Solar Power is at a Tipping Point (The Upshot is Massive Profits)

by | published January 20th, 2015

I have spent years tracking dozens of promising renewable energy companies.

And while the potential of these groundbreaking companies has always been tempting, there have always been limitations holding them back.

New projects require intensive amounts of working capital to make them fully compatible with traditional methods of generating power, and there’s the widely held assumption that renewables can’t survive absent government subsidies and benefits.

All of these, of course, have simply added to the costs that end-users have to pay.

And in the case of solar and wind, there has always been the problem of generating electricity when there’s no wind or sunshine to tap.

What’s more, projects in this sector have always needed a sufficient amount of private investment to get off the ground.

Yet, as it turns out, each of these drawbacks is less of a deal-breaker than originally thought.

You see, despite the odds, alternative energy – led by solar power – is rapidly approaching what the industry has always considered to be the “Holy Grail.”

The upshot for investors is massive profits…

A Brand New Age for Renewable Energy

It all revolves around renewables’ rapid move toward “grid parity.”

Grid parity reflects renewables’ ability to generate power for the same underlying cost as competing sources like oil, natural gas, or coal.

In other words, it’s the point at which the cost of generating renewable energy suddenly becomes equal to its peers.

And the little known fact is that even with the phasing out of government subsidies and the relaxing of power purchasing requirements by utilities, grid parity already exists in many areas.

By other yardsticks of broader economic impact, what I am seeing as this develops is quite significant.

Take the rising position of solar power for example.

In an interesting piece this morning at, Marissa Fessenden gives us an interesting perspective on the subject.

As Marissa notes, the solar industry is growing fast, which puts it in that awkward position where it can lay claim to some very big numbers but also very small ones. As Mother Jones has reported, the amount of solar power produced in the U.S. in the past decade has “leaped 139,000%.” That’s despite the fact that in 2013, according to the U.S. Energy Information Administration (EIA), solar power only made up 0.2% of the energy generated in the country.

Coal, on the other hand, accounted for 39%.

Brad Plumer, from Vox, has reported on another big number: The non-profit Solar Foundation says there are now 174,000 people working in the solar industry. According to Brad, the solar industry has created so many jobs, from solar panel manufacture to installation, that it now employs just about as many people as the coal industry does.

Plumer’s comparison pits Solar Foundation‘s numbers against the 80,000 who work in coal mining, plus the number of people involved in coal transportation and coal power plants. Those later numbers, he notes, are based on 2006 estimates, so solar power may employ even more, as many older coal plants have closed since then.

On the face of it, this may seem like a win for solar power supporters. But Plumer also considers some of the downside.

His comparison also highlights how labor-intensive solar power is compared to other sources. He writes, “If the world wants to avoid drastic global warming, we’ll need to replace dirtier sources of energy, like coal, with cleaner sources – solar, wind, nuclear, say – and fast. And the higher cost of solar is a real impediment to doing so.”

However, the coal industry has a lot of indirect costs – health and environmental impacts – not typically folded into such comparisons. “These costs don’t show up on electricity bills. Instead, they’re dumped on the broader public, in the former of shorter lives or higher hospital bills,” he writes.

The Money is Starting to Flood In

That jobs number may be fuel for political debates, too. The Solar Foundation reports that the tiny solar industry has provided 1.3 percent of all the new jobs created in the U.S. since the 2013 census.

That’s a small number – but it could indicate that the solar industry’s clout is growing just as fast as its share of energy production.

All of this means that there are impediments as well as opportunities in touting solar power as a remedy for the environmental shortcomings of older sources like coal.

Nonetheless, cost parity combined with the rising benefit on the employment and secondary economic impact fronts means renewable energies like solar now have something else going for them.

This much is clear: Renewable prospects are intensifying fast. And that means something else.

In future issues, I’ll be discussing the investments in this portion of the sector as the money begins to flood in.

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  1. Mario J. Martinez
    January 20th, 2015 at 16:47 | #1

    Interesting essay and chronologie of the solar development.
    May I add that solar delvelopment will
    Cohabit with conventional sources of energy supply all along the yourney in the next 50 years and beyond.
    Needles to say I just jot down here the great need for solar-wind power storage so any future to come breakthroughs or disruptive innovation.
    In the meantime, the hybrid approach is the most promising alternative, macro-wise, at our disposal.

  2. Mike O’Rourke
    January 20th, 2015 at 17:03 | #2

    If solar takes the same number of workers to produce .2 % of US energy as coal which produces 39% of US energy that says it all – solar is not even close to competitive. Compare it the nuclear – forget it!

  3. January 20th, 2015 at 17:34 | #3

    Kent: I keep watching as more and more of my neighbors put hideous panels all over their brand new homes. I doubt their owners care much about the loss of curb appeal. But more than that, I wonder if any have given thought to the hundreds of extra holes that the panels have required through their hopefully waterproof roofs. I’m waiting to start hearing the horror stories of how much money it cost to remove the panels in order to patch a roof leak or two and what it costs to remove the entire system in order to re-roof the house. Add in the inevitable deterioration in panel performance (some say the panels only last 12-15 years) and I think grid parity is farther off than you think.

  4. Glen Bosarge
    January 21st, 2015 at 05:37 | #4

    What is the best company to buy stock in for the future

  5. Steve N.
    January 21st, 2015 at 13:49 | #5

    Kent: Regarding alternative energy, what about nuclear power plants worldwide and the opportunity in Uranium?

  6. Allan W.
    January 24th, 2015 at 12:35 | #6

    The future of Solar is gold. According to Tony Seba an expert in disruptive technologies and many other areas has said in 30 years or less all needed power will be produced from solar alone. All cars will be electric powered. Check him out

  7. Allan W.
    January 24th, 2015 at 12:37 | #7

    Solar has continues to become less expensive and vastly improved over the last 3 decades, nuclear power has continues to increase in cost as the years have gone by.

  8. Garry
    January 30th, 2015 at 17:44 | #8

    The western u.s. Should be pushing this ,we have the sunshine let’s use this God given free source.

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