It’s another bad day for the renewable energy business.Thank you for reading this post, don't forget to subscribe!
The bad news started Friday morning with SolarEdge, a company that primarily sells inverters, which convert electricity produced by solar panels into electricity that can be used in homes.
In a surprise announcement, SolarEdge Chief Executive Zvi Lando said that, in the third quarter, the company had “experienced quite unexpected cancellations and pushouts of existing backlog from our European distributors.” SolarEdge warned that several of its key financial metrics, including revenue and operating income, will fall below the low end of the previously estimated range. The company also said it expected “significantly lower revenue in the fourth quarter.” (SolarEdge is based in Israel but the company said the Hamas-Israel war is not related to their financial troubles.)
Investors immediately panicked, selling the stock and sending it down 27% in Friday afternoon trading.
Other solar stocks were also down. Enphase, another solar services and inverter company, fell 14%. Sunrun, a residential solar systems company (meaning it actually installs panels), was down 6%. Shares of Sunrun’s competitor SunPower were down about 9%.
As of today’s trading, SolarEdge has fallen more than 70% in the past year. And those other companies aren’t far behind – they’re all down about 50% to 67% on the year.
The concern is that the problems SolarEdge has identified are not just specific to the company or the inverter business, but to the solar industry as a whole.
The company said its European business had both a backlog of inventory and “slower than expected installation rates”, particularly “in late summer and September where installation rates traditionally increase.”
In a note to clients earlier this week, Citi analyst Vikram Bagri said downloads of solar apps in Europe, which can be used as a proxy for sales, “declined sequentially… in September.” “We see a gradual uptick in downloads from typically seasonally slow downloads.” August period.”
But Friday’s troubles weren’t just limited to solar.
In New York, the offshore wind business received another blow from the state government. Gov. Kathy Hochul, a Democrat, vetoed a bill passed this summer that would have started the regulatory process needed to connect a transmission cable from the planned Empire Wind 2 project on the south shore of Long Island to a substation in Island Park. Must be given, which is now a little inland.
In his veto message, Hochul said that Empire Wind 2’s developer, Equinor, and other companies in the offshore wind business “had an obligation to develop and maintain strong relationships with their host communities during the planning, siting and operation of all large ” Large-scale projects,” adding that the Long Beach City Council did not support using the beach for the project.
Wind projects are nothing new to local opposition – hostility towards such projects on land actually increased between 2000 and 2016. Proponents of offshore wind thought they could avoid this type of local opposition because the planned projects are offshore, usually out of sight of residents, but with the infrastructure needed to bring electricity generated in offshore areas to homes and businesses. There is still a need to build transmission cables and substations on land.
The planned Empire Wind 2 will have a capacity of 1,260 megawatts to serve upstate New York, the most populous region of the state that relies heavily on fossil fuels for power generation. State law mandates that New York generate 70 percent of its own electricity overall by 2030, but that goal would be in jeopardy if renewable energy projects are not built to serve the New York City region.
“The veto of ‘The Planned Offshore Wind Transmission Act’ weakens New York’s commitment to the energy transition and the role of offshore wind in achieving the state’s renewable energy mandate,” Molly Morris, president of Equinor Renewables America, told me in an email statement. reported, “This decision follows last week’s action by the New York State Public Service Commission and sends another troubling signal to renewable energy developers.”
Hochul’s veto came a week after the state’s utility regulator refused to adjust contracts for renewable projects, including four offshore wind projects, after the companies saw much higher costs than expected.
And those high costs aren’t just in offshore wind. The entire renewables sector is in trouble, at least for now.
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