Jeff Siegel, a top renewable energy investor recently took time out from his very busy schedule to grant an interview with Total Solar Energy (TSE).
If you don’t know Jeff, he runs the newsletter Green Chip Stocks, an independent investment research service that focuses primarily on renewable energy and organic & natural food markets.
TSE: Hi Jeff. Thanks for your time. Can you tell me when you first got started in solar stocks?
Jeff: I had actually been an advocate of solar energy ever since I did a high-school project on it back in 1987. I just found it so fascinating that we could power our homes and our lights and our appliances with these little devices. And I found it frustrating that more attention wasn’t being paid to it.
My interest in solar never waned, and as I started working in the world of finance, I made it a point to focus on investment opportunities that would not only pay off for investors – but for the global community as well.
TSE: Given the current economic and volatile stock market situation, would it be wise to invest in solar stocks right now?
Jeff: Well, with any investment, there is always risk. That includes renewable energy. Yes, the future of solar is very bright. Going forward, solar will be a significant piece of our new energy economy. But at the end of the day, any time you invest, you are taking on some risk.
That being said, I think at this time, a lot of quality solar stocks are undervalued. Some of this is because of the euro (so many solar manufacturers are heavily exposed to the euro), some of this is because of the broader market pulling these stocks down, and some of it is because there are a lot of people that are counting solar out because of the German feed-in tariff cut. The latter makes no sense. The future of solar is NOT in Europe, but rather the U.S. and China.
I think the solar market will still struggle this year, but once we have some more clarification on China and U.S. solar support, we’re going to see the launch of one of the biggest solar bull markets ever. So those in it for the long haul, I’ve been recommending picking up some of the stronger solar stocks on those big dips. We are, however, going to have to exercise a little patience.
TSE: How would you evaluate the year 2010 for the solar industry up to now?
Jeff: Lots of irrational thinking this year. Again, there’s too much focus on Europe. Aside from a slide in the euro, long-term investors know that the payoff will come from the U.S. and China market. But until we stop focusing on tariff cuts and the misconception that there’s an oversupply of product (which is absolutely false), then the market will be quite shaky. We’ve seen that this year, and I think we’ll probably continue to see this.
TSE: Where and when to do you expect to see parity with fossil fuels? And what effect will this have on solar stocks?
Jeff: You could actually make the case that they already are. Assuming of course, you strip ALL subsidies for fossil fuels, and take into account the liquidation of natural capital associated with the production, distribution and consumption of fossil fuels.
In other words, if utilities that operated coal-fired power plants had to pay for carbon, had to pay for mercury pollution and had to pay for any other damage done to ecosystem services (things like the regulation of climate, cycling of nutrients and water, pest control, etc), solar would be significantly cheaper than coal. But what we do is use a baseline for energy costs that are simply incorrect.
Back to the real world, however, where we continue to subsidize fossil fuels and turn a blind eye to the trillions of dollars of damage done to our natural capital every year – I imagine we could see grid parity within 10 years in most parts of the world where there is a strong solar resource.
TSE: What are the major threats to the growth of the solar industry at the moment.
Jeff: Lack of leadership and support. I absolutely hate the idea of subsidizing anything. But the only way solar can compete is for it to get the same generous subsidies that the fossil fuel industries have received for years. And we need to end the debate with the naysayers.
The technology exists, the proof exists, the data is conclusive – we can power a significant portion of our world with solar. I no longer even entertain those who want to continue throwing up roadblocks. They are no more than minor bumps that I’m happy to roll over. This is going to happen. You can either be part of the solution, or you can step aside.
TSE: Do you see the UK feed-in tariff having the same effect on share prices as it did when it was introduced in Germany?
Jeff: Hard to say. Every government operates differently. Spain had a great plan, but its execution was horrible. These tariffs have to be monitored and phased out sooner than later. Otherwise, you create a bubble that’s bad for everyone.
TSE: Do you feel the US would benefit from a nationwide feed in tariff?
Jeff: Not necessarily. I think this needs to be done on a regional basis. An FIT in California, Arizona, New Mexico, Texas, Colorado, Utah – these would be great because you have such a strong solar resource in these states. But if you try to force a FIT for the whole country, you’ll get a lot of backlash, and in some areas, it probably won’t be nearly as effective.
TSE: How do you think the solar industry will look in 5 years?
Jeff: I think the leading solar companies today will be some of the biggest corporations in the world. I think the technology will be much more advanced, production costs will decrease and there will be more policy support. The costs for consumers will be much less, and I think we’ll see a lot of companies offering solar leasing programs.
TSE: Once again Jeff, thanks for your time. I certainly hope you are right.