Solar Energy - Green Chip Review

Residential Solar Installers

It's once again time to take a look at the other side of solar.

Wall Street generally gives more attention to global companies providing cells and modules, but mounting policy advantages in certain states are making regional installers increasingly attractive.

At the federal level, everyone is entitled to a 30% investment tax credit for which the $2,000 cap has been removed. And the "10 Million Solar Roofs and 10 Million Gallons of Solar Water Heating Act of 2010" bill introduced by Sen. Bernie Sanders of Vermont would offer a direct rebate of $1.75/watt for PV systems, potentially offsetting another 25% of the cost.

Combined with the solar incentives offered in 19 other states, a homeowner could only be responsible for 25% of the total cost of a photovoltaic system.

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Special Financing

My colleague Chris Nelder recently reported on new financing schemes that are also allowing easier access to rooftop solar systems for homeowners:

A different approach uses private third-party financing to front the cost of a solar PV system to end-users, who then pay it off over 15-20 years or more.

In the commercial sector, companies like Solar Power Partners (SPP) and SunRun of California assume the initial installation cost and own and operate the systems in exchange for a power purchase agreement (PPA) with the customer.

Power generated by the system is sold back to the customer, typically at or below grid rates. At the end of the PPA term, the customer can buy the system at fair market value or renew their PPA.

These types of special financing are increasing demand by allowing homeowners to install PV who otherwise wouldn't have all the capital to do so.

And there are a few publicly traded solar installers poised to take advantage of this coming demand.

A Solar Installer With a Plan

SunRun (the company mentioned in the blurb above) has emerged as the nation's leading home solar service company, thanks to its revolutionary financing model. Here's how their website describes it:

With SunRun you purchase solar electricity instead of solar panels, which means that you don't have to burn through your savings to go solar. Most people can get started for as low as $1,000 down. It also means that you'll never have to worry if — or even how — your system is making power. We'll take care of your solar system. You go think about something else.

The man who found that company is named Nat Kreamer, though you won't readily find him on the website any longer...

And that's where it gets interesting for investors.

In April of last year, Kreamer was appointed to the Board of Directors of Lonestar Capital, which is now doing business as Acro Energy Technologies (TSX: ART.V).

He was named President of the company by June with CEO Harry Fleming saying, "Nat's experience in the solar industry will be invaluable to the Company. His expertise will help strengthen our operations in California and his strategic insights will help us grow across the country this year."

I bet it will.

Remember, SunRun's customer database is probably chock-full of homeowners who have applied for financing... just waiting to have solar installed on their roofs.

Not-So-Strange Bedfellows

So they tapped that asset. A strategic alliance was signed under which "Acro Energy and SunRun will offer solar electricity service agreements to residential customers and Acro Energy will sell solar electricity facilities to SunRun as a preferred solar systems integrator."

It's a match made in heaven. Here's what the new couple had to say...

Nat Kreamer, Interim President of Acro Energy (founder of SunRun):

The ability of homeowners to finance solar electricity systems is the single biggest hurdle for the solar integration market. Offering SunRun to our customers is a competitive advantage for Acro Energy. It should help us convert a significant number of currently contracted customers, who want an affordable solar financing option, into revenue.

Lynn Jurich, SunRun President:

Our relationship with Acro Energy will allow SunRun to bring affordable solar to even more homeowners in California. Together, we look forward to growing the number of homeowners who are getting clean energy and saving money.

Acro was the fifth largest solar integrator in California within a month. They're now the fourth largest by sales volume.

Here's how the stock has done against Akeena Solar (NASDAQ: AKNS), the largest integrator in California, since the alliance:

And conditions are right for continued good performance from this installer. Panels are cheap (below $2.00 for Chinese brand), demand is high, and there are good subsidies and financing mechanisms.

In fact, Acro's January year-over-year sales grew 118% according to a release on CNBC, which attributed the growth to recent acquisitions:

In 2009, Acro Energy acquired Acro Electric, Inc, Energy Efficiency Solar, Inc, and the assets of Light Energy Systems. The combined sales of Acro Electric Inc, Energy Efficiency Solar, Inc, and Light Energy Systems grew by 118% in January 2010 compared to their sales in January 2009, based on the number of kilowatts sold.

"We have successfully integrated our California businesses and leveraged them, via organic growth, to catapult Acro to the top tier of market," said Nat Kreamer, president of Acro Energy.

"We plan to capitalize on this success and expertise by expanding into other US solar markets in the first half of 2010," added Harry Fleming, chief executive officer of Acro Energy.

As a residential solar boom gets underway, you may want to consider adding an integrator to your to solar holdings. The action isn't always in cells and modules.

Call it like you see it,

Nick

Change Coming to German Solar Industry

On July 1, the training wheels will come off Germany's world-leading solar panel industry. Will investors stay for the ride?

The feed-in tariff (FIT) that the biggest economy in Europe has used to stimulate its domestic photovoltaic (PV) market for the past decade is about to be cut by double digits. That move is partly a response to complaints from some constituents and conservative politicians, but Chancellor Angela Merkel and her center-right Bundestag (German parliament) colleagues hope to maintain market dominance despite the changes.

Here's how the drafted FIT shift breaks down:

Rooftop solar PV installations will see a subsidy cut of 16%.

Ground-based modules installed in yards and other open, non-arable patches of land will be 15% less funded by the changed FIT.

PV projects at dumps and old army bases, which along with contaminated industrial plots are called "brownfields," are set for an 11% cut.

The most dramatic shift we can expect in the second half of 2010 is a complete elimination of incentives for large solar panel arrays on arable land. State news agency Deutsche Welle reports that farmers have been crying foul about investors snapping up fertile tracts to "harvest the sunshine." MP Peter Altmaier, a leader of Angela Merkel's own Christian Democratic Union party, insists, "There must be no more panels installed on arable land."

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Aside from that apparent inclination toward a total prohibition, the expected FIT changes for H2 are just that — expected.

Don't Believe the FIT Hype

Though the catchier headline may be to say that Germany's government is yanking the rug out from under its homegrown clean energy champion, the entire point of a feed-in tariff program is to phase the industry to grid parity with its fossil-fuel counterparts.

Coal and natural-gas fired power plants generate electricity for about 20 euro cents per kilowatt-hour. Under the FIT — which is set up to pay a premium for energy generated by photovoltaic panels (the same system can be applied to other sources) — Germany has already gone from a whopping 57 euro cents (c) per kWh in 2004 down to 39c now.

It's all part of a process initiated back in 2000, when the Bundestag passed its Renewable Energy Act. "Cleantech" hadn't dawned yet, and oil was far from record highs it reached later in the decade.

So Germany was ahead of its time and has reaped the benefits of a steroid-injected clean energy economy. Berlin's goal was always to wean producers and installers off the government juice, and that's what we're seeing now.

The come-down hasn't caused the German solar industry to fall flat on its face. Rather, companies like Q-Cells — whose facilities I toured in summer 2008 — are staying on their toes.

The FIT plan will be taken up again on Friday, at which point investors will have a more certain basis for what to do with their money. In the meantime, shares of Q-Cells (Frankfurt: QCE) rose on Tuesday, February 23, a day after draft FIT changes leaked.

Q-Cells investors turned bullish after the company announced that at the end of 2009, its cash position was nearly 65% better than they anticipated.

That stockpile leads me to believe that German solar companies are padding themselves for a blow. Their dominance as producers is due to the size of the market that was created by government mandates, not the other way around.

For installers at all levels — household, commercial, and large-scale "solar farm" developers — now is the time to get capacity in place.

Q-Cells says it's sold out of panels for the first half of 2010, and analyst reports I see every day from solar power suppliers around the world (especially China) indicate that nearly all shipments are being directed to Germany to feed the frenzy. That shift in focus for the first half of 2010 is going to be one of many in the full year and years to come.

German FIT Changes Spread Far and Wide

It costs about 1 billion euros per month to subsidize new solar schemes, and relief for rate-payers must be part of the political calculation going into the finalized FIT cuts. However, the government maintains its target for 66 GW of solar power capacity by 2030 — up from 9 GW today.

Gordon Johnson of Hapoalim Securities thinks the less-than 3 GW per year growth that the 2030 target implies could set solar stock buyers up for a fall, since analysts have based estimates on higher annual increases.

The fact of the matter is that even German companies aren't putting their eggs in one basket these days. If anything, the government has done German solar panel producers the favor of forcing diversification.

The Desertec initiative to get 15% of Europe's electricity from North Africa by 2050 is being led by ten German companies, and in mid-February, Desertec CEO Paul van Son contrasted that undertaking with Germany's rural unrest over solar.

"There's a vast amount of sunshine" in North African countries like Morocco, Tunisia, and Algeria, points out van Son, "and there are vast amounts of space."

Germany is big, but of course it's much more fertile than the Sahara, and no one will tell you it's sunny.

On the other hand, Italy is making long strides toward grid parity between its solar capacity and fossil-fuel plants by virtue of its Mediterranean climate. Look for that country to draw some of the salespeople out of Germany after July.

The point is that international solar power companies — from polysilicon providers up to module makers —all have their heads on a swivel right now. Average sales price (ASP) will be a concern as any national subsidy cut directly affects the money being pumped in from the top.

Long-term solar power bulls are in a good position here, as some stocks and funds like the Claymore/MAC Global Solar Index ETF (NYSE: TAN) appear oversold.

Here we see TAN's performance over the past six months, with a couple of my favorite technical indicators on top:

The Williams Percentage Range indicator gives a heavily oversold reading, and TAN is breaking below its lower Bollinger Band. You can see that the last time W%R was at this level, we didn't see a recovery... but reports about the German FIT were coming in unfiltered flurries at that time.

Now, we have more information, and it's reasonable for investors to look ahead at how companies will adjust to new subsidy conditions, rather than just freaking out and running for the exits.

I'll get back to you with even more complete information next week after the Bundestag session takes the FIT changes from rumor to reality.

Regards,

Sam Hopkins

International Editor

Renewable Energy Legislation

Dear Reader,

By now you know that Green Chip International Editor Sam Hopkins likes to go beyond headlines and straight to what's really making clean energy stocks tick. For him, the story isn't always what stock led a day's cleantech trades or which country put up the most wind turbines in a year. Last week, he brought you an exclusive interview with Iceland's energy authority chief.

Today, Sam is drawing attention to some unsung heroes of the worldwide renewable energy rollout: lawyers.

Good investing,

Jeff Siegel

Publisher, Green Chip Stocks

—————

Why Lawyers are Essential to Cleantech Success

Justice may be blind, but lawyers always have to see clearly. And recently, I've met some legal eagles whose sights are fixed squarely on cleantech.

One Israeli-American law firm is focused specifically on assisting companies that can use both Israel and the United States as bases for global success. ZAG/S&W stands for Zisman, Aharoni, Gayer & Ady Kaplan & Co./Sullivan & Worcester LLP, hence the initials. There's no abbreviation in the joint practice's binational operations, though. Water Resource Development and Renewable Energy & Energy Efficiency each have teams of attorneys tasked with finding opportunities here in the U.S. and in the Middle East's leading economy.

Now, to understand the pivotal role that attorneys play in fostering the kinds of Green Chip Stocks that give this publication its name, we need to explore a sort of paradox in the way the clean energy economy is developing...

The global green energy rollout is both high-tech and grimy as heck.

We have NASDAQ-listed power switch companies like Fairchild Semiconductor (NASDAQ: FCS) and blue-collar job machines like Denmark's Vestas Wind Systems (COP: VWS). Intense work is being done right now to connect new renewable power generation to electricity customers and to get next-level fuels into vehicle tanks. Blowtorches are joining pipes and tiny soldering irons are creating data pathways for all of the heavy-duty stuff to run more efficiently.

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For me to really register what's fueling all the anonymous-looking share price charts and market projections I see, I pay periodic visits to fabrication plants and sites where clean energy capacity is being installed.

But there are plenty of people in suits making this all happen, too. Lawyers go through everything with a fine-toothed comb to bring startups to public listings, and there's plenty of elbow grease and heavy lifting on their end.

Heavy Legal Lifting to Bring Cleantech to Market

On Capitol Hill during last fall's ACORE Phase II Renewable Energy Policy Forum, I sat in a room full of well-dressed listeners who were ready to pounce on new legislation as the basis for business. Simply put, everyone was there to find out more about how the U.S. renewable energy market is growing with government help.

I even ran into Matthew Lesko, the guy in the question mark suit who beams on TV about how to get free government money to start a company, go to school, or learn to throw left-handed... He was there for hot tips for readers. And I was there for you readers, who expressed appreciation for a look behind the scenes.

At the Retech conference a couple of weeks back, I took the opportunity to follow up on that policy pow-wow with Jeffrey Karp, a partner in ZAG/S&W's Washington office. He deals with environmental and natural resource issues specifically, steering clients through new and pending legislation like the EPA's finalized Renewable Fuel Standard (RFS2).

