Wall Street is always looking for the next big thing. The market constantly seems to recognize a trend ahead of the general media and once the newspapers start to talk about a subject, many of the stronger public players in that field have already made significant moves. Nowhere in the renewable energy sectors has this been more apparent than with solar related stocks.
Amorphous Silicon had the largest share of the thin film market (64%) as of the end of 2005. Cadmium Telluride had 26% share of the market and is ramping up very rapidly, with Copper Indium Gallium Selenide having a 10% share of the thin film market, with great potential, but is the least understood and least developed of the three materials.
In 2005, solar stocks outperformed the average NASDAQ stock by an amazingly wide margin -- almost 100 fold greater. Certainly the solar sector of the market was the place to be in 2005.
* Average Gain for US solar stocks in 2005 = +134%
* NASDAQ Gain in 2005 = +1.37%
Last year, 2006, was the beginning of a significant ramp up in solar financings and solar IPO's and more importantly, it marked the beginning of serious financial resources coming into the solar industry, which will allow the industry to continue and even expand its current robust growth.
In fact, 2006 could be called, "The Year of the Solar IPO," with IPO companies coming from all points on the globe -- U.S., Europe and China. I see this surge in IPO's continuing in 2007 and beyond. This industry has incredible growth ahead of it and will need adequate funding to fuel its growth.
With all of this booming growth and activity in 2005 and 2006, what is left for the current year?
I think that 2007 may mark a very significant chapter in the history of the renewable energy industry -- the beginning of the transition from the current dominant technology, crystalline silicon, to the "next generation" photovoltaic (PV) technology -- thin film technologies. This year may well be the "Year of Thin Film Photovoltaics."
Thin film technologies are various technologies that have been underdevelopment for the past 15 to 20 years and utilize very small amounts of specialized materials to create solar panels. These thin film panels have the potential to produce power significantly cheaper than today's standard silicon technology.
The panels are usually made in the form of a monolithic piece of glass, upon which various thin films are deposited. A number of firms are also working on depositing various thin film materials on flexible substrates, such as stainless steel or plastic.
Types of Thin Film Technology
There are primarily three types of thin film technologies that have each been researched for over 15 years and are the current focus of the solar industry: Amorphous Silicon (a-Si); Cadmium Telluride (CdTe); Copper Indium Gallium Selenide (CIGS).
Amorphous Silicon had the largest share of the thin film market (64%) as of the end of 2005. It has been researched for the longest period of time, may be the best understood material of the three and has been commercial for the longest. Cadmium Telluride had 26% share of the market and is ramping up very rapidly, with Copper Indium Gallium Selenide having a 10% share of the thin film market, with great potential, but is the least understood and least developed of the three materials.
Advantages of thin film technologies over conventional crystalline silicon include:
* Lower cost of production than conventional silicon processes.
* Lower manufacturing facility cost per watt -- CapEx.
* Uses far less material, than the amount used in standard silicon cells.
* Lower energy payback -- amount of time until the product produces more energy than was utilized in its manufacture.
* Produces more useable power per rated watt.
* Superior performance in hot and overcast climates.
* Ability to be attractively integrated into buildings -- Building Integrated Photovoltaics (BIPV).
* Produces the lowest cost power.
Thin Film Publicly Traded Stocks
There are a number of public companies that are working in the area of photovoltaic thin films. But the majority of these companies do not have thin film as their primary business. As a result, I will divide them into two groups:
Thin Film Pure Plays. These are companies whose primary business is thin film photovoltaics
Thin Film Related Companies. These are companies that have a division in thin film, an investment in a thin film development company or internal R&D focused on thin film.
* Ascent Solar Technologies, Inc. -- NASDAQ -- symbol ASTI
Material used: Copper Indium Gallium Selenide (CIG)
* First Solar, Inc. - NASDAQ -- symbol FSLR
Material used: Cadmium Telluride (CdTe)
* Daystar Technologies, Inc. -- NASDAQ -- symbol DSTI
Material used: Copper Indium Gallium Selenide (CIGS)
* Power Film, Inc. -- London AIM Exchange -- symbol PFLM-L
Material used: Amorphous Silicon (a-Si)
Thin Film Related Companies:
* Applied Materials, NASDAQ -- AMAT
* Energy Conversion Devices, NASDAQ -- ENER
* Ersol Solar Energy AG, Frankfurt Exchange -- ES6-F
* Q-Cells, Frankfurt Exchange -- QCE-F
* Solon AG Fuer Solartechnik, Frankfurt Exchange -- SOO1-F
* Suntech, NYSE -- STP
These are not all the companies in the world working on thin film technologies. However, they are some of the public companies that have made significant comments in their annual reports concerning their work in thin film and consider it to be a key part of their future expansion strategy.
As a number of thin film technologies mature, I believe we will see many additional thin film pure plays, like First Solar (FSLR) going public to raise the necessary funding to expand their technology to address the booming worldwide PV marketplace. The future of distributed solar electric is rapidly approaching and it is called Thin Film Photovoltaics.
J. Peter Lynch has worked, for 30 years as a Wall Street analyst, an independent equity analyst and private investor, and a merchant banker in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977 and is regarded as an expert in this area. He is currently a financial and technology consultant to a number of companies. He can be reached via e-mail at Solarjpl@aol.com.