The Bright Future Of SunPower Corporation (SPWR), SolarCity Corp (SCTY) & First Solar, Inc. (FSLR)

It’s all about the Benjamins
I hear over and over again that solar energy is simply too expensive and too reliant on subsidies to survive, but few people know just how cheap solar electricity has become. Earlier this year, Todd Myers of the Washington Policy Center said, “The fundamental problem is it’s not economically sustainable.” The problem with that thesis is that facts about solar power get in the way.

Germany is now driven by the economical cost of solar. First Solar, Inc. (NASDAQ:FSLR) says that its cost to produce energy, which are lowest in the industry, will fall from about $0.15 per kW-hr in 2010 to about $0.075 per kW-hr in 2016. These costs are before incentives or tax benefits and will be below the cost of retail electricity in all 50 states.

Still don’t believe the numbers? First Solar, Inc. (NASDAQ:FSLR) just signed a deal to sell power from a 50 MW facility to El Paso Electric for 5.79 cents per kW-hr. That’s less than half of the 12.8 cents per kW-hr Bloomberg estimates it would cost to build a new coal plant.

Last year, SunPower Corporation (NASDAQ:SPWR) won a contract to supply power for 10.4 cents per kW-hr to Kings County, Calif. That’s about two-thirds the cost of retail electricity in the state.

As you can see, solar power is already competitive on a cost basis — which is what really matters. The biggest difference between solar power and fossil fuels right now is their cost trajectory. The cost of fossil fuels is rising and the cost of solar is dropping — fast. What other energy source can you say that for?

How to play solar now
There are three — and only three — solar companies I would consider investing in, given the landscape I’ve laid out. SunPower Corporation (NASDAQ:SPWR) is my top pick because it makes the most efficient modules and has exposure to all parts of the solar industry. First Solar, Inc. (NASDAQ:FSLR) is in the running because it has a great balance sheet and industry-leading utility scale costs. SolarCity Corp (NASDAQ:SCTY) is also worth keeping an eye on because it is the dominant residential and commercial installer in the United States.

I would stay far away from Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) and Trina, the latter of which incidentally lowered its first-quarter guidance this morning. Chinese solar is too risky to bet on.

The article Like It or Not, Solar Energy Is Here to Stay originally appeared on Fool.com and is written by Travis Hoium.

Fool contributor Travis Hoium manages an account that owns shares of SunPower. He also owns shares of SunPower and has long January 2015 $7, $5, $15, and $25 calls on SunPower. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!