From pv journal 9/24
The residential photo voltaic {industry} is commonly referred to within the United States because the “photo voltaic coaster,” because it goes by peaks and troughs in buyer demand, enterprise earnings, and funding.
SunPower, one of many largest and oldest photo voltaic firms within the United States, has taken the ultimate plunge after asserting chapter and delisting from the Nasdaq Stock Exchange. Once valued as price billions of {dollars}, SunPower’s inventory has fallen greater than 99% from its all-time excessive valuation, in 2007.
The firm offers householders with rooftop photo voltaic, power storage, and electrical automobile (EV) charging. It operates a seller community the place small companies can function as gross sales companies whereas SunPower handles installations, or could be SunPower installer-dealers that present gear buy providers. . For a few years the corporate can also be a number one photo voltaic cell and module producer and it’s lively in a big a part of the challenge. The manufacturing enterprise was spun off to kind a separate firm Maxeon in 2020. On August 12, 2024, SunPower mentioned it will be delisted as a publicly traded firm.
Industrial issues
US residential photo voltaic has had its strongest years throughout the Covid-19 pandemic, capping a broader development of householders upgrading their properties. Then, with the onset of post-pandemic inflation, federal borrowing charges had been raised and, with it, mortgage phrases elevated, making it costlier for householders to put money into photo voltaic. With a costlier photo voltaic array, tightened residence budgets, and a long-term return on funding, householders are starting to show down the monetary prospects of photo voltaic.
The lack of worth elevated when, in late 2022, the California Public Utilities Commission authorized its Net Energy Metering 3.0 (NEM 3.0) regime. The new regulatory strategy cuts the speed utilities should pay photo voltaic prospects for the electrical energy they export to the grid, by 80%.
The transition to NEM 3.0 led to a brief improve in prospects seeking to get the legacy NEM 2.0 charges, after which a bust in California. “With costly loans and eliminated incentives, residential PV in California is in ruins,” wrote pv journal Editor Tristan Rayner on the time. “By late 2023, rooftop photo voltaic installations have fallen by 80%, driving greater than 17,000 layoffs – 22% of the {industry}.”
California represents practically half of the US residential photo voltaic market, so the hit to companies with a powerful presence within the state, together with SunPower, was felt deeply. California photo voltaic installers are nonetheless adjusting to NEM 3.0, which now makes battery power storage an integral a part of any photo voltaic challenge to seize invoice financial savings worth for patrons. Although the inclusion of a battery will increase the sticker worth of residence photo voltaic, it provides advantages corresponding to backup energy. Solar installers with a powerful deal with their battery providing are anticipated to do higher than these with out.
SunPower’s struggles
For SunPower, issues started to mount a few yr after the passage of NEM 3.0, because the unfavourable influence of the demand regime turned extra evident and “higher-for-longer” rates of interest turned a truth.
In December 2023, the corporate issued a letter warning traders that the enterprise was struggling to stay viable. The inventory worth fell 40% in December 2023.
The worry was sparked by a technical default on the money owed owed by the corporate. In October 2023, SunPower introduced that it will restate its third quarter monetary outcomes as a consequence of a list reporting error associated to one among its subsidiaries. The late monetary reporting put SunPower in breach of key phrases of a few of its mortgage agreements, leaving the corporate uncovered to lender calls for for fast compensation.
SunPower mentioned the breach of credit score phrases might result in lenders demanding fast compensation of greater than $65 million in debt, prompting the corporate to specific doubts about its means to proceed operations. SunPower mentioned it’s making an attempt to get a waiver with its lenders and, with out one, it might lack funds to help day-to-day operations.
On December 8, 2023, the corporate obtained a waiver that saved it from technical default and offered entry to $75 million in funding. SunPower was given till Jan. 19, 2024 to lift its financing or receive one other waiver for the $65 million in debt it was obligated to pay.
At the time, an analyst advised Reuters the corporate had an excellent likelihood of getting a waiver as a result of its issues stemmed from a technical challenge. Roth Capital Partners warned, nonetheless, that if SunPower fails to safe a waiver it might face a “cascade” of money stream challenges, resulting in constraints for these its vendor.
