Solar 2009--someone forgot the hope
I attended the ASES
conference in Buffalo, NY last week. The tone was much less exuberant than last year’s conference in San Diego when oil prices were still rising ~$1/day. A lot has improved for the solar industry over the last year—in terms of actual legislation passed, the pace of solar installations in states like California, and the tone of the new administration which has put renewable energy front and center of the economic recovery—but the credit crisis has knocked everyone on the back heel.
The challenge we face is how to build the solar industry fast enough to disrupt the fossil fuel industry and save the planet was well described by Denis Hayes’s
keynote address. We have a lot of work to do, and it’s mostly a matter of buckling down and doing it.
To that end, it seems that Solar Thermal (a.k.a. hot water) was more prominently featured than in past conferences. (Plus there was a distinct lack of PV panel manufactures at the exhibit hall, Day4 was the only one from North America.) Given the higher efficiency of solar thermal (50%+ vs 15%+ for PV) and lower cost, it offers a fast payback and I’m happy to see the resurgence. Any industry that uses hot water daily would do well to consider using solar to heat, or pre-heat, their water. Systems are much better engineered than folks that lived through the 80s might remember. Solar thermal is the renewable investment with efficiency type returns (20%+/yr).
Unfortunately the plenary/keynote speaker line up was not as strong as in past years that I’ve attended the conference. The opening talks sounded like corporate infomercials that were a bit light on the info. Jigar Shah, founder of SunEdison gave a provocative talk entitled
“We [solar] got everything but respect” in which he claimed that solar is already cheaper than new coal plants. Jigar Shah points to the habit of [captured?] regulators raising rates (by up to 18% in some cases) to cover the cost of new coal plants—something they obviously would not have to do if new coal were as cheap as we are led to believe. Hayes’ address as mentioned provided a solid, important outlook, but was overly scolding and gloomy in my view; like “An Inconvenient Truth” without the optimism—see the movie to get the joke.
Thursday’s plenary(?) was a major yawn fest, unless you find NYSERDA and LIPA fascinating--that was if you were awake enough to figure out where they hid the session…not everyone did and I almost envy them. The sole noteworthy tidbit that I got came from LIPA’s talk, was that LIPA plans to install 50MW of solar this year and wants another 50MW next year—although the speaker really buried the lead on this story. A NY utility installing 50-100MW is both significant and positive and it is light years ahead of IL where our big news is a single 10MW solar plant announced a couple weeks ago for the same time frame.
Finally the emerging architecture session which generally provides an inspiring array of futuristic eye-candy, was technically a re-emerging architecture session minus the inspiration and the eye-candy. The gray hairs of the passive solar movement confirmed that the DOE (dept. of energy) has an institutional memory with a 3 year half life. In plain English, they can remember about 10% of what they knew 10 years ago and 1% of what they knew 20 years ago. So the guys that did a lot of work for/with the DOE 30+ years ago, are having to remind the DOE to use the passive solar performance data that the DOE itself collected (but can’t remember) in today’s new whiz-bang DOE passive solar performance databases.
Obviously the gray hairs of passive solar find this a distressing development, and used their hour (after the requisite ½ hour of self congratulatory backslapping and name dropping) to try to educate the audience on their collective wisdom. Unfortunately the session wasn’t even as well organized as I’m making it sound. These guys know what we need to be doing in terms of sustainable architecture and have spent their lives doing it; each has important views and ideas and info about what does or does not work and why…and some of that even came through in the re-emerging architecture session. I hope it was enough, but from the audience questions and comments, I have my doubts.
Perhaps I’ve been spoiled by some of the excellent talks (content: Yogi Goswami in 2005; inspirational: Van Jones in 2008—come back!) I’ve heard at prior conferences.
The dark before the dawn?
A number of solar companies will report results over the next couple weeks.
Expectations are very low--indeed there has been a steady and consistent drumbeat of negatives revisions and forecasts from "top" wall street analysts. This could be a terrible quarter...typically Q1 is weak because it is winter, then you add in the credit crunch, the global recession, and an inventory adjustment as companies react to lower silicon prices and results could be awful. After holding steady for years, wholesale prices for solar panels fell by 15-20% (possibly more) in the last 6 months. There have been layoffs, "evolving" business models, and even some consolidation in the solar sector this quarter as companies try to adjust to the new economic realities. But markets are supposed to be forward looking, so are we seeing dark stormclouds on the horizon or is this only the darkness before the dawn?
