HardAssetsInvestor

Written by HardAssetsInvestor.com  |

August 15, 2008

Travis Bradford: Everything They Tell You About Solar Is Wrong

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HAI: What percentage of total energy costs are generation vs. distribution?

Bradford: Fifty-fifty, across the broad energy portfolio.

HAI: What are the risks to solar's success?

Bradford: I don't really see a lot of risk to the forecast that solar is going to get a lot cheaper. It's a pretty powerful trajectory that it's on, and the road map to get to half the price of today is well within reach over the next 10 years. It might even be in the next five.

The only other risk might be that grid electricity prices get dramatically cheaper in the near term. But it would have to get cheaper faster than solar does, in order for grid electricity not to continue to lose economic ground to solar. Solar's prices are falling 5% per annum. The odds that electricity prices will drop 5% per annum over the next 10 years are extraordinarily low.

HAI: There's a feeling that the U.S. is losing its leadership position in the solar industry to overseas competitors. Why is that?

Bradford: The other countries have had much stronger demand support programs, so they've installed a lot more solar capacity. Their local companies have been faster to make investments as a result, as they look to benefit from that. Also, Chinese manufacturers are very good at cost-engineering electronic devices, and they have been able to raise capital in the U.S. capital markets to scale up production.

That said, the reality is that the next generation of solar technology - both photovoltaic (PV) and non-PV, such as solar thermal and solar-concentrating technologies - are predominantly supported by the U.S. private equity and venture capital industries. So the next generation of technologies is going to be driven a lot by American industry.

HAI: What do you think about thin-film technology?

Bradford: I love it. We've written two comprehensive reports about thin-film technology, and the second one is coming out this month. Our optimism about the economic offering of thin-film PV continues to grow every time we do another report. We track 135 thin-film companies around the world, and while not all of them are going to be successful, enough of them are likely to succeed that they will have a major impact on the solar industry and the energy industry in general.

HAI: Who loses when solar wins?

Bradford: The traditional belief is that solar creates a competing offering to electric utilities, and therefore utilities might lose if solar wins. But my firm belief is that getting involved in rolling out the solar architecture is a huge business opportunity, including utilities if they are foresighted enough to take it.

HAI: If you were an individual investor, how would you invest in the solar boom?

Bradford: The problem is that picking individual winners and losers is very hard. Unless you have a lot of expertise, it's going to be difficult to determine the real success stories from those that don't make sense. Perhaps a diversified sector play is the best bet for an individual or nonexpert investor.

HAI: One last question: Do you have solar photovoltaics on your roof?

Bradford: No, they're not practical in my case. I rent an apartment in a very tall building in Chicago.

One point I make is that solar shouldn't end up everywhere; it just should end up in relatively more places than it is today. Solar maps very well to the suburban living patterns of modern society. I've chosen to reduce my carbon footprint by living in an urban apartment. That said, I do hope they put a solar farm up in Chicago soon to help take advantage of clean energy ...