While it may be quite unnerving to think that it has taken this long for us to harness the power of the Earth's most abundant resource, the sun, it may be somewhat gratifying to see how far the solar industry has come so fast.  Solar energy, also known as photovoltaics (or PV, for short) has become one of the fastest growing sectors of the new millennium and we have only scratched the surface of its potential.
Photo: Schwarzerkater , Creative Commons, Flickr

Probably the most unique feature of the solar industry is the extraordinarily wide range of applications that can be made using this technology.  These applications range from consumer products (cell phone chargers, calculators, lanterns, garden lights, etc.) to industrial products (street lights, rooftop arrays, etc.) to full-fledged photovoltaic power plants.  Biofuels mostly serves the transportation sector.  Windpower, hydropower, and geothermal technologies are most practical in generating electricity.  Solar power covers it all (yep, there are even solar-powered cars – every odd year, a band of engineers from competing North American universities race their solar cars that they had spent the last two years developing from Austin, TX to Calgary, AB.  With a robust $1.7-million budget and close proximity to Detroit, the University of Michigan was victorious in the last race during the summer of 2005.  While I am proud to say that my alma mater came out on top last time, as well as various other times since the concept began in the early 90's, I would not recommend making huge investments at this point in an expensive car that carries one person where the driver is not enclosed). 

Photovoltaic technology can be divided into two main categories – crystalline and thin-film.  Crystalline technology is what you see on people's rooftops, as well as on top of commercial buildings and in power plants.  Efficiencies of these solar cells are higher than in thin-film, but this technology also costs noticeably more.  With approximately a 21% efficiency rating, San Jose-based SunPower Corp (SPWR) is among the global leaders in solar technology.  However, crystalline technology is also a lot more expensive to make, and a good portion of the cost stems from its primary raw material, refined silicon.  Currently, there is a global shortage in refined silicon due to insufficient refining capacity, and in turn, this is elevating the cost of manufacturing solar wafers.  To counteract this, Massachusetts-based Evergreen Solar (ESLR) has devised a way to manufacture crystalline cells using substantially less silicon, in the form of their patented StringRibbon® technology.  While the silicon shortage will not last forever, it may be prolonged, and Evergreen could capitalize on this built-in cost advantage. 

While crystalline solar applications have made a lot of headway lately, it is largely because of generous government incentives in place that have helped push it along, especially overseas and in California.  Because of more generous incentives overseas, the U.S. lags behind in terms of share of solar generation installed.  Solarbuzz reports that in 2005, U.S. installations totaled only 156 megawatts (MW), or 7% of the global share, where Germany installed 837 MW, or 57% of the total.

Thin-film technology is primarily useful in smaller applications such as consumer products, where the efficiency rating normally does not need to be very high.  As such, this technology can be produced at a fraction of the cost.  Konarka and Nanosolar are two prominent domestic players in this space.  

Most of the production in the solar industry has come from the large, diversified electronics companies such as Sharp, Kyocera (KYO) and Mitsubishi, that are much better capitalized than the solar pure-plays, and can afford to take on risky ventures.  It should also be noted that some of the oil majors such as BP (BP) and Royal-Dutch Shell (RDS) have also boarded the train and developed solar divisions of their own.  (Hmmm….no ExxonMobil?) 

So it is apparent that while solar energy is the costliest of all forms of alternative energy, it also arguably has the most potential, as there are many different applications and segments within.  Subsequently, this also means that this is where there will likely be the most competition.  There is no clear-cut leader in the sector, but we at ThePanelist will offer our assessment of who will seperate themselves from the pack.  Our planet is undoubtedly getting warmer, and we are looking forward to see who will be able to use the sun to cool it down.  (Interesting paradox, huh?)

Disclaimer: I do not give investment advice.  Do your own research.  Do not rely on anything in this blog to make investment decisions. Consult an investment professional familiar with your specific financial situation before buying or selling any security. 

Disclosure: I do not own any of the stocks above and do not plan on buying any shares at the current prices.