean energy, numerous grants and loan guarantee all totaling an additional $80 million. There is also a $100 million set aside created by the Governor that will be used for farmers that want to make clean energy investments for solar, wind, etc.

    They are also willing to think out of the box. They are willing to take risks and are willing to be a partner in a real way. They will even be a co-signer to your loan. That is how committed they are. Last week they had a waste coal cleanup company that could not get funding without a customer. The state of PA stepped up and guaranteed the company a 10 year contract and they were able to receive their funding.

    They have establish many great policies. These policies are needed not to meet a goal. It is a requirement and they are willing to work with you. The DEALS are OPEN in the Commonwealth of PA. Come and see us.

    The next presenter was US Senator Lamar Alexander. He was instrumental in crafting and eventually passing the largest federal tax incentive with the 2005 Energy Bill.

    There was a standing ovation when he came to the podium. He was also given an award by the Solar Energy Industry.

    Here are my notes from his presentation:

    Today is all about carbon free energy and conservation. There has been significant changes on the Senate floor. There have also been changes in attitude. They are realizing that carbon free is the future. Right now nuclear is the only source that can significantly replace carbon based fuel sources. However, there are many alternative sources that also need to be in the mix, solar included. We are just in the beginning phases of finally getting federal support. The initial bill had a 6 year lifetime and $7,500 in residential credits. We ended up with 2 years and $2,000. He is still very happy with the provisions that were passed.

    He feels that we need to do three things at the Federal level to increase alternative energy.

    We need to leverage the tax break we did get this year. Don't complain, use it.
    We need to embrace new transformational solar technologies.
    We need to extend the tax credits to 6 years as originally proposed.

    At the end of his presentation he left a bit of advice. I suggest that everyone in the solar energy should follow the following hiring practices. For every 2-3 engineers that you employ, please hire at least one designer. The biggest growth potential for the solar industry is to improve the asthetics rather than the engineering. That is how you are going to obtain market penetration. There is a very big market out there and to win you need more than an environmental benefit, you will win on attractiveness. The best looking design will be the winner.

    This last point I agree with 100%.

    October 11, 2005

    Investing in Solar

    The one session I was most interested in attending at the Solar Energy confernce dealt with Investing in Solar. This session was primarily focused on venture capital.

    The panel was moderated by Ron Pernick from Clean Edge

    The panelists were:

    Bill Gross - Energy Innovations and IdeaLab. His company is making small CSP units that can be used for roof top installations.

    Dave Pearce - Miasole. This company is reasearching and producing a CIGS based thin-film PV.

    Howard Berke - Konara. This company is producing an organic based polymer solution for thin-film PV

    Ravi Viswanathan - New Eneterprise Associates. A venture capital firm.

    Erik Straser - Mohr Davidow Ventures. A venture capital firm.

    The main question presented to the panelists was what makes the investing climate different now compared to previous years?

    Bill Gross: The investing climate has never been better. There are many companies now having early successes. The next big thing for this industry is for these solar companies to show real solar profits. Many of the companies are not there yet, but we should see it soon. There have also been many successful IPO's in the market recently. Profitable solar companies promote the success for everyone in the industry. Once they are able to move away from subsidies and are able to form more partnerships, this industry will grow. It is very similar to the successful model of silicon valley. When the industry is able to form an eco-system where everyone can grow, everyone will prosper. He doesn't feel that they all need to be in the same geographic area, the companies just need to be able to work and grow together. Another reason for the growth in VC capital is that the government is just not investing enough. Private industry understands this and needs to step in to take the industry to the next level.

    Howard Berke: They have investors and partners world wide. They have funded their development primarily from VC capital and they have plans to take their polymer based thin-film system up to the production of gigawatts. They have focused on the technology and have found partners to build the plants and manufacturing. They are looking at their next round of financing next year for $20 million. The biggest change in the last 5 years has been more stimuli and incentives by other countries like Germany, Italy, Spain, and Greece. Another factor is that the demand and cost of fossil fuels is increasing the interest in alternatives. They are also finding that the Dotcom Bomb has left the VC's with no where to invest their money. They are looking for new alternatives and many of them are moving into financing this sector. The generalist VC firms have started to enter the cleantech industries in big way. They helped build the entire semiconductor industry and are now helping to build this one. His company is targeting a goal of printed organic polymers down to the cost of 50 cents per watt in 10 years. They are also developing photo active dyes in every color of the rainbow that can be utilized in many installations.

    The VC's also see a way to get paid on their investments. The recent successful IPO's in this industry show away to collect the profits in the investment. There are also some major CEO's of Fortune 100 and 500 companies looking at this sector and the companies that can be acquired so they can enter this space.

    David Pearce: Miasole was founded on building a solar cell built using the same technology that is used to build computer hard drives. They use a sputtering process to coat their material on stainless steel foil. He feels that CIGS thin-film solar is the next focus for their company. The innovations like this provide the potential to be on par with cost to existing electrical generation. In 2003 it was very challenging to find funding. Much of the funding was out of his own pocket. In 2005 it is now a different story. The VC's now see a path to liquidity. He also sees that the path to future growth in this industry is making the solar equipment part of the building infrastructure. He showed a sample of his material as part of roofing membrane material. The closer you integrate the material to the structure, you lower the cost.

    Ravi Viswanathan: New Enterprise Associates is a broadbased investment house. They have a history of being a generatlist in the technolody, information technology, and life sciences sector. One thing that attracts many VC's to this space is that the technology is very similar to the semiconductor industry. There are also similarities with the life sciences. The contacts and knowledge they had built in the 90's during the dot com area are very applicable now in the same space.

