Suntech Power based from Wuxi, China, is a leading solar energy company in the world. The company designs, develops, manufactures and markets PV cells and modules. It also provides PV system integration services in China. Suntech caters to a worldwide customer base spread around Spain, Germany, the United States, China, South Korea, Italy, the Middle East, Australia and Japan.

For its multi-crystalline silicon modules, Suntech uses its patent-pending Pluto PV cells utilizing solar grade silicon. The Pluto technology for crystalline silicon solar cells improves power output by up to 12% compared to conventional production methods.

The company is well positioned to benefit from the Chinese solar subsidy program. China is aiming to increase its installed solar power capacity to 2GW by 2011 from 140MW at the end of fiscal 2008. We maintain our Neutral recommendation on the shares.

However, on a year-over-year basis, Yingli Green’s adjusted earnings per share fell 46%, while revenue declined 25% to RMB 1.5 billion ($219.5 million), hurt by lower average selling price.

Healthy Growth in Shipments & Margins

Highlight of the quarter was a 72% sequential rise in shipments, buoyed by better project financing and demand, with Germany being the chief driver. Gross margin of 18.3% was down from 25.8% in the year-ago quarter. However, it increased from 15.3% in the first quarter on lower blended cost of polysilicon.

European Market Expansion

Yingli Green’s European sales rose about 73% from the previous quarter and about 46% from the year-earlier period, reflecting the benefits of distribution to diversified markets.

Operating Statistics

Quarterly operating expenses climbed 44% year over year to RMB 167.0 million, while operating income was down 73% to RMB 106.8 million. This rise in costs is primarily attributable to higher R&D spending and higher selling expenses. Operating income was down on lower sales.

Balance Sheet

As of June 30, Yingli Green had RMB 2.45 billion in cash and RMB 4.36 billion in working capital. Long-term debt was RMB 1,971.9 million, while the company had short-term borrowings of RMB 1,817.5 million.

Demand Recovery Expected

Yingli Green expects the global economy to improve in 2009. Consequently, the company also sees product financing and market conditions picking up in its key markets. It expects higher product demand for the next few quarters and is pinning its hopes on the rapidly growing demand for solar energy in China.

Margin Forecast Trimmed

Management maintained its photovoltaic (PV) module shipment outlook for fiscal 2009, hoping to send out between 450 megawatts to 500 megawatts (an increase of 60% – 78% from 2008). However, as a result of slumping solar panel prices, Yingli Green cut its gross margin forecast for the year to 18% – 20%, down from the previous range of 23% – 25%.

Yingli Green is a leading vertically integrated manufacturer of photovoltaic products in China. It was incorporated in the Cayman Islands and operates through its principal operating subsidiary, Baoding Tianwei Yingli New Energy Resources Co. Ltd. or Tianwei Yingli, based in Baoding, Hebei Province, 85 kilometers south of Beijing.

Since Yingli Green began production of polysilicon wafers, its annual production capacity has expanded from 3 megawatts of PV modules to 95 megawatts of polysilicon ingots and wafers, 90 megawatts of photovoltaic, or PV, cells and 100 megawatts of PV modules.

We currently rate Yingli Green shares as Neutral.

The new technology that works on SYNC, SmartGauge with EcoGuide and Ford Work Solutions, will allow the owner to select the time, duration and utility rate for recharging his car on a touch-screen navigation interface and Ford Work Solutions in-dash computer.

The owner could thus choose to accept a charge only during non-peak hours, between midnight and 6 am, when electricity rates are cheaper or when the grid can use renewable sources like wind or solar energy.

Ford said that all 21 of its PHEV Escapes fleet are likely to be equipped with the vehicle-to-grid communications technology. The first batch of specially equipped PHEVs has already been delivered to American Electric Power (AEP) of Columbus, Ohio.

Over the past two years, Ford has consistently focused on technologies based on battery systems, vehicle systems, consumer usage, and grid infrastructure to commercialize electric vehicles. So far, the company and its energy industry partners have logged more than 75,000 miles on the PHEV test fleet.

Ford has formed several partnerships to push its PHEV commercialization strategy. Of all 13 of these partnerships, the company considers the one with Electric Power Research Institute to be vital for the promotion of seamless integration of electric-drive vehicles into the power grid and the transportation sector.

Ford has several new launches in the pipeline that are perfectly in line with this strategy. These include a pure battery electric Transit Connect commercial van (to be launched in 2010), a battery electric Focus compact car (2011) and a plug-in hybrid electric vehicle and next-generation hybrid electric vehicle (2012).

We recommend the shares of Ford as Neutral with a target price of $8.

As a result, the Hawaii-based solar energy company made public its intention to find a buyer for the subsidiary on Friday, July 10, and retained Deutsche Bank Securities Inc. (DB) as financial advisor for the purpose.

With approximately $200 million already invested in the 4,000 metric ton polysilicon plant in Pocatello, Idaho, Hoku Scientific has reasons to be worried. Of the total estimated cost of $390 million for the project, the company has been able to secure only $243 million in customer prepayments to date, apart from an additional $41 million in equity.

This still leaves a gaping hole of $106 million to complete the plant which has till now accumulated an order backlog of $1.9 billion spread over the next ten years. However, Hoku’s dismal performance on the bourses following the global economic slowdown rules out the equity-dilution option to plug the shortfall.

Separately, with the fate of its plant hanging in balance, Hoku amended a supply agreement with China-based Suntech Power Holdings (STP). This is Hoku’s fifth consecutive amendment in fiscal 2009. Suntech Power postponed the deadlines for Hoku to achieve three polysilicon plant operation milestones while Hoku lowered Suntech’s aggregate prepayment obligation.

The amendment will give Hoku some leeway to make a last ditch effort to salvage the plant. We reaffirm the Hold recommendation and will keep a watchful eye on Hoku.

The electric power industry is one of the world's largest industrial segments. With a global market share of approximately 25%, the United States is the leading producer of electricity, followed by China, Japan and Russia. Total global electricity consumption volume grew at a CAGR [compound annual growth rate] of 3.1% from 1980 to 2006, the most recently available information, according to the Energy Information Administration of the United States Department of Energy.

Meanwhile, over the same period, total global installed electricity capacity increased at a slower rate of only 2.8%. Given industry forecasts of continuous increases in demand, this supply shortfall must be met by additional energy sources. Worldwide demand for electricity is expected to increase from 14.8 trillion kilowatt hours in 2003 to 27.1 trillion kilowatt-hours by 2025, according to the United States Department of Energy's International Energy Outlook. (Source: Energy Information Administration, US Department of Energy)

Investment in electric generation, transmission and distribution to meet growth in demand (excluding investment in fuel supply) is expected to be approximately $11 trillion by 2030, according to the International Energy Agency. However, the desire for energy independence, fossil fuel supply constraints, infrastructure limitations and environmental concerns all pose challenges to meeting this growing worldwide demand for electricity.

Electricity generated by burning fossil fuels such as coal, natural gas and petroleum accounts for approximately 80% of commercial power production, nuclear reactors produce approximately 9% of commercial power, 6% is contributed by conventional hydroelectric conversion, while renewable resources such as solar, wind, biomass, geothermal, and hydroelectric power generation supply the remaining 5% of commercial power.

In recent years, however, the use of renewable resources in the U.S. has been increasing in response to the growing concerns over reliance on fossil fuels. As opposed to fossil fuels, which draw on finite resources and may eventually become too expensive to retrieve, renewable resources are generally unlimited in availability. Legislation in several states seek to require power production from renewable sources to be approximately 15% of commercial electric power. Bipartisan support for weaning the U.S. off its dependency on foreign oil is led by President-elect Barack Obama's pledge to create five million new jobs by heavily investing in renewable alternative energy sources. (Sources of Electricity in the US [2006] - Energy Information Administration, US Department of Energy)

The alternative energy industry includes solar panel manufacturers and wind farm operators, as well as software designers working on "smart" power grids and electric utilities with solar, wind, hydro and/or geothermal assets. While hydroelectric power generation currently has the largest installed base, solar and wind power generation have emerged as the most rapidly growing renewable energy sources.

While wind power has a promising long-term future with frequent proposals for new wind farms, there are very few publicly traded wind power companies. In the case of ethanol, high and rising corn prices have brought ethanol stocks out of favor with investors.

Solar Energy

Solar energy can be used to convert sunlight into heat, called solar thermal energy, or directly into electricity, known as photovoltaic (PV) energy. Solar thermal applications can be distributed, such as roof-mounted systems for heating swimming pools, or can be centralized where sunlight is concentrated to heat a medium that drives a turbine to generate electricity in large scale plants.

Electricity generated from solar thermal electric power plants requires large concentrators and turbines, which are not suitable for residential locations. We refer to solar power as the use of interconnected solar cells, as opposed to solar thermal technology, to generate electricity from sunlight. The interconnected cells are packaged into solar panels, which are mounted in areas with direct exposure to the sun, such as rooftops.

Solar power technology has been used to generate electricity in space program applications for several decades and in commercial applications over the last 30 years. Increasingly, government incentive programs are accelerating the adoption of solar power. Since 2001, the global market for solar power installed capacity has grown at a compound annual growth rate of approximately 40%, driven by strong growth in Germany, Spain, and the U.S.

