Introduction#
Bank of America has spotlighted several notable stocks in the U.S. cleantech sector, emphasizing the competitive edge of solar power over traditional energy sources, even without government subsidies.
Solar Power's Cost Advantage#
Research from Rystad Energy, referenced by the bank, shows that the cost of unsubsidized utility-scale solar power ranges from $50 to $70 per megawatt-hour. This is significantly lower than the $80 to $100 per megawatt-hour cost of new combined-cycle gas turbine power plants. The cost advantage is attributed to long lead times for gas turbines and rising costs in gas-related construction and engineering.
Market Dynamics and Consolidation#
Bank of America points out that tightening tax equity financing and increased geopolitical risks are widening the gap between leading developers and smaller firms. This trend is expected to push for consolidation in the cleantech industry over the next 18 to 24 months.
Notable Stocks#
Nextpower#
Bank of America has set a price target of $121 for Nextpower, using various valuation methods. The company’s strong business model and execution justify a premium compared to its solar peers. However, risks include challenges in new market segments and inflationary pressures in the supply chain.
First Solar#
For First Solar, the bank's price target is $257 per share, based on discounted cash flow analysis. The company benefits from significant tax credits through 2032, adding value. Nevertheless, it faces risks from a declining price environment and potential changes in trade policies.
Shoals Technologies Group#
The price target for Shoals Technologies Group is set at $11, determined through a mix of valuation methods. Risks include delays in project timelines and competitive pressures. Recent earnings reports showed lower-than-expected results, prompting some analysts to adjust their price targets downward.
HA Sustainable Infrastructure Capital (HASI)#
HASI has a price objective of $42 per share, based on a combination of dividend and cash flow models. Risks for HASI include slower-than-expected growth and potential changes in trade policies that could affect project timelines.