    Erik Strauser: They typically make about 25 investments a year. Clean tech is his focus for the firm. They find many of their companies at the major research universities or from repeat entrepreneurs. There is typically over 20% turnover in the Fortune 500 every decade. He believes that we will see a renewable energy company in the Fortune 500 in the next 10 years. Large companies don't invest in R&D anymore. They use this early stage companies to fuel their R&D development. It is often more cost effective to buy into a technology, rather than try to develop it themselves. He also stated multiple times that they have companies in the portfolio that are doing some very interesting technology that has not hit the markets yet.

    Overall they all agreed that demand for their products are not an issue. Capacity is the biggest issue. Everyone is scrambling to meet demand. They feel that thin-film will become cost competitive with existing technology within the next 5 years. This is why the VC's are investing now for big gains in the future.

    What's Needed for US Solar Energy Market Growth?

    Here is a continuation of my notes from the Solar Energy Conference.

    The next session was a roundtable of various participants from the solar industry. The topic of this roundtable was what is needed to grow the US market for solar energy.

    The following people were on the roundtable:
    Christopher O'Brien, VP of Sharp Solar (Manufacturer)
    Tom Dyer, VP of Kyocera Solar (Manufacturer)
    Barry Cinnamon, President of Akeena Solar (Installer)
    Jeffery Wolfe, CEO of Global Resource Options (Wholesale Distributer)
    Joseph Henri, Director of Pacific Gas and Electric (Utility)
    John Ralston, VP of Premier Homes (Homebuilder)
    William Garnett, Sr. VP of National City Energy Capital (Banker)

    The moderator of the roundtable was Dr. Jan Hamrin from the Center of Resource Solutions.

    This session was primarily a ralling cry to get development going into the solar industry. The global market for solar has been doubling every 30 months and the US is currently third in utilization of solar. Beyond increased governmental incentives, what does the solar industry need to do to grow this market in the US?

    First question: Where do you think your market segment and your company is going to be 10 years from now?

    Chris from Sharp Solar: 10 years ago the world market for solar power was only 74 megawatts of output per year. Today the industry is producing 1,000 of megawatts per year. He envisions that 10 years from now we should see 20 gigawatts of power. However this would require enormous capital and growth. Sharp is committed to the PV business and they are currently leading the manufacturing of silicon based PV panels. The company is also committed to moving toward a 100% zero emissions policy for its manufacturing facilities. The solar business is a key to making this goal a reality.

    Barry from Akeena: The customer perspective on installing solar equipment is the installed equipment cost. The tax incentives help to generate interest, but the cost of installation is still a barrier. The cost has been creeping down over the years, but the current backlog and solar panel shortages have caused the equipment to increase in price recently. There is a common misconception from customers that solar is not cost effective for residential applications. However, most manufactures are now offering 25-30 year guarantees on the equipment, and the large upfront costs can easily pay for themselves when you consider the useful lifetime of the equipment. The way they confront this argument is the rent vs. own argument. Would you rather buy 30 years worth of cheap energy up front, or do you want to rent your energy from the utility company for the next 30 years.

    Joseph for PG&E: The public policy of the state of California has been very positive for solar energy. The California Public Utility Commission (PUC) has been working on its vision of how California will meet its future energy needs. Solar is a part of that vision.

    Tom from Kyocera: In 10 years he feels that we will see ten times the current output when measured by megawatts. The key to future development for the PV industry is improvements in the aesthetics. But he warned that in 10 years, the solar power generated will still only be 1% of the countries total power generation. Without major reforms and incentives, we will not see huge growth in the industry.

    William from National City Capital: The bankers and financial industry are typically the last guys to get onboard with new technology. Their company has been trying to turn that around and they value the clean power that solar (and other forms of alternative energy) can bring to their financial portfolio. The finaicial community is starting to understand that green products can both benefit the market and the bank. Another key aspect to writing these types of loans for large solar installation projects are the guarnatees. They have started to do large solar transactions to fund major projects for commerical property. In 10 years he sees renewables are going to be a much larger part of the loan portfolio. Solar currently sits at 2% and he see's growth into the teens in the next 10 years.

    Next Question: There is currently a demand for solar now that we can't meet. There is a shortage of panels and a shortage of installers. What would happen to the industry if the demand for PV really increased and was competitive with retail rates for typical power generation? What do we need to do to the infrastrucure to meet this demand?

    Kyocera: It is not practical to double production every year. There is a finite rate at which the industry can grow. They are already growing at maximum capacity. The only way to get more growth is to commit more capital. We will not see capital committed until there is a firm commitment and public policy to back up the demand. We need assurance from the policy makers and public to ensure that the current demand and growth for PV is not a short term phenomenon. If there is a long term commitment, then the money will come.

    PG&E: The utilities are often viewed that they want alternative energy to stop or slow down. They don't. PG&E has been working for sometime to create plans for the future and how to handle renewables. They have built interconnection service teams to help streamline the customer interactions to enable grid tie-backs. They are also actively purchasing renewables as mandated by many states. They feel that they can be the customer advocates and help the entire industry.

    Sharp: They are in a capital intensive business and it requires good business planning. He also expressed an interest in greater transparcny in the long term public policy decisions with regard to solar. He feels that California does a good job of this and he wishes that other states and the Feds would provide longer term views of the future plans.

    Akeena: The market needs to drive this growth. The supply chain is very complicated and its not realistic to expect greater than 30% growth in equipment. The incentives really do help drive market share and is a key to future growth. Both Germany and Japan have had incentives for over 10 years and that is one reason why they are number 1 and 2 in solar usage.

    Next Question: Why has there been a great increase in non-residential PV installation?

    National Capital: In California the vast majority of the installations have been in the education and agricultural industry. Due to the public policy, it has been very easy to get funding approved for education.The economics of the new Energy Bill also work better for commercial ventures since the incentive has increased to 30% from 10%. He does fear that this current boom may be short lived since the incentives expire at the end of 2007. Many of these large projects take a great deal of time to get approved, funded, and built. The nature of the incentives are that the install needs to be completed by the end of '07 so as we move along we may see a decrease in commercial installations.

