Move over SunPower Corporation (SPWRA): What’s ahead for solar energy?
Today's Financial News - Posted July 27, 2009
Alternative energy sources, especially solar and wind energy, are torn between economic reality and government spending. Where are they headed?
by Tara Useller
Baltimore, MD – TFN: Does alternative energy have a future in a Depression?
With fossil fuels the cheapest they’ve been in a while, and an economy that’s grim at best, crunchy-granola, save-the-earth kind of investments are just sooo 2007! But before you skip on over to gold, guns, and bulk shipping, consider this:
The costs of solar and wind power have been steadily dropping. There’s good reason to believe cost will keep coming down as demand goes up, both due to more cost-effective manufacturing and the influence of government funding.
Solar and wind energy are benefiting from the current economic climate. Private investment may not have taken off. But the federal government is pouring more money into fossil fuel-chugging cars than Snoop Dogg pours into the Southern California marijuana market.
The costs of alternative energy has deterred many individuals, industries and utility companies for decades. For individuals, the tide is turning. Thanks to the bursting of the housing bubble, home buyers are forced to look at their homes as longer-term investments.
The influence of new federal and state tax credits and utility company incentives has substantially reduced consumer’s cost of a private residential solar power system. A homeowner investing in a $20,000 solar system, when considering the increase, or stabilization of their home’s value, an average savings of $1,000 per year on energy costs, and the elimination of utility rate increases, can expect to recoup their investment in less then ten years.
In addition to direct-to-consumer tax credits, the latest round of federal stimulus has reduced those costs by supporting alternative energy installation and maintenance providers. All over the United States,. solar and wind power sales and installation companies, as well as municipalities are receiving grants to train recently laid-off individuals from all backgrounds in the tasks of installing and maintaining alternative energy systems. While it’s true that this money is not going directly to the manufacturers or distribution companies, it’s alleviating the need for those companies to provide paid training. They can expand their sales and installation teams without having to make that initial investment in the cost of qualified people.
Those stimulus grants aren’t limited to small companies, either. Communities have been investing their stimulus dollars (and providing their own grants) in the development of alternative energy programs. Not only are they providing skilled training and work for their own citizens, they are creating a demand for equipment. Companies that can produce in higher volume turn a higher profit and the dozens of municipalities that are converting their energy supplies are ensuring that the demand exists for what supply will come.
But wait – there’s more!
The current economic climate has created an environment where private residential use of alternative energy is becoming a more realistic investment. Demand for equipment is being driven by communities as well as individuals and manufacturing, but the technology has advanced to the place where it can keep up with those demands.
The technology of production, including the accuracy of lasers used to cut channels for photovoltaic cells, has moved forward at an astonishing rate in the last few years. In addition, the sourcing of affordable supplies and components has kept up the pace. Once more China proves itself our best frenemy: They’ve caused the outsourcing of tens of thousands of U.S. industries. But they’re also at the front of solar grade silicon production. Chinese companies are lead producers of multicrystalline silicon ingots and wafers, the vital ingredients in producing a solar cell.
In short, the future is bright for solar power, and for the companies that will bring the technology to a roof near you.
One of our favorite solar companies, SunPower Corporation (NASDAQ:SPWRA) just reported a second-quarter profit of $24.2 million, or 26 cents per share. The report triggered a tizzy in analyst upgrades. We had recommeded SPWRA in our free TFN Special Research Report: The Three Best Solar Companies to Buy Now on April 17.
TFN readers who took our sage (and even better: free!) advice saw their stock appreciate close to 20% We’re still expecting to hit our 30% gains target on this stock.
But there’s more where these picks came from. We’ll have a brand new report for you later this week: Stay tuned for the three best solar picks under $15 . . . .
Next Article: TFN eNews 07/27/2009: “This TFN Grapevine pennystock is about to pop!”
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November 4th, 2009 at 5:47 pm
great article, seems that solar power should be booming on the other end of the recession is something everyone could agree on. job