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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (29381)	12/22/2007 11:48:40 AM
From: SI Bob	Respond to of 78958

Regarding analyst optimism about [t]AMAT[/t] based on entry into solar-panel field: I personally place zero value on solar panels being a reason to buy a company until some breakthrough technology is invented that drops the price of the panels. Dramatically. With solar panels priced at $5/watt, they're only viable to a pretty small market. Assuming a grid price of $0.10 per KwH (I pay $0.075), and peak solar panel output an average of 5 hours per day, let's look at the math. Panel cost: $835 Wattage: 170 Cost per Watt: $5 Daily output: 835 watt-hours (.84KwH) or enough to power a 60-watt lightbulb for 14 hours. Annual output: 305KwH Cost of 305KwH from grid: $30.50 Panel payback period: 27 years That's assuming the panel lasts that long and continues to produce the same amount of juice over the whole timeframe and doesn't take into account the cost of batteries (which have to be replaced at least a few times in that 27 years) and an inverter/charge-controller. Granted, in some locations it's possible to get more like an average of 10 hours per day of peak output using readily available technology that continuously aims the panels for maximum output, but most of the country/world isn't those areas. And even in those areas, you're looking at 13 years to get your money back. I used 5 hours per day to assume static rooftop mounting and to take overcast days into account, so I think my 5-hour estimate is generous. Personally, I'm planning to get a few panels for my RV and my car hauler when I've got the cash and time to burn on a couple of projects that interest me and have minor usefulness, but I hate the ROI at current prices. Prices have only barely come down in the 5+ years I've been watching them. I don't think solar panels will be much of a big deal until they're priced low enough to make it worthwhile for builders to make it a common practice to put them on the roofs of new houses or add them to existing ones. I'd personally love to have a bunch of panels and am more motivated than most people because of my fascination with alternative energy, but I won't buy any real quantities until they're below $3 per watt. And I think it's going to take $2 per watt before solar panels move from utilities in deserts and the fringe element and into the mainstream. So I disagree with the analyst about solar being a reason to buy AMAT. Nearly everyone who discusses the topic overvalues solar and overestimates the demand for it at anywhere near its current cost. Give me a company that can dramatically reduce the prices either through innovation or economy of scale. I was initially optimistic about it when Honda announced their intentions to enter the foray, since they're a very inventive (and, of course, very large) company, but no joy yet. To me, solar is just a buzzword right now whose overuse is getting long in the tooth.