|
This year's Solar Power 2007 conference in Long Beach, California, offered abundant information on every aspect of the current market. Current market size, opportunities, problems, incentives and what to expect in the coming year were just a few of the topics discussed at the industry insiders' foremost event.
The following is an abbreviated version of the details.
Preparing for Takeoff
In 2006, world production of photovoltaic (PV) grew 41% to 2,520 megawatts (MW). That correlated to the installation of 1,744 MW worldwide, an increase of 19%.
Production in 2006 was dominated by Japan, which accounted for 37% of all manufactured cells. But Germany still dominated installations with 960 MW, or 55% of the world total.
But Japan and Germany, respectively the manufacturing and installation leaders, are no longer guaranteed their spot at the top. They must now fight to maintain their positions.
Japan's output of solar modules actually shrunk in the last year--it lost 7% of its market share--while U.S. production rose 30% and Europe's 42%. And installations in Spain were up over 200%.
Plus, it's predicted that Italy will move into the top three for installed capacity in the next three years, with Turkey and Greece also coming on strong. And the potential in the developing world is not to be ignored either.
And with demand simply outpacing supply, the solar market is shaping up to be a bull's dream, especially as cells continue to increase their efficiency and governmental incentives like the U.S.'s Investment Tax Credit (ITC) and Europe's feed-in tariffs begin to carry more weight. There's just one catch.
Sweet Sweet Silicon
For the past few years there has been a relatively severe and ongoing silicon crunch. And while some experts fear this is a hindrance to the profitability of solar stocks, I tend to lean the other way.
Sure, high silicon prices can affect the profit margins of traditional cell manufacturers. That is, companies that purchase wafers (layers of solar cells) and merely cut them into individual cells to make the final module.
In 2004, the price of silicon stood at $25/kilogram. But increased demand from computer chip manufacturers coupled with skyrocketing production of solar cells has sent the price soaring at times to over $200/kilogram.
With these high prices, companies that conserve silicon by manufacturing thin-film modules and companies that use technologies not dependent on silicon stand to make the highest profit margins.
Take, for example, First Solar (NASDAQ: FSLR), which makes thin film panels that aren't dependant on silicon. Instead, they use a technology called Cadmium Telluride (CdTe). Its market price has shown the benefits of a solar company minimizing its reliance on silicon.
Just look at their share price since they debuted on the NASDAQ right in the middle of the silicon supply crunch.
From what I heard at the conference, the silicon shortage should be over in the next 18 to 36 months. At that point, and even leading up to it, there will be numerous profitable plays in the traditional solar market. Until then, the best way to play this industry will be through silicon manufacturers and refiners and thin-film solar producers (which we have in the Green Chip portfolio).
Beyond Cells
There is another way to get ahead of the silicon crunch as well. Rather than trying to find the best plays in silicon refining or cell manufacturing, there is a third, more obvious route to take.
You see, I went to the solar conference with one ultimate goal: To find profitable stocks in the solar sector for my readers. And I'm pleased to report I found a number of opportunities while attending break-out sessions at the conference and also while perusing the exhibit hall.
In fact, Jeff and I are so excited about one of these companies that we're going to recommend it this week.
This is a company that is agnostic as to the preferred panel technology at any given time, as well as to any price fluctuations in raw materials for cell production.
Actually, we knew about this company before the conference, but the additional information acquired there was enough to send us over the top on this stock.
Have a look at its performance over the past couple of months.
Since its IPO last year, this stock has seen increases as high as 182%. And, as you can see from the chart, it's seen gains of 100% or more just in the past three months.
Let me tell you, this company was simply everywhere at the conference. They had one of the largest booths in the exhibit hall and they even hosted the opening night reception. And that was at a conference that featured industry giants like Sharp, Kyocera (NYSE: KYO), and Conergy.
Right now this tiny little solar play is still trading under $8.50. But it's going to go much higher.
And Green Chip is going to recommend it this week, so there is no time to lose.
Hurry, become a member of Green Chip Stocks by clicking here . Our current discounted price is nothing compared to the gains you could make on this one stock alone.
|