Credit: Source: SolarCity Corporation.But residential solar expansion has been dwarfed by utility-scale expansion in recent years. For electric companies, solar facilities can offer incredibly stable sales via 10- to 25-year power purchase agreements (PPAs). With increasingly volatile fossil fuel prices, reduced risk from alternative energies is a welcome alternative. Some utilities have even expanded their renewable assets to the point where they've spun off an entirely separate "yieldco" company. Similar to master limited partnerships, or MLPs, for traditional energy companies, yieldcos allow utilities to cut taxes for their renewable energy assets. For example, NRG Energy spun off NRG Yield in 2013, and NextEra Energy created NextEra Energy Partners, LP last year.
Less money down, steady sales, and minimal taxation have all transformed solar opportunities.
3. Politics
There's no denying it: Politics play a pivotal role in solar's expansion. Power plants emit nearly a third of our nation's greenhouse gases, and environmentally oriented politicians have been pushing solar. Historically, production tax credits have helped boost solar installations across states. But those credits are coming to an end, and programs like New York's MegaWatt program are tapering tax credits .
The U.S. Environmental Protection Agency's (EPA) proposed Clean Power Plan is the next big political push to benefit solar. If implemented, it could cut out coal's comparative advantage, one of solar energy's heavyweight cost competitors. The plan is state-specific, so different states will experience different degrees of solar incentives and coal disincentives, but the political trend is clear: renewables in, carbon emitters out.
Will solar soar in 2015?
So far this year, the Bloomberg Global Solar Energy Index is up 18.3%, compared to just 2.5% for the S&P 500 . 2015 may be a record year for solar, but technological advances, increasingly accessible financial tools, and favorable political paradigms aren't a one-year-only occurrence. For 2015 and beyond, solar is here to stay. And for long-term investors looking to buy and hold as Wall Street takes its sweet time to turn to solar, now is the time to stock up on solar stocks.
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The article 3 Reasons Solar Will Soar in 2015 originally appeared on Fool.com.
Justin Loiseau has no position in any stocks mentioned, but he does hope the sun soars and the snow melts in Boston very soon. The Motley Fool recommends SolarCity and moving to Alexandria, VA. The Motley Fool owns shares of NRG Energy, and SolarCity. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
