Presented my current take on the solar industry to a group of family office managers in San Francisco last week. I was encouraged by the tremendous amount of interest shown in my cautionary tale about investing in a fast growing and volatile industry.

Solar has grown--and is forecast to continue to grow—at a 60% CAGR.  Tremendous amounts of capital are needed to augment the federal and state incentives available to clean up and smarten how we generate, distribute, and use energy.

And it is a global opportunity.  Solar is moving from a policy driven market to one driven by economics—and is scaled optimally for private equity investors.  Wind is an oligopoly and primarily offshore, the smart grid is, and will continue to be, a policy driven market—customers are afraid it will make their energy bills go up, and energy storage is way too early in the cycle to predict what a successful business model would look like.  Solar has a variety of technology, finance, and execution opportunities that can benefit from the $5 to $15M that a private equity fund can provide.

For that matter, I still don’t know what a successful business model in the solar sector will look like, but I do know two key elements will be: site control next to either loads or transmission w/ capacity, and project finance.

Prior to the talk, I was asked to address how the industry was going to survive after the subsidies disappear. 

With Senator Reid now saying that carbon trading is not going to happen for a while—the brown power industry continues to get a massive subsidy to use the air we breathe as a dumping ground--at no cost.  And China is set to start carbon trading next year.  All we ask for is a level playing field.  Price peak power realistically, value the renewable attributes of solar power transparently, charge a fair price for use of our clean air and water, and we don’t need the subsidies.