3 Stocks to Gain From Expanding Southeast Asian Solar Market
The Southeast Asian region is becoming one of the fastest growing solar markets in the world due to the increasing demand for power and productive solar resources. According to the International Energy Agency (IEA), electricity consumption in this region is expected to double by 2040, which gives the solar market sufficient leeway.
In recent years in particular, the solar market has grown steadily in countries like Thailand, Vietnam, the Philippines, Brunei, Singapore, and Malaysia, where a handful of solar projects have gone online.
Southeast Asian Nations in the Spotlight
As stated in a report by Wood Mackenzie, Vietnam is currently the leader in the Southeast Asian solar photovoltaic (PV) market with the largest installed capacity in the region. In 2019, Vietnam's cumulative solar capacity increased more than five times, which resulted in the nation becoming one of the top ten solo countries in the world.
Among the other countries in Southeast Asia, Malaysia and Singapore are showing strong signs of solar market growth. For example, Malaysia has set a goal of increasing its renewable energy generation in electricity generation from its current 6% to 20% by 2025, and most of that would be powered by solar energy (as reported by Reuters). Singapore has targeted a maximum solar power capacity of at least 2 gigawatts (GW) or more than 10% of current peak electricity demand by 2030, replacing natural gas, which now generates 95% of the country's electricity.
Key catalysts for the Southeast Asian solar market
The use of solar energy is becoming more and more popular in the region due to the significantly increased demand for electricity, falling costs for solar systems, falling technology costs and more favorable measures in connection with the increasing introduction of solar energy. The increasing cost competitiveness of renewable energy sources, including solar energy, continues to boost the facilities significantly.
In view of the growth prospects for the solar market in this region, numerous investments are also being made. Interestingly, a new climate fund, backed by philanthropic donors, is aiming to spark $ 2.5 billion in clean energy investments in Southeast Asia, a large chunk of which is certainly believed to be spent on solar expansion. These growth drivers should undoubtedly give the Southeast Asian solar market a significant boost in the coming days.
What is ahead of us?
According to a Wood Mackenzie report, Southeast Asia's cumulative solar PV capacity is projected to reach 12.6 GW by the end of 2020, which is forecast to grow further to 35.8 GW by 2024.
Large solar projects will have a major impact on installation capacity for the next five years. As the project economy becomes more attractive, distributed solar systems will also gain momentum.
Shares in focus
Let's take a quick look at a few energy companies expanding their presence in the Southeast Asian solar market. Given the market's growth prospects, these stocks should benefit significantly.
Enphase Energy ENPH signed a distribution partnership agreement with Philippine solar energy provider MSpectrum in November 2020 to distribute the IQ 7 family of microinverters to its residential and commercial installers nationwide from the first quarter of 2021, Zacks # 3 (Hold). The full list of today's Zacks # 1 Rank (Strong Buy) stocks can be found here.
Canadian Solar CSIQ, in collaboration with Antah Solar and Eleaps, started building a 5 MWp rooftop solar project for trade and industry (C&I) in Malaysia in August 2020. After commissioning, the system is expected to generate around 6,700 MWh of solar power annually for 25 years. The company currently holds a Zacks Rank 2 (Buy).
TOTAL S.A. TOT signed a binding contract in March 2020 for the supply of solar roofs with 25 megawatt peaks (MWp) for 24 facilities of one of the largest food companies in Thailand. In December 2019, the company completed three solar roofs with a total output of 1.1 MW for Jentec Storage in the Philippines. The company runs a Zacks # 3.
5 shares bet on double
Each copy was selected as the # 1 favorite stock by a Zacks expert to hit + 100% or more in 2020. Each comes from a different sector and has unique properties and catalysts that could fuel exceptional growth.
Most of the stocks in this report fly under the Wall Street radar, which is a great opportunity to get into the ground floor.
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