According to SolarBuzz (a research and consulting firm), the global solar power market, as defined by solar power system installations, generated $17.2 billion in revenue in 2007 (the most recently available information), up 56% over 2006 global revenue. Such total global solar market installation revenue is expected to be within a range of $18.7 billion to $31.4 billion by 2011. On a generation output basis, 2007 global solar cell production also increased 56% year-over-year to 3,436 megawatts (MW); meanwhile, worldwide installations grew 62% to a record high of 2,826 MW. Germany is the global leader for PV installations (1,328 MW in 2007), followed by Spain (640 MW), Japan (230 MW) and the United States (220 MW).

T. Boone Pickens & the "Pickens Army"

In President Obama's Inaugural Address on January 20, 2009, T. Boone Pickens, Texas oilman, Chairman and CEO of BP Capital and Director of Clean Energy Fuels Corp. (CLNE), along with millions of Americans, heard our new President Obama pledge to transform U.S. energy policy. Mr. Pickens is committed to this goal and believes that the president's goals are bold yet achievable.

Mr. Pickens has inspired over 1 million volunteers, known as Pickens' Army, to pressure government for a change in energy policy. In addition, his role at Clean Energy Fuels is committed to convert commercial fleet vehicles to natural gas. Clean Energy Fuels Corp. (Clean Energy) is a provider of natural gas as an alternative fuel for vehicle fleets in the United States and Canada. The Company offers a solution to enable customers to run their fleets on natural gas. It designs, builds, finances and operates fueling stations, and supplies customers with compressed natural gas (CNG) and liquefied natural gas (LNG).

The Obama Administration has already begun working with Congress on a stimulus plan to create more new jobs and return to economic growth by investing heavily in renewable energy sources such as solar and wind power, rebuilding the U.S. electricity transmission grid and ultimately reducing U.S. dependence on foreign oil and ending oil.

OPPORTUNITIES

Compared to other renewable energy technologies, solar power's benefits include:

• Environmental Advantage: Solar power is one of the most benign electric generation resources. Solar cells generate electricity without air or water emissions, noise, vibration, habitat impact or waste generation.
• Fuel Risk Advantage: Unlike fossil and nuclear fuels, solar energy has no risk of fuel price volatility or delivery risk. Although there is variability in the amount and timing of sunlight over the day, season and year, a properly sized and configured system can be designed to be highly reliable while providing a long-term, fixed price electric supply.
• Location Advantage: Unlike other renewable resources such as hydroelectric and wind power, solar power is generally located at a customer site due to the universal availability of sunlight. As a result, solar power limits the expense of, and energy losses associated with, transmission and distribution from large-scale electric plants to the end users. For most residential consumers seeking an environmentally friendly power alternative, solar power is the only viable choice because it can be located in urban and suburban environments.
• Retail Rate Benchmark Advantage: Unlike biomass, geothermal, hydroelectric and wind power generation, which are location-dependent and sell primarily to the wholesale market, solar power competes with retail electric rates as it is customer-sited and supplements a customer's electricity purchased at retail rates from the utility network.
• Peak Energy Generation Advantage: Solar power is well-suited to match peak energy needs as maximum sunlight hours generally correspond to typical peak demand periods when electricity prices are at their highest. These characteristics increase the value of solar power as compared to other renewable resources that do not align with peak demand periods.
• Modularity: Solar power products can be deployed in many sizes and configurations to meet the specific needs of the customer.
• Reliability: With no moving parts or regular required maintenance, solar power systems are among the most reliable forms of electricity generation.

WEAKNESSES

• The global economic crises will temper alternative energy sales and earnings growth.
• The immediate concerns over economic weakness likely takes the short-term focus off progress toward a new energy policy.
• Continued weakness in the debt and equity markets, for as long as it lasts, will raise costs of capital for firms in this emerging sector, and may prevent project financing, working capital requirements, and new research and development. Federal funding for a new energy policy will largely dry up.
• Alternative energy stock prices generally rise and fall in direct proportion to the price of crude oil. While in times of high oil prices this may also present an opportunity, it also increases volatility in the sector.

The electric power industry is one of the world's largest industrial segments. With a global market share of approximately 25%, the United States is the leading producer of electricity, followed by China, Japan and Russia. Total global electricity consumption volume grew at a CAGR [compound annual growth rate] of 3.1% from 1980 to 2006, the most recently available information, according to the Energy Information Administration of the United States Department of Energy.

Meanwhile, over the same period, total global installed electricity capacity increased at a slower rate of only 2.8%. Given industry forecasts of continuous increases in demand, this supply shortfall must be met by additional energy sources. Worldwide demand for electricity is expected to increase from 14.8 trillion kilowatt hours in 2003 to 27.1 trillion kilowatt-hours by 2025, according to the United States Department of Energy's International Energy Outlook. (Source: Energy Information Administration, US Department of Energy)

Investment in electric generation, transmission and distribution to meet growth in demand (excluding investment in fuel supply) is expected to be approximately $11 trillion by 2030, according to the International Energy Agency. However, the desire for energy independence, fossil fuel supply constraints, infrastructure limitations and environmental concerns all pose challenges to meeting this growing worldwide demand for electricity.

Electricity generated by burning fossil fuels such as coal, natural gas and petroleum accounts for approximately 80% of commercial power production, nuclear reactors produce approximately 9% of commercial power, 6% is contributed by conventional hydroelectric conversion, while renewable resources such as solar, wind, biomass, geothermal, and hydroelectric power generation supply the remaining 5% of commercial power.

In recent years, however, the use of renewable resources in the U.S. has been increasing in response to the growing concerns over reliance on fossil fuels. As opposed to fossil fuels, which draw on finite resources and may eventually become too expensive to retrieve, renewable resources are generally unlimited in availability. Legislation in several states seek to require power production from renewable sources to be approximately 15% of commercial electric power. Bipartisan support for weaning the U.S. off its dependency on foreign oil is led by President-elect Barack Obama's pledge to create five million new jobs by heavily investing in renewable alternative energy sources. (Sources of Electricity in the US [2006] - Energy Information Administration, US Department of Energy)

The alternative energy industry includes solar panel manufacturers and wind farm operators, as well as software designers working on "smart" power grids and electric utilities with solar, wind, hydro and/or geothermal assets. While hydroelectric power generation currently has the largest installed base, solar and wind power generation have emerged as the most rapidly growing renewable energy sources.

While wind power has a promising long-term future with frequent proposals for new wind farms, there are very few publicly traded wind power companies. In the case of ethanol, high and rising corn prices have brought ethanol stocks out of favor with investors.

Solar Energy

Solar energy can be used to convert sunlight into heat, called solar thermal energy, or directly into electricity, known as photovoltaic (PV) energy. Solar thermal applications can be distributed, such as roof-mounted systems for heating swimming pools, or can be centralized where sunlight is concentrated to heat a medium that drives a turbine to generate electricity in large scale plants.

Electricity generated from solar thermal electric power plants requires large concentrators and turbines, which are not suitable for residential locations. We refer to solar power as the use of interconnected solar cells, as opposed to solar thermal technology, to generate electricity from sunlight. The interconnected cells are packaged into solar panels, which are mounted in areas with direct exposure to the sun, such as rooftops.

Solar power technology has been used to generate electricity in space program applications for several decades and in commercial applications over the last 30 years. Increasingly, government incentive programs are accelerating the adoption of solar power. Since 2001, the global market for solar power installed capacity has grown at a compound annual growth rate of approximately 40%, driven by strong growth in Germany, Spain, and the U.S.

According to SolarBuzz (a research and consulting firm), the global solar power market, as defined by solar power system installations, generated $17.2 billion in revenue in 2007 (the most recently available information), up 56% over 2006 global revenue. Such total global solar market installation revenue is expected to be within a range of $18.7 billion to $31.4 billion by 2011. On a generation output basis, 2007 global solar cell production also increased 56% year-over-year to 3,436 megawatts (MW); meanwhile, worldwide installations grew 62% to a record high of 2,826 MW. Germany is the global leader for PV installations (1,328 MW in 2007), followed by Spain (640 MW), Japan (230 MW) and the United States (220 MW).

T. Boone Pickens & the "Pickens Army"

In President Obama's Inaugural Address on January 20, 2009, T. Boone Pickens, Texas oilman, Chairman and CEO of BP Capital and Director of Clean Energy Fuels Corp. (CLNE), along with millions of Americans, heard our new President Obama pledge to transform U.S. energy policy. Mr. Pickens is committed to this goal and believes that the president's goals are bold yet achievable.

Mr. Pickens has inspired over 1 million volunteers, known as Pickens' Army, to pressure government for a change in energy policy. In addition, his role at Clean Energy Fuels is committed to convert commercial fleet vehicles to natural gas. Clean Energy Fuels Corp. (Clean Energy) is a provider of natural gas as an alternative fuel for vehicle fleets in the United States and Canada. The Company offers a solution to enable customers to run their fleets on natural gas. It designs, builds, finances and operates fueling stations, and supplies customers with compressed natural gas (CNG) and liquefied natural gas (LNG).

The Obama Administration has already begun working with Congress on a stimulus plan to create more new jobs and return to economic growth by investing heavily in renewable energy sources such as solar and wind power, rebuilding the U.S. electricity transmission grid and ultimately reducing U.S. dependence on foreign oil and ending oil.

