Renewable Incentives

Solar stocks stands to benefit from Biden’s emission targets and policies

By Kevin Roche
solar stocks

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.