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WASHINGTON (Dow Jones)--As oil prices skirt uncharted territory a small group of pioneers are riding a wave of prosperity, the beneficiaries of increasing optimism about the promise of renewable energy.
At First Solar Inc. (FSLR), whose stock is trading close to last week's record high of $308.24 a share, Chief Executive Michael Ahearn has become a billionaire, when paper gains of his 3.23 million shares are factored in. Ahearn has sold more than $156 million in stock in the solar-panel maker this year alone, regulatory filings show, vaulting into a category that for years has been dominated by software and Internet executives.
The rewards highlight one of the side effects of a shift in energy policies: the creation of a new set of winners as oil prices rise near $120 a barrel and concerns about global warming put growing emphasis on developing alternative sources of energy.
"Renewables seems like the next area to create vast wealth, not just for investors and companies but for individuals," said Ben Silverman, director of research at InsiderScore.com, which tracks stock sales by corporate insiders.
The ascent by benchmark crude prices above $100 a barrel in January improved the odds for renewable energy forms like ethanol and solar. Expectations that oil prices will remain high - oil futures have added 50% to their value in just over seven months, a feat that previously took nearly three years to accomplish - renders the long-term economic incentive to invest in renewable energy more appealing.
Although Ahearn stands as the most prominent example of the boom effect, he isn't alone. First Solar Executive Vice President Kenneth Schultz has earned $25 million from options-related sales so far this year. A group of seven SunPower Corp. (SPWR) executives have together made $21.6 million from selling shares in the solar-panel maker so far this year, with Chief Executive Thomas Werner accounting for $8.4 million of the gains.
SunPower spokeswoman Helen Kendrick and FirstSolar spokeswoman Paula Vaughnn both said that the sales are part of programs under which executives routinely sell their shares. They declined to provide more details.
Ranks With Big Names
Since its initial public offering in November 2006 at $20 a share, First Solar shares have zoomed more than 10-fold, hitting a session high Wednesday of $307.80 after the company reported soaring first quarter net income amid surging demand for its next-generation solar cells. The price runup is so great that FirstSolar has already landed in the ranks of big-name companies Oracle Corp. (ORCL), Microsoft Corp. (MSFT), Google Inc. (GOOG), based on the amount of money reaped by insiders over the past year.
Google insiders sold $1 billion in stock over the period, the third-most, while First Solar insiders sold $866.8 million, the fifth-most, according to InsiderScore.com.
The financial rewards are for now outstripping the reach in the
As optimistic investors bid up share prices, some observers see parallels to the Internet boom of the late 1990s, when investors made big bets on technology companies before the companies' businesses had been proven. Many lost money as a result of the frenzy, but some made fortunes, and in the process created what have amounted to whole new industries.
"It's a lot like the Internet," said Mark Bachman, a renewable-energy analyst at Pacific Crest Securities who works out of
One advantage is that First Solar is profitable - unlike many of the Internet companies that went public in the late 1990s. At the same time, it's considered to have a competitive advantage because it produces solar panels that don't rely on silicon, with the result that its solar panels produce electricity at a lower cost per kilowatt than any other solar company, Bachman said. The cost is still higher than the 6 to 7 cents per kilowatt paid for electricity by most residential customers.
First Solar makes "thin-film" solar panels that can be used as an alternative to silicon-based panels, which have become more difficult to manufacture because of a tight global supply of silicon. Although not rated as efficient as the more prevalent silicon-based solar cells, use of thin-film panels has taken off in the past year because of soaring demand for alternative energy. First Solar is sill mainly active outside of the
Government Subsidies Key
To be sure, renewable-energy companies still face obstacles and uncertainties. The sector broadly has attracted large amounts of investment, most notably into biofuels, generating substantive hype amid a move to reduce
"Compared to the telecommunications revolution, this one is much harder because it's so big and so expensive - so capital intensive," said Phil Verleger, who was the director of the office of domestic energy policy at the U.S. Treasury Department during the Carter administration, when the nation suffered its last extended oil-price shock.
Of all the types of renewable energy being discussed, he is most optimistic about solar power. "If someone makes a breakthrough on solar and puts it on a house and cuts people's electric bills in half, you don't have to build all that infrastructure," he said.
For now, the vast amounts of wealth that stand to be created may come with backing from the government, which has policies that subsidize investment in solar and wind-powered projects. States across the Southwest and in the Northeast mandate that a certain share of electricity be generated from solar power. And since 2006, the government has granted tax credits of 30% for investments in solar equipment, making solar power the most highly subsidized source of electricity after refined coal.
As First Solar broadens its reach outside of European markets and seeks to
Source: Dow Jones Newswires
