Solar and renewable companies seen to benefit after US Senator Joe Manchin and Senate Majority Leader Chuck Schumer struck a deal on a tax and energy policy. The “Inflation Reduction Act of 2022” earmarks a record $369 billion for climate and clean energy provisions. The bill, which the full Senate will consider next week, includes a 10-year extension of clean energy tax incentives. The Investment Tax Credit, which has been key to the industry’s growth and has typically garnered bipartisan support, was last extended in 2020. It was set to decrease at the end of this year. The package would also include incentives for domestic manufacturing. [1]
The US Solar PV market shipped 29 million PV modules, up 38% versus 2020: Growth in US PV module shipments remained robust in 2021, and is up sharply over the last decade (29 million modules shipped in 2021 versus just 2.6 million in 2010. Furthermore, the average dollar per watt value continued to drop. According to the country’s Energy Information Agency (EIA), in 2010 the average value of PV modules was US$1.96/W, with this steadily falling to US$0.38/W in 2020 and US$0.34/W in 2021. [2]
India installed more than 12GW of solar PV in the financial year 2022 (FY2022); expected to soar to more than 20GW in FY2023: According to JMK Research, India’s PV installation is expected to increase by over 60% in FY2023 to 20GW as the country looks to accelerate its solar deployment. Moreover, at the end of March, India had commissioned around 46GW of utility-scale solar capacity and an additional 43.6GW was also sat in project pipelines. [3]
Please remember that all performance figures are showing net data. Past performance is not indicative of future performance, and when you invest in ETFs your capital is at risk.
Macro Outlook
The surprise climate deal struck between Democratic Sens. Joe Manchin (W.Va.) and Chuck Schumer (N.Y.) this week could transform the U.S. energy sector, slashing emissions and delivering historic investments in clean technologies. Senators will vote on the legislation, called the Inflation Reduction Act 2022, which, if passed, would put the US on a path to a 40% emissions reduction by 2030. The $369 billion “Inflation Reduction Act” contains new funding provisions and broad policy changes for nearly every segment of the energy sector, including wind, solar, hydrogen, carbon capture, and oil and gas. The legislation package would provide at least $369 billion over the next ten years. This would represent an unprecedented long-term effort from the US to address climate change. [4]
Climate is the biggest portion of the Inflation Reduction Act’s spending. The deal is packed with incentives to boost low-carbon technologies, including delivering tax code reforms sought for years by renewable industries, center among them a 10-year extension of wind and solar’s tax credits. In all, there is a large mix of tax breaks intended to bring down the costs of solar, wind, batteries, cars, heat pumps, and other clean technology. It would also offer new tax credits for domestic manufacturing of solar panels, wind turbine parts and other key equipment for growth of renewables. The idea is to drive as much renewable development as possible in the heaviest-polluting parts of the economy: transportation and electricity generation.
Solar ETF Performance Table (As of 31.07.2022)
|
|
1M
|
3M
|
6M
|
YTD
|
12M
|
SI
|
|
Solar Energy UCITS ETF
|
15.59%
|
23.46%
|
22.49%
|
0.99%
|
-7.61%
|
3.49%
|
|
EQM Global Solar Energy Index
|
15.69%
|
23.76%
|
23.07%
|
1.50%
|
-6.60%
|
4.80%
|
Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/07/2022
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.
Learn more about our solar ETF.