The solar industry has had a bumpy 2022 as supply chain disruptions, rising production costs, and labor shortages have hampered the sector, but there’s no denying its long-term exponential growth. Over the last decade, solar energy has witnessed an average annual growth rate of 49%. This phenomenal growth is due partly to strong federal policies like the Solar Investment Tax Credit, which currently provides a 26% tax credit on solar investments.
Another factor that is fueling growth in the industry is declining prices for solar components and installation. The cost of solar has plunged 90% over the past decade, along with falling equipment and infrastructure prices. An average-sized residential system has dropped from a price of $40,000 in 2010 to roughly $20,000 today.
Solar power isn’t going anywhere anytime soon, so continued growth can be expected in the long term. Business Insights projects that the $163 billion global solar industry will reach $194.75 billion by 2027, exhibiting a CAGR of 6%. Today we’ll cover an investment for our readers who are looking to cast a wide net and reap benefits from promising companies across the solar industry.
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The Invesco Solar ETF (TAN) is still down 30% from its February 2021 high but has gained more than 20% in the past six months, and the industry seems primed to build on this strong momentum.
The Invesco Solar ETF is a great way to gain exposure to solar without investing in just one stock. The fund seeks to track the MAC Global Solar Energy Index and is comprised of about 35 individual components — including both U.S. and international stocks. The fund follows a blended strategy, investing in value and growth stocks with various market caps.
TAN’s share price peaked in mid-February 2021 and has fallen since. However, it could be an excellent opportunity to get in at a more attractive price as growth in the solar industry will likely gain strength in the long term.
ETFs, by their nature, are often considered a less risky investment as they tend to be much less volatile than individual stocks. If you’re unsure about which solar stocks to buy and want to cut back on potential risk, TAN is a relatively safe way to add solar energy to your investment portfolio.
Invesco Solar ETF (TAN)
- Weighted Average Market Cap $8.10B
- Price / Earnings Ratio 44.39
- Price / Book Ratio 2.32
- YTD Return 8%
- Yield 0.10%
- Expense Ratio 0.66%
- Net Assets 2.31B
- Number of Holdings 147
- Top Holdings Enphase Energy, SolarEdge Technologies, Sunrun
Where to invest $1,000 right now...
Before you consider buying TAN, you'll want to see this.
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And it's not TAN.
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Find that to be extraordinary?
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
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