Which solar company is the best investment right now: SunPower, Trina Solar, LDK Solar, Canadian Solar, Suntech Power, First Solar, or another big solar company?
Advisors will tell you that some companies have the highest “production efficiency” or the highest “panel efficiency,” while other companies are laden with debt or caught up in international tariff disputes.
I am here to tell you that, “which solar company is the best investment” is not the question you should be asking right now.
Solar companies will come and go, that is the nature of business and you can expect some big winners and losers along the way, especially in emerging technologies like solar. But you should not gamble on who will win and lose, you should look for low-risk opportunities that provide consistent returns.
I cannot tell you who will win and lose, but I can tell you that solar power is not leaving.
Still projected to grow at around 30% annually, meaning the solar market will double approximately every 2.5 years, solar power is rapidly becoming a staple of our energy portfolio and supplying reliable energy to homes, businesses, and utilities.
Back to investing:
Do you think Warren Buffett invested in solar and wind by picking a couple of companies and saying “they make the best solar panels or wind turbines around, and in a few years they will make me rich!”
No way, Buffett is interested in smart investments that produce reliable returns. In his eyes that means infrastructure and energy. As a result, Buffet is heavily invested in railroads and clean energy technology. Through MidAmerican Energy (a subsidiary of Berkshire Hathaway), Buffett has invested approximately $6 billion in wind power and is about to purchase two more large wind farms.
He has done the same thing with solar power. Instead of gambling on companies, he buys the whole farm. He has invested approximately $3 billion in two solar farms, owning all of the Topaz solar farm in California and 50% of the Agua Caliente solar project in Arizona. Buffett would not be making these big moves unless he thought the solar projects would produce clean energy at prices rivaling the status quo, and supply even cheaper energy in the coming years, thus ensuring the low-risk, high value, consistent returns that he craves.
So how do you invest like Buffett?
You don’t get greedy and try to predict the future of which companies will make it, you pursue reasonable returns and invest in a variety of renewable energy and solar projects. Look for projects that have tangible assets and a plan to produce consistently priced electricity.
Sure, not all of us can go out and buy an entire solar farm when we want to invest in solar power, but that does not mean we can’t own a piece of the pie.
Disclaimer: Any opinions expressed reflect the current judgment of the author of the relevant article, and does not necessarily reflect the opinion of Mosaic. Nothing herein shall constitute or be construed as an offering of financial instruments, or as investment advice or recommendations by Mosaic of an investment strategy or whether or not to “buy,” “sell” or “hold” an investment.