A solar ETF for the future

Simon Brown ETF Investor, Latest

Investco Solar ETF (Dali-E)

Investco Solar ETF (Dali-E)

It seems everybody I know is installing either battery backup or going full solar as the Eskom load shedding continues its relentless march towards darkness.

Globally demand for solar panels continues to increase and some countries, such as the US, offer solar Investment Tax Credits (ITCs) that will provide a 22% credit for systems installed in 2023.

Add to this is US President Biden’s Build Back Better Act which also includes an increase and extension of the investment tax credit and an energy storage ITC. There is also a Green Energy Tax Incentive in the that should extend renewable energy ITCs for projects that begin construction before 2026 before being phased out over the subsequent two years.

Solar is booming and there is an ETF for that.

A decade ago I was looking at going off-grid but the tech was not great and pay back was slow. Now I could get a 2x better system (with more power and lithium ion batteries instead of lead acid) and for half the price. This experience is not unique to me, it is a global trend.

The Investco Solar ETF (NYSE code: TAN) includes companies in the solar energy industry which should see continued growth even in regions without tax credits.

There is also a lithium ETF.

Add to this, the move towards net metering (such as recently announced in Cape Town) where consumers can sell their excess solar power back to the grid will see more customers, especially in the commercial space.

Then of course industry is also getting in on the game. Omnia (JSE code: OMN) just announced a second phase of their solar power plant at their Sasolburg operations. This will add an additional 11,000 photovoltaic (PV) panels, over 6.5 hectares.

This Investco Solar ETF focuses on solar and has a 41.4% exposure to the US with China at 19.5% and Israel at 15.2% making the top three exchanges and is mostly benefiting from solar panel growth in the US.

Top five holdings
Enlight Renewable Energy Ltd 13.48%
First Solar Inc 10.25%
SolarEdge Technologies Inc 8.32%
Enphase Energy Inc 5.67%
Xinyi Solar Holdings Ltd 5.01%

ETF details
ETF name Investco Solar ETF
ETF issuer Investco
Issue date 15 April 2008
Total investment cost 0.69%
ETF Benchmark MAC Global Solar Energy Index
Tax-free savings account NO
Market cap US$2.5billion
Performance 1 year +29.3%
Performance 3 years +136.8%
Performance 5 years +209.1%
Performance 10 years +394.9%
Dividend yield 0%

Simon Brown

ETF blog

At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.