OPPORTUNITIES

Compared to other renewable energy technologies, solar power's benefits include:

• Environmental Advantage: Solar power is one of the most benign electric generation resources. Solar cells generate electricity without air or water emissions, noise, vibration, habitat impact or waste generation.
• Fuel Risk Advantage: Unlike fossil and nuclear fuels, solar energy has no risk of fuel price volatility or delivery risk. Although there is variability in the amount and timing of sunlight over the day, season and year, a properly sized and configured system can be designed to be highly reliable while providing a long-term, fixed price electric supply.
• Location Advantage: Unlike other renewable resources such as hydroelectric and wind power, solar power is generally located at a customer site due to the universal availability of sunlight. As a result, solar power limits the expense of, and energy losses associated with, transmission and distribution from large-scale electric plants to the end users. For most residential consumers seeking an environmentally friendly power alternative, solar power is the only viable choice because it can be located in urban and suburban environments.
• Retail Rate Benchmark Advantage: Unlike biomass, geothermal, hydroelectric and wind power generation, which are location-dependent and sell primarily to the wholesale market, solar power competes with retail electric rates as it is customer-sited and supplements a customer's electricity purchased at retail rates from the utility network.
• Peak Energy Generation Advantage: Solar power is well-suited to match peak energy needs as maximum sunlight hours generally correspond to typical peak demand periods when electricity prices are at their highest. These characteristics increase the value of solar power as compared to other renewable resources that do not align with peak demand periods.
• Modularity: Solar power products can be deployed in many sizes and configurations to meet the specific needs of the customer.
• Reliability: With no moving parts or regular required maintenance, solar power systems are among the most reliable forms of electricity generation.

WEAKNESSES

• The global economic crises will temper alternative energy sales and earnings growth.
• The immediate concerns over economic weakness likely takes the short-term focus off progress toward a new energy policy.
• Continued weakness in the debt and equity markets, for as long as it lasts, will raise costs of capital for firms in this emerging sector, and may prevent project financing, working capital requirements, and new research and development. Federal funding for a new energy policy will largely dry up.
• Alternative energy stock prices generally rise and fall in direct proportion to the price of crude oil. While in times of high oil prices this may also present an opportunity, it also increases volatility in the sector.

For an explanation of the contrarian stance that makes Schaeffer's so unique, check out a recent version of Trading Tools.

Options speculators stay sunny

According to Zacks, JA Solar bewitched a band of bullish options bettors on Thursday. More specifically, the Chinese solar sultan saw single-day call volume of nearly 15,800 contracts - more than 12 times the security's average daily volume of fewer than 1,300 contracts. Most active was the stock's April 5 call, which saw more than 7,500 contracts cross the tape. Furthermore, the option's popularity extended into Friday's session.

As a result of Thursday's bombardment of bullish bets, the equity's Schaeffer's put/call open interest ratio (SOIR) dipped lower overnight. As JASO call volume shot higher, the stock's SOIR went from 0.21 to its current reading of 0.13, indicating that calls are nearly 10 times more popular than their put rivals among options slated to expire within 3 months. What's more, compared to similar readings taken during the past year, the security's SOIR ranks in the 4th percentile. In other words, short-term options speculators have been more bullishly biased toward JASO only 4% of the time during the past 52 weeks.

Fueling the flood of optimistic options activity was most likely industry-related news out of China. For the first time ever, the Chinese Ministry of Finance said that it will offer a national subsidy for solar energy. Many analysts deem the move rather "generous", considering the subsidy could cover more than half the cost of a solar panel, Dow Jones Newswires reported. In light of the news, a slew of solar concerns joined JASO on options traders' radar Thursday, including LDK Solar (LDK ), Canadian Solar (CSIQ), and Solarfun Power Holdings (SOLF).

Picking up steam on the charts...

The chatter from China also seduced a fresh wave of buying pressure, as the stock shot up 42% on the news. Furthermore, Thursday's journey higher continued Friday, with shares of JASO defying broad-market woes to advance 32 cents, or 8.5%. The security is now flirting with the 4 level, and is poised to close the week atop double-barreled resistance at its 10-week and 20-week moving averages for the first time since May 2008. However, the equity's trek into the black could find a potential speed bump in the overhead 5-to-6 region, as this area has contained the stock's rally attempts since October 2008.

Looking back, JASO's outperformance of the broad market today is nothing new for the alternative energy issue. During the past 20 trading sessions, the equity has outshined the S&P 500 Index (SPX) by 64%. Nevertheless, the stock has attracted a fair amount of skeptics on the Street. According to Zacks, JASO garners only 4 "buy" or better ratings from analysts, compared to 8 lukewarm "holds."

However, this pile-up of pessimism could actually be a boon for the equity in the near term. Should the shares of JASO extend their recent run higher, capitalizing on the news from China, the bears could abandon ship. A round of upgrades or price-target boosts could act as catalysts higher for the stock.

Zacks Investment Research

The electric power industry is one of the world's largest industrial segments. With a global market share of approximately 25%, the United States is the leading producer of electricity, followed by China, Japan and Russia. Total global electricity consumption volume grew at a CAGR [compound annual growth rate] of 3.1% from 1980 to 2006, the most recently available information, according to the Energy Information Administration of the United States Department of Energy.

Meanwhile, over the same period, total global installed electricity capacity increased at a slower rate of only 2.8%. Given industry forecasts of continuous increases in demand, this supply shortfall must be met by additional energy sources. Worldwide demand for electricity is expected to increase from 14.8 trillion kilowatt hours in 2003 to 27.1 trillion kilowatt-hours by 2025, according to the United States Department of Energy's International Energy Outlook. (Source: Energy Information Administration, US Department of Energy)

Investment in electric generation, transmission and distribution to meet growth in demand (excluding investment in fuel supply) is expected to be approximately $11 trillion by 2030, according to the International Energy Agency. However, the desire for energy independence, fossil fuel supply constraints, infrastructure limitations and environmental concerns all pose challenges to meeting this growing worldwide demand for electricity.

Electricity generated by burning fossil fuels such as coal, natural gas and petroleum accounts for approximately 80% of commercial power production, nuclear reactors produce approximately 9% of commercial power, 6% is contributed by conventional hydroelectric conversion, while renewable resources such as solar, wind, biomass, geothermal, and hydroelectric power generation supply the remaining 5% of commercial power.

In recent years, however, the use of renewable resources in the U.S. has been increasing in response to the growing concerns over reliance on fossil fuels. As opposed to fossil fuels, which draw on finite resources and may eventually become too expensive to retrieve, renewable resources are generally unlimited in availability. Legislation in several states seek to require power production from renewable sources to be approximately 15% of commercial electric power. Bipartisan support for weaning the U.S. off its dependency on foreign oil is led by President-elect Barack Obama's pledge to create five million new jobs by heavily investing in renewable alternative energy sources. (Sources of Electricity in the US [2006] - Energy Information Administration, US Department of Energy)

The alternative energy industry includes solar panel manufacturers and wind farm operators, as well as software designers working on "smart" power grids and electric utilities with solar, wind, hydro and/or geothermal assets. While hydroelectric power generation currently has the largest installed base, solar and wind power generation have emerged as the most rapidly growing renewable energy sources.

While wind power has a promising long-term future with frequent proposals for new wind farms, there are very few publicly traded wind power companies. In the case of ethanol, high and rising corn prices have brought ethanol stocks out of favor with investors.

Solar Energy

Solar energy can be used to convert sunlight into heat, called solar thermal energy, or directly into electricity, known as photovoltaic (PV) energy. Solar thermal applications can be distributed, such as roof-mounted systems for heating swimming pools, or can be centralized where sunlight is concentrated to heat a medium that drives a turbine to generate electricity in large scale plants.

Electricity generated from solar thermal electric power plants requires large concentrators and turbines, which are not suitable for residential locations. We refer to solar power as the use of interconnected solar cells, as opposed to solar thermal technology, to generate electricity from sunlight. The interconnected cells are packaged into solar panels, which are mounted in areas with direct exposure to the sun, such as rooftops.

Solar power technology has been used to generate electricity in space program applications for several decades and in commercial applications over the last 30 years. Increasingly, government incentive programs are accelerating the adoption of solar power. Since 2001, the global market for solar power installed capacity has grown at a compound annual growth rate of approximately 40%, driven by strong growth in Germany, Spain, and the U.S.

According to SolarBuzz (a research and consulting firm), the global solar power market, as defined by solar power system installations, generated $17.2 billion in revenue in 2007 (the most recently available information), up 56% over 2006 global revenue. Such total global solar market installation revenue is expected to be within a range of $18.7 billion to $31.4 billion by 2011. On a generation output basis, 2007 global solar cell production also increased 56% year-over-year to 3,436 megawatts (MW); meanwhile, worldwide installations grew 62% to a record high of 2,826 MW. Germany is the global leader for PV installations (1,328 MW in 2007), followed by Spain (640 MW), Japan (230 MW) and the United States (220 MW).

T. Boone Pickens & the "Pickens Army"

In President Obama's Inaugural Address on January 20, 2009, T. Boone Pickens, Texas oilman, Chairman and CEO of BP Capital and Director of Clean Energy Fuels Corp. (CLNE), along with millions of Americans, heard our new President Obama pledge to transform U.S. energy policy. Mr. Pickens is committed to this goal and believes that the president's goals are bold yet achievable.

Mr. Pickens has inspired over 1 million volunteers, known as Pickens' Army, to pressure government for a change in energy policy. In addition, his role at Clean Energy Fuels is committed to convert commercial fleet vehicles to natural gas. Clean Energy Fuels Corp. (Clean Energy) is a provider of natural gas as an alternative fuel for vehicle fleets in the United States and Canada. The Company offers a solution to enable customers to run their fleets on natural gas. It designs, builds, finances and operates fueling stations, and supplies customers with compressed natural gas (CNG) and liquefied natural gas (LNG).

