The solar power industry watched its star decline over the last
few years, hammered by a toxic combination of political
controversy, massive oversupply in the solar cellmarket and
competition from cheaper Chinese manufacturers. The highest-profile
problems came as congressional Republicans assailed the Obama
administration over its handling of a $535 million guaranteed
to Solyndra, which later went spectacularly bankrupt.
That setback pushed the government farther out of the solar
financing game it dominated in the boom years. Since their peak in
2008, shares of the most important US manufacturer, First Solar (
), declined from over $300 to less than $30. That decline mirrors
the fall in the Guggenheim Solar
), which lost more than 90 percent over the same period.
As energy prices continue to rise, however, some private investors
are getting back into the game.
heavyweights like Berkshire Hathaway (
), Google (
) and KKR jumped into solar projectinvestment , seeking out
the regular returns of 15 percent or more that an established solar
infrastructure project can generate. Those three firms, alongside
) and John Hancock Life
, invested $500 million in renewable energy projects in 2011,
according to Bloomberg New Energy
"A solar power project with a
sales agreement could be viewed as a machine that generates
revenue," Marty Klepper, an attorney with Skadden Arps Slate
Meagher & Flom LLP, told the news source. Klepper's firm
a major solar deal.
Energy center executive director Dan Reicher of Stanford University
pointed out the main draw of solar project
for these investors in Bloomberg. Once all the infrastructure and
is lined up, Reicher explained, solar installations run with low
costs while creating predictable returns off a product that is
always in demand - electricity.
This surge in privateinterest coincides with increasing
difficulties on the public front. As mentioned above, First Solar
long represented the best of the U.S. domestic solar industry, with
major projects across California and the Southwest, and proven
technologies married to a fairly efficient production process.
Yet they too now find themselves in the crosshairs of the
Congressional Republicans out for scalps from President Obama's
reports that Energy Secretary Steven Chu will testify today at the
House, calling the affair a political attempt to create "false and
misleading controversy" about solar
. The debate centers on two projects - Arizona's Agua Caliente and
California's Antelope Solar Valley Ranch - which received a total
of $1.6 billion in funding from the Department of Energy. Both
projects use First Solar modules, and Representative Darrell Issa
of California claims that the projects lacked the "innovation,
accountability or job creation" capability to justify the loans.
Even as the government finds itself embattled on the renewable
energy front, however, private investors jumped in with both feet.
But there's reason to be wary. Last year, total renewable energy
investment hit a record $260 billion, with US investment inching
ahead of China's,
New Energy Finance
reported in January. However, NEF chief executive Michael Liebrich
cautioned that "the US figure was achieved thanks in large part to
support initiatives such as the federal loan guarantee programme
and a Treasury grant programme which have now expired."
Another reason for small investors to watch out is their inability
to invest on the same scale as Buffett and Google. While the latter
can reap the 15-percent rewards of major solar installations,
and ETF investors must hitch their wagons to the fate of the firms
themselves, which can wind up losing money even as solar becomes a
more important technology.