The Investment Case for Solar Energy | Executive Summary

The Investment Case for Solar Energy: Executive Summary

Learn more about our solar energy ETF

As the renewable energy revolution enters an important inflection point this decade the case for solar energy investing is more compelling than ever amid two potential catalysts: the commitment from many countries to promote a clean-energy future and the significant decline in renewable energy costs. Together these factors may lead to increased adoption of solar and other clean energy sources.

On the policy side governments of more than 100 countries have pledged to achieve net-zero carbon emissions by 2050 due to climate-change mitigation and economic considerations.[1] Affordable and clean energy technologies will have meaningful benefits for the world over the long term according to the International Energy Agency (IEA). These benefits include improved energy security among countries through reliance on an indigenous inexhaustible and mostly import-independent resource enhanced sustainability reduced pollution as well as lower costs of alleviating global warming and keeping fossil fuel prices lower.[2]

On the cost side it is important to note that conventional energy from fossil fuels (i.e. coal oil and natural gas) has dominated the global power supply because until recently electricity from fossil fuels especially coal was far cheaper than electricity from renewables (i.e. solar wind rain and geothermal heat). This has dramatically changed within the last decade. In most places across the globe power from new renewable energy sources is now cheaper than power from new fossil fuels.[3]

In fact solar energy is now the cheapest new source of global electricity in most developed countries. With solar less expensive today than fossil fuels this may serve as a key driver of rapid wide-scale adoption.[4]

In the United States there has been an ongoing trend away from conventional toward renewable energy. The U.S. Energy Information Administration (EIA) forecasts that the share of renewables in the U.S. electricity generation mix will increase from 21% in 2020 to 42% in 2050. Wind and solar are responsible for most of that growth. The renewable share is projected to increase as nuclear and coal-fired generation decrease and the natural gas-fired energy generation share remains relatively constant.[5]

According to the EIA solar electric generation which includes photovoltaic (PV) and thermal technologies as well as both small-scale and utility-scale installations will surpass wind energy by 2040 as the largest source of renewable energy generation in the United States.[6]

For investors the pivotal shift toward renewable energy this decade and the continued development of the technology to support it may present an appealing investment opportunity. Now may be a good time to invest in companies within the solar energy supply chain (the constituents of our solar energy ETF ) that provide solutions and enable the transition from fossil fuels to clean energy.[7]

Visit our solar energy ETF fund page.