    The following questions were from the audience to specific panel members.

    How do we move beyond the Southwest? How do we take this National?

    Sharp: The passage of Federal tax credits will be a major reason to see growth nationally.

    Next Question: Some have said there needs to be a uniform metering system that incorporates peak time of day and year allowances. These reforms would require a reform in the tarrif structures for residential systems. How would you make these types of changes?.

    PG&E: "Net metering is a fascinating subject" (plenty of laughs from the crowd) The biggest problem he sees is in the public perception and public policy. Everyone wants stable prices. Changes to the tariffs and net metering would cause spikes and big changes to the customers. From a broad consumer standpoint, people don't understand net metering.

    What is being done to deal with the silicon shortage?

    Sharp: In reality this is a business planning question. Many of the silicon companies were burned by the internet boom and had excess capticty. The solar industry now seems to be growing faster than the semiconductor industry so the investment is happening now. However, it typically takes 2-3 years to build new plants. We are still a year or so away till we see the end of the current shortage.

    October 10, 2005

    An Introduction to Solar

    Last week on Thursday and Friday I attended the Solar Power 2005 conference. My primary goals were to try and talk with some of the public companies that I follow in this sector and also to try and gain a better understanding about the industry. I understand the fundamentals of solar technology, but I was looking to get a better understanding of the industry itself and not just the technology.

    This conference (like many other industry specific conferences) was geared towards people that are already in the industry. So being at an industry conference like this and talking and listening to people that live in this industry is a great way to gauge the health of that industry. Overall, everyone that I met with and overheard was upbeat about their business. Everyone seemed to have more work than they could handle. I overheard that there were several new faces and companies at the event. It was also reported that the attendance of over 1,300 was larger than normal. These are all healthy signs of a growing industry.

    The first session of the conference was ideally suited for me since the focus was an "Introduction to Solar."

    There were about 200 people in attendance for this first session. Here are my notes from this introduction session. You may find some interesting tidbits in here, I certainly did.

    solarpanel.jpgThe use of solar power has be used for almost 200 years. In the 17th and 18th centuries people used to coat water storage tanks with solar absorbers so they can heat the water for showers.

    The last time solar energy was in prominence was during the 70's during the last oil shock. At that time there were many tax incentives to install thermal solar panels used to heat water. The speaker at the conference stated that "These tax credits were one of the worst designed since people were actually able to make money on the credit by installing cheap and poor performing systems." This gave the entire solar industry a bad name during this time frame and it has taken over 20 years to overcome this tax dodge reputation.

    Today we have solid companies and new technologies that are not just solar thermal based. With the 2005 Energy Bill that was just passed, we also see the return of solar tax credits and incentives. But these incentives are tempered with limits.

    Today we have three predominant uses of solar power.

    1. Thermal solar: which is still in use today but new technology have vastly improved the performance.
    2. Photovoltaic Systems (PV): which is where people now equate what solar energy is all about. These PV systems can be either crystalline silicon based, photo sensitive polymer based, or organic based photo receptors.
    3. Concentrating Solar Power (CSP): systems are based on a series of mirrors or reflectors that focus the sunlight into a central photo receptor. These systems tend to be very large and produce hundreds of megawatts of power. The Stirling systems are an example of this technology.

    Now when someone typically mentions solar power, most people now think about PV systems and the silicon based technology. PV is easy to understand for most people since they have been exposed to this technology for many years. You may have a solar powered calculator sitting on your desk now and these have been around for over 30 years.

    sharp_roof_close.jpgBack in the '70's the government was researching energy independence and a great deal of research capital went into PV technology at this time. There was also a great deal of research into PV as power requirements for in-orbit space flight required cheap electrical generation. Over the last 25 years the the costs have decreased and the technology has improved. The biggest advance in the reduction of cost were primarily based on advanced manufacturing techniques. Many of the solar cells used to be hand tied onto the platform. Now with automated manufacturing solar panels can be constructed in minutes compared to what used to take 6 hours. There has been a consistent 5-7% decrease in cost per year.

    However, the raw materials are now becoming an issue. 95% of all PV solar panels utilize silicon to make the photo receptive cells. Silicon is now facing a sever shortage. The silicon usage has grown over 10 times from 1996 to 2004. The biggest contributer to this increase is caused by the semi-conductor industry. The internet dot com bubble of the 90's had many of the silicon manufactures ramping up to meet the supply. When the dot com bubble burst, the silicon suppliers were left holding their excess inventory and they stopped investing in new manufacturing plants. The solar manufactures were able to use this inventory at dramatic savings as they started to ramp up. That inventory is now dried up and the solar panel manufactures are now using over 1/3 of all the world supply of silicon. New silicon manufacturing facilities are under construction now but are at least 1-2 years out from coming online. So this demand imbalance may actually cause the cost of PV solar panels to increase over the next couple of years.

    Many of the new and exciting PV technologies don't use silicon in their construction. They can use synthetic polymers or organic materials that can be printed onto the thin films. This process is very similar to the photo film technology. There is also research in nanotechnology to provide alternative methods to coat photo sensitive surfaces. These new non-silicon based technology is where most of the interest and R&D is currently being focused.

    solar_stirling.jpgThe third type of solar power is Concentrated Solar Power (CSP). The typical PV systems are considered distributed technologies. The energy generated will be at or very near the point of use. The CSP technology uses the typical utility company model where the power is generated at a centralized facility and is then transported to the location of usage. The typical CSP system will house acres of mirrors that focus the sun power to a photo receptor. There are also systems that utilize troughs that super heat fluids for the generation of power. These systems are typically used for multiple hundred megawatt applications. This technology was heavily developed in the '80's but went underground due to lack of funding. With the passage of the recent Energy Bill the interest in this type of technology has seen much greater action. Privately held Stirling Energy has recently signed contracts with SCE and SDG&E to provide electricity from its CSP based fields.

