Solar Cheaper than Natural Gas?

Brian Hicks

Written By Brian Hicks

Posted August 14, 2014

A startup company based in Durham, North Carolina says they have developed a technology that will make solar cells cheaper than natural gas.

The company is called Semprius, and they say that their revolutionary solar panels will – if mass produced – allow for solar energy prices lower than 5 cents per Kwh.

For reference, the EIA projects that new natural gas plants can produce electricity for around 6 cents per Kwh.

Their technology involves stacking compatible semiconductors that can absorb different frequencies of light. By doing so, they say that the efficiency of the panels could go well over 50%.

Traditional solar cells only have an energy conversion rate of 25%, so by doubling the output of the technology it seems that Semprius believes they could eventually solve solar’s biggest problem…cost.

So far their prototypes have clocked an efficiency rating of 43.9% for the first one and 44.9% for the second one.

Not only do they do this by using different types of semiconductors, but they also make their solar panels out of a series of incredibly small solar cells.

These cells are only about 1 millimeter long, and allow for faster cooling and more light absorption which is how they project that once mass produced their technology could be cheaper than natural gas.

I’ll believe it when I see it…

I don’t mean to be a naysayer, but a lot of solar companies have made a lot of promises over the years, and if half of them came true it feels like we would never need to drill an oil well again.

Add to that that any startup company has to make a big promise like this or they won’t get noticed by deep-pocketed angel investment firms who could help fund research and mass production.

But if their promises are true we would also be remiss if we hadn’t kept our eye on them.

Of course, they are still a start up so we can’t buy any shares yet, but they could become a great investment in the future if they ever go public.

As of right now though, solar stocks that are public are too volatile for my liking…


Above is the chart for the Guggenheim Solar ETF (NYSE: TAN). And as you can see, in the last six months the stock has been on a roller coaster ride.

Much of this comes from a collision between investor sentiment and a company’s earnings…

Many people get excited about the potential that solar has, but the smart investor gets concerned when solar companies take on a large debt-load without enough profit.

In response you see the swings exemplified in the chart above.

Still there are some bullish signs out there for solar investors…

For example, Saudi Arabia recently announced that state run Saudi Aramco was taking over $109 billion dollar solar project.

And Germany has added over 36,000 megawatts to their grid as of June 2014.

So clearly there is a lot of potential, but until the big players like India, China, and the United States hop on the solar bandwagon there won’t be much movement on the market.

Maybe if Semprius picks up enough funding to prove their claims true, we would see a solar bull market unlike anything we’ve ever seen.

Until that time, stay cautious when buying solar stocks.

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