Solar, Utility Integration

Investing in Solar Niche Markets

Mr. Lynch, with all the volatility in solar stocks you have certainly been correct in your comments about solar stocks “not being for the faint of heart.” Boy, you were not kidding, this is certainly a traders market. I took your advice and took profits and stepped to the side line — thanks. My question is: are there any specific areas of the solar industry that I could keep an eye out for that could be promising areas for the future? Thanks, C. Medeot — London, England.

Mr. Medeot, you’re welcome. I have been involved in the stock market for over 30 years and I have NEVER seen volatility like this, it is indeed a “traders market.” However, with that said the future of the solar industry is very bright indeed and I do see a number of market niches that I am personally keeping my eye on, which I feel will be significant areas in the future. My primary focus in these areas, at this time, is their potential for very LOW COST.

Below are examples of three areas that I think have merit and have the potential to become among the most promising sectors of the solar industry in the future. In addition and in the interest of full disclosure, I have also invested in all three example companies that I will highlight below. These are not currently public companies, but I invested in each privately knowing that at some time in the future they hope to become publicly traded companies.

1. Thin Film Technologies and Building Integrated Photovoltaics (BIPV)

The name of the game in solar at this time is, without question, lowest cost. Thin-film technologies are the current lowest cost producers and in addition to that, should be able to better weather any upcoming margin compression due to projected silicon over supplies in 2009. At the current time the only real publicly traded thin-film “pure play” company (meaning PV thin film is the only business the company is involved in) has been First Solar (FSLR). As a result, there has really been no other place for investors to place a bet on thin films. I would keep an eye out for thin-film companies that complete IPO’s over the next year or so. Once some additional thin-film companies become public, I would bet that some of the investor’s in FSLR will diversify their holdings into some of the new public thin-film companies.

Example Company: EPV Solar

EPV Solar is a low-cost thin-film producer in New Jersey. The cost of their manufacturing facility (CapEx) and the cost of their product are among the lowest in the industry. There is a section on their website, under products, describing BIPV that is very interesting and educational. I think that BIPV is a very cost effective area of solar that Wall Street is just catching on; you will be reading more and more about it this year.

2. Flexible, Light Weight Thin Film Technology

A number of companies are working on flexible, light weight, low-cost solar panels that have the potential for numerous applications where a rigid PV panel would not be applicable. One such company is Xunlight, Inc. in Toledo, Ohio.

The company’s website has plenty of information regarding the company and its technology and products. This type of product will have a number of potentially very large niches in markets around the world as the solar industry grows and expands.

3.  Unique Low Cost/High Value Hybrid Products

Sometimes a product comes along that does not quite fit into any of the industry standard classifications, but since the primary focus of the PV industry is low cost I have to include a mention of a small company with a unique product designed specifically for large commercial buildings with flat roofs — big box retailers, certain hotels, distribution buildings.

The name of the company is BrightPhase Energy, Inc. Bright Phase has a unique, patented and proprietary technology that gives a commercial building owner the ability to get THREE REVENUE STREAMS (electricity, solar heat and diffuse day light) all from a single very compact rooftop module. This unique 3 for 1 product is very cost effective, in fact, the numbers on their website (product section) show that the product could be financially viable without government subsidies.