| ALTERNATIVE ENERGY OUTLOOK | | | | Locational Advantage: Unlike other renewable |
| The Alternative Energy industry is going through a | | | | resources such as hydroelectric and wind power, |
| recovery after absorbing the global recession and the | | | | solar power is generally located at a customer’s |
| cascading fall in global crude oil prices. Earlier this year, | | | | site due to the general availability of sunlight. As a |
| quite a few alternative energy companies were in the | | | | result, solar power limits the expense and energy |
| trough. Though these alternative energy companies | | | | losses related with the transmission and distribution |
| have recovered from their lows, their valuations are | | | | from large-scale electric plants to the end users. For |
| still extensively lower than their 52-week highs. | | | | most residential consumers in quest of an |
| The growth of alternative energy companies is | | | | environment-friendly power alternative, solar power is |
| closely tied to the fortunes of the economy. In its | | | | currently the only viable choice as it can be sourced |
| latest release, the Energy Information Administration | | | | in urban and rural environments. |
| (EIA) predicted that total U.S. electricity usage will | | | | Subsidy Programs: Governments, most notably that |
| decline by 3.3% in 2009 before growing by 1.3% in | | | | of China, have augmented their financial support for |
| 2010 as the improving economy coaxes a gradual | | | | alternative energy and solar projects. China is aiming |
| recovery in electricity sales. In fiscal 2008, annual U.S. | | | | at increasing its installed solar power capacity to 2GW |
| photovoltaic (PV) installed capacity grew by 63% | | | | by 2011 from 140MW capacity at the end of fiscal |
| year-over-year, bringing the cumulative installed | | | | 2008. To satisfy this objective, the Chinese |
| capacity to 792MW. | | | | government offers 50% of the cost of investment |
| According to the Solar Energy Industries Association | | | | of solar power projects. For solar projects in remote |
| (SEIA) -- the U.S. trade association on behalf of close | | | | areas, the government subsidizes 70% of the |
| to 500 companies in the solar energy industry -- | | | | project cost. A company under our coverage |
| Germany ranked first followed by Spain, Japan and | | | | benefiting from this move includes Solarfun Power |
| U.S. in terms of cumulative installed solar electric | | | | Holdings Co. Ltd. (SOLF - Snapshot Report). |
| power as of year-end fiscal 2008. However in fiscal | | | | Through the American Reinvestment and Recovery |
| 2008, Spain (2.46GW in 2008) beat Germany | | | | Act (ARRA) passed in February 2009, the U.S. |
| (1.86GW) in terms of new installations. World solar PV | | | | Treasury Department has implemented a alternative |
| installations reached a record high of 5.95GW in 2008, | | | | energy program to hand out cash grants in lieu of |
| representing growth of 110% over 2007. | | | | the investment tax credit for renewable energy |
| According to the European Photovoltaic Industry | | | | projects. Recent focus on renewable sources will |
| Association (EPIA) -- the world industry association | | | | greatly benefit green crusader companies like |
| for solar photovoltaic electricity market -- the | | | | Rentech Inc. (RTK - Snapshot Report). Also, the |
| cumulative global installed PV capacity stood at | | | | Department of Energy (DOE) in the U.S. has |
| almost 15GW, compared to only 9GW in 2007. | | | | implemented a loan guarantee program to help |
| ALTERNATIVE ENERGY OPPORTUNITIES | | | | developers obtain financing for solar power projects. |
| Alternative Energy Environmental Advantage: Solar | | | | ALTERNATIVE ENERGY WEAKNESSES |
| power is one of the most benign electric generation | | | | Recent Start-ups: A large number of alternative |
| resources. Solar cells make electricity without air or | | | | energy companies are recent start-ups with limited |
| water emissions, noise, vibration, habitat impact or | | | | resources. As such, quite a few depend on their |
| waste generation. | | | | customers’ ability to finance solar projects. |
| Fuel Risk Advantage: Unlike fossil and nuclear fuels, | | | | Global Recession: The global economic crisis has |
| solar energy has no risk of fuel price instability or | | | | affected alternative energy sales and earnings |
| delivery risk. Although there is variability in the | | | | growth. Weakness in the debt and equity markets, |
| amount and timing of sunlight in the day, season and | | | | for as long as it lasts, will raise costs of capital for |
| year, a properly sized and configured alternative | | | | firms in this emerging sector and may hinder project |
| energy system can be designed to be highly reliable | | | | financing, working capital requirements and new |
| while providing a long-term, fixed-price electric supply. | | | | research and development. |