Solar panel top stocks are at a major crossing point.
In 2008, record oil prices caused a big push for clean energy. Demand for polysilicon drove prices up and producers' share prices went along with them. Those who controlled the bulk of the supply chain and buffered themselves against price spikes were able to make the most out of the panel-price runup.
Then oil and the global economy fell off a cliff.
Now, solar panels are down from $4.20 per watt to just over $3... a 30% drop.
Then oil and the global economy fell off a cliff.
Now, solar panels are down from $4.20 per watt to just over $3... a 30% drop.
The Silicon Key for Solar Market Success
Computer sales are abysmal and could get weaker deep in the worldwide recession, and the virtual halt in microchip production means silicon is far into oversupply.
Computer sales are abysmal and could get weaker deep in the worldwide recession, and the virtual halt in microchip production means silicon is far into oversupply.
The gears of consolidation are turning, though, with the recession putting semiconductor manufacturers out of business and leaving industrial-grade silicon in the hands of fewer and fewer firms.
"When this recession ends," The New York Times's Bits blog forecasts, "the chip industry that emerges on the other side will look rather different than it did heading into this thing."
We don't have to wait for the recession to end for that transformation...
The government of Taiwan just announced on March 5 that it will set up an island-wide Taiwan Memory Company, which will crank out DRAM chips for phones and household gadgets, under the auspices of the country's economic ministry.
If Taiwan Memory Company can kickstart global semiconductor production (as the nation is disproportionately powerful on the international semi scene), which will then flow into a stimulated computer market, silicon prices could go back up quickly.
In that scenario, companies that used their vertical integration strategies to pick up lower-priced silicon will watch their competitors get squeezed in the spot market.
Oil prices are creeping back up, and major government incentives mean that solar panels are doubly attractive―costing a third less and heavily subsidized as part of various countries' stimulus packages.
We may be near a bottom in polysilicon and oil at the same time, and solar panel prices are set to recover fast.
We may be near a bottom in polysilicon and oil at the same time, and solar panel prices are set to recover fast.
The 20 Year Solar Panel Market Guarantee
Expectations have been tempered across the global equity market, with earnings and forecasts settling deeper into a prolonged funk. Caution is the key for both lenders and project heads.
Yet we're hearing about credit loosening up for renewable energy projects in Europe, where the state development bank of Germany, KfW, is stimulating solar production through '09.
Expectations have been tempered across the global equity market, with earnings and forecasts settling deeper into a prolonged funk. Caution is the key for both lenders and project heads.
Yet we're hearing about credit loosening up for renewable energy projects in Europe, where the state development bank of Germany, KfW, is stimulating solar production through '09.
The only catch is, the solar panels used to reach Germany's expected 2+ GW of installed capacity in 2009 will have to last 20 years or more...
Fine by us! Top producers like Q-Cells issue standard warranties of 20 years or more, with panels operating at greater than 3/4 capacity throughout that time.
Tight lending has forced Q-Cells and other producers to get their industrial bona fides in order. The ones who can't prove their cost advantage and come up with solid payback plans simply won't get loans, and their blueprints will get snapped up by the survivors... if those plans are deemed worthy of continuation by the remaining larger, more creditworthy firms.
At its root, a warranty is a pledge from producer to consumer.
In 2009, though, a warranty as much a handshake between creditor and debtor as it is anything... think of all the fright surrounding Detroit automakers and whether the Pontiac you buy today will be free to fix if GM goes under. GM can't sell cars because it can't stand behind them, and lending to GM is too speculative if new sales aren't picking up.
Fine by us! Top producers like Q-Cells issue standard warranties of 20 years or more, with panels operating at greater than 3/4 capacity throughout that time.
Tight lending has forced Q-Cells and other producers to get their industrial bona fides in order. The ones who can't prove their cost advantage and come up with solid payback plans simply won't get loans, and their blueprints will get snapped up by the survivors... if those plans are deemed worthy of continuation by the remaining larger, more creditworthy firms.
At its root, a warranty is a pledge from producer to consumer.
In 2009, though, a warranty as much a handshake between creditor and debtor as it is anything... think of all the fright surrounding Detroit automakers and whether the Pontiac you buy today will be free to fix if GM goes under. GM can't sell cars because it can't stand behind them, and lending to GM is too speculative if new sales aren't picking up.
It's not a vicious circle―it's a vortex. And it's sucking in company after company, in nearly every industry.
No one wants a shoddy solar panel either... Not utilities like Germany's E.ON, who want to buy excess capacity from companies and households with installations, and certainly not the home and business owners who are tapping investment tax credits and want energy savings to put them at parity with coal or gas-generated electricity.
For us investors, though, it's even more important to know there's a two-decade time horizon for quality clean energy stocks.
That's the warranty you need, even if you don't think a single solar panel will ever sit on your rooftop.
For us investors, though, it's even more important to know there's a two-decade time horizon for quality clean energy stocks.
That's the warranty you need, even if you don't think a single solar panel will ever sit on your rooftop.
And if you're looking for solar stocks that pass the 20-year test, take a look at some of the Green Chip International portfolio stocks we've picked precisely because they've got the goods to make it through this recession and beyond.
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