Bizarre as it may sound, solar energy stocks have in fact taken a beating ever since oil prices began to tumble last June and weakness has continued this year as well. The decline in oil prices has made renewable energy stocks unattractive, sparing neither U.S. nor Chinese solar companies.
While the solar energy sector’s long-term potential is undeniable, the industry’s near-term prospects remain hostage to intrinsic limitations like high installation costs. But let’s not forget that the demand for solar energy is strengthening at a rapid clip and analysts see no fundamental correlation between the oil plunge and solar share losses.
It is important to note that in 2014 only 1% of U.S. electricity was oil-generated. Renewable sources of energy accounted for about 10% of total U.S. energy consumption and 13% of electricity generation last year.
Hence, the recent losses suffered by some of the fundamentally strong solar stocks can be good buying opportunities. The U.S. solar market continues to grow as it registered 30% year-over-year growth in 2014, as per the Solar Energy Industries Association.
Apart from the recent oil price scenario, other weaknesses that can impact the renewable industry at large are discussed below.