    Many people feel that you have to live in the Southwest in order to utilize solar energy. The reality is that the entire US is ideally suited for solar. When you look at solar usage, the US is currently third behind Germany and Japan. Both of these countries currently have the solar footprint of Northern Michigan, but they are both able to make solar power work for them.

    This is the first of many postings about the conference. I will try to have everything posted over the next day or so, so please stay tuned.

    October 06, 2005

    Solar Power 2005 Conference

    For the next two days I will be at the Solar Power 2005 conference in Washington DC. I'm currently deep in the bowls of the Hyatt and I'm finding that wireless internet (and also cell phone) coverage is spotty at best. I just finished the first session and will be posting conference notes later when I have a strong internet connection.

    It looks like there is about 300 people in attendance and the first session on Introduction to Solar was informative. If you happen to be reading this and you are attending the session, say Hello, It would be nice to meet some readers face-to-face.

    October 03, 2005

    XsunX Produces Large Area Transparent Solar Cell on Thin-Film Plastic

    xsnx_logo.gifXSUNX Inc. (XSNX) announced that continued product development success has produced large area integrated solar cell modules on transparent polyester films. This represents a milestone for the Company in efforts under its Phase III development program to perfect a scalable manufacturing method for large area solar cells on inexpensive Polyethylenenapthalate, or PEN based thin film plastics. [ more ]

    XsunX is an interesting company that was brought to my attention from one of my readers. They are developing transparent films that can be used on normal windows. These films can be used as solar cells to produce energy.

    First generation Power Glassâ„¢
    Second generation Power Glassâ„¢

    From the XsunX website:

    Power Glassâ„¢ represents a new breed of solar cell design that balances solar cell efficiencies and manufacturing costs with broad applications and uses. The Company believes that these design, manufacturing, and application efficiencies may provide as much as a 100% efficiency-to-cost gain over conventional opaque solar cells. This 100% gain in efficiency-to-cost is based on Company estimates of Power Glassâ„¢ solar cells operating at as much as 50%, or half, the efficiency of conventional opaque amorphous solar cells yet costing as little as 25%, or one fourth, to produce. Final cost to efficiency analysis will be determined upon completion of development.

    This company currently trades on the OTCBB and would be considered a penny stock since they are still very much in R&D mode. They are currently not selling anything, but are looking for licensing partners for the technology. I was hoping that they were going to exhibit at the SolarPower 2005 conference, but they are currently not listed as an exhibitor. Maybe I can find a representative in one of the meetings this week so I can learn more about this company.

    The stock is currently trading up over 15% on today's announcement.

    September 29, 2005

    Questions about DayStar Technologies

    I received an e-mail from a reader that had questions about holding DSTI.

    I had some concerns about DSTI. I was wondering if you still believe investment in this company or alternative energy stocks is worth it. If crude oil drops further (let say mid 50s) do you think it will have negative impact on alternative energy stocks particularly ENER and DSTI. I was very happy with the holding a couple days ago, but the performance of DSTI in last 2 days without any news has got me concerned.

    Let me answer your question with first a question. What is your investment time horizon? If you are thinking in terms of less than a year, then I would say most of the Alternative Energy stocks are currently over priced and the short term trading profits are going to be harder to come by.

    If you have a longer term time horizon of say 3-5 years, then I feel many of these stocks will make excellent investments. The key is to buy them with as low of a cost basis as possible. I have owned DSTI in the past and sold it recently before I started tracking all my portfolio purchases. The lack of news tells me there is nothing fundamentally wrong with the company. With such great gains over the last year, It maybe as simple as profit taking. You also have to keep in mind that the entire market has been in a funk the last couple of weeks. So it could also be acting in sympathy with the general market.

    A quick look of the chart confirms that it topped out in early August and has been building a base around the $13 level. It has recently broken down below this base and now currently sits at a minor support level around $11.


    The technical side of me is also thinking it could fill the gap that was created in June and we could very easily see $6. However, a move like this would have to be caused by something fundamentally wrong in the company (i.e. bad news or possibly loosing a contract.)

    My plans for DSTI are to hold tight here. I still think it is a good long term investment. The RSI is also starting to show a slight oversold indication so we may have seen the end of the selling. If this $11 level turns out to be some good support, I will probably add more of the stock to the mutual fund. If we see $6 with no news, I will seriously consider averaging down at this level since this is a point of major support. Keep in mind a move $6 is a greater than 50% loss on the initial investment. Most people would not be willing to stomach that type of a loss on a single investment. I am willing to take that loss in the short term if the company stays fundamentally strong. I would be a seller of the stock if they are not able to meet the goals that management has detailed in the most recent operational update.

    As to the question about $50 dollar oil (or even $40), I still feel the alternative energy sector is going to do well in the next 3-5 years. We WILL see $50 dollar oil again (maybe even this year) but this is fighting the long term trend in oil and alternative energy sources are here to stay.

    September 20, 2005

    Barron's Report on Silicon Shortage

    Tyler Hamilton over at Clean Break has an excellent summary of the Barron's article on the State of the Solar PV market.

    A couple of interesting points made in the story, based on data from analysts:
    • Within 10 years solar PV technology will be in cost parity with retail electricity prices.
    • About $100 million (U.S.) has been invested in solar-related ventures in the first half of 2005.
    • Shares of publicly traded solar-focused companies have jumped 150 per cent over the past 12 months.
    • By 2010 solar power production is expected to quadruple to 6 gigawatts worldwide. During the time, the market will grow from $11 billion (U.S.) this year to $36 billion (U.S.).

    You can read Tyler's full summary and also a link to the Barron's article over at the Clean Break website.

    September 13, 2005 comments on ENER

    The Motley Fool finally had something good to say about an alternative energy stock. It just so happens to be for one I purchased earlier this morning.

