Recent climatic anomalies have led to blackout in major cities across America. From Puerto Rico to California and now Texas, extreme climatic conditions have repeatedly put the spotlight on the importance of disaster resiliency through community-controlled renewable energy service. Grassroot organizers and environmentalists have been harping on energy savings and clean power initiative, especially community and rooftop solar energy projects.
The solar rooftop market has been witnessing significant growth over the past few years. In the coming years, growing demand for residential solar rooftop systems owing to rising end-use applications will drive this market further.
Solar Rooftop Market Drivers
One of the major reasons for solar rooftops’ rising demand is high power bills, especially during winter months. However, one may weigh the cost of panels and installation to the bills and back out. Well, some states in the United States, especially California, allows creation of community choice energy services. These are small, community-controlled power suppliers that can pool in money for solar installation and distribute power among members of the community.
Cost is a big problem for many planning to invest in solar rooftop systems. However, since the last decade, there has been a gradual drop in the prices of key components used in the manufacturing process of solar cells like silver and poly-silicone. The price drop has been a boon for many as inflation in the electricity & natural gas sector constantly moves north.
EnergySage report, in the United States, solar panel cost for a 10 kilowatt (kW) installation ranges from $17,760 to $23,828 after the federal solar tax credit, and the average price per watt for solar panels ranges from $2.40 to $3.22. In fact, the cost of solar panels has fallen over 20% over the past five years. According to Wood Mackenzie, average commercial rooftop system costs in 2020 were $1.65 per watt and are expected to fall 16% by 2025.
Additionally, constant research and development is helping solar panels to increase their ability in absorbing light. Last year, researchers from the University of York in partnership with NOVA University of Lisbon made a breakthrough that checkerboard lines design in solar panels increase their ability to absorb light by 125%. Such breakthroughs have led to the production of thinner, lighter and more flexible solar rooftop panels which can be used in a wider range of products.
Biden Push to Buildout Clean Energy
While declining costs and constant R&D are boosting demand, President Joe Biden’s clean energy initiatives also play a crucial role in boosting the solar rooftop market. Biden has promised that America will run on 100% clean energy by 2035 and will reach net-zero emissions by 2050. How does the solar rooftop market come into play here? Earlier last year, there was a recommendation of installing 8 million solar roofs and community solar energy systems within five years by the Biden-Sanders Unity Task Force. Biden has not indicated to go with the installation, per the
report. However, a coalition of community solar and energy justice advocates has demanded the Congress to go for more installations than mentioned in the report.
Additionally, Biden has signed an executive order to strengthen the Buy American Act, which instructs the federal government to give preference to domestic manufacturers in procuring goods and services. So far, majority of the solar panels and parts are being procured from China. The country produces most of the world's solar cells and polysilicon used in panels and supports solar manufacturing through direct subsidies and other policies that aren't the norm in the United States. Hence, Biden's manufacturing push will also be effective for the solar market.
5 Stocks to Watch Out
Massive adoption of clean energy and factors constantly driving growth of solar rooftop markets will surely benefit these stocks.
Enphase Energy, Inc. ( ENPH Quick Quote ENPH - Free Report) designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic industry. The company’s expected earnings growth rate for the current year is 42.3% compared with the Zacks Solar industry’s projected earnings growth of 23.3%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 7.7% upward over the past 60 days.
Enphase Energy carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here . SolarEdge Technologies, Inc. ( SEDG Quick Quote SEDG - Free Report) designs, develops and sells direct current optimized inverter systems for solar photovoltaic installations. It also offers smart energy management solutions used in residential, commercial, and small utility-scale solar installations and a cloud-based monitoring platform. Belonging to the Zacks Solar industry, SolarEdge Technologies has an expected earnings growth rate of 16.8% for the current year. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 5.3% upward over the past 60 days. SolarEdge Technologies carries a Zacks Rank #3 (Hold). Tesla, Inc. ( TSLA Quick Quote TSLA - Free Report) designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems. It offers solar panels that are designed to be highly efficient, delivering maximum energy production. The company’s expected earnings growth rate for the current year is 78.6% compared with the Zacks Automotive - Domestic industry’s projected earnings growth of 19.1%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 9.9% upward over the past 60 days. Tesla carries a Zacks Rank #3. First Solar, Inc. ( FSLR Quick Quote FSLR - Free Report) provides photovoltaic solar energy solutions. Belonging to the Zacks Solar industry, the company has an expected earnings growth rate of 8.6% for the current year. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 14.7% upward over the past 60 days. First Solar carries a Zacks Rank #3. Sunnova Energy International Inc. ( NOVA Quick Quote NOVA - Free Report) provides residential solar and energy storage services. Belonging to the Zacks Solar industry, the company has an expected earnings growth rate of 58.8% for the current quarter. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 13.5% upward over the past 60 days. Sunnova Energy carries a Zacks Rank #3. These Stocks Are Poised to Soar Past the Pandemic
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