Solar Energy & Solar ETFs Are Here To Stay

May 04, 2015

Solar energy has long held the promise of delivering clean kilowatts and a cleaner world, but for the longest time, it didn’t quite deliver on its promise. Those days are over.

We now inhabit a world where demand for solar energy—photovoltaic (PV) panels that create electricity out of photons from sun, to be specific—continues apace even as oil and gas prices have collapsed by about half in the past year.

Gone are the days when the viability of solar energy was linked to a spike in oil or gas prices. And what a relief to investors in funds such as the two cheap pure-play solar funds, the Guggenheim Solar ETF (TAN | B-37) and the Market Vectors Solar Energy ETF (KWT | D-31). These ETFs are securities that investors might actually want to hold onto for the long haul as the solar industry unfolds and blossoms.

It hasn’t been that way so far. Those who are old enough or have a sense of history will recall a number of energy-related events in the past four decades that each, in their way, had a huge effect on the economics of alternative energy. A look at the chart below provides several talking points.

It’s really the very right of the chart that shows crude prices dropping by about half that’s of interest here.

Source: MacroTrends using U.S. EIA and BLS data. Prices are adjusted for inflation and expressed in today’s dollars.

Because up until then—whether we’re talking about the sixfold increase in oil prices in the 1970s that put solar energy on the map in the first place, or every price collapse and price spike since—alternative energy entrepreneurs and investors have been prisoners to the vagaries of oil and gas prices forever and ever.

Until now.

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