ABOUT BETTING ON SOLAR

Fundamentals For Solar Energy Look Great, But Companies With The Right Strategy Are Lacking
Simit Patel, December 25, 2011 (Seeking Alpha)

"…Here is a short summary…of the current situation in the solar energy market:

"...Solar ETFs have been some of the worst performing ETFs in 2011 -- which of course piques my buying interest quite a bit…[T]hese stocks could continue to go further down…[but] the underlying fundamentals have changed; concerns over peak oil and the need to transition away from fossil fuels are only growing, and players like China and Google are still viable candidates for being the "smart money" that can bring the demand to push prices higher -- demand upon which small-time players like individual investors can piggyback on…"

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"...But while solar as a sector is set to grow for years and will help the world transition away from fossil fuels, not all parts of the solar value network are the same…[T]he value network is still evolving rapidly as new technologies -- particularly those related to storage -- continue to come on to the scene…[O]ne trend that…will drive much of how the value network changes and profit opportunities are created, is the rapidly declining price of solar panels. As solar panels continue to fall in price, I suspect profit opportunities will transition to firms that specialize in installation and the development of custom solar solutions…companies that are more service-oriented and customer-relations centric rather than pure product makers."

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"And here is… why I have yet to make an investment in the solar sector. There simply isn't a company I've found that has the strategy…a stable balance sheet and competent leadership. The solar ETFs, KWT and TAN, could be viable ways of playing the entire sector, though I don't think they have the right kind of companies…in their portfolio. And so, I'm still on the sidelines when it comes to solar…"