The Obama Administration has already begun working with Congress to create more new jobs and return to economic growth by investing heavily in renewable energy sources such as solar and wind power, rebuilding the U.S. electricity transmission grid and ultimately reducing U.S. dependence on foreign oil and ending oil.

OPPORTUNITIES

Compared to other renewable energy technologies, solar power's benefits include:

Environmental Advantage: Solar power is one of the most benign electric generation resources. Solar cells generate electricity without air or water emissions, noise, vibration, habitat impact or waste generation. Fuel Risk Advantage: Unlike fossil and nuclear fuels, solar energy has no risk of fuel price volatility or delivery risk. Although there is variability in the amount and timing of sunlight over the day, season and year, a properly sized and configured system can be designed to be highly reliable while providing a long-term, fixed price electric supply.
Location Advantage: Unlike other renewable resources such as hydroelectric and wind power, solar power is generally located at a customer site due to the universal availability of sunlight. As a result, solar power limits the expense of, and energy losses associated with, transmission and distribution from large-scale electric plants to the end users. For most residential consumers seeking an environmentally friendly power alternative, solar power is the only viable choice because it can be located in urban and suburban environments.
Retail Rate Benchmark Advantage: Unlike biomass, geothermal, hydroelectric and wind power generation, which are location-dependent and sell primarily to the wholesale market, solar power competes with retail electric rates as it is customer-sited and supplements a customer's electricity purchased at retail rates from the utility network.
Peak Energy Generation Advantage: Solar power is well-suited to match peak energy needs as maximum sunlight hours generally correspond to typical peak demand periods when electricity prices are at their highest. These characteristics increase the value of solar power as compared to other renewable resources that do not align with peak demand periods. Modularity: Solar power products can be deployed in many sizes and configurations to meet the specific needs of the customer.
Reliability: With no moving parts or regular required maintenance, solar power systems are among the most reliable forms of electricity generation.

We favor companies offering photovoltaics (PV) and large-scale concentrated solar power (CSP) and nuclear systems over other forms alternative energy such as biofuels, geothermal or hydropower. Alternative energies plays such as Entergy (ETR), FPL Group (FPL), Energy Conversion Devices (ENER), Evergreen Solar (ESLR), SunPower (SPWRA), Canadian Solar (CSIQ), First Solar (FSLR), and JA Solar (JASO) appear favorable to Hoku Scientific (HOKU), Aventine Renewable (AVR) and Raser Technologies (RZ).

WEAKNESSES

The immediate concerns over economic weakness likely takes the short-term focus off progress toward a new energy policy.

Continued weakness in the debt and equity markets, for as long as it lasts, will raise costs of capital for firms in this emerging sector, and may prevent project financing, working capital requirements, and new research and development. Federal funding for a new energy policy will largely dry up.

Alternative energy stock prices generally rise and fall in direct proportion to the price of crude oil. While in times of high oil prices this may also present an opportunity, it also increases volatility in the sector. Zacks Investment Research

Industry Outlook for Alternative Energy Stocks: Speculative - Bullish

The electric power industry is one of the world's largest industrial segments. With a global market share of approximately 25%, the United States is the leading producer of electricity, followed by China, Japan and Russia. Total global electricity consumption volume grew at a CAGR [compound annual growth rate] of 3.1% from 1980 to 2006, the most recently available information, according to the Energy Information Administration of the United States Department of Energy.

Meanwhile, over the same period, total global installed electricity capacity increased at a slower rate of only 2.8%. Given industry forecasts of continuous increases in demand, this supply shortfall must be met by additional energy sources. Worldwide demand for electricity is expected to increase from 14.8 trillion kilowatt hours in 2003 to 27.1 trillion kilowatt-hours by 2025, according to the United States Department of Energy's International Energy Outlook. (Source: Energy Information Administration, US Department of Energy)

Investment in electric generation, transmission and distribution to meet growth in demand (excluding investment in fuel supply) is expected to be approximately $11 trillion by 2030, according to the International Energy Agency. However, the desire for energy independence, fossil fuel supply constraints, infrastructure limitations and environmental concerns all pose challenges to meeting this growing worldwide demand for electricity.

Electricity generated by burning fossil fuels such as coal, natural gas and petroleum accounts for approximately 80% of commercial power production, nuclear reactors produce approximately 9% of commercial power, 6% is contributed by conventional hydroelectric conversion, while renewable resources such as solar, wind, biomass, geothermal, and hydroelectric power generation supply the remaining 5% of commercial power.

In recent years, however, the use of renewable resources in the U.S. has been increasing in response to the growing concerns over reliance on fossil fuels. As opposed to fossil fuels, which draw on finite resources and may eventually become too expensive to retrieve, renewable resources are generally unlimited in availability. Legislation in several states seek to require power production from renewable sources to be approximately 15% of commercial electric power. Bipartisan support for weaning the U.S. off its dependency on foreign oil is led by President-elect Barack Obama's pledge to create five million new jobs by heavily investing in renewable alternative energy sources. (Sources of Electricity in the US [2006] - Energy Information Administration, US Department of Energy)

The alternative energy industry includes solar panel manufacturers and wind farm operators, as well as software designers working on "smart" power grids and electric utilities with solar, wind, hydro and/or geothermal assets. While hydroelectric power generation currently has the largest installed base, solar and wind power generation have emerged as the most rapidly growing renewable energy sources.

While wind power has a promising long-term future with frequent proposals for new wind farms, there are very few publicly traded wind power companies. In the case of ethanol, high and rising corn prices have brought ethanol stocks out of favor with investors.  

Solar Energy

Solar energy can be used to convert sunlight into heat, called solar thermal energy, or directly into electricity, known as photovoltaic (PV) energy. Solar thermal applications can be distributed, such as roof-mounted systems for heating swimming pools, or can be centralized where sunlight is concentrated to heat a medium that drives a turbine to generate electricity in large scale plants.

Electricity generated from solar thermal electric power plants requires large concentrators and turbines, which are not suitable for residential locations. We refer to solar power as the use of interconnected solar cells, as opposed to solar thermal technology, to generate electricity from sunlight. The interconnected cells are packaged into solar panels, which are mounted in areas with direct exposure to the sun, such as rooftops.

Solar power technology has been used to generate electricity in space program applications for several decades and in commercial applications over the last 30 years. Increasingly, government incentive programs are accelerating the adoption of solar power. Since 2001, the global market for solar power installed capacity has grown at a compound annual growth rate of approximately 40%, driven by strong growth in Germany, Spain, and the U.S.

According to SolarBuzz (a research and consulting firm), the global solar power market, as defined by solar power system installations, generated $17.2 billion in revenue in 2007 (the most recently available information), up 56% over 2006 global revenue. Such total global solar market installation revenue is expected to be within a range of $18.7 billion to $31.4 billion by 2011. On a generation output basis, 2007 global solar cell production also increased 56% year-over-year to 3,436 megawatts (MW); meanwhile, worldwide installations grew 62% to a record high of 2,826 MW. Germany is the global leader for PV installations (1,328 MW in 2007), followed by Spain (640 MW), Japan (230 MW) and the United States (220 MW).

T. Boone Pickens & the "Pickens Army"

In President Obama's Inaugural Address on January 20, 2009, T. Boone Pickens, Texas oilman, Chairman and CEO of BP Capital and Director of Clean Energy Fuels Corp. (CLNE), along with millions of Americans, heard our new President Obama pledge to transform U.S. energy policy. Mr. Pickens is committed to this goal and believes that the president's goals are bold yet achievable.

Mr. Pickens has inspired over 1 million volunteers, known as Pickens' Army, to pressure government for a change in energy policy. In addition, his role at Clean Energy Fuels is committed to convert commercial fleet vehicles to natural gas. Clean Energy Fuels Corp. (Clean Energy) is a provider of natural gas as an alternative fuel for vehicle fleets in the United States and Canada. The Company offers a solution to enable customers to run their fleets on natural gas. It designs, builds, finances and operates fueling stations, and supplies customers with compressed natural gas (CNG) and liquefied natural gas (LNG).

The Obama Administration has already begun working with Congress on a stimulus plan to create more new jobs and return to economic growth by investing heavily in renewable energy sources such as solar and wind power, rebuilding the U.S. electricity transmission grid and ultimately reducing U.S. dependence on foreign oil and ending oil.

OPPORTUNITIES

Compared to other renewable energy technologies, solar power's benefits include:

    
• Environmental Advantage: Solar power is one of the most benign electric generation resources. Solar cells generate electricity without air or water emissions, noise, vibration, habitat impact or waste generation.    
• Fuel Risk Advantage: Unlike fossil and nuclear fuels, solar energy has no risk of fuel price volatility or delivery risk. Although there is variability in the amount and timing of sunlight over the day, season and year, a properly sized and configured system can be designed to be highly reliable while providing a long-term, fixed price electric supply.    
• Location Advantage: Unlike other renewable resources such as hydroelectric and wind power, solar power is generally located at a customer site due to the universal availability of sunlight. As a result, solar power limits the expense of, and energy losses associated with, transmission and distribution from large-scale electric plants to the end users. For most residential consumers seeking an environmentally friendly power alternative, solar power is the only viable choice because it can be located in urban and suburban environments.
  
