Solar energy innovations rise to new heights

Keep it brief

  • Renewable energy has dramatically fallen in price but it still faces headwinds
  • Nevertheless, leaders and communities around the world are committed to tackling climate change
  • Recent developments in solar technology could potentially transform the renewable energy space
  • Innovations in the solar energy industry could represent an interesting opportunity for investors

Are we on the cusp of a clean energy revolution?

Capital at risk: The value of investments and the income from them can fall as well as rise and are not guaranteed. You may not get back the amount originally invested.

Recent innovations in clean technology have help tilt the economics in favor of renewable resources, so the cost of generating power from the sun can compete with traditional fossil fuels.

Today, the cost of installing solar energy is 52% cheaper than it was five years ago

(Solar Energy Industries Association, September 2018)

While progress is being made towards a transition to renewable energy, analysis by the Overseas Development Institute based in the UK shows that G7 governments continue to provide at least US $100 billion in subsidies to the production and use of coal, oil and gas, which may hinder or delay these shifts (G7 fossil fuel subsidy scorecard, June 2018).

Moreover, recent tariffs on solar panels levied by the US federal government could pose a significant threat to the current and future state of the industry.

Despite headwinds, Sarah Kjellberg, head of US iShares Sustainable ETFs at BlackRock is confident the renewable energy market has room to grow and modernize.

How is technology helping the
case for renewable energy?

Solar panels have traditionally been made from silicon-based materials but development of a new organic material, known as photovoltaics, made from carbon and plastic, are expected to revolutionize solar panel production.
These organic solar cells convert sunlight as efficiently as silicon, for a lower cost and are also more flexible, opening up opportunities from curved solar panels to solar-powered clothing.
Researchers estimate that over a 20-year period, organic solar cells would produce electricity at less than 7 cents per kilowatt-hour, a nearly 30% decrease from the current national average (US Energy Information Administration, January 2018).
Advances in battery technology have extended supply of more dependable, reliable energy to both commercial and household use, even when the sun is not shining.
Battery-pack prices are down to less than $230 per kilowatt-hour from almost $1,000 in 2010 according to a 2017 report by McKinsey & company (The next disruptive technology in the power sector, June 2017).
These next-generation batteries are helping to power consumer products from electric vehicles to rooftop solar panels.

As a result of these innovations, the solar energy sector may be poised for significant growth. In fact, McKinsey estimates that between 2016 and 2050 solar and wind market will grow 4 -5 times faster than every other source of power (Energy 2050, McKinsey & Company, November 2016).

Sustainable investing is not just a
“feel good” exercise

Sustainable investing is the combination of traditional investment approaches with environmental, social and governance (ESG) insights. There is growing recognition that how companies manages ESG issues can have real and quantifiable implications that may not be captured by traditional financial analysis.

Build a sustainable core
with iShares ETFs

Invest for yourself and future generations with ETFs that screen for important ESG attributes. With iShares sustainable core ETFs, investors can build a low-cost portfolio with broad exposures across key markets.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any financial instrument or product or to adopt any investment strategy.

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