Congressman Ed Markey (D-MA) told us at the Phase II Policy Forum that his goal is to create a "Darwinian, paranoia-inducing marketplace" through legislation. For that sort of competitive environment to come to full flower, the participants need to know the rules.

Jeffrey and his partners have to stay on top of cap-and-trade developments, RFS2, and the SEC's recent guidelines on how public companies report the money they spend on climate change risk mitigation.

As these groups of attorneys move, they hack through the legal brush and blaze trails for technology licensing deals, joint ventures, venture capital money, and mergers and acquisitions to pass through.

Take Plasson, Ltd., an Israeli company that makes plastic pipe fittings. Plasson's 1000+ products are used in wastewater processing, mining offtake, and for routing telecommunication cables. Plasson used ZAG/S&W's consulting to snap up a 77% stake in Industrial Pipe Fittings LLC, which is based in Texas.

Or take Madgal, the 30 year-old Israeli company bringing computerized high-end smart faucet designs from the Middle East, where water scarcity is a fact of life and bone of geopolitical contention, to showrooms, bathrooms, and kitchens in the U.S.

Karp's team is making sure that Madgal has its i's dotted and t's crossed so it can get down to business. That means entering into partnerships with local companies to expand Madgal's market reach.

The Sun is Shining on Israeli Cleantech

Many of the companies Jeffrey Karp and his colleagues are involved with are based on kibbutzim. A kibbutz is a type of cooperative settlement unique to Israel, and each one of the nearly 300 of these communities scattered around Israel has a central way of generating money. For some it's dairy (Yotvata); for others it's sandals (Teva/Naot). And now for a growing number, cleantech is the key to prosperity and a high communal standard of living.

Although the kibbutz is essentially a socialistic concept, capitalist tendencies are driving more and more kibbutz-based companies like Madgal to seek out export opportunities.

Others — like Kibbutz Ketura's Arava Power Company — expect to benefit from Israel's own national clean power goals. Located in Israel's arid Negev Desert, very near the border with Jordan, APC has signed up neighboring communities for a photovoltaic network totaling 100 megawatts. I profiled Arava Power back in 2007, long before their recent financing field day.

German engineering conglomerate Siemens has stepped in with $15 million for Arava Power, which amounts to a 40% stake. The Israeli government is encouraging the development of utility-scale solar power at home, though its goal of 10% clean energy in electricity by 2020 falls far short of European and many U.S. state targets.

Even given diminutive national goals, Arava's attorneys obtained the licensing they needed to gain the lead in the domestic market. Feed-in tariffs are coming into play in Israel to stimulate wind energy and small PV power plant development.

And the fact of the matter is that solar is not new to Israel. 95% of the homes in Israel have rooftop solar thermal water heaters, which have been mandatory since 1980. As Eco Energy Ltd. head Dr. Amit Mor told us at Retech, those existing installations are far more basic than what Israeli solar power engineers can do today.

Israel now has a number of technology incubators, where budding biotech firms and clean energy power generators can find initial financing and access to resources, as well as attention from venture capitalists and legal shepherds like ZAG/S&W.

The big dogs — like Ormat Industries, parent of Ormat Technologies (NYSE: ORA) — are developing their own solar arrays to explore utility-scale possibilities to boot.

From idea to market, there are plenty of pitfalls that can be avoided with a good map. Attorneys are the ones doing recon for the Israeli companies on their way toward public listings. Since we're tracking them now, we'll be sure to bring you the latest.

Regards,

Sam Hopkins

China's Clean Energy Progress

Every so often, the Green Chip team is asked to provide insight about the cleantech industry to national magazines and other media outlets. Next month, Nick Hodge will be featured in SFO Magazine, covering China's growing presence in the space. Here's a sneak peek at his article before it hits the stands.

Enjoy,

Jeff Siegel
Managing Editor

The United States is rarely referred to as a silver-medal nation. But that's exactly what we're becoming with respect to the race for clean energy.

There's been progress on domestic soil to be sure. Installed wind capacity has grown over 900% since 2000. Solar installations have kept similar pace.

But there's an unexpected place where clean technology is being deployed at a more rapid rate. A place often condemned for its perverse pollution; a country often decried as the world's biggest emitter of greenhouse gases (GHGs): China.

Enter the Dragon

As the U.S. continues its polarized debate around cleantech policy — diddling with implementing some type of carbon pricing, a federal renewable energy standard (RES), and a way to streamline large projects — the Chinese have quickly lept to a leadership position in the industry.

In 2006, they passed an RES calling for renewables to comprise 15% of the energy mix by 2020. But Shang Xiaoqiang, vice chairman of the country's National Development and Reform Commission (NDRC), recently said capacity could grow to 20% by that time.

Studies also show that by 2020, China could actually install three times its 30 gigawatt (GW) wind target. And they'll meet their 2020 solar target of 1.8 GW next year.

The U.S. hasn't even set national targets, so meeting or beating them is a moot point.

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And when it comes to government investment, the Chinese have long pulled away. Our Recovery Act called for $80 billion to be invested in the sector. China has announced $217 billion for the next five years, and could invest upward of $650 billion in the next decade.

One recent report claimed they're spending $12 million per hour ensuring they emerge on top.

For the U.S., 'losing' could quickly turn into 'lost.' Fortunately for investors, stock exchanges are border agnostic.

The Cleantech Arms Race

In a very real way, democracy is hindering the States' deployment of cleantech assets. The infamous Cape Wind project has been stymied because it'll "ruin the view." Massive utility-scale solar installations in southwestern states have been delayed on behalf of reptiles.

And that's without mentioning the see-sawing in Congress as lobbyists on both sides of the issue wield their well-funded swords. A recent Reuters report succinctly noted:

Beijing's top leaders have made clear their intention to have their nation dominate this new industry, up and down the value ladder. And in their quest for the prize, they are not burdened by concerns facing their Western counterparts — such as the impact of wind turbines on landscapes, higher energy prices for consumers, or investor returns.

Our leaders' inaction has not only delayed development of what could be a trillion-dollar domestic market — not to mention energy independence — but they've forced companies within that market to tread water by providing inconsistent incentives and policy guidance.

The evidence of this is abundant. But the issue really came to the fore when a Chinese company, A-Power Generation (NASDAQ: APWR), was selected to provide turbine parts for a $1.5 billion U.S. stimulus-funded wind farm in Texas.

Politicians on both sides cried foul before A-Power announced it would build a manufacturing facility in the U.S. that will employ 1,000 workers while cranking out parts for wind turbines.

So it's not only difficult for U.S. companies to get ahead, it's increasingly easier for China-based cleantech companies to row their boats ashore.

Made by China

China's laser-like focus on cleantech has thrust them squarely into a global leadership position.

Last year, Chinese companies produced about 50% of the world's solar cells. And that's likely to rise to 70% in the next few years, as costs continue to fall more quickly there than in Europe or the U.S. In fact, firms based in Germany — the cradle of the modern solar industry — have been finding it's cheaper to buy from the Chinese than it is to make their own solar cells.

And they're not just ramping up production; solar installations are also on the upswing. China will meet its 2020 target of 1.8 GW next year, and Greentech Media is forecasting installed solar capacity could actually hit 10 GW in the next decade, implying a 450% expansion.

Wind energy is witnessing a similar scenario. The Global Wind Energy Council (GWEC) has reported that China "doubled its entire installed capacity each year since 2005." Last year, they became the largest wind market in the world, installing 13 GW compared to 10.5 GW in Europe and 9.9 GW in the U.S.

That growth is largely due to a booming Chinese wind manufacturing market. Producers like Sinovel and Goldwind are already top ten globally, and could soon threaten companies like GE and Suzlon that currently inhabit the top five.

The Chinese cleantech production model is so robust that it's now being exported around the globe, in much the same way that other Asian countries have taken automobile manufacturing abroad.

A-Power — the company awarded part of a U.S. stimulus-induced wind project — is already setting up manufacturing on U.S. soil. Yingli Green Energy (NYSE: YGE) has announced plans to build a solar manufacturing facility on U.S. Turf; so has Suntech Power (NYSE: STP).

And, in the most revelatory example of all, the Wall Street Journal has reported that "Duke Energy Corp.(NYSE: DUK) is in talks with State Grid Corp., China's biggest electricity distributor, over a joint venture that may involve cooperating on power transmission lines in the U.S."

While we were distracted by health care, Tea Parties, and executive pay, China quickly pounced on what is proving to be the most vital and valuable industry of the 21^st century. They've mastered the production side and, as the Duke example highlights, they're moving on transmission as well.

Our energy assets of tomorrow may not be made in China, but it looks like they'll made by China. And, as you can imagine, Chinese cleantech success is also apparent in public markets.

Rated to Outperform

Here in the States, First Solar (NASDAQ: FSLR) is by far the most recognizable solar name. The company still boasts one of the lowest costs per watt and highest efficiencies for thin film solar. But First Solar, too, is losing ground as Chinese firms continue making inroads. The stock is down nearly $200 from its 2008 high over $300.

The same holds true for Germany's Q-Cells, one of the largest solar cell producers in the world. The growing Chinese advantage in both cost and scale have led to a huge discrepancy in prices for stocks that share the same peer group, as companies like Trina Solar (NYSE: TSL) and Canadian Solar (NASDAQ: CSIQ) have pulled investors away from traditional solar stocks.

That trend is being mirrored in the wind industry, where protectionism has forced billion-dollar development costs to remain on the balance sheets of Chinese companies. Though industry stalwarts like Vestas (COP: VWS) and Gamesa (MCE: GAM) are knocking hard on the door, failure to penetrate the Chinese market has caused investors to look elsewhere for wind-blown returns.

Most analysts and industry insiders — myself included — don't see this trend abating anytime soon. Feed-in tariff (FiT) cuts for cleantech in Europe, though a sign of industry maturation, are driving sales higher in China as installers race to buy turbines and panels at the lowest cost before subsidies are cut later this year.

And the lack of long-term policy guidance in the U.S. is forcing cleantech companies here into a holding pattern, hesitant to invest in new manufacturing capacity or asset deployment with uncertainties still rampant with respect to the tax code and incentives. With price parity still not reached, renewable energy developers sometimes don't even know if there will be an end buyer for their electricity.

China, on the other hand, passed a law last year requiring grid operators to buy all the electricity produced by renewable resources. What's more, the Chinese cost advantage is leading to rebranding, wherein a company like GE buys solar panels from a second-tier Chinese company and sells them as their own.

This is paving the way for many companies you've never heard of to emerge as global players. Yingli, JA Solar (NASDAQ: JASO), Renesola (NYSE: SOL) and others are already becoming household names. Yingli is even sponsoring this year's FIFA World Cup.

The initial public offering (IPO) market is also flooded with Chinese entrants. Blade maker HT Blade, polysilicon producer Daqo, and wafer maker JinkoSolar have all already filed.

Indeed, it looks like the global cleantech game will be dominated by Chinese players for the foreseeable future. And that's a vast departure from standard practice, where China has typically trailed European and U.S. companies in entering nascent industries.

In a recent talk at an industry conference in Washington D.C., President of GCL Solar Energy Hunter Jiang didn't mince words about his country's position. His company is now the third largest producer of polysilicon in the world. After ruminating on China's laggard position throughout modern history's industrial revolutions and commenting on how automobiles and computers were cradled elsewhere, he said, "Today we are the leader."

Call it like you see it,

Nick

P.S. Solar and wind aren't the only sectors being dominated by the Chinese... one small company is about to make a big splash in the battery arena. Its batteries are already in nearly every power tool in China, and soon they'll be in every hybrid the Middle Kingdom churns out. Some analysts — Berkshire's Charlie Munger included — say it's one of the best cleantech growth companies around. You can learn all about it in this new report.

The Rooftop Solar Market

Distributed generation of renewable energy is off to a rocky start, but it's finally making some headway.

The research side is looking good. The $28 billion request in the president's FY 2011 budget for the DOE Office of Energy Efficiency and Renewable Energy includes large increases for programs including wind, weatherization, smart grid technologies, and solar — plus $58 million for National Renewable Energy Laboratory (NREL) infrastructure and $50 million to stimulate clean energy education.

An additional $300 million would support the Advanced Research Project Agency — Energy (ARPA-E) initiative. Modeled after the DARPA program that resulted in the Internet, ARPA-E will fund the fundamental research to incubate the energy grid of the future, what Ethernet inventor Bob Metcalfe termed the Enernet.

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Grid investment is coming along well, with $75 million allocated to it in the budget request, plus $40 million toward grid storage solutions. It's a relatively paltry amount, but it should be bolstered soon by major grid reform legislation making its way through Congress.