• Retail Rate Benchmark Advantage: Unlike biomass, geothermal, hydroelectric and wind power generation, which are location-dependent and sell primarily to the wholesale market, solar power competes with retail electric rates as it is customer-sited and supplements a customer's electricity purchased at retail rates from the utility network.    
• Peak Energy Generation Advantage: Solar power is well-suited to match peak energy needs as maximum sunlight hours generally correspond to typical peak demand periods when electricity prices are at their highest. These characteristics increase the value of solar power as compared to other renewable resources that do not align with peak demand periods.    
• Modularity: Solar power products can be deployed in many sizes and configurations to meet the specific needs of the customer.    
• Reliability: With no moving parts or regular required maintenance, solar power systems are among the most reliable forms of electricity generation.

WEAKNESSES

    
• The global economic crises will temper alternative energy sales and earnings growth.    
• The immediate concerns over economic weakness likely takes the short-term focus off progress toward a new energy policy.    
• Continued weakness in the debt and equity markets, for as long as it lasts, will raise costs of capital for firms in this emerging sector, and may prevent project financing, working capital requirements, and new research and development.  Federal funding for a new energy policy will largely dry up.    
• Alternative energy stock prices generally rise and fall in direct proportion to the price of crude oil.  While in times of high oil prices this may also present an opportunity, it also increases volatility in the sector.

The electric power industry is one of the world's largest industrial segments. With a global market share of approximately 25%, the United States is the leading producer of electricity, followed by China, Japan and Russia. Total global electricity consumption volume grew at a CAGR [compound annual growth rate] of 3.1% from 1980 to 2006, the most recently available information, according to the Energy Information Administration of the United States Department of Energy.

Meanwhile, over the same period, total global installed electricity capacity increased at a slower rate of only 2.8%. Given industry forecasts of continuous increases in demand, this supply shortfall must be met by additional energy sources. Worldwide demand for electricity is expected to increase from 14.8 trillion kilowatt hours in 2003 to 27.1 trillion kilowatt-hours by 2025, according to the United States Department of Energy's International Energy Outlook. (Source: Energy Information Administration, US Department of Energy)

Investment in electric generation, transmission and distribution to meet growth in demand (excluding investment in fuel supply) is expected to be approximately $11 trillion by 2030, according to the International Energy Agency. However, the desire for energy independence, fossil fuel supply constraints, infrastructure limitations and environmental concerns all pose challenges to meeting this growing worldwide demand for electricity.

Electricity generated by burning fossil fuels such as coal, natural gas and petroleum accounts for approximately 80% of commercial power production, nuclear reactors produce approximately 9% of commercial power, 6% is contributed by conventional hydroelectric conversion, while renewable resources such as solar, wind, biomass, geothermal, and hydroelectric power generation supply the remaining 5% of commercial power.

In recent years, however, the use of renewable resources in the U.S. has been increasing in response to the growing concerns over reliance on fossil fuels. As opposed to fossil fuels, which draw on finite resources and may eventually become too expensive to retrieve, renewable resources are generally unlimited in availability. Legislation in several states seek to require power production from renewable sources to be approximately 15% of commercial electric power. Bipartisan support for weaning the U.S. off its dependency on foreign oil is led by President-elect Barack Obama's pledge to create five million new jobs by heavily investing in renewable alternative energy sources. (Sources of Electricity in the US [2006] - Energy Information Administration, US Department of Energy)

The alternative energy industry includes solar panel manufacturers and wind farm operators, as well as software designers working on "smart" power grids and electric utilities with solar, wind, hydro and/or geothermal assets. While hydroelectric power generation currently has the largest installed base, solar and wind power generation have emerged as the most rapidly growing renewable energy sources.

While wind power has a promising long-term future with frequent proposals for new wind farms, there are very few publicly traded wind power companies. In the case of ethanol, high and rising corn prices have brought ethanol stocks out of favor with investors.

Solar Energy

Solar energy can be used to convert sunlight into heat, called solar thermal energy, or directly into electricity, known as photovoltaic (PV) energy. Solar thermal applications can be distributed, such as roof-mounted systems for heating swimming pools, or can be centralized where sunlight is concentrated to heat a medium that drives a turbine to generate electricity in large scale plants.

Electricity generated from solar thermal electric power plants requires large concentrators and turbines, which are not suitable for residential locations. We refer to solar power as the use of interconnected solar cells, as opposed to solar thermal technology, to generate electricity from sunlight. The interconnected cells are packaged into solar panels, which are mounted in areas with direct exposure to the sun, such as rooftops.

Solar power technology has been used to generate electricity in space program applications for several decades and in commercial applications over the last 30 years. Increasingly, government incentive programs are accelerating the adoption of solar power. Since 2001, the global market for solar power installed capacity has grown at a compound annual growth rate of approximately 40%, driven by strong growth in Germany, Spain, and the U.S.

According to SolarBuzz (a research and consulting firm), the global solar power market, as defined by solar power system installations, generated $17.2 billion in revenue in 2007 (the most recently available information), up 56% over 2006 global revenue. Such total global solar market installation revenue is expected to be within a range of $18.7 billion to $31.4 billion by 2011. On a generation output basis, 2007 global solar cell production also increased 56% year-over-year to 3,436 megawatts (MW); meanwhile, worldwide installations grew 62% to a record high of 2,826 MW. Germany is the global leader for PV installations (1,328 MW in 2007), followed by Spain (640 MW), Japan (230 MW) and the United States (220 MW).

T. Boone Pickens & the "Pickens Army"

In President Obama's Inaugural Address on January 20, 2009, T. Boone Pickens, Texas oilman, Chairman and CEO of BP Capital and Director of Clean Energy Fuels Corp. (CLNE), along with millions of Americans, heard our new President Obama pledge to transform U.S. energy policy. Mr. Pickens is committed to this goal and believes that the president's goals are bold yet achievable.

Mr. Pickens has inspired over 1 million volunteers, known as Pickens' Army, to pressure government for a change in energy policy. In addition, his role at Clean Energy Fuels is committed to convert commercial fleet vehicles to natural gas. Clean Energy Fuels Corp. (Clean Energy) is a provider of natural gas as an alternative fuel for vehicle fleets in the United States and Canada. The Company offers a solution to enable customers to run their fleets on natural gas. It designs, builds, finances and operates fueling stations, and supplies customers with compressed natural gas (CNG) and liquefied natural gas (LNG).

The Obama Administration has already begun working with Congress on a stimulus plan to create more new jobs and return to economic growth by investing heavily in renewable energy sources such as solar and wind power, rebuilding the U.S. electricity transmission grid and ultimately reducing U.S. dependence on foreign oil and ending oil.

OPPORTUNITIES

Compared to other renewable energy technologies, solar power's benefits include:

• Environmental Advantage: Solar power is one of the most benign electric generation resources. Solar cells generate electricity without air or water emissions, noise, vibration, habitat impact or waste generation.
• Fuel Risk Advantage: Unlike fossil and nuclear fuels, solar energy has no risk of fuel price volatility or delivery risk. Although there is variability in the amount and timing of sunlight over the day, season and year, a properly sized and configured system can be designed to be highly reliable while providing a long-term, fixed price electric supply.
• Location Advantage: Unlike other renewable resources such as hydroelectric and wind power, solar power is generally located at a customer site due to the universal availability of sunlight. As a result, solar power limits the expense of, and energy losses associated with, transmission and distribution from large-scale electric plants to the end users. For most residential consumers seeking an environmentally friendly power alternative, solar power is the only viable choice because it can be located in urban and suburban environments.
• Retail Rate Benchmark Advantage: Unlike biomass, geothermal, hydroelectric and wind power generation, which are location-dependent and sell primarily to the wholesale market, solar power competes with retail electric rates as it is customer-sited and supplements a customer's electricity purchased at retail rates from the utility network.
• Peak Energy Generation Advantage: Solar power is well-suited to match peak energy needs as maximum sunlight hours generally correspond to typical peak demand periods when electricity prices are at their highest. These characteristics increase the value of solar power as compared to other renewable resources that do not align with peak demand periods.
• Modularity: Solar power products can be deployed in many sizes and configurations to meet the specific needs of the customer.
• Reliability: With no moving parts or regular required maintenance, solar power systems are among the most reliable forms of electricity generation.

WEAKNESSES

• The global economic crises will temper alternative energy sales and earnings growth.
• The immediate concerns over economic weakness likely takes the short-term focus off progress toward a new energy policy.
• Continued weakness in the debt and equity markets, for as long as it lasts, will raise costs of capital for firms in this emerging sector, and may prevent project financing, working capital requirements, and new research and development. Federal funding for a new energy policy will largely dry up.
• Alternative energy stock prices generally rise and fall in direct proportion to the price of crude oil. While in times of high oil prices this may also present an opportunity, it also increases volatility in the sector.

The electric power industry is one of the world's largest industrial segments. With a global market share of approximately 25%, the United States is the leading producer of electricity, followed by China, Japan and Russia. Total global electricity consumption volume grew at a CAGR [compound annual growth rate] of 3.1% from 1980 to 2006, the most recently available information, according to the Energy Information Administration of the United States Department of Energy.

