Thursday, February 5, 2009

What Makes Solar Attractive to Investors?

Solar is not impervious to macroeconomic headwinds, there are good reasons why solar stocks are making progress while the wider markets decline. On Wednesday the Nasdaq and the S&P were down and for the second time in a week solar rallied as the major indexes declined. Led by combined Tuesday-Wednesday gains of 10% for STP and 9% for SPWRA, The Green Market's solar stock averaged a 4% gain on Tuesday and 1.7% on Wednesday.

In recent years, certain solar stocks have been very good to investors. We have seen strong triple digit returns from stock like OTCBB:XSNX which saw a 545.95% gain, and FSLR has led the solar industry with returns in excess of 700%.

As the most abundant form of energy on earth, solar possesses a host of intrinsic merits that make it a sound investment. Solar power has the smallest footprint of all electric generation resources. Solar cells generate electricity without emissions, waste or sound. Solar goes everywhere and can be located where the energy is needed. When the sun is at its peak, demand also peaks, this makes solar well suited to meet daily peak energy demand. Solar is a stable and reliable source of power with less volatile pricing and lower delivery risk than many other forms of electricity generation.

Modularity is one of solar's greatest attributes, solar has the ability to be deployed in multiple sizes and configurations. Solar is the only renewable system well adapted to both the urban and suburban residential contexts. And solar easily complements standard electric power purchased through a utility. On site solar does not bleed power because it does not require a transmission infrastructure to move electricity from large scale electric plants.

According to a recent Merrill Lynch report "[O]ur early take is that increasing electrification of the economy will continue with solar the most promising approach." There is an increasing role for distributed generation in the future, and solar is the logical choice.

As always there are reasons for concern, the global economic crises, weakness in the debt and equity markets and the low lying price of oil. Although some fret that the worst is still to come, solar companies that have their financing in place will weather this economic storm and lead the cleantech revolution.

1 comment:

scott said...

i would really like to feature this post on my solar news site and also discuss with you about becoming a contributor...i really like your solar insight.