Amid weakness for stocks, the Invesco Solar ETF (NYSEArca: TAN) remains a catalyst-rich story and mounting data points confirm as much.
TAN seeks to track the investment results of the MAC Global Solar Energy Index, which is designed to provide exposure to companies listed on exchanges in developed markets that derive a significant amount of their revenues from the following business segments of the solar industry: solar power equipment producers including ancillary or enabling products.
As has been frequently mentioned, increased adoption is a major driver for renewable energy equities and that’s a theme relevant to solar and TAN.
“Some 40% of all new electricity generating capacity additions in 2019 in the U.S. came in the form of solar power, its highest share ever, according to a report by the Solar Energy Industries Association and Wood Mackenzie,” reports S&P Global Market Intelligence.
TAN Can Still Shine
Data confirm the number of solar installs measured in gigawatts (GW) soared in 2019.
“Researchers said that 13.3 GW of solar power capacity was installed in 2019, a 23% increase over 2018. That’s more than any other source of electricity installed in 2019, according to the report; total operating solar capacity in the U.S. now exceeds 76 GW,” notes S&P Global Market Intelligence.
Looking ahead, the U.S. Energy Information Administration projects that solar’s share of the U.S. renewable power space will expand to nearly 50% by 2050 from 13% in 2018, surpassing all other renewable energy sources as renewable power’s share of the overall grid expands to 31% from 18%.
“The U.S. added 2,919 MW of new utility-scale solar generating capacity in the fourth quarter of 2019, according to S&P Global Market Intelligence data. That’s 400 MW more than the combined solar capacity brought online in the three preceding quarters. Roughly 1,640 MW of solar capacity was added in December alone,” according to S&P Global Market Intelligence.
That’s relevant for TAN because the U.S. is the ETF’s largest geographic exposure at almost 45%, according to Invesco data. Tax credits could also come into play for TAN as this election year unfolds.
“Tax credits for solar will step down to 26% of commercial and residential project costs this year, dropping to 22% in 2021. In 2022, the tax credit for residential installations will be eliminated, while commercial and utility-scale installations will continue to qualify for a 10% tax credits,” reports S&P Global Market Intelligence.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.