Obama Budget Proposes Big Increases for Spending on Clean Energy

Photo courtesy of KMBC.com

Photo courtesy of KMBC.com

President Barack Obama’s fiscal year 2014 budget proposal made headlines this week mainly for its changes to Social Security, but the increases proposed in US government support for clean energy spending did not go unnoticed. Reuters News Service called the increases for electric cars, wind power and other green technology “dramatic,” particularly because they arrive in the face of Republican criticism.

While many government agencies get slimmed down in the budget proposal, the Department of Energy would get an 8 percent increase to $28.4 billion next year, Reuters reported. Included are a 75 percent increase in spending on advanced vehicles to $575 million and a 29 percent increase in spending on the ongoing effort to integrate solar and wind power into the national electric grid, Reuters reported. Support for biofuels would increase by 24 percent.

“These increases in funding are significant and a testament to the importance of clean energy and innovation to the country’s economic future,” the Obama administration wrote in the budget proposal, according to the Reuters report.

While Republicans have criticized the US backing of companies like Solyndra, a solar panel maker that went bankrupt, and Fisker Automotive, a hybrid sports care maker which is struggling and laying off employees to hold off bankruptcy, President Obama has maintained that clean energy is a key to the country’s future.

Government support for the clean energy industry “has nearly doubled (the US) energy generation from wind, solar, geothermal and other renewable energy sources” since Obama took office in 2008 and maintaining this level of support “could lead to breakthroughs in the years to come,” Reuters reported.

We’ve been following several wind and solar energy companies, including:

Newbury Park, CA-based Sauer Energy (OTC: SENY, http://www.sauerenergy.com/) is a development stage company developing vertical axis wind turbines for commercial and residential uses. Formerly BCO Hydrocarbon Ltd., the company disposed of its oil and gas interests and in July 2010 purchased Sauer Energy and in May 2012 purchased Helix Wind Corp. Back on Dec. 24 it was trading for $0.24. It closed April 12 at $0.10, down 1 cent for the day. Its market cap is now $9 million and 52-week range is $0.08-$0.39.

China-based China Ming Yang Wind Power Group (NYSE: MY, http://www.mywind.com.cn/) is a wind turbine manufacturer focused on designing, manufacturing, selling and servicing megawatt-class wind turbines. Last July, MY announced it was considering a joint venture with China-based Huaneng Renewables Corp. to develop wind power and solar power projects in China and overseas markets. MY stock closed Dec. 24 at $1.21. It closed April 12 at $1.35, up 1 cent for the day. Its market cap is now $169 million and 52-week trading range is $1.06-$2.47.

Chatsworth, CA-based Capstone Turbine Co. (Nasdaq: CPST, http://www.capstoneturbine.com/) develops and markets microturbine technologies, including technologies used to provide on-site power generation for wind power. It closed Dec. 24 at $0.91 with a market cap of $278 million.CPST closed April 12 at $0.93, down 4 cents for the day. Its market cap is now 282 million and 52-week trading range is $0.73-$1.20.

San Mateo, CA-based SolarCity Corp. (Nasdaq: SCTY, http://www.solarcity.com) designs, installs and sells or leases solar energy systems to residential and commercial customers, as well as electric vehicle charging products.  It closed March 15 at $16.74 with a market cap of $406.5 million. SCTY closed April 12 at $19.97, down 41 cents for the day. Its market cap is now $1.5 billion and 52-week trading range is $9.20-$21.40.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/ ), which sells a variety of solar products, closed back on March 15 at $3.50 with a market cap of $151 million. It closed April 12 at $4.07, down 3 cents with a market cap of $176 million. Its 52-week trading range is $1.95-$5.15.

San Jose, CA-based SunPower Corp. (Nasdaq: SPWR, http://www.sunpowercorp.com/), which makes a wide variety of solar products and systems, closed back on March 15 at $11.80 with a market cap of $1.4 billion. SPWR closed April 12 at $11.06, up one cent for the day. Its market cap is now $1.8 billion and its 52-week trading range is $3.71-$13.88.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/) designs, manufactures and sells photovoltaic modules worldwide. Back on March 15, TSL closed at $4.11 with a market cap of $291 million. It closed April 12 at $4.19, up one cent, with a  market cap of $335 million. Its 52-week trading range is now $2.04-$7.99. 

China-based Yingli Green Energy Holding Co. (NYSE: YGE, http://www.yinglisolar.com/) makes photovoltaic products including cells, modules and systems. YGE closed back on March 15 at $2.47 with a market cap of $387 million. It closed April 12 at $2.12, down 5 cents, with a market cap of $324 million. Its 52-week trading range is $1.25-$4.12.

