Top 5 Solar Stocks To Own For Solar Big Bang


Get ready: The solar “big bang” is getting underway as we speak. Byall accounts, solar power is quickly becoming the fastest growingenergy source in the United States, and indeed, the world. But here’sthe most amazing part…

Even with a meteoric 48% annual growth -and that of a select group of solar companies – it’s just gettingstarted. The market is expected to double over the next five years, andtriple in just seven.

What’s behind solar’s shine? Is thistorrid growth sustainable? What opportunities are there for investmentin the solar space? Let’s take a look.

A Quick Solar Panel Primer

Solarpanels can be divided into several types: thermal, photovoltaic, hybridand building integrated photovoltaics (BIPV). In a thermal collector,water or another fluid is heated by the sun’s rays, piped into astorage tank, and then used to heat either domestic hot water or as aheat source for a building.

A photovoltaic solar panel is madeup of a number of individual semiconductor solar cells. Electricity isproduced when protons from the sun’s rays slam into electrons in thecells, raising their energy level. A small electrical signal is theresult. This signal is combined with that of other cells and panels,and the resulting power can then be stored, used directly at thegeneration site (someone’s home, for instance), or pumped back into thelocal electrical grid for use elsewhere.

Hybrid panels combineboth thermal fluid heating and electrical power generation into oneunit. These are relatively new, and while showing great promise, arenot yet widely available.

Typical installations combine manypanels together into arrays. These may be located on the ground, buttypically are on residential and commercial rooftops, otherwise wastedspace. A control system handles the interface and control of the panelsto the existing electrical supply or hot water system.

Let’s take a closer look at photovoltaic panels, since that’s where the growth and investment opportunities lie.

Higher Efficiencies and Dropping Panel Costs

Notunlike other semiconductors, continued research and developments in thematerials themselves have resulted in huge boosts in panel energyconversion efficiencies. As little as 10 years ago, 2% conversionefficiencies were the norm for polysilicon panels.

Commercial panels are now approaching 9% to 10%, and researchers have achieved nearly 20% in the laboratory.

However,new cadmium telluride thin-film technology is the industry’s currentprice/performance leader, and it and other derivations of thin-filmwill completely replace polysilicon panels in a few years.

Currentpanel costs are in the range of $1 to $2 per watt, however somecompanies have already broken the $1 per watt barrier. This trend willcontinue, with prices reaching $0.50 per watt and even lower in just afew short years. At the same time, panel efficiencies continue toincrease, making solar installations even more financially attractiveas time goes on. Have they finally become cost effective? The answer isyes and no…

Governments Around the World Gear Up

Germanyand China are still the two biggest markets for solar. The Germanmarket will grow by nearly one-third this year, and that’s in the faceof less than ideal economic conditions.

All indications are thatglobal credit is beginning to loosen, particularly for solarinstallations in countries where governmental subsidies exist: Germany,China and now the United States.

The United States is the darkhorse of solar, with some states offering as much as 35% credits on topof the 30% federal refund. It’s no wonder that the forecasts for solarinstallations for this year and next are double that of last year.

Here are the top five solar companies to invest in now:

First Solar (Nasdaq: FSLR) is the biggest player in thin-film solar panels, and is also the lowestcost producer. The company is a likely candidate for the S&P 500and should experience a great second half of 2009.

Evergreen Solar (Nasdaq:ESLR)is another thin-film panel maker. This company is just beginning toramp up its manufacturing, and that’s a good thing, since it has abacklog of over $3 billion.

Canadian Solar (Nasdaq:CSIQ) makes panels in the current polysilicon technology, but represents a great short-term (less than one-year) play in the space.

Ascent Solar (Nasdaq: ASTI) is focused on the developing BIPV market, and as such represents a great long-term play.

Energy Conversion Devices, Inc. (Nasdaq: ENER) makes, sells and installs photovoltaic panels and batteries for energy storage.

As I indicated last week,growth will likely continue to ramp up in a big way here in the UnitedStates and by 2016 our total installed base could equal that of therest of the world. China and India are also heavily subsidizing solarinstallations and will drive growth even more.

Even with allthis heady growth, total worldwide energy gleaned from solar will stillbe less than 3%. Clearly, investing in solar for the long termrepresents one of the greatest growth opportunities in our lifetime.

by David Fessler



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