    Don't look now, but Energy Conversion Devices might just prove to be that rare bird -- an alternative energy play with actual products and a reasonable chance of living up to lofty investor expectations.

    ... It would appear to me that hybrid vehicle batteries are the biggest near-term opportunity. Although the company didn't specify the customers, it has acknowledged receiving production orders for battery packs. [ more ]

    They say that timing is everything. I just wish everything I touched worked out this well. Look at the daily chart for today's trading in ENER. Now that I'm in, hopefully its nothing but up from here (knocking on wood.)


    Shares in Energy Conversion Devices Purchased

    ecd_logo.gifEnergy Conversion Devices Inc (ENER) opened up trading this morning with a gap down to the $33 level. For the last hour it has been steadily rising up from this point.


    As I said in my earlier post, I have been looking for a good entry point in this company and feel that the near term support of $33 is an ideal area to place an order. The stock has been on a run for several months and it is always hard to take a new position in a stock that has already seen dramatic increases in a stock price. When this happens I have learned to look for short term pullbacks, or a retest of support lines to start new positions.


    The fear (and potential downside) is that the support will not hold and you could be looking at a very big loss. This is where you need to look back at the fundamentals of the company. There is alot of good news about the future of this company, and the most recent earnings announcement points to several optimistic opportunities to look forward to.

    "...Cobasys' success in winning purchase orders for its proprietary NiMH battery system solutions for the automotive markets is another big plus for our business," continued Stempel. "Cobasys' ongoing work in hybrid vehicle prototype development will hopefully lead to more opportunities down the road."

    "ECD Ovonics is well positioned to capitalize upon the current government and consumer focus on new sources of energy," Stempel said. "We're extremely pleased with the pace of production and shipments at United Solar Ovonic. In the fourth quarter, we manufactured a record level 5.7MW of products with a sales value of $18 million and we're now running essentially at our rated production capacity of 25MW." [ more ]

    I purchased shares this morning in both the mutual fund and my personal portfolio at an average price of $34.75.

    DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

    Energy Conversion 4Q Sales Disappoint

    ecd_logo.gifEnergy Conversion Devices Inc (ENER) announced quarterly results on Monday. They beat Wall Street expecations with a less than expected loss, but did not meet sales estimates. They posted a loss of $6.9 million, or 23 cents per share, for the three months ended June 30, compared with a year-ago loss of $11.5 million, or 44 cents per share. The company's loss from continuing operations was 22 cents per share. Wall Street estimates on the loss were 26 cents a share.

    The stock is currently trading down over 4% in pre-market trading. I have been looking for a good entry point on this stock and will see how trading continues throughout the day.

    September 12, 2005

    NY Times article on Solar Investing

    The alternative energy investing stories continue to be written. The most recent was published on Sunday by the NY Times. This article specifically mentions Evergreen Solar, DayStar Technologies, Energy Conversion Devices and Spire, and SunPower.

    "The solar market is projected to grow 35 percent a year for the next three to five years," said Walter V. Nasdeo, managing director of Ardour Capital, an investment bank in New York that specializes in energy companies. "As these technologies get better, we're seeing things being developed like solar panels integrated into roofing tiles. That way, they don't look like a science project hanging on your roof." [ more ]

    September 09, 2005

    Shares of Daystar Technologies Purchased

    dsti_logo.jpgDayStar Technologies Inc (DSTI) has been on my radar for some time and the recent operational update created some renewed interest in the company. The stock traded up nicely over the past couple of days and it is now trading back down to the near term support due to some profit taking on the news. I have been looking for a good entry point on this stock and I feel like today is the day to make the move. Technically, the downside of this stock is that it may not be able to hold its currently levels and could be facing a sharp +30% decline below the $10 level. The cause for this type of decline would have me reevaluate my long term hold on this position.

    Currently the company is trading at 5x book value and holds little debt. They are not close to showing a profit, but the prospects of California solar initiatives and the new energy bill are stirring some interest in this company. They are a growing company and plan on adding new manufacturing space and employees to keep up with the research and demand of their products and services.

    Today I purchased shares in this company at an average price of $13.46 for both my personal portfolio and the mutual fund. I will continue to be a buyer of this stock below the $15 price level.

    DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

    September 07, 2005

    DayStar CEO Issues Operational Update

    Dr. John Tuttle, Chairman and CEO of DayStar Technologies Inc (DSTI) released a very extensive operational update detailing fundamental progress that has been made by DayStar over the past several months.

    "Since my last communication of this nature, we have made great progress towards establishing our first product-based revenue opportunities and have announced two new exciting customer relationships. Specifically, on June 9, 2005, we reported signing a purchase agreement with Blitzstrom, GmbH, a PV system integrator of Megawatt-scale PV power plants and a distributor of photovoltaic systems and components in Germany and the EU. This agreement, which could yield over $60 million in revenues to DayStar through 2008, calls for delivery of up to 30 Megawatts of our proprietary TerraFoil(TM). On July 11, 2005, we also announced the signing of a purchase agreement with China-based Micro Energy Group providing for delivery of up to 500 kilowatts of our proprietary TerraFoil-sp(TM) solar cells. [ more ]

    Dr. Tuttle is painting a good picture of growth and prosperity for DSTI. The stock market is also liking what he is saying as well with the stock currently trading up over 6%. This company has been on my watch list for sometime. It has a nice stairstep chart pattern and it looks like its ready to make another up move.


    August 31, 2005

    Solar Power 2005

    sp_header.gif I just completed my registration to attend the Solar Power 2005 conference in October.

    I plan on blogging my notes for this conference for everyone to read and will be keeping a sharp eye out for new investment opportunties. Many of the companies in this sector will be in attendance and I will be spending a great deal of time on the expo floor trying to determine who I should invest in next. Here is the current exhibitor list.

    If you have any questions you would like me to ask, feel free to leave a comment below. If you will be attending walk on up and say hello.

