After a year of slowing demand, global solar capacity will come roaring back in 2013 thanks to China. But be careful how you play it.
Can China be stopped?
It seemed just yesterday that the United States of America was the formidable force that held the top spot in nearly every economic statistic known to man.
And of those notches that didn’t belong to the US of A, they certainly weren’t owned by the Chinese.
That’s no longer the case.
It appears that the tables have turned…
It’s simply astounding what the Chinese have managed to achieve in such a short amount of time.
Now I’m not going to waste time and list all the accolades that have been overtaken by China recently. A simple Google search can easily take care of that.
However, I will say this: yet another impressive statistical trophy will soon be sitting on China’s mantle.
And if your appetite for oil or mining has waned like many other investors have lately…then you might want to consider a slumping play that’s going to make a huge comeback in 2013.
You see, when it comes to solar energy, European nations have historically been at the top of the pyramid – with Germany and Italy ranking first and second, respectively.
But over the past year, growth in the industry has slowed – especially in the EU.
New photovoltaic (PV) installations in Germany rose just two percent to 7.6 GW according to German energy grid regulator Bundesnetzagentur (BNEF).
Italy saw the most growth, connecting some 9.3 GW of new PV to the grid – yet was well off its record high of 12.8 GW in 2011 as demand shrank.
Globally, capacity slowed to 4.4 percent in 2012.
Meanwhile, it’s been a different story in China.
Installations there soared 180% in 2012.
In fact, growth in the Chinese market is set to leapfrog over both Germany and Italy in 2013.
10 GW of new solar projects are expected to come online, which will more than double their growth last year.
In doing so, global installations will rise over 14 percent to an astonishing 34.1 GW, bringing total capacity to more than 100 GW, estimates the European Photovoltaic Industry Association (EPIA).
And although coal is still the undisputed king of energy in China, solar power is turning out to be a legitimate force to be reckoned with.
The rapid advancements in PV technology have slashed production costs, thus making this renewable energy source more attractive and affordable to consumers.
This in turn is spurring on more demand…to the point where the Chinese government is planning to install a whopping 35 GW by 2015.
With all this growth, one would think that investing in solar energy companies will be like shooting fish in a barrel – well, not exactly.
See, part of the reason why solar energy lost momentum last year was precisely due to the industry’s incredible rise.
Similar to how shale gas has been unlocked in America, a jump in PV production has resulted in a supply glut – whereby zapping producers’ profit margins, pulling down share prices, and even pushing some companies to bankruptcy.
The opportunity to cash-in on the solar explosion therefore lies not on the manufacturing side of the equation – but in installations.
With solar energy costs at historic-lows, installers have enjoyed record revenues while manufacturers struggled.
Installation companies like SunPower Corp. (SPWR) saw triple-digit growth while manufacturers such as Norway-based Renewable Energy Corp ASA (REC) have tanked over the same period.
Barring no extreme change of events, the bulging solar supply doesn’t look to be diminishing anytime soon.
With that said, SunPower is definitely worth keeping a close eye on…but the one to really watch for is First Solar (FSLR).
First Solar not only has a solid balance sheet with excellent cashflow, but they also became the first American solar company to ink a deal in China.
The Company will be installing 2 MW of solar panels as part of a test project during Q1 2013.
It’s a somewhat paltry number by most accounts. But getting one’s foot in the door of the most lucrative energy market in the world is a major milestone in and of itself.
Should the test project prove successful, their share price will have nowhere to go but up.
But there’s even more long-term upside for First Solar…
The Company continues to have a stronghold on utility projects in the States.
And if you’ve been tracking utility stocks, their gains have been remarkably consistent over the past four years.
Not long after the recession hit, XLU, the Utilities SPDR ETF that tracks a variety of utility companies, plunged to $23.00 in early March 2009.
But since then, it has rallied back over 66%.
With domestic utility projects expected to trend upwards well into 2013 and beyond, along with solar demand skyrocketing in China…First Solar is poised for a massive upswing.
Mark my words: it’s time to be bullish on solar energy again.
Yours in profits,
for Top Stock Millionaire
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