The Barnard Observer
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Home Vault Misc Contact c2003-08 Thomas Barnard
Solar Isn't Going Away This Time
Alan Greenspan and Ben Bernanke
This week is rife with news of Alan Greenspan's book and Ben Bernanke's action at the Fed. I have not yet read the book, but I spent an hour watching an interview with Greenspan. And here's what I get out of it. The reason he was on the job so long was because we were in a long period of disinflation and unusual productivity brought on by the faster and faster chips, and a machine that could make the best use of them - the personal computer. Globalism has helped out in the last decade keeping prices down and allowing a boom in housing. And if he had to do the dirty work Volcker (who he thought did a good job) had to do raising rates to 20% to kill inflation, he would have been out of office after one term, too.
Interestingly, Greenspan the libertarian turns out to be a populist on the issue of housing. He wants homeownership to be as wide as possible. To allow everyone to enjoy the fruits of capitalism and to make better and happier citizens. Unfortunately, it is not that simple. Lower interest rates and an easy attitude towards loan underwriting has allowed the mortgage system to run amuck with ARMs and interest only loans, and option ARMs. Mortgage brokers have routinely loaned beyond 100% of a house's value because, don't you know, the kids need a few bucks to buy furniture.
This lack of regulation means that the home debacle will be with us as far as the eye can see. One problem is that instead observing trenches where loans of similar quality were written together, they stuck in a subprime loan here and there, so nobody is sure what they have and meanwhile, trading in those instruments, CDOs (collateralized debt obligations), has shut down. Hedge funds have been selling off their blue chips to raise funds, but it has created the recent downturn in stocks.
Bernanke is in a fix. If he helps the homebuilders and the private equity people with lower rates, then the dollar sinks and oil and gold prices rise. And bingo, that's just what happened. The stock market has also gone up, but that may be because sentiment was so poor.
Gold
I always hate to recommend gold, because that puts us just one step away from barter, and a return to the stone age. But now is probably a good time for gold. Bernanke probably needed to hold the line. Economists have been playing around with inflation indexes for years now, but if you plug back in the volatile food and energy prices, we're looking at inflation of maybe 8%, and the Fed probably needed to deal with that.
But it's a thorny problem. And Bernanke is looking beyond the inflation problem to the problem of confidence in the system, and having written about the errors of the Great Depression, he's taking the easing way out.
The other reason I don't particularly like gold is because it is not necessary. Scarce it is, and a good conductor of electricity, and because it glitters well, it is good for jewelry. But personally, I would like to put my money where there will be real demand. And in the 1930s people still bought food and went to the show.
Goldcorp (GG) has been the low cost producer, and so that would be my recommendation for those of you who adhere to the Austrian School until I look into it some more.
Energy
Alan Greenspan argues for a $3 dollar a gallon tax on gasoline (to be rebated elsewhere) to cut our gasoline consumption forthwith. He doesn't see anything other than plug-in cars as a solution in the near future, and neither do I. The sooner the better. Oil is still probably a good bet, and I sold too soon. The operative word to bring the price down is "glut" and I don't see it anywhere. Stay with your oil holdings until you see that.
But energy is something we will need and I like it better than gold. Unfortunately, this has resulted in subsidies and interest in corn ethanol, which I think is a disaster because corn, unlike oil, is a foodstuff, and it has already resulted in higher food prices. Corn has gone up. Farmers planting more corn are also planting less soybeans (six million acres less than last year) because planting farmland unlike other things in the financial world, really is a zero sum game. So, soybean prices are up, and everything based on corn and soybeans are up. Milk and cheese are up.
There are other options, and even a capitalist curmudgeon like Lee Raymond said in a Business Week interview with Maria Bartiromo (Sept 24, 2007), "It's all hands on deck. By that I mean all sources of energy that meet the competitive standard set by the markets should be encouraged. That's coal, clean coal, nuclear, conventional oil and gas, nonconventional oil and gas, biofuels, solar. Anything that can clear the economic hurdle needs to be encouraged."
