2020 was a HUGE year for the solar power industry.
U.S. solar installations jumped 43% on a year-over-year basis, adding 19.2 gigawatts (GW) of clean energy to the electric grid.
But that’s nothing compared to what’s ahead.
Last week, the Biden administration released a report by the Department of Energy (DOE) detailing MASSIVE growth for the solar power industry over the next three decades.
Its plan calls for a whopping 1,570 GW of solar capacity … even though we only have 80 GW as of 2020.
That means we’ll need to ramp up our solar panel installations by 1,860%.
We’re talking about the biggest project of our lifetimes…
Solar Power Infrastructure Won’t Be Cheap
The White House proposal of 1,570 GW of solar capacity by 2050 will require an enormous number of solar panels.
According to the DOE, it takes about 3.1 million solar panels to produce 1 GW of electricity.
Estimates from the National Renewable Energy Laboratory (NREL) suggest that we’ll need over 12 million acres of solar farms to produce 1,570 GW of power.
(Source: The Department of Energy.)
Plus, solar power only works when it’s sunny out.
For our electric grid to function 24/7, we also need 1,600 GW of battery storage … and we currently only have enough storage for 24 GW.
That construction won’t be cheap.
President Joe Biden has already earmarked $335 billion for renewable energy projects as part of his infrastructure bill.
And the DOE’s report estimates that the total investment needed for solar power is over $560 billion.
But the benefits outweigh the costs…
Why Solar Power Is the Future of Energy
First, the U.S. has a relatively sunny climate.
As the chart below shows, most of the country has enough sunlight to power a significant portion of its electric grid.
The light-orange areas get at least 4 kilowatt-hours (kWh) per square meter of solar power a day, while the dark-orange and red areas get over 5 kWh per square meter of solar power a day.
That means many Americans will be able to save money by powering their homes (and, eventually, their electric vehicles) with inexpensive solar power.
Second, while building the necessary infrastructure is expensive, it will boost the economy by creating construction and manufacturing jobs.
The DOE estimates the solar industry could employ between 500,000 and 1.5 million American workers by 2035, up from 230,000 currently.
Subsidies and tax breaks can also help U.S. solar panel manufacturers keep up with their overseas competition.
Third, technological advancements will make solar panels cheaper and more efficient over time.
The NREL expects solar panel costs to fall as much as 60% by 2030.
Finally, relying on clean energy sources such as solar power, wind power and hydropower will nearly eliminate our electric grid’s carbon dioxide emissions by 2035.
The DOE estimates that decarbonization will reduce the costs of climate-related damage by as much as $1.7 trillion over a 30-year period.
That’s a HUGE amount of savings that easily offsets any construction costs.
Solar Power Stocks Are Incredibly Cheap
Biden’s infrastructure plan envisions a future where solar power generates up to 45% of the U.S. electricity supply by 2050.
That would make it the No. 1 energy source in America.
And what’s amazing is that solar power stocks are still incredibly cheap.
In fact, the Invesco Solar ETF (NYSE: TAN) is down nearly 20% from the beginning of the year.
This exchange-traded fund holds shares of U.S. solar power companies such as Enphase Energy, First Solar, SunPower, Sunrun and Sunnova.
But its holdings include businesses in Asia, Europe, Israel and Canada, making it a safe bet no matter what the future holds.
So, TAN offers an easy way to add exposure to the broad solar power market … but it won’t stay below $100 a share for long.
For more investment ideas in this space, you can check out Ian King’s Strategic Fortunes service.
His readers bought SunPower in June of 2020, and they sold half of the position this past January for an incredible 780% profit in roughly seven months!
Regards,
Assistant Managing Editor, Banyan Hill Publishing
