The globe is currently in the midst of an energy crisis. Due to multiple factors, such as the global energy shortage, the geopolitical tensions between Russia and Ukraine, and the poor utilization of energy infrastructure, these issues require society to find alternatives to energy consumption.
With energy growing higher in demand, enterprising individuals see this as an opportunity for the transition to solar power. Solar energy is renewable, cost-efficient, and much more environmentally beneficial than traditional sources.
If you’re looking to invest in solar, you may have some looming concerns in your mind. But fear not because this guide will teach you everything you need to know.
Why Invest in Solar Energy?
For a good reason, many people believe solar energy is the future. The technology has been around for quite some time and more people are starting to see it as a better alternative to fossil fuels. The industry has been growing rapidly in the US since 2000, with the most recent decade recording an annual growth rate of 33%. Likewise, China’s solar energy industry saw a 14% growth rate.
SolarPower Europe’s Global Market Outlook for Solar Power noted that the capacity of using solar energy was further demonstrated in 2021 when global participation led to installing 168 GW of solar power, with an addition of at least 200 GW slated for 2022. Today, global solar capacity has effectively doubled since 2018, reaching 2.3 TW by 2025.
5 Ways to Invest in Solar Energy
With the points above in mind, it’s clear that solar energy holds tremendous potential. But now you may be wondering how you can invest in this increasingly popular alternative. To help you out, here are five ways you can invest in solar energy.
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Solar Stocks
Solar stocks operate around the same principle if you’ve invested or participated in the stock market. By holding on to these stocks that can potentially increase in value over time, you stand to earn profits and dividends each year from the solar company you’ve chosen to invest in.
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Solar Derivatives
This type of investment can be much more complicated than traditional solar stocks. Solar derivatives are geared more towards experienced investors since they require complex financial instruments and are prone to larger rises and falls.
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Solar Power Exchange-Traded Funds(ETFs)
An excellent alternative to standard solar stocks, solar power ETFs combine several solar companies’ stocks in a fund, so investors reduce the risk of losing significant amounts of money. They also create a more stable investment experience and are preferred by those looking to invest in solar power projects in the long term.
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Real Estate
If investing through stocks and bonds is something you don’t want to do, another way to invest in the solar energy boom is through real estate. By leasing your land to solar companies and farm operators, you can negotiate a share of their earnings or earn through the agreed-upon rent.
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Solar Power Farm or Plant
Creating your own solar farm may be costly, but the profits and returns on investment over time make it a potentially worthwhile investment. If you plan on pursuing this in the future, having the necessary materials, space, and market research is encouraged to reap the highest possible benefits.
Benefits of Investing in Solar Farms
It’s already been established that solar farms and investing in solar energy are becoming more feasible over time. Aside from solar energy being good for the environment, investing in solar power provides many benefits for individuals and businesses.
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Reduces Your Electric Bills
Making the shift to solar energy can significantly reduce your monthly electric bills. When transitioning to solar energy, you essentially use free power from the sun, and modern panels are commercially made to last at least 25 years.
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Protects consumers from rising energy costs
One of the benefits of shifting to solar power is that you’ll no longer be affected by rising energy costs. Through this, you can protect yourself from any unpredictable increases in electricity costs and be able to predict future estimates for better expense management.
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Creates jobs and boosts the economy
Because the industry is moving rapidly, the increased demand for solar energy will create new jobs. More people installing solar panels in their offices and homes can create more demand for logistics workers, installation staff, and those managing the solar farms on-site.
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Takes advantage of government incentives
Various governments are providing incentives to encourage their citizens to switch to solar. In North American countries, this is reflected through the likes of the Solar Investment Tax Credit, which offers a 26% tax credit to eligible individuals. China’s government has had subsidy programs since the 1990s, encouraging the country’s solar power industry to thrive.
In the Philippines, the government has also encouraged sustainable energy use through the Renewable Energy Act of 2008, which provides both fiscal and non-fiscal incentives to investors
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Reduces carbon emissions
One of the main criticisms of the avid use of fossil fuel is its non-renewable nature and the harmful byproducts it creates upon consumption. These byproducts eventually become the driving factors for climate change.
On the other hand, solar power offers a cleaner alternative because it generates energy from the sun, so no carbon emissions are produced throughout the lifespan of the solar energy process.
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Reduces operating costs of businesses
Like how households can benefit from going solar through lowered electricity bills, businesses can save on operating costs too. Companies transitioning toward sustainable energy can eventually save money that they can use for other operations and internal initiatives.
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Encourages energy independence
With solar energy, you no longer need to rely on electric power distribution companies for your electricity. In many ways, if more people were to shift to renewable energy as the main driver in their homes and workplaces, energy would be accessible to almost everyone. It can also lessen the drastic price fluctuations of commercially sold energy.
How to Get Started
Before you start your solar venture, you’ll need to make several considerations before you build or invest in a solar farm. These can range from small things like conducting market research, applying for documents, or doing oculars and field work to find the best location to build your farm.
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Do your research
As a beginner in the industry, it’s important to find out who the key players are within your area. These involve identifying who the potential competitors or threats are to your business and your target market.
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Create a business plan
Implementing a business plan is an effective guide for any long-term initiatives and investment opportunities forged along the way. A business plan should include executive summaries, a company description, roadmaps, funding requests, and financial projections.
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Obtain the necessary permits
To ensure the business runs smoothly from here, you’ll need to apply for and acquire the necessary paperwork to start a solar farm. Depending on the location of your plant, permit requirements may differ.
For example, solar plants mounted on top of buildings would require electrical and building permits, while those based on the ground can require clearance permits from local and federal institutions.
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Scout for an optimal location
To create a good farm, you’ll need lots of lands to work with. Properties zoned for industrial or agricultural use make the ideal location for solar business ventures. A plot between 8 to 16 hectares is required in terms of size.
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Apply for financial safekeeping and insurance
You’ll need to protect your business should anything unexpected happen. Coordinate with your bank, apply for a new business account, and apply for insurance policies that can cover your business financially and protect them from risks.
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Create your business branding
While marketing your business is optional, investing in your online and offline presence can generate revenue and publicity for your solar farm. It can attract more investors and clients and further your business in revenue generation.
Here Comes the Sun
The solar energy industry has come a long way, and the industry’s outlook is brighter than ever. Thanks to the growth the sector is experiencing, investing in solar energy can be a great way to earn profit and care for the environment simultaneously.
Amid global crisis and economic uncertainty, the promise of solar energy is something you can bet on. Be ahead of the game with SolarNRG, a premier partner for your renewable energy needs!
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