Everything is relative and relative to most industries solar is still looking good, especially in the US. Granted the US is much smaller than top solars markets like Germany and last year Spain. California is the clear solar leader in the US, historically representing more than half of the market (by MW installed) and installations in 2009 are running at twice the rate of last year. Not bad considering we are in the midst of the worst recession in almost 80 years.
Furthermore, it appears that installed system pricing has not fallen as much as wholesale panel pricing would suggest. If wholesale prices fall $0.50/watt, I expect installed prices would also fall $0.50/watt (at least!). I looked at data from the California Solar
website and was hard pressed to see any fall in the installed price. In part because a greater proportion of the installed systems are for homes (the average installation size is ~half what it was last year) rather than businesses. This makes sense since the feds removed a cap on the tax credit homeowners can get--late last year. Eliminating the Fed cap lowers the homeowners cost by ~$2/watt for systems over 2kw in size, assuming an $8/watt installed cost.
It is possible that the cheaper panels are being offset by the higher expense of installing smaller systems. Or the installers could still be working off their higher priced inventory. What is clear is that more of each solar dollar is going to installers this year than last year. We will have to see how and when/if lower wholesale prices get passed along to consumers.
In CA individuals are increasingly investing in solar when their out of pocket cost falls under $5/watt. Utilities
in the midwest seem willing to experiment with solar when their out of pocket cost falls under $4/watt (and financing is available). My take away is that a 30% increase in the solar energy yield doubles actual installations and/or a 6% energy yield is a threshold/hurdle rate for investing in solar.
A solar yield for those of you new to the concept is the per watt annual return (value of all energy produced by a watt in a year) divided by the cash/out-of-pocket investment cost of the watt. A solar yield is a way to easily compare your solar investment to other investments like stocks, bonds, etc.
Update on solar stocks
I made a series of posts 3-4 months ago about some incredible bargains in solar stocks. At that time we were in the midst of the 2008 global market crash. The market was in transition from supply constrained (due to the end of a multi-year shortage of silicon) to demand constrained. Basically the lousy economy, falling home prices (and credit crisis) has made it hard to finance relatively large expenditures like a car purchase or solar installation.
Wall Street has become very bearish on the solar sector--releasing a raft of downgrades in the sector over the last couple weeks--pointing to greater silicon supply (and thus lower silicon prices) and lower module prices (they fell about 7% in Q4 08 and probably fell another 7% in Q1). For some reason Wall Street analysts think that a big price drop combined with a big increase in incentives will not increase demand. (but hey these guys also missed the crash) Six months ago wholesale panels cost ~$3.5/watt, now they are ~$3/watt. A 15% drop in prices in 6 months is challenging (it is about 2 years worth of estimated price declines before the global market crash), and could result in some ugly inventory write-downs for Q1. Remarkably solar stocks have held their ground or even moved higher with this onslaught of downgrades--perhaps because silicon prices are falling faster than module prices? If silicon dropped say 30%, module makers could actually end up with higher margins.
Looking beyond the next couple months there are some reasons to be very bullish on solar. Starting in 2009-2016 utilities, and homeowners in the US get an uncapped 30% federal tax credit (businesses already had this)--look for this to boost solar adoption in the NE and SW where many states offer additional subsides (In CA state + federal incentives cover more than 1/2 the installed cost of solar.) The recently passes $787B stimulus bill has a number of goodies for solar and the Obama budget for 2010 will likely continue to support renewable energy.
Just this week China announced that it will offer a solar subsidy of nearly $3/watt. Details are still sketchy, but on its face this is a bold move. This really surprised me and I think changes the solar market psychology (especially for Chinese companies) from survival mode to growth mode. For the first time the US, China, Japan and Europe will all be offering significant subsidies for solar power. Once the recent drop in silicon and module prices is digested and assuming it is passed on by installers, I think demand will surge. I even wonder what the next bottleneck will be…inverters?
I continue to think that Sunpower is one of the best positioned solar companies, in terms of a great brand and diversified activities (50% of revenue from making solar panels and 50% from installing them). They have the most efficient solar panels on the market (silicon based) and have been able to maintain a premium price as a result.
SPWRB trades at just under $22/share (make sure to buy the B class shares since they are 15% cheaper than the A class).
I think SPWRB will double in the coming year.
