Hello, Reader.
Tom Yeung here with today’s Smart Money.
Earlier this month, I found myself staring at a crisp white envelope on my desk.
The paper seemed to glow under the fluorescent lamp… a glossy corporate logo in the corner winking ominously at me.
It was… cue the foreboding music… my utility bill.
Now, I knew my Massachusetts-state utility bill would be high, because New England has the worst utility prices in the nation. However, it was even higher than I expected, because a surge in nationwide utility prices means that just about all Americans’ utility bills are rising 60% faster than average inflation.
Here’s the thing: This little envelope from my utility company and the sky-high bill likely sitting in your own inbox have more to do with your portfolio’s potential profits than you think.
For the first time since moving into our home, we’re considering adding solar panels to this 200-year-old house.
And as millions of other homeowners (and their state representatives) come to the same conclusion, we’re going to see a new boom in solar spending.
As Eric detailed in a recent Smart Money, solar stocks may soon become hot, hot, hot once again… especially during this second Trump administration.
So, in today’s Smart Money, I’d like to dive deeper into the solar industry’s latest, upcoming revolution, why we could see an uptick in solar spending, and what this all means for your portfolio.
Let’s dive in…
The Solar Revolution’s Third Act
The first American solar “revolution” started in California after then-Governor Arnold Schwarzenegger signed the Million Solar Roofs initiative – a cash incentive and rebate program that began in 2006. By 2020, roughly 15% of the state’s utility grid was from solar.
The second revolution began during President Donald Trump’s first term in office.
The surprising truth about the “drill, baby, drill” president is that solar output doubled under his watch, before doubling again during the Biden administration. Trump’s hands-off approach to power generation meant states like Texas and Florida expanded their incentive programs for solar installations with minimal federal intervention, and these efforts continued through the following administration. (These two states combined now produce more solar than California.)
The result is that power prices in both states have fallen in real terms since Trump first took office in January 2017.
The third revolution is now set to start… for three specific reasons:
- Red-Hot Electricity Demand: The acceleration of AI data center construction has turned electricity generation into a “sunrise” industry, especially in states still lacking solar power.
In the Mid-Atlantic, for example, auction prices for wholesale electricity have risen almost tenfold since last year on insatiable demand. - Cheapening Solar Prices: The levelized cost of solar energy is at least 29% lower than the cheapest fossil fuel option. The price of lithium-ion batteries – an essential component of solar installations – is also in retreat.
Prices have dropped 25% in the past year alone, thanks to sharp year-over-year decreases in lithium prices (-22%) and cobalt prices (-25%). This makes solar broadly more affordable for utilities, which must provide energy in both daytime and night. - State Regulations: Then there are homeowners like me… staring at our rising utility bills.
One effect of this will be more residential solar. The U.S. Energy Information Administration believes residential rooftop solar is growing at 25% annually, and that rate could accelerate as electricity prices continue to rise.
But the biggest prize will come from regulatory pressures for utilities to construct more capacity. Utility-scale projects currently make up around two-thirds of installed U.S. capacity and will likely remain the largest growth driver thanks to economies of scale.
In all, we’re already seeing some effects of these three catalysts…
A Compelling Opportunity
Last week, Massachusetts state regulators announced plans to force local utilities to reduce total gas bills “by at least 5%” after public outcry over heating costs. Utilities seeking to raise prices in states like New York will almost certainly find it more difficult going forward.
The math is also changing for public utilities.
Eversource Energy (ES), a New England-based utility company with few historical ties to solar power, is now considering large-scale solar as far north as New Hampshire – a state better known for icy downhill skiing than abundant sunshine.
In addition, solar farms can take as little as eight months to construct – far faster than gas-powered (one to three years) and nuclear (five-plus years) power plants.
Energy companies are seeing unprecedented short-term demand, and solar offers a quick way to meet that need while appeasing regulators and customers.
That is why Eric believes that solar stocks are presenting a compelling opportunity. It’s also why he recently added a promising solar investment to his Fry’s Investment Report portfolio that’s primed for significant growth.
It’s an investment that Eric previously took an almost 80% gain from during the first Trump administration. This go-around, he believes double that first gain is well within reach.
To learn more about this company, and all the stocks in Eric’s portfolio, click here to learn about becoming a Fry’s Investment Report member today.
Regards,
Thomas Yeung
Markets Analyst, InvestorPlace
P.S. As we’ve been talking about all week here, at 8 p.m. ET tonight, TradeSmith CEO Keith Kaplan goes live with his full market briefing: The Last Melt-Up. And it couldn’t be more urgent. The S&P 500 is pulling back. President Trump’s agenda is facing headwinds in Washington. Inflation looms. And the Fed seems stuck in neutral.
Is the great meltdown finally here? Is it time to cut your losses and sell? Join Keith tonight at 8 p.m. ET here and you’ll get the full answers. Or you can sign up here.
