The Start of a Modern Solar Energy Megatrend

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In the current year, the solar industry has witnessed a jaw-dropping run-up. Invesco Solar Portfolio ETF (TAN), the industry’s only pure-play solar investment, has risen 234 percent over the last 52 weeks, with a decent chunk of those gains coming after Joe Biden was proclaimed the winner of the United States presidential election a month-and-a-half ago. The enormous momentum is undoubtedly starting to look like a major bubble in the process, given that it is difficult to show how in the span of just twelve months, the fundamental valuation of solar firms has more than tripled.

Yet, as the solar market ramps up infrastructure, Wall Street continues very bullish on the field and expects the rally stretching for months as well as even years thanks to impressive growth runways. Within the next 5 years, United States solar power income is projected to almost double. And one secular trend aims to revolutionize the solar industry entirely: the solar culture. Although residential solar demand has increased in recent times as more Americans strive to play their role in climate change reduction, the hard truth is that others may not get solar on their own roof.

Fortunately, community solar will make solar electricity affordable to almost every one of the 128 million households in America. Residential electricity consumers who wished to turn to solar power have been constrained to two choices for decades: installing their first solar panels or buying solar from their utility company off the grid. The homeowner rooftop solar panels generate plenty of savings, with the average project usually covering for itself within 6-10 years. Unfortunately, infrastructure costs keep rising, with the machine’s total cost after tax credits stepping in at ~$13,000.

In comparison, while some solar policies entail no initial expenditures, they have the major downside of locking the client into several decade contracts. But in fact, these are the smaller evils of residential solar; the main one is that only around 23% of the American households have easy access to solar rooftops. The sad situation is attributed to causes that affect about 49 percent of U.S. families, such as residing in rented housing or apartment complexes, tree shade, and stringent association laws for homeowners. The second choice is not that enticing from the viewpoint of a client, either.

Customers who want to import solar electricity directly from the utilities or retail energy providers do not profit entirely from the declining cost of clean energy. Though solar and wind are often the lowest source of power in most areas, most of these cost reductions are not passed on to the consumer but end up in the wallets of distributors—green energy plans pass on their green credits to consumers but provide limited savings without savings, with some still paying more.