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Opportunity from Disaster, How Fukishima Pushed Up Shares in Renewables

The new year has brought a renewed confidence in solar stocks on world markets, with increases of up to 41% seen over the course of a day and a positive Solar Stocks Index performance of 15.5% over 1 month. This short term performance has been attributed to stabilising solar energy component prices and increases in new solar installations in key markets such as Germany. With mounting pressure on governments globally to reduce emissions, and the increased opposition to nuclear power plants in the wake of the Fukushima disaster, solar energy is expected to capture a larger share of global energy supply.


Scientific advances and large scale government solar installations in China, the UAE and several other locations will also serve to instil confidence in an industry that has been rocked by global markets over the last year. Private demand is also increasing, as governments in countries such as Australia continue to pursue carbon trading schemes and provide an impetus to invest in alternative energies to fossil fuel generation.


Uncertainty plaguing traditional fossil fuels due to geopolitical factors, increasing cost of production and supply, and the combination of the decreasing cost of supplying solar energy installations will also drive demand for the sector. However, despite strong positive indicators the sector is not without risks, globally, demand has still not caught up with the supply of solar energy components and installations and until this glut clears there will be downward pressure on share prices and revenue for the industry. This environment will possibly see decreased innovation in the face of uncertainty and the gradual removal of smaller, financially unstable firms from the market.


What this may mean is that there will be consolidation of the industry, with larger and more financially stable companies absorbing smaller players in the market. This consolidation could bring increased stability and maturity to an industry marred with short term volatility.

Importantly, the emergence of global market leaders in the industry will create an increasingly global, efficient and competitive industry with an enhanced ability to compete with traditional energy markets.


If you would like any more information about the solar industry and current opportunities to break into the market please contact Todd Soulas at tsoulas@industrygrowth.net

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