Solar's Death Greatly Exaggerated: Poll
NEW YORK (
) - When it comes to green energy, at least recently, it ain't easy being a solar company.
This past week was no exception to the selloff in the solar sector, with most of the public solar companies suffering weekly declines in share price, as the pressure from European governments to move harder and faster against what have been very lucrative solar incentive schemes has raised questions about the solar industry's financial model.
Italy was the latest European government to announce a somewhat unexpected hard cap on solar of 8 gigawatts between now and 2020. The 8 gigawatt hard cap, if passed into law by the Italian government, would force a re-evaluation of the growth prospects in what had expected to be one of the biggest national boons to solar capacity as other countries, like Germany, reduce their incentive schemes.
What's more, there are questions about the level of continued political support for an expensive form of electricity at a time when government budgets from Berlin to California are queing up in what looks like the modern economic state equivalent of a bread-line.
Some readers of
TheStreet
have been incensed at recent coverage of the solar sector, with comments ranging from legitimate arguments that the solar selloff could be overdone, to more nefarious claims that
TheStreet
reporters, as well as the German government, and big oil and coal, are in cahoots in a grand conspiracy to short the solar sector. There may be an opportunity for a Michael Moore movie in this scenario, but we believe it might even fail his oft-malleable standards of reasoning.
TheStreet
has also received comments in which readers and solar fans display a high level of frustration with the idea that short-term political winds -- and economic budget problems -- could hold sway over the more important goal of creating a more sustainable energy future. After all, these readers have said, if you take into account the price that reliance on black coal and dirty oil is costing our world -- from health-related costs to the unquantifiable challenge of confronting global warming -- a few extra euro cents for solar electricity should seem rather puny a price to pay.
The logic of this argument may be sound, or at least a valid talking point. However, it is perhaps naive to think that the political power brokers of the world make decisions based on the long-term logical considerations, and not based on short-term cow-towing to public anger, corporate interests and the immediate economic environment. (If you believe that, you probably also believe that the powers that be in Washington will push ahead with health care reform because health care costs will be out of control in a few decades, as opposed to delaying on health care reform because of the desire to win upcoming midterm Congressional elections.)
Regardless, the real question is not whether there is a grand conspiracy to short the solar stocks into the abyss -- as far as we know, there isn't -- but whether the photovoltaic solar industry has established itself at a level of economic stability and political stability to ensure that the run won't be pulled out from under its panels.
In other words, does photovoltaic solar have to be part of the answer for the energy picture of the future, or could it join the long line of once-promising technologies that get pushed to the sidelines of history. After all, many people might not even know that once upon a time, Henry Ford -- who has done as much as anyone to create the oil economy -- was harvesting soy beans as part of his dream to create the first biofuels industry, in the 1920s.
The goal is for the capital markets, the government incentive schemes and the alternative energy companies to arrive at a long-term global renewables energy portfolio, as opposed to triggering short-term booms and busts in solar stocks ad nauseum.
We have seen in recent weeks what occurs to solar stocks when unexpected changes in government support occur.
Trina Solar
(TSL)
,
Yingli Green Energy
(YGE)
,
JA Solar
(JASO)
,
Canadian Solar
(CSIQ) - Get Report
and
First Solar
(FSLR) - Get Report
, to name just a few of the public solar companies, have taken big hits in share price.
It can be argued that some of these solar stocks, with the exception of First Solar, had become so frothy in share price in the period leading up to the European political winds of change, that a correction was due -- and what has occurred is no more than that correction, with the lower feed-in tariffs matching the reduction in average sales price of solar modules, wafers and cells.
In light of all this, we asked
TheStreet
readers: Are the prospects for the long-term role of photovoltaic solar about to dim, or is solar poised to emerge from the current crisis as a stronger renewable energy player?
The response from
TheStreet
readers is unambiguous: they believe that the reports of solar's death are greatly exaggerated. Approximately 73% of our survey takers said they believe that the solar doomsday scenario is overdone, and that the solar sector will come back strong.
Approximately 20% of survey takers, however, do think there will be a diminished role for photovoltaic solar in the global renewable energy portfolio of the future. By this way of thinking, solar will not burn out, but if it can't reach a scale of economic efficiency or technological innovation that speeds it ahead to grid parity ahead of reductions in government incentives, solar may find itself a less-favored alternative in the halls on congresses and parliaments.
As for the solar bears? The solar bulls will be happy to know that a mere 7% of survey takers believe that solar will be the next ethanol, with one final, all-consuming bust triggered by the sooner-than-expected end of the current solar welfare state structures. The 7% of readers who are predicting the doomsday scenario for solar could, indeed, represent the grand conspiracy to short solar that has been suggested by some
TheStreet
readers. Or, the 7% of solar doomsdayers could just indicate a lot of repeated online poll vote clicking by Hapoalim Securities analyst Gordon Johnson.
All in all, it may have never been completely fair to compare solar to ethanol. Still, whether the fields of the future will be as replete with solar panels as we once thought they would be with corn for ethanol, is still an open question. Remember, 90 years ago, Henry Ford believed that the soy beans he was harvesting were the answer for the biofuels industry of the future.
-- Reported by Eric Rosenbaum in New York.
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