China-based Suntech Power Holdings (NYSE: STP, http://am.suntech-power.com), the world’s largest producer of solar panels, closed at $0.70 back on March 15 with a market cap of $127 million. It closed April 12 at $ 2012, and then rose to $1.87 in early January, but has been falling since. STP closed March 15 at $0.75, udown 12 cents for the day, with a market cap of $135 million. Its 52-week trading range is $0.30-$2.96.

St. Peters, MO-based MEMC Electronic Materials (NYSE:WFR, http://www.memc.com) manufactures and sells silicon wafers and photovoltaic materials. Through SunEdison, it’s a developer of solar energy products. It closed March 15 at $4.53 with a market cap of $1 billion. WFR closed April 12 at $4.76, down 6 cents, with a market cap of $1 billion. Its 52-week trading range is $1.44-$5.70.

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Q/A with Philip Lawes, Founder and President of Insoltech Solar

Philip Lawes, founder and president of Laguna Beach, CA-based Insoltech Solar, has been in the solar power business for 34 years. He is a designer and consultant for renewable power systems such as solar photovoltaic systems. Although based in Southern California, Lawes has installed renewable energy systems in various parts of the world including the Caribbean, Mexico and the South Pacific, as well as in the California desert areas.

Smallcapworld: How did you get into the solar business way back in the 1970s and what was your first solar job?

Solar farm photo courtesy KCOY.comChannel 12

Lawes: It was a solar hot water system. That’s all there was back then in the late 1970s that was financially viable. Solar power has been around for a long time. The photovoltaic cell was developed by Bell Labs and the first applications were for space and to power communications satellites. But it really kicked off during the second energy crisis in 1978. Saudi Arabia basically cut off all our oil and gas prices skyrocketed. Remember the long lines and high gas prices? There was an “energy crisis” and everyone started looking for alternative energy sources. President Carter helped boost the solar business by creating large financial incentives through generous tax breaks.

Q: Which companies were making the solar panels back then?

A: A lot of companies got into it, but they were mostly small companies, many based in Europe, making solar thermal collectors. It was mostly about heating water to reduce natural gas bills and in some cases electric bills, if you had electric heating.

Q: When did you get into photovoltaics?

That would be in the 1980s. I did a lot of work in Baja California, in and around Cabo San Lucas. I worked for expats in the area, for their small palapas and for pumping water on their ranches, for their cattle or other needs. The idea was to generate electricity in remote areas where utility power was not available and the cost to run diesel-powered generators was prohibitive.

Q: Tell us about some of your other projects.

A: I built a solar electric system for a small resort called Papageno in Fiji. Just a few years ago I also designed and built a solar electric system for Johnny Depp for his private island in the Bahamas. I was also a subcontractor for a 1.3 million watt system for the Twenty-Nine Palms Marine Corps base in the California desert. And I built a small solar energy water pumping system for the Irvine Company here in Southern California to provide water for an endangered species. We are working on a custom home in Shady Canyon now, an exclusive area of the Irvine Ranch.

Q: There are many different types of solar arrays now available. Which are best for the average homeowner?

A: The typicial, flat-plate, mono- or poly-crystalline solar modules are still the workhorses of the industry. They are scalable, maintenance free and offer excellent warantees and still the best route for average homeowners. Thin film modules are not as efficient so they require more area. And companies are still having problems getting the manufacturing process down. People got into thin film because they thought they could manufacture them cheaply but that hasn’t really happened yet. And no one anticipated that the standard modules would come down in price so much.

Q: Are there American companies that are able to compete with the Chinese in the manufacture of solar modules?

A: Oh sure. FirstSolar is a thin film manufactuer, the only really successful thin film manufacturer. SunPower is an American company and has a very efficient module built with great technology but they manufacture offshore, primarily in the Phillipines. Helios is based in Wisconsin and has been successful making solar modules. But there has been, and will continue to be, lots of attrition. Some companies are even selling their modules at a loss.

Q: Why do some companies like Helios succeed, while others like Evergreen Solar and Solyndra fail?

A: Solyndra stepped out of the box and tried a very different approach and ultimately had too many problems. Their idea was to build little glass cylinders with thin film cells inside. They were light weight and didn’t require ballasting, but I believe they had a lot of breakage and lots of other problems in production. Ultimately, they didn’t anticipate the dramatic decrease in price of today’s standard workhorse mono- and poly-crystalline modules. Evergreen had a different approach, called ribbon technology. My take is that they couldn’t approve on the efficiency of the modules enough, couldn’t get enough volume going and couldn’t compete with the big guys from China and Germany. Helios is successful so far, but who knows, we could read tomorrow that they are in trouble. But they do provide the old standard modules people want and a lot of people just want to buy American only, which helps them. I think SunPower makes the highest efficiency module of all.

