[Update]
Last November I told you that the solar energy sector was primed for a rally. The sector is now up 38%!
But it’s not too late to late to gain exposure to the solar power revolution. In fact, now is the perfect time.
Solar panel sales rebounded in 2019. That’s an important change for the critical clean energy source.
Installations for new residential solar panels fell in 2017 due to changing tax rules on panels. However, a 55% drop in costs for solar panels has caused an increase in demand now.
Research firm Wood Mackenzie predicts 14% growth in solar sales for 2019. That’s double the growth rate of 2018.
This means now is a great time to consider investing in this alternative energy resource…
Solar has been the future of energy for over a decade. But until now, it struggled to deliver power.
Solar panels have advanced leaps and bounds.
The average cost per watt — that’s how you get the cost of solar panel installation — is down 75% since 2009.
That means the average American can expect to pay $18,000 to add panels to their home — compared to around $40,000 in 2010. That’s a 55% decrease in solar panel prices.
With shrinking costs, more Americans are considering solar energy as an alternative resource.
The chart below shows the average price of solar power and yearly added solar capacity:
As you can see by the blue columns, installation of solar panels fell by nearly 25% from 2016 to 2017.
There’s a mix of reasons for falling sales. Changes in the tax code, poor margins and lack of incentives all dampened sales … but that’s now changing.
2019: Double Growth for Solar Panel Installations
The downtrend we saw in 2017 didn’t last. Solar installations fought through some strong headwinds to climb again.
Last year, installations grew by 7%. And this year is set for even higher growth at 14%.
You can see what I mean on the chart below:
As you can see, the installation of solar panels in residential homes rose in the fourth quarter of 2018. And that was in the face of serious headwinds.
The U.S.-China trade war hit solar sales hard. The Trump administration rolled out plans for a 30% trade tariff on solar cells and parts back in 2018.
The incentive was to help domestic producers, but it hurts sales overall. Worry over the tariff halted projects last year.
In addition, tax incentives for homeowners to install solar panels ended.
So, there was no longer a tax benefit to install solar panels in 2018. In spite of that, the volume of solar panels increased to nearly its highest point again.
That’s why we see solar as a great sector to invest in today. It’s the right time for investors like us to profit from this uptrend in solar power.
An Easy Way to Add Solar Energy to Your Portfolio
As you can see, the trend in solar installations is up. It’s a great sector to own right now.
For a broad approach, consider the Invesco Solar ETF (NYSE: TAN). This exchange-traded fund (ETF) holds a basket of companies in the solar energy space.
Tune in next week for my top solar pick. I’ll be comparing two of Invesco Solar’s ETF top holdings to tell you which is a better buy!
Good investing,
Managing Editorial Analyst, Banyan Hill Publishing
This post was updated on March 6, 2020.
