In the alternative energy movement, the mantra is a simple one: go to where you want to be – not where you are now. Think of hockey great Wayne Gretzky, who once said “I skate to where the puck is going to be, not where it is has been, or where it is now.”
So it goes for the solar power market, where emerging companies are taking a technology that was once considered to be a unique, but ineffective method of heating and lighting your home, used primarily by descendents of Druid sun worshippers and hemp-loving hippies, to growing popularity in the home and commercial energy marketplace.
Why not solar power? After all, the major energy source contributing to solar energy is the sun, which shines every single day for free of charge. In addition, solar power emits zero carbon emissions.
Turns out the sun worshipers were right, and now the rest of the world may be catching on. Currently, solar energy currently provides less than 0.1% of the electricity generated in the United States, but a new report finds that solar power's contribution could grow to 10% of the nation's power needs by 2025. The report, prepared by research and publishing firm Clean Edge and the nonprofit Co-op America, projects nearly 2% of the nation's electricity coming from concentrating solar power systems, while solar photovoltaic systems will provide more than 8% of the nation's electricity. Those figures correlate to nearly 50,000 megawatts of solar photovoltaic systems and more than 6,600 megawatts of concentrating solar power.
In a recent report on the promise of solar technology on Bloomberg.com, the outlook for the technology is so promising that you might have to wear shades.
Says Bloomberg, “Costs for the technology will fall below coal as soon as 2020, the U.S. government estimates. JPMorgan Chase & Co. and Wells Fargo & Co. invested last year in the biggest solar plant built in a generation; Chevron and Google are funding research; and Goldman Sachs is seeking land to lease as demand out-paces wind turbines and geothermal.”
Then there is General Electric Co., which estimates that its emerging solar-energy division will top $1 billion in annual revenues by 2010. "I'm very optimistic about solar. I think it will be a billion-dollar business for GE sooner rather than later," said John Krenicki, president and chief executive of GE Energy, which has businesses ranging from gas turbines to nuclear power to windmills. Even Wal-Mart is getting into the act, launching half-a-dozen pilot programs that are testing out solar energy in selected stores.
So it’s no surprise that solar energy is generating a rising amount of buzz in Wall Street trading pits, with young companies like First Solar Inc (FSLR), SunPower Corp (SPWR) Suntech Power Holdings Co Ltd (STP) and Evergreen Solar Inc (ESLR), all seeing new highs in their stocks prices over the last year.
Says Adam Grosser, a partner at the venture capital firm Foundation Capital, solar stocks are a new opportunity for investors. “80 or 90% of the energy needs across the world are being met by fossil fuels, but that’s going to change,” he says. “Sure, right now the cost of generating solar energy is about three or four times the price of fossil fuels. But in 10 years or so, the prices should come down to the point where it’s more affordable than fossil fuels. And that’s going to drive the value of solar energy stocks higher over the long term.”
In the short term, solar energy is suffering from something of a power outage in a public relations sense. “But that story is changing, too,” adds Grosser. “”Historically, technology has been a great way to break into a market. And right now, energy is a $6 trillion market globally, so it’s not easy to break through. Solar’s problem has been that it hasn’t had enough dynamite to make a big impact. But with energy prices rising, and consumer attitudes changing toward alternative energy sources, solar stocks are going to do very well.”
Grossar’s on to something. After all, on Wall Street, it’s all about catching the next big wave before it crests. With solar energy, the future is now.