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The Solar Energy Race Gets Serious

by | published April 8th, 2011

Solar energy – as an investment sector – has long labored under the assumption that breakout prospects are dependent upon a few small start-up companies that have insufficient working capital and miniscule share prices.

That may be true in some areas of the technical advances that reduce costs, increase energy harvesting, or provide the myriad breakthroughs necessary for the development of a genuine storage apparatus.

But that is not the case when it comes to simply producing the main components of solar capture technology.

Better-known (and among the largest) players are already moving into solar energy – and doing so both here and abroad. And every time we see new evidence of that, it’s an encouraging development, both for solar energy prospects and the investment sector developing around them.

That’s because no energy source can expand market presence, attract the significant investment necessary to develop as a genuine alternative source, or overcome a range of infrastructure and system problems based solely on a network of small, under-capitalized companies.

Just yesterday, in fact, two developments arose that testify to the accelerated presence of well-capitalized companies in the solar space.

And that means the solar investment space is finally heating up.

Development No. 1: 3M Brings Solar Manufacturing to China

The first – and most important – was an announcement by U.S.-based industrial goods company 3M Co. (NYSE:MMM). It plans to build a solar manufacturing facility in China, with construction set to begin in the second quarter of this year.

Now, this is the ninth plant 3M has built in China since 1984. But its previous footprint there largely involved technical services, R&D, and basic product manufacturing.

The new plant in Hefei (central China between the Yangtze and Huaihe Rivers) will produce a range of solar energy products.

The latest Chinese plant will also further enhance the company’s position in the renewable energy market and follow upon recent investments in solar energy product manufacturing facilities in Colombia, Missouri, Hilden, Germany, and Singapore.

The most interesting part in all of this, however, revolves around one of the products to be produced at the Chinese plant. Among a variety of renewable energy products planned is one that both has a major role to play in solar energy and is tailored to existing Chinese-based production.

It’s a product called Scotchshield™ – a film that protects the back sides of solar photovoltaic (PV) modules from moisture and contamination. The film is designed for use with crystalline silicon modules, which just happens to be a type of solar panel made mostly in China.

3M now produces the film at a plant in Decatur, Alabama, but the brunt of its emphasis is likely to shift to Hefei. The company expects to be providing the film to several of the major Chinese solar manufacturers.

It is this sort of bilateral corporate synergy that is likely to enhance major advances moving forward.

As with many other large, multifaceted manufacturers, 3M’s involvement in renewable energy has a long history. It goes back to the 1970s.

Yet only recently has management designated renewables as a major growth opportunity. In fact, 3M’s renewable energy division did not even exist until two years ago. That unit now encompasses production for the solar, wind, geothermal, and biofuels energy markets.

3M is now moving in on the solar market.

Top executives have identified the industry-wide market for PV panels and related equipment as moving into a major growth cycle. Last December, CEO George Buckley put the growth in that market at 27% through 2015.

Likewise, the company sees its Chinese expansion as paralleling plans for solar energy-related production. In 2010, China accounted for 6% of 3M’s total sales – of $26.7 billion – but that share is expected to increase to 9% by 2015. Earlier this year, the company said it would spend up to $1.5 billion on capital expenditures in 2011, with 40% of that directed to developing economies like China.

Sounds like a win-win to me.

But 3M is hardly the only major moving into solar – leading to the second announcement that came yesterday.

Development No. 2: GE Taps into U.S. Solar Market

The largest U.S. manufacturer of wind turbines, General Electric Co. (NYSE:GE) is already a major presence in the renewable energy sector. Yesterday it announced it would build the largest American production site for solar panels.

GE is being unusually coy about where the plant will be located, saying only that multiple locations are under consideration and a final decision would come in three to four months. But it does reveal that it will cost in excess of $600 million to construct, with first production beginning in 2013. The company says it already has in hand orders for more than 100 megawatts of panel production.

GE contends that these panels will be the most efficient so far available, with a rating of almost 13%.

This is thin-film PV technology – a similar, though competing, technology to the 3M-Chinese approach.

That’s precisely what I like about these new developments. They create competition. And competition always provides opportunities for investors.