    June 20, 2005

    Universal Communication Systems, Inc. Subsidiary Millennium Electric TOU Ltd. Secures New Orders for up to $2.5 Million for Photovoltaic (PV) Solar Energy Panels and Products for Delivery to the US

    Universal Communication Systems Inc (UCSY) announced the execution of a new agreement with HELIOCOL (US). (, granting them distribution rights for the US market for our unique range of Millennium Brand PV Solar Panels and related products. In addition, the agreement calls for HELIOCOL to purchase up to 200KW this year and 500kw early next year, for up to $2.5 million in value of PV Solar Energy Panels for the US market. This new export order is once again a major endorsement of the high quality of our Millennium Brand PV Solar Energy Panels. [ more ]

    Evergreen Solar Added to the Russell 2000 and Russell 3000 Indexes

    evergreen_logo.gifEvergreen Solar Inc (ESLR) announced that the Company is scheduled to join the Russell 2000® and Russell 3000® indexes. The newly reconstituted Russell indexes will become effective at the close of the U.S. markets on June 24, 2005. [ more ]

    June 10, 2005

    DayStar Technologies Announces First Sales Agreement of Photovoltaic Foil(TM) to Blitzstrom, GmbH

    DayStar Technologies Inc (DSTI) announced the signing of a purchase agreement with Blitzstrom, GmbH for Blitzstrom's purchase of DayStar's exclusive TerraFoil(TM) solar cells. Contingent on DayStar's ramp-up of its production capacity, the agreement calls for monthly delivery of TerraFoil(TM) escalating in volume through the end of 2008 with price based on a variable market- competitive pricing mechanism. [ more ]

    June 08, 2005

    Major Solar Power System to Be Implemented at Timberland's California Distribution Center

    prtn_logo.gifDistributed Energy Systems Corp (DESC) announced that it has entered into an agreement to design, engineer and construct a 400 kW solar power system at Timberland's 429,000 square-foot Ontario distribution center in Southern California.

    The 401.8 kW photovoltaic (PV) system will be installed on a new "TruckPort" steel mounting structure next to Timberland's warehouse, leveraging an unused area of the facility's truck yard by providing storage space for the facility as well as shaded parking for employees. A total of 1,960 PV modules will be mounted on the structure in strings of 14 each. The high-efficiency modules and inverters are expected to produce almost 60% of the facility's electrical load. [ more ]

    Spire Solar to Provide EMMVEE Solar Systems with a PV Module Line

    Spire Corp (SPIR) announced that it has executed a contract to provide EMMVEE Solar Systems Private Limited, Bangalore, India, with a SPI-LINE(TM) 5000M. Spire's advanced photovoltaic (PV) module manufacturing production line includes automated equipment for solar cell stringing and lay-up, lamination, module testing, and related training. EMMVEE Solar Systems selected Spire Corporation as their production line supplier based on Spire's proven experience, the quality of its equipment, and its training program. Shipment of the production line is expected to begin in the fourth quarter of 2005. [ more ]

    May 31, 2005

    SatCon's Photovoltaic Inverters Lead Market in Efficiency

    satcon_logo.gifSatCon Technology Corporation (SATC) photovoltaic inverters have proven to have efficiencies that are on average 1% higher and as much as 2% higher than comparable products. These results allow PV installers and users to make predictable photovoltaic system performance evaluations, leading to more accurate calculation for payback of the system cost. The conversion efficiency values are used to determine the amount of rebate incentive available to the purchaser. Financial incentives for qualifying commercial photovoltaic power systems in California are calculated for 2005 at $3.50 per watt. For a 100 KW system, each point of higher efficiency would yield an additional $3,500 to the system purchaser. [ more ]

    May 03, 2005

    Solar Integrated Technologies and GE Commercial Finance Energy Financial Services Team Up to Finance Solar Project Utilizing Uni-Solar Ovonic Solar Products

    ecd_logo.gifEnergy Conversion Devices Inc (ENER) announced that Solar Integrated Technologies (SIT), a Los Angeles-based manufacturer of photovoltaic roofing systems for commercial and industrial buildings, has teamed up with GE Commercial Finance Energy Financial Services to fund SIT's solar roofing projects which utilize Uni-Solar Ovonic's flexible photovoltaic laminates. The first project will be with the San Diego City Schools with which SIT has a contract to install more than 2 MW of solar roofs. [ more ]

    April 26, 2005

    Magnetek Reorganization Centers on Alternative Energy Products

    MAG_logo.gifMagnetek Inc. (MAG) announced a reorganization of the Company's operating structure to accelerate growth in alternative energy markets. "Alternative energy products currently account for less than 5% of our quarter-billion-dollar annual revenue," said Magnetek chief executive Andrew Galef. "But that revenue has the potential to increase exponentially over the next few years, based on double-digit growth rates in alternative energy markets and proprietary power conversion products that we are now introducing for solar and wind power markets." [ more ]

    April 19, 2005

    Universal Communication Systems, Inc.'s Wholly Owned Subsidiary Solar Style, Inc. Announces May Launch for Its Complete Range of New "PV Solar Chargers" for the Global Consumer Electronics Market

    Universal Communication Systems Inc (UCSY) announced that the company will launch its new complete range of Patented PV Solar Chargers for the consumer electronics market in May. The new products are all fitted with new exclusively developed "Battery On Board" (BOB) technology, enabling the consumer to apply "charging" to his/her electronic device 24 hours per day, all year round. The entire range of our products is designed to operate both in sunlight, and indoors. [ more ]

    April 13, 2005

    Spire Corporation Receives Nasdaq Notification

    Spire Corp (SPIR) received a Nasdaq Staff Determination indicating that the Company is no longer in compliance with the $10,000,000 minimum stockholders' equity requirement for continued listing set forth in Nasdaq Marketplace Rule 4450(a)(3), and that its common stock is, therefore, subject to delisting from the Nasdaq National Market. [ more ]

    While this type of event is never a good thing, it certainly doesn't ring the death of this stock. They will just start trading OTC.

