Balaji As a trader,speculator and Investor- Balaji have more than a decade of experience trading commodities, stocks and Fixed income securities including as a senior trader with Vexes capital.He also mentors or teaches investors, traders about Financial markets and provide professional training for individuals combining Institutional experience with a technical grasp of seizing market opportunity. Since leaving the Vexes capital and Newyork city,Balaji has been working as Trading coach along with presenting seminars and writing for a number of publications.

Is Solar Power a “Good” Investment?

2 min read

The idea that solar power may soon be everywhere isn’t nutty anymore. The price of solar panels has plunged more than 80 percent in the past five years and is expected to keep falling.Global output from photovaltics,panels that convert light directly into electricity, has increased 40 percent every year for the past decade. The industry is drawing more than $140 billion in annual Investment.In some places where the price of power is high, solar already is able to compete with fossil fuels on cost. But the idea, pushed by some environmental groups, that solar could soon meet the world’s energy needs seems far less likely For one thing, those big increases come on top of a tiny base — in 2011, solar accounted for only a fraction of 1% of the world’s electricity supply.There are still nights and cloudy days to deal with. Since we like our power always on, that means that cost versus coal isn’t the only hurdle — there’s figuring out how to feed a lot of intermittent power into a system meant for steady production. That could make the outlook for solar partly cloudy.

Profit Making Boom

Regardless of all these hurdles political leaders are working toward a global agreement next year in Paris on fighting climate change, there’s a lively debate about how much subsidy, if any, solar should get. Solar’s price is dropping, and many nations, led by Germany and Spain have scaled back lucrative incentives.Worldwide, installations are highest in China (including their dream of becoming a global superpower) where government want to reduce dependence on fossil fuels,In India many politicians of  BJP particularly Modi wants to make renewables more competitive  so action is happening at the state level Many Government have adopted standards for how much power should come from renewable sources the goal is 33 percent of power by 2020 up from 20 percent current reading. In my  practice, where we work with power investors, utilities, private equity funds, and independent power producers, my colleagues and I were pursuing fossil-fuel projects almost exclusively five years ago. Renewables represented less than 10 percent of our clients’ deal flow. Since then renewables deals have become our most common transactions.What’s driving the deals? New technologies that have pushed down the cost of renewables, for starters. Add to that crucial global Yield seeking investors  financing, which has multiplied due to ZIRP from G5 Central banks. Perhaps most importantly, the mindset of the energy prospector has changed. We see it in our clients; people who once chased oil and gas rights and traditional power deals are now going after solar contracts.

 
Rapid Growth

The U.S. invented solar cells but never had the determination to commercialize them. AT&T’s Bell Labs in New Jersey made the first photovoltaic cell in 1953.For decades, solar only made economic sense in satellites. Oil companies led by Exxon and Arco invested in solar panels — arrays of photovoltaic cells — following the oil crisis in 1973, then backed out when the price of crude crashed in the 1980s. Japan kept the industry alive through the 1990s, when Sharp, Kyocera and Sanyo were producing the majority of the world’s cells.Solar installations soared, and for several years Germany led the world in solar panel manufacturing.The model was copied in other countries and so many new solar panel makers sprouted up that a Price war followed and the concentration of the industry in China, where companies led by govt financing and cash from foreign investors — support that allowed them to survive a winnowing that shut many manufacturers elsewhere.Solar panels cost 60 percent less than they did just two years ago. Residential installation costs for solar panels in California now run about $4.25 per watt; in three years, says the U.S. Energy Information Administration (EIA), that number will be $2.88 per watt (we believe it could get there even sooner). Costs for utility-scale solar installations have fallen just as drastically, dropping from over $7.00 per watt to $2.50 per watt in the last five years. Total U.S. solar installations now produce 14 gigawatts of electricity, a five-fold increase from 2010. That’s equivalent to 23 billowing coal-fired power plants. Another 10 gigawatts are expected to come online in 2015 

solar-chartFINAL-01

How to Profit from it?

Simple-An average retail investors may buy solar company stocks from a speculation perspective and make sure you get paid dividends, good enough to hold the stocks for at least next couple of years this isn’t any sought of short term plays, Here we are going with boom and bust sequence that creates a speculative profits for selling at bust and buying in the middle or bottom of the boom. Similar to dot-com bubble during 1990’s, the solar boom itself is created by the same reinforcing structure- technology and appetite for replacement of classic energy system, we need to be careful at buying good companies with efficient dynamics which can sustain in the business even after the bubble is busted .

Balaji As a trader,speculator and Investor- Balaji have more than a decade of experience trading commodities, stocks and Fixed income securities including as a senior trader with Vexes capital.He also mentors or teaches investors, traders about Financial markets and provide professional training for individuals combining Institutional experience with a technical grasp of seizing market opportunity. Since leaving the Vexes capital and Newyork city,Balaji has been working as Trading coach along with presenting seminars and writing for a number of publications.

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