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Solar ETFs Hot Again; Brighter Days Ahead? - ETF News And Commentary

Benzinga.com
0 Comments| September 2, 2014

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Solar stocks were victims of growth and momentum meltdown this year but roared higher last month. This was primarily thanks to improving industry fundamentals including a high level of panel installations, a surge in demand for solar power, supply shortfall expectation, falling equipment and financing costs as well as stable incentives.

Though uninspiring earnings from most of the solar companies and increased regulatory policy took a toll on the stock prices last week, this could be viewed as a solid entry point given the bright outlook for the industry (read: Gains Still Ahead for Solar ETFs despite Mixed Q2 Earnings).

Demand/Supply Trends

According to Bloomberg, global installations are expected to climb from 40 gigawatts in 2013 to a record 52 gigawatts in 2014 and 61 gigawatts in 2015. The current 2014 forecast is seven times higher than the capacity of the photovoltaic (PV) equipment installed five years ago. Despite increased installations, the global solar industry will likely face the first shortage of panels in eight years resulting from soaring demand and would push panel prices higher.

China, Japan and the U.S. jointly will drive more than half of the global growth. China will continue to lead the solar industry with installation capacity of as much as 14 gigawatts for the year, followed by 11.9 gigawatts in Japan and 5.6 gigawatts in the U.S.. Growth in other countries, which suffered the most from a two-year slump on global supply glut, are now recovering and these nations will also see strong demand in the years ahead (read: 3 China ETFs Surging Higher).

In particular, demand for solar energy is rapidly growing for electricity generation across the globe. Notably, total electricity production from solar power more than doubled in the first half of the year in both the U.S. and China ...

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