North American solar firms are expanding globally as governments in Asia and Europe look to boost their domestic solar power capacity. First Solar has been awarded millions of dollars in incentives from the Indian government, while Canadian Solar and Enphase Energy are capitalising on the EU’s latest drive to end its over-reliance on Chinese solar imports, while meeting the IPCC’s call for climate urgency.
Enphase Energy and Canadian Solar eye European opportunity
Across Asia and the world, China is currently the dominant player in the solar power supply chain, but some regions are following the US’s example in attempting to boost their domestic capacity.
Europe’s efforts to reduce its reliance on China for solar power stepped up in March, as EU energy commissioner Kadri Simson told the continent’s solar power lobby that switching from fossil fuels to renewables “should not mean replacing one dependency with another”.
IPCC calls for urgent action
The UN Intergovernmental Panel on Climate Change’s (IPCC) latest report on 20 March painted a grim picture of the world’s efforts to combat climate change to date.
The report, containing research from hundreds of climate scientists and signed off by global governments, suggests that global warming is “more likely than not” to pass the 1.5C threshold specified in the Paris Agreement.
Funds in focus: Global X Solar ETF
Investors seeking broad exposure to the solar theme alongside concentrated exposure to First Solar can select the Global X Solar ETF [RAYS]. As of 31 March, First Solar is RAYS’s top holding, with 12.42% of net assets. Enphase Energy is the fund’s fifth holding with a 6.16% weighting, while Canadian Solar has a 1.29% weighting.
Significantly, RAYS isn’t limited to North American stocks. Its second- and third-largest holdings at respective weightings of 9.09% and 8.67% in JA Solar Technology [002459.SZ] and Sungrow Power Supply [300274.SZ] reflect China’s current global dominance of the market.
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