It’s been 2 weeks since the IPCC called our current state of affairs a global “climate genocide,” and yet the oil companies still dominate the global energy market. While we are not surprised, we wonder what will finally push mainstream investors to act. Numerous pundits including The New York Times predict a “strong risk” of the climate crisis in the coming decades. We at Boundless believe that humanity has only just begun to harness the power of the sun as an alternative energy source, and impact investors are forging the way. Analysts have long emphasized that the transition from fossil fuels to solar energy will radically transform global energy infrastructure and markets. The power of solar energy is tremendous and gives us hope. More energy from the sun reaches Earth every two hours than is used by the entire planet over the course of a full year!
A September Boundless report on the US Solar Market overview shows that global investment in solar reached $161B last year. As the solar industry grows, increased deployment leads to greater economies of scale, involving technological and manufacturing improvements, increased competition, and declining costs. Clean energy innovation and deployment are becoming increasingly valuable components of investors’ portfolios, offering considerable financial returns and substantial environmental impact. It comes as no surprise for those watching the space that more money was invested in solar power in 2017 than in coal, gas, and nuclear power combined and that fossil fuels are starting to see a significant drop in their total share of power generation globally.
America’s top companies are investing in solar in record amounts, according to the Solar Energy Industries Association’s Solar Means Business 2017 report. Solar energy is a cost-effective way for businesses to generate the electricity they need for manufacturing, distribution, storage, retail, and many other applications. Leading brands like Target, Walmart, Apple, Kohl’s, Costco, Ikea, Macy’s and Amazon are placing their faith (and capital) in solar energy, totaling more than 2.5 gigawatts of solar capacity across approximately 7,400 solar projects.
And GTM Research’s Global Solar Data Hub show that 2018 will be the first-ever triple-digit year for the global solar market, with an anticipated 106 gigawatts of PV coming online. The global market is diversifying, but large countries like China, India and the U.S. still dominate. The number of countries installing 1 gigawatt or more annually will grow from 9 to 14 over the course of these two years, the report said. The GTM Research shows that 18 U.S. states will install 1 gigawatt or more of PV between 2018 and 2022.
The Boundless report states that the global solar PV market will add over 100 gigawatts of capacity for the first time in 2018, with installations reaching 104 gigawatts — representing 6% annual growth. As capital expenditures and innovations in materials processing and manufacturing drive cost reduction, panel costs are likely to lower even further to at least 36% over the next 10 years, with average efficiency expected to rise 20%. Policy considerations such as the investment tax credit (ITC), net metering policies and foreign tariffs have influenced demand and actual consumer adoption of solar energy.
This report analyzes different financial instruments and strategies for investing in solar including private equities, public equities, debt, fixed-income, cleantech funds, and more. It also outlines new developments in energy storage as well as technologies that are making solar energy more efficient and more widespread through different applications. Risks such as commodity and cyclical risks are considered to help investors mitigate losses and drive capital towards long-term growth strategies.
Despite the 30% tariffs slapped on solar panels in early 2018, the US added more solar power than any other type of electricity in the first quarter of the year. The extraordinary surge in solar deployment and investments shows how smart investors are changing with the global energy demand and reaping the financial benefits as a result.
Undoubtedly the conversations around investments in solar energy are always hot – pun intended.