Saudi Arabia’s Vision 2030 plan includes building 9.5 GW of renewable energy generation, and it’s hoping to do so with local product. This means a big investment in renewable energy by a nation that would be seen as among the least likely to want to promote it. Instead, it’s showing just how cheap solar energy can be.
Making an even bigger pie
What’s positive about this for companies like SunPower (NASDAQ: SPWR) and First Solar (NASDAQ: FSLR) — two of the largest solar project developers in the world — isn’t that Dubai or Saudi Arabia will be big markets in and of themselves. With 75 GW of solar expected to be installed in 2016, they’ll be fairly small markets even if they hit the goals laid out above.
However, their embrace of solar shows that solar demand is starting to have breadth across the world. And economics are starting to drive decisions to go solar, not just subsidies and politics.
For most of the past decade, solar has been in a boom-and-bust cycle as Germany, Spain, Japan, and other countries raised and lowered their subsidies. The industry would go through periods of booming demand and massive oversupply as a result of its reliance on a relatively small number of markets. But, today we’re seeing solar growth in the U.S., China, South Africa, Mexico, Chile, the Middle East, and even India.
As the industry grows and there’s more breadth of demand, it will create a more consistent operating environment, which should bode well for leaders like SunPower and First Solar. Even if they aren’t winning contracts in each of these markets, a rising tide lifts all boats, and as the biggest boats in solar, these are two companies with very bright futures.
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By Travis Hoium of Motley Fool