This Proves Why Solar Energy Is an Unstoppable Megatrend
Put aside any preconceptions that solar power is the impractical dream of tree-hugging, granola-eating, Birkenstock-wearing environmentalists. The industry is poised for a long-term boom that should generate market-thumping gains for decades.
Consider this: 10 billionaires have rushed to invest massive sums in renewable energy technologies such as solar. Warren Buffett, George Soros, Bill Gates, and their super-wealthy peers can hardly be considered as naïve and utopian.
But there’s another misconception about solar right now. Many investors think that persistently low oil and gas prices will compel end users to abandon solar in favor of cheaper fossil fuels.
If you believe that fallacy, you’ll miss one of the most exciting investment opportunities to come along in decades. Fact is, the infrastructure for the solar industry is now pervasive and entrenched, leading to a “price decoupling” of solar and fossil fuels. Solar and other renewable energies are now part of the energy status quo and no longer need high oil and gas prices to attract users.
And so oil prices are plunging, yet solar power continues to thrive. This is not what the textbooks have taught us about the relationship between crude oil and solar.
So what gives? For answers, let’s turn to the Gartner Hype Cycle.
The Gartner Hype Cycle
The Hype Cycle is a graphical presentation developed and used by technology research and advisory firm Gartner for representing the maturity, adoption and social application of specific technologies.
Each Hype Cycle describes five crucial phases of a technology’s life cycle:
1) Technology Trigger: A technology breakthrough kicks things off; excitement builds.
2) Peak of Inflated Expectations: Early publicity spawns a flurry of success (and failure) stories. Some companies adapt; others fall by the wayside.
3) Trough of Disillusionment: Interest diminishes as reality fails to live up to the hype. A shake out ensues, but the smartest early adopters survive and continue to invest and experiment.
4) Slope of Enlightenment: The technology becomes better understood and implemented. Second- and third-generation products emerge.
5) Plateau of Productivity: Mainstream adoption takes off.
Simply put, solar has already passed through its “hype” period and is now approaching a “plateau of productivity” for sustainable, long-term growth.
The solar industry has not seen its fortunes diminish in the face of cheaper fossil fuels because solar now moves along its own supply-and-demand dynamics within its plateau of productivity.
It doesn’t matter if oil is dirt-cheap right now. Solar’s customers are increasingly dependent on inexpensive, reliable power from the sun and see no reason to switch.
We expect the solar industry’s upward trajectory to last for decades, as the U.S. and major developing countries such as China plow considerable resources into renewable energy and the price of photovoltaic (PV) cells continues to plummet.
Consider the recent announcement by China’s National Energy Administration that the country’s goal is to increase solar-power capacity fourfold by 2020. In its bid to fight chronic air pollution and pivot away from coal, the government wants to boost PV capacity by 20 gigawatts per year from 2016 to 2020.
Solar power is becoming more pervasive, larger in scale and cheaper to produce. The average price of a solar panel has dropped by 60% since 2011 and technological advances continue to push down costs.
According to the Earth Policy Institute, an increasing number of countries are aggressively pursuing solar power as costs come down. More than 30 countries now claim a capacity of over 100 megawatts, a figure that the institute expects to double by 2018.
As you can see, solar has evolved from a “flash in the pan” to a sustainable growth industry with some significant tailwinds. Later this week I’ll dive into a group of solar companies that should be on your solar watch list.
For more information about solar power and why it’s an investment megatrend, Investing Daily’s lead energy analyst Robert Rapier just released a special presentation that dives deeper into the story around what he calls Solar 2.0. Inside, he reveals a set of remarkable buy opportunities in solar you don’t want to miss. Learn about these game-changing companies by clicking here now.