Home solar and backup-power companies are facing a slump in US demand despite increased concerns about the reliability of the power grid that’s being battered by extreme weather and heat waves.
(Bloomberg) — Home solar and backup-power companies are facing a slump in US demand despite increased concerns about the reliability of the power grid that’s being battered by extreme weather and heat waves.
SolarEdge Technologies Inc. and Generac Holdings Inc. became the latest to warn about weaker-than-expected sales due to softening consumer demand in the face of higher borrowing costs.
SolarEdge tumbled 18% Wednesday in its largest decline in a year as the solar equipment maker offered a disappointing third-quarter revenue forecast. Generac at one point lost nearly one-fourth of its market value Wednesday after the backup generator, solar and battery supplier lowered its sales guidance for the year given a “softer than previously projected” consumer environment. Other home solar companies including SunPower Corp. and Enphase Energy Inc. have seen their stocks drop after offering similar weaker outlooks.
Sunrun Inc. appeared to buck the trend, reporting a surprise quarterly profit that sent its shares up as much as 8% after hours. While Sunrun did reaffirm its growth guidance in installed solar capacity between 10% and 15% for this year, executives noted a slower-than-expected recovery in California, the biggest solar market.
“The higher interest-rate environment in the US is a key headwind for the US residential solar market,” Jeffrey Osborne, an analyst for TD Securities, wrote in a research note on Tuesday.
Companies have also pointed to lower utility rates — due to a drop in natural gas prices — while diminished rooftop solar incentives in California are making it harder to sell their home-power systems. Given they operate on thin profit margins, “a slowdown in new installations can quickly turn into a bigger financial trouble,” said BloombergNEF analyst Pol Lezcano in a note published last week.
The home-power suppliers remained upbeat despite their gloomy short-term outlooks, noting that the upward trend toward electricity outages and higher utility rates should eventually work in their favor.
“The mega-trends that are driving awareness for backup power solutions are as compelling as ever, homeowners and business owners are becoming increasingly sensitive to the growing frequency of power outages, driven by extreme weather,” Generac Chief Executive Officer Aaron Jagdfeld said during the company’s investor call Wednesday.
(Updates with Sunrun results in fourth paragraph.)
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