The Secret Law of Solar Investing

Moore’s Law has presided over the technology sector for over 50 years now.

Put simply, Moore’s Law states that computing power doubles every 18 months while costs are cut in half, and it’s been a reliable bellwether since 1965.

You’ve likely heard of Moore’s Law.

But I’ll bet you don’t know anything about Moore’s Law’s first cousin — Swanson’s law, which relates to the solar industry.

Swanson’s law: When global manufacturing capacity for solar panels doubles, the average price of producing those panels drops by 20%.

The law is relevant now — more than ever — for three reasons…

  • Because solar has reached its tipping point — that is, solar is now an economically viable alternative to natural gas, coal and oil. In some applications, solar is cheaper than conventional energy sources…
  • A recent technological breakthrough will further lower solar costs, and…
  • Stocks like SolarEdge Technologies (SEDG) are moving notably higher.

As a futurist, my job is to understand the downstream effects of new technologies as they come on line. When I’m working with solar technologies — as is the case today — the task is made easier by the reliable price guidance offered by Swanson’s law.

So does the solar industry meet my criteria for investment?

Let’s take a deeper dive to find out.

The Case for Solar Is Undeniable…

According to Ramez Naam writing in Scientific American, “In 14½ seconds, the sun provides as much energy to Earth as humanity uses in a day…

“If humanity could capture one tenth of one percent of the solar energy striking the Earth — one part in one thousand — we would have access to six times as much energy as we consume in all forms today, with almost no greenhouse gas emissions.

“At the current rate of energy consumption increase — about 1% per year — we will not be using that much energy for another 180 years.”

Pretty amazing, wouldn’t you agree?

Considering its infinite potential along with steeply declining prices, I find it difficult to take any type of anti-solar stance. Well, except when the forecast is for overcast skies.

Here at our headquarters in Baltimore, it can be cloudy for days on end. Especially during the winter months. What effect would that have on a future society powered by sunshine?

Thanks to a recent technological breakthrough, we won’t have to find out.

“Traditional solar panels do technically work in the shadows, but they’ll only achieve about half as much energy as their counterparts in full sunlight, since the light is indirect,” reports Popular Mechanics.

But scientists just announced a breakthrough.

Applying a tiny layer of gold to solar cells agitates electrons, thereby increasing the electrical current when only indirect light is available. The result of this “gold coating” process is a 200% increase in efficiency over traditional solar cells.

Of course, this won’t happen overnight.

The science must now transition from laboratory to commercialization.

But technologies that fill a void in the marketplace — i.e., solar cells that work when it’s not sunny — tend to cruise through the manufacturing process.

And when manufacturing capacity expands, solar prices fall (Swanson’s law).

For those reasons, I’m extremely bullish on solar cell technologies.

Onward and upward,

Robert

Robert Williams

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Robert Williams

After nearly 20 years in the trenches of high finance, Robert has joined St. Paul Research to assume the role of Chief Futurist. Robert cut his teeth as an analyst for one of the most revered and prestigious medical institutions on Earth, whose endowment is valued at $4.3 billion. From there, Robert became the lead...

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