The Guggenheim Solar ETF (NYSEArca: TAN) touched a new 52-week high earlier in Wednesday’s session and is currently trading higher by 2% on news that India is constructing the world’s largest solar plant.
Although India, Asia’s third-largest economy, does not yet have an indigenous solar industry par with that of China or the U.S., the country has been steadily boosting its solar capacity in recent years. “Since 2010, India has hiked installed solar power capacity from a meagre 17.8 megawatts to more than 2,000MW,” reports Penelope Macrae for Agence France Presse.
India’s drive to increase solar capacity and consumption is the result of a catalyst that has sent TAN and the rival Market Vectors Solar Energy ETF (NYSEArca: KWT) soaring since the start of last year. Solar companies are solving one of the industry’s long-standing problems: Driving costs low enough to compel end users to make the switch from traditional fuel sources. [Sunny Days for Solar ETFs]
India will spend $4.4 billion to “build the world’s largest solar plant to generate 4,000MW on the shores of a saltwater lake in the northwestern desert state of Rajasthan, which should drive solar power costs even lower,” according to the AFP.
There is some grumbling that India’s potential to become a major solar market is not benefiting the country’s manufacturers because the solar industry there is nascent at best. The aforementioned $4.4 billion plant is being constructed mainly with Chinese and some U.S. products. That still works in TAN’s favor as those two countries combine for two-thirds of the $368.2 million ETF’s weight.