āWe’re not just going to tinker around the edges. We’re going to make historic investments that will seize this moment in history.ā
Presidential front-runner Joe Biden said this last month. He was talking about his blockbuster green energy spending plan. As you may have heard,Ā Biden plans to spendĀ $2 trillionĀ on clean energy and infrastructure over four years if he becomes president.
Thatās a staggering amount of money. The Trump administration currently allocates less than $100 billion per year to clean energy technology. So, weāre talking about a 20-fold surge in spending!
Biden also plans to end carbon emissions from power plants by 2035. Itās an ambitious goal. One that would require millions of solar panels, and tens of thousands of wind turbines.
Of course, you may think this is way too much money to spend on green energy. You may not think that climate change is a big deal. Or maybe you donāt think Biden should be Americaās next president.
But you shouldnāt let your political views get in the way of big investment opportunities. Thatās an expensive mistake many people make. Instead, I like to focus on the most likely outcomes, and invest accordingly.
And thereās no denying that Bidenās plan would turbocharge green energy stocks. Weāre talking about $2 trillion, after all!
The solar industry is still a relatively small market. It accounts for just 2% of the total electricity generated in the United States.
Itās also only about a $53 billion industry worldwide. But itās growing like crazy. By 2026, the global solar industry is projected to be worth $223.3 billion. Of course, Biden isnāt a shoo-in. Thereās a chance that Trump is our president for four more years. But the solar industry doesĀ notĀ need the federal governmentās support to thrive.
Residential solar installations hit a record high during the first quarter of this year. And last year, solar accounted for 40% of all new power capacity. Solar is going mainstream for a simple reason: Itās competitive with traditional energy sources.
The cost of solar energy has plunged 90% over the past decade. And the price of residential solar power is projected to fall another 17% over the next five years. Not only that, 28 states have set CO2 emission reduction targets, and 23 states have signed the US Climate Alliance pledge to reduce emissions by 28% by 2025.
The worldās biggest companies are also committed to green energy. Last month,Ā Apple (AAPL)Ā announced its plan to become ācarbon neutralā across its entire business by 2030.
Microsoft (MSFT)Ā is aiming to become carbon negative by 2030. By 2050, the tech giant plans to remove all carbon emitted by the companyāeither directly or by electrical consumptionāsince the company was founded in the 1970s!
Amazon (AMZN)Ā is purchasing 100,000 electric vans from US-based electric vehicle maker Rivian. It plans to have all of them on the road by 2030. The retail giant also operates 91 solar and wind projects worldwide!
And itās still very much the early days.Ā Thatās why Iāve been pounding the table on hydrogen and solar stocks for months.
When it comes to solar stocks, the chart below tells you all you need to know. It shows the performance of theĀ Invesco Solar ETF (TAN), which invests in a basket of solar stocks, since Trump took office in January 2017. Itās nearly tripled in value.
Compare that with theĀ Energy Select Sector SPDR Fund (XLE), which invests in oil and gas stocks. Itās plummeted 51% over the same period.
The VanEck Vectors Coal ETF (KOL), which invests in coal stocks, has also been a terrible investment despite Trumpās best effort to rescue the dying industry. KOL has plummeted 44% since Trump took office in early 2017.
Solar stocks have left ādinosaur energy stocksā in the dust for the past four years. And I see them surging much higher in the months ahead, with or without Bidenās help.
To understand why, look at this chart. It shows the performance of TAN since the fund launched in 2008.
TAN has spent the past eight years ācarving a bottom.ā Itās now bumping up against a level that has already acted as a resistance twice before.
In other words, itās likely only a matter of time before TAN rips through this key level. If that happens, solar stocks should be off to the races.
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