Power Up Your Portfolio: 5 Smart Ways to Invest in Solar Energy
By Charles Schaffer
An efficient and environmentally friendly form of power, multiple forms of solar energy generation are growing.
According to a Solar Market Insight Report from SEIA (Solar Energy Industries Association), solar energy accounted for 45% of all new electricity-generating capacity in 2022, which was enough to power 24 million American homes.
Residential rooftop solar had a great run but has declined for several reasons, including higher interest rates and California’s substantial reduction in credits for supplying power to the grid.
The U.S. solar industry expects to add 32 gigawatts (GW) of production capacity in 2023. That’s up 53% from 2022.
With the inevitable growth in solar and renewable energy, helped by government incentives, accredited investors have many opportunities to participate in the industry’s development. In this blog, we’ll discuss five ways that you can invest — from buying stock to investing in land development, solar projects, solar manufacturing, and electric vehicle charge stations.
1. Buy stock in publicly traded manufacturing companies
One way to invest in solar is by buying stock in publicly traded manufacturing companies such as First Solar (FSLR), SolarEdge Technologies (SEDG), and Brookfield Renewable (BAM). First Solar manufactures thin-film solar panels, SolarEdge Technologies manufactures power optimizers for solar panels, and Brookfield Renewable operates solar energy generating facilities, wind farms, and hydroelectric power plants.
According to Motley Fool, solar companies stand out among the best investment options thanks to their financial profiles and visible growth outlooks. The solar industry is expected to continue its rapid growth in the coming years, ultimately boosting stock prices.
Stocks are the generic way to invest in solar. Below are more targeted opportunities.
2. Land development for utility-scale solar
A more targeted approach to investing in the solar industry is to invest in land development for utility-scale solar — a power generation facility that provides energy to the electric grid. Utilities are typically composed of a mix of energy inputs, including fossil fuels, nuclear, and renewables. The number of these plants in sunny states like Arizona, Nevada, and California is increasing.
Investing in a solar power plant can yield many benefits, including the following:
Excellent cash on return
Long duration contracts
Cash flows tied to inflation
Low volatility due to predictable revenue
Year-round earnings
Participating in the expansion of clean energy sources
The U.S. Energy Information Administration predicts that solar will see the most growth in the coming decades, making this a solid investment choice.
Solar power plants are an expensive undertaking, which is why financing is crucial, and an excellent opportunity for private investors to get involved in the early stages of a project.
3. Participate in commercial installation tax reduction
Equally attractive to investors are the tax benefits associated with solar projects.
The solar investment tax credit (ITC) is an incentive that can be claimed on federal corporate income taxes for 30% of the cost of a solar photovoltaic (PV) system, along with bonus and 5-year MACRS depreciation for assets placed in service during the tax year. Many investment opportunities are with non-profits that do not file a tax return and need a 3rd party investor to monetize the tax incentives on solar.
An example is a solar installation project we at SDC Energy facilitated at Mira Costa High School in Manhattan Beach, CA. The school had budgetary limitations and, without SDC's help, may not have been able to get approval for the solar project.
Winsor School Solar Panel Array - Boston, Massachusetts
4. Solar EV charging stations
A newer category of solar industry investment option is fast, grid-connected PV plus battery charging stations like the Tesla Supercharger stations.
This type of charging station uses panels to convert energy from the sun to directly power EVs (direct PV-to-EV). Energy is stored in a power bank for charging when the sun isn't shining. The grid is used
EVgo (EVGO) has over 850 fast-charging locations across 30 states in the US.
You can expect more investment opportunities in this category over time.
5. Equity investments in solar panel manufacturing
The solar panels are on a different side of the project supply chain. The global supply of solar panels is falling well short of demand. The additional panel capacity needed is expected to grow from 29.8% in 2022 to 64.3% in 2030.
In February 2023, the U.S. Energy Information Administration announced that solar energy will provide 29.1 GW, or 54% of new US generating capacity, in 2023.
The IEA predicts PV solar will have the world’s largest installed power capacity by 2027.
Like in many industries, innovative solar PV panel manufacturing and assembly startup businesses require early-stage capital to get off the ground.
Direct investments in renewable energy have a positive impact on our environment by:
improving energy performance
stabilizing electricity access
reinforcing economic development
alleviating climate action
Businesses and company owners can financially invest in the renewable energy space through onsite and offsite direct investments.
With the solar industry's rapid growth over the last decade, investing in domestic solar manufacturing is a solid choice. The recurring revenue may pay dividends for years, creating a great ROI.
We are all looking for sustainable and reliable energy alternatives in today's environmentally friendly society.
There are many investment opportunities in the solar space. The industry is on the rise, and many sources claim that solar is set to experience explosive growth.
SDC has been working with private investors for more than 15 years. In that time, we’ve helped thousands of people reap the rewards of tax benefits and solar energy, and there’s no better time than the present to invest in solar energy.
A capital raise for solar farm land development will launch soon. Get notified.
Charles Schaffer
President and Founder, SDC Capital Ventures
Charles has founded and operated several development companies over his 35+ year history to pursue his passion for Alternative Investing where he believes outsized returns can be achieved without a corresponding increase in risk. Under Charles' leadership, SDC has developed and financed over $80 million of commercial real estate and renewable energy projects.
