How to Invest in Solar

Solar power is becoming the latest niche frenzy in the Green Tech and nanotech space. There’s all sorts of talk about thin film solar and printable photovoltaic (PV) cells using nanorods or nanotubes.

We’re going to paint our houses with solar-cell paint and shingle our roofs with solar-cell shingles. There are solar-powered backpacks that, if left in the sun all day, can charge a cell phone and an iPod.

Although this sounds exciting and earth friendly—I mean, if you don’t want to get off the grid or lower your carbon footprint, you’re certainly not cool—it’s about as close to happening as fuel-cell-powered cars. And if that still doesn’t register to you wide-eyed optimists, it means we’re not likely to see a revolution in solar power anytime soon.

Yes, there are a number of companies around the world that are working on developing some remarkable new solar technologies. But the problems of production, costs and efficiencies are still major roadblocks.

The point is, even if some of these things work as well as advertised, getting them into production would still be an enormous task. You’d still have to be able to maintain incredibly high-quality control standards on production that likely would be orders of magnitude larger than these firms are used to producing.

But don’t despair. There are two ways to get into this sector and make money without getting stuck with a sizzling new solar company that has yet to provide any steak.

The first thing to do is buy an existing solar company that has contracts and is selling products to customers right now. Sure, these companies are using old silicon technologies with the typical efficiencies and not the pie-in-the-sky numbers you hear about for future generations of PV cells. But the crazy thing is these “boring” PV makers are actually making money.

My favorite in this space is Spire Corp. One of the things I like best about this company is, even in this hyped sector, it doesn’t get much press. That means it isn’t stupidly overvalued.

The way I see it, in this whole nanotech/Green Tech gold rush, we’re at the point where the folks selling the picks and shovels have a much better shot to make money that the panners and miners. Spire sells turnkey PV production facilities around the world to utilities and industries looking to diversify their power generation and consumption profiles.

It also has a medical devices division and a semiconductor design/manufacturing division, but its solar division is going like gangbusters now. The point is the company is making money, landing contracts and distribution deals in India, Germany, Portugal and Spain, not to mention some solid contracts in the US. Spire is competing in foreign markets and winning; once the US market starts walking the walk more than talking the talk, Spire will have that much more growth ahead.

Keep your thin film, sci-fi PV talk; I’ll take this shovel maker anytime.

The second way to take advantage of this “star power” energy talk is to move in an entirely different direction. Instead of using PV tech, why not use coatings technology to develop the same characteristics or do the same things in a different way? That’s where companies as varied as 3M and Industrial Nanotech come in.

3M uses nanotech coatings on windows for strength, as well as light passivity, to help control the heating and cooling cycles in buildings using the passive solar radiation as a source of heating and cooling. Industrial Nanotech has a line of coatings that are applied for heat containment on pipes—such as deep-sea drilling rigs or oil/gas pipelines—as well coatings for homes, buildings and machines.

Industrial Nanotech is even working on a coating that will use the energy generated between, say, a cold outside wall and a warm inside wall to generate electricity that could supplement a building’s HVAC system. And this isn’t pie in the sky; the company expects to release a product by next year. Its other paints and coatings are available at Lowe’s stores, and wider distribution is underway.

It also has growing contracts with Brazil’s state-owned oil company Petrobras and a major brewery company in Latin America, as well as offshore oil and gas drillers.

Again, this kind of stuff isn’t as exciting as hearing about thin film PVs, but this is where the money is now. Buying into emerging technologies is about buying companies and believing in scientific progress. But being a company comes first.

Don’t buy the hype; buy a company with a product and a plan to get that product out to people who will buy it. Don’t count on companies solely making it with venture capital money, grants or DARPA contracts.

And if you find a story that you can’t ignore, even though your rational mind is telling you “No,” don’t buy it until it has sold something to another business—and delivered it.