When Solar Becomes an Investment: Key Insights You Should Know

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January 24, 2017 | By RGR Marketing Blog

Is It Time to Invest in Solar-Related Stocks?

The solar industry has been experiencing substantial and consistent growth rates over the last few years; so much in fact, that the solar sector is considered one of the best investment opportunities of this generation. But, like all investment opportunities, investing in solar isn’t without its fair share of risks.

Over the last decade, some solar companies have prospered while others have closed. Some technologies have taken hold and some have been cast aside. What this all means is that before you start investing in solar, you should try and gain some insight into what’s in store for the future of the business and the tech that drives it. With that in mind, here are four key insights you should know before you invest in solar.

#1: Not All Solar Panel Manufacturers Are Equal

When it comes to investing in a solar panel manufacturer, it is important that you don’t fall for empty promises. Unfortunately, in this industry, there are a lot of companies making promises based on findings acquired in laboratories, which are controlled environments. Then, when their products are put to the test in real-life situations, they perform far below what they had originally claimed.

Instead of investing in a company that is being whispered as “the next big thing,” your investment will usually do better if you stick with a company that has a proven track record of building quality panels, and selling them at a profit.

#2: Keep a Company’s Risk in Perspective

Exciting and news-worthy press releases are common in the solar industry. This company or that is always touting their most recent innovation or cost-effective manufacturing changes. And, with each change that a company makes, a certain level of risk is attached to it. Therefore, it is important to understand the company’s risk so you can make the best decision possible for your own investment potential.

Here’s an example – if a company has a history of making incremental improvements to the efficiency of its cells year after year, and it distributes a press release claiming that it has done so yet again, this is a relatively low-risk gamble because the company has proven reliable in past claims.

But, if a larger solar manufacturer purchases a smaller, unproven one and it makes extraordinary claims as a result, then the risk here is substantially higher. Remember, the bigger the promise a company makes, the bigger the risk it is taking on. By investing in that promise, the risk is transferred to you.

#3: Cost Reductions Are Better Investments Than Tech Improvements

You would think that investing in companies that are paving the way in terms of solar technology would pay off bigger dividends, but the truth is, companies that reliably improve cost efficiencies are not only more consistent, but also fare better.

The reason is because technology is always changing, while reducing costs is something that all companies strive for. With the cost of solar equipment falling year after year, cost efficiency is a key to choosing a sound investment.

#4: Always Keep Cost “per kW-hr of Energy” in Mind

One of the most telling pieces of information an investor should be looking at before investing in solar is a company’s cost per kW-hr of energy. The lower this cost is, especially in comparison with on-grid utilities, relates to how much the end-user could stand to save.

Of course, not too many companies divulge their cost per kW-hr of energy, so another way to help ensure you’re making a good investment is to look at the company’s gross margin. The higher its gross margin, the better it is at producing products that command higher prices in a very competitive industry.

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Is It Time to Invest in Solar-Related Stocks?

#1: Not All Solar Panel Manufacturers Are Equal

#2: Keep a Company’s Risk in Perspective

#3: Cost Reductions Are Better Investments Than Tech Improvements

#4: Always Keep Cost “per kW-hr of Energy” in Mind

Start making more
money today!

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Is It Time to Invest in Solar-Related Stocks?

#1: Not All Solar Panel Manufacturers Are Equal

#2: Keep a Company’s Risk in Perspective

#3: Cost Reductions Are Better Investments Than Tech Improvements

#4: Always Keep Cost “per kW-hr of Energy” in Mind

Start making more money today!

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