The push towards renewable energy use is getting an added boost from the U.S. government, especially with the recently signed Inflation Reduction Act, which contains solar energy subsidies. As such, the solar energy market is expected to see its growth triple within a five-year span.
“The Inflation Reduction Act has given the solar industry the most long-term certainty it has ever had,” Michelle Davis, principal analyst at Wood Mackenzie, said in a statement based on a CNBC report.
“Ten years of investment tax credits stands in stark contrast to the one-, two-, or five-year extensions that the industry has experienced in the last decade. It’s not an overstatement to say that the IRA will lead to a new era for the U.S. solar industry,” Davis added.
Solar-Powered ETF Exposure
With opportunities abounding for growth in the solar energy market, one exchange traded fund (ETF) to consider that could benefit from the act is the Global X Solar ETF (RAYS). Government subsidies supporting the increased use of solar power could energize RAYS, making it an ideal growth option.
RAYS seeks to invest in companies positioned to benefit from the advancement of the global solar technology industry, which includes companies involved in solar power production, the integration of solar into energy systems, and the development/manufacturing of solar-powered generators, engines, batteries, and other technologies related to the utilization of solar as an energy source.
The prices of solar power materials have gone down as of late despite the rising tide of inflation. That said, more solar projects could be underway in the coming years due to the passage of the act, which can allocate more funds towards renewable energy sources like solar.
RAYS offers investors:
- High growth potential: Forecasts suggest that the global market for solar energy could reach $200 billion by 2026, quadruple the market size in 2019.
- Advancing clean technologies: Solar is the most abundant energy resource on earth. Increased adoption of solar technologies could potentially help address global power insecurity and minimize the adverse environmental impacts of fossil fuel consumption.
- Conscious approach: RAYS incorporates environmental, social, and governance (ESG) screens and follows ESG proxy voting guidelines to affect positive change alongside financial returns.
For more news, information, and strategy, visit the Thematic Investing Channel.