Sunday, June 22, 2008

Solar Investing: Where Politics & Finance Come Together

That was the headline at AltEnergyStocks earlier this week:
Most solar sector watchers will remember the second half of May 2008, when the solar world collective held its breath awaiting to find out what German policy-makers were going to decide about solar subsidies in that country. All this commotion was caused by the fact that Germany, despite lacking favorable physical conditions in the form of ample sunshine, had become the world's largest solar market on the back of a very aggressive incentive program. Germany alone is in fact so critical to sales growth in the solar sector that the mere announcement of a review of the subsidy caused solar stocks to fall and analysts to issue rating cuts. In the end, German politicians decided to take it easy on subsidy cutting, to the delight of investors.

This episode brought home the fact that, while debates among pundits about when solar will reach grid parity are often very informative, this very much remains a sector that survives - and even thrives - on government support. Even when solar does reach grid parity in jurisdictions where electricity prices are elevated, large-scale deployment must still be supported by some form of state policy (e.g. net metering, transmission facilitation, coordination with dispachable supply, etc.)

The Policy Dimension: Key to Understanding Risk...MORE

We, of course, have taken Senator Simon Cameron's words to heart:

"The honest politician is one who when he is bought, will stay bought."
Our Hero
Simon Cameron

Here are our comments on the Ontario feed-in tariff, from last year:

June 26, 2007
Solar tax breaks, rebates in Canada

May 20, 2008
Canada: New rules jeopardize wind and solar projects
Never, never, in nothing great or small, large or petty, trust a politician....*

*Apologies to the spirit of the Great Man
(which is both arrogant and ironic):
" Never, never, in nothing great or small, large or petty, never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy.''

Via the Churchill Centre