By Porter Stansberry in the S&A Digest:

Longtime readers of my newsletter will recall my frequent warnings about the solar-power industry. In short: Solar power is yet another example of hope conquering experience (and reason).

Solar technology isn't nearly efficient enough to generate power for an electrical grid. The laws of physics tell me (and anyone else who considers them) it never will be. Energy doesn't work that way. You can't make diffuse sources of energy, like sunlight, concentrated enough to deliver across a grid at any reasonable price. It's like trying to put a smashed egg back together.

Nobody in his right mind would buy a solar panel for a power grid. So who does buy these things for power grids? Governments, of course. In particular, the governments of California, New Jersey, Germany, and Spain.

I'll let you connect the dots about what kind of politicians these places are all well known for having. These states also have another thing in common: They are all broke. Spain, in particular. That's bad news for the solar-panel industry...

In 2008, Spain accounted for half of the world's new solar-panel installations. It spent roughly $1.6 billion on subsidies to build 2.6 megawatts of solar-generating capacity - or about 1% of its total generating capacity. That's $615 per watt. The national power company of the Philippines is building a new 100 megawatt coal power plant this year. The cost estimate is $95 million. That's 95 cents per watt. Which do you think is a better investment?

Spain nearly bankrupted itself trying to afford solar power. So this year, the politicians cut the subsidies. Now, we're back to a "no one in his right mind would buy solar power" situation. This year, Spain's solar capacity is actually falling. It's not even worth the cost of maintaining the existing plants.

Crux Note: The S&A Digest comes free with a subscription to Porter Stansberry's Investment Advisory. In his latest issue, Porter warns about the serious inflation he sees coming – and shows you how to prosper from it.  To learn more, click here...

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