Solar Stocks Plunge on Drop in Oil Price

With oil prices down about 20 percent from the mid-July peak, this hardly seems like the time to be thinking about alternative energy. On the other side of the coin, these stocks may be priced more favorably than they would be if oil were closer to $80 per barrel. Indeed, solar cell makers Suntech Power Holdings Co. Ltd. <STP.N>, SunPower Corp. <SPWR.O>, Energy Conversion Devices Inc. <ENER.O>, and Evergreen Solar Inc. <ESLR.O> are now priced about 40, 35, 43, and 48 percent respectively below their 2006 highs.

For the time being, it would seem that the last thing in the world solar investors need is lower oil prices.

While observers laud the cleanliness and easy availability of sunlight as a power source, producing electricity from this source remains about 10 times as expensive as power generated from fossil fuels. Even solar bulls acknowledge that the industry today depends heavily on the fact that governments in some countries heavily subsidize this otherwise uneconomic energy source...read more