The production side has become a bit of a buyer's market, yet manufacturers are still building new capacity in anticipation of the boom ahead. Yes, China is building more capacity in the U.S. than American companies are, but as I have argued previously, that's fortunate given the urgency of our situation. Solar PV supply is high and prices are as low as they've ever been, which is constructive for new installations.

Overall, I would say we're making progress on the hardware front. But then it's easy to throw money at hardware.

The real problems now are in finance and policy. The big up-front cost has always been the main hurdle to distributed generation (and rooftop solar in particular), but now several ways to overcome it are available.

10 Million Solar Roofs

At the federal level, we have the "10 Million Solar Roofs and 10 Million Gallons of Solar Water Heating Act of 2010" bill introduced by Sen. Bernie Sanders of Vermont, which was modeled after the California Solar Initiative (Ahnold's "Million Solar Roofs" program).

A direct rebate of $1.75/watt for PV systems and $1/watt for solar hot water would offset somewhere around a quarter of the project cost. Combined with existing 30% federal investment tax credit (ITC) and state incentives where available, it could bring the end-user's cost down to 25% of the actual retail price. The $2-3 billion price tag of the bill will be hard to swallow... but if it passes, it would be a major shot in the arm for rooftop solar.

The more interesting solutions, however, are at the local level.

PACE

Under a fairly new type of program called property assessed clean energy (PACE), local governments float bond issues secured by real property in their districts and use the proceeds to fund renewable energy and efficiency projects. The property owners then pay back the debt as special assessment included in their property tax bill over 20 years.

As an example, $12,000 in financing through the program would translate to roughly $75 a month in payments. If the property is sold, the energy systems and the tax obligation remain with it.

PACE is offered by Oakland-based Renewable Funding and has been implemented in three counties and three cities in California, including San Francisco, Los Angeles, San Diego, and Sonoma.

A statewide program expected to commence this year. San Francisco's program was approved this week and will offer $150 million in bonding capacity. Fifteen states have adopted PACE programs over the last year and a half, and interest continues to grow without discernable opposition.

Contributing to the popularity of PACE is that it's a voluntary program that only affects property owners who choose to participate, and that it applies to a wide range of measures in addition to rooftop solar.

Third-Party Financing

A different approach uses private third-party financing to front the cost of a solar PV system to end-users, who then pay it off over 15-20 years or more.

Power generated by the system is sold back to the customer, typically at or below grid rates. At the end of the PPA term, the customer can buy the system at fair market value or renew their PPA.

SPP's targets include water districts, wineries, universities, airports, and other large facilities. Their current portfolio stands at about 14 MW, which is tiny compared to a single 500-1,000 MW coal-fired plant... But I see potential for robust growth in such financing options.

Cutting the out-of-pocket expense to zero makes solar PV a no-brainer for any facility that wants to produce some of its own power and lock in fixed power prices. (If they know anything about the future of energy, they should).

The private capital behind the strategy gets a 5% annual rate of return (or better) at nearly zero risk by assuming the 30% ITC and taking ownership of a producing, hard asset.

When lines of credit shrunk or dried up altogether in the Great Credit Drought of 2008-2009, solar installation companies turned to private capital as well. Companies like Geoscape Solar of New Jersey and SolarCity of California offer financing options with zero upfront cost under PPAs and lease arrangements to the residential and small commercial market.

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FITs

Feed-in tariffs, or FITs, have proved the world's most effective incentive for rooftop solar and distributed power, typically offering customers three to four times the grid price for kilowatt-hours they generate. FITs are financed by incorporating their cost into grid power prices across the board, resulting in a very modest price increase for all customers.

The FIT in Japan was so successful that it is already being phased out.

The German FIT captured half the world market for solar modules in roughly five years, reached its target early, and is now accelerating its schedule for declining tariffs. Studies have already shown that the program has actually reduced the fully-considered costs of delivering power to the country, and Green Chip International readers have tapped companies from both inside and outside of Germany that generate earnings as German rate-payers benefit.

Spain's FIT was fully subscribed in short order, then fell victim to a federal budget shortfall as Spain descended to become the S in PIIGS — the nations at risk of sovereign default that have been rattling world markets recently.

A new FIT for the UK has just been announced which will pay 41 pence initially — as compared with a standard grid price in the 10-12 pence range — for production from residential-sized generators including PV, wind, micro-hydro, and biomass. The tariff depends on the technology and is inflation-indexed.

In the U.S., the failure of the federal government to offer a FIT has prompted states and a few cities to try creating their own equivalents. Unfortunately, it's a regulatory path fraught with peril because the Public Utility Regulatory Policies Act (PURPA) of 1978 forbids states from setting tariffs above the "avoided cost" of generation from other sources, like conventional natural gas-fired plants.

As the excellent summary by Paul Gipe explains, a new report (actually a long legal opinion) from NREL lays out two legal paths states can take.

One is to lard the tariff over and above the avoided cost with revenue from renewable energy credits (RECs), subsidies, and tax credits, which fall outside the Federal Energy Regulatory Commission's (FERC) jurisdiction.

Alternatively, in the handful of states where ownership of distribution and generation are split, utilities may offer higher tariffs for solar PV voluntarily... but the opportunities under this strategy are few.

The other practical path is for FERC to exempt generators under 20 MW from PURPA. The California Energy Commission has asked the state to seek a clarification from FERC on this point, and it seems likely that other state regulators will join that effort.

Since PURPA was written over three decades ago before the age of renewables began, this seems a reasonable fix to the problem. Rep. Jay Inslee of Washington has proposed the necessary changes to the law, but unfortunately they are tied up in the Waxman-Markey climate change bill, which is going nowhere fast.

The pieces are now — or will soon be — in place to enable an explosion of distributed renewable energy in the U.S. It has the technology, the financial mechanisms, the public sentiment, and the right cost of entry: zero. It will not be stymied by musty regulations, utility opposition, or even the recalcitrance of banks.

Solar manufacturers, smart grid players, progressive but risk-averse capital, and most of all the public stand to benefit handsomely.

Until next time,

Chris

Spain's Solar Power Market Meets Morocco

Today, I want to expand on Spain's role in the global renewable energy boom.

You'll remember that last week I detailed the role of Spanish investors and companies in Peru's clean power expansion. As it turns out, Spain is fast becoming the hub of not only a trans-Atlantic but also a trans-Mediterranean green energy economy.

Spain's investment in South America is nothing to sneeze at, and neither are its results. Latin Business Chronicle reports that Spanish lender BBVA (NYSE: BBV) is banking on expansion of its Western Hemisphere operations to keep it growing. The bank upped its income from countries like Colombia, Chile, and even Venezuela, helping to offset weakness back in Spain where the recession has hit construction and other industries hard.

While at home the going is still tough for Spain's #2 bank (and really any bank that isn't boosting earnings by cannibalizing its own recommendations), BBVA's overseas outposts provide a glimmer of hope about future earnings for execs and investors.

For the Spanish renewable energy industry, there's a market much closer to home that we expect to provide megawatts worth of opportunities in the next few years.

I'm talking about Morocco.

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More Energy for the Land of the Moors

Morocco lies just across the Strait of Gibraltar from Spain, but it's a world away economically. Spain's economy is over 19 times the size of Morocco's, and because the industrial base is so much stronger on the Iberian Peninsula (also including Portugal), Spain consumes 10 times the amount of power that Morocco does.

The only reason Spain doesn't eat up the same proportion of power as its GDP would suggest is that Morocco's energy intensity (usage per unit of GDP) is highly inefficient.

Despite the current disparities between the two countries — or maybe because of them — in 2010, we will see Morocco take the baton from Spain in solar power generation plans against a backdrop of previous Spanish strength in the sector.

Over the past several years, the Spanish government in Madrid stimulated the global market for solar power modules and components with attractive subsidies. The goal with such incentives is to guarantee residential and commercial solar power customers that they won't hemorrhage money from high-cost installation and panel prices. Instead, feed-in tariff (FIT) plans for solar PV in Spain and Germany, and for wind energy in Denmark, effectively bring clean power technology down to coal or natgas prices.

In 2008, Spain saw solar power capacity jump by 380% over 2007 as the national subsidy quintupled, but at the end of that year Madrid hit the brakes. Spain dialed down its solar subsidy, put a limit on the amount of sun power it would subsidize (500 MW per year), and effectively gave whiplash to worldwide suppliers and module makers like Germany's Q-Cells and China's Yingli Green Energy (NYSE: YGE), who had expected a hungry Spanish solar market for years to come.

So many assumptions came crashing down in late '08, as the credit crisis shocked companies into deep job cuts, investors ran from the market's falling knife, and politicians looked for any tourniquet they could find.

Over a year after the you-know-what hit the solar panel, Morocco, which imports 95% of the energy it uses, is launching a bidding round to start building 500 MW in concentrating solar power (CSP).

Moroccan Energy Minister Amina Benkhadra announced that the first bidding round to build and supply the solar plant at Ourzazate will be held in late February, just over a month from now.

That auction could put Spain in the driver's seat as a primary producer rather than a primary consumer of solar power products.

Empty Land, Full of Promise

One downside of large-scale solar power that its detractors like to point out is just how much land a major array takes up. Yet the desert Southwest of the U.S., Spain's southern desert regions just across from Morocco, and Morocco itself possess vast, virtually uninhabitable areas where solar power plants make sense.

Though Morocco won't get to 500 MW overnight, the country's goal of drawing 38% of its power from five local solar projects will in turn draw money and technology from around the world. Japan — one place where they don't have much land to play with, let alone sun-soaked deserts — is putting up $7.4 million for photovoltaic plant in Morocco. That announcement came along with commitments to up Japanese involvement in water access and rural electrification in Morocco.

Greentech Media reports that Spanish companies Cuantum Solar, Siliken, and Fotowatio are moving into the U.S. market to offset domestic weakness, and we're sure those firms are willing to hop the ferry over to Morocco for new business, too.

Let's not forget that even though Morocco gets lumped in with the Middle East, North Africa is a distinct region with history and potential. At this week's World Economic Forum in Davos, Switzerland, Francis Beddington of emerging market investment house Insparo Capital told Reuters, "Not investing in Africa is like missing out on Japan and Germany in the 1950s, Southeast Asia in the 1980s and emerging markets in the 1990s."

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Morocco's primary industry is textiles. It won't get anywhere beyond being the European Union's poorest southern neighbor without energy. Spain has the practical and political expertise to get Morocco off the ground and even make it part of the EU's Desertec plan to draw 15% of continental electricity from North Africa by 2050. The grid linkup technology is there (high voltage direct current HVDC), and so is the resource.

You can take a peek at the future in this Desertec map from the Club of Rome:

From Brazil to Japan to Israel, Spain, and Morocco... it's time to tie all these international experiences in together for comprehensive energy development action.

Regards,

Sam Hopkins
International Editor

P.S. From February 3-5, Nick Hodge and I will be at ReTech, the premier technology conference and exhibition in Washington, D.C. There, I'll be focused on the "International Markets and Competition" track, one of six different "courses" over 5,000 attendees will follow to get updates on the state of the global industry.

I'm looking forward to catching up with old company contacts and meeting new ones, as well as getting a clear picture of how different regions and companies are adjusting to tough financial conditions to keep their clean energy progress rolling. You read my report from the ACORE Phase II Renewable Energy Policy Forum direct from Capitol Hill this fall, and I expect the info from ReTech to be just as vital for investors. There are still spots open if you want to attend ReTech. Find out more here.

The Clean Energy Battle: U.S. vs. China

A word of advice to the developed world: stop making China the climate scapegoat.

I might even broaden that advice to include emulating the Middle Kingdom in some ways.

You see, the developed world is always quick to point out China's vast emissions and lackluster approach to sustainability.

I would submit to you, though, that in many ways the U.S. falling drastically behind its Asian counterpart when it comes to numerous issues involving emissions and the adoption of clean technology.

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The Emissions Thing

It's generally been the United States' position that China should commit to reducing its emissions as prerequisite to domestic action.

What we (as a nation) fail to realize, however, is that per capita (the amount of emissions per person), emissions in China are far less than in the U.S. And if that surprises you, wait 'til you see these other comparisons...

Both China and the U.S. have set emissions goals for 2020:

The U.S. has proposed a 17% cut in emissions from 2005 levels
China has proposed a 40% to 45% reduction in carbon intensity (per person) from 2005 levels

The World Resources Institute has said those two efforts would have about the same outcome.

But here's the kicker: China's goal is official policy. Ours is simply a goal announced by the White House, though the EPA now has the authority to act independently.

So who's more committed?

The Energy Thing

Last year, China got 9% of its energy from renewable resources. It has committed to raise that number to 15% by 2020. But recent reports show that if the current expansion rate continues, solar power alone could reach five or ten times the 15% target.

The most recent U.S. data comes from 2007, when we received 7% of our energy from renewable resources. A 15% by 2020 target has been passed by the House, but the Senate has yet to act. If passed, state governors could reduce the target to 12% if they increase efficiency targets.

