On Sunday, TraderMark at Fund My Mutual Fund opined that the solar sector was headed for a shakeout. Well, he didn’t quite opine that…he reported the major points from Greentech Media’s Solar Market Outlook event. The main conclusion is that it’s not only 2008 that’s going to be a tough year for solar, but rather the next 3 to 4 years as the industry matures and consolidates. TraderMark argues that the solar sector will follow a boom-bust-echo path; we’re currently just exiting boom times (read: incredibly rich valuations times) and the whole think is about to go bust, but if you can pick up future winners on the cheap during this period echo will do great for you. On Wednesday, Jim Fraser at The Energy Blog reported that the end might be in sight for silicon shortage in the solar industry. The timing will be unfortunate for many PV hopefuls. Just as solar PV manufacturers get a break on the cost side, the revenue end will likely give as too much supply forces prices down. Where should you look for good long-term investments? Low manufacturing costs and healthy balance sheets to come out ahead in the consolidation game. On Thursday, The Economist discussed the transition process from geek to green. Do high-profile techies have what it takes to be good at running successful cleantech and alt energy firms? On the one hand, there is a decidedly ‘tech’ feel to a whole side of the business. On the other hand, the forces driving much of the momentum in cleantech and alt energy are vastly different from those driving the technology industry. Mind you, the internet sector did broadly follow a boom-bust-echo development path (see first item), so maybe experience navigating this sort of environment is what will really matter as the sector matures. On Thursday, David M. Herszenhorn at the the NYT discussed the passing by the House of a bill to extend tax credits and other incentives to the alternative energy sector. Concerns about those credits are partly responsible for the current volatility experienced by alt energy stocks, most notably solar. It seems ridiculous to me to argue that Big Oil needs tax breaks to operate profitably. Alternative energy, on the other hand, still needs a push in the near term, although it holds tremendous promises in the long run from nearly any point of view. Given demands by industry actors to end political uncertainty soon so as to not stunt growth, separating the two issues would probably be a more pragmatic road to take at this point. After all, old pork-channeling habits die hard, so in its current form don’t expect that bill to go down without a fight from the White House. On Friday, Gerard Wynn at Reuters informed us that banks are in talks to shape U.S. climate policy. This news comes just a few weeks after a coalition of major US banks claimed they were going to place more weight on climate risks in lending. Are these two pieces of news coincidental? Not at all. As the entities that will be running the trading show in carbon markets, big banks have every incentive to ensure that the system is structured in a way that will maximize value for them and their shareholders. Of course there are those who are cynical about this and claim that carbon markets will be nothing but a big money grab by big finance. I’m in the camp of those who believe that you have to be real about it, and that if everyone loses it will be years before any real climate action is taken. After all, Gordon Gekko’s famous “Greed is good” speech became famous for a reason.
