Solar Stocks Report Begins Jan. 9

My last post contends that solar stocks in America are becoming mainstream on all of the major indexes. I've noticed over the past two weeks just how closely ten top, publicly-held solar companies, listed in the previous post, have paralleled the DJIA and NASDAQ nearly point-for-point.

While I'm obviously an advocate for solar power worldwide, I only have a general knowledge of the machinations of the stocks and bonds world. Still, investors and non-investors look to the major stocks indexes to gauge growth of any industry and particular stocks within that industry. For that reason, a new feature, tentatively called "Key 20 Solar Stocks This Week" will begin posting Friday, January 9, 2009.

Why Follow Solar Stocks?

First off, we can assume the Obama Administration will be more proactive in the realm of renewable energy. Indeed, solar and wind power could be the Magic Bullets for the new administration in that they can: (1) provide good jobs that cannot be exported: (2) reduce carbon emissions by burning less coal and natural gas for power thereby (3) mitigate the effects of global warming. The extension of the federal solar tax credit to 2016 can be a boon for solar in all 50 states. (BTW, I sold a solar kit to a man in Alaska four years ago which he installed on his summertime fishing lodge on the Kenai Peninsula. It would have cost him $20,000 to bring utility power in which he would use just four months a year. Long summer days gives him plenty of power exactly when he needs it. My overall point is that solar makes sense nationwide.)

Hedging like a college football coach, I cannot confirm nor will I deny that solar stocks could be the ones to buy in the near future. More states are instituting their own rebates and/or tax credits. Here in San Diego, Mayor Jerry Sanders announced this month that the city will begin a solar loan program in March that allows citizens to purchase PV systems at a low, fixed interest rate paid over twenty years with state property taxes. All of these incentives stimulate growth of the solar industry even during these difficult times because the future cost of electricity is, at best, any one's guess.

Selecting the Key 20 Stocks

If somewhat subjective, choosing the key solar stocks will be an informed selection on my part. The best I can say is they will be panel or inverter manufacturers; cover crystalline and thin-film technologies; and will be comprised of major stocks worldwide with the preponderance being American companies. Any stock that is delisted by the NYSE or NASDAQ obviously will be dropped from the list and replaced.

My Ulterior Motive

The posts in this blog covering the price of panels and solar stocks generated the most hits, by far. I will not be forsaking the educational angle of this blog but generating hits is important to any blogger. For those who are passionate about what they write, like I am, will know online traffic is the name of the game. It's about spreading the word.

Commentary: Solar Stocks Going Mainstream

About a week ago I installed the free MarketBrowser program (www.marketbrowser.com) that will track up to twelve major stock indexes and specific stocks of choice. Stock prices are updated every 20 minutes and can be viewed by list or graphically by charts. I remember in the late 70s early 80s delayed stock quotes in your desktop made a company called Quotron a lot of money. Today, with Internet access this service is free.

I selected the Dow Jones Industrial Average and the NASDAQ exchange as my overall stock barometers. Then I chose ten of the most prominent solar stocks to follow. These are Canadian Solar, Energy Conversion Devices (UniSolar), First Solar, SolarFun, Suntech, LDK Solar, JA Solar, SunPower, Renesola and Evergreen Solar. This international mix of companies are among the major players with the stay power to get them through the recession.


Just glancing over all 12 year-at-a-glance charts one can easily notice that nine of the ten solar stocks closely paralleled the DJIA and NASDAQ indexes (ECD-UniSolar the exception). Most started considerably higher in January; dipped in the spring; surged a little in the summer; and began the taper down with the banking failures starting in September. Just like DJIA and NASDAQ. Granted, solar stocks can be volatile but that's not unusual for companies in an emerging industry. If anything, solar stocks are looking more mainstream than ever before.

Solar stocks have taken a beating this year but then what stocks (beside defense or oil stocks-- one protecting the other), haven't had a bad year? Still, solar has shown a 25-40% annual growth rate since 1996 and even if there is a lull because of the credit crisis, the demand for solar power should not wane.

As I explained in my Nov. 26 post, there are many reasons the solar industry could be bullish for the economy. The Wall Street bailout included the solar investment tax credit extension through 2016. Residential solar buyers beginning Jan. 1 can claim a full 30% income tax credit on the price of a home installation, a credit that's been capped at $2000. Investor-owned utilities, formerly exempted from the tax credit, can claim it, too, beginning next year. This is particularly key for California utilities that are mandated to have 20% of there energy production from renewable sources by 2010, 30% by 2020.

The growth of solar companies will also be an answer to the dearth of jobs nationwide while it helps cut carbon emissions. If the Obama Administration institutes a formal carbon cap-and-trade program, it will be a boon to solar--and wind, geothermal--as well.

The day will come when solar units--whether for power or hot water or both--will be as ubiquitous on houses and buildings as computers are inside them. Mark my words.

Care & Handling of the Solar Tax Credit

By now most know the Emergency Economic Stabilization Act of 2008 extended the solar investment tax credit (ITC) through 2016 and the $2000 cap for residential solar installations has been dropped allowing for the full 30% credit businesses get. The extension, as it turns out, might be the only good thing for Main Street in a major chunk of legislation aimed at fixing Wall Street. It's a very good thing, to be sure, but let's review the details.




The Database of State Incentives for Renewables & Efficiency (DSIRE, see Related Links) summarized the solar electric ITC extension in October thus:

"A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the U.S. used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is on a new home, the 'placed in service' date is the date of occupancy by the homeowner. Expenditures include labor costs for onsite preparation, assembly, or original system installation and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year... Consumers who receive other incentives are advised to consult with a tax professional regarding how to calculate this federal tax credit."

DSRIRE went on to say that in case of joint occupancy, the maximum qualifying amount allowed is $6,667 per occupant. Lifewise, the credit may be claimed proportionally by how much each individual paid. Finally, the law states the PV installation must be used as a residence but does not have to be the principal residence to qualify. Any unused tax credit from the first tax year may be carried over to the next tax year.

It is particularly important to consult a CPA or tax attorney if your state offers a solar rebate which is taken with the federal tax credit. Normally, the tax credit is taken on the balance after the rebate is deducted from the total installation cost. If however, one takes the tax credit against the whole installation cost along with the rebate, the rebate could be taxed as income. At present, the issue is better determined by a professional who also considers the solar customer's tax situation.

A four-page set of frequently asked questions about the solar tax credit was produced by the Solar Energy Industries Association, the national trade organization for the solar industry. It is available at: http://seia.org/galleries/pdf/ITC_Frequently_Asked_Questions_10_9_08.pdf