Inflation and rising interest rates have hit the solar industry hard in the last three months and dampened investor interest.
The iShares Global Clean Energy ETF hit its lowest level since July 2020 this week, the Wall Street Journal reported. The exchange-traded fund invests in renewable energy and utilities based on S&P Dow Jones indices benchmarks, including First Solar and Plug in the Power. This year it is down 32%.
Then the Wall Street Journal noted that some stocks fell even further. “U.S.-listed shares of Enphase Energy have fallen 64% in 2023, while shares of rival SolarEdge Technologies have fallen more than 70%. If we exclude stocks that have fallen in the S&P 500, SolarEdge is among the worst-performing stocks in the index this year, the Wall Street Journal reported Wednesday.
SolarEdge warned that demand in Europe had weakened significantly, adding to sentiment towards the renewable energy sector in a difficult year.
SolarEdge CEO Zvi Landau cited “unexpected significant cancellations and recalls” from the company’s European distributors due to high inventory levels and slow installation times.
“Specifically in the third quarter, install rates were much slower in late summer and September, a time when install rates are traditionally higher,” Landau said.
On October 20, the Invesco Solar ETF fell 6.57% to $44.18, its lowest level since July 2020. Shares of other solar companies fell primarily on the pessimistic outlook. Shares of Sunrun and Sunnova fell 5.7% and 8.9%, respectively, while shares of Emphasis Energy fell about 15%.
“Supply chain issues and falling demand have exacerbated the problems associated with high borrowing costs. The result: a stock market sell-off, despite pledges by the United States and other major economies to boost sustainable energy production.”
High interest rates have eroded attractive loan packages for homeowners and loan origination fees have skyrocketed. Electricity rates have stabilized and even declined compared to last year, making the savings outlook for rooftop solar customers bleak, the Wall Street Journal reports.
Tesla said its residential solar segment installed 49 megawatts in the third quarter, up from 66 megawatts in the previous quarter and up 48% from the same period in 2022.
Despite the decline in solar energy usage, Tesla's energy storage business posted strong growth, offsetting the decline in solar sales. In the third quarter, storage deployments increased 90% year over year to 4 GWh.
“As this business grows, the energy division will become our most profitable business. “Energy and services now generate quarterly profits of more than $0.5 billion,” said CEO Elon Musk.
Alex Mills is the former president of the Texas Energy Producers Alliance.
This article originally appeared in the Wichita Falls Times Record News; Solar companies report a challenging third quarter
