Investing in Solar Industry Today

Solar installations in USA is growing fast, with IHS predicting 15GW of USA solar installations in 2016. Even during the last year, USA achieved a record 7.3 GW installations. This is enough to power more than 5 million homes. Developing countries like India is also targeting to achieve 100 GW of solar installation by 2022 from 6.7 GW now. However the USA solar stocks have not shown the promise as shown by the number of installations so far this year.

Source: Google Finance

Though USA extended the investment tax credit in December last year, the state of Nevada took a reverse approach towards rooftop solar installations in the state literally punishing residential players for going solar.

During the last month SunEdison, the once poised to become a leader in the renewable energy industry filed for Chapter 11 protection. The Q1’16 results for SolarCity (NASDAQ:SCTY) also do not look very promising, given the booming residential solar market in USA. The solar stocks are not performing as per the investor expectation. The decline in oil and gas prices are definitely having a negative impact on the solar stock performance.

However the solar prices are also falling. The bids are coming in at record low tariffs.

Though it is a good sign for developing nations like India, the country cannot completely ignore the dirty cheap coal to provide affordable power for all. The Indian Power Minister recently made his stance clear that he would be readily using coal based power in case renewable energy is still not competitive.

“If the renewable energy is not competitive and viable, the other option is to abort the programme. I am not going to purchase power at Rs.7 per unit when we can have (coal-based) power at Rs.3 a unit just because someone else (the developed world) has put all that green house gas in the air. Sorry; we are not ready to do that. I will run this programme till it is sustainable,” said Goyal.

Source: Livemint

So what is all this hinting at? Is solar power no more the gen next energy efficient source of power anymore? Is solar power losing all its attractiveness in this energy hungry universe? I understand the questions arising in an investor’s mind. Well these are the paradoxes of solar running together in today’s times.

Go Solar!

This itself proves that solar has finally become competitive with traditional power prices, at large in different parts of the globe. Solar power is abundant, clean and most important of all free. The companies that are technologically more advanced and keen on innovation will only be able to survive these cycles. Solar power is poised to set record installations globally. New technologies are coming in the form of storage coupled with attractive leasing programs to promote solar. Solar Power has reached grid parity in many parts of the world including India, where solar prices have become competitive with the state industrial power tariffs like in Maharashtra. Though the falling gas prices are taking a toll over solar energy, it is here to stay for long. I think it is the right time to invest in technologically advanced companies like First Solar (NASDAQ:FSLR) and SunPower (NASDAQ:SPWR) to take advantage of the long term secular growth of the solar industry.

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