Solar Stocks Still Undervalued | DanaBlankenhorn

Civilization is never going forward so long as we're tied to the technology of our caveman ancestors, looking around for stuff to burn, then burning it. It progresses – I would argue it starts – 

• when we settle down to harvesting the energy that's all around us. Let this be the century when man is finally civilized. 
• Let the Wall Street Journal put $100 into natural gas stocks, you put $100 into solar stocks, and see who wins 20 years from now.

 

 

While most investors were hurt bad by the Sendai earthquake, those who invested in solar stocks were protected.
Big solar companies like First Solar and SunPower have, in fact, been out-performing the market this year. But even with recent gains they're still selling at price-earnings multiples below that of the market, comparable to those of big oil companies like Exxon Mobil.


They're not being treated as growth stocks. They're being treated like newspaper stocks. One reason makes sense – we don't really know who the long-term winners are. Another reason is foreign competition. Some folks just don't believe America can win. (Picture from Civilianism.)


That may be why the Wall Street Journal still expects natural gas, despite its environmental problems,  to outpace solar.


I'd like to place a bet on that one. This is an industry that grew 67% last year. You really think natural gas can compete with that?


Fact is, as the folks at SolarDock and other suppliers know well, solar efficiency measured in watts of output per square foot continues to climb. It's doubled in the last decade, and there's no reason to believe it won't double again in the next.


The theoretical maximum is 1000 watts per square foot, because that's the average output of the Sun on the average piece of ground on the average day. Most current production panels run at 150 watts per square foot, so there's room for improvement.


Improvement comes every year, and not just on that single dimension. I wrote yesterday about how PPA agreements can become standardized. That cuts costs. Connectors can become standardized, and that cuts costs. Mass production leads to cost reductions, and that cuts costs. Harnessing heat as well as light (not to mention non-visible wavelengths) increases production and cuts the cost per watt. I'll bet you can think of some other dimensions of improvement as well.


Natural gas can never work that way. Greater production, at enormous long-term costs to our water table, could increase supply and maintain costs at near their current level, in the near term. But every cubic meter of gas consumed is one less cubic meter of gas in the ground. Meanwhile, the Sun keeps shining.


Civilization is never going forward so long as we're tied to the technology of our caveman ancestors, looking around for stuff to burn, then burning it. It progresses – I would argue it starts – when we settle down to harvesting the energy that's all around us.


Let this be the century when man is finally civilized. Let the Wall Street Journal put $100 into natural gas stocks, you put $100 into solar stocks, and see who wins 20 years from now.