Cash in on solar energy's bright future

Solar energy stocks have suffered a sell-off recently as governments have cut subsidies. But investors are wrong to be spooked, says James McKeigue. Here, he picks the best solar stock to buy now.

America has been here before: in the 1970s, wars and revolution in the Middle East pushed up the oil price and derailed the US economy. Since then, solar and wind energy have struggled to compete on price with fossil fuels. But that looks set to change as they finally achieve 'grid parity' the moment when alternative energy is as cheap as conventional grid power. Solar has already achieved this in sunny islands such as Hawaii, while wind does the same in windy places such as Ireland. Now, thanks to technological breakthroughs and falling equipment costs, it is set to become more common.

Measured by cost per kWh, the price of wind turbines has fallen 20% since 2007, but the improvements in photovoltaic (PV) solar have been more impressive. PV solar the technology that turns sunlight directly into electric current as opposed to using its heat now costs about 15 US cents per kWh. That compares to around eight cents per kWh for wind and anywhere between three and seven cents per kWh for gas and coal. Panels cost 50% less than they did in 2008. What's more, solar provides power at the hottest time of the day, which, thanks to air conditioning, matches peak electricity demand for many countries.

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James McKeigue

James graduated from Keele University with a BA (Hons) in English literature and history, and has a certificate in journalism from the NCTJ. James has worked as a freelance journalist in various Latin American countries.He also had a spell at ITV, as welll as wring for Television Business International and covering the European equity markets for the Forbes.com London bureau. James has travelled extensively in emerging markets, reporting for international energy magazines such as Oil and Gas Investor, and institutional publications such as the Commonwealth Business Environment Report. He is currently the managing editor of LatAm INVESTOR, the UK's only Latin American finance magazine.