Who's more committed? Who's making more progress?

The Efficiency Thing

Three years ago, China pledged to improve energy efficiency 20% by 2010. They are on target to reach that goal and to create a more stringent goal for 2020.

The U.S. — while committing a few billion for efficiency projects in the stimulus — has set no firm targets. The Waxman-Markey bill that has passed the House mandates a paltry 5% by 2020.

Who's more committed?

The Auto Thing

After a big U.S. push to increase Corporate Average Fuel Economy (CAFE) standards, the blanket target efficiency is 35.5 miles per gallon.

China is also beating us in this arena: in 2008, average fuel economy for new cars was reported at 36.7 miles per gallon.

The Disclaimer Thing

Of course, I can't put forth such a rosy Chinese sustainability picture without a few caveats.

The country is building coal plants at an alarming rate.

China is home to some despicable industrial practices that cause dangerous levels of chemical pollution.

And yes, they are the world's leading overall emitter of greenhouse gases, with dangerous levels of pollution still clogging numerous cities and rivers. (We'll get to their behavior in Copenhagen in another article.)

So yes, there are still serious problems in China... but we can't ignore the positive steps they're taking to address them — nor can we ignore the profit implications those steps will have for green investors.

The Reality Thing

The reality is pretty scary.

Think back a decade, to the height of dot-com expansion. Who were the leaders?

Sun Microsystems. Yahoo!. Google. eBay. Amazon. All U.S.-based companies.

Now think about the present day...

My best gains this year came from Chinese companies. And they came from multiple sectors.

Chinese solar producers are undercutting their European and American counterparts. Companies like Canadian Solar, Trina Solar, Suntech Power, and JA Solar have begun to show great strength.

The Chinese wind industry has also turned into a juggernaut, with multiple multi-gigawatt projects announced or under construction. American Superconductor (NASDAQ: AMSC) has been the way to harness those strides. And what about A-Power's (NASDAQ: APWR) monster run?

The Middle Kingdom has also become a breeding ground for battery and electric vehicle companies. Hong Kong Highpower (NASDAQ: HPJ) and China BAK Battery (NASDAQ: CBAK) have offered legendary gains this year.

It's hard to find a cleantech sector without at least one dominant Chinese player.

We should all keep this in mind as we form our investment strategies and policy opinions for next year.

China, while it still has a way to go, may not be the monster it's made out to be. Their ambitious approach thus far, coupled with their penchant to be seen favorably by the world, will make for even more gains in 2010.

Green Chip will continue to cover policy advancements and investment opportunities both here and abroad, bringing you the best information and analysis available.

Have a great holiday,

Nick

P.S. There's one Chinese company in particular that I've been keeping a very close eye on. It's a small car manufacturer, but it's getting ready to take the electric vehicle and battery market by storm. Some reports claim its technology could make this outfit bigger than Toyota in the very near future. Click here to learn all about the company, and how much investors stand to make as China greatly expands its cleantech reach.

The U.S. Army's New Solar Power Plant

It's the same U.S. military that guards Persian Gulf oil routes.

And it's now becoming a force in renewable energy's worldwide expansion.

Far from the wars in Afghanistan and Iraq, the Department of Defense is setting its own target list to achieve energy independence for the Army's biggest bases.

First, California's Fort Irwin has just begun a multi-year march toward 1,000 MW in solar energy capacity and self-sufficiency from the desert sun.

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Fort Irwin Goes Solar

No one would think you were crazy if you thought Fort Irwin — the Army's biggest training camp — was a Middle Eastern outpost. As a matter of fact, the Mojave Desert complex plays host to a sort of mini-Iraq, where hundreds of Iraqi actors are employed by DoD to accurately play out urban fighting scenarios soldiers may encounter during deployment.

Its 1000+ square miles of barren landscape also make Fort Irwin an ideal place to test aircraft, artillery, tanks. . . and even solar power.

In this map from the National Renewable Energy Lab (NREL), you can see that Fort Irwin's location smack-dab between Las Vegas and Los Angeles also puts it right in the middle of the country's highest average daily solar radiation: over 7,500 Watt-hours per square inch.

Those conditions mean you've got to drink a lot of water during training exercises, and you can bet air conditioners are whirring all day long nearly year-round. . .

So the Army commissioned Irwin Energy Security Partners — comprised of Spanish energy and infrastructure company Acciona's solar power division and Virginia-based Clark Energy Group — to reduce the drain Fort Irwin exerts on local generators like Hoover Dam, and to bring a massive power supply improvement inside the base boundaries.

The Army's International "Green Coalition"

You may not expect to see Madrid-traded Acciona (MAD: ANA) on a roster of the U.S. ground force's top energy developers. But Acciona's North American operations, which include water desalination and wind power, give the Spanish company a firm domestic base that the Pentagon sees as favorable to its own efforts. Acciona North America has its headquarters in Henderson, Nevada, just outside Las Vegas.

For the Fort Irwin solar power project, Acciona has teamed up with Clark Energy Group, an energy services company based in Arlington, Virginia, just outside D.C.

Clark is able to navigate the bureaucracy and get Acciona's concentrating solar power (CSP) technology into the military power mix.

A combination of solar thermal power and photovoltaic (PV) technology will contribute 500 MW of capacity by 2022, at a cost of about $2 billion. That should make Fort Irwin energy-independent as far as electricity is concerned.

The Wall Street Journal is reporting that Army officials have hinted at selling some of that output to area grids — especially if the solar plant is expanded to a full gigawatt under the Army's Enhanced Use Leasing (EUL) program. The EUL is the military equivalent to Public-Private Partnership (PPP) arrangements that many emerging countries and cash-strapped cities have used to launch infrastructure improvements.

Under the EUL, which is administered in Baltimore, Irwin Energy Security Partners will lease Army land to install and operate the solar power plant. The consortium will cohabitate with the military with the goal of landing more contracts as the Pentagon shifts to sustainable energy on its bases.

Out in the brightest, driest reaches of the United States, more international clean energy companies with American HQs may find themselves involved in the Defense Department's "Green Coalition."

Israel's Ormat Technologies has its main North American offices in Reno, Nevada, just north of Fort Irwin. Ormat (NYSE: ORA) is already drawing steam from the ground to drive geothermal electricity generation throughout the West, and inclusion in Army energy plans could give another shot in the arm to Ormat shares, which are now holding just above support levels at $36.

Be it Acciona, Ormat, or another company that gains the most from the American military's forays into security through clean power, one thing is certain: the U.S. is now building an international coalition on renewable energy like none we've seen before.

We'll keep you up to date on which international green companies are set to benefit.

Regards,

Sam Hopkins

International Editor

P.S. Nick Hodge and I just issued another successful recommendation to Green Chip International subscribers. That's become the norm for GCI, as our current open positions now average a 45.9% gain. As for the ones we've closed out. . . they did even better — with a 58% payday. And we're working on more winners for you as we speak. Just take a look at this GCI special report today so you don't miss the next one: Profiting from International Clean Energy Expansion.

Solar Energy Stocks

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Others haven't had it so good:

Indeed, playing cleantech's franchise player has proven to be a tough gig.

On one hand, you have a small group of Chinese companies on the brink of doubling or tripling in just two quarters.

On the other. . . a wild roller-coaster ride has ended as it usually does, back at the starting gate.

But what's stoking such discrepancies in a group of stocks that are so closely related?

A Lack of Solar Education

I'm convinced the reason for such volatility and variance is a lack of solar understanding and education that is worsened by constant misinformation from the media.

For the second group of solar stocks above, a downtrend since June doesn't make much sense at all. Granted, the summer months were sluggish. . . but there was a significant uptick in sales during August and September, with demand exceeding supply for several major producers.

That increase in demand should have acted as a bullish signal for major module producers and cell manufacturers.

Instead, it was the so-called second tier suppliers, like Trina Solar (NYSE: TSL), that saw a major jump.

That surge in demand should continue, buoyed by an already-passed 1 GW Chinese solar subsidy and new tax advantages included in the U.S. stimulus. An additional 1 GW subsidy could be passed by the central Chinese government in coming months.

What's more, that same increase in demand is allowing installers and distributors to mark up prices for panels, which could lead to higher average selling prices (ASPs) for suppliers down the road.

And finally, this increase in demand should bump up fourth quarter shipments just enough to beat expectations, which always leads to higher valuations.

This is probably all new information to you. And that's part of the problem. . .

Because you don't always get the full story by reading mainstream news and press releases. Consider these recent headlines from Wall Street Journal, Bloomberg, and the like:

"Glut Feeling: Solar Power's Got Too Much of a Good Thing"
"Solar Panel Glut Will Scorch Small Players"
"Watch Out: Solar Stocks Might Sink"
"Supply Glut Will Put the Heat on Solar Stocks"

With stories like these being pushed by stalwart financial news agencies in the face of contrary data. . . is it any wonder that investing in solar stocks has been a crapshoot?

Finding the Solar Truth

Perhaps the most revealing example is this gem of headline, run in some form by Bloomberg and many others: "German Solar Subsidies Face 'Enormous' Cut."

An 'enormous' subsidy cut in the world's largest solar market would be enough to make any investor shy away from the sector. . .

But it wasn't true.

After the story had been picked up by countless news agencies — even the AP ran it — and spooked countless investors. . . Reuters ran a piece entitled, "New German Government Won't Slash Solar Power Rates: Source." And, as they often do with controversial or misreported topics, they ran a factbox to clear everything up.

Now, if you were getting your solar information from me. . .

I would've told you from the beginning that the German solar subsidy would not be cut this year or next. And, even if it is cut in 2011, that would only lead to increased sales in 2009 and 2011 — ahead of any subsidy changes.

With respect to a solar glut. . . I've been saying that it's a possibility, but that any oversupply could be absorbed by global stimulus-funded projects. Increasing volume, even slightly, can be enough to maintain profitable margins.

A recent joint announcement by First Solar (NASDAQ: FSLR) and the Chinese government that they're building a 2 GW solar power plant is clear proof of that.

This is the problem with most financial news: There's no nuance. It's either black or white — bull or bear.

Hell might freeze over if they were bullish with caution or bearish with a silver lining.

Here at Green Chip, we take a different angle. We want to make money as much as you do. And only telling one side of the story doesn't contribute to that end.

Instead of telling you a "Supply Glut Will Put the Heat on Solar Stocks," I've been warning against a potential oversupply, while still highlighting the best investment opportunities and maintaining a bullish outlook.

I'm not saying to dismiss other news agencies and websites. I'm simply suggesting you make sure to get the entire story — every time.

Not doing so could mean missing a great investment opportunity. . . such as the six-month ~200% runs by Canadian Solar and Trina Solar.

But you wouldn't have wanted to invest in them. . . there was a massive solar glut at the time, right?

Call it like you see it,

Nick

P.S. After writing this article, I came across a new article on Barron's about the German solar subsidies. Direct quote: "The agreement does not call for immediate cuts in the so-called feed-in tariff for solar projects." Maybe they're learning.

P.P.S. I've been using this straightforward approach to lead investors to cleantech profits time and time again. . . no matter what the other outlets are claiming. I've closed 45 winners this year, including several solar stocks at a time when there was supposedly a "glut." If you're tired of the spin, and just want profitable investment information, this approach is definitely for you.

Solar Thermal Energy Companies

Siemens (NYSE: SI) is moving from country to country and from strength to strength in the renewables sector.

This month, the German engineering giant added Israeli solar-thermal company Solel Solar Systems to its Environmental Portfolio. Here, we'll see that Solel's recent progress and Siemens' green growth goals make this is a well-timed acquisition that points to further opportunities for large-cap clean energy investments.

Siemens shelled out nearly half a billion bucks ($418 million) for Solel, which has already established itself as a player in key clean energy markets.

A small California wind energy company is now developing a wind farm worth $700 million.

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Solel currently operates 750 MW worth of installed capacity at 15 solar-thermal plants around Spain. The company got a $2.6 million grant from the Spanish government in September, meant to help the company finance Spain's first solar field component plant south of Madrid. There, Solel engineers will produce solar receivers that focus the energy generated at parabolic trough power plants.

Siemens will take on that project now, gaining a leg up in the country Ernst & Young ranks in the top 5 most attractive renewable energy markets in the world.

In Spain and elsewhere, Siemens will couple Solel's high-efficiency receiver production with its own market-leading steam turbine division.

Every bit of synergy helps Siemens push beyond its own advantageous German base — Germany is the #2 overall clean energy market in the world, according to E&Y's Q4 2008 All Renewables Index.

Globally, Siemens expects to take a big bite of the rapidly growing solar-thermal market, which it says will be worth 20 billion euros by 2020.

That's a figure that big companies can't say no to.

And the greening of Siemens, GE (NYSE:GE) and other industrial giants presents us with a new category of global mega-cap shares that are gradually becoming, well, Green Chip Stocks.

