Stock woes cloud near-term outlook for solar

Source: Christa Marshall, E&E reporter • Posted: Friday, May 13, 2016

A rocky week for solar stocks is raising questions about the sector’s near-term growth.

SolarCity had one of its worst stock collapses in months after reporting disappointing first-quarter results and lower planned solar panel installations for the year.

While SolarCity share prices recovered somewhat this week after plunging more than 20 percent Tuesday to below $17 a share, investors remain jittery about pushback in states like Nevada against the technology. A year ago, the stock was hovering near $60. CNBC analyst Jim Cramer said SolarCity was in a “first-class crisis” after first-quarter earnings.

Sunrun, Vivint Solar and First Solar also are also having a tough year on Wall Street. Sunrun’s stock, for example, is down more than 40 percent for the year. The numbers are a sharp turn from a solar stock surge last year.

SolarCity is being watched closely because of its link to Tesla’s storage batteries and its status as the nation’s largest solar installer.

Tesla CEO Elon Musk is SolarCity’s chairman. Earlier this year, GTM Research reported that sales of Tesla’s energy storage systems to the solar company are expected to be greater than the entire U.S. market last year. SolarCity also recently announced new utility services (EnergyWire, May 6).

In an earnings call this week, CEO Lyndon Rive blamed overlapping “headwinds” as part of the reason the company was lowering its 2016 forecast for installations this year from 1,250 megawatts to around 1,100 MW. That included increased pricing in January and regulatory uncertainty in Nevada, where utilities regulators recently increased fees for rooftop solar customers and lowered the price they could receive selling electricity back to the grid. SolarCity exited the state after the decision.

“Guidance disappointed due in part to adjustments in [state] net metering rules,” Oppenheimer noted in an analysis of SolarCity’s earnings. In a shareholder letter, SolarCity also cited regulatory uncertainty in some states but noted that many issues have been resolved in places like Massachusetts and New Hampshire.

“Many of the regulatory uncertainties affecting us have since been settled in our favor,” the letter says.

New Hampshire Gov. Maggie Hassan (D), for example, signed a law this month doubling the current net-metering cap in the state from 50 to 100 MW.

The company said new financing structures, including what it believed to be a first-of-its-kind product providing upfront financing for solar renewable energy credits, would help drive growth. Rive described the new product as a hybrid between a power purchase agreement and a loan.

“We’re expecting to see big demand” for it, Rive said on the earnings call. The company also is offering additional 10- and 20-year financing options, he said.

The solar industry announced its 1 millionth U.S. installation this month and predicted it would reach another million within two years. In a recent interview, GTM analyst Cory Honeyman said that while there are some risks at the state level, net metering certainty in California — along with the congressional extension of a key tax credit — would help drive solar’s U.S. growth in coming years.