As the world moves more towards renewable energy sources, solar energy could be one of the main beneficiaries. According to a “United States Solar Energy Market – Growth, Trends, and Forecasts (2020 – 2025)” report, more growth is ahead over the next five years.

“The United States solar energy market is expected to grow at a CAGR of 17.32% during 2020-2025,” the report noted. “Factors, such as solar PV projects under construction, in the pipeline and planning stages, and supportive policies of the government are expected to boost the cumulative installed capacity of solar energy during the forecast period.”

Nonetheless, the industry is still facing some challenges it needs to overcome.

“Like many other industries, the solar energy industry has been hit hard by COVID-19 pandemic, resulting in uncertainty for the players involved in the solar energy market,” the report added. “More than 72,000 solar workers are expected to lose their jobs because of the pandemic. According to the industry experts, around 30% decline is anticipated in the new solar PV capacity additions in 2020. This decline in new installations can be attributed to challenges posed by work being halted, permitting delays, and the decline in consumer demand. In addition, financing for solar projects has become a significant challenge. The economic downturn is causing tax equity markets to dry up, an important market that solar companies use to finance their projects.”

For investors looking to capitalize on solar energy, one fund to look at is 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.

TAN Chart

TAN data by YCharts

Broad, Leveraged Energy Plays

Additional plays on energy for traders to consider are 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.

Fund features:

  • 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.