What’s Driving Growth In Solar Industry And ETFs?

Provisions in last year’s bailout bill and this year’s stimulus gave the solar industry and its exchange traded funds (ETFs) an enormous boost.

In 2008, solar energy capacity grew an astonishing 17%. Of the four types of solar power, the growth leader of the pack was photovoltaic capacity, which grew 44% in 2008 over 2007. Additionally, last year was the first year for large-scale utility projects to utilize mirrors to harness the sun’s energy, states Kate Galbraith of The New York Times.

It isn’t all sunshine for the industry, though. The global recession and tight credit markets have taken their toll on the industry, making financing very difficult to come across. Additionally, it is very costly to use solar power as a form of renewable energy. In general, producing power from photovoltaic panels can cost up to three times as much as producing electricity from the wind.

The industry is still actively lobbying Congress to implement policies that will further be beneficial. On top of their wish list is a national renewable electricity standard with a solar carve out, which will require the country to get a certain percentage of its electricity from solar power. The good news for the industry is that there are currently about a dozen states that have this kind of a carve out in their state-level renewable standard policies.

If you want to grab exposure to this sunny sector, take a look at the following ETFs:

• Claymore/MAC Global Solar Energy Index ETF (TAN): down 20.2% in the last three months

• Market Vectors Solar Energy ETF (KWT): down 19.7% in the last three months

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