    April 11, 2005

    Advanced Solar Energy System to Provide Nearly 50% of Power for NY Science Center

    Northern Power Systems, a subsidiary of Distributed Energy Systems Corp (DESC), has received a grant from the New York State Energy Research and Development Authority (NYSERDA) to construct and install a state-of-the-art photovoltaic (solar) energy system at the Black Rock Forest Consortium's Center for Science and Education in Cornwall, New York.

    The building that will incorporate Northern's solar energy system is both a cutting-edge research center and a sustainable energy facility, utilizing technologies such as self-composting toilets, solar radiation, and geothermal heating and cooling systems. The site also has a sophisticated data acquisition system in place for research and educational purposes. [ more ]

    April 06, 2005

    Spire to Provide Hyundai Heavy Industries with a PV Module Manufacturing Line

    Spire Corp (SPIR) announced that it has entered into a contract to provide Hyundai Heavy Industries Co., Ltd. (HHI), of Ulsan, Korea, a multi-megawatt turnkey photovoltaic (PV) module assembly line. The line is scheduled to be delivered during the Spring of 2005.

    Spire's advanced PV module manufacturing equipment and process technology will enable HHI to manufacture state-of-the-art PV modules from solar cells to address the growing Korean and Asian solar PV market. [ more ]

    March 25, 2005

    Brunton Solar Port 4.4


    I'm going to be doing some extensive traveling this summer. While traveling I always need to power my various electronic gadgets so I can keep intouch with clients and my office. One of my trips this year is going to London and a photography tour of the English countryside. So I just ordered the Brunton Solar Port to keep all my various batteries charged.

    I purchased it from and I will do a review once I receive it in a couple days.

    The Brunton Solar Port 4.4 is available for purchase now at

    March 23, 2005

    Green energy seen as $100 billion market in decade

    Renewable energy like wind and solar power and hydrogen fuel cells could blossom into a $100 billion a year global market in less than a decade as technology costs fall, according to a study.

    The combined market for "green" sources of energy has already grown 68 percent since 2002 to more than $16 billion last year, according to Clean Edge, a research and publishing firm based in California. [ more ]

    You can view and download the complete Clean-Energy Trends report at the following link. [ more ]

    March 14, 2005

    DayStar Technologies and Auxilia Sign Memorandum of Understanding for Systems Integration of LightFoil(TM) Photovoltaic Power in Unmanned Airships

    DayStar Technologies Inc (DSTI) and Auxilia, Inc. today signed a Memorandum of Understanding (MOU) regarding design and development of fully integrated photovoltaic power systems for the unmanned airship (lighter-than-air vehicle) marketplace. The objective of the agreement is to develop plug-and-play architecture for the existing and developing products of both companies that could enable diverse airship configurations for low, middle and stratospheric altitude applications.

    DayStar and Auxilia will focus on integrating DayStar's proprietary LightFoil(TM) photovoltaic power product with Auxilia's products by utilizing the Auxilia Airship Simulation Center (AASC). LightFoil(TM) is specifically designed for unmanned airship applications where weight, high power generation and physical flexibility are required. [ more ]

    March 09, 2005

    WorldWater & Power Corp. Signs $1.8 Million Contract to Supply Solar Electric Power to California Tree Farm

    Worldwater Corp (WWAT) announced signing of a contract for $1.8 million to supply solar-generated electricity for a tree farm in California. The company's proprietary solar AquaMax(TM) will drive a 200 hp water pump in addition to the system saving an estimated 70% of the Cocopah tree farm's electrical bills, according to Quentin T. Kelly, WorldWater's Chairman and CEO. [ more ]

    DayStar Technologies Unveils LightFoil(TM) Photovoltaic Product for Military and Homeland Security Applications

    DayStar Technologies Inc (DSTI) unveiled LightFoil(TM) for high specific power applications. This proprietary alternative energy solution is the first of many highly anticipated Photovoltaic Foil products expected from DayStar.

    Military and Homeland Security applications for LightFoil(TM) include high altitude airships (HAA), winged unmanned aerial vehicles (UAV), and orbital applications for next generation satellite craft. The product meets the low weight, high power, and form flexibility metrics required by onboard power generation systems for these weight sensitive applications. [ more ]

    March 01, 2005

    FPL Group, Inc. Recognized in Global 100 Most Sustainable Corporations in the World

    fpl_logo.gifFPL Group Inc (FPL) announced today that it has been recognized on the first, annual list of Global 100 Most Sustainable Corporations in the World. FPL Group, Inc. is one of only 100 companies chosen from 2000 of the world's largest corporations whose sustainability performance falls within the top five percent of their business sector. The company is part of a select group of only 20 U.S.-based companies included in this special recognition. FPL Group was selected based on its ability to manage the triple bottom line - society, environment and economy. [ more ]

    February 17, 2005

    Evergreen Solar Introduces Sunplicity Flat Roof Mounting System for EC-100 Series Modules

    evergreen_logo.gifEvergreen Solar Inc (ESLR) introduced Sunplicity(TM), an advanced Flat Roof Mounting System (FRMS) designed specifically for use with its EC-100 Series modules.

    Geared for large and small solar PV installations on commercial, institutional and government buildings, the Sunplicity FRMS is a non-penetrating, aerodynamic, self-ballasted system that enables faster, easier and more cost-effective PV installations. [ more ]

    February 04, 2005

    FPL Energy and Carlyle/Riverstone Purchase Solar Assets in California

    fpl_logo.gifFPL Group Inc (FPL) and affiliates of Carlyle/Riverstone announced today that they have purchased ownership interest for an effective 141 megawatts (MW) of solar power generation in California.

