During Joe Biden’s presidency, the U.S. solar industry experienced a significant boost, primarily driven by the Inflation Reduction Act (IRA). This $369 billion package, signed into law in 2022, has been a game-changer for the renewable energy sector. The IRA provided substantial incentives for renewable energy, including tax credits, grants, and investments in clean energy infrastructure. The IRA has also reduced the U.S. reliance on imported energy resources. The economic benefits of the IRA have been widely recognized, with bipartisan support from both Democratic and Republican leaders.
According to a report by the Solar Energy Industries Association (SEIA) published on December 4, the US solar market installed 8.6 GW of capacity in Q3, continuing the trend of record-setting quarterly volumes this year and marking a notable 21% increase compared to the same quarter in the prior year. The report also highlights significant growth in domestic solar module manufacturing capacity, which increased by over 9 GW in Q3, reaching nearly 40 GW. This marks a substantial rise from less than 7 GW at the end of Q2 2022, before the introduction of domestic manufacturing and procurement tax credits under the IRA. Additionally, the first US cell manufacturing facility opened in Q3 marking a significant milestone in reshoring cell production for the first time since 2019. Utility-scale solar remained the largest contributor, with 6.6 GW installed in Q3, which signifies a 44% increase year-over-year and marks the highest third-quarter performance on record for the segment.
Solar’s Future Under Trump
As Donald Trump prepares for a second term as president, the future of the U.S. solar industry is a topic of significant interest. Trump’s campaign rhetoric has signaled intentions to bolster the fossil fuel industry, repeal Biden-era policies such as the IRA, and increase trade tariffs.
In an interview with CNBC on November 9, John Berger, CEO of Sunnova, discussed the impact of a potential second Trump administration on the solar industry. Berger emphasized that the market is currently driven by wild speculation and emotional responses, but he believes that the fundamentals of the solar industry remain strong and the demand for energy is increasing, suggesting it could bring even more success and growth for the solar industry and his company.
Berger addressed the speculation about future policy changes, particularly regarding the Inflation Reduction Act (IRA). He stated that the IRA is unlikely to change significantly, noting its success and the bipartisan support for domestic manufacturing, especially in the production of solar panels, batteries, inverters, and electric vehicles. He also stated that 85% of the plants that manufacture solar panels and batteries are located in Republican districts. Berger concluded by praising the IRA, particularly the tax credit for manufacturing (45X), which has played an instrumental role in growing and building domestic manufacturing plants in the U.S.
Despite the potential for federal policy changes, the solar industry will undoubtedly play an increasingly vital role in global energy systems. With that in context, let’s take a look at the 10 best solar energy stocks to buy now.
An aerial view of a large building complex with solar panels on the roof, symbolizing the investments in the utilities sector.
Our Methodology
To compile our list of the 10 best solar energy stocks to buy now, we used Finviz and Yahoo stock screeners, clean energy ETFs, and online rankings to compile an initial list of 25 solar energy stocks. Then we used Insider Monkey’s Hedge Fund database to rank 10 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Solar Energy Stocks To Buy Now
10. Shoals Technologies Group, Inc. (NASDAQ:SHLS)
Number of Hedge Fund Investors: 27
Shoals Technologies Group, Inc. (NASDAQ:SHLS) specializes in electrical balance of systems (EBOS) solutions for solar energy projects. The company provides key components such as combiner boxes, inline fuses, and wire harnesses, which are essential for solar power generation systems. Shoals Technologies Group, Inc. (NASDAQ:SHLS) has established itself as a key player in the utility-scale solar market by offering a comprehensive range of products and services that enhance the efficiency, reliability, and cost-effectiveness of solar installations.
Recognizing the growing demand for solar solutions in the commercial, industrial, and institutional (CC&I) sectors, Shoals Technologies Group, Inc. (NASDAQ:SHLS) is making significant investments to address this market opportunity. The CC&I market, while smaller than the utility-scale solar market, is growing at an attractive pace and leverages many of the company’s existing strengths and capabilities. Shoals Technologies Group, Inc. (NASDAQ:SHLS) has built an experienced commercial and product development team dedicated to serving the CC&I market and has already begun shipping products to this segment. The company has also signed an agreement with one of the largest distributors in the space, further solidifying its position in the market.
Shoals Technologies Group, Inc. (NASDAQ:SHLS) is at the forefront of technological advancement in the solar industry, with a strong focus on product innovation. One of the key areas of development is the transition to 2kV electrical systems, which are designed to increase the voltage in solar projects to 2,000 volts. This advancement is expected to significantly improve the efficiency, sustainability, and cost-effectiveness of solar installations. The company has initiated pilot programs of this technology with industry leaders such as GE Vernova.
9. Fluence Energy, Inc. (NASDAQ:FLNC)
Number of Hedge Fund Investors: 27
Fluence Energy (NASDAQ:FLNC) is a global leader in energy storage technology, specializing in battery-based energy storage solutions. The company designs, manufactures, and delivers energy storage systems for solar energy along with software that enhances the efficiency, reliability, and sustainability of energy networks. The company’s products play a key role in improving grid stability, integrating renewable energy sources, and managing energy costs effectively.
Fluence Energy (NASDAQ:FLNC) is actively working to build a resilient and localized supply chain in the United States. The company has established six production facilities across the US, including a dedicated battery module production line in Utah and two battery cell production lines in Tennessee. These facilities utilize advanced robotics and automation technology to improve production efficiency and ensure high product quality. By localizing its supply chain, Fluence Energy (NASDAQ:FLNC) aims to reduce dependence on Chinese imports, minimize exposure to potential tariff hikes, and take advantage of incentives provided by the Inflation Reduction Act (IRA).
Fluence Energy (NASDAQ:FLNC) is also broadening its market reach by expanding its geographic presence and growing its project pipeline. The company is actively pursuing opportunities in the US, Germany, Australia, Canada, and Chile. Furthermore, Fluence Energy (NASDAQ:FLNC) is prioritizing recurring services and digital business offerings to drive long-term growth and stability.