MEMC (ticker WFR) is a maker of silicon that goes into solar cells (and semiconductor chips). The price of silicon is dropping while the company is expanding capacity. This makes analysis a little complicated. Sales and earnings could grow if prices stabilize, or they could shrink if the price of silicon keeps dropping. Surprisingly it was the major semiconductor chip companies delaying orders that most hurt the company last quarter...the solar half of their business did just fine. The stock is trading about $18.5 and I think it will rise to $26 in the next year (N.B.
WFR had a big move this week, up about $3 on takeover speculation--I think a takeover is very unlikely). If the shares run up another $2 in the coming days I'll probably sell some shares. I'd wait for the shares to pull back to ~$16 to buy back in. News of stabilizing silicon demand/prices (especially from chip companies like Intel) would cause me to adjust these targets upward by several $.
FirstSolar is the other widely acknowledged leader in the solar field because it offers the lowest cost panels (it uses a thin film technology that does not rely on silicon). Obviously low cost solar is all good and FirstSolar will do well in a growing market for solar. FSLR trades at about $147 and it will likely rise 50% in the coming year. While I like FSLR, I am concerned that the drop in silicon prices over the last couple quarters mostly benefits its competitors and may put some downward pressure on its margins.
If you prefer to get broad exposure to "clean tech" companies (i.e. but you don't want to buy individual stocks) you can buy an PBW (powershares wilderhill cleantech--an exchange traded fund/ETF) for just over $8/sh. An ETF is basically a mutual fund that you can buy and sell just like a stock (no minimums, no early withdrawal penalties, etc.). Because it is a fund I would look for at most 25%-30% appreciation in the coming year: price target $10-$11.
If you want to buy one solar stock, buy SPWRB.
If you'd prefer to buy a diversified clean tech fund buy PBW (you get the above three along with several dozen other companies from electronics to wind and everything in between).
Disclosure: I own shares of WFR, SPWRB and PBW.
Take this post for what it is: one person thinking out loud. I only post it because there has been such a deluge of Wall Street “professionals” trashing solar stocks recently that I feel compelled to respond. Please consult an investment professional before acting on any stock recommendations from any blog—especially this one! I am an aggressive investor with an off the charts tolerance for risk. These are my personal views based on my (incomplete) understanding of solar markets. Do your own due diligence.
Getting more out of Utility Scale Solar PV—Dynamic Solar Arrays
In recent years we have seen a growing interest on the part of companies and individuals in using solar power in the US. The interest has translated into installations in the states that offer the best incentives. Just in the last 18 months we have begun to see forward leaning utilities bid/announce projects in the hundreds of megawatts (i.e. utility scale solar). It is exciting to see some utilities making real investments in solar power, because those of us in the solar field need utilities as our partners to realize the full potential of solar power.
And speaking of the full potential of solar power, for years many utility executives have dismissed solar because it is intermittent—i.e. the utility cannot control the output of today’s solar panels at any given moment. Despite such lack of control solar power is beginning to make inroads, but wouldn’t utilities be even more interested in solar power if we could give them some control over the output of their PV panels?
What if we could not only give a utility executive more control over the output of a solar panel, but also improve the performance of the solar panels at the same time?
Talk about win-win!
So how might one provide greater control over the power output of a panel AND enhance performance of the panel at the same time?
By building a system that allows one to control the temperature of the solar panel.
It is well documented that solar PV panels produce less power at elevated temperatures. The obvious corollary is that PV panels produce more power (all else equal) if one lowers the panel temperature. The amount of power increase (or decrease) is small for each individual degree change, but can add up to a considerable fraction of total output over multiple tens of degrees (20%+ of total output would be quite practical).
One simple way to control the temperature (and hence the power produced) of a panel would be circulate a fluid, such as water, across the panel. Assuming the water temperature is cooler than the panel, controlling the flow of water across the panel allows one to reduce the temperature of the panel—and thereby increase the power that panel produces.
Obviously one would need a large reliable source of cooler than panel temperature water, luckily in most places the ground itself (if you dig down several feet) offers a consistent year-round reservoir of cooler than panel temperatures that are multiple tens of degrees cooler than the temperature most solar panels operate at. Cheers to the geothermal folks.
Finally if one maintains two fluid reservoirs at different temperatures, one can control the temperature of the solar panels (and hence the power output) at any intermediate temperature by simply mixing the fluid from both reservoirs together as needed. This means the utility would be able to dial up (or down) the amount of power produced by its solar panels as desired between the limits imposed by the reservoir temperatures.
