Posting in Energy
The idea is that a solar panel maker will enter into a long-term deal with a utility for panels, and government will cooperate, allowing both sides to scale-up, fueled by tax breaks passed last year and signed into law by President Bush.
Fortunately he's retired. My sister couldn't be happier. And now neither could I.
Applied's heyday is now mostly in its rear-view mirror. Its performance has trailed that of rival KLA Tencor for most of this decade, and this year KLA has only lengthened its lead.
Applied makes fabrication equipment, the machines companies like Intel use to make chips. (Intel, in fact, is a key customer.) But Moore's Second Law is a harsh mistress. As chip-making gets more complex and more expensive, suppliers like AMAT (its stock symbol) are squeezed.
Fortunately the current technology for building solar panels is very much like that for making the silicon wafers chip-makers use. So Applied is trying a new business model.
They call it fab2Farm, and its aim is to unite local businesses, government, and utilities around the idea of building big solar farms.
The idea is that a solar panel maker will enter into a long-term deal with a utility for panels, and government will cooperate on things like zoning for both, allowing the two sides to scale-up, fueled by the Emergency Economic Stabilization Act passed last year and signed by President Bush.
Most of that law was meant to address the banking crisis -- it's where the TARP comes from -- but it also extended a 30% Investment Tax Credit for solar power by 8 years and, for the first time, let utilities in on the boodle.
This delivers "visibility and predictablity," Applied says, allowing utilities to get some skin in the game, rather than signing Power Purchase Agreements where developers now shoulder all the risks.
And there are risks. Serious risks. Solar panel prices have plummeted this year, despite shrinking rebates that are cutting the number of home buyers. New buyers must be found.
Applied has bet big on solar panels, figuring it can make up on volume what it's losing as chip-making gets harder.
Don't listen to that cynic in the corner, noting that there are other ways to harness solar energy other than silicon-based solar panels, methods that are vastly more efficient, and there are more methods being developed all the time.
Buy now. And buy big. The corporate life you save may be your own.
Well, my brother-in-law's friends at any rate.
Sep 11, 2009