Channell predicts 5 percent growth in solar installations globally this year before picking up to 17 percent in 2014.
There is still "horrendous" overcapacity versus demand, Channell said. The industry had attracted a lot of extra capital by yielding returns of 40 percent to 50 percent, but manufacturing eventually moved to Asia.
Unable to compete with the low-cost operators in Asia, U.S. and European companies are looking for more profitable solar activities, he said.
"What we are seeing typically with the U.S. companies is that they are moving more into project development, which is where we think the returns are largely at the moment," Channell said.
First Solar, for instance, is building solar farms, where returns "are still quite high," he added. The company reported a 52 percent revenue rise in its first quarter to $755 million on Monday.
Earlier this year, Warren Buffett's MidAmerican Energy Holdings bought two SunPower plants in California for more than $2 billion—another sign of the attractiveness of the farms, Channell said.
He said, however, that storage remains his chief interest because of what's happening in Germany, which has moved to solar during many high-use periods.
"There's no peak demand for utilities left in Germany," which is why they've been issuing profit warnings, Channell said.
The main players in storage have been companies making batteries for electric vehicles. He sees Asian tech companies investing more in this part of the solar market.
Citi's long-term solar picks are Renewable Energy, SunPower, and GCL Poly Energy.
—CNBC's Anna Andrianova. Follow her on Twitter @AndrianovaAnna.