“Considering the improved economics of solar in these markets along with other growth enablers such as solar leasing, availability of low cost financing, we expect installed capacity growth of ~600% over the next 4 years,” Deutsche Bank analysts said.
Renewable companies are are being structured as “C” corporations that act as holding companies, similar to real estate investment trusts and master limited partnerships, which enjoy certain tax breaks.
“If investors value MLP and REIT assets at 7% to 8% distributable cashflow yield, there is good reason to believe they will value renewable assets at similar, if not lower, yields,” Deutsche Bank said.
The solar investment tax credit will expire in 2016, so many are installing now while they can take advantage of the incentive program. Additionally, solar leasing, which allows residents to install solar systems for free and pay nothing for maintenance, is on the rise. [Solar ETFs Can Keep Shining]
Investors can play the solar industry with some ETF options, including the Guggenheim Solar ETF (NYSEArca: TAN), which is up 92% year-to-date, and the Market Vectors Solar Energy ETF (NYSEArca: KWT), which is up 59%. [Solar ETFs’ Holdings See Spike in Short Interest]
For more information on the solar industry, visit our solar category.
Max Chen contributed to this article.