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Solar, Silicon: Shrewd Energy Plays

Solar panels are shown with the Frog's Leap winery in the background in Rutherford, Calif., Tuesday, Sept. 18, 2007. San Francisco-based Sunlight Electric has helped more than a dozen wineries, including Frog's Leap, to go solar. The company estimates there are 28 systems in Napa County and another 14 in next-door Sonoma County. (AP Photo/Eric Risberg)
Eric Risberg
Solar panels are shown with the Frog's Leap winery in the background in Rutherford, Calif., Tuesday, Sept. 18, 2007. San Francisco-based Sunlight Electric has helped more than a dozen wineries, including Frog's Leap, to go solar. The company estimates there are 28 systems in Napa County and another 14 in next-door Sonoma County. (AP Photo/Eric Risberg)

The alternative-energy sector is as good as gold, according to Walter Price, portfolio manager of the Allianz RCM Tech Fund. His fund is up an average of 18.1 percent per year over the last five years.

Recommendations:

With all signs pointing to still more expensive fossil fuels for the foreseeable future, Price's top pick is First Solar.

"First Solar is the lowest-cost producer of solar energy," he told CNBC. "I think they're putting pressure on the whole industry to catch them."

He sees some potential obstacles being scaled, as solar energy continues to be developed.

"Solar still has to have government subsidies to get down the learning curve and get to scale," he said. "I think within a few years, actually, solar will be competitive with other forms of distributed energy."

Price also likes MEMC Electronic Materials.

"This is a company that is providing silicon, and they've had some start-up problems in their plant, but their plant's about to come onstream," he said.

"People have underestimated how fast the costs of silicon are going up, with the cost of steel and the cost of reactor vessels going up, I think MEMC's going to be in a very good position, having silicon at the right price at the right time."

Disclosure:

Price owns First Solar and MEMC Electronic Materials through his fund.

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