To bolster its own position in what looks like a fast-growing energy application, GE also announced yesterday that it has acquired Arvada, Colorado-based PrimeStar Solar Inc., a developer of the family of thin-film PV solar technology at the basis of GE’s solar panel operations. This acquisition has been coming for several years. GE became PrimeStar’s majority equity owner in 2008. But it was PrimeStar’s breakthrough on the efficiency side with its thin-film technology that finally sealed the deal.

Two gigantic multinational conglomerates are now planning rapid expansions of their solar markets, with 3M producing in central China and GE someplace in the U.S….

It looks like the solar race is getting serious.

Sincerely,

Kent

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  1. Don Giles
    April 8th, 2011 at 10:37 | #1

    A company you may want to check out is Gasfrac, a small but rapidly growing factor in “fracking.” It appears to have a unique position because it uses LPG instead of water, having both economic and environmental advantages. I admit my interest is selfish–I already own a small position.
    Thanks,
    Don Giles

  2. John Peck
    April 8th, 2011 at 10:40 | #2

    Can you put specific recomendation of stock in one table and rate each of them according to when would be the best time to buy?

  3. Pops Thomas
    April 8th, 2011 at 11:13 | #3

    What goes on with Allis Chalmers?

  4. GEC
    April 8th, 2011 at 12:30 | #4

    So, does this mean that SATC is an even stronger recommendation?

  5. Roger Morgan
    April 8th, 2011 at 13:44 | #5

    Kent, The quoted efficiency of the GE/Primestar PV cells at 13% is far outranked by that of Sharp at 35%.

  6. marvin tarnol
    April 8th, 2011 at 14:04 | #6

    @John Peck
    Where can I find your recommendations. I am just able to read your articles. I never know what to buy.Thank you

  7. jimmymac
    April 8th, 2011 at 14:45 | #7

    Kent,
    Yes the most recent advances in thin film solar has increased efficiency by about 25% to the 13% level. The great thing about this technology is that it can be utilized as an integrated component of commercial roofing and is competitive with the panelized solar applications cost wise on a $ per watt basis. The best panels are currently running at almost 40% efficiency but anticipate about a 20% increase to 45% or thereabouts soon as the latest research is incorporated into manufacturing. Thanks for the nice update on this it shows a multidimensional viewpoint which is much appreciated.

  8. crackin
    April 8th, 2011 at 14:47 | #8

    don@Don Giles
    Whats’s the stiock symbol I was wonting to buy but can’t find the
    stock !

  9. james
    April 8th, 2011 at 22:14 | #9

    What about the Company Satcon ticker sym. satc its in the solar bus.

  10. bobby
    April 9th, 2011 at 00:46 | #10

    what`going on with SATC.dawn 20% for thise week.

  11. Abeer Obeidat
    April 9th, 2011 at 05:18 | #11

    do you have any information about Johanna Solar, it’s a german company manufactring thin film PV panels based on technology aquired from Johansberg University. they also have a manufacturign facility underway in china.

  12. Leslie R Easley
    April 10th, 2011 at 17:17 | #12

    If we were to completely cover every square yard of all
    of the millions of acres owned by the US Government that we are prohibited to use for drilling for oil, why do we think we could use that vacant land for anything? If we had billions of killowatts available
    would we be able to have room on the power grid to
    allow that power to be transmitted without building
    trillions of dollars worth of electric transmission
    lines and power stations? The recent TV Commercial
    that states we can purchase a solar panel and some sort of “magic box” for large sums of money is what
    appears to be a scam;it can’t power even a fraction
    of our household power so why are such commercials
    alllowed to air?

  13. Randy S
    April 11th, 2011 at 02:36 | #13

    GASFRAC Energy == GSFVF Trades OTC Pink sheets.

  14. Bill Thompson
    April 11th, 2011 at 07:53 | #14

    If solar is so great, why does is it subsidized? Where would it be without tax credits? Who efficient is solar? How does total cost of electric compare to what I’m paying the utility?

  15. olykolansy
    October 4th, 2011 at 13:05 | #15

    I like GE it pays a nice dividend as well as good growth .

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