COAL UP, SUN DOWN, FIGHT ON

Coal Beats Solar as Analysts Favor Peabody Energy
Christopher Martin and Jeremy van Loon, March 17, 2010 (Bloomberg News)

"Wall Street’s contribution to the debate on how to curb global warming: Buy coal, sell solar.

"Peabody Energy Corp., the biggest coal producer, is rated a “buy” by 79 percent of analysts, while 44 percent recommend First Solar Inc., the largest maker of thin-film solar panels. The Stowe Global Coal index of 38 coal producers has gained 6.5 percent in 2010, and the Bloomberg Global Leaders Solar index of 38 solar module and component makers has dropped 17 percent."

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"While investors including T. Boone Pickens and Warren Buffett are pushing cash into green technologies, the tilt toward Peabody and away from First Solar is the widest in two years. It reflects a sense that government support for reducing air pollution may be waning…Solar companies’ profitability is falling because of competition from China and cuts to state support in Germany and Spain, where about 72 percent power-producing photovoltaic panels were installed in 2008 [and panel prices are expected to fall as much as 10 percent in 2010 after dropping 30 percent in 2009].

"Peabody has rallied 9.6 percent since Feb. 12, when the benchmark coal price was $49 a ton, its lowest for 2010. First Solar is little changed. Coal is burned to make about 41 percent of power worldwide and will increase its share to 44 percent by 2030, the International Energy Agency forecast…"

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"Even with growth predicted for coal-fired power generation, global investment this year in all forms of renewable energy, including wind and biomass, will climb to between $175 billion and $200 billion from $162 billion last year…With economies in Europe and the U.S. coming out of recession, attention has focused on the costs of renewable energy. The price in the U.S. of a kilowatt-hour of power from renewable sources, enough to run a toaster for 60 minutes, is about 20 to 25 U.S. cents…[One coal] company’s cheapest coal plant makes power for 2.7 cents a kilowatt-hour [but building new coal plants is more expensive than building new solar or wind capacity]…

"Even with coal demand rising, solar photovoltaic panel sales will climb this year…Germany may install 3,000 megawatts, or about a third of the world’s total…In the Czech Republic, a country of 10 million people, about 900 megawatts of solar power will be deployed, almost matching existing U.S. installations…[R]ising global demand will help some companies weather the slump in panel prices…"