Profit from the "Solar Shift"

The Solar Energy Sector: Profit From the “Solar Shift” With These Five Firms

by David Fessler, Energy and Infrastructure ExpertThursday, January 21, 2010: Issue #1180
“Skill to do comes of doing.” – Ralph Waldo Emerson

This simple statement fits the progress of the solar energy sector over the past 50 years.
In terms of that filtering down to solar stocks, however, the progress is more intermittent. The solar energy sector was one of the bright investment spots in 2007 and 2008, but was conspicuously absent from the big rally of 2009.
A closer look reveals that there isn’t actually too much holding the sector back in the United States. And I’ve got five companies aiming to take advantage of this up-and-coming area…
From Science Project to Mainstream Power Source… Almost
Back in 1954, Daryl Chapin and Calvin Fuller created the first photovoltaic (PV) solar cells, based on polysilicon technology. Despite the breakthrough, early PV cells were expensive and progress stalled before it ever really got going.
But through technological advances, panel efficiency (the amount of solar energy that is converted into electrical energy) has risen steadily. There are at least a dozen new panel technologies manufactured commercially – all with an eye toward lowering the cost-per-watt. Polysilicon panels and CIGS panels (Copper, Indium, Gallium, Selenide) are currently the two largest technologies in commercial use.
Commercial PV solar panels now capture 10-20% of the sun’s energy – a number that is expected to climb to about 30% over the next 10 years or so. But what about the nitty-gritty – the cost?
Wanted: Parity In the Solar Energy Sector
One of the drawbacks of a burgeoning technology like solar power is the high cost. And make no mistake… cost is the important issue here.
In order for solar power to reach widespread price-convergence with conventional power sources (a term referred to as grid-parity), the cost of silicon-based panels has to hit about $1 per watt.
However, the price currently stands at $4 per watt. That number is falling fast, though – it dropped by 20% in 2009 alone. For less-efficient thin-film panels, the cost is about half that number.
And thanks to a large dose of federal and state government stimulus money, plus the recently renewed Solar Investment Tax Credit, a few high-demand locations like California and New Jersey are already there.
According to solar research firm GTM Research, 11 states will have likely surpassed grid convergence in the commercial sector by 2012, while 10 will have reached it on the residential side.
For consumers and investors alike, here’s why grid-parity is so important: once it’s achieved on a widespread basis, commercial utility projects will soar, particularly given the growing dislike for fossil fuel power plants. Residential demand will explode, too – a development expected to fuel an estimated 40% of the sector’s future growth.
And if you don’t believe it can work, just take a look at one of Europe’s big boys…

The German Example: A Model of Solar Energy Success
Germany is a great example of how the shift to increased solar power can work.
In 2000, the German government passed “The Renewable Energy Sources Act” (known as EEG in Germany). It was a paradigm-shifting event for Germany. Citizens knew they could all become energy producers. And grid systems operators are committed to not only accepting the power they produce, but paying fixed fees for it.
Today, with those fees declining every year, the EEG’s benefits are powerful…
Germany is on track to become the leading solar market in the world. It currently produces nearly half of all the world’s solar electricity and fulfills nearly 15% of Germany’s total electricity needs. The EEG plan has them on track to increase that to 27% by 2020.
The German solar energy sector now employs over 230,000 people.
Thanks to solar power, Germany has reduced its CO2 greenhouse gas emissions by over 100 million tons per year.
It should be easy to replicate a model in the United States, right?
read rest of article: http://www.investmentu.com/IUEL/2010/January/the-solar-energy-sector.html