When Blue Chip Stocks Go Green

Now, being an industrial behemoth with a U.S. market cap of over $87 billion, Siemens dwarfs most pure plays on renewable energy. Some investors may like the underdog feel of clean energy stocks — after all, until the past few years, the mainstream media paid little attention to anything green. . . and oil prices didn't seem to justify high-dollar acquisition strategies like the one Siemens is currently pursuing.

Siemens isn't shelling out hundreds of millions for Solel on a whim. In fact, solar isn't even the primary motivation for this green grab, if you listen to Siemens CEO Peter Loscher. When the Solel deal was announced, Loscher said, "After the rapid and highly successful expansion of our wind power business, we now want to continue this success story in the solar sector."

Indeed, Siemens is bringing in wind turbine orders at an incredible clip for a recent market entrant. . .

On October 13, Siemens announced six new wind turbine orders in North America, worth over $900 million. A quarter of the 565 MW in turbines Siemens ships will head to Ontario, which has become the hub of Canadian wind energy market momentum. Wind-blown states like Wyoming, Oklahoma, and California (the nation's top renewable energy market), will get the rest.

This is big, and this is real. We've heard fair criticism of multinational firms that engage in "greenwashing," which means they put a ton of public relations money into magnifying relatively small moves towards sustainability. With emissions reductions mandates now being developed in national capitals ahead of the Copenhagen Climate Conference (COP-15) in December, even those baby steps by blue chips will evolve into long strides. So on one hand, Coca-Cola won't necessarily become a "green" company, but Atlanta executives will have to reevaluate their industrial logic like never before.

Siemens, on the other hand, is fusing its own in-house research and resources with valuable startups like Solel. Solar-thermal plant designers will now be able to source steam turbines and receivers from one company, which is huge. Easier procurement means economies of scale are achieved more quickly, costs come down, and more drawing-board plans move into the range of reality.

We've been keeping you up to date on the state of renewable energy finance throughout the credit crisis, and M&A is a major piece of the puzzle for keeping clean energy on track to provide more capacity and enable investors to profit (Wall Street-traded Siemens shares are up 67% in the past six months).

Rest assured, there's plenty more on the way when it comes to top-down industrial stimulus for clean energy stocks.

Regards,

Sam Hopkins

P.S. You've read about the evolution of clean energy and sustainability in Green Chip Stocks for years now. But there's another way to tell the story, and a new film highlights another area where the green shift is taking place. You can watch the whole video, Scraphouse, online right here.

Solar Industry Tariff

Last Wednesday, the New York Times reported that companies importing solar panels to the U.S. are facing up to $70 million in unexpected tariffs.

Because solar panels have become too sophisticated to qualify for duty-free status, the U.S. Customs Agency has stated that they will be treated as electric generators - which are subject to a 2.5% duty.

Now word is, hardly anyone in the industry was even aware of the tariff until last week. I do find this hard to believe. And if they weren't aware of it, they should've been. Such an oversight seems a bit questionable to me.

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Nonetheless, unpaid duties and penalties have been piling up. But it's not just foreign solar manufacturers that are unhappy with the tariff.

The fact is, as a result of an enforced tariff, other countries could impose their own tariffs on U.S. exports. This has caused concern for some domestic manufacturers, as the U.S. has already exported more than a half billion dollars in solar panel equipment this year.

Still, imports do account for nearly half of the solar panels sold in the U.S. So it is likely that we will see foreign and domestic suppliers working together in an effort to negotiate a deal with Customs.

In the meantime, it should be noted that some foreign solar manufacturers are now moving some of their operations to the U.S. Certainly this would allow them to avoid the duty, while also enabling domestic job creation. Cutting out the heavy distribution costs (both environmental and economic) also serves as a bonus.

Moving In

Back in October, 2008, German manufacturer SolarWorld AG (ETR:SWV) opened a solar cell manufacturing plant in Hillsboro, OR. That facility is expected to reach a 500 megawatt capacity by 2011.

And just this past May, Chinese manufacturer Suntech Power (NYSE:STP) announced its plans to establish manufacturing in the U.S.

CEO, Dr. Zhengrong Shi said. . .

"We believe in the outstanding long-term prospects of the solar energy market in the United States, and we will continue to invest in our ability to meet a substantial portion of that potential growth through in-market manufacturing. A number of favorable developments have led us to this decision, including the dramatic growth in utility demand for large-scale wholesale solar projects, the increasing number of states with incentive programs for customer-owned systems and the federal government's recent stimulus package, all of which will drive steady, long-term growth in demand."

According to Reuters, it looks like Suntech will set up shop in either Arizona or Texas.

Still, even with domestic manufacturing credits and the call for more domestic job creation, there's no disputing the fact that China's own tax breaks and labor costs have enabled Chinese manufacturers to cut prices nearly in half.

And while Suntech is building manufacturing in the United States, Dr. Zhengrong said in an interview that in an effort to build market share, his company is actually selling panels on the U.S. market for less than the cost of materials, assembly and shipping.

It's hard to believe that less than a decade ago, solar was cast aside as nothing more than a pipe dream or toy for the wealthy and eccentric.

Yet here we are today, dealing with an industry that's now so lucrative and growing so fast, our heads are spinning with costly tariffs and cut-throat competition.

How times have changed!

So what are your thoughts on all of this?

Should a tariff be enforced?

Can the U.S. effectively compete and create jobs?

I certainly don't have the answers to these questions. But I look forward to reading your responses.

To a new way of life, my friends. . .and a new generation of wealth

Jeff

Buy, Sell, or Hold: First Solar and the Power Revolution

Welcome to the Green Chip Review Weekend Edition — our insights from the week in everything renewable energy and cleantech, as well as links to our most-read Green Chip Review and sister publication articles.

Dear Reader,

If you haven't had a chance to read any of Steve Christ's stuff. . . you're missing out. He's the managing editor of our sister site, Wealth Daily, offering his expertise on real estate and biotech markets. But this week, he has his sights on First Solar, so I thought I'd pass it along.

Good Investing,

—Nick

Buy, Sell, or Hold: First Solar and the Power Revolution

Given the recent decline in shares of solar power stocks, the solar doom and gloomers just can't help themselves these days.

They've come out of the woodwork with their scary tales of impending woe.

In fact, the chorus from these folks turned downright cloudy in August after analysts from Jeffries & Co. downgraded the entire solar sector amid new pricing fears.

"We expect rapid growth in solar volumes," Jeffries said in a note on August 21, "but a downward pricing spiral and lack of discipline around capital deployment leave us cautious on cell and module manufacturers."

Those dark warnings sent shares of nearly every company in the sector into an immediate tailspin, including shares of First Solar stock, which Jefferies cut to from a hold from a buy.

However, as my old pal Nick Hodge said to me on the morning of the news, the Jefferies call was a bit over the top. "It was," the green guru said, "completely unwarranted."

That has given investors with a time frame longer than it takes to eat a sandwich yet another opportunity to invest in one of the few true growth sectors, including in well-run U.S. companies like First Solar Inc.

As for the industry itself, it appears the anti-solar crowd's fears aren't warranted either.

In that regard, consider the following recent developments within the industry that will undoubtedly help to boost future sales:

On August 13,the U.S. government announced a program to award $2.3 billion in tax credits to manufacturers of advanced energy equipment. Authorized by the February stimulus bill, this new provides tax credits to manufacturers who produce clean energy equipment.

On July 30, the Energy Department announced it is making up to $30 billion in loan guarantees available for renewable energy and electric grid modernization projects. The government-backed authority should help boost lending capital for renewable and other clean-energy technology projects, which has dried up with the financial recession.

On top of that, when it comes to renewable energy, let's just say the industry also has more than a few friends in high places, including Energy Secretary Steven Chu. An actual Nobel Prize-winning scientist, Chu is one of solar power's biggest supporters.

In fact, according to Chu, the administration's new goal is to double renewable electricity generation over the next three years. "To achieve that goal," Chu said, "we need to accelerate renewable project development by ensuring access to capital for advanced technology projects."

That means the government will be there to help push these new technologies forward - now and in the future - by whatever means necessary.

Of course, that's not to say that the solar power industry hasn't had its share of problems lately. It has. The industry has definitely been hurt by excess capacity, tight credit, and a bloated inventory of panels that iSuppli predicts will not end until 2012.

On top of that, there is a supply glut of polysilicon that has hurt the industry's earnings and margins this year.

Even still, given the combination of eventual improvements in the technology and favorable government policies both here and abroad, solar power as a long-term investment is one whose time has definitely arrived. . . all doom and gloom aside.

And in this free six-page report, The Wealth Advisory Research Team has broken down the one of the most promising solar power giants, answering the question on every investor's mind these days. . .

Is First Solar Stock (NASDAQ: FSLR) a Buy, Sell or Hold?

In this free report, Wealth Daily subscribers will receive:

The results from The Wealth Advisory's proprietary scoring model
A buy, sell, or hold recommendation
A 12-month Price Target, along with a current Stop/Loss
A technical and fundamental analysis of the company's share price
And much more. . .

To receive a free download of this report and our Buy, Sell or Hold recommendation for First Solar Inc. (NASDAQ: FSLR), click here.

I hope you enjoy your free First Solar report. I'll be publishing many more of these in the weeks to come. . .

Your bargain-hunting analyst,

Steve Christ, Investment Director

The Wealth Advisory

P.S. In case you missed any of the recent top stories from Green Chip Review and our sister publications, we've included them here:

Water Infrastructure Stocks: Flows of Profits Under Your Nose
Energy & Capital Editor Nick Hodge digs through the archives to prove why investing in water infrastructure stocks is always a good idea.

The Tipping Point is Now: How You Can Take Advantage of the Cleantech Revolution
Over $200 billion worth of "stimulus money" has already been allocated to this industry. . . five times bigger than the tech explosion of the '90s, we'll tell you about the cleantech boom on the horizon — and how you can still make lots of money.

Solar Stocks 2010: "The Worst is Already Over" for Top Solar PV Stocks
Editor Sam Hopkins points out why it's a danger for your portfolio to only keep a short-sighted view of solar power stocks. . .

A Meeting of the Bigwigs: What You Need to Know about the Upcoming COP-15 Summit
Some of the world's most formidable leaders are attending a meeting in Denmark this December, including the very same Silicon Valley investment firms that brought you Google, Cisco, and Amazon. . . and we reveal how you can get in on what the insiders will discuss at this historic meeting.

Romania Wind Energy: A New 600 MW Wind Farm In Romania
With about half of the wind farm expected to come online in 2010, Editor Jeff Siegel talks about how this particular wind farm is likely to be the largest onshore wind project in Europe.

Nanosolar's New Solar Technology: New Modules Could Be the Cheapest in the World
Green Chip Review Editor Chris Nelder reviews the latest announcements from thin-film solar manufacturer Nanosolar on their groundbreaking technology and its potential to print the cheapest solar cells in the world.

Green Stocks: Taiwan's UMC on Dow Jones Sustainability Index
Green Chip Editor Sam Hopkins tells readers about Taiwan's United Microelectronics. . . it's not a clean energy company, but it is a top-tier sustainable public company.

Nanosolar's New Solar Technology

There was a very exciting announcement in the world of energy this week, and I've been taking a hard look at it.

No, it wasn't the Tiber field find by BP. Although peak oil deniers seized on the discovery as validation of their argument that technology will continue to make vast new reserves of oil accessible and solve the peak oil problem, the hype was typically overblown. It reminded me of the initial excitement over the Jack field in 2006, which is east of the Tiber field and part of the same Lower Tertiary trend in deepwater Gulf of Mexico.

Perhaps I'll write on Tiber when there is more hard information about it, but on the basis of the very scant data currently available, I would speculate that first oil from it might be produced in 10 years, at a cost in the low billions of dollars, and that it might achieve a maximum flow rate of 200,000 - 300,000 barrels per day (bpd) some years later.

The Economist Calls it "The Fifth Fuel"...

After uranium, coal, gas, and oil...

And there's one company that has a monopoly on it.

Giant banks like Citigroup, Credit Suisse, and Goldman Sachs... are all investing in it.

But this report is about to blow the lid off "The Fifth Fuel" story... And how investors can buy the company that makes it for less than $1.00.

The share price will easily double - or triple - as word gets out.

In other words, in the context of the peak oil problem, where we're worried losing 4 mbpd of oil production capacity each year starting somewhere around 2012, a discovery like Tiber is a good thing. . . but it's hardly a solution. We'd need to continually make similar discoveries roughly once a month in order to significantly change the global supply curve, and that simply isn't happening.

Rather, what had me excited was an announcement from Nanosolar that it was finally ending its "quiet period" after seven years of development, and had completed a new solar panel assembly plant near Berlin. The plant is fully automated using state-of-the-art equipment, and can reportedly sustain a production rate of one panel every 10 seconds, or 640 MW (megawatts) a year if operated 24/7.

