On Wednesday, California utility PG&E (PCG) agreed to buy electricity from a solar powered facility in an effort to move beyond fossil fuels. With the price of oil expected to climb even higher, is solar power the way of the future?
The guys turn to Sunpower (SPWR) CEO Thomas Werner for some insights.
Following are excerpts from their conversation.
How much growth have you seen?
“Solar power is the real deal,” says Werner. “We’ve tripled revenues each of the last 3 years and the overall market has grown 40% over the last 4 or 5 years.”
Are you doomed if oil prices come back down?
“No,” replies Werner. “As we (achieve greater) scale we pull cost out.. and we have the scale now to get cost out fast enough so we’re becoming more and more economic as compared to retail electric rates.”
Who are you selling your products to?
“We’re selling to mainstream residential and then we’re selling to companies such as Macy’s (M), Tiffany’s (TIF), Wal-Mart (WMT), the airforce…”
(Interrupting) Tiffany’s is selling solar panels?
“Tiffany’s is buying solar systems and installing the system,” answer Werner.
So you’re selling to retailers who are generating power?
“Exactly,” replies Werner
“It’s a joke,” says Eric Bolling. “There would be no solar stock chart that looks as good as it does without government regulation… Tiffany’s did it just to look good,” he says.
“Wrong,” replies Werner “Tiffany’s did it for economic reasons.. Tiffany’s bought solar power as a hedge against electricity prices going up."
Warner adds “The other thing is other energy sources that PG&E buys from such as nuclear, natural gas, coal – all of those have some form of government incentive. The idea that solar is special is just wrong.”
Is Wal-Mart buying it and putting it on their stores?
“Yes. They’re buying it and putting it on their stores. There’s a 3rd party that’s financing it, so Wal-Mart doesn’t actually own the system – they just pay for the power.”
Why is all the competition coming from China? And do they have an impact on your business?
“No,” says Werner… You can look at the solar market and you can think of differentiation based on technology. There’s high efficiency sun power and there’s middle of the pack technology that’s not that as efficient but it’s (a technology that makes it ) easy to enter that market – and that’s what the Chinese are doing.”
Eric Bolling thinks the only way to play the solar trend is own the silicon chip makers such as MEMC Electronic Materials (WFR).
Dylan Ratigan asks the other traders what they think?
Jeff Macke is interested is hearing more. Pete Najarian likes the company. Guy Adami says it’s a buy when the price comes back down.
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Trader disclosure: On July 25th 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (ATVI), (JWN) Bolling Owns (BP), (XOM).