If you have been watching the share prices of the solar stocks, you will understand the joke (and perhaps not even laugh) that investing in these has turned many 401-K retirement funds into 201-K retirement funds. It has been a disaster and now many of these companies are not even profitable.
Don’t bother telling the solar woes to Google Inc. (NASDAQ: GOOG) and to KKR & Co. L.P. (NYSE: KKR). The two companies announced that they would invest a total of $189 million on a combined basis domestically in solar facilities. Some $94 million will be invested by Google to fund four California solar farms which are being constructed near Sacramento. KKR’s $95 million investment is said to include new unannounced projects as well as the Sacramento projects. Sharp Corporation’s Recurrent Energy is selling the existing projects.
It is easy to bash solar stocks right now because their losses have been beyond what most could conceive. Still, Warren Buffet’s MidAmerican Energy under Berkshire Hathaway Inc. (NYSE: BRK-A), NRG Energy Inc. (NYSE: NRG), and others have continued to invest. What is interesting is that it is currently one of the best times to invest in solar projects, as long as your financial lifeline is not dependent upon the margins of manufacturing the solar panels.
First Solar Inc. (NASDAQ: FSLR) might be building a large Arizona desert solar farm but the company has proven that it is far from immune to the woes of the sector. Whether or not the mandated California utility one-third renewable goal by 2020 can help is so far not helping these companies out.
The good news for solar power buyers is that there are still some financial incentives and panel prices have tanked. Europe is in austerity-hell that is keeping its solar ambitions lower and China has been flooding the market with cheap solar panels (are those knock-off solar panels?).
Google’s side-bar projects do not have to have the same return as its search business, but the Internet search giant has now committed close to $1 billion into various forms of clean energy investing. Roughly half appears to be in solar of some sort.
To show just how brutal the solar investing has been, take a look at the two key solar ETF products. The TAN Guggenheim Solar ETF (NYSE: TAN) trades at $2.71 and the 52-week trading range is $2.54 to $9.16; and the Market Vectors Solar Energy ETF (NYSE: KWT) trades at $3.89 versus a 52-week range is $3.64 to $14.33.
JON C. OGG