Elon Musk’s foray into right-wing politics hasn’t dimmed his love for solar power. It’s a fandom he shares with Sundar Pichai, CEO of Google parent Alphabet, who exchanged friendly messages with the world’s richest man after Musk expressed admiration for Willow, Google’s breakthrough quantum computing chip. During the exchange, Musk noted humans are not at all close to harnessing all the energy available on earth, and said blanketing deserts and arid regions in solar panels could roughly quintuple the globe’s power supply.
“Indeed,” Pichai replied. “We should scale solar so much more, amazing that we keep looking at alternatives when the most obvious path is staring at our eyes, literally!”
That will probably happen.
— Elon Musk (@elonmusk) December 9, 2024
Any self-respecting civilization should at least reach Kardashev Type II.
In my opinion, we are currently only at <5% of Type I. To get to ~30%, we would need to place solar panels in all desert or highly arid regions.
It may have been a theoretical discussion, but the conversation between two of America’s most powerful executives bodes well for an industry that investors have largely soured on since Donald Trump’s election victory last month. Musk, or America’s new “first buddy,” is set to lead a so-called Department of Government Efficiency and has become a key part of Trump’s inner circle.
Regardless of Musk’s sway in the Oval Office, multiple asset managers told Fortune they remain optimistic about the industry’s fortunes under Trump. The president-elect made clean energy a frequent punching bag on the campaign trail. However, the solar sector’s performance during his first term, said Greg Smithies, a partner at venture capital firm Fifth Wall, suggests the industry could still thrive.
Shares of Invesco’s Solar ETF, which trades as TAN on the NYSE, soared 544% during Trump’s presidency, far outpacing the S&P 500’s 70% gain. The ETF had dropped 6% between his election night victory over Hillary Clinton and his first inauguration in January 2017.
This time, TAN dropped 18% in the two weeks following Trump’s latest win over Vice President Kamala Harris. At the time, Jay Hatfield, CEO of Infrastructure Capital Advisors, told Fortune that the selloff was “irrational.” Some investors appear to have agreed as the ETF has regained 5% since.
“During the last Trump administration, people were putting solar into the ground because it was cheaper,” said Smithies, a former finance executive at the Boring Company and then Neuralink, two of Musk’s companies, “and now it’s just even cheaper.”
Why solar could thrive under Trump
To many, the economic case for solar is undeniable. It’s no secret the world needs more energy than ever before, especially with advances in AI and computing creating ravenous demand from tech giants like Pichai’s Alphabet. Then there are developments like the rise of electric vehicles, where Musk’s Tesla is the world’s leader.
It makes sense, said Jennifer Boscardin-Ching, who specializes in clean energy and environmental investing at Geneva’s Pictet Asset Management, that companies and countries will consider virtually any and all ways to get more power. Agreements between Big Tech behemoths and nuclear companies have received plenty of press, she noted, despite similarly sized deals being struck with renewable energy providers.
“But those don’t make the headlines,” she said, “because that’s just kind of the new status quo.”
Solar companies have also been big beneficiaries of the Inflation Reduction Act, which set aside $400 billion in federal funding toward clean energy. While not a single Republican voted for the legislation in 2022, which Trump has called the “Green New Scam,” several right-wing lawmakers have a vested interest in the law’s survival. A group of 18 House Republicans, for example, recently sent Speaker Mike Johnson a letter cautioning that some of the bill’s incentives have created jobs and boosted investment in their districts.
And while tariffs during Trump’s first term hit the solar industry hard, companies should be more prepared for protectionist policies this time around. For example, Sunnova CEO John Berger recently told CNBC that his company has become immune to tariffs after switching almost entirely to domestic suppliers.
Finally, some believe certain Republican policies might help the industry. A Trump administration could ease permitting requirements for all energy projects, including solar, Smithies said, and increase access to public lands. That includes plenty of desert owned by the Bureau of Land Management, he noted.
Musk has made clear what he thinks should happen to it.
