Solar has also been one of the hottest investment sectors in 2010. Many solar energy companies saw double and triple digit sales growth in 2010, outstanding numbers compared to almost every other industry, with 2011 looking just as promising. In the past decade, large-scale solar installations have been all the buzz in Europe and Asia.
Over the next ten years, the U.S. is set to become the next big player. The Obama administration has launched a program called SunShot, which aims to reduce the cost of utility scale solar energy by 75% to about $1 per watt by 2020. This roughly translates to $0.06 per kilowatt hour. Current costs for a large photovoltaic instillation are about $0.26 per kilowatt hour.
Investments in solar cover a wide range of company types along different levels of the supply chain, utilizing differing technologies. Also, many believe that there is an overabundance of solar manufacturers, that supply outstrips demand. Picking the right companies in this type of competitive environment is especially critical to long-term investment success. Get the full FREE Solar Report and get a complimentary issue of the Roen Financial Report in your inbox today. Just follow this link. This report, Invest Solar: Solar Energy Investment Opportunities will review the history of solar, help investors understand the types of solar companies; outline the investment choices available, and show how to pick companies most likely be the winners.
Types of Solar Companies
Investors who want to take part in solar energy need to know what they are investing in. For example, there are several important sectors within the solar industry. Also, companies reap different amounts of their income from solar operations. These types of solar companies are outlined in Invest Solar: Solar Energy Investment Opportunities. Get the full FREE Solar Report and get a complimentary issue of the Roen Financial Report in your inbox today. Just follow this link.
Equipment Manufacturers for Solar Industry
Companies in this category support different aspects of solar production. This ranges from selling factory equipment used to make solar cells, to manufacturing films that cover solar panels, to building power inverters specific to solar cells. This is a strong category because of its viable investment story, since these are the companies supplying the nuts and bolts needed for solar producers. No matter which of the many photovoltaic companies wins out in the end, they will all require machinery and materials. It’s like the California gold rush, where the only people who consistently made money were the ones who sold picks and shovels.
The specific solar companies in this category are outlined in Invest Solar: Solar Energy Investment Opportunities. Get the full FREE Solar Report and get a complimentary issue of the Roen Financial Report in your inbox today. Just follow this link.
These are the type of companies most people think about when they want to invest in solar. Collectively they manufactured enough panels to produce upwards of 15 gigawatts of electricity in 2010. Though all these companies are in the same sector, their businesses can be quite different.
There is an important distinction in the kind of solar cell that a company produces, as the solar industry is basically divided between more traditional silicon-based solar cells (monosilicon and polysilicon), and those using “Thin Film” technologies. Traditional silicon-based cells are more efficient in converting sunlight to electricity, but are more expensive to produce. Most Chinese solar companies fit into this model. Thin film panels lose out in efficiency, but gain in far reduced cost of production.
The specific solar companies in this category are outlined in Invest Solar: Solar Energy Investment Opportunities. The report also discusses the types of solar cells produced by these companies, and gives a detailed comparison of photovoltaic companies. Get the full FREE Solar Report and get a complimentary issue of the Roen Financial Report in your inbox today. Just follow this link.
Installation and Service Companies
A great way to strategically invest in the solar industry is to focus on companies involved in distribution, installation and service of solar arrays. Whether they be smaller rooftop instillations, or vast utility-scale projects, there is no doubt that the number of instillations will continue to grow. The five largest instillation companies are graphed in a comparative chart. Companies are compared to the five others in each of the graphed categories. So the higher the bar, the better a company rates as compared to the others.
click on the graph above to access its Excel file
This graph and the specific solar companies in this category are outlined in Invest Solar: Solar Energy Investment Opportunities. Get the full FREE Solar Report and get a complimentary issue of the Roen Financial Report in your inbox today. Just follow this link.
Utility companies offer a good balance to an investor. They offer a relatively stable stock price that tends to hold up well in economic downturns, since electricity is a staple commodity that will always get used. They also offer attractive dividends, important to income investors. It is difficult, however, to do a pure solar play within utilities since solar currently makes up only a small part of their energy portfolios.
There are two different ways to generate utility-scale solar electricity, photovoltaic and concentrated solar power. In concentrated solar power, instead of using photovoltaic panels to generate electric current, mirrors are used to focus heat from the sun to make steam that powers turbines. Two methods are currently being used to concentrate the sun’s heat. Trough type uses long, trough-like mirrors to heat a central pipe running down the length of the trough. Tower types use a large array of flat mirrors concentrating the heat to one central tower.
Many utilities prefer the concentration method, since it is cheaper than photovoltaics, and relies on more traditional technologies that have been used for decades. Another advantage is that it is easier to store heat from a concentrator system than it is to store electricity from a photovoltaic system. There are also less concerns around toxic materials, which are used in photovoltaic production. Further, the electric current from a solar panel is DC (direct current), which has to be converted to AC (alternating current) reducing overall efficiency.
The specific solar companies in this category and the full discussion in this section are outlined in Invest Solar: Solar Energy Investment Opportunities. Get the full FREE Solar Report and get a complimentary issue of the Roen Financial Report in your inbox today. Just follow this link.
What does this all mean for investors? There is much competition in the solar manufacturing sector. It is a very crowded field that many argue is supplying more panels than there is demand. Others, however, feel that we are in the early stages of more wide-spread solar adoption, with many innovations ahead. This is a similar analogy to the early stages of the tech revolution in the 1980s. I am in this latter camp.
There are concerns that solar instillations will decrease dramatically as subsidies are cut in Europe. This slack will likely be picked up, however, in the US and Asia. In a report released by GTM Research in late 2010, it was pointed out that while only 215 megawatts of utility scale solar arrays are currently operating in the US, there are 25 times that number, or 5,362 megawatts, currently contracted for completion by 2011. If you add in projects that have been announced but are not yet under contract, then there is an additional 10,103 megawatts by 2015, creating an $8 billion market.
So far, government support for solar is not waning. The tax bill that Congress passed and the President signed in December 2010 extended the 1603 Treasury Grant Program through 2011, which offers a 30% tax credit for the cost of a solar project. Also, as part of the President’s SunShot program, an additional $27 million for nine new projects in advanced solar development and manufacturing has been announced. This is part of the $50 million in grants the Department of Energy is intending to fund for cutting edge, utility-scale solar projects.
Overall, I believe solar is set to continue its growth and prove an excellent long-term investment if you are in the right companies. Join the many Roen Financial Report subscribers that use this financial newsletter to keep up with the dynamic alternative energy industry, and learn how to find the best investments.
The full discussion in this section is outlined in Invest Solar: Solar Energy Investment Opportunities. Get the full FREE Solar Report and get a complimentary issue of the Roen Financial Report in your inbox today. Just follow this link.