Meanwhile, over the same period, total global installed electricity capacity increased at a slower rate of only 2.8%. Given industry forecasts of continuous increases in demand, this supply shortfall must be met by additional energy sources. Worldwide demand for electricity is expected to increase from 14.8 trillion kilowatt hours in 2003 to 27.1 trillion kilowatt-hours by 2025, according to the United States Department of Energy's International Energy Outlook. (Source: Energy Information Administration, US Department of Energy)

Investment in electric generation, transmission and distribution to meet growth in demand (excluding investment in fuel supply) is expected to be approximately $11 trillion by 2030, according to the International Energy Agency. However, the desire for energy independence, fossil fuel supply constraints, infrastructure limitations and environmental concerns all pose challenges to meeting this growing worldwide demand for electricity.

Electricity generated by burning fossil fuels such as coal, natural gas and petroleum accounts for approximately 80% of commercial power production, nuclear reactors produce approximately 9% of commercial power, 6% is contributed by conventional hydroelectric conversion, while renewable resources such as solar, wind, biomass, geothermal, and hydroelectric power generation supply the remaining 5% of commercial power.

In recent years, however, the use of renewable resources in the U.S. has been increasing in response to the growing concerns over reliance on fossil fuels. As opposed to fossil fuels, which draw on finite resources and may eventually become too expensive to retrieve, renewable resources are generally unlimited in availability. Legislation in several states seek to require power production from renewable sources to be approximately 15% of commercial electric power. Bipartisan support for weaning the U.S. off its dependency on foreign oil is led by President-elect Barack Obama's pledge to create five million new jobs by heavily investing in renewable alternative energy sources. (Sources of Electricity in the US [2006] - Energy Information Administration, US Department of Energy)

The alternative energy industry includes solar panel manufacturers and wind farm operators, as well as software designers working on "smart" power grids and electric utilities with solar, wind, hydro and/or geothermal assets. While hydroelectric power generation currently has the largest installed base, solar and wind power generation have emerged as the most rapidly growing renewable energy sources.

While wind power has a promising long-term future with frequent proposals for new wind farms, there are very few publicly traded wind power companies. In the case of ethanol, high and rising corn prices have brought ethanol stocks out of favor with investors.

Solar Energy

Solar energy can be used to convert sunlight into heat, called solar thermal energy, or directly into electricity, known as photovoltaic (PV) energy. Solar thermal applications can be distributed, such as roof-mounted systems for heating swimming pools, or can be centralized where sunlight is concentrated to heat a medium that drives a turbine to generate electricity in large scale plants.

Electricity generated from solar thermal electric power plants requires large concentrators and turbines, which are not suitable for residential locations. We refer to solar power as the use of interconnected solar cells, as opposed to solar thermal technology, to generate electricity from sunlight. The interconnected cells are packaged into solar panels, which are mounted in areas with direct exposure to the sun, such as rooftops.

Solar power technology has been used to generate electricity in space program applications for several decades and in commercial applications over the last 30 years. Increasingly, government incentive programs are accelerating the adoption of solar power. Since 2001, the global market for solar power installed capacity has grown at a compound annual growth rate of approximately 40%, driven by strong growth in Germany, Spain, and the U.S.

According to SolarBuzz (a research and consulting firm), the global solar power market, as defined by solar power system installations, generated $17.2 billion in revenue in 2007 (the most recently available information), up 56% over 2006 global revenue. Such total global solar market installation revenue is expected to be within a range of $18.7 billion to $31.4 billion by 2011. On a generation output basis, 2007 global solar cell production also increased 56% year-over-year to 3,436 megawatts (MW); meanwhile, worldwide installations grew 62% to a record high of 2,826 MW. Germany is the global leader for PV installations (1,328 MW in 2007), followed by Spain (640 MW), Japan (230 MW) and the United States (220 MW).

OPPORTUNITIES

Compared to other renewable energy technologies, solar power's benefits include:

• Environmental Advantage: Solar power is one of the most benign electric generation resources. Solar cells generate electricity without air or water emissions, noise, vibration, habitat impact or waste generation.
• Fuel Risk Advantage: Unlike fossil and nuclear fuels, solar energy has no risk of fuel price volatility or delivery risk. Although there is variability in the amount and timing of sunlight over the day, season and year, a properly sized and configured system can be designed to be highly reliable while providing a long-term, fixed price electric supply.
• Location Advantage: Unlike other renewable resources such as hydroelectric and wind power, solar power is generally located at a customer site due to the universal availability of sunlight. As a result, solar power limits the expense of, and energy losses associated with, transmission and distribution from large-scale electric plants to the end users. For most residential consumers seeking an environmentally friendly power alternative, solar power is the only viable choice because it can be located in urban and suburban environments.
• Retail Rate Benchmark Advantage: Unlike biomass, geothermal, hydroelectric and wind power generation, which are location-dependent and sell primarily to the wholesale market, solar power competes with retail electric rates as it is customer-sited and supplements a customer's electricity purchased at retail rates from the utility network.
• Peak Energy Generation Advantage: Solar power is well-suited to match peak energy needs as maximum sunlight hours generally correspond to typical peak demand periods when electricity prices are at their highest. These characteristics increase the value of solar power as compared to other renewable resources that do not align with peak demand periods.
• Modularity: Solar power products can be deployed in many sizes and configurations to meet the specific needs of the customer.
• Reliability: With no moving parts or regular required maintenance, solar power systems are among the most reliable forms of electricity generation.

WEAKNESSES

• The global economic crises will temper alternative energy sales and earnings growth.
• The immediate concerns over economic weakness likely takes the short-term focus off progress toward a new energy policy.
• Continued weakness in the debt and equity markets, for as long as it lasts, will raise costs of capital for firms in this emerging sector, and may prevent project financing, working capital requirements, and new research and development. Federal funding for a new energy policy will largely dry up.
• Alternative energy stock prices generally rise and fall in direct proportion to the price of crude oil. While in times of high oil prices this may also present an opportunity, it also increases volatility in the sector.

Industry Outlook for Alternative Energy Stocks: Speculative - Bullish

The electric power industry is one of the world's largest industrial segments. With a global market share of approximately 25%, the United States is the leading producer of electricity, followed by China, Japan and Russia. Total global electricity consumption volume grew at a CAGR [compound annual growth rate] of 3.1% from 1980 to 2006, the most recently available information, according to the Energy Information Administration of the United States Department of Energy.

Meanwhile, over the same period, total global installed electricity capacity increased at a slower rate of only 2.8%. Given industry forecasts of continuous increases in demand, this supply shortfall must be met by additional energy sources. Worldwide demand for electricity is expected to increase from 14.8 trillion kilowatt hours in 2003 to 27.1 trillion kilowatt-hours by 2025, according to the United States Department of Energy's International Energy Outlook. (Source: Energy Information Administration, US Department of Energy)

Investment in electric generation, transmission and distribution to meet growth in demand (excluding investment in fuel supply) is expected to be approximately $11 trillion by 2030, according to the International Energy Agency. However, the desire for energy independence, fossil fuel supply constraints, infrastructure limitations and environmental concerns all pose challenges to meeting this growing worldwide demand for electricity.

Electricity generated by burning fossil fuels such as coal, natural gas and petroleum accounts for approximately 80% of commercial power production, nuclear reactors produce approximately 9% of commercial power, 6% is contributed by conventional hydroelectric conversion, while renewable resources such as solar, wind, biomass, geothermal, and hydroelectric power generation supply the remaining 5% of commercial power.

In recent years, however, the use of renewable resources in the U.S. has been increasing in response to the growing concerns over reliance on fossil fuels. As opposed to fossil fuels, which draw on finite resources and may eventually become too expensive to retrieve, renewable resources are generally unlimited in availability. Legislation in several states seek to require power production from renewable sources to be approximately 15% of commercial electric power. Bipartisan support for weaning the U.S. off its dependency on foreign oil is led by President-elect Barack Obama's pledge to create five million new jobs by heavily investing in renewable alternative energy sources. (Sources of Electricity in the US [2006] - Energy Information Administration, US Department of Energy)

The alternative energy industry includes solar panel manufacturers and wind farm operators, as well as software designers working on "smart" power grids and electric utilities with solar, wind, hydro and/or geothermal assets. While hydroelectric power generation currently has the largest installed base, solar and wind power generation have emerged as the most rapidly growing renewable energy sources.

While wind power has a promising long-term future with frequent proposals for new wind farms, there are very few publicly traded wind power companies. In the case of ethanol, high and rising corn prices have brought ethanol stocks out of favor with investors.  

Solar Energy

Solar energy can be used to convert sunlight into heat, called solar thermal energy, or directly into electricity, known as photovoltaic (PV) energy. Solar thermal applications can be distributed, such as roof-mounted systems for heating swimming pools, or can be centralized where sunlight is concentrated to heat a medium that drives a turbine to generate electricity in large scale plants.

Electricity generated from solar thermal electric power plants requires large concentrators and turbines, which are not suitable for residential locations. We refer to solar power as the use of interconnected solar cells, as opposed to solar thermal technology, to generate electricity from sunlight. The interconnected cells are packaged into solar panels, which are mounted in areas with direct exposure to the sun, such as rooftops.

Solar power technology has been used to generate electricity in space program applications for several decades and in commercial applications over the last 30 years. Increasingly, government incentive programs are accelerating the adoption of solar power. Since 2001, the global market for solar power installed capacity has grown at a compound annual growth rate of approximately 40%, driven by strong growth in Germany, Spain, and the U.S.

