2008: The Year of Solar

February 19, 2008

By Jim Woods and Paul Carton

No matter where you look, alternative energy is the topic du jour. Driven by the economics of record-high crude oil, the spotlight is shifting to non-traditional energy sources, particularly solar.

But while solar stocks were some of the biggest gainers for much of last year, recently the segment has taken big hits -- with several key leaders such as First Solar (FSLR), SunPower Corp. (SPWR) and Evergreen Solar (ESLR) down as much as 50% from their 52-week highs.

To find out what is going on with solar and the other alternative energy segments, we surveyed 182 ChangeWave Alliance members who work directly in the industry.

To receive regular insights from ChangeWave on emerging technology trends and companies, go to: http://www.changewave.com/hotwire.

Solar Leads

In our December survey, solar continued to show the most momentum of all of the alternative energy segments, according to industry respondents. Not only has it shown strong gains since our previous survey in February 2007, but it also led in each of the following areas:

Most Rapid Economic Growth -- Past 12 Months: When asked which alternative energy sector has experienced the fastest growth during the past year, solar (49%) topped the list -- up a whopping 14 points since our previous survey in February. In comparison, biomass (including biofuels and bio products) came in at 41%.

Most Rapid Economic Growth -- Next 12 to 24 Months: Going forward, respondents saw solar as experiencing the most rapid growth in the industry for the next one to two years, up 20 points to 38%.

Most Momentum -- Next Five Years: Over the long term, solar also retains its strength, as 31% of respondents (a five-point increase) said it will be the top sector for the next half decade.

Here's a closer look at solar versus the other major alternative energy sectors.

Solar is also seen as experiencing the biggest technology breakthroughs (up two points to 27%). Perhaps most importantly, as the following chart shows, solar cells are expected to be affordable enough to achieve a competitive return on investment (ROI) within seven years.

According to our solar experts, the industry's growth is being propelled forward by global photovoltaics manufacturers like SunPower Corp. and Suntech Power Holdings (STP) -- who are able to increase efficiencies and lower the cost-per-watt, thereby driving demand in both the industrial and home markets.

The burst of demand for solar panels is also a boon to the suppliers of polysilicon, the basic material for the vast majority of solar cells produced in the world today. Look for polysilicon suppliers like MEMC Electronic Materials (WFR) and China-based LDK Solar (LDK) to enjoy the benefits of this huge burst of growth.

According to ChangeWave analyst Josh Levine, "Demand for solar cells is unquestionably robust, solar tax credits will soon be extended, and the price of oil is trending higher. The forces are aligning exceptionally well for the solar industry. It's the right time for investors to be exposed to the sun."

Clearly, solar energy had the momentum in our latest ChangeWave survey. We'll continue tracking solar and the rest of the alternative energy industry for new opportunities in 2008.

For a copy of the entire ChangeWave Solar Energy report, please contact Darlene March, March Media Relations, (714) 514-3736.

To receive regular insights from ChangeWave on emerging technology trends and companies, go to: http://www.changewave.com/hotwire.

Paul Carton is the Research Director of the ChangeWave Alliance. Jim Woods is ChangeWave's Senior Editor. The Alliance is a network of 15,000 highly-qualified business, technology and medical professionals in leading companies of select industries. The Alliance is surveyed weekly on a wide range of business and investment research and intelligence topics.