There is much debate over whether or not solar power is a viable solution to our energy problems. Some believe that the sun provides us with enough energy to sustain us forever, while others believe that we are better off searching for ways to improve traditional energy sources.
I chose to examine the subject from an economic perspective, in order to provide a more objective viewpoint.
Why Solar Power?
It is well known that fossil fuels cause significant damage to the environment, and that renewable sources such as solar power offer a cleaner and greener alternative. For this reason, there has been a surge in interest in solar power over the past few years. The technology is becoming more affordable, with the cost dropping dramatically due to mass production. In 2015 alone, the cost of solar power reached its lowest point in nearly two decades, as the cost of solar modules decreased by 23%.
This promising development has not gone unnoticed by the investment community, which has responded by pouring money into innovative solar technologies and by setting new records for funds raised through initial public offerings (IPOs). Take a look at some of the biggest IPOs in solar this year:
Sunnyside Solar’s (NYSE:SNS) IPO
The most significant IPO of the year was that of Sunnyside Solar (NYSE:SNS). The project-based company builds, buys and sells solar power plants. Its products are designed for use around the world, and it operates primarily in North America, South America and the Asia-Pacific region. At the end of the second quarter of 2016, the company had generated around US$100 million in revenue and expected to close out the year in the same way.
Hanwha Q Cells’ (NYSE:HQC) IPO
Another company going public this year is Hanwha Q Cells (NYSE:HQC). This manufacturer and supplier of solar products, mainly in the form of crystalline silicon panels, focuses on the solar market in China and Southeast Asia. Its products are used in commercial and residential rooftops and in large-scale solar power plants. The company is particularly active in the development and production of larger and more economical solar cells and products. Hanwha Q Cells’ IPO was highly anticipated, as it was the largest solar-related IPO ever, raising over US$13 billion at the time of its listing.
First Solar’s (NASDAQ:FSLR) IPO
Also going public this year is First Solar (NASDAQ:FSLR). This provider of solar energy products, mainly solar cells and small solar PV modules, has a focus on the wholesale markets and sells its products to manufacturers, repairers and end users. The company launched its IPO with great fanfare, raising over US$11.5 billion at the time of its listing. In September 2016, the company became a public company after going through a merger with another solar company, raising even more money for its investors.
Q CELLS’ (THAIFV:QC) IPO
Q Cells (THAIFV:QC), the parent company of the above-listed companies, is also going public this year. On April 12, 2017, the company will list on Stock Exchange of Hong Kong (SEHK), raising over US$11 billion.
What Does The Future Of Solar Power Look Like?
The future of solar power looks incredibly bright, as more and more people are realizing the many benefits that solar power provides.
The price of solar modules has continued to decrease, making it easier and more affordable for everyone to enter the game. The sheer volume of solar power installations makes it clear that the industry is growing at a record pace. In 2021 alone, experts predict that the size of the solar market will increase by more than 20%, reaching a total value of around US$164 billion.
The report goes on to state that the solar market will continue its positive growth trajectory in 2022 and 2023 as well, reaching a total market value of around US$196 billion and US$233 billion, respectively.
This is great news for investors, especially those looking to gain exposure to the solar industry. While the prices of solar modules continue to decline, that of solar farms and power plants are expected to increase, making this a lucrative investment opportunity.
Let’s take a quick look at how we got to this point. While oil-related prices fluctuated over the past few years, the cost of solar power continued to decrease, as manufacturers took advantage of greater demand and reduced competition in the marketplace. This trend made it possible for more and more people to enter the game, increasing the total number of installations by 25% in 2021 alone.
Experts also predict that power consumption will increase by 20% in the next four years, reaching 25 billion kWh globally in 2027. This is expected to provide further growth opportunities for companies in the solar industry.
Is Solar Power The Future Of Energy?
Based on the information presented so far, it is clear that solar power is set to grow significantly in the coming years, providing sustainable and cheap energy for homes and businesses around the world. The future looks incredibly bright for solar power, and as a result, so does the investment opportunity.