This Week in Solar

I feel like a broken record, but it's been another terrible week for solar stocks. Stocks are down across the board as everyone panics over fallout from European debt problems, Solyndra's demise, and diminishing margins throughout the industry. While I think the sell-off is overdone, the market has proven that thesis wrong in recent weeks.

Beyond the market panic, here are a few of the things that happened in the solar industry this week.

No guarantee for you
First Solar (Nasdaq: FSLR  ) announced this week that it wouldn't meet Department of Energy deadlines for a loan guarantee on its 550 MW Topaz Solar Farm. The project is still going forward, but the company will look for other ways to finance it, and is in talks to sell it.

Loan guarantees have been a key driver behind major projects for First Solar and SunPower (Nasdaq: SPWRA  ) , but if this is any indication, they don't appear to be a dealbreaker.

Better balance sheets
Chinese solar manufacturers have not only begun buying back shares of stock in the open market; some are also trying to pay down debt. LDK Solar (NYSE: LDK  ) announced this morning that it had purchased $10.8 million of debt for a discount to par. Heavy debt loads are a major risk factor for LDK, JA Solar (Nasdaq: JASO  ) , and Suntech Power (NYSE: STP  ) , which have used short-term borrowings to build out their businesses. As the industry matures, we're slowly starting to see de-leveraging and companies buying back shares. The current moves are small but should lead to better balance sheets going forward.

Questioning Solyndra
Solyndra investors and executives are scheduled to be questioned by members of Congress sometime today. But instead of getting some insight into what really happened at the company, we'll likely hear a lot of: "I plead the fifth."

Solar growth here at home
Despite what the market is telling us, solar installations are still growing rapidly in the U.S. Installations will soon pass the 1 GW mark, on their way to 1.8 GW this year, according to Greentech Media. The U.S. market is now one of the largest and strongest growing markets in the world despite the lack of a national plan for solar.

Fool contributor Travis Hoium owns shares of LDK Solar, SunPower, and First Solar. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of First Solar. Motley Fool newsletter services have recommended buying shares of First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On September 25, 2011, at 8:35 AM, xetn wrote:

    I believe it is safe to say that the sun is starting to set on this sector. This is so because people are starting to realize that the economics of solar are not being proven. Of course, only has to look at the fact that a government subsidy has been required to gain any traction, and since we have seen subsidies beginning to disappear, well you can see the results.

    I am not saying there is no future for solar, because in some areas of the world, it my be the only means for sourcing power. It may also, once the cost/benefit improves, become a supplemental source of power. But unless there is some miracle breakthrough in the technology, it can not be considered as sustainable energy. (What happens when the sun doesn't shine or the wind doesn't blow?) And how many people want a wind generator in their back yards? They are just plain ugly to look at.

  • Report this Comment On September 26, 2011, at 8:19 AM, bparting wrote:

    Solar is in fact a proven business. The fact that government guarrantees are being turned down shows they arent needed by the best.

    As to using govenerment intervention as some kind of indicator that an industry doens work? If you did that you could rule everything in the US from Automobiles, to big oil, to airlines, and even chickens. Although it is true the US operates a corporate welfare state, solar power is hardly a poster boy for it.

    First Solar is very capable of making some serious cash, and the US would be shooting itself in the foot if its doesnt recognise the strategic importance of this industry.

  • Report this Comment On September 26, 2011, at 9:00 AM, Onigato wrote:

    xetn, no-one can ensure that "alternitive energy" sources like solar or wind will always work, day in, day out, 365 days a year. Though I'm not currently "off-the-grid", I have done so in the past, and can say from personal experience that if properly implemented, the number of days where you have no power at all is so near zero as to be statistically insignificant.

    If the sun doesn't shine, it's either night-time (nothing anybody can do about that, yet) or it is heavily cloudy. And not just kinda sorta cloudy, either. Solar systems can continue to work, at admittedly reduced efficency, even with light-blocking cloud density in the 50-60% range. This means total coverage, and ground light levels about 50% of clear skies for the same time. And if you are experiencing cloud coverage of that density, there is typically going to be some significant wind. Enough to run a farm or two of wind turbines, at the least.

    If the wind doesn't blow, well, that happens sometimes, but the vast majority of the time, enough wind is blowing to get at least some use out of the system. And usually if the winds are calm, the sun is shining and the solar panels are cranking out the juice. And as for not liking the look of a turbine, sure some of the older systems were chunky boxes, but modern wind turbines are sleek, smooth pieces of goodness, little different than a sattelite dish. And municiple sized systems are usually placed off the beaten path, on top of a nearby mountain, to get all the available wind.

    In the (rare) event the wind doesn't blow, and the sun doesn't shine (at night, in a calm), a backup system is in place. On a municple level, this could be a gas instant response turbine, a massive battery backup (not really a good idea on a muni level, but it is an option), or in a worst case scenario, buy some juice of your neighbors nuclear or hydro plant. On a personal level, these are just scaled back a bit. A gasoline generator, a battery backup system, or a connection to the local power grid. Same effect, different scale.

    Like I said earlier, although I do not currently live with a solar/wind combo system, I have done so before, and intend to do so again, home ownership and local ordanaces willing.

  • Report this Comment On September 28, 2011, at 11:53 AM, Baalsitch wrote:

    And we know, no other energy sector ever receives any incentives or subsidy.....(sarcasm intended).

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