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China's New Solar Target Could Set the Stage for a Solar Boom

SunPower's concentrated solar systems could be a hit in China. Source: SunPower.

But the benefits will be felt well outside of China. Growing demand could shift the balance of power from installers to solar panel manufacturers, who have been dealing with an oversupplied market since 2012. If demand begins to exceed supply, we could see panel prices inch higher, something we saw gradually in 2014.

At the very least, high-quality manufacturers like SunPower and First Solar should see stable pricing and potentially increasing demand for their products. In SunPower's case, demand comes just as it begins a plan to triple manufacturing capacity by 2019, and First Solar rolls out more efficient panels that will compete in more markets. Neither of these companies have a big exposure to China, but as industry leaders, I think that's where investors should put their money, because they'll feel some of the side benefits as Chinese-based manufacturers.

One storyline to keep an eye on in 2015 will be the cost structures of U.S. solar installers. SolarCity and Vivint Solar both buy most of their panels from Chinese manufacturers, and if prices rise as a result of China's growing demand, it will hit their bottom lines. For years, they've had the upper hand against panel manufacturers in an oversupplied market, but in 2015, the tables may turn.

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The article China's New Solar Target Could Set the Stage for a Solar Boom originally appeared on Fool.com.

Travis Hoium owns shares of SunPower. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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