Solar energy has been considered a very hot industry over the last several years as on the global scale, everybody is looking into renewable energy to reduce the carbon footprint and limit global warming. Along with that trend, we see the establishment and rise of many solar companies with stock prices going through the top.
One of the U.S. solar companies is First Solar (FSLR). I still remember one of my friends telling me about the recommendation from his professor for First Solar in the end of 2006, beginning of 2007, when the stock price was $26-$29 a share. Within just one year, it shot up to $266 a share in December 2007. The same with the famous case of Solyndra, viewed as the symbol of green energy for the U.S. Solyndra has been received $1 billion from venture capital equity, along with more than $500 million loan guarantee from the government.
Recently, the guy who was famous for short-selling activities, Jim Chanos, has commented on renewable energy, especially solar and wind energy companies in the current market conditions. Around three months ago, he targeted First Solar and Vestas in Denmark (PINK: VWDRY) as short-selling opportunities. At the Irah Sohn conference, he gave the presentation: “Solar + Wind = Hot Air” with the bearish comment “Wind and solar are not capable of being sufficient sources of power, they are not economically efficient. They are just not efficient; wind is 50% more expensive than natural gas, while solar is four times more expensive.” He has pointed out that job creation in the renewable industry is more like construction jobs, not value-added jobs, as the main important thing in renewable is the technology.
He also noted that during the Japanese nuclear crisis, the solar stock ran up, but the rally may have been so ignorant of the fact that the technology advancements that the economies of solar have made cannot be a replacement for base-load generation. From an economical standpoint, natural gas and coal are still much cheaper. That is why even wind and solar maybe the source of energy in the not so near future, but people would still need the core power plants for now.
Several factors combined, such as the not-yet-proven and useful technology and the high cost of production, has made the current alternative energy fields economically inefficient. That is why the role of government support is important for countries that want to be leaders in green energy. The biggest country with heavy government support is China, where $20 billion is funded by the government for Chinese solar companies to compete globally, driving down the solar price that put competitors out of business, and the most outstanding example is Solyndra case. (Readers can read more on Solyndra on: Solar Panels And The Fall Of Solyndra)
And what has driven the installations for solar and wind over the period of time is the policy and the government support, not the genuine demand. Just three years ago in 2008, Spain represented 40% of total solar demand, then the next year first place went to Germany with 50% of demand, then fell to 40% in 2010. Italy has a 25% share. Taking into account the problems Italy and Spain are having with their economies along side the rest of Europe, the solar fate may be the same.
One of the U.S. solar companies is First Solar (FSLR). I still remember one of my friends telling me about the recommendation from his professor for First Solar in the end of 2006, beginning of 2007, when the stock price was $26-$29 a share. Within just one year, it shot up to $266 a share in December 2007. The same with the famous case of Solyndra, viewed as the symbol of green energy for the U.S. Solyndra has been received $1 billion from venture capital equity, along with more than $500 million loan guarantee from the government.
Recently, the guy who was famous for short-selling activities, Jim Chanos, has commented on renewable energy, especially solar and wind energy companies in the current market conditions. Around three months ago, he targeted First Solar and Vestas in Denmark (PINK: VWDRY) as short-selling opportunities. At the Irah Sohn conference, he gave the presentation: “Solar + Wind = Hot Air” with the bearish comment “Wind and solar are not capable of being sufficient sources of power, they are not economically efficient. They are just not efficient; wind is 50% more expensive than natural gas, while solar is four times more expensive.” He has pointed out that job creation in the renewable industry is more like construction jobs, not value-added jobs, as the main important thing in renewable is the technology.
He also noted that during the Japanese nuclear crisis, the solar stock ran up, but the rally may have been so ignorant of the fact that the technology advancements that the economies of solar have made cannot be a replacement for base-load generation. From an economical standpoint, natural gas and coal are still much cheaper. That is why even wind and solar maybe the source of energy in the not so near future, but people would still need the core power plants for now.
Several factors combined, such as the not-yet-proven and useful technology and the high cost of production, has made the current alternative energy fields economically inefficient. That is why the role of government support is important for countries that want to be leaders in green energy. The biggest country with heavy government support is China, where $20 billion is funded by the government for Chinese solar companies to compete globally, driving down the solar price that put competitors out of business, and the most outstanding example is Solyndra case. (Readers can read more on Solyndra on: Solar Panels And The Fall Of Solyndra)
And what has driven the installations for solar and wind over the period of time is the policy and the government support, not the genuine demand. Just three years ago in 2008, Spain represented 40% of total solar demand, then the next year first place went to Germany with 50% of demand, then fell to 40% in 2010. Italy has a 25% share. Taking into account the problems Italy and Spain are having with their economies along side the rest of Europe, the solar fate may be the same.