So how might a utility use a Dynamic Solar Array? The simplest (and most logical to those in the solar industry) would be to turn the temperature setting to the coolest point and generate as much additional power as possible. But another possibility would be to make adjustments to maintain as stable an output as possible over the course of a day--i.e. dial up the power 10% to offset a drop in power due to a passing cloud and lower the power back down 10% after the cloud passes. Or the utility could set the temperature at some intermediate point for most of the day, but boost the output from the panels to maximize production at a period of peak demand. Obviously the utility could use a Dynamic Solar Array in many different ways (that’s the point of giving them more control!) depending on its other generating assets and objectives.
Is this extra control (you still need sunlight!) worth the expense of adding plumbing to solar panels and across the entire solar plant while maintaining relatively large fluid reservoirs at different temperatures? That is a question the solar industry and utilities must determine together.
I’m optimistic that adding relatively simple technology, like plumbing, and one which utilities have considerable experience using throughout their operations, that can potentially boost solar PV panel output by 20% or more would be given serious consideration all on its own. Offering utilities greater control over a relatively expensive asset they have complained about not being able to control in the past seems like one of the purest expressions of “adding value” I can think of.
Mind blowing greed
From the annals of you can't make this shit up:
"
Insurance giant AIG to pay $165 million in bonuses"
Yes, this the same AIG that has received $170-180 BILLION in taxpayer funded bailouts over the past 7 months.
OUTRAGEOUS!^Nth
From the article
Geithner termed the current bonus structure unacceptable in view of the billions of dollars of taxpayer support the company is receiving, this official said.
In a letter to Geithner dated Saturday, Liddy informed Treasury that outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so.
Liddy said in his letter that "quite frankly, AIG's hands are tied" although he said that in light of the company's current situation he found it "distasteful and difficult" to recommend going forward with the payments.
*allow me to count backwards from 10 to 1 to avoid going ballistic*
*exhaling*
Okay...first as a matter of English, how can a bonus be a contractual obligation? A bonus is quite literally "something extra", "in addition to what is expected or strictly due". Second even if you accept the dubious notion that a bonus can be a contractual obligation, nobody should expect a bonus for bankrupting the firm! (and this is what the good folks at AIG have done). I'd really like to see the clause that says you get this bonus no matter how completely you fail in your job--such that Mr Liddy's "hands are tied".
Speaking of tying hands...where is the investigation into the massive fraud that AIG perpetrated?
I think the most responsible reaction to AIG getting all legalistic (I mean so what if AIG "could face lawsuits" from the clowns that blew the place up?--oh noes! not lawsuits! AIG is only the biggest insurance company on the planet--or pretended it was!) is to send in a medium sized army of federal investigators to comb through AIG's books and emails looking for anything worthy of prosecuting.
Mr. Attorney General, are you listening?
They sold hundreds of billions of dollars of financial insurance without any ability (or intention) of paying if off...that is a textbook case of fraud. And it was clearly a conspiracy...possibly involving racketeering! This is like an institutionalized Bernie Madoff x 10!
I think the Treasury should furthermore freeze the assets of any individual at AIG suspected of involvement in the fraud or the conspiracy to commit the fraud.
And these scoundrels are demanding bonuses!
No. NO. NOOOOOOOOO!
Talking the market down...
Interesting...CNBC is talking the market down...not that the market needs a lot of help. Still is it normal for CNBC commentators to recommend investors short equities including the most beaten up names?
I thought investors were supposed to look for opportunties to buy quality names, with good management, and proven earnings potential at a low price. Can prices go lower? of course that is always a risk. Yeah a bad recession is taking down earnings this quarter and next--Uhm is that news?
I understand stearing clear of financials...but suggesting people short them here? That seems foolhardy. If you think the world economy will not recover--and I admit there is a small chance it won't (5%? 10%?) then sure, why not short the market? not that all the money you make will do you a whole lot of good if you are right!
But barring a complete halt to world trade, for non-financials I expect this time we are in will look like the buy of the century in a few years.
Solar Flux
The solar industry is certainly in flux. Major economic winds are reshaping the industry, which has largely developed in the cocoon of government incentives.
A transition was inevitable for an industry growing almost 40% per year to reach ~4GW in 2008--as recently as 2001 total industrial production was under 400MW.
