Solar Opportunity for Sovereign Wealth Funds

Over the past few years, solar energy has been in demand driven by government subsidies, rising cost of fossil fuels, shifting regulatory environments, and organizations wanting to go greener. Aggressive public policy from various states and nations have further increased stimulus and awarded tax credits in the renewable sector to foster industry growth. Then in 2008, the financial crisis hit, causing meltdown in the capital markets. Some solar companies had trouble accessing capital; not all solar manufacturers experienced this. Through market distortion, these global subsidies coupled with the financial crisis, created the environment for an oversupply of solar panel manufacturers. The effect was a major decline in the price of solar panels, thus eroding profit margins in the solar manufacturing sector. In fact, on Wednesday Germany solar company Solar Millennium filed for insolvency which is probably not the last to file for bankruptcy. In the United States, the headline solar company to fail was American taxpayer-backed Solyndra based out of Fremont, California. Yes, solar energy was losing its luster in 2010, but if priced right, it can be a reliable investment.

Polysilicon prices have plunged more than 90% percent in three years.

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