One of my favorite companies that belongs to the alternative energy investment theme is Evergreen Solar (NASDAQ/ESLR). Not only is this company well managed, but it has the right technology and critical mass to really be successful going forward.
One of the most difficult aspects of the solar energy industry is silicon, which is the raw material necessary to manufacture a solar cell. Supplies of silicon aren’t exactly plentiful and they remain in high demand by a number of industries.
In Evergreen Solar’s case, the company has the orders to manufacture and sell a lot more solar panels than it is currently producing, but the tight supply of silicon has been holding the company back. This situation is happening to many solar energy companies.
Fortunately for Evergreen Solar, the company just secured a new supply agreement for silicon with Renewable Energy Corp., which is based in Norway. This company will supply one of Evergreen Solar’s joint venture companies with 7,400 metric tons of granular polysilicon over a seven year period starting in 2008.
This is very significant because this supply of silicon will allow Evergreen Solar to boost its production levels some tenfold from present levels.
This means the company’s business will be getting a whole lot bigger, and that a huge risk has been lifted from the stock. I expect Evergreen Solar’s stock price will do well over the near-term, because of this news.
Frankly, the more and more I look at the solar energy industry, the more I like it. As solar panel production increases, prices come down for consumers. With energy such a contentious and expensive issue for most consumers, the prospect of having some renewable energy production for your own home is becoming more and more attractive.
For an aggressive equity portfolio, I think I would have at least one stock with some connection to this burgeoning industry.