Solar Power Boom Faces First Test

The solar power industry uses the same silicon raw material as the semiconductor industry and may share a similar boom-bust path, according to some analysts.

The semiconductor industry collapsed in 2000 amid a dotcom bust which pulled demand for electronic chips.
Solar companies saw their share prices skyrocket last year but many endured a steep fall in January, halving in the case of one market leader Oslo’s Renewable Energy Corporation.

Such falls reflected a view that solar power valuations had run ahead of themselves. High profits plus low barriers to entry have attracted new manufacturers from China and the prospect of more serious over-capacity looms is now dividing opinions.

“Alternative energy and solar energy are a very compelling growth opportunity and that’s going to be a multi-decade phenomenon,” said Gunnar Miller, global co-head of Research at Allianz Global Investors (AGI).

“It’s going to be something on a par with volume growth of flat panel screens, PCs and handy phones,” he said, while adding some companies had become over-valued.

Planet Ark