Boon or curse for solar companies?


The California Public Utilities Commission (CPUC) yesterday proposed a revised rooftop solar subsidy plan. The plan called Net Energy Metering (NEM) is designed to incentivize homeowners to use solar energy and sell the energy back to the grid. In effect, this significantly reduces consumers’ monthly payments towards energy bills and also relieves pressure on the national grid.

The revised plan rejected monthly grid connection fees that had been proposed earlier and which solar companies had opposed. However, it reduced the payments homeowners would receive for selling excess electricity to the grid on a staggered basis by up to 75%.

Additionally, the revised plan also pushes for the adoption of solar plus storage options. The proposal is hated by solar industry veterans because they believe it will reduce California’s rooftop solar installations, which account for nearly 45% of the nation’s installed capacity.

Meanwhile, the CPUC has revised the NEM tariff, stating that the current plan “negatively impacts non-participating ratepayers; disproportionately hurts low-income taxpayers; and is not profitable.

The revised NEM plan has both advantages and disadvantages. The vote on the bill is scheduled for December 15, until then the proposal remains without effect. Some companies, like Sunrun (NASDAQ: RUN) massively mobilized yesterday at the announcement of the revised proposal. Let’s take a look at a few solar companies that have shown massive movement on the bill’s disclosure and those that will benefit.

Sunnova Energy International (NYSE:NOVA)

Sunnova Energy provides both solar and energy storage devices and could be one of the main beneficiaries of the new plan. NOVA stock jumped 19.7% yesterday, while the stock has gained 73.8% over the past six months.

Unhappy with the proposal, Sunnova CEO John Berger said, “Solar-only is something you want to encourage just to balance the system… We’re moving in the right direction, but we still have a ways to go. .”

Is Sunnova Energy a good stock to buy?

With ten buy ratings and two hold ratings, NOVA stock has a strong buy consensus rating. On TipRanks, Sunnova Energy’s average price target of $35.36 implies upside potential of 53.5% from current levels.

SunPower Corp. manufactures and sells solar panels and solar technologies in North America and internationally. SPWR stock jumped 19.6% yesterday, after gaining 66.9% over the past six months.

Is SunPower a good stock to buy?

On TipRanks, SPWR stock has a Consensus Hold rating. This is based on three buy ratings, five hold ratings and three sell ratings. SunPower Corp.’s average price forecast. of $22.44 implies a downside potential of 2% from current levels.

SolarEdge Technologies (NASDAQ:SEDG)

SolarEdge engages in the operation of inverter solutions for harvesting and managing solar photovoltaic energy. The company not only offers residential solutions, but also commercial solutions and network services, and is also expected to benefit immensely from the Inflation Reduction Act (IRA). SEDG shares gained 13.8% yesterday after gaining 31% over the past six months.

Is SolarEdge a good stock to buy?

On TipRanks, SEDG stock has a moderate buy consensus rating based on nine buys and four holds. The average SolarEdge stock forecast of $327.67 implies upside potential of 15.5% from current levels.

end thoughts

Solar companies surged on the announcement of the revised NEM plan. However, the focus on storage energy solutions may hurt solar-only rooftop players. In addition, the lower payments offered to sell excess energy back to the grid could demotivate consumers. Only time will tell how and when the proposed rules, if passed, will impact the industry. For now, analysts remain optimistic about the industry’s long-term potential.



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