According to SolarBuzz (a research and consulting firm), the global solar power market, as defined by solar power system installations, generated $17.2 billion in revenue in 2007 (the most recently available information), up 56% over 2006 global revenue. Such total global solar market installation revenue is expected to be within a range of $18.7 billion to $31.4 billion by 2011. On a generation output basis, 2007 global solar cell production also increased 56% year-over-year to 3,436 megawatts (MW); meanwhile, worldwide installations grew 62% to a record high of 2,826 MW. Germany is the global leader for PV installations (1,328 MW in 2007), followed by Spain (640 MW), Japan (230 MW) and the United States (220 MW).

OPPORTUNITIES

Compared to other renewable energy technologies, solar power's benefits include:

    
• Environmental Advantage: Solar power is one of the most benign electric generation resources. Solar cells generate electricity without air or water emissions, noise, vibration, habitat impact or waste generation.    
• Fuel Risk Advantage: Unlike fossil and nuclear fuels, solar energy has no risk of fuel price volatility or delivery risk. Although there is variability in the amount and timing of sunlight over the day, season and year, a properly sized and configured system can be designed to be highly reliable while providing a long-term, fixed price electric supply.    
• Location Advantage: Unlike other renewable resources such as hydroelectric and wind power, solar power is generally located at a customer site due to the universal availability of sunlight. As a result, solar power limits the expense of, and energy losses associated with, transmission and distribution from large-scale electric plants to the end users. For most residential consumers seeking an environmentally friendly power alternative, solar power is the only viable choice because it can be located in urban and suburban environments.
  
• Retail Rate Benchmark Advantage: Unlike biomass, geothermal, hydroelectric and wind power generation, which are location-dependent and sell primarily to the wholesale market, solar power competes with retail electric rates as it is customer-sited and supplements a customer's electricity purchased at retail rates from the utility network.    
• Peak Energy Generation Advantage: Solar power is well-suited to match peak energy needs as maximum sunlight hours generally correspond to typical peak demand periods when electricity prices are at their highest. These characteristics increase the value of solar power as compared to other renewable resources that do not align with peak demand periods.    
• Modularity: Solar power products can be deployed in many sizes and configurations to meet the specific needs of the customer.    
• Reliability: With no moving parts or regular required maintenance, solar power systems are among the most reliable forms of electricity generation.

WEAKNESSES

    
• The global economic crises will temper alternative energy sales and earnings growth.    
• The immediate concerns over economic weakness likely takes the short-term focus off progress toward a new energy policy.    
• Continued weakness in the debt and equity markets, for as long as it lasts, will raise costs of capital for firms in this emerging sector, and may prevent project financing, working capital requirements, and new research and development.  Federal funding for a new energy policy will largely dry up.    
• Alternative energy stock prices generally rise and fall in direct proportion to the price of crude oil.  While in times of high oil prices this may also present an opportunity, it also increases volatility in the sector.

As Murray points out, the Claymore/MAC Global Solar Energy ETF (NYSE: TAN) is up 55% over the past five days, and other alternative energy funds are rallying too. The First Trust ISE Global Wind Portfolio (FAN) is up 30% over the past week, and the PowerShares Global Clean Energy ETF (PBD) is up nearly as much, all on expectations that Obama will funnel money into the alternative energy build-out.

I've had a few people ask me why these stocks would bounce now, when Obama has been building his lead in the polls for some time now.  It's a way of suggesting that the bounce will necessarily be short-lived; a temporary euphoria before the inevitable crash.

That may be true. But remember that just six weeks ago, Obama wasn't looking so hot in the polls. In mid-September, you could by InTrade futures on an Obama victory for less than $0.50 (each contract pays $1 if Obama wins). Now, those same futures trade for $0.93, suggesting an Obama presidency is a near lock in the minds of investors.

I guess we'll find out in a few hours.

Notes On Our Commodities Conference

Jim, you did a good job summarizing the takeaways from our commodities conference. But I think you left out two key suggestions: 1) Build a bunker; 2) Stock canned food.

The best play on the coming economic crisis may be Campbells Soup (NYSE: CPB)---which, by the way, is trading near a 52-week high.

I'm mostly kidding, of course, but there were a lot of smart people and a lot of great discussion about what's happening in the U.S. economy, and none of it was pretty.

For my money, that was the highest conviction conference I've ever attended. By that I mean, I think every single person who attended that conference yesterday is looking closely at commodities today. I suspect the majority of attendees will either start or increase their allocations to commodities as a result. 

I know, for instance, that I was very happy at the end of that conference that I included commodities in my 13.65 basis point portfolio. Could I make a larger allocation? Possibly. But I sure am glad I have something in there.

BTW: One clarification for conference attendees. During the Industrial Metals panel, both of the speakers identified Tin as the single most attractive industrial metal right now. There was then some discussion about whether or not there was a way for retail investors to actually access tin.

It turns out, there is: the iPath DJ-AIG Tin ETN (NYSEArca: JJT) provides exposure to tin in an exchange-traded note format. It trades infrequently, an investors should use limit order to buy and sell, but it can be done.  

Prospects that Barack Obama will become the next U.S. president continued on Tuesday to provide a surge for exchange-traded funds focused on solar energy.

"There are a lot of factors going on in markets right now, but we think there's good evidence that at least with solar ETFs, a lot of this is coming from an Obama bounce," said Christian Magoon, president of Claymore Securities.

He was speaking as the day's session along Wall Street was finishing and right before many polling centers were opening on the East Coast. Later in the night, of course, results were expected in the race between Obama and Sen. John McCain.

The Bush administration has focused more on oil- and transportation-related issues, noted Magoon. "But this presidential campaign has really brought more attention to solar energy. And Jim Cramer led off his television show on Monday making a solar ETF one of his first post-election trades," said Magoon.

The popular CNBC stock trader picked The Claymore/MAC Global Solar Energy ETF (NYSEArca: TAN) as one of his top choices for the new year. It was up more than 10% in the final hour of trading. That came after TAN jumped better than 15% the day before. In the past five trading days, the ETF has gained 48%-plus, according to Morningstar data.

That signals a complete turnaround for TAN, which launched in April. In the past three months, the fund had returned -48.32% through Monday.

The Market Vectors Solar Energy ETF (AMEX: KWT) has gotten an even bigger bounce. The fund, which also launched in April, has soared—though by somewhat less. In the past five trading days, it's up 45%; on Monday alone it gained 11.66%.

Obama is considered more solar-friendly than Republican candidate John McCain in some circles. But analysts along Wall Street have been putting out notes lately warning that such views, whether accurate or not, aren't enough fuel to support such a big run-up in stock prices.

Many market observers are warning that after a so-called "Obama Bounce," the sector could be due for a considerable slowdown.

But it certainly has served to raise the profile again of alternative energy ETFs. Niche funds such as TAN and KWT are getting an extra kick as their underlying benchmarks, both of which use different methodologies for screening out pure-plays from large conglomerates.

But the solar energy market is a small market, and these are very focused ETFs, holding less than 30 companies each in a typical reporting period. (See related article here.)

Magoon also pointed out that no matter who wins the White House race, "both candidates have been talking about solar and alternative energies a lot."

"A new administration is likely to raise the profile for solar ETFs as a whole, whether it's Obama or McCain," he said. "So we're seeing this election as a positive no matter who wins."

This from Investor’s Daily Edge:

It’s finally here.  The long awaited and hard fought election will end tomorrow (at least I hope we don’t see a repeat of 2000 where we don’t know who won for weeks).  Rather than make predictions about the election itself, I want to tell you how I think things will play out after the election.

First, I think the overall market will rally after the…

This from Penny Sleuth:

How many times have you read that before? Several, I imagine. But this is not just my headline writer suffering from a crisis of creative confidence. It is, with a slight variation, lifted from the agenda of next week’s AIM conference, to which the London Stock Exchange has graciously offered me a free ticket thus saving me from having to fork out £650 for this one day event. It will be interesting to hear what the presenters at this conference make of the state…

This from Penny Sleuth:

How many times have you read that before? Several, I imagine. But this is not just my headline writer suffering from a crisis of creative confidence. It is, with a slight variation, lifted from the agenda of next week’s AIM conference, to which the London Stock Exchange has graciously offered me a free ticket thus saving me from having to fork out £650 for this one day event. It will be interesting to hear what the presenters at this conference make of the state…

This from Penny Sleuth:

How many times have you read that before? Several, I imagine. But this is not just my headline writer suffering from a crisis of creative confidence. It is, with a slight variation, lifted from the agenda of next week’s AIM conference, to which the London Stock Exchange has graciously offered me a free ticket thus saving me from having to fork out £650 for this one day event. It will be interesting to hear what the presenters at this conference make of the state…

JASO registered a three-fold rise in revenues while its earnings jumped four-fold in the second quarter of 2008. Bullishness stems from strong global demand for its photovoltaic cells. Going forward, increasing demand for solar energy, improving production costs, coupled with ongoing capacity expansions and burgeoning committed supply of key raw materials, will continue to boost the cash-rich JASO's growth story.

However, rising silicon wafer costs, and the company's high R&D [research and development] expenses may put pressure on margins over the near-term. Accordingly, we maintain our Buy recommendation on JASO with a six-month target price of $10. Price appreciation to our near-term valuation target represents 66.7%% upside potential.

Read the full analyst report on JASO

Since then, however, concerns of oversupply have whacked solar stocks. This prompted Goldman Sachs (NYSE:GS) to downgrade several solar companies to a "sell".

J. Cristoph Amberger says the current financial crisis will hurt investment in solar power. He recommends investors sell their positions while they still can.

