Editor’s note: Today, Executive Editor Chris Reilly talks to Stephen McBride about what Stephen calls “the most underrated disruption in the world.”
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Chris Reilly: Stephen, on our latest internal team call you shared your #1 most underrated disruption...
Solar.
Why solar?
Stephen McBride: Every forecast for solar adoption over the past 20 years has been too conservative. And not just by a little. Year after year, solar installations blow past the predictions.
I love this chart. Every yellow line is a forecast from the International Energy Agency. The black line is what’s actually happening.
Source: @iamredave on X
Year after year, the experts predicted solar growth would flatten out… and year after year, reality blew past them.
That’s the hallmark of a true megatrend: It keeps surprising even the people paid to study it.
Chris: Why do you think that happens?
Stephen: Human bias. People systematically underestimate exponential growth. It’s the same mistake they made with smartphones, the internet, and cloud computing. Early on, adoption looks slow. Then it takes off like a rocket.
Solar is on that same curve.
The sun rises every day, free of charge. Panels keep getting cheaper and more efficient.
In the last 50 years, the price of solar modules has declined from $106 to $0.38 per watt—a 99.6% decline. And the plunge in solar costs continues to accelerate. In 2023 alone, prices nearly halved.
People still have an outdated image of solar... But sun power is no longer some hippie dream. It’s getting cheaper all the time. Exactly how cheap depends on the sunniness of the location and how you calculate the all-in cost. But by some measures, solar electricity is now cost-competitive with fossil fuels.
Also, a lot of investors are still stuck in the mindset that solar needs subsidies, but that’s just not true anymore.
Chris: What about the narrative that solar can’t provide baseload power because it’s intermittent?
Stephen: That’s true. Solar will never totally replace on-demand energy sources. But it doesn’t need to; solar is still incredibly valuable in a supplementary role. Pair it with natural gas or nuclear, and you have a robust grid.
And don’t forget: some of the most deep-pocketed companies—Amazon (AMZN), Microsoft (MSFT), and Google (GOOGL)—are big buyers of solar power. They’re paying premium prices for it, so you know it’s not just some subsidy game.
Chris: The largest solar ETF—the Invesco Solar ETF (TAN)—is up 29% this year.
But as you’ve said before, buying the ETF isn’t a great strategy. While TAN holds some of the world’s best solar businesses... it also has a lot of junk.
Your Disruption Investor solar pick, which you and Chris Wood recommended back in April, is up 87%.
Stephen: Yeah, it’s the global leader in smart solar tracker systems. Think of trackers as the brains of a solar farm. Instead of panels sitting there passively, trackers tilt and rotate the panels to follow the sun across the sky. That can boost energy output by 25% or more.
Chris: So, they’re making each panel more productive?
Stephen: Exactly. And that’s crucial because solar is scaling up at breakneck speed. Every major utility, every government, and every tech company is racing to power data centers—they’re turning to solar as part of the mix. Companies will beat down the door for a product that can squeeze more efficiency out of every solar farm.
Disruption Investor members can get the full story here.
Chris: So what’s the takeaway for investors... and how much bigger can the solar megatrend get?
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Stephen: A lot bigger. Solar isn’t some “green dream.” It’s an unstoppable cost-driven megatrend. It’s not just going from 10% market share to 12%. It’s going to be a dominant form of energy.
Chris: Thanks, Stephen. Reader, if you’d like to upgrade to Disruption Investor and get Stephen’s solar pick, go here.