Back in October, I noted “Wall Street’s mistake” — solar panel makers, and their undervalued stocks.

Since then, the Guggenheim Solar ETF (NYSE: TAN) that I recommended is up more than 10%. First Solar Inc. (Nasdaq: FSLR), mentioned in the same piece, is up more than 40%.

And it’s just the beginning of a move higher in this sector.

What’s driving it?

Solar Panel Makers

The amount of solar power produced by America’s utilities and independent power companies hit a record in 2017, rising by nearly 47% last year, according to the Department of Energy’s record keepers.

Add in “small-scale” solar — the thousands of homes and businesses with their own panels — and you’re talking about nearly 2% of U.S. power generation coming from solar.

Two percent may not sound like much. But, for comparison in 2015, solar made up less than half of 1%. In 2012, it was .001% — that’s one-tenth of 1%.

That makes solar the fastest-growing source of electricity on the U.S. power grid:

What’s driving the trend? The cost of high-efficiency solar panels fell nearly 40% last year, thanks to changes in panel-manufacturing technology, and gains in global production.

But there’s even more profitable news to this picture…

The Year of Solar Power

Here’s the kicker: Both the IRS and federal energy regulators recently handed out little-noticed (but hugely important) rulings.

I think those rulings are guaranteed to encourage even more solar power generation.

It has to do with energy storage; i.e., really, really powerful batteries.

• The IRS’ tax experts ruled that a home energy storage unit (think of a Tesla Powerwall), when integrated into a residential solar system, is eligible for an investment tax credit.

• The Federal Energy Regulatory Commission gave the nation’s grid operators a year to come up with a plan to make energy storage a reality for their power networks.

The drawback to solar and wind energy has always been that it’s a “use it or lose it” proposition. The power can’t be stored for use on a rainy or windless day.

But energy storage changes that equation. Battery prices are falling dramatically, thanks to Tesla’s so-called “gigafactory” and a dozen others just like it in China, Japan, and Europe.

Unfortunately, there’s no energy storage ETF yet. But I already have a dividend-paying stock recommendation on this trend in the Total Wealth Insider portfolio.

In my view, both rulings are guaranteed to push utilities (and homeowners) toward installing even more solar generating systems in the years to come. Look for bigger gains in the Guggenheim Solar ETF and First Solar as these two trends — cheap energy storage and solar panels — combine for a profitable one-two punch.