This article is part of Our Top 5 Energy Stocks for 2012 series.

As we look forward to 2012 in the energy sector, I feel like a kid in a candy store. There are so many exciting developments, from natural gas and oil growth in the U.S. to oil sands expansion in Canada. But the developments in the solar sector have been so fast and furious in 2011 that I think the opportunity is too good to pass up.

That's why I'm making SunPower (Nasdaq: SPWR) my best energy stock heading into 2012. Here's why.

Grid parity is here
The solar industry has been something for tree huggers, environmentalists, and the occasional politician for most of the past 30 years. It was something that was great to talk about, great for the environment, but never really made sense financially without government support.

That all changed in 2011 when the industry finally broke through the grid-parity barrier in places, cracking open a world of demand.

This wasn't done on purpose by the industry, at least not this year. In fact, there's been a lot of pain to get to this point. Feed-in tariffs have been in limbo in Europe and with debt problems consuming the continent, financing for solar projects has dried up. That wreaked havoc on demand for solar manufacturers like SunPower, Trina Solar, and Yingli Green Energy (NYSE: YGE) in the short term.

As demand fell, module prices fell and so did demand for polysilicon, the single largest cost in a solar module. The falling cost of polysilicon may have put a chokehold on suppliers like LDK Solar (NYSE: LDK), JA Solar (Nasdaq: JASO), and Renesola (NYSE: SOL), but overall it's good for the industry's module costs.

At the end of the day we had a much less expensive solar module, leading the way to grid parity and a slew of stocks that can't wait for 2011 to come to an end.

Transition from subsidies to sustainable growth
As 2011 closes, the industry is in the painful transition from heavily subsidized areas like Germany, Italy, and Spain to more stable markets like India, China, and the U.S.

In the U.S., solar installations have grown 90% in the first three quarters of 2011 and the fourth quarter is expected to be another record quarter. Demand in India is expected to grow sixfold in 2011 and a recent auction to develop solar projects resulted in bids as low as $0.18 per kWhr. A similar dynamic is taking place in China, where a feed-in tariff was enacted earlier this year and the country plans to increase solar capacity tenfold in the next five years.

European countries like Germany and Italy will continue to play a big role in solar power's future, but the diversification of demand locations and reduced reliance on subsidies is taking solar power into a more sustainable future. I think next year is when investors realize this transition is taking place and seek out the best companies in solar to take advantage of what should be a long period of growth in the industry.

The best in class
With the macropicture more defined it's time to delve into why I think SunPower will be a winner in 2012.

There are a number of reasons SunPower will be the biggest winner long-term in the solar industry. The company has backing from a major energy player, Total (NYSE: TOT), which owns 60% of the company and has also made $1 billion in credit available to SunPower. It also has one of the biggest utility and power plant pipelines in the world, building projects that are now being purchased by the likes of Siemens, NRG Energy, and Warren Buffett. SunPower is also aggressively cutting costs, which will help margins if sales prices stabilize as we hit grid parity. In 2011, SunPower will cut costs as much as 20% per watt with another 12% reduction anticipated in 2012.

But the biggest reason SunPower is best-positioned in solar is because it makes the highest-efficiency modules, something Chinese manufacturers are having a hard time catching up to, and commands a premium price for its product.

There used to be a question about whether low costs or high efficiency would win out in the solar business. For a time, First Solar (Nasdaq: FSLR) led the way with by far the lowest cost, but in the past 12 months it's become apparent that efficiency is what will win in the end. High efficiency allows for fewer panels, less land, less wiring, and, as costs fall, lower overall cost of electricity. It's these balance of system costs, where SunPower leads the way, that will become the focus of the industry going forward.

Bang for your buck
Just because a company is positioned well strategically doesn't mean it's a good investment. You want to get value as well, something I think is priced into shares already.

SunPower will report big losses for 2011 primarily because it wrote off about $350 million in intangible assets during the year. Losses will likely continue into 2012, but once the industry emerges from its currently cloudy conditions, investors are in prime position to profit. Investors are going to have to get out ahead of this anticipated turnaround to cash in.

From a value perspective, shares of SunPower are currently trading at 48.2% of the company's tangible book value, a steep discount considering the company's growth. Even if management decided to close up shop investors may come out ahead at that price.

Foolish bottom line
This energy pick isn't without risks, but in my Foolish opinion the risk/reward is too good to pass up. Solar is a growing part of our energy future and I think the company leading the way is a great stock to own heading into 2012.

Not only am I picking SunPower in our "Best Energy Stock" series, I've given the stock a green thumb on My CAPS and I've also literally put my money where my mouth is (as the disclosure below shows).

I think SunPower is a great pick for the future, but our analysts have selected a different stock that they believe is poised for tremendous growth in 2012. Find out which company in our new free report: "The Motley Fool's Top Stock for 2012." Thousands have already requested access and it'll only be available for a limited time. Simply click here -- it's free."