Solar power on the rise
December 31, 2013
Investors are paying close attention to the rise of solar stocks globally. The investment newsletter "The Motley Fool," in a column dated Dec. 8, notes that "increasing demand has resulted in stable pricing in the second half of 2013, and that's been a boon for manufacturers." It's also a boon for building owners. Here's some background to this story:
In California, high costs for solar power installations in the early years of the industry, from 1998 until around the end of 2012, resulted in the need for the California Energy Commission to issue rebates to offset some of those costs. This helped jump-start the industry in this state, and the rebates declined in steps on the presumption that solar costs would come down over time. This is precisely what occurred. Overproduction of solar panels, mostly in China, from 2008 until early this year consolidated the industry, lowering panel costs significantly. The rebates ended early this year, but their availability allowed California to lead the nation in solar installations right from the beginning.
It is very important to be aware that a 30 percent federal tax credit remains, creating an excellent incentive to make the transition from utility power to renewable power while having Uncle Sam pay for almost a third the cost.
As is often the case, California leads the nation in adopting new, forward-thinking ideas, and the rebates were a prime example of how this policy can be beneficial to both an emerging new industry and to electric rate-payers. As a state, we not only lead the U.S. in solar power but are ahead of all other countries except Germany and Japan. This is just the beginning, both here in California and globally.
Analysts at JP Morgan, a powerhouse in the investment banking sector, note that gross profits of the top four solar panel manufacturers are up in 2013 from 15 percent to 29 percent over 2012. These are hefty increases for investors, but there are implications to that go far beyond the investment community.
The real significance to this trend is that solar power is not only a good investment for stock market investors, but more importantly that it is here to stay and is gaining in acceptance among electricity users as an alternative to paying ever-increasing utility bills. We are seeing the evidence right here in Nevada County, as sales (and leases) of solar systems set records in 2013 with 2014 looking to be even better. Now that costs are lower and multiple financing options are available, with everything from zero-down leases to low-interest loans from various sources for purchase, homeowners and business owners now have more reason than ever to investigate the advantages in locking in low long-term electricity costs over a 20- to 25-year span and beyond.
Here is a simple way to decide if an investment in solar power for your home or business is worth looking into: If a homeowner or business owner's average electric bill is $150 per month or more, a solar investment will lock in low costs per kilowatt hour for decades. We all use electricity daily, and it is essential to our lifestyles. With solar, once the hardware costs are calculated, the fuel is free forever (and it's clean, too.) Even with borrowing costs figured in, paybacks are usually under 10 years.
After that, it's all gravy. Is it worth checking out?
With the global upward trend in solar stocks as a leading indicator, it's becoming apparent there is something substantial to this idea. As the new year approaches and December's electric bill arrives, now is an excellent time to think about going solar and deciding for yourself.
Dave Clark, a solar system designer at California Solar Electric, lives in Alta Sierra.