Solar Energy ETFs Find Momentum

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December 13, 2012
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TANGuggenheim Solar
KWTMarket Vectors Solar Energy
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The sun finally breaks through and starts shining a bit on solar ETFs.

Solar energy ETFs shot up this week, buoyed by a successful initial public offering of one of Silicon Valley’s largest clean-energy companies at a time when the market was already supported by reports that China plans to increase its investment in solar power.

The $49 million Guggenheim Solar ETF (NYSEArca: TAN) and the $11 million Market Vectors Solar Energy ETF (NYSEArca: KWT) were the best-performing U.S.-listed ETFs Wednesday, posting gains of 8.5 percent and 6.3 percent, respectively.

Their performance is even more impressive on a five-day stretch. TAN has tallied nearly 18 percent in gains since Dec. 7, while KWT is up 16 percent in the same period. The rally has been unaccompanied by net inflows, according to IndexUniverse’s ETF Flows Tool.

For solar energy enthusiasts, the recent run-up is a welcomed reprieve from what has been one long year of losses in solar funds, as the segment faces collapsing prices while output capacity grows.

Year-to-date, both TAN and KWT have bled roughly a third of their value, and those losses look even steeper on an annual chart. TAN has lost 40 percent in the past year, while KWT is off by 37 percent.

Still, SolarCity—one of Silicon Valley’s largest U.S. installers of residential solar system—successfully raised $92 million in its initial public offering Wednesday, after the IPO was postponed for a day.

The company, which has a market valuation of $584.6 million, has seen its revenue grow fourfold in the last five years, according to a Reuters report.

China’s announcement that it would inject another $1 billion in the solar industry this year—bumping up its support of solar power companies—was another piece of good news, even if China’s subsidies of its solar sector has sparked some concern among trade partners, Reuters reports.

 

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