But the global financial crisis and the ensuing world-wide recession has acted as a pressure cooker, compressing changes that would normally play out over years to take place in a matter of months. Capital and credit markets siezed up in near perfect sychrony last fall, abruptly shifting investors primary concern from the "ability to reach scale" to simple "survivability". Firms at the very center of our global economy disappeared overnight or were de facto nationalized, entire industries are on the brink of failure (or have already failed but are too stubborn to admit it--Detroit anyone?)
Against this backdrop, the solar industry flux can seem insignificant, but it is not. The solar industry by its nature (~ all the costs are upfront) is driven by 1) price (panel and install), 2) financing, and 3) government policy/incentives. Each of these is rapidly "evolving".
Start with 2) financing. Not only are manufactures struggling individually with the rapid changes in credit markets, so are their suppliers and customers. Some financial institutions were major financiers of renewables like solar via tax credit financing arrangements, even for the financial institutions that still exist, the wild profits that drove the tax credit appetite seem unlikely to return. As a result investors are currently skeptical of planned projects that rely on this tax credit financing.
Silver lining: interest rates are low and some recent policy changes (primarily in the US) have increased the value of the tax credits and the number of people that can utilize them.
Back to 1) Price. This is the most "visible" factor. A recent supply bottleneck (silicon) for the solar industry is shifting from scarcity to plenty. Elimination of this bottleneck was widely anticipated and analysts expected the cost of solar to fall 10-20% by the end of 2009, but all the previous forcasts assumed continued robust demand growth for solar and parallel (semiconductor) industries. It appears that panel prices fell 6%-10% in the last quarter of 2008, and some expect the same trend to continue this quarter (and possibly next?). There have also been significant currency moves as a result of the financial crisis--Euro weakness, Yen strength--which complicates analysis of these price trends. Still we are seeing a year's worth of price moves in a single quarter and that is bound to negatively impact a number of companies in the solar supply chain in the short term. Longer term a lower cost of silicon is good for solar as it brings the cost of solar down relative to competing energy sources, but abrupt changes are inevitably disruptive.
Silver lining: Lower prices will lead to greater demand. Each 1% drop in module prices reduces the simple payback of solar by ~1 month. (Even more in locations without incentives or marginal annual sun-hours.)
3) Government policy/incentives. While generous subsidies in Europe are getting scaled back (bad), the US is increasing its support for solar under President Obama (good) and both Japan and China appear to be increasing support for solar (good). On balance, I think this will prove an intermediate and long term plus for solar, although it is unclear what the near term effect will be. Incentives that are too generous tend to be volitile (subject to cuts in a crisis) and sometimes lead to misbahvior/fraud like we saw in Spain last year. In addition in the US utilities now have the same relative incentive to invest in solar as individuals or businesses. This could quickly lead to significant growth in utility scale investment and installations (100MW+)...already we have seen CA utilities take the lead due to generous state incentives. If utilities across the southwest follow suit, excess solar industry capacity would quickly be filled.
In summary, the US is the largest natural market for solar (the largest economy + plus lots of territory with good sun), and for the first time in a generation policy is likely to be supportive of solar for the next several years. Combine this with a lower cost of solar due to de-bottlenecking the solar supply chain, and the US may be at the center of a 40GW solar industry in 2015. While investors need to be mindful of short-term adjustments and pitfalls--see any solar companies 3 month stock chart--I see every reason to think that solar will be one of the industries leading the US out of its current recesssion.
Is it possible the Republicans still don't get it?
I have watched the stimulus bill "discussion" with astonishment.
Setting aside the complete hypocrisy of Republicans who supported Bush's $1.3T tax cuts (primarily for the wealthy) AND the $1T+ war in Iraq, arguing that $800B to jump start the US economy is "irresponsible"...
Don't the Republicans know or talk to a single economist? Virtually every economist I've seen, read or heard says that government spending (on virtually anything; although spending on infrastructure sounds vastly more responsible) IS an effective way to combat the worsening recession. Not only is it effective, it is multiple times more efficient way to bost GDP per dollar spent than tax cuts alone. And that a larger spending package is better than a smaller one.
The main idea of stimulus is to put people back to work. If you lose your job, you spend less; and millions of americans have lost their jobs in the past few months. This is bad for the economy. If the government spends money on bridges and roads, this puts people back to work. When you get a job, you are going to spend most of what you make. That is how stimulus works.
