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Investigate Before You Invest - Even with Solar!

01/08/13

  06:06:00 pm, by Jim Jenal - Founder & CEO   , 339 words  
Categories: All About Solar Power, Solar Economics, Solar News

Investigate Before You Invest - Even with Solar!

We noted the other day the sizable purchase made by a Warren Buffett-related company in two solar power plants being built by SunPower.  Good deal all around.  But then we saw the news that lots and lots of folks proceeded to invest in solar module makers - as if that was what Buffett had done.  (He hadn’t.) Was that smart?  Some would certainly say, No!  To which we respond, with solar as with anything else, investigate before you invest.

My dear sister has tried to get me hooked on Downton Abbey and as I watched the first episode of Season Three the other night, it seems that the Patriarch of the clan has managed to lose most of the family’s money by investing everything in one company that is now going bankrupt.  Which brings me back to this cautionary tale about investing in solar module makers, such as Trina Solar.  In a really scary story about what might not always be obvious to the casual investor (the “momentum investor” in the language of this piece), Richard Pearson over at Seeking Alpha writes about Trina Solar: As Debts Come Due, $14 Billion in Off-Balance Sheet Liabilities.

Seems that Trina is locked into some long-term supply agreements for polysilicon (the primary raw material for its solar modules) which are resulting in the company having negative margins on its products.  In other words, they are losing money on every solar panel that they sell.  Talk about not sustainable.  Yet Trina’s stock price rose on news of the “Buffett” purchase and continues to rise.  Have those investors seen this information?

There are lots and lots of reasons to be strong on solar as a technology, as a job creator, and as the way of the future.  But if you are going to invest in solar companies - any solar company - you would be wise to make sure you really know what is going on.  Or you might just lose your abbey.

(Disclosure: I have no position whatsoever in any solar company - other than Run on Sun!)

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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