Why is Germany among the world leaders in solar power, with five times more photovoltaic panels installed than the US? A big reason is what they call a “feed-in tariff,” which requires utilities to pay above-market rates for (cleaner) alternative energy, according to solar experts and a recent article in the New York Times (http://www.nytimes.com/2009/03/13/business/energy-environment/13solar.html?ref=business). We reported about 6 weeks ago that the US recently surpassed Germany (finally) in wind-turbine power (with maybe 8 times the land mass, shame on us).
In Germany, as in Spain and other parts of the EU, businesses and homeowners who generate renewable power and feed it onto the grid get paid up to four times more to produce electricity than the rate paid to a power plant. We are told that Italy has awarded hundreds of solar and wind-energy licenses to companies such as Zug, Switzerland-based EnergyMixx AG, which trades on the unregulated Frankfurt exchange as EM2.
After studying the German system, Gainesville, FL (not typically a climate-change leader, but who’s counting?) has recently adopted a similar incentive system and Los Angeles, Hawaii, Oregon and Washington are discussing following the European lead. It sounds like the perfect triangular cooperation scheme for a recession-plagued world: government incentivizes industry, which profitably creates jobs and a way for individuals and small business to green up AND make a buck.
A key to the European success is that the incentive plans have long horizons — between 10 and 20 years — said Phil Lawes, owner of Laguna Beach, CA-based Insoltech Solar (http://www.insoltechsolar.com), a 30-year-old, privately-held energy systems design and installation firm. “You need to have at least a 10-year incentive program to give businesses and homeowners a nice, steady, stable return on their investment,” Lawes said.
If this new financing system catches on in the U.S., and the evidence shows it very well may, many small solar stocks could benefit, such as Los Gatos, CA-based Akeena Solar Inc. (Nasdaq: AKNS, http://www.akeena.net), which has been struggling of late but is focused largely on the residential market. Trading at only 67 cents, Akeena is way off its high of $8.90 from last spring.
Or how about Roseville, CA-based Solar Power Inc. (EBB: SOPW.OB, http://www.solarpowerinc.net), which develops and manufactures solar panels but also does business and residential installations. SOPW.OB was trading at 53 cents, down from $1 as recently as the start of 2009.
Then there’s Santa Clara, CA-based DayStar Technologies (Nasdaq: DSTI, http://www.daystartech.com), which makes solar products for commercial and residential markets and trades at $1.38. DayStar’s 2008 year-end results conference call is scheduled for 5 p.m. EDT Monday, March 16. Worth a listen.
The problem with our crystal ball is that there is little clarity at this point in the federal incentive-cum-jobs-creation programs, even though we have been told over and over by the old and new administrations that Jobs are Job One and Green is the Theme. You can’t tell where the bailout will strike first, though logic would have it that alt-energy could be the mother lode.
As Earth2Tech reported Friday, Sunnyvale, CA-based privately held Serious Materials (http://www.seriousmaterials.com) is one of the first US “green” employers to hang out a major “Help Wanted” sign, prepared to hire and train people for a green career (in this case, making what used to be Kensington and/or Republic windows, http://earth2tech.com/2009/03/13/green-jobs-whos-hiring/). And DOE announced Friday that it is releasing the first tranche of $780 million from $8 billion earmarked for “weatherizing,” which would tend to support the Serious Materials approach (http://www.greenbiz.com/blog/2009/03/13/doe-weatherization-efficiency-funds).
It’s hard to imagine a green industry sector that has more potential jobs than solar energy — look at manufacturers like Bedford, MA-based Spire Corp (Nasdaq: SPIR, http://www.spirecorp.com/), trading at $4.67 vs a year-high of $18.75 for a current market cap of about $39 million, with about $49 million in revenues for its 9 months ended Sept 30, 2008, and a solar sector that is growing more than 100% a year (http://phx.corporate-ir.net/phoenix.zhtml?c=76421&p=irol-newsArticle&ID=1229774&highlight) .
Or look at First Solar (Nasdaq: FSLR) , the paragon of solar investors, out of our league with a market cap of $10.5 billion, but surging a bit in last week’s rally. Or the crowded field of solar installers, thin-film manufacturers, solar concentrator designers and builders. We have reported on all of those areas, and very few of them have yet to feel the twin tickle of incentives like the German-inspired Gainesville experiment and the adrenalin-rush of federal job-oriented subsidies.
We are a-settin’ and a-waitin’ to find out where the trickle-down will, well, trickle down.