Solar stocks. Very nice. Solar outlook. Great Success.

Last week, Biden’s administration released a study showing solar’s potential to produce 40% of the country’s energy by 2035 – building the case for further investment into the sector.

Shining in the right direction

The US installed ~15 gigawatts (GW) of solar power capacity last year – and production is expected to remain the same with current policies in place. Hardly enough to meet the US’ decarbonization targets…

• To meet targets, the US will need to install 30GW annually in the next five years and 60GW annually the following five years.
• By meeting targets, the US could save $1.7t, while the cost of new power would be “fully offset by technological improvements.”

But the US relies on solar panel imports from China, which controls 67% of the photovoltaic cells market — a key component in making solar panels — while the US holds less than 1%. Here’s why that could be changing:

• In June, the US banned imports from a Chinese solar materials supplier for using child/forced labor.
• The US could also leave Chinese suppliers out of federally funded projects.

Meaning: More solar panels could be domestically manufactured — increasing demand for US solar companies. The rising shipping costs from Asia also made US panels more affordable.

Stepping stones to a solar future

Solar-friendly policies are the first step towards widespread solar adoption, but the products delivering the energy will need to improve:

• Better tech, better prices: Solar is the cheapest energy source in some states, but prices and tech need to improve to meet targets.
• More energy storage: Long-term solar energy storage needs further development to reliably meet demand surges.

The solar industry also needs more employees with an estimated 1.5m needed to meet employment demands – currently, it employs 250k people.

Investors: Sunny days ahead?

The solar industry hasn’t performed well in 2021. The Invesco Solar ETF (NYSEARCA:TAN) is down over 20% on the year. But these US solar companies weathered the storm better than others:

• First Solar (NASDAQ:FSLR), which supplied 16% of the panels deployed in the US last year, is flat since the start of 2021.
• SunPower (NASDAQ:SPWR), a solar power generation company, is down 16% in 2021.

Falling costs and Biden’s commitment to emissions targets should benefit solar investments – and the sector’s stock prices with it.