Saturday, November 8, 2014

The Solar Civil War: Don't Short-Shrift The Cost-Shift

Article Abstract:

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours


  • There's a growing civil war between utilities and the solar industry.
  • 20 years ago the cost of solar was prohibitive. Times have changed. Over 100,000 houses went solar in 2013 and installations increased 41% over 2012.
  • At the heart of the matter is a growing and heated debate about net energy metering and it has the ability to completely disrupt or save either industry.
  • If NEM favors utilities, costs shift to solar; if NEM favors solar, costs shift to utilities. Ultimately, this is a zero-sum game with global ramifications.
There's a growing civil war between utilities and the solar industry and it will challenge the fundamental value of both industries by pitting them against one another in a zero-sum, cost-shift game.
Even without federal tax credits, which are set to expire in 2016, solar power offers homeowners a great way to save money. For some it's about more than saving money, it's about being less of a drain on the environment. For others it's about living off the grid, without the need for government subsidy of any kind. Whatever the reason, the "case" for solar energy has both price and passion behind it.

Renewed Growth in Solar

Solar energy first made waves 20 years ago, but the cost was prohibitive. Now that volume manufacturing has brought costs down residents in places like California, Arizona, Massachusetts, New Jersey and Hawaii are signing up for more. The chart below, published by the California Solar Initiative, illustrates the rapid decline in costs over the past 7 years.

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