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A Strategy Shift And A Buying Opportunity In Solar

Two pieces of news this week sent contradictory signals for solar power and resulted in a bit of a crazy week for investors in that industry. Now that the initial reactions have died down, however, the long and short-term trends that the stories indicate suggest a change of strategy in solar stocks may be warranted.

First, the Institute for Energy Economics and Financial Analysis (IEEFA) issued a report that stated that April was projected to be, in their words “momentous”, as renewable energy looked set to surpass coal in U.S. electricity generation for the first time ever. Then, just as investors were digesting and reacting to that, word came from the U.S. trade delegation that a particular type of solar panel had been removed from the tariff list, an action that prompted a big drop in the major U.S. solar companies.

Bifacial solar panels are, as you might have deduced from the name, panels that produce power from both sides. That enables them to generate electricity from reflected as well as direct sunlight and as a result, increase the efficiency of a solar array in terms of the area of land needed. The technology if relatively new so they are not yet a big part of the industry, but most analysts see them as becoming increasingly dominant in new solar arrays built by utilities.

Chinese companies are the main producers of bifacial panels and, until this week, they were subject to a 25% import duty as part of the broader tariffs on that country. On the…

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