Grid Parity is Here
Most Important Energy Event of the Decade
It was 2007 when I wrote that:
The solar market is still very fragmented. And that's because no clear winner(s) have emerged.
For the solar industry to really establish roots and confirm its position as a future energy stalwart, it must first reach what has become known as "grid parity." That's when the price of producing electricity via PV reaches the price of buying electricity at the retail level.
It is predicted that solar will not reach it for the next five to seven years. During that time, every company will be striving to drive down costs in order to compete with traditional sources of energy.
As that happens there will be little consolidation. Each company will want to keep and increase its market share until there is an established solar energy system that optimizes all angles of efficiency, installation, and aesthetics.
It flew by, but guess what?
Grid parity is here.
Earlier this year in California, the weighted average highest cost of solar contracts bought by California utilities for 20-year power purchase contracts was 8.9 cents per kilowatt-hour (kWh).
What's the average residential cost of electricity in California? It's 15 cents per kWh, otherwise known as more than 8.9 cents.
Indeed, in much of the Southwest (where sunshine is abundant) and much of the Northeast (where electricity costs are high) solar is already on par with its traditional counterparts.
Even though it's getting close is some regions, solar electricity isn't yet cost-competitive in all markets. But it's getting close.
And that day is getting a lot of investors excited – even those who have been hitherto “anti-green.”
Most Important Event of the Decade
I had to rub my eyes when I saw an article from TheStreet.com come across the wire this week entitled, “When Solar 'Crossover' Hits, the World Will Quake.”
While I can't say if the earth will quake, I do know the event will usher in great shareholder wealth. Here's the first line of that Street article:
The most important financial event of this decade will be called "crossover." That's the point at which solar energy becomes cheaper than fossil fuel energy.
Crossover will transform energy economics. It puts a thumb down on energy prices. When costs for exploiting a fuel source go above the crossover price, that fuel source becomes uneconomic, as solar cell production scales to meet it.
It continues, and this is the point of my article today, that:
The hope of bulls in companies like First Solar is that subsidies can assure sales until crossover is achieved.
What can upset the balance is new technology that draws power from light outside the visible spectrum, a fuel source now being wasted. The problem is always moving new technology into production.
In other words... Major financial reporting and advisory outlets are hailing reductions in the cost of solar as the “most important financial event of the decade,” and they are pointing to further technological advances to get it there.
This Is the One
As I indicated to you earlier this week, solar installations are already going parabolic.
Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
I also told you I'd reveal a company that has a simple patented process for lowering the cost of solar even further.
It's a coating process than can double the output of all solar wafers while cutting the cost in half.
In short, it's what the entire industry has been waiting for.
And here's the best part...
This isn't a solar company. It's not going to be producing its own panels to compete against the hundreds of other solar companies that are already struggling.
Instead, it plans to license its coating process to any solar manufacturer that wants it.
The company is trading below a buck as I write this, while companies from North America, Europe, and Asia are already lining up to place orders.
It's not just another solar company... It's the company that will make all solar panels – no matter who makes them – as cheap, or cheaper, than fossil fuels.
You see, the process can be integrated into most existing solar fabrication lines.
Like some of the most profitable companies in the world, this one is setting up a recurring revenue model. It's going to license the technology while generating constant and recurring revenue by selling the necessary chemicals to the same customers over and over.
Think of it like Keurig cups for solar, with its recurring revenue stream for those millions of K-cups. Green Mountain Coffee (GMCR: NASDAQ) is up more than 1,800% since introducing that brilliant model.
Only we're dealing with the $6 trillion global energy industry and not the $58 billion global coffee industry.
Moments and opportunities like this are what I live for.
Something I've been calling for for half a decade is about to happen.
Call it like you see it,
Nick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street Underground. He also heads Nick’s Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor's page.