Solar Power Continues to Grow, but Stocks Remain a Risky Investment
Given what’s been going on in the conventional energy market over the last year, it may seem like there’s never been a better time to invest in renewable energy in general, and solar energy in specific. And, from an ethical perspective, nothing could be truer.
Unfortunately, solar energy as an industry continues to be unpredictable, regardless of its staggering ongoing growth. Furthermore, another setback like the Chinese flooding the market with cheap solar panels as they did in 2012 could leave investors exposed to major losses.
The market is volatile and subject to outside influences that can provide major setbacks to investors. And, if recent news coming out of Nevada is anything to go by, the crazy growth that the industry underwent in some parts of the country over the last couple of decades may not last forever.
But if you do the research and can stomach the risk, you can realize significant returns investing in solar power manufacturing and installation.
Researching the Companies
These days, there are quite a few solar companies that are publicly traded. These companies have some similarities and they also have some striking differences. There are differences in their role in the market, as well as in the technology that they have to offer consumers. There are manufacturers, financing companies, installers, and commercial solar power producers, among others.
To make things even more complicated, there are companies that handle two or more of these roles. Each role in the industry comes with its own set of risks and benefits, which can seriously impact your potential for a return on your investment. So, like with any other industry, make sure that you thoroughly research the companies you’ll be investing in prior to taking the plunge.
Researching the Solar Market
Technological differences and industry roles can have a major effect on the potential profitability of investing in one solar energy company over another. But, nothing impacts potential profitability as much as fluctuations in the overall energy market.
While solar has been growing rapidly and steadily over the last few decades and shows great promise, especially considering the extension of federal incentives for homeowners into 2019, it is still a part of an overall energy market that remains highly volatile.
Additionally, as mentioned above, changes in availability of materials and finished products as well as state-level changes in incentives and rates (like what just happened in Nevada) can have a chilling effect on the market, and stall or reverse gains made by solar energy companies.
Make sure that you research the market and continue to stay abreast of any changes to the worldwide solar and conventional energy markets, as well as domestic policy changes that might affect your investment.
Understand the Risks Before You Get In
The solar industry is ripe with potential for investors that understand its penchant for volatility and the factors that contribute to that volatility. Understanding the industry, as well as global energy markets, is a great first step toward putting your money in green investments that will yield a good return.
[Photo via: Pennystockobserver]