As photovoltaic panel installations expand and solar power becomes one of the world’s biggest source of electricity, solar sector-related exchange traded funds could be a good long-term play to access this fledgling industry.
According to the International Energy Agency, solar plants could generate as much as 16% of the global electricity while concentrating solar facilities could produce another 11% by 2050, reports Marc Roca for Bloomberg. In contrast, solar panels only make up a 0.3% share of the electricity market now.
The IEA has also grown more optimistic over the renewable energy outlook, raising its photovoltaic panel installation estimates from 11% of global power by 2050. [Solar ETFs: Demand Outpacing Supply for First Time Since 2006]
ETF investors who are interested in gaining targeted exposure to the growing global solar industry have two options: the Guggenheim Solar ETF (NYSEArca: TAN) and Market Vectors Solar Energy ETF (NYSEArca: KWT). Year-to-date, TAN has increased 20.0% and KWT has gained 9.6%. [Volatility and Cyclical Trends in Solar Sector, ETFs]
TAN includes a hefty 43.3% weight toward U.S. companies, but it also includes overseas exposure to China 28.4%, Hong Kong 28.4%, Switzerland 4.1%, Germany 3.1% and Canada 1.6%. KWT also tilts toward the U.S. with a 38.5% position, followed by China 33.6%, Taiwan 13.7%, Norway 4.8%, Canada 3.3%, Germany 1.1% and South Korea 0.5%.