Michelle Ma and Top Alak |: Bloomberg
California is helping the US solar industry by subsidizing rooftop panels at a time when the federal fight against climate change is just beginning. This is now slowing sales and threatening widespread adoption.
Installers have their work cut out for them. Failures are increasing. And moms and dads aren't the only ones feeling it.
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Inphase Energy Inc. The solar equipment maker, long considered the industry standard, announced this week that it will cut its workforce by 10% and close two contract factories, CEO Badri Kothandaraman said in a letter to employees in California.
The amendment follows California regulatory changes that reduce solar owners' profits from selling to the grid. This change occurs because higher interest rates make the system more expensive.
Ohm Analytics, a research firm that tracks the solar energy market, said sales to private residential installers in the state fell from 67% to 85% since the change took effect in April.
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Falling sales in the state that has the largest share of U.S. solar installations is a setback for a key source of green energy that President Joe Biden wants to accelerate the nation's transition to green energy. And not just California. More than a dozen other states have cut subsidies, saying they are raising utility rates for other homeowners who can't afford solar.
As a result, the rapid growth of rooftop solar power generation at the national level will slow down in recent years. Between 2019 and 2022, residential solar installations in the US will grow by an average of 32 percent. The research firm now predicts annual growth of 5% for the rest of the decade.
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"I'm very concerned that we're going to get through the winter," said Ross Williams, CEO of HSS Solar, a San Diego-based installation company. Sales are down 20% from 2022 levels and the company has laid off more than half of its 75 employees. "The process was amazing for us."
Some people believe that this decline is only temporary. Sunnova Energy International Inc. CEO John Berger told Bloomberg TV this month that "we're on the downside" as the industry adjusts to sales in a volatile environment, expecting growth to continue this quarter or next.
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However, the current downturn shows that the rooftop solar power business is still dependent on government policy, as supporters hope that this business can grow based on the economy alone. At this time, it is possible to dismiss more. A survey by the California Solar and Storage Association found that 59 percent of solar contractors in the state expect further reductions, while another 11 percent are unsure. The organization estimates that California could lose 17,000 manufacturing jobs.
"We're losing jobs similar to the Great Recession," said Bernadette Del Chiaro, executive director of a trade group fighting to change incentives for solar owners.
And slowing sales in California and other states are creating headwinds for the solar industry at a time when many investors expect the industry to grow. Shares of SunPower Corp. fell 31% on Dec. 18 after the company announced a settlement with creditors due to late filing of its quarterly report with the U.S. Securities and Exchange Commission. The company said it was trying to reach an agreement with creditors, but Guggenheim warned that it would be difficult for SunPower to raise money, citing the weak market in California.
California was an early adopter of solar power, with former governor Arnold Schwarzenegger seeking to cover millions of rooftops with solar panels in 2006. Industry has responded by making the state home to major companies like SunPower and Enphase, as well as other companies. Companies like HES. After learning of Schwarzenegger's goals, Williams quit his job in Washington and moved to San Diego to pursue a growing business that could help the world.
"It has all the characteristics of what I want to do in my life," he said. "Do something important for future generations and then do something good for society."
California regulators have been discussing for years how much excess electricity would be sent to the grid, known as net energy metering, and the change finally took effect this spring. Energy companies pushed for the change, saying the incentives would increase bills for households without solar. Mike Gazda, a spokesman for PG&E Corp., the state's largest utility, said without solar power, California customers would pay $5 billion a year in energy bills.
A spokeswoman for the California Public Utilities Commission, which made the change, said the new lower incentives would better reflect the "true value" of exported solar power by aligning subsidies with other states. Board President Alice Bushing Reynolds declined to comment for this story.
Installers and some environmentalists have criticized the change as a power gamble by utilities and regulators seeking to stifle competition by making solar power cheaper, though some consumer advocates support the move. The net metering in Nevada was It was suspended in 2015 and reinstated two years later following mass layoffs and mass protests by truckers leaving the state. California appeals court judges are considering arguments to overturn the new policy.
The new laws make battery systems mandatory for homeowners if they want to save on electricity bills with solar energy. Instead of selling excess electricity to the grid, it is now more economical for homeowners to use their own electricity during peak demand times in the afternoon and evening. The Public Utilities Commission has proposed new net energy metering rules to encourage such systems and sees them as a way to reduce the strain on California's power grid after the sun goes down. But the average battery price is $18,000 according to BNEF, and the payback period for solar storage systems is 12 to 15 years in most states, 5 to 8 years for panels. The Public Utilities Commission estimates that a battery-operated solar power system will pay for itself in 9 years.
Some loaders rely on batteries to help them adapt to new stimuli. Escondido-based Baker Home Energy said its overall sales were down by half compared to the same period last year, said Ian Lochor, vice president and general manager of Baker's solar division. He said the company is selling smaller systems, but because they all have batteries, revenue is declining.
"People who can't read tea leaves and know how to install and maintain batteries" will have a hard time, Lochor said.
- with assistance from Mark Chediak.
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