Solar industry acquisitions are surging as solar panel installations continue to grow strongly in the US and Europe as demand for solar electricity expands and renewable energy investment hits a new record.
US renewables production has reached an all-time high in the first half of the year with solar generation rising by almost 25 per cent. Investment in US Renewables has hit a record high following a record 26 GW of clean energy projects coming online, while the European industry is establishing new production lines after years of relying on imports in Asia.
Jane Edmondson, developer of the Solar Energy UCITS ETF says: “As natural gas prices have sky-rocketed, pressuring households with higher energy bills we expect this trend to continue. Demand for solar electricity is surging in the US and around the globe as buyers have had a busy first half of the year pointing to further strong growth and a positive outlook for the sector.
“We have seen that supply chain constraints are leading to price increases across every solar market segment and this is the first time that solar prices have increased quarter-over-quarter and year-over-year in every market segment.
“However, the longer-term outlook remains strong. Bullish long-term factors include strong demand for renewable energy as countries strive to meet their carbon-reduction targets set under the Paris COP21 global climate agreement. As more than 130 countries have set or are considering a target of reducing emissions to net zero by mid-century according to the United Nations, expectations for continued strong solar demand as solar has now reached unsubsidized grid parity in more than two-thirds of the world.”
Strong demand from the US and Europe for solar panels is also driving changes – many of the panels installed are produced in China from CO2 and carbon intensive factories. However, some Chinese manufacturers are well-placed to respond to demand with factories which run on hydropower, the firm writes.
Analysis shows at least 455GW of new solar PV capacity will need to be installed by the end of the decade to enable the world to reach net zero status by 2050.
The Solar Energy UCITS ETF (LSE ticker: TANN) ‘TANN’, which is listed on the London Stock Exchange, Deutsche Borse Xetra and Borsa Italiana, tracks the EQM Global Solar Energy Index which delivered net returns in the past 12 months of 45.83 per cent.
The firm writes that focusing on solar energy offers a different opportunity set from just targeting clean energy and potentially stronger returns. Companies are screened for compliance with UN Global Compact Principles plus operational business involvement in the fields of oil sands, fossil fuel or controversial weapons.
Hector McNeil, co-Founder and co-CEO at HANetf, says: “The Solar Energy UCITS ETF ‘TANN’ provides a more focused opportunity than simply looking at clean energy and is the first pure-play exposure to the global solar energy industry and its growth prospects distinct from the wider clean energy investment universe which takes in more companies and different technologies. It not only expands our offering in the thematic space but adds significantly to our expanding range of clean and renewable energy and ESG ETFs.”
