There were a lot of bright spots in the markets during 2019, but energy couldn’t power its way through to higher gains compared to other sectors. However, as more initiatives towards clean energy become higher priority, renewable energy sources could help drive strength in the sector.
“Falling costs have made possible the rise of renewable energy sources,” wrote Tsvetana Paraskova in OilPrice.com. “According to research from Energy Innovation and Vibrant Clean Energy from 2019, as much as 74 percent of America’s coal-fired national fleet, or 211 GW, was at risk in 2018 from local wind or solar within 35 miles that could provide the same amount of electricity more cheaply.”
“Utility solar photovoltaic (PV) becomes increasingly cost-competitive with wind, gas, and other electricity generation resources, the Q4 2019 Solar Market Insight Report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie Power & Renewables showed,” Paraskova wrote. “According to SEIA, climate policy, investment tax credit extension, state net energy metering, building codes, and renewable portfolio standards will all drive solar energy growth in the 2020s, which could be the Solar+ decade.
Investors who want to take advantage of lower costs in the solar energy sector can look to ETFs like the Invesco Solar ETF (NYSEArca: TAN). TAN, which started back in 2008, 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.
Leveraged, Broad Energy Play
For a leveraged broad market play on energy, traders can consider funds like the Direxion Daily Energy Bull 3X Shares (NYSEArca: ERX) for bullish plays and the Direxion Daily Energy Bear 3X Shares (ERY) for bearish opportunities should they arise. ERX rose 2.19% at the close of Mondays session.
- ERX seeks daily investment results equal to 300% of the daily performance of the Energy Select Sector Index. The index is provided by S&P Dow Jones Indices and includes domestic companies from the energy sector which includes the following industries: oil, gas and consumable fuels; and energy equipment and services.
- On the other end of the spectrum, ERY seeks daily investment results that equate to 300% of the inverse of the daily performance of the Energy Select Sector Index. The index is provided by S&P Dow Jones Indices and includes domestic companies from the energy sector which includes the following industries: oil, gas and consumable fuels; and energy equipment and services.
For more market trends, visit ETF Trends.