Drug maker Schering-Plough is getting a 1.7-megawatt solar system for its New Jersey facilities in a deal that, to some degree, forges new ground in solar.
The novelty in the deal is that Schering-Plough makes medicines. So far, the big solar installations have mostly been commissioned by companies directly or strongly interested in seeing solar power grow. Sharp, the biggest PV maker in the world, put up a 5-megawatt system to help run its advanced solar manufacturing facility in Japan while Applied Materials, with its 1.9-megawatt system, makes equipment for the solar industry. Nellis Air Force Base installed (with MMA Renewable Ventures) a 14-megawatt system, but the government has an obligation to fund emerging industries and technologies. Who do you think is buying fuel cells? Google? The two founders have a personal interest in carbon-free energy.
Schering’s main interest seems to be in the fact that it is located in a state with great solar incentives and that the company has publicly committed to reducing its carbon emissions by five percent by 2012. It should be operational by the end of the year.
PPL Renewable Energy will design and operate the system on behalf of Schering.
The world could see an unprecedented spike in oil prices toward $200 a barrel that could plunge the world into a panic.
Or it might drop to $90 a barrel after a new president is inaugurated in 2009 as the Saudis try to cozy up to a new U.S. president.
Arjun Murti of Goldman Sachs put out a recent report, according to the Telegraph, that demand from China and lackluster growth in supply will push oil near the $200 mark over the coming months.
“We believe the current energy crisis may be coming to a head. A super-spike end game may be in the early stages of playing out,??? Murti wrote, according to the paper.
But wait! Edward Morse over at Lehman Brothers in a report speculated that Saudi Arabia may boost output by 1.3 million barrels a day next year, more than the growth in demand. This could push prices toward $90 a barrel, according to the report, as reported by Forbes. The Saudis recently said that three new fields have entered production. And the country has used oil for diplomatic overtures before. A weakened correlation between the dollar and oil prices may also help push prices down.
Lehman, however, admits it predicted oil would drop to $90 a barrel this quarter in an earlier report. It sells for around $122 to $126 a barrel. Hurricane season could also hurt a drop in prices.
I also had my cat, Fraulein Katze, walk across my keyboard. She came up with $132 a barrel. (disclosure: Frost and Sullivan sometimes employs her as a consultant.).
News like this really must be tough on survivalists. I mean, do you stock up on more canned foods and ammo, beating the surge in demand that’s going to occur, or do you unload all that powdered milk you have stored in that cave near McGill, Nevada and buy more armor for the Hummer?
No matter who you believe, however, it does point to an essential truth in the oil business. It is wildly unpredictable. I recall once attending an oil technology conference in Qatar in 2005. Oil had just come down from $70 a barrel to the mid-50s range. Despite the drop, companies were enjoying a surge in profits. So you’d expect everyone to be excited.
Not so. Most of the speakers went out of their way to remind the audience that boom times only last for brief periods.
Not all solar IPOs are created equal.
Real Goods Solar, a solar installer that says it erected the first residential solar panel in the U.S. in 1978, started trading in a public offering at $10 a share today. The stock, however, is hovering around the $9 level at the moment. It has traded mostly between $8.25 and $9.25 so far. It's not the end of the world. Dell geared up for its IPO amid the 1987 stock meltdown. Nonetheless, it's not the best news in the world. The $10 offering price was at the low end of the pre-IPO $10 to $12 offering price range.
Solar installation is, according to some, the next hot frontier in solar. Installation takes up about half of the cost of a residential solar system, but it’s still relatively antiquated. Basically, guys with tool belts clamber up onto your roof, do a lot of measuring and cutting, and then hand you a bill for several thousand dollars. (There’s your answer when some dolt says “Why can’t the solar industry grow like Facebook or Google????). Most of the research in the solar panel universe has been spend on improving the efficiency of solar cells.
In recent years, however, SolarCity, Standard Renewable Energy and others have come up with ways to reduce some of those onerous install costs. SolarCity organizes installations to reduce time in the field truck runs. Sungevity, a newcomer to the field, has developed software that can give a customer a solar system estimate over the Internet, a process that most companies can only accomplish with a visit to the home. Real Goods’ main selling point is that it has done a lot of installations—more than 2,400—and can use this experience to expand rapidly. The company is part of the Gaiam lifestyle group, which also sells yoga tapes. Some may scoff, but lifestyle products are expected to grow too.
Still, installation is essentially a branch of contracting and thus margins are tight. The queasiness surrounding the solar tax credits doesn’t help either. Not counting two acquisitions, Real Goods pulled in $16.8 million in revenue in fiscal 2007 and $102,000 in net profit. Including the acquisitions of Marin Solar and Carlson Solar, Real Goods had revenue of $32.7 million and net income of $491,000, according to the S-1 filed with the SEC.
Real Goods hopes to expand beyond its traditional base in California and Colorado into Arizona, Nevada and other states rolling out solar incentives.