Solar Energy Monthly Report | March

04 March 2022

 Solar Energy ETF Monthly Report: Key Takeaways

Germany aims to get 100% of energy from renewable sources by 2035. Germany aims to fulfil all its electricity needs with supplies from renewable sources by 2035, compared to its previous target to abandon fossil fuels "well before 2040," according to a government draft paper released February 28, just days after Russia invaded Ukraine and sent oil prices spiking higher. Economy Minister Robert Habeck has described the accelerated capacity expansion for renewable energy as a key element in making the country less dependent on Russian fossil fuel supplies. German Finance Minister Christian Lindner has referred to renewable electricity sources as "the energy of freedom". Europe's top economy has been under pressure from other Western nations to become less dependent on Russian gas, but its plans to phase out coal-fired power plants by 2030 and to shut its nuclear power plants by end-2022 have left it with few options. [1]

China's solar power capacity set for record increase in 2022. China is expected to add 75 to 90 gigawatts (GW) of solar power in 2022, according to it its solar manufacturing association (China Photovoltaic Industry Association). This is far higher than a record increase in capacity last year. The world's biggest solar products maker and solar power generator brought 54.88 GW of new solar power into operation in 2021, taking the total installed capacity to 306 GW despite a supply disruption of raw materials. China could add an average of 83 to 99 GW of new capacity each year during 2022 to 2025. China’s solar association also warned that the booming pace of solar manufacturing in the United States and certain European countries would challenge the industry in China. [2]

Biden admin eases Trump-era solar tariffs but doesn't end them. Biden extended Trump-era tariffs on imported solar energy equipment by four years, but in a major concession to installers he also eased the terms to exclude a bifacial panel technology dominant among big U.S. projects. The decision represented a balancing act by the Biden administration to meet the demands of two important political constituencies: union labor which supports import restrictions to protect domestic jobs, and clean energy developers keen to access cheap overseas supplies. The administration also opened a pathway for duty-free supply from neighboring Canada and Mexico, which currently supply less than 1% of imports. Domestic solar manufacturers condemned the decisions to exclude bifacial panels and to raise the cell quota, while industry trade groups representing installers and developers said they were pleased with those terms. [3]

California utilities commission won’t vote on controversial rooftop solar bill ‘until further notice’ A vote on a controversial proposal that would dramatically change the state’s net energy metering (NEM) rules was postponed from its scheduled date of February 10 at the voting meeting of the California Public Utilities Commission. An Administrative Law Judge ruled that the proposed decision “will not appear on the Commission’s voting meeting agenda until further notice.” California’s NEM rules have not been updated since January 2016. In December, the long-anticipated proposed decision was released. The officially named Net Energy Metering tariff called for a slew of changes, including altering how much solar customers are paid when they send power back to the grid. Changes worried solar proponents who worried that solar incentives could be rolled back. [4]

 

Macro Outlook

Russia’s invasion of Ukraine is inextricably linked to the global energy crisis. Russia is a major part of the global energy system thanks to its huge fossil fuel resources. It is the world’s third largest oil producer after the US and Saudi Arabia, accounting for 12% of global output, and the second largest gas producer after the US, responsible for 17% of the global output. Russian energy supplies are particularly important in Europe, which receives around 70% of the country’s gas exports and half of its oil exports, according to official US data, and more than a third of Europe’s gas supplies come from Russia. Russia’s attack on Ukraine has prompted widespread debate over how to respond. Concerns over energy security are particularly acute in Europe, which is heavily reliant on Russian exports of coal, oil and gas. Many, including leaders from the European Commission’s Ursula von der Leyen to the UK’s Boris Johnson, have emphasized the need to accelerate the roll out of clean energy technologies. Significantly, the German government is now aiming to accelerate a shift to a 100% renewable electricity system by 2035, according to reports. [5]

While the Russia-Ukraine crisis remains ongoing and many questions remain about how this will affect global geopolitics and energy policy, it appears certain that the war in Ukraine will reshape Europe’s tolerance for relying on Russian energy and high gas prices and spiking oil prices in Europe are accelerating the momentum behind energy transition in Europe. Net-Zero policies and solar energy may be a critical component to helping to reduce longer term reliance on Russian oil & gas and the risk of longer-term high energy prices.

 

Solar Energy ETF Performance (As of 28.02.2022)

 

1M

3M

6M

YTD

12M

SI

Solar Energy UCITS ETF

6.63%

-20.40%

-20.21%

-12.09%

 NA 

-9.91%

EQM Global Solar Energy Index

6.74%

-20.38%

-20.03%

-11.97%

-26.45%

-9.10%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 28/02/2022

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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