We just came across an article in which a certain Mark Congloff from the Wall Street Journal warns about investing in Solar stocks. He likens it to the ethanol industry, which once, just as solar now, was the darling of alternative energy. Does he have a point?
Here a quote from that article:
The similarities between the two industries might scare solar bulls. Both are somewhat at the mercy of commodity prices. Ethanol is suffering from expensive corn. Solar has been pinched by skyrocketing silicon, the key ingredient in photovoltaic modules, the black roof panels that store the sun’s energy.
Ethanol’s margins are also squeezed by a glut that has crushed prices. Solar’s pricing power has held steady, but could be at risk next year, given the vast and growing number of people making solar panels.
There is an interesting comment in the STP earnings report:
Suntech expects that greater quantities of reasonably priced silicon will become increasingly available from mid-2008
So much for “being at the mercy of commodity prices” though. Well, he does agree that there are “many more” reasons to be bullish on the solar sector, but they can’t defy gravity. We agree. But so far, we see little gravity. It’s also one of the reasons we like Trina Solar, as it’s one of the most reasonably priced solar stocks.
We will have more to say on this issue shortly.