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Solar Stocks Struggle to Decouple From Crude

Since late September of this year, the stock market has given investors a bumpy ride as it continues its current downhill slide.

Along with other sectors, the solar market has also taken a dive. On top of this, solar is experiencing and additional drop due to relatively low oil prices. This one-two punch is hitting the solar market hard.

Solar stocks are at a 3 month low, and some have given up all of their 2014 gains at this point.

Credit: ARENA

Credit: ARENA

The solar market is in a period of steady growth, and has been a good bet for investors in recent years. In 2014, worldwide solar installations are on course to meet predictions of 42-48 GW. Unfortunately, as the market has a tendency to react to fear and current news stories like the Ebola problem are giving traders pause. However, low oil prices and their effect on solar stocks is a puzzler. In the US, Solar competes primarily with coal-fired electricity, which supplies 39% of the nations energy supply. Meanwhile, petroleum supplies only 1% of US electrical generation. Petroleum prices could drop precipitously, and make virtually no dent in the price of electricity. On the other hand, solar does compete directly with natural gas, which is the nations #2 source of electricity, providing 27% of US electrical generation. Back in March, CNBC reported that price links between solar and crude prices had “begun to break down completely.” However, current conditions indicate that the uncoupling from petroleum is not yet complete.

In recent days, some solar stocks have shown small rallies, while others remain flat. Investors seem to be waiting for indications that the slide has reached bottom, while others are more optimistic. Market watchers at some websites like are calling it a good time to buy, but others remain cautious. reports that solar’s fundamentals remain strong, despite its current “guilt by association” with oil.


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