There has been a growing trend in recent years to move away from traditional energy sources, such as coal and petroleum, and toward new “clean” sources, including solar power.
The use of solar energy has been growing fast but the stocks of many such companies have lagged for more than a year and some do not seem to ready to take off the way investors might like. Solar energy is attractive because it involves harnessing the light and heat of the sun as an environmentally friendly power source.
Unfortunately, there are clear limitations to solar energy, namely that one cannot generate it at night or in inclement weather due to the lack of sunlight. Due to these limitations, the efficiency and speed with which solar energy is generated take heightened importance.
There is potential for widened variation in the quality of solar energy products offered by companies in that sector, compared to traditional energy organizations. Therefore, a quality product is critical to the success of a solar energy company.
In the past, federal tax credits and other incentives allowed many lesser quality solar companies to be successful. As these tax credits have mostly expired, only companies that continue to innovate and improve their products are likely to succeed.