The Dream of Fusion
If we could tap fusion, why we could build desalination plants and start watering the desert in Saudi Arabia. Think of it, the Arabs might become breadbasket to the world. As it is, the first fusion plant was announced in 2006, and will cost $13 billion and be ready in 2016. It will be of tokamak (magnetic confinement fusion) design. It will produce 500 MW (500,000,000 watts). It will be built in Cadarache not so far from the French Riviera.
But containing the plasma produced in such a plant has proven to be a bit of trick, there are things we can do while we wait to see how fusion pans out, which might take decades or centuries. Fission is one of those options. Probably we'll move on to breeder reactors, but maybe not immediately. Apparently, uranium is cheap and so "breeders" may still be a few years. Breeder reactors generate fuel, and so might last a very long time indeed.
And not to forget, nuclear plants produce that pesky radiation stuff which is lethal and which we don't know what to do with. Moreover, there are not so many exciting possibilities for investors. There is General Electric and Westinghouse, and some uranium mining companies. The latter have already had a run, but there won't be any real new demand for years, so a lot can happen to those stocks in the meantime, and maybe not all of them positive.
Wind power is coming along. Geothermal is getting some attention, and tidal wave action is also being looked at. And I suppose everyone by now has seen that video where radio waves can be used to burn salt water. Maybe it's a miracle but there is some doubt that the energy released in the reaction is more that what you put into it. If so, then this idea is kaput. Then there is solar.
Solar
I'm not a particular solar fan because it hasn't been that efficient yet, but I'll look into anything. Solar does minimal damage to the environment, which is a tricky thing. Think about our fantasy of watering the desert. How would that change the environment? More greenhouse gases, perhaps. Triggering an ice age for which we are totally unprepared. Ah, the complications.
According to the Universe programs recently showing on the History Channel, the sun produces 380 billion billion megawatts of power per second, of which only 44 million billion megawatts are directed at the earth, which is, needless to say, still a lot of power. The Hoover damn only produces 2,080 megawatts by comparison. And if you think deeply, all blessings flow from the sun. Oil and coal and natural gas are composted remains of plants from millions of years ago. Wind power takes advantage of turbulence in the environment, a lot of which is caused by solar flairs and heat from the sun. And the heavy metals like uranium come from supernovas, explosions of stars much bigger than the sun.
But so far we have not been anything like as efficient at harvesting that power as photosynthesis which is something like 90% efficient. If we could become more efficient then it would make sense to take another look at harvesting the power of the sun. There is research going on, so let's take a look.
Research
The rule so far is that although a photon may carry enough energy to excite more than one electron, only one gets jazzed. So, that's been the rule so far, one photon excites only one electron (an exciton). Research revealed in Science News (June 3, 2006) has turned up the possibility that a photon may excite more than one electron. This kind of efficiency turns the whole solar possibility into a very interesting proposition. If a photon excites two electrons, it seems to me we are talking about a huge improvement. Here's the research results so far:
Medium (Quantum Dot) Electrons Excited Research Group
Lead selenide nanocrystals 3 Los Alamos
Lead sulfide Multiple National Renewable Energy Laboratory (NREL)
Lead sulfide 7 Los Alamos
These are exciting possibilities. A lot more work needs to be done. These finds need to be confirmed in the laboratory and also theoretically to be believed. I don't see any company to play on this information. We will have to wait to see what develops.
Meanwhile, here is a list of companies:
Solar Companies
This list is not exhaustive, merely representative. I am listing some companies you cannot invest in, so that you have some sense of what is out there.
Daystar (DSTI) - makes Copper Indium Gallium Selenide chips, which require 1/50 to 1/100th the raw materials needed for typical solar cells. Their goal is produce solar cells at costs competitive with fossil fuels. Losing money.
Dyesol (DYE.AX) - Australian solar company. From their website: "Artificial photosynthesis is based on the concept of a dye analogous to chlorophyll absorbing light and thus generating electrons which enter the conduction band of a high surface area semiconductor film and further move through an external circuit, thus converting light into 'green' power."
