As prices for coal, natural gas and oil have soared, solar power has been getting perhaps its most serious look from investors since US president Jimmy Carter pulled on a cardigan and asked Americans to damp their furnaces. The new interest means that the handful of US solar stocks has been surging, too.
Over the last year, the shares of Evergreen Solar, DayStar Technologies, Energy Conversion Devices and Spire -- all small US firms that make equipment for converting solar power into electricity -- have more than doubled in price. Last month, Cypress Semiconductor said it would try to raise as much as US$100 million in an initial public offering for its SunPower subsidiary.
"The solar market is projected to grow 35 percent a year for the next three to five years," said Walter Nasdeo, managing director of Ardour Capital, an investment bank in New York that specializes in energy companies.
Back in the days of Carter's cardigan, the US was mired in an energy crisis, with an oil embargo and long lines at gas stations. Today, tumult in oil-producing places like the Middle East and Venezuela is roiling markets. Strong demand for electricity has contributed to increases in the prices of coal and natural gas.
And Hurricane Katrina, of course, has worsened the situation. Yet these dire developments have been a boon for companies that make devices like silicon wafers and rooftop panels that convert solar energy.
The economics of the solar business has not been tempting to many consumers or investors. Without government or utility subsidies, the US$20,000 to US$25,000 that it costs to buy and install a typical home solar-power system may be too high to be recouped at the end of a 30-year mortgage.
But government help, combined with the recent climb in energy prices, has made solar more appealing. Some states offer big subsidies, helping to defray much of the initial cost of a home system.
Some electric utilities also offer incentives. In theory, solar-energy systems free them from having to invest in additional generating capacity. Homeowners typically connect their systems to the power grid and buy electricity when their panels do not produce enough power; they sell electricity to their utility when they have a surplus.
Federal law requires utilities to buy excess power generated by consumers using solar power, although rates vary from state to state, said Joseph Schwartz, chief executive of Home Power magazine. And the new federal energy law, signed by President George W. Bush last month, includes a tax credit of as much as US$2,000 for the purchase and installation of a residential solar-power system.
"Despite all of the concerns about imported oil and climate change, most people make their decision to install solar based on whether they're going to save money," said Steven Taub, director of emerging power-generation technologies at Cambridge Energy Research Associates.
In states with generous subsidies, he said, solar power may be attractive for many consumers. In New Jersey, for example, subsidies can cover as much as 70 percent of the cost, leaving consumers with a net cost of about US$6,000 on a typical home system.
Though the four little US solar-power companies stand to benefit from new demand for power, they account for only a fraction of the world's solar-device production. The biggest of the four, Energy Conversion Devices, has a market capitalization of only about US$1.1 billion.