Meanwhile leading Republicans are united in their belief that the world is flat....errr...that ONLY tax cuts are effective stimulus. Of course they very vocally decry giving tax breaks/credits/refunds to people in the lowest income brackets...insisting that is welfare! the very people that are most likely to spend every penny of stimulus. Eliminating the lowest earners means the Republicans tax breaks would go to the more affluent. But it is not at all clear that an affluent tax payer would spend this marginal tax dollar, rather than save it. In fact recent evidence (even Republicans should be able to remember last year!) points to the fact that maybe $0.30 per dollar of marginal tax cuts are spent--call it the negative multiplier.
You would think that a disintegrating economy...we lost 600,000 jobs in January alone...might be enough to prod the Republicans on work with Obama. Unemployement jumped 1% in just the past two months! Instead they think they can roll Obama's outstretched hand of bipartisanship into a straight-jacket. Obama is thankfully too clever to fall for such foolishness.
I almost wish Obama would force a Senate Republican to filibuster the stimulus...I'd pay good money to see that...but instead he will work with a few Republicans that can see past their nose.
But I'm really forced to wonder who the Republicans think they are kidding? At least while the American economic pie was growing they could argue that their policy of tax cuts for every ailment was benefiting someone. But now that the deregulatation/free market fundamentalism has clearly gone bankrupt, arguing that more tax cuts are just what the economy needs is frankly daft.
Oh Happy Day!
Congratulation Mr. President Obama (a.k.a. 44!).
What a wonderful event to witness, and it is certainly time for a change.
Obama gave an excellent
inaugural address that expressed a marked shift in tone, and direction.
I was encouraged that there was no "scaling back" of what we can do as a nation. Some personal highlights:
"Now, there are some who question the scale of our ambitions - who suggest that our system cannot tolerate too many big plans. Their memories are short. For they have forgotten what this country has already done; what free men and women can achieve when imagination is joined to common purpose, and necessity to courage."
"What the cynics fail to understand is that the ground has shifted beneath them - that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works - whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified. Where the answer is yes, we intend to move forward. Where the answer is no, programs will end."
"Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control - and that a nation cannot prosper long when it favors only the prosperous. The success of our economy has always depended not just on the size of our Gross Domestic Product, but on the reach of our prosperity; on our ability to extend opportunity to every willing heart - not out of charity, but because it is the surest route to our common good."
"As for our common defense, we reject as false the choice between our safety and our ideals. Our Founding Fathers, faced with perils we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations. Those ideals still light the world, and we will not give them up for expedience's sake."
"What is required of us now is a new era of responsibility - a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task."
He has certainly set the stage for a dramatic presidency. Hope and Change--Yes We Can.
Make it happen...
Happy 2009!, and good riddance to 2008.
Yes, I had a miserable investment year, my small consolation is that I didn't have that much money to start with, so lots of people lost a whole lot more--cold comfort perhaps. Reminds me of the Billy Joel lyric "their sharing a drink they call loneliness...but its better than drinking alone."
I am more determined than ever to get something going this year with my solar designs.
My New Year's resolution is to MAKE IT HAPPEN.
As president elect Barack Obama would say "this is the moment"...
Have a wonderful hope-filled year.
Solar stocks are an incredible buy right now
I pulled up some stock charts and was amazed to see that many solar companies are down 50%-80% in the last MONTH!
As Sylvester the cat used to say "This is Ridiculous!"
So let me start (some would say continue) to pound the table. Now is a good time to buy, buy, buy! In a year or two you'll wish you had.
These are growing, profitable businesses that are getting clobbered in the credit market turmoil.
Yes there is a lot of uncertainty about both supply and demand. More silicon supply (what 85% of solar cells are made of) is coming onto the market at the same time that demand is rather uncertain because of the Global Markets Crash (and the flight to safety dollar rally).
It is my fundamental belief that demand will recover as credit markets ease and lower prices propagate along the supply chain over the coming 2-3 quarters.
Who said Solar Panic?
This is apparently what a panic looks like in the solar markets!
The last two month chart for of SunTech (orange), First Solar (red), WFR (blue), and SunPower (tan).
It should be noted that these stocks are (or at least were in Q3'08) growing revenues and earnings by 30-50%+ a year. The stocks are between 65-85% below 52 week highs.
Yes Yes Yes Obama!
I am so proud of Barack Obama!
He called on all of us to choose hope over fear. He campaigned consistently on the message of change AND unity. And WE listened and voted in
record numbers for him!
My faith in America has been renewed.
