Why Solar ETFs Could Soon Shine Brighter

The price of solar panels is coming down so much that they’re becoming affordable to some consumers. This could ultimately benefit solar exchange traded funds (ETFs) as more people take their homes into the era of green.

The cost to install solar panels as a source of energy has dropped nearly 40% over the last year, which has made them more popular among consumers.  The reason that these panels have fallen in price is twofold, states Kate Galbraith for The New York Times.

• The production of polisilicone, which is a major material used in these panels, has skyrocketed as more factories around the world are producing it and some of these factories are actually producing the panels themselves.
• Global demand for solar panels has slowed down.  In particular, demand in Europe, which is the second-largest market for solar panels, has slowed down and is expected to drop 26% compared to 2008.

These cheaper prices, in conjunction with generous federal credits and innovative ways to finance the trend toward solar panels may be beneficial for the industry in the long haul.

• Claymore/MAC Global Solar Energy Index ETF (TAN): down 7.2% year-to-date

• Market Vectors Solar Energy ETF (KWT): down 11.5% year-to-date

For more stories on solar energy, visit our solar energy category.

Kevin Grewal contributed to this article.