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Investing in Solar Energy

According to the Solar Energy Industries Website solar energy power generation capacity grew by 17% in the United States in 2008. Photo cell, photovoltaic, capacity grew by 44%. Solar energy production is a very small portion of national power production with lots of room to grow.

Solar energy has been growing well on its own the last few years but will benefit significantly from economic stimulus monies tagged for infrastructure improvements. The largest use of solar energy collection is passive systems to heat pool water. However, neither that use nor large scale collection and concentration grew much last year. The president has called for 10% of US energy to come from renewable sources by 2012 and 25% by 2025.

It would appear that to some degree renewable energy, including solar energy will have its day. However, solar energy produced by photo cells is more expensive to generate that wind by a factor of three. Nevertheless it is renewable and favored in the current political climate.

Where does that put the long term investor?

It would appear that the government will put money into subsidizing clean energy, including solar energy. If the tax credits and other benefits are long lasting then the long term investor can put his or her money in a project that, albeit subsidized, will provide returns over the years.

The situation with ethanol comes to mind, however. Oil prices were high and everyone was turning their corn into alcohol for addition to gasoline. Money was invested across the Corn Belt in small factories. Then the price of oil dropped and the bottom fell out of the corn for alcohol for fuel market. The question to ask regarding solar energy, wind, biomass and the other types of “clean” and “renewable” energy is if they will retain their political and economic support from administration to administration with subsidies during bad times.

Currently a dozen states have standards for how much of their power generation will be from solar energy. It is not very much. However, that kind of political support, if kept up will protect the investor over the working life of a solar energy project.

Certainly oil prices will go up again as the world pieces together its economic problems. One of the issues for the United States, beside cost of production, will be access to oil. As the economies of India and China grow they not only bid up the price of oil but they will exert their political influence with oil producers to be favored customers. If seen as a United States national security issue the promotion of renewable energy, solar and other, will likely receive support for a long time.





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