It won't be easy, but President-elect Barack Obama has shown us how WE THE PEOPLE--as one nation, inspite of our many historic divisions--can come together and place the good of the whole country above the powerful few who endlessly sow seeds of discontent.
Today marks a "new dawn", I hope we all get up early and work hard to make the comings days America's best days ever!
Some
Historic! headlines here.
At first I supported Barack, because he had nothing to lose by running.
Then I became more enthusiastic as I discovered that Barack was inspiring so many others to want the same thing that I want for America's future: ending the Iraq war--which should never have started; using smart diplomacy before using "smart" bombs; using science to inform politics, rather than using politics to infect science; that the constitution should be defended not deleted; that a growing middle class IS good for america, not growing the wealth of the Forbes 400; that renewables are the solution to our energy woes, not the problem!
This was the
January night that I decided that Obama could go all the way! (even though I trouble spelling his name *sigh*).
VOTE NOV 4.
I thought this was a clever video:
Make History!It made me smile.
Before the clip was even over, I wrote Make History on my calendar...
We can make history, but it will take all of us getting our butts to the polls.
DON'T FORGET TO VOTE NOV 4.
1992-2002: the socialist decade?
Since when did the tax rates of the late 1990s (for the wealthiest 1% of taxpayers) become equivalent to socialism?
This
interview is surreal.
So cutting middle class taxes by 2-5%, while raising taxes on the wealthiest 1%, back to the level of the late 1990s (such austerity!) is somehow Marxist? Huh?
Sigh! I suppose there is a reason the blog-o-sphere calls the extreme right "wingnuts".
Nobody likes paying taxes--I know I don't...
Who (Cindy McCain excepted) really thinks that McCain's plan to cut capital gains taxes and give corporations a $300 billion tax cut is what we need to do right now to fix our economy? (who even has capital gains these days? short-sellers maybe?)
Irrational Dread? or Consternation?
Everything to do with global markets looks awful right now.
We are stuck in a negative feedback loop, everything that happens leads to more selling (or so it seems). Housing declines lead to bank loses which lead to bank layoffs which leads to recession fears which leads to tighter credit which leads to corporate lay-offs which leads to deeper recession fears which leads to commodity market sell-offs which leads to continuing mayhem apparently.
Substantial companies (many in the DJIA) are selling for mid-single digit trailing P/Es. Yet someone (lots of 'em) keeps selling!
Fundamentals no longer matter...fear seems to rule, which means people have to basically close their eyes and step in, or remain on the sidelines.
A part of the problem appears to be the "flaw" in the ideology of the free market capitalists. Facing such flaws doesn't inspire confidence...
At some point the upside in stocks will outweigh the downside. But is that point 10% lower? 20% lower? or where?
Sadly my crystal ball turned dark a few weeks back.
Bush's legacy of multi-lateralism
Sorry, I was just listening to
George Soros on "The Journal" and it reminded me of a
post of mine from mid-March 2008 entitled "Wall Street's Katrina Moment".
You know what? I was right on the money...and six+ months ahead of the administration. Who would have guessed that the Bush administration's Katrina response was really quite swift?
Why does it take the biggest financial cock-up in 75 years for Bush to finally become
a full bore multilateralist?
"It doesn't matter if you're a rich country or a poor country, a developed country or a developing country — we're all in this together," Bush said. "We take this seriously, and we want to work with you."
So back in the day when we were the Superpower "you are either with us or against us". And a mere 6-7 years later with credit so F***ed up, that banks won't even lend to each other, we (of the free-est markets ideology) are nationalizing entire industries!, and the SHIT won't stop hitting the fan, now "we're all in this together" and "we want to work with you".
OMG F***ing brilliant.
The rising tide lifts all yachts, but the bunged-up sewer system overflows into everyones house!
Latest panel data
I had a chance to test out my 1/2 size demonstration panel today--it now has a cover and sides.
On a 25C ambient sunny October afternoon, I measured a temperature of 70C inside my panel versus 50C on the standard panel.
The good news is that my panel generated 26.3W versus 20.5W on the standard panel. 28.3% more power...And my panel had an extra 3/8 inch polycarb sheet over the cells absorbing sun that the standard panel did not.
The power breakdown: my panel 5.46A, 4.82V; standard 4.11A, 4.99V.
When I first put my panel in the sun I measured 5.13V, but as my panel heated up the voltage dropped a little over 6% to 4.82V.
After the deluge...what?
