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).
JA Solar is one of the largest producers of solar products in the market, manufacturing some of the most powerful and cost-effective offerings in the industry. SunEdison provides solar-generated electricity and services to residential, commercial, government and utilities customers. SunPower also sells rooftop and ground-mounted solar power systems and utility-scale power plants, and the company recently announced a joint venture with Apple (NasdaqGS: AAPL) to build solar power projects in China. Lastly, Trina is China’s largest panel manufacturer and is expanding its services across the globe.
TAN includes 2.5% JASO, 8.6% SUNE, 4.6% SPWR and 3.9% TSL. KWT includes 2.1% JASO, 8.3% SUNE, 4.7% SPWR and 4.4% TSL.
Looking ahead, Wang Zhongying, director of the China National Renewable Energy Centre, said that renewables will be a major economic driver in China, according to ClimateWire. The Centre projects that China could generate most of its energy from renewables by 2050 and the sector could make up 6.2% of China’s gross domestic product.
Guggenheim Solar ETF
For more information on the photovoltaic panel industry, visit our solar category.
Max Chen contributed to this article.