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The Solar Bears Are Wrong

Stocks in this article: FSLR SCTY SPWR YGE HSOL JKE BRK.A TSLA

NEW YORK (TheStreet) -- Right now, some 2,400 solar installations with 43 gigawatts of power are at some stage of the building process. They will make the U.S. the world's third-largest solar market.

Yet, there is an immense bearish pressure being applied to solar energy these days:

  • Arizona has imposed a fee of roughly $5/month on all solar panels, for connecting to the grid. Such taxes tend to increase with time.
  • New Mexico has cut solar's share in its renewable energy mix, reducing the value of solar energy credits and increasing the value of those devoted to geothermal energy.
  • In Europe, which has 76% of the world's solar panel energy (Germany alone has 30% of the total), subsidies have been cut back repeatedly in recent years.

Renewable energy "skepticism" has replaced pure denialism, but its policy choices are the same. Bjorn Lomborg, an adjunct professor in Copenhagen who got his degree at the University of Georgia, is the cover boy for the new movement. In books like Cool It he calls renewable energy subsidies inefficient.

But there are some much better reasons to ignore the solar bears and look favorably on stocks like First Solar  (FSLR), up 89% this year; SolarCity  (SCTY), which has nearly tripled in 2013 and SunPower  (SPWR), up a whopping 431% for 2013 alone.

There have also been gains in the previously beaten-down Chinese solar sector. Industry leader Yingli Green  (YGE) is up almost 128%, Hanwha Solarone  (HSOL) is up 256%, and Jinko Solar Holding  (JKE) has quadrupled in value this year.

The economics of solar have changed.

The Institute for Global Self Reliance offers a "solar parity map" that shows that, by next year, 18 states will have solar costs in line with those of other grid energy -- without subsidies of any kind.

Add in the 30% federal tax credit due to expire at the end of 2016 and nearly the whole country has already reached parity. When it falls to 10%, only nine states will find solar power uneconomic on those terms.

The solar industry has also learned to tap the capital markets. It started a few years ago, with First Solar finding it could develop large projects for utilities and then sell them on to companies like Mid-American Energy, a unit of Berkshire-Hathaway  (BRK.A).

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