Is there a bubble in the solar and EV sectors

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Is there a bubble in the solar and EV sectors

In the era of technological advancements across the globe, some sectors would benefit the most, such as electric vehicles and solar power. People need to mitigate the risks of Climate change and overcoming these sectors looks promising in the longer run. The companies are trying to grab the opportunities arising from these sectors which various governments push through policies.

Now, with high optimism the stocks related to these sectors have made a huge run in the markets. In this article, we will examine whether there is a bubble in the solar and EV sectors.

Industry Overview and Outlook

Solar Sector

In 2023, the Indian solar energy market generated around USD 10.4 billion in revenue. Government policies and initiatives are expected to drive growth in solar energy adoption. It can contribute to a CAGR of 13.4% from 2024 to 2030 and reach USD 24.9 billion by 2030.

India is looking to decrease the carbon intensity from its economy by less than 45% by the decade’s end. The country is looking to achieve 50% of its electric power from renewables by 2030 and reach net-zero carbon emissions by 2070. To accommodate the plan, India is looking to install 500 GW of renewable energy capacity by 2030.

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The Government’s support includes developing solar parks, providing essential infrastructure for large-scale solar projects, and simplifying the development process. These parks help integrate solar energy into the grid and promote efficient land use, making it easier for developers to establish and operate solar power facilities.

These initiatives aim to create regulations that encourage rapid adoption of solar technology, positioning India as a global leader in solar energy. This aligns with India’s Nationally Determined Contributions (NDCs) to reduce GDP emission intensity by 45% from 2005 levels by 2030 and achieve about 50% of total installed electric capacity from non-fossil fuel sources.

Is solar energy worth the hype?

Solar energy is rich and will be available as long as the sun exists, making it a sustainable option for energy needs.
Installing solar panels can significantly lower electricity bills. Homeowners may even earn money by selling excess energy back to the grid. They can even borrow the power if required especially during winter seasons.
It produces no carbon emissions during operation, which helps to reduce the overall carbon footprint and combat climate change.
Solar panels have few moving parts, which means they require minimal maintenance over their lifespan.
Beyond electricity generation, solar energy can be used for heating water, powering vehicles, and even for cooking applications, showcasing its versatility.

Flipside of solar energy

The upfront costs for purchasing and installing solar panels can be significant, which may deter some potential users.
Solar energy production is less effective on cloudy days and non-existent at night, requiring backup systems or storage solutions.
Solar installations require a considerable amount of space, which can be a limitation for urban areas or smaller properties.
Solar Energy can be used with the use of batteries. The storage required to store can be expensive, even for replacement. This may add to the overall cost of the system.
There are some limitations in current solar technology especially in efficiency. The angle of incidence, light absorption, dirt and shading, and others might affect to produce sufficient energy for the needs.

EV Sector

India’s electric vehicle sector is growing rapidly driven by incentives from the government, concerns with climate change, and advancements in technology. From initiatives like the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, India aims to boost EV adoption, transforming its transportation landscape towards sustainability and innovation.

This global shift towards electric vehicles presents new opportunities for automotive suppliers. The Indian EV battery market is expected to grow from US$ 16.77 billion in 2023 to US$ 27.70 billion by 2028.

India has set ambitious targets for EV sales by 2030. This includes 30% for private cars, 70% for commercial vehicles, 40% for buses, and 80% for two-wheelers and three-wheelers, aiming for a total of 80 million EVs on the roads. The country also aims for complete domestic EV production through the ‘Make in India’ initiative.

In 2023, India saw a 49.25% increase in electric vehicle sales, reaching 1.52 million units. While the sector is still in its early stages, it is gaining momentum. According to Fortune Business Insights, the EV market in India is projected to grow to US$ 113.99 billion by 2029 from US$ 3.21 billion in 2022, which is an impressive CAGR of 66.52%.

Is Electric Vehicle (EV) worth the hype?

EVs produce no tailpipe emissions, which significantly helps to improve air quality and reduce greenhouse gas emissions, especially in urban areas.
Charging an EV typically costs less than fueling a gasoline vehicle over the period, which leads to substantial savings over time.
With fewer moving parts than internal combustion engines, EVs require less maintenance, resulting in lower long-term costs for owners. Even the efficiency is higher in EVs compared to ICE.
Owners can charge their vehicles at home overnight, which eliminates the need for regular trips to gas stations.
Electric motors operate silently, reducing noise pollution and providing a more enjoyable driving experience.

Concerns related to Electric Vehicle (EV)

The purchase price of EVs is generally higher than that of traditional vehicles due to advanced technology and battery costs.
Most EVs have a range of 200 to 300 miles on a single charge, which can be less than that of gasoline vehicles, and can potentially lead to to range anxiety.
The availability of charging stations can be limited, particularly in rural areas, making long trips more challenging.
Depending on the charger used, it can take anywhere from 20 minutes to several hours to fully charge an EV, which is longer than refueling a gasoline vehicle.
Over the period, EV batteries can lose capacity which reduces the vehicle’s range and includes costly replacements.