This from Today's Financial News:

Two key solar stocks are being hit hard in early indications. First Solar, Inc. (NASDAQ: FSLR) had already cut its 52-week high of $317.00 by more than half. Trading below $140 today (down 10%-plus), it’s still twenty bucks above its 52-week low of $124.96.

SunPower Corporation (NASDAQ: SPWRA), too, has been decimated. (In fact, “decimated” — meaning a violent elimination of a tenth! — seems too tame a term to describe what’s happened!) The stock is worth just a third of its 52-week high of $164.49, trading just above its 52-week low of $52 right now.

My own recent recommendation of Yingli Green Energy (NYSE:YGE) is down to $7.59 (-10.50% just today) for a total loss of -55.58%.

I do not believe the stock will double any time soon for us to break even on it. Goldman Sachs’ change of direction tell me we’re in for a sea change in the attitude toward solar companies in general, beyond the upheaval in the current market.

My original call on Yingli — which we had covered since its IPO back in the Taipan days — was motivated by expectations that Obama will win the election, unleashing a tidal flow of speculative money into “politically correct” investments. A flow triggered by the expectations of a Federal gravy train of subsidies that could make up for the economic shortcomings of solar energy.

That money may still be coming. But overall, I believe recent fascination with solar is a Prosperity Phenomenon. It’s the equivalent of a Levenger catalog (”Tools for Serious Readers”) or an Eagle Scout project marking storm drains in prosperous suburban neighborhoods with “Don’t Dump” stencils. (I did that last Saturday!)

Large-scale adoption of solar technology by consumers represents a huge investment. And currently, it doesn’t look like there will be excess play money lying around anywhere… or credit being extended.

Plus, there’s talk of a huge solar over-supply by 2010.

My recommendation: Solar technology is the new bio-ethanol. Sell while you still get money for your shares.

Source: The Death of Solar? Yet Another Bubble Has Popped!

ENERGY

Oil falls as global demand concerns re-emerge

SINGAPORE (AP) -- Oil prices fell below $106 a barrel Tuesday in Asia -- $10 below its close Friday before the Labor Day weekend -- as investors shifted their focus to slowing global demand after worries about Hurricane Gustav subsided.

Wind, solar energy built on temporary tax breaks
Congress is putting the short-term future of renewable energy companies in jeopardy even as the presidential candidates and most lawmakers hail windmills, solar panels and biofuels as long-term solutions to high gasoline prices and global warming.

Russian gas oil, gasoline exports fall in Aug

Russian exports of gas oil and gasoline fell in August. Russian oil companies exported 86,219 tonnes per day of gas oil in the first 27 days of August, down by 5.7% from 91,390 tonnes per day in the first 30 days of July. Exports of gasoline, which usually amount to just around 10% of total sales of the fuel, fell by 14.7% to 9,167 tonnes per day from 10,740 tonnes per day in July.

MISC Says It's Halting Ships Travel to Gulf of Aden After Vessels Hijacked MISC Bhd., the world's biggest owner of liquefied natural gas tankers, halted its vessels from entering the Gulf of Aden until more security measures are in place after pirate attacks off the coast of Somalia.

AGRICULTURE

Corn, Soybeans Tumble as Oil Declines on Reduced Hurricane Damage Concern Corn plunged by the trading limit and soybeans tumbled as oil fell after Hurricane Gustav passed the U.S. Gulf Coast without causing major damage, driving the dollar up and reducing demand for the crops as an alternative investment.

GOLD

Gold Declines for Third Day as Crude Oil Slips, Dollar Rallies

Gold fell for a third day in London as the dollar strengthened and crude oil slid, reducing demand for the metal as an alternative investment and inflation hedge. Platinum also dropped.

US DOLLAR

Dollar Bears' Mea Culpa Makes Ben Bernanke No Liability in Global Slowdown Federal Reserve Chairman Ben S. Bernanke has gone from a dollar liability to an asset, sparking a rally that even bears say shows few signs of ending

CANADA

Canada's Harper Seeks National Election, Opposition Leader Dion Says Canadian Prime Minister Stephen Harper will likely call national elections after failing to find common ground with rival parties for the agenda of the next session of Parliament, opposition Liberal Leader Stephane Dion said.

GLOBAL ECONOMY

China's Spending May Thwart Olympic Curse, Buoy Asia

After four straight quarters of decelerating gross domestic product growth, the government is considering a fiscal stimulus of as much as 400 billion yuan ($58 billion), according to economists and reports in domestic news media.

A plan awaiting approval from the State Council and the National People's Congress includes 220 billion yuan of spending and 150 billion yuan of tax cuts, the Beijing-based Economic Observer newspaper reported last week.

China has tripled railway spending this year to 300 billion yuan. The current five-year plan, which runs through 2010, calls for investing almost 4.8 trillion yuan on power stations, waterways, roads and other infrastructure projects -- more than the combined output of Taiwan, Thailand and Vietnam. Reconstruction after May's Sichuan earthquake could cost another 1 trillion yuan, the government says.

As global economy slows, visions of $80 oil grow

Economist Glen Langan told BloggingStocks a further decline in oil to below $100 is consistent with the recent slowdown in global economic growth, but he'll await further international GDP data before arguing for an oil dip to the $80 range.

"The key here, again, as with the uptrend in the previous four years, is China. If oil consumption growth slows in China, oil will experience a large sell-off, as institutional investors and traders sense that the great bull run in commodities is at least pausing," Langan said. "China is likely to register GDP growth of about 10% in Q3, and if it's below 9% or 8.5%, investors will take that as a sign that a slowdown is ahead, which is bearish for commodity prices." China's economy grew 10.2% in Q2 and 10.4% in 1H 2008.

ENERGY

Oil falls as global demand concerns re-emerge

SINGAPORE (AP) -- Oil prices fell below $106 a barrel Tuesday in Asia -- $10 below its close Friday before the Labor Day weekend -- as investors shifted their focus to slowing global demand after worries about Hurricane Gustav subsided.

Wind, solar energy built on temporary tax breaks
Congress is putting the short-term future of renewable energy companies in jeopardy even as the presidential candidates and most lawmakers hail windmills, solar panels and biofuels as long-term solutions to high gasoline prices and global warming.

Russian gas oil, gasoline exports fall in Aug

Russian exports of gas oil and gasoline fell in August. Russian oil companies exported 86,219 tonnes per day of gas oil in the first 27 days of August, down by 5.7% from 91,390 tonnes per day in the first 30 days of July. Exports of gasoline, which usually amount to just around 10% of total sales of the fuel, fell by 14.7% to 9,167 tonnes per day from 10,740 tonnes per day in July.

MISC Says It's Halting Ships Travel to Gulf of Aden After Vessels Hijacked MISC Bhd., the world's biggest owner of liquefied natural gas tankers, halted its vessels from entering the Gulf of Aden until more security measures are in place after pirate attacks off the coast of Somalia.

AGRICULTURE

Corn, Soybeans Tumble as Oil Declines on Reduced Hurricane Damage Concern Corn plunged by the trading limit and soybeans tumbled as oil fell after Hurricane Gustav passed the U.S. Gulf Coast without causing major damage, driving the dollar up and reducing demand for the crops as an alternative investment.

GOLD

Gold Declines for Third Day as Crude Oil Slips, Dollar Rallies

Gold fell for a third day in London as the dollar strengthened and crude oil slid, reducing demand for the metal as an alternative investment and inflation hedge. Platinum also dropped.

US DOLLAR

Dollar Bears' Mea Culpa Makes Ben Bernanke No Liability in Global Slowdown Federal Reserve Chairman Ben S. Bernanke has gone from a dollar liability to an asset, sparking a rally that even bears say shows few signs of ending

CANADA

Canada's Harper Seeks National Election, Opposition Leader Dion Says Canadian Prime Minister Stephen Harper will likely call national elections after failing to find common ground with rival parties for the agenda of the next session of Parliament, opposition Liberal Leader Stephane Dion said.

GLOBAL ECONOMY

China's Spending May Thwart Olympic Curse, Buoy Asia

After four straight quarters of decelerating gross domestic product growth, the government is considering a fiscal stimulus of as much as 400 billion yuan ($58 billion), according to economists and reports in domestic news media.

A plan awaiting approval from the State Council and the National People's Congress includes 220 billion yuan of spending and 150 billion yuan of tax cuts, the Beijing-based Economic Observer newspaper reported last week.

China has tripled railway spending this year to 300 billion yuan. The current five-year plan, which runs through 2010, calls for investing almost 4.8 trillion yuan on power stations, waterways, roads and other infrastructure projects -- more than the combined output of Taiwan, Thailand and Vietnam. Reconstruction after May's Sichuan earthquake could cost another 1 trillion yuan, the government says.

As global economy slows, visions of $80 oil grow

Economist Glen Langan told BloggingStocks a further decline in oil to below $100 is consistent with the recent slowdown in global economic growth, but he'll await further international GDP data before arguing for an oil dip to the $80 range.

"The key here, again, as with the uptrend in the previous four years, is China. If oil consumption growth slows in China, oil will experience a large sell-off, as institutional investors and traders sense that the great bull run in commodities is at least pausing," Langan said. "China is likely to register GDP growth of about 10% in Q3, and if it's below 9% or 8.5%, investors will take that as a sign that a slowdown is ahead, which is bearish for commodity prices." China's economy grew 10.2% in Q2 and 10.4% in 1H 2008.