Solar Energy Monthly Report | February

 Solar Energy ETF Monthly Report: Key Takeaways

Global Investment in Low-Carbon Energy Transition Hit $755 Billion in 2021 – a new record. According to Energy Transition Investment Trends 2022, a new report Renewable energy, which includes wind, solar and other renewables, remains the largest sector in investment terms, achieving a new record of $366 billion committed in 2021, up 6.5% from the year prior. Energy Transition Investment Trends is BNEF’s annual accounting of how much businesses, financial institutions, governments and end-users are committing to the low-carbon energy transition. The global commodities crunch has created new challenges for the clean energy sector, raising input costs for key technologies like solar modules, wind turbines and battery packs. Against this backdrop, a 27% increase in energy transition investment in 2021 is an encouraging sign that investors, governments and businesses are more committed than ever to the low-carbon transition, and see it as part of the solution for the current turmoil in energy markets. [1]

Reports suggest the new Section 201 rules would keep in place the exemption on bifacial modules in a major boon for the utility-scale solar industry in the US. On January 30, unconfirmed reports suggest that the Biden administration is said to be considering making bifacial panels exempt from extended Section 201 tariffs on solar imports in a major boon for the utility-scale solar industry in the U.S. Reuters yesterday (27 January) cited two sources familiar with the matter as stating that the White House is preparing to extend S201 tariffs by four years, in line with recommendations made late last year by the US International Trade Commission, but exempt bifacial panels from those tariffs when they are extended. According to the report, the White House is also contemplating doubling the tariff-free quota on solar cell imports from 2.5GW to 5GW per year. [2]

Solar to account for almost 50% of new US electric generation in 2022. According to the U.S. Energy Information Administration, Solar power will account for nearly half of utility-scale capacity additions in the US this year. The agency expects 21.5GW of utility-scale solar to be deployed in 2022, representing around 46% of the total 46.1GW of forecasted new utility-scale electric generating capacity to be added to the US power grid. This planned new capacity would surpass last year’s 15.5GW of utility-scale solar capacity installations, an estimate based on 8.7GW of reported additions up until October and 6.9GW of installs scheduled for the last two months of 2021. [3]

Macro Outlook

2022 will be the first year in which more than 200GW of solar will be installed. BNEF’s (Bloomberg New Energy Finance) mid scenario for 2022 build is 228GW (range 204-252GW). This is a significant uptick from our expectation seven in November 2020, where the highest scenario for 2022 was 206GW. [4]

While polysilicon production has been a bottleneck for solar in 2021, significant polysilicon supply is expected in 2022. This should reduce prices of solar modules, which BNEF expects to fall from $0.278 per Watt for standard monocrystalline silicon, mono-facial modules using 166mm cell to 25 U.S. cents per Watt in 1H 2022, and 1-2 cents per Watt lower in 2H 2022. total supply enough to make nearly 300GW of silicon solar products, thanks to new capacity ramping up and factory debottlenecking. This will ease the supply crunch. Already, the silicon price has fallen back from $37/kg in October to $32/kg in the last month of 2021. BNEF expects that to further decline to $20-25/kg in 2H 2022. Improved efficiency, and modules made of larger wafers with side length of 182mm and 210mm becoming a mainstream product, are estimated to allow another 1 U.S. cents/W reduction in module prices. BNEF therefore expects a 11-15% module price drop to 23-24 U.S. cents/W in 2H 2022. [4]

Solar Energy ETF Performance (As of 31.01.2022)

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/01/2022

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Please note that all performance figures are showing net data.

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