The company claims to be churning out 1 million solar cells (about 1 MW) per month now, including production from its San Jose, California, plant which opened earlier this year and is expected to eventually reach 430-MW capacity. When both plants are operating at capacity, Nanosolar would be getting close to thin-film king First Solar's (NASDAQ: FSLR) manufacturing capacity, which is expected to reach 1,189 MW by the end of the year.

Nanosolar has taken a few hits in the press for keeping the wraps on its technology for so long. Founded in 2002, it gained early notoriety for raising a $150 million startup war chest — which rose to $500 million last year — before publicly divulging any real details about its technology, its strategy, or its anticipated production capability. The company is still privately held (much to the dismay of your editors here at Green Chip Stocks!).

Now we have an idea why the company was so careful to play close to the chest. . . and why their unveiling is truly a big deal.

Groundbreaking Technology

I first became aware of Nanosolar in late 2005, when a couple of their engineers gave a dog-and-pony show of their technology to the solar company where I was working at the time. I was immediately impressed by their visionary approach of "printing" solar material using a printing-press technology, which had the potential to achieve enormous savings in manufacturing cost.

But there were some problems to be solved first, like how to deposit a nice even coat only one-micron thick of their CIGS (Copper-Indium-Gallium-Selenium) "solar ink" on the substrate, and to do so at high speed, while still producing cells that were electrically matched so they could be wired together into high-efficiency panels.

There were also uncertainties about whether they should try to produce something revolutionary — like giant solar wrappers that could cover a bus or a building — or more evolutionary, like traditional rectangular modules that could be mounted using the same hardware as standard silicon modules.

Now, it appears they have solved those problems, tested their modules thoroughly, and gotten everything approved by UL, the International Electrotechnical Commission, and other regulatory agencies.

Here are a few of the advantages that Nanosolar's technology has over other types of photovoltaics.

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Instead of using glass as a substrate, like First Solar and other thin film manufacturers do, Nanosolar uses aluminum foil. This has three advantages: One, foil is much cheaper (one or two cents per square foot and mil thickness). Two, it enables them to make the cells in a "roll-to-roll" process, turning a roll of foil into a roll of 50,000 cells in one continuous loop. (Check out their video to see their process in action.) Three, the end result is very lightweight and adaptable to many applications.
Nanosolar may be able to produce its modules more cheaply than any other manufacturer.

Until now, First Solar's module manufacturing cost has been the lowest in the industry, at about 87 cents per watt. Nanosolar has not yet announced its manufacturing cost or module pricing because it is only targeting utility-scale projects where the price is customarily undisclosed. (At this time, the company does not have a product for the retail market, but reports that one is in development.) But in an e-mail response to my inquiry, Nanosolar CEO Martin Roscheisen stated that his company is "planning to demonstrate that our capital efficiency is three times as good as First Solar's."

"Capital efficiency" is a broader metric than cost per watt, including the cost of building a fabrication plant and other costs. As recently as last year, Nanosolar believed it could potentially deliver product to the market at 1/10th the cost of traditional silicon, and build physical plants with roughly 1/10th the capital. I did not receive a direct answer on whether this is still their claimed. But it does seem plausible that Nanosolar will be the cheapest manufacturer in the industry.

The efficiency of Nanosolar's cells is now the highest in the thin-film industry. The National Renewable Energy Laboratory has independently verified that Nanosolar's cells can convert a maximum of 16.4% of the solar energy hitting them into electricity. When the cells are sorted and matched and turned into modules, Nanosolar's median efficiency is higher than 11%, just edging out First Solar's average efficiency of 10.9%. By comparison, traditional silicon modules are about 16% efficient, and hybrid modules like those from SunPower (NASDAQ: SPWRA), are 19.3% efficient — but both types cost more than twice as much as thin-film modules.
Nanosolar has incorporated several important innovations in the design of their Nanosolar Utility Panel^TM modules.

With their solar foil hermetically sealed between two sheets of tempered glass, their modules are mechanically stronger, more durable, and more lightweight than other thin-film modules, so they can be made in larger sizes and eliminate the need for bulky aluminum frames. They claim their modules are able to span 1.7 times the distance between rails that First Solar's modules can, reducing the need for mounting rails by 41% and significantly reducing the installation labor. Their thin profile also allows the company to ship more than three times as many kilowatts-worth in a shipping container as First Solar can, reducing shipping costs.

Nanosolar's panels can carry six to seven Amps of current, compared with one Amp for First Solar's panels, which minimizes resistive losses and puts them on par with silicon modules. Consequently, the panels can be strung together in much longer strings before hitting the inverter's voltage input limit. This can reduce the need for cables running back to the inverter — a significant part of the balance-of-system costs — by as much as 73%, and allows arrays as long as 64 meters (versus a 12-meter maximum for First Solar), further reducing installation and cabling costs. The panels are also designed and certified to handle a system voltage of 1500V — 50% higher than the industry standard.

Finally, the modules have an electrical connector on the edge of the module, rather than inside the back of the module, so only a short cable between modules is needed to make the electrical strings. This reduces the labor cost of interconnection by 85%, according to independent third-party testing. Having personally spent many an hour crawling around under arrays fiddling with the wires (and occasionally making costly mistakes in the process), I can tell you this is a terrific innovation.

In total, Nansolar believes the advantages of its module design will bring the balance-of-system costs for their installations in line with that of traditional high-efficiency silicon modules.

A Very Promising Future

Now, you might be wondering why I'd spend this week's column talking about a company that isn't publicly traded. The answer is simple: Nanosolar's technology could be a game-changer for solar PV, pushing the industry ever closer to the point where watt-hours generated from solar are as cheap — or cheaper — than those from coal. Its production process also offers the tantalizing possibility of churning out solar cells almost as easily as we print newspapers.

As the company matures and increases the consistency and rate of its output, and its product cost becomes more fully-known, the rest of the world will get a glimpse of just how effective solar power can be in addressing our energy challenge. With a reported $4.1 billion backlog of orders to fulfill (outside the U.S.), a strong balance sheet, and a bright future ahead, Nanosolar is emerging as a serious player. . . and they haven't even started on the retail market, let alone groundbreaking applications beyond rectangular rail-mounted modules.

In time, maybe we'll even get a chance to jump in on an IPO, and ride the next big wave of technological evolution in solar.

Until next time,

Chris

P.S. While you can't invest in Nanosolar just yet, there are plenty of available solar plays turning profits for investors. In fact, Nick's readers at the Alternative Energy Speculator are finding ample opportunity for profit. Of the nearly 40 winners they've closed so far this year, 17 of them have been from solar companies. And that doesn't include the open winners in his portfolio! Click here to see how Nick is closing more than a winner per week and what his next move will be.

Solar Stocks 2010

I don't consider myself a big Billy Joel fan, but I've had some classic lyrics stuck in my head at the office lately. . .

You may be right.

I may be crazy.

That's what I wanted to say to solar power market analysts at investment bank Jefferies & Company, who took a machete to their estimates in the same clean energy sector on August 21.

Investors to Gain 171% as Canadian Province Pulls the Plug on Coal and Oil

As you read this, British Columbia is forcing its coal/oil power industry out of business.

While funneling over $30 billion to a new generation of companies to fill the void.

One in particular is about to nearly triple its market capitalization off a single hydro project!

Don't wait to read about it in the Wall Street Journal. Get the name and ticker symbol right now.

As a listed firm, Jefferies Group (NYSE:JEF) has enjoyed an impressive share-price appreciation of 184% in the six months from March to September. I won't doubt that investors assigned that premium for a reason.

Yet, the logic behind their downgrades of no fewer than eight solar power stocks seemed rash.

PV sector observers at Jefferies cited a downward pricing spiral and overproduction in China as reason enough for pessimism across the board. They said they even factored in lower production costs at solar module manufacturers around the world that could pad margins, and that the forecast looked bleak. That mass downgrade spooked investors, and many fled their positions.

My colleagues and I here at GCR thought the hatchet approach to solar power stocks that Jefferies took was short-sighted.

"They may be right. . . for now," we said. "But what about in 2010?"

It's true that solar panel prices have dropped by 50% this year, as economies around the world wobbled. And capacity utilization has been estimated at as low as 25%, with manufacturers holding over 100 days' worth of inventory they would rather move from shelves to rooftops.

Still, billions of stimulus dollars are ready to be doled out well into 2010 in Germany, China, the United States, and other countries among the world's top current and developing solar markets.

Nevertheless, to paraphrase the piano man, Jefferies & Co. may have been right — and solar bulls may all have been crazy.

On Tuesday, September 8, we saw who had all their marbles when Arizona's First Solar (NASDAQ:FSLR) announced a deal with the Chinese government to build a 2,000 MW solar power plant in Inner Mongolia. Jefferies & Co.'s oversupply scenario now looks more like an overreaction.

First Solar Proves Big Project Power

I've seen Inner Mongolia for myself. The capital city of Hohhot is made up of rows of huge identical housing blocks, stretching across the barren landscape like a Las Vegas made of Legos.

Its remoteness isn't an issue as far as the Chinese government is concerned: for decades, they've been moving people from the crowded east to the area where First Solar will operate a 2 GW operation.

And just as migration is a process, First Solar's plan to provide power to some three million homes in the autonomous region of Inner Mongolia won't play out right away. . . but instead over the ten years leading up to 2019.

You might see that as painfully slow. . . or as sustained business that will keep revenue flowing. First Solar will provide thin-film PV products and also kick-start local production to give the American company a low-cost manufacturing base for Asian endeavors.

At least in the case of First Solar, Jefferies only dropped it to a "hold." So if you stayed put, you didn't miss the nearly 16% upside FSLR has delivered in just the first two trading days of this week.

What about Trina Solar (NYSE:TSL), a Chinese solar ADR that Jefferies didn't touch? They didn't get the 2 GW go-ahead in their own backyard, so do they see clouds covering their profit prospects a year from now?

Trina CFO Terry Wang says no.

"The Worst is Already Over"

"The worst is already over," Wang said this week in Beijing, referring to the PV market. He even gave a tempered time frame to allow for inventories to dust off the cobwebs for more big deals to come through. The U.S. and Chinese solar power sectors "can wake up in the fourth quarter" of this year, "but a full recovery is likely to have to wait until the second quarter of next year."

That's just around the corner, and any investor's periscope should be peering into Q2 2010 right now.

Suntech Power (NYSE:STP), another China-based solar player, isn't even waiting that long. STP has restored its 2009 shipment goal after lowering it not long ago. "Maybe about a month ago the markets were still slower than we would have liked, but as of the past month — and this has been led principally by Germany — we have seen the market pick up," Chief Strategy Officer Steven Chan said in early September.

Germany is a key market where Jefferies pointed to uncertainty in government incentive packages as a potential major drag on global PV company profits.

Suntech's Chan echoes Piper Jaffray's PV sector analysis. Jaffray, unlike Jefferies, is saying fears about Germany's feed-in tariff are overblown. Household installations are now cheaper than ever — meaning more business will come with recovery — and India's 20- GW solar power goal brings another major developing market in with China as a driver of PV market growth.

Again, I may be a card short of a full deck, but I'm not going around spooking investors out of winning positions just because the current numbers look sour. Analysts ignore the power of stimulus-fed megadeals at your risk, not just their own.

We will continue to do our best to give you the long view of what you can expect and where you should invest.

Regards,

Sam Hopkins

Editor's Note: It's not winter yet, but ministries of finance, environment, and energy from around the world are already preparing for December's COP-15 talks in Copenhagen. It's being called "a deal on the economic structure of the planet." Click here to learn more about how to stake your claim.

Solar Power Stocks

This past Friday, while the market was barreling north, thanks to the obligatory positive remarks made by Ben Bernanke (who didn't see that one coming?), an analyst from Jefferies & Co. issued downgrades on a number of solar stocks.

Needless to say, the sheep followed, and most solar stocks ended the day in the red.

While there are certainly issues still plaguing the solar market, one reason given for these downgrades is a bit questionable. That reason being, "end markets are not ready to support the levels of volume production being planned for 2010."

Essentially, in an effort to counter lower average selling prices, many solar companies are dependent upon heavy volume. But to assume that end markets are not ready to support levels of future volume production is not a safe assumption to make. At least not with so much stimulus money and muscle backing increased solar integration in both China and the United States.

Granted, since much of this solar support has either just started or is set to start shortly, it's difficult to quantify. The fact is technically, the effect of this government support is still an "unknown."

Sure, we can predict how it'll affect the market. . . But when you make a prediction, isn't that really like making a guess? And when it comes to making investment decisions, who wants to just guess when you have current, objective data right in front of your face?

Yes, $117 million of the stimulus has been set aside for solar. But most of that money hasn't even started to funnel through the system yet. So, do we disregard that funding, although we know it's a lock — but just hasn't traveled from point A to point B yet?

