The booming US residential solar market is at a crossroads. It’s being supported like never before by expanded federal funding and fears of increasingly fragile grids and volatile fuel prices. But solar also faces unprecedented headwinds, from soaring interest rates and state subsidy cuts to a weaker economy and historic rainstorms.
On Wednesday, investors will get an early look at which trend is winning out, as SunPower Corp. kicks off a week-long period in which three of the biggest US residential solar companies report earnings. Along with Sunrun Inc. and Sunnova Energy International Inc., all three have been bullish on the sector with strong recent growth. But the market has been less sanguine, with shares of each down at least 30% since President Joe Biden signed the Inflation Reduction Act in August.
“These are serious headwinds, but they are reversible headwinds,” said Pol Lezcano, an analyst at BloombergNEF. “There are ways for the industry to adjust to keep the market at reasonably high levels of activity.”
The bumpy start to the year follows a banner 2022. The US residential-solar sector almost certainly set an annual record for installations last year — potentially as much as 30% growth, according to Lezcano. Even with a possible slowdown, 2023 may still top last year’s deployment total, though the decline will make it tougher for the country to meet Biden’s lofty climate goals.