    Under terms of the agreement, FPL Energy, along with certain FPL Energy affiliates, and Carlyle/Riverstone purchased majority interest in five 30-megawatt Solar Energy Generating System (SEGS III-VII) assets in the Mojave Desert. FPL Energy will operate the SEGS plants and hold a 45 percent ownership interest in the projects. Carlyle/Riverstone, as co-general partner, will own a 49 percent interest in the projects with the remainder being held by a group of limited partners. All of the power generated from the SEGS projects is sold to Southern California Edison under long-term contracts. Financial terms of the transaction were not disclosed. [ more ]

    January 31, 2005

    United Solar Ovonic Signs Two-Year Agreement With Conergy AG for 1.5 MW of Photovoltaic Products

    ecd_logo.gifEnergy Conversion Devices Inc (ENER) announced today that it has signed a two-year distribution agreement with Conergy AG of Germany for 1.5 MW of photovoltaic (PV) products.

    Conergy AG, a supplier of solar systems based in Hamburg, will distribute UNI-SOLAR(R) products in France, Greece, Spain, and Switzerland through its main subsidiaries. [ more ]

    January 14, 2005

    Evergreen Solar and Q-Cells Form Joint Venture to Develop Solar Manufacturing Plant in Thalheim, Germany

    evergreen_logo.gifEvergreen Solar Inc (ESLR) and Q-Cells AG, the world's largest independent manufacturer of crystalline silicon solar cells, today announced the formation of a joint venture to undertake the development of a 30-megawatt solar wafer, cell and module manufacturing plant in Thalheim, Germany, which is approximately 100 miles from Berlin. Construction of the facility is currently expected to begin in early 2005 and take approximately 12 months to complete. The total capital cost for all property, plant and equipment for the 30-megawatt factory is expected to be approximately $75 million. Evergreen Solar will own 75.1% of the joint venture; Q-Cells will own 24.9%. [ more ]

    January 11, 2005

    Universal Communication Systems Inc. Subsidiaries Millennium Electric TOU Ltd & Solar Style Inc. Respond to Worldwide Appeal for Assistance and Emergency Aid: Companies Donating 1,000 Portable Solar Chargers for Use in the Disaster Areas

    Universal Communication Systems Inc (UCSY) announced today that the companies are jointly donating 1,000 Portable Solar Chargers for the International Aid Workers and delegations leaving for the areas affected in the recent Tsunami disaster. [ more ]

    January 07, 2005

    Spire Provides BIPV Systems to Chicago's Green Commercial Center

    Spire Corp (SPIR) announced the completion of Building Integrated Photovoltaic ("BIPV") Systems at the Bethel New Life Lake-Pulaski Commercial Center. The commercial center, located on the West Side of Chicago, will house a day care facility, commercial enterprises, a clinic and employment services.
    The Lake-Pulaski Commercial Center has two BIPV systems. One, approximately 25 kilowatts in size, is a roof-tile system; the other is a 7-kilowatt awning system. The BIPV awning system is the first commercial building appearance of clear back-sheet photovoltaic modules locally manufactured by Spire Solar for a greater appeal to aesthetics. The awnings will improve the building's year-round energy performance, reduce glare and increase occupant comfort. [ more ]

    December 21, 2004

    Alternative Energy Gets Real

    BusinessWeek has written an article about the investment opportunities available int he Alternative Energy marketplace.

    Renewable energy is booming. The use of solar power has been growing by more than 30% a year and, except for a hiccup in 2004 -- when Congress delayed renewing a tax credit -- so has wind power. Ethanol is heading for record production levels. And there's no end in sight, given high oil and gas prices, an increasing number of government mandates and incentives, and the first real steps toward tackling global warming. Clean Edge Inc., a research and strategy consultant, predicts that the total clean-energy market will grow to $92 billion by 2013, about seven times its current size of $13 billion. "The investment community is starting to see real opportunities," says Ron Pernick, co-founder of Clean Edge. [ more ]

    This article mentions many of the stocks followed on this website.

    Northern Power Systems to Supply Remote Power Systems in Alaska

    prtn_logo.gifNorthern Power Systems, a subsidiary of Distributed Energy Systems Corp (DESC) has been awarded an approximately $800,000 contract for eight hybrid TelePower(TM) remote power systems. The 48VDC systems will supply power for a critical U.S. military application in Alaska.

    Each of the eight Northern TelePower systems will generate power through a combination of renewable sources consisting of a photovoltaic (PV) array with a single wind turbine and a pair of Thermo Electric generators to be used when the renewable sources are not adequate. The systems are designed to reliably operate year round in the harsh Alaskan environment, particularly during the extremely cold winter months. [ more ]

    December 17, 2004

    FPL Group Scores Highest in U.S., Second Globally in Report on Clean, Efficient Energy

    fpl_logo.gifFPL Group Inc (FPL) scored the highest ranking in the U.S. and second globally in a World Wildlife Fund (WWF) report that analyzed 72 of the world's leading power companies reviewing current use of available technologies to reduce C02 emissions, as well as clear commitments made for future improvements. The new report said FPL is a bright spot in the U.S. rankings. The WWF says FPL Group scored high due to leadership in developing wind energy and a commitment to dramatically improving power plant efficiency. [ more ]

    December 10, 2004

    WorldWater Unveils World's Largest Solar Irrigaton Pumping System

    Worldwater Corp (WWAT) unveiled the world's largest solar-powered irrigation pumping system during a commissioning ceremony at Seley Ranches, Borrego Springs, CA.

    WorldWater's proprietary and patented AquaMax(tm) system drives a 200 horsepower pumping system at the Seley Ranches facility. The 267 kW system is grid-connected, and can operate independently from the solar array, from the electrical grid, or from both sources if necessary. This also allows the system to ``net meter,'' that is, return excess solar electricity to the utility for credit if it is not required in the field. [ more ]

    December 07, 2004