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Renewed Rise For Solar
Electric utility NRG (NYSE: NRG) announced the purchase of additional solar projects, a move that will roughly double the utility's number of solar operations. The industry is showing accelerated signs of life after the BP Oil (NYSE: BP) and Massey Energy (NYSE: MEE) disasters. Solar stocks have rallied.
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NRG's Purchase
NRG is buying nine solar development projects in California and Arizona that are scheduled to come on line between 2011 and 2013. This will give the utility company a 1,150 megawatt capacity in its solar projects. NRG is in the electric generation business with its coal, nuclear and oil-fired plants. The $6 billion market cap company has been battling a downturn in earnings over the last couple of years with the bad economy. NRG has been growing its revenue, however.
Solar Pummeled
Solar stocks were beaten down in April, what with the projected withdrawal of government subsidies around the globe. The Euro debt crisis, followed by planned subsidy cuts of the solar feed-in tariffs by big solar boosters such as Germany, dampened enthusiasm for the industry. Although the cuts were due as early as July, now there is some doubt they'll be implemented by then. Germany currently is solar power's largest market.
China Solar
Although solar isn't yet cost-effective in China, China remains a fertile incubator for the industry. Chinese solar stocks such as Trina (NYSE: TSL), Solarfun Power Holdings (Nasdaq: SOLF), recent IPO JinkoSolar Holding (NYSE: JKS) and others have rallied. While traditional energy forms such as coal will continue to be more important near term, solar is a part of China's present, not just its future. The U.S. is increasing solar slowly. Traditional U.S. domestic utility PG&E (NYSE: PCG) will finance $100 million in home solar installations through next year. The company's solar subsidiary, Sun Run, is on a torrid growth pace.
Fossil Or Sun?
What the push-pull debate in the economy misses about whether traditional energy, fossil fuels, will continue to trump alternative energy, is that the road to transition will likely be a long and uneven one. The likelihood of oil and coal diminishing overnight, despite such tragic events as the BP spill and the Massey mine explosion, is not realistic. Solar, wind and even more arcane technologies such as geothermal and others will develop along a parallel path to traditional energy, yet with overlap. So the energy industry is not simply an either/or proposition. Traditional or alternative? Think both.
The entry by such traditional utilities as NRG into solar and wind, and PG&E into solar, show that there will be a highly complex mix of energy business going on in both the near and long term. The assessment that solar would be wounded by, for example, the Euro crisis misreads what represents more of a blip than a real long-term hit. Yes, investors should keep in mind the complicated economic, political and cultural forces. The desire for greening the environment will affect all energy technologies, traditional and alternative. Investors should keep in mind the dynamic interplay of all these factors when investing not just in solar, but in any energy stocks.
What To Make Of Solar Stocks
At the risk of over-simplifying, while traders will play the volatility of the solar sector or other energy stocks that have a solar component, such as NRG, the long-term way to invest is on fundamentals. There will continue to be fits and starts in the industry. There are many large and small names to study, so do so on an individual basis, just like with any other group. Investors should look at some of the solar names mentioned earlier, as well as Sun Power (Nasdaq: SPWRA) or even such companies as China's ReneSola (NYSE: SOL). Choose carefully, but realize that solar's a long-term growth industry where with wise stock selections, investors should book big profits along the way. (Learn more; see Spotlight On The Solar Industry.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
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NRG's Purchase
NRG is buying nine solar development projects in California and Arizona that are scheduled to come on line between 2011 and 2013. This will give the utility company a 1,150 megawatt capacity in its solar projects. NRG is in the electric generation business with its coal, nuclear and oil-fired plants. The $6 billion market cap company has been battling a downturn in earnings over the last couple of years with the bad economy. NRG has been growing its revenue, however.
Solar Pummeled
Solar stocks were beaten down in April, what with the projected withdrawal of government subsidies around the globe. The Euro debt crisis, followed by planned subsidy cuts of the solar feed-in tariffs by big solar boosters such as Germany, dampened enthusiasm for the industry. Although the cuts were due as early as July, now there is some doubt they'll be implemented by then. Germany currently is solar power's largest market.
China Solar
Although solar isn't yet cost-effective in China, China remains a fertile incubator for the industry. Chinese solar stocks such as Trina (NYSE: TSL), Solarfun Power Holdings (Nasdaq: SOLF), recent IPO JinkoSolar Holding (NYSE: JKS) and others have rallied. While traditional energy forms such as coal will continue to be more important near term, solar is a part of China's present, not just its future. The U.S. is increasing solar slowly. Traditional U.S. domestic utility PG&E (NYSE: PCG) will finance $100 million in home solar installations through next year. The company's solar subsidiary, Sun Run, is on a torrid growth pace.
What the push-pull debate in the economy misses about whether traditional energy, fossil fuels, will continue to trump alternative energy, is that the road to transition will likely be a long and uneven one. The likelihood of oil and coal diminishing overnight, despite such tragic events as the BP spill and the Massey mine explosion, is not realistic. Solar, wind and even more arcane technologies such as geothermal and others will develop along a parallel path to traditional energy, yet with overlap. So the energy industry is not simply an either/or proposition. Traditional or alternative? Think both.
The entry by such traditional utilities as NRG into solar and wind, and PG&E into solar, show that there will be a highly complex mix of energy business going on in both the near and long term. The assessment that solar would be wounded by, for example, the Euro crisis misreads what represents more of a blip than a real long-term hit. Yes, investors should keep in mind the complicated economic, political and cultural forces. The desire for greening the environment will affect all energy technologies, traditional and alternative. Investors should keep in mind the dynamic interplay of all these factors when investing not just in solar, but in any energy stocks.
What To Make Of Solar Stocks
At the risk of over-simplifying, while traders will play the volatility of the solar sector or other energy stocks that have a solar component, such as NRG, the long-term way to invest is on fundamentals. There will continue to be fits and starts in the industry. There are many large and small names to study, so do so on an individual basis, just like with any other group. Investors should look at some of the solar names mentioned earlier, as well as Sun Power (Nasdaq: SPWRA) or even such companies as China's ReneSola (NYSE: SOL). Choose carefully, but realize that solar's a long-term growth industry where with wise stock selections, investors should book big profits along the way. (Learn more; see Spotlight On The Solar Industry.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Greg Sushinsky
Greg Sushinsky is a passionate independent investor, who has done his own research, analysis and investing for 20 years. One of his earliest investing memories was when he first saved and bought U.S. Savings Bonds with his own money as a small child. From there, he studied investing on his own and made small stock purchases as he grew as an investor.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
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