Solar power installations are on the rise in North America.
In early 2019 the US experienced a 10% increase in direct current due to solar (NYSEARCA:TAN)power. This compares to a 5% year over year growth spurt in PV installation in the US in 2018. In Mexico, where the sun shines for longer periods than its neighbor to the north, installations were up 62%, year over year in 2019. It appears that in the United States the surge in solar PV installations was within the residential sector. Going forward it appears that the trend will likely continue as green energy(NYSEARCA:XLE) continues to become more efficient and needs less government intervention to make installation cost-effective.
Energy Output Rises in Q1 2019
According to the Solar Energy Industries Associations, the solar energy market installed 2.7 gigawatts of direct current solar PV capacity which was a 10% year over year increase and the strongest first quarter in history. This followed a strong 2018 which saw solar energy in the US grow by 5% which was driven by an 8% growth in the residential market. The commercial markets in the US declined due to policy transitions issues.
PV installation continues to pace all electricity generation capacity in the US. The SEIA reports that solar PV accounted for 51% of all new electricity generating capacity additions in Q1 2019. Additionally, solar electricity generation surpassed 2 million installations in Q1 2019.
Who is Driving PV Installation?
It appears that utilities continue to be the drivers of PV installation. Voluntary purchases of utility PV based on its economic competitiveness continues to drive projects according to consultant Wood Macenzie. While utilities and cities have announced 50% or 100% renewable energy or zero-carbon standards, the announcements have not yet resulted in an uptick in PV procurement. Corporate procurement of utility solar drove 14% of projects announced in 2019.
How Can You Invest in Solar PV
With the solar industry growing, traders who want to invest in stocks could consider several different companies. Companies that have a business focusing on solar energy in the US come from multiple sectors. This could include businesses in the utility space or industrial (NYSEARCA:XLI)sector. First Solar and SunPower Corp are two companies that have a focus on the solar PV space. During the first half of 2019, First Solar outpaced the S&P 500 index by nearly 30% only to give all the gains back relative to the large-cap index in the H2 of 2019.
Also, read about 12 Biggest and Best Solar Panel Companies In The World
What Area is Struggling?
Regulation in this space continues to be the roadblock that non-residential markets are facing. In California and Massachusetts regulation is still hampering development. In California, installations were flat year over year. Massachusetts is still being negatively impacted by the transition to its new incentive program.
The solar PV market in North America continues to expand, driven by growth in the residential space. Utilities have been the largest growth providers, but regulation in the US has hampered accelerating growth. Mexico experienced a robust 62% year over year growth spurt in 2019. While several US states have declared a zero carbon footprint, they have yet to move from natural gas or coal-fired generation to a solar PV model. There are several stocks that outpaced the S&P 500 index in the first half of 2019, only to give back most of the gains during the H2 of 2019. Looking forward, new energy should continue to expand especially if regulation loosens.