Q: You say you helped do an installation at a Marine base. Why is the military getting into solar?

A: There have been mandates from the Department of Defense, one of the largest if not the largest user of electricity in the country, and they are looking for ways to do things cheaper.  In many cases these military installations are out in the middle of nowhere and it’s a cheaper alternative than using diesel generators. They also want to be autonomous, and have security. That’s why they are also looking at biofuels. They want to use stuff we grow ourselves instead of relying on outside sources. 

Q: How is solar power progressing in other countries, like the emerging parts of the world?

A: The emerging nations are finally beginning to grasp the value of renewable energy. Cuba has lots of solar, so do the Virgin Islands, and Hawaii as well because they have to import their fuel. Many parts of the world don’t have coal, natural gas or hyro power. It’s all about diesel-fired generators. It’s all about what they call grid parity. That’s the holy grail. If you can product power at a lesser cost than what they charge. Grid parity is now in places like the Bahamas, but it all depends on the particular area.

Q: How long does it take the average residential installation to pay for itself in terms of decreased or eliminating energy bills?

That really depends on your location. There are so many variables like which utility is in the area and what the rates are and what rebate programs they offer. In Southern California, with large homes and large usage like the tier 4 and tier 5 users, it’s about 5-7 years. But in places like Hawaii that doesn’t have coal-powered plants or hydro and electricity is very expensive, but there’s plenty of sun, the payback can be quicker.

Q: What are the chief maintenance problems with a home system? Do you need to have special insurance to cover the installation on the roof?

My main expertise here is California, which doesn’t have extra insurance, in fact they make it mandatory to not charge extra insurance. But as California goes, so goes the rest of the country, typically. The chief maintenance problem is keeping the modules clean. Again, that depends on where you live. Actually, it’s easier on the East Coast where they get more rain. In California, where it can go months without rain, it can be difficult to keep them clean, particularly if you live near a construction area that is generating lots of dust. It’s good to wash them every few months. Have a window washer do it if you can.

Bipartisan Support in Senate Points to Bull Market for Wind Power

Thanks to high-profile bankruptcies like Solyndra and Evergreen Solar, good news has been in short supply this year for companies in alternative energy. But the wind energy industry bucked that tide earlier this month.

On Aug. 2, the Senate Finance Committee voted to renew a tax credit for wind power for one more year, according to

Photo courtesy of Knowledge-Allianz.com

the New York Times (http://www.nytimes.com/2012/08/03/business/wind-industry-wins-senate-panels-support-for-a-tax-break.html). The provision to renew the tax break is part of a $200 billion package that still must be passed by Congress when it returns from summer break. Furthermore, the vote was bipartisan (19-5) with several Republicans from key wind power states joining the Democrats in favor.

While still not a done deal, it is clear that “the wind industry convinced a key Senate committee that green can be good politics in red states as well as blue states,” the Times noted.

A week after the vote, the American Wind Energy Association announced that the U.S. “hit 50 gigawatts of wind-powered electric capacity in the second quarter of this year.” Energy and Capital noted that so far in 2012, “the nation has had 2,800 megawatts and 1,400 wind turbines installed countrywide, chiefly across Nevada, Idaho, Iowa, Hawaii, Oklahoma and California.” A total of 39 states now have “utility-scale wind facilities” with most of the growth in the industry is coming from domestically manufactured turbines and materials, according to Energy and Capital.

Let’s take a look at a few randomly chosen small cap companies that are involved in wind turbines and wind power.

Newbury Park, CA-based Sauer Energy (OTC: SENY, http://www.sauerenergy.com/) is a development stage company developing vertical axis wind turbines for commercial and residential uses. Formerly BCO Hydrocarbon Ltd., the company disposed of its oil and gas interests and in July 2010 purchased Sauer Energy and in May 2012 purchased Helix Wind Corp. SENY currently has a market cap of $20.6 million and a 52-week trading range o $0.10-$0.95. It closed trading Aug. 27 at $0.26, up 2 cents on the day.

China-based China Ming Yang Wind Power Group (NYSE: MY, http://www.mywind.com.cn/) is a wind turbine manufacturer focused on designing, manufacturing, selling and servicing megawatt-class wind turbines. In July, MY announced it was considering a joint venture with China-based Huaneng Renewables Corp. to develop wind power and solar power projects in China and overseas markets. MY’s market cap is $147.5 million and 52-week trading range is $1.10-$3.73. It closed Aug. 27 at $1.21, down 4 cents for the day.

