The Guggenheim Solar ETF (NYSEArca: TAN), the largest ETF dedicated to solar stocks, is up more than 32% year-to-date, a number that could rise as markets price in continued growth ahead for the solar industry.
In fact, solar is the world’s fastest-growing energy source. New data from the International Energy Agency (IEA) confirm as much.
“Solar power grew faster than any other source of fuel for the first time in 2016, the International Energy Agency said in a report suggesting the technology will dominate renewables in the years ahead,” reports Bloomberg.
The clean energy sector found support under President Barack Obama as the administration pledged to fight against global warming and climate change through heavy subsidies into green technology. However, Trump, who called climate change a hoax perpetrated by China, pledged to cancel last year’s Paris climate agreement and remove Obama’s Clean Power Plan, could reverse years of supportive alternative energy policies.
“The IEA expects about 1,000 gigawatts of renewables will be installed in the next five years, a milestone that coal only accomplished after 80 years. That quantity of electricity surpasses what’s consumed in China, India and Germany combined,” according to Bloomberg.
Related: Sunny News for Solar ETF
A number of bullish factors have supported the rebound in solar stocks, including continued strong overall world demand for solar, especially from India, Latin America, the Middle East and Southeast Asia; greater demand for solar power due to increasingly competitive price of solar, compared to alternatives as countries seek to meet carbon-reduction targets under the Paris climate agreement; and continued low valuations, relative to pricier U.S. large-caps, according to MAC Solar Index, the index provider for the underlying benchmark of TAN.
“The surge of photovoltaics in China is largely due to government support for renewables, which are being demanded by a population concerned about air pollution and environmental degradation that has led to deadly smogs. The country is seeking to reduce its reliance on coal and has become the world’s largest market for renewables, particularly solar,” reports Bloomberg.
TAN’s year-to-date performance is all the more impressive when considering oil prices are plunging. Previously, solar stocks have risen when oil prices do the same because expensive oil renews calls for cheaper energy alternatives. TAN has not finished higher on an annual basis since 2013.
For more information on the photovoltaic panel industry, visit our solar category.