Exchange traded funds that invest in the solar energy sector could get some mileage out of a new deal in which electric car makers are teaming up with solar manufacturers to appeal to their common client base.
SunPower Corp. (Nasdaq GM: SPWRA) is taking a shot at driving solar power to the mainstream with Ford Motor Co. (NYSE: F).
Concerns over the higher price of fossil fuels mixed with global warming and increased electricity demand around the world are reasons solar power manufacturers are taking steps to reach the mainstream. The “Drive for Green Life” program is aimed at carbon-free driving with a solar paneled rooftop from SunPower Corp., reports Dana Hull for Bend Bulletin, atop a Ford Focus Electric vehicle.
“This is a great opportunity to take solar mainstream,” said SunPower CEO Tom Werner, on Bend Bulletin. “We’re thrilled to provide electric car owners with a clean source of fuel.” [Will Google Plan Put Solar ETFs Back on Track?]
“While only marginally cost-competitive on its own, solar power has gained significant traction nonetheless. The Energy Policy Act provided for federal supports that have greatly enhanced the economics of solar power. With a $247 million budget, 2010 saw a 41% increase in federal funding over 2009…2012 looks to garner a record $457 million,” said Abraham Ballin for Morninstar. [First Solar Boosts Sector ETFs on Loan Guarantees.]
The solar industry is still in its infancy, and the economics and possibilities of proposed technologies are still experimental. An ETF is a good way to gain multiple company exposure to the sector, while relatively new businesses get off the ground. Government subsidies, and demand and expansion for solar energy in China, India the United States are necessary for the sector to strengthen. [First Solar and ETF Reactions to German Energy Move.]
Guggenheim Solar ETF (NYSEArca: TAN) provides global exposure to companies in the solar manufacturing business. SunPower is a holding in TAN at about 4%. Market Vectors Solar energy (NYSEArca: KWT) is another sector ETF.
Guggenheim Solar ETF
Tisha Guerrero contributed to this article.