Or do we figure into the equation the result of this funding, before it actually gets to where it needs to go? Moreover, do we figure into the equation the tax credit extensions that take us through 2016, or an increased demand coming as a result of lower pricing?

Based on how this market has unfolded over the past five years, this can actually be a tough call to make.

"The # 1 Oil Play in the Country"

With the rest of the nation in recession, one state is enjoying a real live oil boom.

It's all happening in North Dakota, where the Bakken -- a massive oil formation -- has already become a major force in our domestic energy picture.

And now, geologists tell us, we may be looking at a "second Bakken"... one that could easily double the Bakken's 4.3 billion barrels of recoverable oil.

Read on to learn more about what's being called "the #1 oil play in the country"... and the profit-making stocks behind it.

What If?

We've never been comfortable with completely disregarding the "what ifs." After all, the "what ifs" are what made most Green Chip investors get into the renewable energy market to begin with.

What if oil prices climb above $60 a barrel?

Done!

What if climate change becomes a launching pad for the integration of renewable energy?

Done!

What if we deplete all of our fossil fuel resources?

Between now and 2025, it is likely we will see the peak of every single one of our finite fuel resources.

You can read more about that here.

The point is, when it comes to renewable energy, you can't always disregard those "what ifs" and expect to make any money.

Especially when you throw China's energy mess into the mix.

What if China. . .

Let's look at the numbers.

According to the State Grid Corp. of China (the largest electric power transmission and distribution company in the world):

China's power demand is expected to more than double from 3.4 trillion kilowatt-hours in 2008 to approximately 7.7 trillion kilowatt-hours in 2020.
Installed power generating capacity is expected to increase from 793 gigawatts in 2008 to 1,600 gigawatts in 2020.
Installed capacity of clean energy will account for about 35% of the total installed capacity in 2020. Today, it represents about 10 percent if you include nuclear, about 8 percent if you exclude nuclear.

So how is China going to facilitate a 25% growth in clean energy capacity?

Well, some of this will come from China's new solar initiatives. These include:

The Ministry of Finance and Ministry of Science and Technology's Golden Sun solar subsidy
National Development and Reform Committee's (NDRC) feed-in tariff
Ministry of Finance and Ministry of Science and Technology's Building Integrated Photovoltaics subsidy

About a month ago, guidance was given on the Golden Sun subsidy. It will be capped at 640 MW, which works out to 20 MW per Chinese province.

Separate from that is the NDRC's feed-in tariff. And while the specifics aren't due out until Q4, it's expected the tariff will cover 1.5 GW of solar installations through 2011.

Then there's the 20RMB-per-watt subsidy for building integrated photovoltaics, which is expected to cover 500 MW through 2011.

In total, these subsidies will cover 2.6 GW of new solar through 2011.

This kind of stuff is not irrelevant, and in our opinion, should not be disregarded when analyzing the ability of end markets to support levels of volume production planned for 2010.

The fact is pricing will continue to fall, production will continue to increase (instigated by government support and continued through increased consumer demand, as a result of decreasing prices), and the long-term sustainability of the solar industry will be validated through technological innovations and the holy grail of grid parity — which many believe is only about six to seven years away.

This is the future, my friends. And those who disregard solar because of random downgrades and herd mentality will miss out on one of the greatest investment opportunities of the 21stcentury.

To a new way of life, and a new generation of wealth. . .

Jeff

Suntech Power Stock

The most impressive solar eclipse in China this week wasn't the one Beijing residents waited so long to see. . .

It was the solar stock market rally, where Chinese shares tripled the Dow's record pace.

Capital city dwellers came out to behold the longest total solar eclipse the Middle Kingdom has seen since 1814. Alas, the sky was too cloudy.

As I and anyone else who's visited Beijing during this time of year can tell you, you don't get a lot of blue-sky days.

But even though the eye could only strain so much through the haze to see the once-in-a-lifetime celestial wonder, a slew of Chinese and international investors got the treat they wanted from the Chinese sun.

And interestingly enough, skywatchers in Shanghai — home of the country's main stock exchange — had a clear view of the natural solar phenomenon.

Chinese Solar Stocks Shine Brighter

Let's take just one mainland Chinese solar stock as an example. Here, we see American Depositary Receipt (ADR) shares of Suntech Power Holdings Co., Ltd. (NYSE:STP) in blue vs. the Dow in red:

After lagging behind the industrial benchmark for months, STP has absolutely crushed the blue chip index recently.

To find out why, let's start with the bigger market picture. The Dow is above 9000 for the first time since January. That's great for bulls, but it doesn't make a lot of sense.

A positive earnings surprise in the midst of a major economic lull is something like the day the school bully stays home sick.

It's a nice break from the normal shakedowns, and your step may lighten, but you know in the back of your mind that you'll have to cough up more lunch money as soon as the bully returns to the playground.

Wall Street estimates have been scraping bottom on firms from the most speculative over-the-counter shares, all the way up to blue chips. So, "better than horrible" earnings were all the market needed to get a rise out of buyers.

Look at the gap up in STP shares on Tuesday! Some other force must have been at work. . .

And indeed it was: The Chinese government announced a plan to chase the darkness away.

It's like getting a piece of the automobile market back in 1908.

And not just Ford either. We're talking about the market as a whole. Oil, rubber tires, road construction... the whole nine yards!

Click here to learn more.

The Golden Sun Project

China unveiled a multi-ministry solar subsidy package on Tuesday that will inject billions into China's solar power industry while pushing towards new national renewable energy targets.

With a three-pronged approach, China's central government will spur the creation of up to 2.6 gigawatts of new solar power capacity through 2011. By that time. . .

The Golden Sun solar subsidy, from the ministries of Finance and Science & Technology, will subsidize 640 MW of solar photovoltaic (PV) installations across the country. . .
The Ministry of Housing and Urban/Rural Construction will administer a 500 MW-subsidy package for BIPV (building-integrated PV). . .
And the National Development and Reform Commission (NDRC) will manage a feed-in tariff to support up to 1.5 GW in new PV installations that will sell energy back to grid utilities.

Local market observers are also expecting a new renewable generation target from the NDRC and National Energy Administration.

The NDRC's Energy Research Institute forecasts an increase in China's 2020 solar capacity goal from 1,800 MW to 10,000 MW, or even more!

State-run newspaper China Daily reports that NDRC officials want to match the European Union and its "20x20" moonshot, by which 20% of electricity capacity will come from renewable resources by 2020.

Right now, China officially has its sights set on 15% by 2020.

"Personally, I think we could reach the target of having renewable sources make up 20 percent of total energy consumption," the NDRC's international ambassador Zhang Xiaoqiang said recently.

And even though China Daily tends to make China look good, this new optimism is far from fluff.

Next to the premium that investors are delivering to stocks like Suntech, perhaps the biggest bet on China's solar power progress is coming from Washington.

U.S. Cleantech Moves Closer to China

On July 15, the U.S. and China told the world about new plans to create a high-tech energy research center that would incubate jointly developed technology while lowering trade barriers.

The first estimate of how much it will take to establish a top-notch lab complex with dual headquarters in both countries is $15 million.

But that's chump change compared to the billions it will take to establish grid-connected solar power in China and expand additional off-grid generation into the hinterlands.

Beijing will subsidize up to 70% of independent solar power projects in unconnected remote areas, official CCTV reports.

Leapfrogging thermal (coal-fired) energy in undeveloped regions will help ensure that more of China's skies stay blue and, more importantly for investors, that new solar customers will chip away at China's excess domestic capacity.

More than 95% of the solar cells produced in China are currently sold abroad.

With Golden Sun and other new initiatives, China's solar power producers will have a more robust local market to add to their revenue sources abroad.

We'll keep you up to date with the latest in Chinese policy and market moves.

Regards,

Sam Hopkins

International Editor

P.S. Green Chip International readers have already closed out gains of 42% and 32% in separate Chinese solar power stocks, and we're sitting on one more that's up 34% in just two weeks! Don't miss the next one. . . Join GCI today and get our market-beating research advantage.

Japanese Solar Power Investments

Japan's renewable energy market is at a crossroads.

Japanese installed wind power capacity actually dropped from March 2008 through the same month this year, after an underwhelming increase in 2007.

New regulations are partly to blame, since the government now requires wind turbines to meet the same safety standards as tall buildings — despite wholly different surroundings.

Overall, the world's #2 economy ranks a woeful #20 in the latest Ernst & Young Renewable Energy Attractiveness Index. For wind power specifically, it's even lower down the ladder, despite being the world's fourth-heaviest greenhouse gas (GHG) emitter and home of the Kyoto Protocol.

But in solar power, Japan ranks third in the world for installed capacity, behind only Germany and Spain. . .

And those countries adopted Japan's feed-in tariff model for stimulating their own homegrown solar sectors!

Now, with silicon prices cratering and government support for the sector increasing, we're seeing Japan become a magnet for foreign solar power investment.

Taiwan's AUO Makes a Big Bet on Japanese Solar

The government's pumping $9 billion worth of stimulus into the market, pushing demand for solar panels in Japan up for the first time since 2006.

Prime Minister Taro Aso said on June 9 that solar power and electric cars will play a key role in lifting Japan out of the economic muck and into robust growth. The PM foresees a cleantech industry worth 50 trillion yen (about $510 billion) by 2020.

He wants solar power generators installed at roughly 37,000 public schools in the next three years, a move which would keep PV production lines humming along steadily through 2012 and beyond. The total increase would boost Japanese solar production twentyfold by 2020.

Yet, Aso knows that such a rich future for Japanese solar won't be fueled solely by domestic money. . .

An Urgent National Priority

GE, Google, IBM, and Cisco have quietly invested $3 billion in a new technology that Energy Secretary Steven Chu has called an "urgent national priority."

It's all part of the emerging $2 trillion smart grid market.

And claiming your share has never been easier. Click here to learn about my three best smart grid plays.

Taiwanese technology company AU Optronics (NYSE:AUO), a maker of LCD flat-screen televisions, just announced it would take a 51% stake in M. Setek, a Japanese solar material supplier that's been around since 1978. That move is both opportunistic and optimistic, given today's silicon market conditions.

Raw material providers like M. Setek are hurting from silicon prices that have dropped sharply in the past year, from nearly $1.50 per pound to just above 50 cents today. Though current levels are closer to the 5-year baseline, the boom-bust cycle we've seen in the global economy and energy investment over the past two years has had a severely destabilizing effect on upstream firms.

In the current environment, other Asian solar material providers are issuing shares — China's ReneSola (NYSE:SOL) is selling $100 million of new stock — and tapping fresh lines of credit.

But M. Setek found a buyer in AU Optronics, and investors like it. AUO shares have gained since the $125 million private-placement deal was announced.

And AUO isn't alone — other internationally listed companies are also pouncing on Japan's stimulus-fed solar consumer surge and could expect a market premium for their efforts.

Canadian Solar to Sell Chinese-made Cells in Japan

Canadian Solar (NASDAQ:CSIQ) announced just this week that it will target 12,000 kilowatts of yearly solar cell sales in Japan from its Chinese production base.

With the government paying up to $785 per kilowatt for rooftop photovoltaic (PV) installations as part of its $9 billion rooftop solar stimulus package, CSIQ is smart to turn towards the Land of the Rising Sun.

As Nick Hodge has pointed out in recent reports from Wall Street's Renewable Energy Finance Forum, clean energy financing flows are shifting fast and furious these days.

Low silicon prices, though they hurt producers' balance sheets, are enabling governments to get more bang for their stimulus bucks (or yen), which in turn will boost sales at vertically-integrated solar power companies.

Regards,

Sam Hopkins

P.S. Nick and I work hard to keep Green Chip International readers ahead of the curve when it comes to how much money is going where, and when. As I've shown you today, many of the best plays on global green projects like Japan's massive solar stimulus are actually found on Wall Street. It couldn't be easier, or more necessary, to take advantage of a world's worth of opportunities in clean energy. GCI subscribers are sitting on current gains of 186% and 29%, with plenty of other winners already closed out for profits. Don't miss the next moneymaking opportunity. . . check out GCI today.

G20 Renewable Energy

"We have today therefore pledged to do whatever is necessary to build an inclusive, green, and sustainable recovery."

That's all the Group of Twenty said about renewable energy in its communiqué this week.

You know what, though? That one clause was plenty for us, and plenty to reinvigorate renewable energy stocks' moving forward...

By taking a holistic approach to the reform of global financial institutions and the way money moves, the G20 will ensure the flow of funds into clean energy ventures and national projects.

Just consider the direct chain reaction we've become familiar with over the past year of stock market turmoil. When jobs are lost, consumers lose confidence, and energy spending falls. And despite some impressive discipline within OPEC to lower oil output and fight declining crude prices, black gold has come down hard.

The same whirlpool of confidence goes for many energy stocks over the past year. . . But the most recent quarter of clean energy market gains foreshadows a global alternative energy infrastructure buildout.

It's exactly the kind of inclusive and sustainable recovery effort the G20 countries all agree on, and that broad consensus means profits for investors who connect the dots.

Consider the biggest news item from the G20, the tripling of the IMF's endowment to over $1 trillion. . .

Energy: the "Missing MDG"

IMF and World Bank leaders have lamented the lag in implementing wide-ranging Millennium Development Goals set by the UN for poor countries. Environmental sustainability is one of the MDGs, but that alone seems to miss the point.

Even before the bubble burst, the head of the Intergovernmental Panel on Climate Change, India's Rajendra Pachauri, said that in one region in India it would take 240 years to provide electricity access at the current rate of rural electrification. That means little or no economic connection to the outside world, and even when recovery comes to New York or New Delhi, such unconnected areas are left years behind the global rebound. So, Pachauri calls energy the "missing MDG."

Worse, in cash-strapped developing nations left in the lurch by all our Anglo-Saxon economic engineering, the recession has meant highly beneficial, community-based energy projects have been scuttled.

That will change. IMF head Dominique Strauss-Kahn was effervescent this week, beaming "the IMF is back!"

And in contrast to the IMF's role in the 90s and early this decade, the Fund should micromanage national finances less and focus on getting money to long-lasting projects with multiplier effects in jobs and economic growth. . . Clean energy projects fit the bill perfectly.

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How Would You Spend $1 Trillion?

Along with the major increase in funding that G20 leaders promised together, side discussions between Barack Obama and heads of state from China, India, Russia, and others point to a more concerted heave-ho when it comes to energy and environmental matters. That has to do not only with funding but also a convergence in principles that extends from financial regulation to power consumption.

In contrast to the Bush-era staring contest in which the U.S. would not move on such matters until China and India did, the new administration recognizes the fact of American leadership:

"If China and India with their populations had the same energy usage as the average American then we would all have melted by now," the President said at the summit.

Notwithstanding the sci-fi imagery, the performance of listed clean energy companies from China and India proves just how urgently China's firms are developing ideas and products to meet booming market demand.

The market, in turn, likes what it sees...

Just take a look at these Chinese solar stocks over the past month:

That's a trading-floor result of policy moves that have accumulated in China over the years, as the central government saw the writing on the wall and encouraged private enterprise to develop solar solutions to China's coal-fired pollution problems.

Smart energy development is not only a great way to get the economy back in gear, but it's also an insurance policy against future spirals of energy costs that can feed inflation, kill jobs, and deplete national resources.

As the financial system is strengthened and rid of its toxic assets, clean energy will emerge as top priority for targeted financing as well as a moneymaking opportunity for retail investors. The G20's commitment to fighting protectionism tells us the flow of products and trade credit will continue, enabling cross-border cooperation and investment.

This April is a wild month for Barack Obama and clean energy market observers worldwide. Just in the next week, the President has to attend a major EU-US Summit and NATO Summit, and he'll be expected to be out in front in consensus-building there just as he was in London.

It's also a busy period for banks and companies eager to tap the renewed cascade of international financial support for clean energy.

That's why I'll be at the Renewable Energy Finance Forum in Rio de Janeiro, Brazil at the end of this month. I'll be in the mix with all the listed firms, banks, and even government representatives as they create exactly the kind of deals the G20 and IMF want to kickstart.

As I listen in, I'll be passing the best opportunities along to Green Chip International subscribers from right there in Rio.

And here in the States, I'll be at the Department of Energy's EIA Energy Conference next week in D.C., getting the lowdown on U.S. energy development and how my government plans to move ahead and stimulate clean energy in this global recovery effort.

If you're going to be there, contact us through the GCS website, and the Green Chip team would be happy to meet you and chat about all the developments we're watching in energy this spring.

It's truly a historic time to be an energy investor, and the upside keeps building.

Regards,

Sam Hopkins

International Editor

P.S. - Green Chip International subscribers already know about a world's worth of clean energy opportunities. It didn't take the G20 to bring us the double-digit profits we booked in March, but we'll gladly take advantage of the political boost we know is coming from new energy spending. To learn more, click here: http://www.angelnexus.com/o/web/11539

Solar Stocks

If you needed yet another reason to pay close attention to the solar industry - this is it...

Earlier this month, First Solar (NASDAQ:FSLR) announced that by the end of this year it will have the capacity to produce more than 1 GW per year. To put that in perspective, that's the equivalent of an average-sized nuclear power plant!

Of course, unlike a nuclear power plant, First Solar's technology does not require the mining or transportation of uranium to stay operational, and it doesn't come with $31.4 billion in waste management costs. That's what has been set aside for the nuclear waste fund, according to the Nuclear Energy Institute.

Now, we put a buy out on First Solar back in November at $88.61 a share. Today the stock trades around $153. Given today's market, a 72% gain in 4 months isn't bad.

Of course, we're not about to sell this thing now. Figuring very conservatively, this stock is worth no less than $170 a share. And depending upon how quickly the stimulus money moves through the solar sector later this year, investors could be looking at a share price of around $190.

Now, I realize that most investors don't want to hear about how their tax dollars are going to be used to provide support for the solar industry - or any industry for that matter. After all, we all advocate a free-market system without government intervention.

But the fact is, when it comes to energy, there's never really been a "free market" system in place.

No Apologies for Profits

Whether its solar and wind or oil and coal - across the board, energy has long been highly subsidized.

So we make no apologies for taking full advantage of the government's latest efforts to bolster solar development in the U.S.

Now as you already know, $43 billion was set aside in the stimulus for renewable energy. But truth be told, it's the solar industry that's getting the lion's share on this one.

First off, as my colleague Nick Hodge has mentioned before, consumers can now take a 30% refund on the value of new installations. . . before state incentives.

So a $25,000 solar power system in North Carolina, for example - where there's already a 35% state credit in place - will now run about $8,750.

Consumers in North Carolina can shell out that much to the utilities in just 3 ½ years!

With that kind of payback, no one should be surprised to see homeowners rush to take advantage of these discounts on the taxpayers' dime.

There's also $6 billion dedicated to loan guarantees on new solar construction, and $5.5 billion set aside so federal buildings can increase their use of renewable energy.

According to the U.S. General Services Administration, 75% of those projects receiving funding will use solar technology.

This is huge!

But it doesn't stop there. . .

In order to facilitate those large-scale solar farms in places like California, Nevada and Arizona, the government is also coughing up billions for infrastructure upgrades that will move those solar-powered kilowatts to the grid.

So basically, the government is not only funding new solar development - but they're also guaranteeing the infrastructure necessary to move all this clean, solar-powered electricity.

The Game Changer

It couldn't be more obvious that Washington desperately wants to add solar to the nation's energy mix.

Sure, they could've done this years ago, as solar technology has been around for decades. But the truth is, it's never been able to compete with coal, nuclear or natural gas.

Until now. . .

You see, with every doubling of solar capacity, the cost of solar comes down by about 20 percent.

My friends, the government is giving the solar industry a billion-dollar shot of steroids. And as a result, new capacity is set to soar - and the cost of solar is expected to fall dramatically.

So much, in fact, that according to the Sacramento Municipal Utility District, the price of solar can be competitive within 2 years.

I'll say that again, because it's worth repeating. . .

In 2 years, solar can be competitive with coal and natural gas.

This is the game-changer, my friends. And this is what now allows the solar industry to guarantee one of the single most disruptive technologies in the history of power generation.

Now if you're currently a member of Green Chip Stocks, you're well aware of our favorite solar companies that have already started to benefit this year.

In fact, you've probably already made a few bucks in these early stages of Washington-fueled growth.

But if you're not already a member, you can get a free copy of our latest report: Profiting from the Great Solar Shakeout.

This report outlines our top solar picks for 2009 and beyond, and is free when you become a member.

Whether you think solar is the real deal, or think it's nothing but hot air, one thing is certain. . .

Thanks to the government's new-found love for solar, there are a couple of solid solar stocks that can make you a lot of money this year. So why not make it?

Click here to get your free report now.

To a new way of life, and a new generation of wealth. . .

Jeff

Dubai Renewable Energy

You know the energy world is changing when a Persian Gulf financial crisis has big renewable energy implications...

Abu Dhabi produces about 90% of the oil in the United Arab Emirates and is host to the world's first green city project, Masdar. Abu Dhabi is also an angry neighbor, since it just had to bail out heavily-indebted Dubai with $10 billion in bond purchases.

That was the biggest news of the year in the UAE, but it barely got a column in the Western press.

Dubai got itself $80 billion underwater in the past few years, leveraging itself into the stratosphere so it could build opulent manmade islands, indoor ski slopes, and the world's tallest building. It was an orgy of irresponsibility in the conservative Gulf region.

Even though it holds only about 5% of the UAE's oil, Dubai's rulers and eager entrepreneurs spent like they had an endless bounty of the commodity. They anticipated oil prices would stay high and optimism would soar higher still. Both expectations crashed in 2008.

Now, Abu Dhabi's Masdar initiative, a partnership with MIT to build a zero-carbon emissions city on the emirate's desert edge, was almost the polar opposite in terms of fossil fuel foresight. Masdar, which means "source," was launched with the goal of maximizing current oil exports and creating a prosperous future that doesn't hinge on oil wealth or even oil usage.

Masdar's supply demands already have global solar, wind, water, and cleantech firms salivating...

American solar stock First Solar (NASDAQ:FSLR) is first to bite, having been chosen to provide solar panels to Masdar's solar power plant. Other Green Chip Stocks favorites are sure to follow. Will those same companies have a fresh target in Dubai, after Abu Dhabi imposes bailout conditions that promote clean energy?

Canadian Province Says "No" to Coal...

You thought the U.S. Government was intrusive?

Right now, Canada's new "Green ATF" is closing down coal/oil power plants all over British Columbia...

While funneling over $30 billion to companies of their choosing to pick up the slack.

Find out here which company will more than double in size as coal and oil are switched off.

Dubai can't expect its next-door financial safety net to come without some conditions. As Gulf Research Center economist Eckart Woertz said early in March:

"Most likely this comes with strings attached, with a price tag. Before, Dubai was dependent on international banks. Now it's dependent on Abu Dhabi."

Masdar 2: Dubai?

The UAE, with all of its seven component monarchies, was the first major bloc of oil producers to ratify the Kyoto Protocol.

This could stem partially from a tight relationship with Japan, which is the UAE's top crude oil customer (60%) and the consumer of almost all UAE's natural gas.

But ratification and action are of course two different things, and motivation can come from many sources. In Abu Dhabi, the Masdar project opened the flow of the world's largest sovereign wealth fund, estimated at $328 billion late last year, into bottom-up renewable energy development.

The strings we'd like to see attached to the UAE central bank and Abu Dhabi's Dubai bailout are ties that bind Dubai to smart growth projects such as Masdar.

Dubai can turn from hosting glitzy sports events and branding itself as a sort of Middle Eastern Monte Carlo into a cooperative effort for sustainable regional development through negawatts.

On that note, Masdar is currently operating not as a city but as a sovereign investment firm, the Abu Dhabi Future Energy Company.

Future Energy Company CEO Sultan al-Jaber said in mid-March that project leaders and financial analysts will exercise due caution in 2009, but will still spend $15 billion on Phase 1 of the Masdar plan.

That's more than the bailout Abu Dhabi had to pony up on Dubai's behalf, but it's still only the first chunk of money it will take to make Masdar a carbon-neutral home for 40,000 people by 2016.

"2009 is an execution year for us. We will be looking for opportunities worldwide but are being cautious in finding investment opportunities. It is wait and watch now. . . how the economic downturn will be," al-Jaber says.

We'll wait and watch, too. But the energy tide in the Persian Gulf is turning steadily towards clean energy market growth, and the opportunities are mounting by the day.

Regards,

Sam Hopkins

P.S. - First Solar is an American firm, but Abu Dhabi's strong ties to Japan and worldwide reach mean the UAE's sovereign wealth will be diffused throughout the international renewable energy market. By diversifying into clean energy companies in different regions, including the Middle East, Green Chip International readers are positioned to capture Masdar project spending wherever it ends up. To learn more, check out GCI today: http://www.angelnexus.com/o/web/11403

P.P.S. - Not every country can count on a neighbor's money stockpiles to fund energy projects, and they certainly can't expect banks to finance as freely as they used to. I'm heading to the Renewable Energy Finance Forum in Brazil next month to find out just how the gears are turning these days, to make sure promising plans aren't abandoned and due diligence is back to responsible pre-bubble standards. I'll be reporting regularly from Rio and other spots in South America, but the best way for you to understand is to be right there with me. Find out about the 2nd Latin America Renewable Energy Finance Forum in Rio right here.