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Solar's Day in the Sun Is Around the Corner

Stocks in this article: FSLR TSL JASO

NEW YORK ( TheStreet) -- The most important date of our time is something I call crossover. That's the point at which solar energy costs less than any alternative.

It won't all happen at once. Places without grid energy already know solar is their best alternative. Places with expensive grid energy may have already passed crossover. The key date is when the stock market wakes up and finds most of the mass market has passed this point.

GE estimates crossover at 2016. The Department of Energy estimate is 2015.

Oil wells won't be shut in on those dates. But around that time solar panels will cease living in a buyer's market and go to a seller's market. Right now, the best solar investment lies in the channel, in finding people to buy panels and buyers for the electricity. (Companies like SolarCity, which announced its IPO yesterday.) Once crossover is achieved, this will reverse, as those companies making panels will be able to price alongside alternatives (even a little below) and earn a profit.

Once crossover is reached, solar plants can scale without worrying about creating a market glut, which we have now. Once we have crossover, there's a thumb on the buyer's side of the electricity market. Once crossover happens, abundance starts.

This sort of thing has happened before. A generation ago, Moore's Law gave us an abundance of mental power, replacing floors of secretaries and accountants, and causing the amount of net warehouse space to hit a peak it has yet to exceed -- because goods don't spend time in warehouses anymore.

Of course, if you're old enough to remember the 1970s (congratulations), you probably remember an era of shortages, of persistent "stagflation," and high unemployment. (Plus some really ugly clothes.) That's the way transitions work -- a period of market crisis creates demand for change.

Skeptics of crossover insist that alternative energy can't scale to meet demand, regardless of price. But that's saying manufacturing can't scale.

This does not mean you should run off and buy shares of First Solar or even some of the leading Chinese companies like Trina Solar and JA Solar. Because we have yet to reach crossover, booms are still followed by busts. We're in a bust now. Polysilicon is selling for less than it costs to produce. So are panels. There will be more bankruptcies, more pain. By this time next year, panel prices may actually be higher than they are now as the shakeout proceeds.

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