I'm growing very concerned about the damage this "silly" credit crisis may be doing to our real economy, especially the renewable sector. Global markets are in sustained free fall.
There is no person/company/country or combination (of appropriate stature/independence/distance from the financial mess) that is coming forward and saying that this selling panic is insane.
Is every company on this planet really worth 20-30% less than it was 130 hours ago?
(Which makes me wonder if I really should be panicking.)
There is a growing wishlist of solutions, but each solution once implemented has resolved nothing...with pundits almost universally declaring that it is too little, or is too late, or is not addressing the real problem.
Each day that the markets fall 4-8% means that any rebound (assuming it does eventually come) will only fix the damage from that day or two's fall.
Meanwhile, if noone will lend, noone can borrow, and eventually business grinds to a halt. GM drops 30% in one day and nobody says "boo". Actually I assume the market already knows that all the US car companies (and the airlines) are in major trouble, but nobody unrelated to GM--in fact I'm not even sure GM stepped up to say "this is nuts".
Without lending do we even have an economy? How long until lending resumes? Who will be able to borrow?
Tell me when its safe to panic
Dow dropped ~400 pts in the last hour of trading, down 7%+ on the day.
Asian markets opened down 8%-10%.
This is getting serious!
Everyone says this is not the time to panic, and I'm not the panic-ing type...but yeeooow!
This is really ugly.
Solar bargain
I just have to point out that MEMC Electronics(WFR) is trading at an absurdly low price. At ~$23/share it trades at a P/E of ~8. It also has $6/sh in cash and virtually zero debt. So the real P/E is closer to 6.
The knocks are well know...the economy is in the dumps which means earnings probably won't reach the $4.87/share that is estimated for next year. WFR makes high grade silicon for semiconductor chips and solar cells.
The company has benefited from a massive run-up in silicon prices as silicon was in short supply for 3-4 years. Silicon nearly tripled in price in that time frame, due to the hugh growth in solar panels in Germany and Spain. More supply is coming on line next year which should bring supply/demand back into balance. Most silicon is sold on a multi-year contract basis, so earnings may not grow as fast as recent years, but they are not going to fall off a cliff. But the stock is trading as if the solar industry is in terminal decline, as opposed to growing 40%ish per year.
New Solar Tax Credit changes the game
The newly enacted Federal Solar Tax Credit makes a real difference.
In a state like
California which has lots of sun, high electric rates, and provides its own solar incentives the elimination of the cap will really boost solar installations.
Assuming an $8/W installed price for solar panels, a 3.5kW installation of solar panels (enough to supply nearly 600 kwh/mth) would cost $28,000 total. But after state rebates (worth $1.90/W) and the solar tax credit (worth ~$1.83/W) the homeowner would pay just under $15,000 (~$4.27/W) for a system that generates $1,000/yr worth of electricity ($0.14/kwh rate).
The yield from this solar investment is 6.6% tax free. An equivalent taxable investment would have to yield ~9.5% (assuming a 30% tax rate).
Oh yeah, don't forget the solar investment is 1) risk free, & 2) understated because the year-by-year return (i.e. yield) will rise as energy prices go up in the future.
There are now eleven states that have residential electricity rates greater than or equal to $0.14/kwh; the US residential average is now about $0.115 kwh according to the
DOE. If you look at the bottom you can see that in Hawaii the residential price is $0.31 kwh (!!). I almost can't believe this.
Hawaii gets
as much sun as CA, let's assume 2,000 hrs/yr and state incentives (
dsire shows that the state offers a 35% tax credit up to $5K), a $10/W installed price fora 3.5kw solar system (price is assumed to be $2 higher than CA due to less competition) leads to a sticker price of $35,000. After the federal tax credit ($2.8/W), and the $5k max state rebate (~$0.7/W) leads to a homeowner cost of just under $23,000* ($6.5/W) for a system that generates $2,200 worth of electricity each year (the value is higher b/c electricity costs more).
A solar system in Hawaii yields ~9.6% tax free each year (a.k.a. 10.5 yr simple payback). The equivalent before tax yield would have to be 13.7% (again risk free).
SOLAR POWER IS FULLY ECONOMIC IN HAWAII.
I predict that homeowners, companies and utilities begin installing solar hand over fist on the islands come 2009!
*I assumed the state rebate must be subtracted before applying the federal tax credit. The effect of this assumption is to undercount the federal tax credit amount (i.e. the tax credit would be bigger) if one can apply the federal tax credit first.
