Solar Energy: What You Need to Know

How much do you really know about investing in solar-focused companies and funds?

The following are key insights from TheStreet.com on the potential opportunities and risks in solar energy investing.

From Three Solar Players Push Envelope With New U.S. Plants:

Konarka Technologies Inc. said Tuesday it has opened a plant that could produce up to 1 gigawatt per year of its organic photovoltaic "power plastic" material by the start of next decade.

Konarka is one of a handful of companies exploring thin-film solar cells that use organic materials. Organic materials are carbon-based substances that are used instead of silicon, cadmium, copper and other minerals that can be found in commercial solar cells today.

But whether the Lowell, Mass.-based company will find buyers for that much organic photovoltaic material remains to be seen, given that it still isn't as efficient at converting sunlight into electricity as its inorganic thin-film competition, analysts said.

Read the full version of Three Solar Players Push Envelope With New U.S. Plants.

Cramer: Solar's Cooling Off (Video, Oct. 8)

Jim Cramer thinks Goldman Sachs made the right call in downgrading solar names.

To watch the video, click the player below:

Plus, don't miss this video on TheStreet.com TV: Solar Energy: Can You Afford It? (Sept. 30: Julia Hamm of the Solar Electric Power Association tells Debra Borchardt that solar is striving to become more affordable for the residential market.).

From Suntech Breaks Into Solar-Power Financing:

Suntech Power Holdings Co. (STP Quote) said Thursday [Oct. 2] it is entering the solar-power financing and management business by buying EI Solutions, a solar integrator and installer.

Suntech, which makes solar cells and panels, also said it has formed a joint venture with MMA Renewable Ventures, which finances, owns and operates commercial solar projects.

The new venture, called Gemini Solar Development Co., plans to finance, develop and operate large solar power plants of 10 megawatts or more. Kristina Peterson, Suntech's director of structured finance, will become Gemini's president.

Gemini Solar is a 50-50 joint venture based in San Francisco, McLanahan said. Lining up a partner also makes sense at a time when the financial market turmoil means fewer banks will be available to offer loans for building solar and other renewable energy projects.

Read the full version of Suntech Breaks Into Solar-Power Financing.

From Green Energy Sector Gets Boost From Senate:

The U.S. Senate on Tuesday [Sept. 23] approved about $18 billion of renewable-energy tax credits after repeated failed attempts to do so this year.

The 93-2 vote cleared a major hurdle for extending a set of tax credits for businesses and residents investing in renewable energy, from building and operating power plants to installing small wind turbines on residential properties.

Solar, wind and other renewable-energy investors and executives have been anxiously waiting on Congress to extend a set of investment-tax credits that would offset 30 percent of the cost of a solar project.

"We know with certainty that the extension of these credits sends out a green ripple effect: solar projects on hold can now move forward, America creates new green-collar jobs with over 214,000 in California alone, and businesses and homeowners can count on lower energy bills in a time of economic hardship," said Barry Cinnamon, CEO of Akeena Solar (AKNS Quote), in a statement.

Read the full version of Green Energy Sector Gets Boost From Senate.

From Senate Sends Energy Tax Credits Back to House:

The Senate was unhappy with the House [of Representatives] version, however, and had refused to consider it.

The House's Monday [Sept. 29] rejection of the $700 billion plan to prop up the ailing financial market -- prompted by bankruptcy filings and sales of troubled U.S. investment banks and mortgage lenders -- gave the Senate an opportunity to push for its own renewable-energy bill again.

Senate majority leader Harry Reid, D-Nev., announced Tuesday night that the Senate would tweak the House's version of the financial-market bailout package and vote on it, but only along with the renewable-energy tax credits

Read the full version of Senate Sends Energy Tax Credits Back to House. (Update: Congress Finally Gives Solar Industry 'Policy Certainty')

From Solar's Outlook Gets a Bit Sunnier:

The key industry players badly need to assure investors that they will not simply be a flash in the pan. The House still needs to sign off on the bill as well. It is also worth noting that the $18 billion package is completely offset by the reduction in benefits to the oil and gas industry.

Shares in the group have soared and plunged, depending on broader sentiment, as these stocks carry very high betas. Yet institutions have largely placed their bets on First Solar (FSLR Quote), which is the only stock in the group closer to its 52-week high than its 52-week low, and which is valued at a lush 13.3 times projected 2008 sales on an enterprise value basis.

Notably... the China-based solar plays... sport the lowest valuations, in large part because of the absolute decimation of the broader Chinese market.

But investors need to stay focused on the fact that industry growth can stay above 25% for the next three to five years, as the legislative backdrop is likely to become yet more favorable. Both presidential candidates have expressed a great deal of support for an expansion in credits and subsidies for alternative energy.

Read the full version of Solar's Outlook Gets a Bit Sunnier (RealMoney access required).