Solar Installation Hits A Record In 2020: ETF To Tap The Boom

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The U.S. solar industry has been shining bright and has strongly survived the coronavirus pandemic. This is especially true as solar installation jumped 43% year over year in 2020, reaching a new high of 19.2 new capacity, per the latest report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie.

The jump came primarily on the back of strong demand in the second half of the year as well as accommodative policies that offset the impacts of the coronavirus crisis. In particular, residential solar installation picked up in the second half to a record boosted by higher demand for home improvement during the lockdown. The solid trend is likely to continue this year given the attractive loan offers, surging interest in home improvement, and power outages from extreme weather events.

In fact, solar currently represents 43% of all new electricity-generating capacity in the United States, its largest-ever share of new generating capacity. Investors should note that solar has become the cheapest form of new power in many places.

Per SEIA, the U.S. solar market is expected to quadruple by the end of the decade driven by the extension of a key industry subsidy late last year and booming demand for carbon-free power. President Joe Biden called for an emissions-free power sector by 2035 as part of his $2 trillion infrastructure and climate package unveiled last July. The sector will install 324 gigawatts (GW) of capacity over the next decade, more than three times the nearly 100 GW installed by 2020.

Additionally, the recent two-year extension of the investment tax credit will drive greater solar adoption through 2025. The credits have helped to reduce the cost of solar projects and saves homeowners 26% of the cost of their solar installation. The credit will stay at 26% for projects in all market segments — residential, commercial, industrial, utility-scale — that begin construction in 2021 and 2022, and then drop to 22% for projects that begin construction in 2023. After 2023, the residential credit will drop to zero while the commercial and utility markets will sit at a permanent 10% credit beginning in 2024.

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