Brent crude oil has fallen 34% since breaking the psychological $US100/barrel level in September, with the Ardour Solar Index falling by the same amount over that period.

The Ardour Solar Index includes companies from around the world that derive at least 66% of their revenue from solar power and related products and services, but rarely R&D.

On a weighted basis, its 33 member companies from the US, Taiwan, Norway, Spain, Hong Kong, England and Spain derive over 90% of their revenues from the solar industry.

To give an idea of scale, the biggest company is Chinese green energy supplier GCL Poly Energy with a market capitalisation of $US29 billion. The smallest is Spanish Solaria Energia with a market cap of $78 million.

Nathan Lim, Sydney-based international equities portfolio manager for superannuation and investment company Australian Ethical, told Energy News that investors were blindly lumping energy stocks together under the generalist assumption that “they have to sell the power somewhere”

He cited several factors that prove “it makes no sense to see solar shares being sold off with the fall in the oil price”

Solar does not compete with crude oil for electricity generation and is becoming increasingly price competitive in more places around the world without subsidy – with lower execution risk – and is relatively quick to build compared to coal-fired power plants.

“The permitting and construction time for even large scale solar projects is a fraction of the time needed for conventional power plants,” Lim said.

“A conventional power plant can see the permitting process stretch out for years as rigorous environmental studies need to be conducted to protect wildlife and safeguard against emissions.

“The low environmental footprint of a large scale solar project (never mind the virtually nil impact of a solar panel on a rooftop) helps to speed along the permitting process.

“This means projects can be deployed quickly and with minimal impact on the environment or the neighbourhood.

“From a developer’s point of view, a solar project has lower execution risk than say a coal-fired power plant.”

According to Lim, lumping solar stocks in with oil stocks is even more inexplicable considering solar dovetails into global government policy seeking to reduce the emissions intensity of the economy.

“Only 5% of crude oil is used to produce electricity globally and much of this is occurring in the Middle East where crude oil is cheap and abundant,” Lim said.

“Crude oil power generation is simply not a significant end market because it is not growing and is utilised mostly in regions with unique circumstances i.e. an abundance of cheap oil.”

At the wholesale level, Dubai has just set a new global low for the price of electricity generated from solar, signing a power purchase agreement at US5.98c per kilowatt hour – cheaper than either coal or natural gas power generation.

This follows auctions in Brazil that achieved a price of 8.7c, which is only a little over the 7.8-8c signed with fossil and biomass fuelled power plants.

In Australia, meanwhile, Lim said that even without any financial assistance the retail price of electricity was so high that the payback on a typical solar installation was well under 10 years, with the potential to be as short as six years with small scale technology certificates.