1. The Investment Case for Solar
Tracking index for Guggenheim Solar ETF (NYSE ARCA: TAN)
www.MACsolarindex.com
2. Long-Term Bullish Factors for Solar Sector
• Spending on new solar installs will be a massive $3.7 trillion through 2040
and solar will account for 35% of new electricity installs, according to
Bloomberg New Energy Finance.
• Room for double-digit growth for decades; solar is less than 1% of U.S. utility
electricity generation now.
• Industry has matured after 2011-12 shake-out; survivors are established with
best technology and scale; margins have recovered; supply now better
matched to demand.
• Solar panel demand has persistently surprised to the upside
• Solar costs are falling due to improved technology and lower
system/installation costs; grid parity is being reached in a progressively
larger number of markets. Lower solar cost means increased demand,
bigger target market, more unit sales, more profit.
3. Solar – Long-term Solution for Sustainable Electricity
Advantages
• Clean & Safe - Solar is a clean & safe electricity solution; unlike nuclear, coal, natural gas.
• Cost certainty -- Solar has a fixed up-front electricity-generation cost with no fuel cost risk,
unlike coal and natural gas where generation costs depend on unknown future fuel costs.
• Falling costs - Solar costs are falling steadily due to technology improvements and
manufacturing scale. Also, solar has a near-zero marginal cost once installed unlike high
fuel operating costs for coal and natural gas.
• Distributed Generation – Solar insulates electricity users from grid failures and protects
against future utility electricity price increases
• Scalable – Solar can be small or large scale; residential, commercial buildings, utility.
Disadvantages
• Day-Use Only – Solar but matches peak electricity usage times; add battery storage
• Variable solar intensity – but still economical in northern climes
• Installed Cost – Falling fast; grid parity in growing number of areas
4. Solar PV and Thermal could together become the world’s
largest electricity source by 2050 (IEA)
▪ Solar PV and Solar Thermal Electricity (STE) could together account for 27% of global energy share by
2050 (16% for PV, 11% for STE) versus current <1%, thus becoming the world’s largest electricity source.
▪ This would prevent CO2 emissions of 6 billion tonnes per year, more than today’s U.S. energy sector
emissions or world transport sector emissions.
Source: International Energy
Agency Technology Roadmaps
for Solar Electricity (2014).
12. MAC Solar Index - Methodology
• Global solar energy index of qualified solar stocks listed on
exchanges in developed countries.
• Passive index of qualified solar stocks – no stock picking.
• Modified market cap weighting.
• Liquidity minimums to add a stock: $150 million market cap and
$750,000 in average daily trading value.
• Exposure Factor 1.0 for pure-play solar stocks (solar revenue above
2/3); Exposure factor of 0.5 for medium-play stocks (1/3 to 2/3 solar
revenue).
• Quarterly index review on third Friday of March, June, Sep, Dec.
13. Advantages of Index/ETF Over Individual Solar Stocks
• Own the global solar sector in one trade – reduced transaction costs
• Long track record – 9+ year history (launched in April 2008)
• Dynamic Portfolio – add solar growth stocks and drop losers
• Diversification – across geography, technology, value chain
14. Diversification Across Geography
By Company Headquarters:
• North America: 9 companies
• China: 9 companies
• Europe: 5 companies
By Stock Listing:
•North America: 13 companies
•Hong Kong: 5 companies
•Europe: 5 companies
15. For More Information
• Solar Sector Research at:
www.macsolarindex.com
• List of solar information sources at:
www.macsolarindex.com/resources