New ChangeWave Survey Shows Why Solar Energy Keeps On Shining

By Paul Carton

"Keep your face to the sunshine..." -- Helen Keller

No matter where you look, alternative energy is the topic du jour. Driven by the economics of record-high crude oil, the spotlight is shifting to non-traditional energy sources, particularly solar.

But while solar stocks were some of the biggest gainers for much of last year, recently the segment has taken big hits - with several key leaders such as First Solar (FLSR) SunPower (SPWR) and Evergreen Solar (ESLR) down as much as 50% off their 52 week highs.

To find out what's going on with solar and the other alternative energy segments, we surveyed 182 ChangeWave Alliance members working directly in the industry. The survey was conducted December 18-26.

Solar Leads

Solar continues to show the most momentum of all alternative energy segments, according to industry respondents. Not only has it shown strong gains since our previous survey in February 2007, but it also leads in each of the following areas:

• Most Rapid Economic Growth – Past 12 Months: When asked which alternative energy sector has experienced the fastest growth over the past year, Solar (49%) topped the list – up a whopping 14-pts since our previous survey in February. In comparison, Biomass – including biofuels and bio-products – came in at 41%,
• Most Rapid Economic Growth – Next 12-24 Months: Going forward, respondents see Solar (58%; up 20-pts) as experiencing the most rapid growth in the industry for the next one-to-two years.
• Most Momentum – Next 5 Years: Over the long term, Solar also retains its strength, as 31% of respondents (up 5-pts) say it will be the top sector for the next half decade.

Here's a closer look at Solar vs. the other major Alternative Energy sectors.

Solar is also seen as experiencing the biggest technology breakthroughs (27%; up 2-pts). But perhaps most importantly, as the following chart shows, solar cells are expected to be affordable enough to achieve a competitive return on investment within seven years.

According to our Alliance solar experts, the industry's growth is being propelled forward by global photovolatics manufacturers like SunPower Corp. (SPWR) and SunTech Power Holdings (STP) - who are able to increase efficiencies and lower the cost-per-watt, thereby driving demand in both the industrial and home markets.

The burst of demand for solar panels is also a boon to the suppliers of polysilicon, the basic material for the vast majority of solar cells produced in the world today. Look for polysilicon suppliers like MEMC Electronic Materials (WFR) and China-based LDK Solar (LDK) to enjoy the benefits of this huge burst of growth.

According to ChangeWave Analyst Josh Levine, "Demand for solar cells is unquestionably robust, solar tax credits will soon be extended, and the price of oil is trending higher. The forces are all lining up exceptionally well for the solar industry. It's the right time for investors to be exposed to the sun."

Clearly, solar energy has the momentum in our latest ChangeWave survey. We'll continue tracking solar and the rest of the alternative energy industry for new opportunities in 2008.

Jim Woods co-wrote this article.