Solar stocks collapse as clouds gather

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Solar panels at the Sutter Greenworks solar site in Calverton, NY

Bruce Bennett / Getty Images

The proposed new rules for solar installations in California surprised investors on Tuesday, pushing down inventories of major solar installers.

Leading solar developer and installer


Sunrun

(ticker: RUN) fell 14% in afternoon trading.


SunPower

(SPWR) and


Sunnova Energy International

(NOVA) fell 11%.

While California has historically adopted friendly solar policies, the latest California Public Utilities Commission proposal would be “seriously detrimental to growth and solar margins on rooftops in the short term,” said Stephen Byrd, analyst at Morgan Stanley.

The commission can charge people with rooftop solar panels a monthly grid connection fee of up to $ 40 for an average home and reduce the amount of money utilities pay solar users for electricity. that they refer to the network. The rules aren’t final yet, but they pose a real threat to the growth of solar in California, which has more panels than any other state.

For SunPower and Sunrun, California accounts for about 50% of projected growth, Byrd estimates. He is more optimistic about the long-term outlook for companies, given the growth in sales of battery storage systems for solar customers, but expects their near-term performance to be affected if the rules are enforced. .

The California proposal isn’t the only cloud gathering in the industry. Solar panels are being installed at a record pace in the United States, but that trajectory could be reversed in the next year due to supply chain issues and uncertainty about government policies.

A new report Energy consultants Wood Mackenzie shows the United States is on track to breaking the record for most solar installations in one year. Already, more than 15.7 gigawatts have been installed this year, enough to power around 3 million homes. Solar power has accounted for 54% of new electric capacity in the United States this year, according to the report.

But the industry’s growth trajectory is in jeopardy. Wood Mackenzie lowered its 2022 installation projection by 7.4 gigawatts, a 33% drop from its previous projection. The estimates would mean that the total number of installations in 2022 would fall below the 2021 figures.

The solar supply chain has been hassled by some of the same factors that are slowing deliveries in other parts of the economy. And the action around tariffs has made things even more complicated. An anonymous group of solar companies had asked the government to add new tariffs on solar modules imported from Thailand, Malaysia and Vietnam, after the group argued that the modules from those countries violated anti-dumping rules. The Commerce Department rejected the petition in November, but it still affected solar companies, convincing some of them to postpone their purchases.

“Even before the US government took action, the threat of petitions blocked equipment shipments from these countries due to the unlimited risk, further exacerbating supply chain constraints,” the report said. by Wood Mackenzie.

Write to Avi Salzman at avi.salzman@barrons.com

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