North Coast Solar Stocks

September 17, 2009

Enter Gigawatts: Solar Power Comes of Age

Filed under: FSLR, SPWR, STP — Tags: , , , , — Jason @ 11:38 am

By Russell Gold

A brief history of solar power.

In the pre-industrial era, solar power was used pretty much exclusively by plants and cold-blooded amphibians. Then came solar panels – expensive and not particularly efficient – but a way to turn the sun into power. And solar power was embraced by off-the-grid hippies.

Then a few years ago, something happened. To be exact: feed-in tariffs happened. And solar power began to grow in Germany and Spain and elsewhere in Europe where government policy created predictable profits. Policy begat interest which begat scale which begat lower prices. This was the first growth phase of solar power.

We are about to enter the “second growth phase of the solar era,” says Vishal Shah, a Barclays analyst in a research note this morning. This phase is driven by utility-scale purchases of solar panels. “We expect the U.S and Chinese solar markets to lead growth during the second growth phase of the solar era, primarily driven by development of large scale solar projects,” he notes.

In short, our little boy is growing up.

Earlier this month, First Solar (FSLR) announced a deal to build a two-gigawatt facility in China. Granted, it will take a decade – but how long will it take to build a new nuclear reactor? (By the way, Barclays raised its stock price target for both First Solar and SunPower (SPWRA, SPWRB) today, in part arguing that these companies as well as Suntech Power (STP) “appear to be best positioned to lead” in the U.S. and Chinese utility markets.)

Take a second to consider that two-gigawatt figure. That is four times California’s solar capacity and more than twice as much as the U.S. (IREC_Solar_Market_Trends_Report_2008). It is not far away from the generating capacity to be added by the proposed two-reactor expansion at NRG Energy’s nuclear plant in Bay City, Texas.

We don’t want to see solar through rose-tinted glasses. No, it’s not base-load electricity generation. It works when the sun shines. And yes, it is an expensive alternative to other power sources, although the spread is narrowing.

But we’re just pointing out that utility-scale solar – gigawatt-sized solar – is no longer wishful thinking. All indications are it will be here before the London Olympics.

Now that it can be built on a giant scale, what must happen before it can capture a share of the market? Do you need advances in energy-storage capability, allowing power from the sun to let us watch infomercials at 2 a.m.? Or do you need a power-generation fleet that accommodates this variable power source, increasing the use of natural gas plants that can be switched on and off quickly.

Now that our little boy is growing up, what will it look like when the solar industry demands to be treated like an adult?

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