Chatsworth, CA-based Capstone Turbine Co. (Nasdaq: CPST, http://www.capstoneturbine.com/) develops and markets microturbine technologies, including technologies used to provide on-site power generation for wind power. On Aug. 23, CPST shares crossed their 50-day moving average and closed the day at $1.05 with 2.8 million shares sold. Its market cap is $302.6 million and 52-week trading range is $0.85-$1.53. It closed Aug. 27 at $1.01, down 1 cent for the day.

One company in the news lately is Italy-based Enel Green Power, which trades on the Milan Exchange (EGPW.MI) and is Italy’s biggest renewable energy company (http://www.enelgreenpower.com/) . EGPW announced in early August that it will partner with GE Capital to build the Prairie Rose wind farm in Minnesota, expected to have a total installed capacity of 200 megawatts. The farm is scheduled to commercially operational  in this year’s fourth quarter. This follows earlier announcements of other investments in wind farms in Oklahoma, Mexico, Denmark and Croatia.

Finally, Naperville, IL-based Broadwind Energy (Nasdaq: BWEN, http://www.bwen.com/) announced Aug. 23 that it was reducing its manufacturing footprint and shifting its “capacity and marketing focus to non-wind sectors.” In early August the company reported a $4.2 million loss for the fourth quarter. It also made a 1-10 reverse split of its common stock. BWEN closed Aug. 27 at $2, down 26 cents for the day.

With Solar Power’s Future So Bright, Which Solar Stocks Are Oversold?

All the noise about the bankruptcy of privately-held Solyndra, despite the reported $535 million federal loan guarantee, could lead some to think that the solar industry is in trouble. That would, of course, be spectacularly wrong.

While shares in the publicly-traded solar equipment makers have been falling since Aug. 31, the day the bankruptcy was announced, the future of solar power has never been brighter, according to many experts including NRG President and CEO David Crane. He told Jim Cramer on CNBC Sept. 20 that while price of solar panels has dropped “precipitiously…within three to four years, the cost of solar power in at least half of the states in the U.S. will be less than drawing power off the grid.” Crane also added that solar panels represent “a billboard for what you stand for as a business owner. NRG is working with the Washington Redskins to build a 2 megawatt solar installation and solar plug-in stations in the parking lot of their stadium.

As has been noted recently, the problems Solyndra experienced were unique to the company and solar panel equipment makers in general. Basically, its solar panels were too expensive and cost more to install than its competitors. Yahoo News reported that the price for solar panels has dropped by about 42 percent this year alone due to, you guessed it, competition from China.

The problem with picking solar stocks, particularly the solar panel and equipment makers, will be finding which of the group will survive and enjoy the promising future of solar power. Let’s take a look at the stocks of several solar equipment makers and see what they have done since Aug. 31, the day the long anticipated Solyndra bankruptcy became official. They have all fallen sharply, but have they been oversold? If so, which ones?

One of the larger solar companies Tempe, AZ-based First Solar (Nasdaq: FSLR, http://www.firstsolar.com/), the world’s largest maker of thin-film solar modules with a $6.5 billion market cap, hit a four-year low Sept. 22, dropping all the way down to $66.85, then “rallied” on Sept. 23 to $70.24. First Solar’s most immediate problem is apparently its own federal loan program, which is facing new scrutiny due to Solyndra’s problems. FSLR sold for more than $100 as recently as Aug. 31 but has been mostly falling since that day when it lost $1.95 and closed at $99.98.

China-based Suntech Power Holdings (NYSE: STP, http://www.suntech-power.com/), which makes photovoltaic products and provides construction services, was trading for $5.25 on Aug. 31. On Sept. 23 it closed at $2.64, down 7 cents for the day.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/), which sells a variety of solar products, was trading for $6.74 on Aug. 31. It closed Sept. 23 at $4.72, up 31 cents on the day.

China-based LDK Solar Co. (NYSE: LDK, http://www.ldksolar.com/) manufactures solar products and silicon materials. On Aug. 31 it closed at $5.71 and by the close of market Sept. 23 it had dropped to $3.40, down 7 cents on the day.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/) designs, manufactures and sells photovoltaic modules worldwide. Its closing price Aug. 31 was $15.88, while on Sept. 21 it closed at about half that price, or $7.69, up 25 cents.

Shanghai-based JA Solar Holdings Co. (Nasdaq: JASO, http://www.jasolar.com) makes solar cells and other solar products. It closed the trading day Aug. 31 at $3.66. On Sept. 21 it closed at $2.20, up 10 cents on the day.