Don't Trust Everything You Hear About Solar

At the top of every article we write for The Motley Fool is our purpose stated for our readers to see. We intend "To Educate, Amuse & Enrich".

As our solar analyst, I take the education of our readers very seriously, and sometimes that means correcting the misinformation that seems to be everywhere in solar today. From combating overreacting and overarching comments like "solar is too expensive" to revealing the truth about solar subsidies, I've tried to put the solar industry's position into perspective. But the fallout from the Solyndra bankruptcy has brought on an assault of bad reporting, skewed perspective, and incorrect facts.

Look, Solyndra was a debacle from the start. It was high risk, low reward, and in a terrible strategic position compared with low-cost competitors such as First Solar (Nasdaq: FSLR  ) , Trina Solar (NYSE: TSL  ) , and Yingli Green Energy (NYSE: YGE  ) .

But if you listen to Fox News, efficiency leader SunPower (Nasdaq: SPWRA  ) is exactly the same as Solyndra, and so is its recently approved loan guarantee. Following are some of the myths Fox News is spreading, followed by some actual facts or clarifications for investors who should care about the difference.

Myth: "They're (SunPower) creating jobs not in the U.S., but in Mexico."

Fact: SunPower's loan guarantee is not for a manufacturing plant, like Solyndra was. It is for a utility-scale solar installation in the United States. Where those solar modules are made is irrelevant to the loan guarantee itself.

SunPower did say that most modules would be made in its Silicon Valley plant, but because of the project's size, facilities in Mexico and Asia would also provide modules.

Myth: "Another failing solar company."

Fact: Really? Not only is the guarantee not for SunPower directly, but SunPower is also one of the strongest companies in solar. Oil giant Total (NYSE: TOT  ) made an investment in the company just a few months ago, and in fiscal 2011 SunPower had a net income of $179 million. The current market conditions create challenges, no doubt, but few companies are as well prepared to weather the storm as SunPower is.

Myth: "Lobbyist is the son of a congressman."

Clarifcation: Here is SunPower's response to this allegation, as reported by Greentechmedia: "George Miller IV [the son of a congressman] had no role in the loan guarantee or the California Valley Solar Ranch project and does not lobby in D.C. for SunPower. His firm -- Lang, Hansen, O'Malley, and Miller -- represents us in California."

I could go on and on, but you get the point. The demonizing of the solar sector has gone overboard, and investors need to make sure they're aware of the real facts.

The rest of the story
There are problems with the Department of Energy's loan-guarantee program but SunPower isn't part of those problems. Just as with First Solar, if the loan guarantee fell through, SunPower could probably find financing for the project. It would probably be slightly more expensive, but it probably would have been built.

It may make for popular headlines and flashy news stories to compare Solyndra with SunPower, but the facts just aren't there.

Interested in reading more about solar manufacturers? Add your favorites to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

Fool contributor Travis Hoium owns shares of 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 serviceshave recommended buying shares of Total and First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.


Read/Post Comments (7) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 17, 2011, at 7:17 PM, tilolite wrote:

    You think that "the demonizing of the solar sector has gone overboard", wait until you hear what Fox News is saying about Obama. :)

  • Report this Comment On October 17, 2011, at 8:22 PM, TopAustrianFool wrote:

    You are too caught up in the details. Just because Foxnews is clueless doesn't make you right. Its all garbage propped up by govt subsidies and like the real estate bubble, the alternative energy scam bubble will pop too.

    Don't you get that all of these so called alternatives to oil, in order to be cheaper than oil have to violate the 2nd Law of Thermodynamics?

  • Report this Comment On October 17, 2011, at 8:52 PM, MHedgeFundTrader wrote:

    I received some questions last week on my recent solar pieces as to whether I minded paying more money for “green” power. My answer is “hell no,” and I’ll tell you why. My annual electric bill comes to $1,500 a year. Since the California power authorities have set a goal of 33% alternative energy sources by 2020, PG&E (PGE) has the most aggressive green energy program in the country (click here for “The Solar Boom in California”). More expensive solar, wind, geothermal, and biodiesel power sources mean that my electric bill may rise by $150-$300 a year.

    There is another factor to count in. Anyone in the oil industry will tell you that, of the current $82 price for crude, $30 is a risk premium driven by fears of instability in the Middle East. The Strategic Petroleum Reserve, every available tanker, and thousands of rail cars are all chocked full with unwanted oil. This is why prices remain high.

    If enough of the country converts to alternatives and adopts major conservation measures, then we can quit importing oil from that violent part of the world. No more sending our president to bow and shake hands with King Abdullah. Oil prices would fall, our military budget would drop, the federal budget deficit would shrink, and our taxes would likely get cut.

    Yes, these are simplistic, back of the envelop calculations that don’t take into account other national security considerations, or our presence on the global stage. But these numbers show that even a modest conversion to alternatives can have an outsized impact on the bigger picture.

    By the way, please don’t tell ExxonMobile (XOM) or BP (BP) I told you this. They get 80% of their earnings from importing oil to the US. I don’t want to get a knock on the door in the middle of the night.

    The Mad Hedge-Fund Trader

  • Report this Comment On October 17, 2011, at 10:48 PM, mhonarvar wrote:

    oil,gas,coal STILL get more funding and subsidies than alternative energy does.....

    a wind turbine might make some noise...but they don't cause billions in damage every few years through spills, air pollution or explosions...and they don't have $30 added from "fears" of mid east violence.

  • Report this Comment On October 18, 2011, at 10:57 AM, TopAustrianFool wrote:

    "oil, gas, coal STILL get more funding and subsidies than alternative energy does"

    what nonsense... Name one subsidy.

    If you deregulated the industry and allowed competition then you wouldn't have the oil monopolies lobbying for tax breaks.

    Basically the problems you want to solve by govt subsidizing the alternative energy garbage are caused by government restriction of competition in the oil, gas and coal industries.

  • Report this Comment On October 18, 2011, at 11:05 AM, TopAustrianFool wrote:

    "oil, gas, coal STILL get more funding and subsidies than alternative energy does"

    Actually, lets say it is true they are subsidized. Then ask for govt to cut them off from the subsidies and lets see if the Oil price goes high enough for alternative energy to be competitive.

    Also, allow for domestic drilling and then you can let Abdullah defend himself.

  • Report this Comment On November 03, 2011, at 9:42 PM, thidmark wrote:

    So what you're saying is the Solyndra debacle was obvious to most everyone but the government that was throwing taxpayer money at it? Good lord, that is frightening.

Add your comment.

DocumentId: 1571312, ~/Articles/ArticleHandler.aspx, 8/1/2014 2:03:46 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement