So I met with a client this week who is the CFO of a solar panel company. They came on board with my company when they had just seven employees and currently have 115 on payroll.
During our discussion, I asked him candidly about investing in solar power. He said that he has done very well over the past few years, but explained how the market has plateaued. He talked about the socially conscious consumers who ponied up tens of thousands of dollars for panel systems in the past. He went on to discuss that the costs for these comprehensive systems have not come down and affordability now is far more difficult. He stressed that the industry needs to take less profit per transaction and evolve into a more volume-based business model.
In 2003, plasma televisions came out and they were awesome. I'll never forget going to a good friend's house and his father had a 50" Pioneer Elite hanging on the wall. I looked the item up online and it was $9,999. Now, that current model is about $2,800 and is a far more advances product. If the solar power sector can adjust their costs and pass those savings to consumers, the industry will certainly thrive. However, in times of national layoffs and plunging investment portfolios, do you think this industry will thrive targeting residential accounts or will the commercial accounts be enough to keep them afloat without federal funding?
1 comment:
I think you have to look at it from a different perspective. You can't JUST look at it as an industry as a whole, but company by company. Certain companies with small back logs, no financing, and nothing to differentiate from the competition are going to have a hard time through this crisis.
Evergreen, on the other hand, has 3 Billion in backlog orders - and it's newest facility in Devans, MA is at 100% production capacity... it can't even accept new orders until a new plant is opened. That's because they have a product that's the cheapest of it's kind. Running at 100% capacity with 3B in orders for the next five years should keep ESLR afloat.
In regards to federal funding, while they aren't getting cash up front per se - they are getting huge tax incentives, which will help bring their costs down to par with other forms of renewable energy. In addition, one of the few benefits of Obama Bin Laden as president is that he is a huge proponent of solar and wind, and that means 4-8 years of the most powerful person in the world supporting the industry.
That's it I'm done.
(PS it's about smart portfolio management. I unloaded personal positions in ESLR at $5/share, and will reload again today when it dips sub $3 again)
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