A Tailwind for SCTY Stock
Markets were cruel to SolarCity Corp (NASDAQ:SCTY) through most of 2015, battering SCTY stock from August onwards. Of all the weights on SolarCity, none was heavier than the possible expiry of the “Investment Tax Credit” (ITC).
Residential solar would have died without that subsidy. It’s still a young industry that requires some help to make the economics work. However, that situation won’t last for long.
There is one metric that truly shows how fast the solar industry is growing. It’s not the price of solar panels (which is rapidly dropping), or the rate of installation growth (which is rapidly increasing). This one number has the power to shift perceptions about solar energy in a way that seemed impossible five years ago.
I’m talking about the number of people working in the solar industry. Employment is the silver bullet renewable energy has needed for a long time.
Think about it: America recently went through the greatest recession since the Great Depression. (Source: “U.S Solar Jobs Boom While Oil, Coal Struggle,” Fortune, January 12, 2016.)
The unemployment rate was staggeringly high for a long time, and decent jobs were hard to come by. It’s at times like that when change is least palatable. People want the comfort of nostalgia, of a time they associate with peace and prosperity.
But they wouldn’t find that comfort in the oil and natural gas industries. Traditional fuels crashed, taking thousands of jobs with them. The labor market tightened, particularly at the lower end of the skills range. People liked the idea of solar, but they didn’t see it as a mainstream supply of energy. I’m thinking this number could turn them around.
The solar industry employs more than 209,000 Americans. In 2015 alone, there were 31,000 new jobs created in the sector, and that was during a period of enormous uncertainty. The industry is expected to add another 30,000 jobs this year. (Source: Ibid.)
SolarCity stock recovered slightly after the ITC was extended, but there’s still a wide discrepancy between SCTY’s share price and the on-the-ground reality. The fact that more and more Americans are working in this sector could alter its political and economic status in American energy markets.
The truth is this: the more workers migrate to solar, the more it becomes a legitimate threat to the status quo. I see a snowball effect taking place in the next two years and that momentum could have a drastic effect on SCTY stock.