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Solar to Comprise 50% of '22 U.S. New Electric Capacity Addition (Revised)

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Per the latest report by the U.S. Energy Information Administration (EIA), almost half of the planned 2022 electric capacity additions in the United States are expected to be solar. In particular, according to EIA’s Preliminary Monthly Electric Generator Inventory report, 46.1 gigawatts (GW) of new utility-scale electric generating capacity is projected to be added to the U.S. power grid, of which 21.5 GW is expected to be solar.

This planned new capacity would exceed 2021’s 15.5 GW of solar capacity additions. This should benefit stocks like Enphase Energy ENPH, ReneSola SOL and First Solar FSLR that have a strong presence in the U.S. solar market.

Factors Driving Increased Solar Capacity

The U.S. solar industry, which was dealt a big blow at the initial stages of the pandemic due to a decline in installation trend, is once again on a solid growth trajectory. Several factors have been boosting the growth of this industry, which we expect to witness this year as well.

While the rapid transition of the entire world toward a net-zero carbon environment driven by growing demand for clean energy has been the primary catalyst bolstering the solar industry, factors like declining price, abundant corporate investment and a booming storage market have been playing a vital role in strengthening the U.S. solar industry lately.

For instance, per the Solar Energy Industry Association’s report (SEIA), as of 2020, the cost to install solar dropped by more than 70% over the last decade. According to SEIA’s latest Solar Means Business Report, U.S. corporate solar investments swelled to 8300 megawatts, growing 20-fold over the last decade.

Per Wood Mackenzie, the United States commands a global leadership position in energy storage and is expected to constitute 40% of the world’s capacity by 2030.  Such developments are surely boosting the U.S. solar industry.

Solar Stocks to Benefit

Considering the aforementioned favorable trends of the U.S. solar industry along with the forward-looking prospects, the following solar stocks are expected to witness growth in the days ahead.

Enphase Energy: Based in Fermont, CA, Enphase designs, develops, manufactures and sells home energy solutions, while microinverters remain this company’s legacy product. At the onset of the fourth quarter of 2021, the company introduced an all-in-one Enphase Energy System with IQ8 solar microinverters for customers in North America. With IQ8 being Enphase's smartest microinverter, so far, this launch surely expands the revenue growth prospects of the company in the United States.

The Zacks Consensus Estimate for Enphase’s 2022 earnings has improved 15.2% over the past 90 days. ENPH boasts a four-quarter earnings surprise of 29.49% on average.

ReneSola: Based in Stamford, CT, ReneSola is a solar project developer and operator, with robust pipeline projects worldwide. The United States continues to be a large and lucrative market for ReneSola. As of Sep 30, 2021, the company had mid-to-late-stage projects of 464 MW in the United States.

The Zacks Consensus Estimate for Enphase’s 2022 earnings indicates an improvement of 39% from the prior-year estimated figure. SOL boasts a four-quarter earnings surprise of 127.50% on average.

First Solar: Based in Tempe, AZ, First Solar is a leading global provider of comprehensive PV solar energy solutions and specializes in designing, manufacturing, and selling solar electric power modules. The company announced plans to expand its manufacturing capacity by 6.6 GW by constructing its third U.S. manufacturing facility in Ohio. This should enable First Solar to maintain its position as the largest U.S. solar module manufacturer.

First Solar currently boasts a solid long-term earnings growth rate of 10.8%. FSLR has a four-quarter earnings surprise of 19.01% on average.

(We are reissuing this article to correct a mistake. The original article, issued on January 13, 2022, should no longer be relied upon.)


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