Will Solar Ever Shine?
Gerelyn is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Maybe if the folks at The Superdome in New Orleans had taken a page out of the playbook of the New York Giants, Washington Redskins, or New England Patriots, they would have had solar panels installed at the stadium and they could have prevented the power failure that interrupted play for more than half an hour in Superbowl XLVII. Indeed, the aforementioned trio of football stadiums have thousands of NRG Energy (NYSE: NRG) solar panels installed throughout their campuses, according to the company's annual report, which is a good thing because New York's Met Life stadium is hosting next year's championship game.
Solar is entirely absent in New Orleans. NRG Energy recently donated a solar-powered playground at the Dr. Martin Luther King, Jr. Charter School for Science and Technology in an attempt to educate and inspire the next generation for solar. The installation includes hundreds of solar panels that will produce 112 kilowatts of power, which the company says will produce 33 percent of the schools electricity during peak times.
Solar stocks as a sector are off to a good beginning in 2013. The Market Vectors Solar Energy ETF has advanced 10% year to date and had been up as much as 18% in 2013, as pointed out by The Wall Street Journal. If history is any teacher, however, that doesn't bode well for the sector because in the last two years solar stocks were off to a similarly strong start but ended the year with double-digit declines.
It's still early on in 2013 but all that's ahead appears to be more roadblocks. Demand for all of 2012 was a meager 25-to-30 gigawatts, according to Matt Feinstein with Lux Research is cited in the WSJ. Plus, a possible trade-war is looming with China over a possible polysilicon tariff that -- should the Chinese decide to impose -- would make it more expensive for U.S. solar producers to make panels.
For its part, Princeton, NJ-based NRG Energy is a hybrid in that it produces both alternative power and fossil fuel-generated energy. NRG recently completed its stock-for-stock merger worth $1.7 billion with Houston, Texas-based Gen On, which operates coal plants, to create the largest competitive power generation company in the U.S. Taken as a whole, NRG has several business segments, including 1.) selling electricity in the open market; 2.) retail electricity; 3.) alternative power including solar and wind-generated electricity; 4.) electric car fuel.
In recently updated financial guidance, the company increased its EBITDA and free cash flow projections amid a revised outlook on commodity prices, review of expenses and revisions to the impact of projected capital expenditures.
"...NRG is reaffirming 2013 adjusted EBITDA guidance, increasing its 2014 adjusted EBITDA guidance by $70 million and increasing both 2013 and 2014 Free Cash Flow before Growth guidance by $75 million and $55 million, respectively." (Source: NRG Energy press release)
NRG Energy, which pays a current quarterly dividend of $0.09 per share, is trading close to its 52-week high. The company doesn't report its 4Q earnings until the end of this month but based on the tone of the guidance management seems eager to communicate its performance.
Meanwhile, Tempe, AZ-based First Solar (NASDAQ: FSLR) is not only the world's largest thin-film solar module maker -- it is also the most competitive. After purchasing a 50-megawatt solar farm from Element Power Solar in January, the company appears to be selling the electricity produced at the plant at a discount. First Solar is reportedly selling the power to El Paso Electric in New Mexico for about half of what coal-producers are charging per kilowatt hour, according to a recent Bloomberg article. It is unclear whether First Solar will be offsetting lower rates with any state or federal incentives.
Estimates for First Solar's sales and earnings in 2013 aren't very ambitious as analysts expect flat revenues and a 12% drop in revenues, the WSJ indicates. The company's sales and net income both declined in the 3Q amid restructuring charges coupled with lower production although First Solar is profitable and is looking toward long-term growth and value creation, the company indicated. The stock is trading approximately 43% below its 52 week high.
San Jose, Calif.-based SunPower (NASDAQ: SPWR) is making it easier and cheaper for U.S. homeowners to install solar panels on their roofs. The company partnered with U.S. Bancorp to offer expanded financing options worth $100 million for up to 3,000 individual homes. The project is meant to make solar power more accessible to residents and it expands leasing options across nine U.S. states from Hawaii to Vermont.
SunPower announced a corporate restructuring in October and as a result expects to take mostly-cash charges worth as much as $40 million when the company reports 4Q earnings on February 7th.
The power outage at the Superbowl certainly produced a memorable experience but not one that anyone wants to see repeated. Although the stadium was equipped with LED lights that are touted for being environmentally friendly, the argument for solar just got a little bit stronger in New Orleans.
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