China revealed a huge surge in photovoltaic panel installations over the first quarter, a typically slow season for the industry, and if the country maintains its pace, it could portend a strong year for solar stocks and sector-related exchange traded funds.
Year-to-date, the Guggenheim Solar ETF (NYSEArca: TAN) jumped 40.8% and Market Vectors Solar Energy ETF (NYSEArca: KWT) increased 30.3%. [Clean Energy ETFs Power Ahead]
On Monday, the China National Energy Administration announced that the country added 5.04 gigawatts of solar capacity, or just shy of France’s entire solar capacity, in the first three months of the year, Bloomberg reported.
China is planning to install as much as 17.8 gigawatts of solar power this year, or two-and-a-half times the capacity added by the U.S. in 2014 as part of the country’s aggressive plans to cut carbon emissions. For instance, the country’s recent move away from small coal plants will avoid the annual release of as much as 11.4 million metric tonnes of carbon dioxide, which could help cut emissions for the first time in over a decade, Today Online reports.
Chinese companies make up 22.9% of TAN’s underlying holdings and a hefty 38.4% of KWT’s portfolio.
According to RBC Capital Markets, the surge in new installations for what is typically a seasonally slow first quarter could raise the possibility of China hitting its 2015 full year installation targets, reports Lee Jackson for 24/7 WallSt.
The optimistic outlook could bolster RBC’s top solar stocks rated Outperform, including JA Solar Holdings (NasdaqGS: JASO), SunEdison (NYSE: SUNE), SunPower (NasdaqGS: SPWR) and Trina Solar (NYSE: TSL).