Many can change within a decade. Ten years ago, for example, it cost between $ 140 and $ 150 per megawatt hour (MWh) solar energy, and this is with the benefit of investment tax credits. By 2020, however, costs were lower to $ 25 to $ 35 per MWh, making solar power cheaper than fossil fuels. The downward trend in solar energy costs will have to continue over the next decade, as it is offline the lowest cost form of bulk energy, even after the battery is stored.
Addition of solar power capacity is also on track to accelerate in the coming years. The industry expects to install an average of 10 gigawatts (GW) of new capacity per year until 2022, which should increase to 18 to 20 GW annually in the period 2023 to 2030.
It looks like it’s going to be a golden decade for solar energy. Three stocks plan to take advantage of this mega-trend Brookfield Renewable (NYSE: BEP) (NYSE: BEPC), First solar power (NASDAQ: FSLR), en NextEra Energy (NYSE: NO). These are good stocks to buy and hold until at least 2030.
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A solar-powered growth plan
Brookfield Renewable is currently one of the world leaders in the field of hydroelectric power. However, it sees the brightest future in solar power thanks to the dramatic drop in costs, which has significantly improved the economy of developing new solar energy projects. Brookfield writes in a recent letter from shareholders: “We believe that it is possible that the greatest production capacity of Brookfield Renewable will have solar power in ten years. It is not that we do not believe in wind or hydro, but the growth in solar power. and the ability to develop and earn strong risk-adjusted returns should enable us to grow our solar operations at a much greater rate. ‘
The company has built up its solar energy platform over the past few years. It bought the rest of TerraForm Power, which it did not own, acquired a 50% stake in the developer of X-Elio for solar energy projects, bought several solar energy development projects in Brazil and recently agreed to acquired Exelonsolar business. As a result, Brookfield is now developing a pipeline of more than 10 GW of solar power projects. To put this in perspective, Brookfield’s current renewable energy portfolio is 19.4 GW. These solar energy development projects are a major source of strength, enhancing the company’s forecast that it will be able to grow its cash flow at a double-digit rate by at least 2025.
A bright future lies ahead
First Solar is a leading developer of thin film solar panels, ideal for utility projects. The company currently has a backlog of contracts totaling 12.2 GW of system sales and 8.3 GW of additional resources until late stages. In terms of perspective, the company’s current production capacity is 5.5 GW, which means it has set up years of future sales.
Meanwhile, First Solar has one of the best balance sheets in the sector, with a net cash position of $ 1.4 billion at the end of the third quarter. It has unmatched financial flexibility to continue expanding its manufacturing capacity to meet faster demand while investing in the development of even better panels. This should enable him to stay one step ahead of his competitors and gain a significant share of the solar panel market in the coming decade.
This renewable energy is only going to get bigger
NextEra Energy is already the world leader in producing power from wind and solar. However, it currently has 15 GW of renewable projects in its backlog, which is larger than its existing portfolio. A significant part of the new additions are solar projects due to the reduction in the cost of panels and energy storage.
That extended backlog leads NextEra Energy to believe that its earnings per year could grow by at least 2023 at an annual rate of 6% to 8%. Given its expertise and financial strength, it should be able to continue to seize opportunities at above average rate over the next decade. This can give him the power to continue to outperform the market. This has been the case for the past decade, as NextEra has generated a total return of more than 500%, more than double that of the S&P 500.
Well positioned for the mega-trend of solar energy
Solar energy begins to shine. It is on track to become the lowest cost form of almost fixed bulk power thanks to the dramatic drop in panel and battery storage costs. Industry-focused companies look set to grow rapidly in the coming decade, led by Brookfield Renewable, First Solar and NextEra Energy. This makes them excellent stocks to buy and hold at least 2030.