Solar energy has been growing in popularity for homeowners and businesses alike, the commercial federal tax credit offerings and incentives help pay for solar enable solar infrastructure to pay for itself in a matter of years. Investors are taking note. Solar energy is becoming a popular place to invest. As growing concerns and instability in traditional energy markets have heads turning towards a reliable, renewable energy solution, solar is taking center stage. But is solar the right investment for you? Let’s explore the pros and cons of investing in solar energy companies.
PRO: Solar’s supply chain means there are many ways to invest
The solar energy supply chain includes manufacturers of various components, solar battery storage, solar inverters, solar panels and other equipment used to secure, build and install solar energy systems. Beyond the supply chain, there is even a market for building and selling the energy generated from these solar panels, a secondary market for used parts, and more.
You can invest in a solar panel manufacturer like First Solar (NASDAQ: FSLR) or SolarEdge Technologies (NASDAQ: SEDG) that manufactures power optimizers for solar panels. You can invest in more technology-based companies, including the equipment and tech power house Tesla (NASDAQ: TSLA). Those who invest in Tesla aren’t necessarily in it for the here and now, although they are offering some cutting-edge products, but rather are in it for the potential that company promises in future tech in the solar realm. There are even exchange-traded funds (ETFs) that involve stocks around the manufacturing and distribution of solar panels and other parts of solar energy systems.
Before adding solar to your portfolio, here are some things you should consider, the good and the not-so-good.
PRO: Solar investing is a future-forward long-term option
Installing solar is relatively straightforward with a low environmental impact for generating clean energy, especially as compared to fossil fuels. Solar energy generation has the potential to drastically lower greenhouse gas emissions compared to coal or oil, and there isn’t the same damage to land that you find with fracking. This popularity puts solar at an advantage for long-term investors.
CON: Solar energy can be fickle without the right battery storage
While it is true that solar panels can only generate energy when the sun is out, there are increasingly more ways to store large amounts of solar energy in solar batteries for use whenever you need it. Intermittent cloud cover, rainy days, and longer nights can impact how much energy a solar energy system is able to generate. Look for companies that have a hold on how to maximize profit without relying on the daily path of the sun across the sky. Most have already solved this challenge by adding battery storage options or other solutions.
CON: Solar panel manufacturing relies on precious minerals
Another consideration is that there are precious minerals needed for the manufacturing of a solar cell. If there were ever to be an interruption, or price increase in the production of these materials, like various metals or silicone for example, there could be a hiccup in the supply chain for the entire industry.
CON: Recycling solar panels is difficult, and the waste could add up
Disposal is also becoming a growing concern as some of the first solar panels begin aging out of use. Solar panels’ ability to gather the sun’s rays degrades over time, little by little, and while many still have nearly 80% capacity even at 25 years, eventually landfills will be stuffed with burnt out solar panels.
Currently, recycling the materials in the panels is possible, but the process is time consuming and expensive.
PRO: Recycling solar panels is becoming a market of its own
There are companies investing in research for out how to increase recyclability of solar panels by focusing on the mechanisms and materials used, making the panels easier to dissemble, or building with more easily recyclable materials. Some have already found solutions, but there is still a way to go to make these processes universally beneficial.
First Solar is one company already working to solve the solar recycling problem. In 2018, the company initiated a recycling program for photovoltaic modules and solar farms that works to maximize profit from the process and make recycling an attractive way to recoup loss for investors. Having an affordable recycling program in place is going to make a company more attractive to consumers and investors.
Other key players in the solar panel recycling market include:
- First Solar Inc.
- Echo Environmental, LLC
- SILCONTEL LTD
- Canadian Solar
- Silrec Corporation.
- SunPower Corporation
- Reiling GmbH & Co. KG
- Trina Solar
- Aurubis
- Envaris
- SiC Processing GmbH
- Yingli Energy Co. Ltd.
- Hanwha Group
Investing in solar today
Solar isn’t new, but it is a rapidly growing form of alternative energy that’s affordable and clean. For long-term investors looking for an innovative opportunity to grow wealth and profit, solar stocks could be just the ticket to keeping your financial future bright.
This post was written using Fiverr, Colleenfallon is a solar energy writer. I asked her to write three posts about investing in solar energy and it’s been a great success. I hope you enjoy this post. Subscribe for more business, sales and investing posts. Have a lovely day.
