Will 2013 Be the Breakout Year for Alternative Energy? (FSLR)

Proponents of alternative energy such as solar and wind power have fought a long uphill battle. For years they've tried to prove that these energy solutions were not only more ecologically friendly, but also that the potential, long-term returns made them a better investment. Well, it appears as though this year might finally be when average investors stand up and see that investing in alternative energy companies is not the wild roller-coaster ride it once was.

Let's look at the most recent developments in the space and see how alternative energy might lose the "alternative" moniker.

Solar: Efficiency is the name of the game
The biggest gripe with alternative energy, notably solar, is that it can't compare with fossil fuels because the per-watt costs were too high. Thanks to developments in the technology, this is becoming less and less the case. According to a report in The Economist, the average cost for a solar installation per watt produced has dropped 99.14% since 1977 and is now about $0.74 per watt produced. When considering additional installation costs, an average solar facility will run about $4.00 per watt, which is pretty reasonable when compared with the $3.00 per watt needed to build a coal-fired facility. 

One example of improving efficiency from solar is First Solar's (NASDAQ: FSLR  ) Macho Spring facility in New Mexico. The 50-megawatt solar farm will sell power to El Paso Electric(NYSE: EE  ) for 5.79 cents a kilowatt-hour, less than half of what El Paso pays to buy power from coal plants. A large uptick in manufacturing has also helped First Solar start to realize even further cost reductions. Today, the company sports one of the lowest per-watt costs at about $0.66 today, and the cost is expected to lower by another 33% in four years.