Emcore (EMKR) - "EMCORE Corporation engages in the design, manufacture, and marketing of compound semiconductor-based products for the broadband, fiber optic, satellite, solar power, and wireless communications markets worldwide. It operates in three segments: Fiber Optics, Photovoltaics, and Electronic Materials and Devices." (from Yahoo).
Energy Conversion Devices (ENER) - They've been around for a long time, batteries whatnot. Now they're into solar. Here, from Yahoo, "Energy Conversion Devices, Inc. commercializes materials, products, and production processes for the alternative energy generation, energy storage, and information technology markets. The company operates in two segments: United Solar Ovonic and Ovonic Materials. The United Solar Ovonic segment designs, develops, manufactures, and sells proprietary thin-film solar (photovoltaic or PV) modules, which are lightweight, thin, flexible, and durable products for converting sunlight into electricity..." Losing money.
Evergreen Solar (ESLR) - The company uses its proprietary 'String Ribbon' technology process in manufacturing crystalline silicon wafers, the primary components of photovoltaic cells (from Yahoo).
First Solar (FSLR) - Yahoo: "First Solar, Inc. and its subsidiaries engage in the design, manufacture, and sale of solar electric power modules. The solar module is a polycrystalline thin film structure that employs cadmium telluride semiconductor material to convert sunlight into electricity. The company sells its products to solar project developers and system integrators primarily in Germany." Revenues of $130 million produced a profit of $4 million. Before last year, losses.
Miasole - no symbol. Google founders invested in this thin film solar cell maker.
Nanosolar - no symbol. Thin film solar cell maker.
Open Energy Corporation (OEGY.OB) - The company offers building-integrated photovoltaic (PV) roofing materials for commercial, industrial, and residential markets. Its products include SolarSave PV Roofing Tiles...(from Yahoo description). Has a deal with German maker Q-Cells.
Q-Cells AG Thalheim (QCLSF.PK) - German. One of the largest solar cell makers in the world.
Stirling Energy Systems - no symbol, but there is a shareholder page on their website. Old technology. They use mirrors that track the sun to heat a vessel filled with something, typically oil, to run an electrical generator, this is called Concentrated Solar Power (CSP). A plant using this in Nevada produces energy at 17 cents per kilowatt hour. Coal is 2 to 3 cents, but environmental regulation may bring these closer to each other. Something to watch.
SunPower (SPWR) - made the solar cells used in the 12 megawatt Solar Park Gut Erlasee in Bavaria, Germany, the largest of its kind in the world. They feel they will cut the cost in half in the next five years. Losing money.
SunTech (STP) - third largest maker after Sharp and Q-Cells. 90% of output goes to Germany, which has subsidies for solar power. Apparently the low cost provider.
XSUNX - (XSNX.OB) - Thin film solar cell maker. 160 million shares and no revenues. You do the math.
Investment Advice on Solar
Suntech (STP) is the only one I like. It is making money, mostly because of German subsidies, but I don't think they're going away anytime soon. The Germans are committed to solar.
And Now a Message from Our Sponsor
Update on My P10B (Potential 10 Bagger)
My poor P10B seems dead as a door nail, flat lining. But I noticed on their website, unannounced, that they have bagged three new potentially huge U.S. customers, which means they have apparently locked up most all of the competition in the U.S. But I think more of their revenue comes outside the U.S. Apparently, in their niche, they are the company to go for their expertise. Their product is still just coming on. Most people don't even know this is available yet (for various reasons, like companies wanting to use their old technology in which they have invested so much). No profits yet, but the losses are small. Big problem is that the word is not out on this stock, which is an advantage for you. Consider putting $5,000 or $10,000 of your speculative dollars with me. By the time you see it anywhere on your own, it will be four times higher than it is now.
The Barnard Partnership. Tom Barnard, tbbarnard@yahoo.com, 708-386-9300.
September 23, 2007