Solar installations, especially in the rooftop market, tend to be highly sensitive to interest rates. Further, the central bank has cautioned about the lingering possibility of a mild recession. It’s also worth noting that interest rates have started creeping up with the markets on edge due to the uncertainty surrounding precisely when the Federal will start cutting rates. solar sector will record a more modest 10% growth in installed capacity in 2024, with high-interest rates and the net metering policy in California seen as key headwinds. Perhaps this has got something to do with a December report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie that predicted the U.S. Unfortunately, solar stocks can’t seem to catch a proper break with the TAN ETF down 10.9% just 10 days into the new year. Last month, the solar and clean energy sector went wild after the Fed announced that it will keep short-term interest rates unchanged and penciled in three cuts in the current year, a potentially very bullish development for 2024. Despite the strong growth in installed capacity, solar stocks were badly hammered with the sector’s favorite benchmark, Invesco Solar ETF (NYSEARCA:TAN), crashing nearly 26% in 2023. The 10-year treasury yield jumped from half a percentage point in 2020 to just under five-percentage points in November 2023 as the Federal Reserve hiked rates to combat stubbornly high inflation in the aftermath of the Covid-19 pandemic. It’s something of a minor miracle that the sector was able to record that kind of growth at a time when interest rates were going through the roof. solar sector, with installed capacity rocketing 55% Y/Y to a record 33 GW, driven by robust growth by residential solar and high energy prices. Last year proved to be a banner year for the U.S.
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