An Unlikely Source of Dirt-Cheap Energy

April 28th, 2014
in Op Ed

by Greg Guenthner, Daily Reckoning

Solar power is celebrating a big event. The solar panel turns 60 on Friday- but this birthday celebration will be unlike any other the industry has seen so far.

I know what you're thinking...

Solar's an interesting idea. But it's nothing new. Why bet on an industry that's had a long history of over-promising and under-delivering?

Follow up:

Chimes in Rude researcher Noah Sugarman:

"You wouldn't be wrong to think that, It's not that unlimited renewable energy from the sun was ever a bad idea. The timing was just wrong. But now that's all changed - the market's ready for solar."

In the past, solar energy's high price tag meant its wide-spread usage was nothing more than a pipe dream. But now an event 60 years in the making just occurred - solar is potentially cheaper than oil and Asian liquefied-natural-gas.

Dollars per MMBTU by Energy Type

Noah explains:

"That's an absolutely violent decline in solar pricing, "While other sources of energy have fluctuated in a relatively tight range in recent years, solar just keeps getting cheaper. Best of all, this is a story that will get even more interesting down the road. As a technology, Solar will keep dropping. Fossil fuel extraction, on the other hand, will continue to become more expensive."


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We're already seeing results from the big drop in solar costs. The U.S. Solar Energy Industries Association sees more solar installations in the past 18 months than in the previous 30 years. 37,007 megawatts of solar power installations in 2013 alone drove a 35% increase in world solar power capacity.

Even more exciting - solar still sees just .17% of the overall energy market. Just imagine what will happen to solar stocks if that share is increased to as little as 5% - never mind the majority of overall energy usage.

Solar's promise has been marred for decades by high production costs that translate into pretty low outputs. Practical hurdles have limited its usage, especially in comparison to much cheaper fossil fuels. But if this is true, you're looking at the ground floor of arguably the biggest energy development in recent memory.

A solid play on this trend is the Guggenheim Solar ETF (NYSE:TAN). After fading over the past couple of months, it looks like it's ready for another run...

Guggenheim Solar ETF (NYSE:TAN), September 2013-Present









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