Weekly Insider (Senate, Solar & The World's Greatest Gift)

First: Matthew Nordan, President of Lux Research, gave a captivating testimony on nanotech yesterday in front of the Senate about the National Nanotech Initiative. Quoting Matthew, “The NNI has funded prodigious research in areas ranging from noninvasive cancer therapies to high-efficiency solar panels. But moreover, it’s spurred a renaissance of materials science development in the private sector. U.S. corporations like GE and Motorola spent $2.4 billion on nanotech R&D last year – 23% more than government spending at the federal and state levels combined – and venture capitalists put $632 million into U.S.-based nanotech start-ups, four times the annual figure before the NNI began.”



Second: Take this with a grain of salt. Recent conversations and scuttlebutt revealed that an alarming number of my hedge fund friends are short solar or looking at putting puts on. Of course, they know that markets can stay irrational longer than they can stay solvent, but they are calling the solar boom, “watt-coms” and seeing lots of patterns in common with the dot.com debacle. One CEO of a public solar company apparently told his audience he’d be raising new money every year. When an investor questioned him about dilution, the CEO snapped back: all my investors rent my stock anyway (meaning they were speculators not long-term holders).



From a technology view, let me be clear: solar is Occam's razor—it simply makes sense. But from an investors view, it’s the razor’s edge—good luck. Here's my controversial view: solar will end up as the Global Crossing of energy. Whereas the unintended consequences of biofools, er-biofuels are now being deemed "crimes against humanity"...the unintended consequences of solar will eventually be the exact opposite, what I’ll call "a gift for mankind".



When I say gift: it’s not what you think. Unfortunately the mass of VCs and public market investors flocking like Icarus to the sun will experience how cynically true the wisdom of 17th century French writer Pierre Corneille’s words are: “The manner of giving is worth more than the gift.”



Worth—as in billions of dollars being lost to give it. Startups are already marketing to municipalities and city bureaucrats to buy panels that people and recessionary roofs (corporations) aren't. Here's my prediction: The big winner? Africa.



Solar is to Africa as Global Crossing was to the world a decade ago. The latter helped do a great public good, connecting the world—by laying massive fiber with cheap capital provided on flawed (or fraudulent) assumptions. It was an invisible emerging market tax on speculators—that is: speculators subsidized massive infrastructure buildout. The local people in foreign lands ended up being the real winners. Solar too, at great expense to its private investors is doing a great good for the public. I predict Africa, with low or no baseload power will be the biggest beneficiary.



As William Wordsworth wrote: “Pleasure is spread through the earth; In stray gifts to be claimed by whoever shall find.” Eventually, some years from now, some opportunistic entrepreneur will buy up excess panels and capacity and distribute distressed solar power assets to a distributed population (in Africa). As I’m so found of quoting so often from Jim Surowiecki: in greed and avarice lies the hope of progress.