SunPower – Maxeon
SunPower is to not be confused with SunPower-branded photo voltaic panels designed, manufactured, and bought by Maxeon Solar Technologies. “Except for a product model identify, there isn’t any present relationship between Maxeon and SunPower Corp.,” a spokesperson from Maxeon Solar advised pv journal after the announcement of SunPower’s chapter. SunPower Corp. and Maxeon separated in August 2020, when Maxeon moved as an unbiased firm. Maxeon beforehand had a provide settlement to produce photo voltaic panels to SunPower Corp. “But that settlement was terminated in 2023 and as of Q1 2024, Maxeon will not ship any merchandise to SunPower Corp,” the spokesperson added.
Cash stream
Shortly after the warnings had been issued concerning the money stream of US residential photo voltaic, unfavourable headlines began appearing.
In February 2024, publicly traded installer Sunworks filed for chapter after a 29.5% decline in quarterly earnings, yr over yr, for the third quarter of 2023, led by a 44.5% diminished residential PV enterprise. That comes after main installer Sunrun posted a lack of greater than $1 billion final quarter.
In April 2024, SunPower introduced it will shut a number of enterprise items and minimize 1,000 jobs — greater than 1 / 4 of its workforce. The firm introduced plans to section out residential photo voltaic set up places and shut its direct gross sales unit. “While we’re working arduous to keep away from this end result, the market will get better way more slowly than we initially anticipated,” mentioned Tom Werner, chief government officer. The firm mentioned it’ll nonetheless function the brand new home-based business division.
More struggles
In June 2024, one other main US installer, Titan Solar, mentioned it will shut its doorways. Founded in 2013 in Arizona, the corporate is likely one of the largest residential photo voltaic installers within the nation, with 1000’s of installations in 16 states.
Titan Solar has grown quickly by its Solar Dealer program, a community of partnerships with gross sales organizations that promote Titan providers whereas the corporate focuses on set up. The partnership is predicated on a pricing mannequin the place Titan fees a price for finishing initiatives and distributors retain the steadiness as a gross sales fee.
“Despite these successes, the corporate has confronted criticism for its enterprise practices, manufacturing, and customer support, which has led to many unfavourable opinions and authorized disputes,” mentioned Ara Agopian, CEO. of residential photo voltaic insurance coverage supplier Solar Insure. The insurance coverage enterprise says the reliance on third-party distributors for gross sales creates a layer of separation between Titan and its prospects, resulting in communication gaps and an inconsistent service expertise.
Solar Insure mentioned that whereas Titan’s dealer-network enterprise mannequin is profitable, it has confirmed to be a double-edged sword. The foremost motivation of salespeople within the gross sales group is to maximise their commissions, says Solar Insure, which typically results in aggressive gross sales techniques and overselling techniques with out ample consideration of wants. to the client.
“This disconnect between gross sales guarantees and set up realities additional strains Titan’s sources and buyer relationships,” Agopian mentioned. “As financial circumstances tightened and borrowing prices elevated, monetary stress on Titan and its distributors elevated, exacerbating money stream points and operational inefficiencies.”
Last days
By July 2024, SunPower’s share worth suffered a 70% decline because it turned clear that the enterprise was unlikely to outlive. At that point, the corporate mentioned it will cease countersigning new agreements and wouldn’t have the ability to help set up providers for shipments which can be in transit or have already been delivered.
On August 6, 2024, the corporate formally declared chapter. “SunPower is dealing with a extreme liquidity disaster as a consequence of a pointy decline in demand within the photo voltaic market and SunPower’s lack of ability to lift new capital,” mentioned Matthew Henry, chief government change officer at SunPower.
The firm mentioned it’ll promote its property, together with set up firm Blue Raven Solar and its new residence unit, to Complete Solaria for $45 million. SunPower is asking the courts to approve that deal by late September 2024.
“SunPower’s struggles are a company-specific challenge and shouldn’t be seen as a touch upon the underlying demand for residential photo voltaic within the US,” mentioned Pavel Molchanov, an analyst at monetary providers supplier Raymond James.
Ohm Analytics reviews that, industry-wide, the US residential photo voltaic market is down practically 20% in 2024. For 2025 and 2026, Ohm predicts reasonable 5% to 10% {industry} development, suggesting that the US residence photo voltaic could have been hit. below the most recent dip within the photo voltaic coaster.
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