"Since 2023, a total of 16 large PV companies in the United States have failed. Last year alone, more than 100 PV companies went bankrupt. That's 6 times the sum of the previous three years. Ross Securities expects more than 100 more residential solar companies in the United States to face closure.
Giants collapsed in batches
从规模较小的Infinity Energy、Solcius、Kayo Energy，到户用巨头Titan Solar Power，一场席卷全美的光伏“倒闭潮”正在快速蔓延。
On June 18, Titan Solar Power, a leading residential solar installer in the United States, sent an email to its employees announcing its permanent closure.
Image source: Reddit.
A few days ago, photovoltaic manufacturer Toledo Solar announced that it would immediately terminate all R&D work and phase out operations, and the company was about to go out of business. At the same time, Toledo Solar mentioned in a statement that it had begun to phase out operations in early May.
On July 19, Eastern time, the share price of United States solar giant SunPower suddenly collapsed, plummeting by more than 57% during the session, and the cumulative decline in a week reached 75%. According to Reuters, SunPower has informed employees that it will suspend a number of core operations and stop shipments of new products.
Wall Street analysts believe that SunPower is on the verge of bankruptcy.
As one of the largest photovoltaic companies in the United States, SunPower had more than 5,000 employees at its peak and offices in more than 10 countries around the world. Today, its collapse is widely seen as a microcosm of the United States PV market. Gone are the glory days of residential solar power generation in the United States.
Looking back, though, this history is not very recent.
In 2022, a record 6GW of peak generation was installed on 700,000 rooftops, bringing the total residential solar generation to 40GW, almost enough to power Los Angeles and Philadelphia. More and more countries, including the United States, have joined the competition with China, which has led to lower module and inverter prices, which has contributed to the prosperity of the PV industry to some extent.
In August of the same year, President Joe Biden signed the Inflation Reduction Act (IRA), which sparked a carnival of renewable energy subsidies. The bill increases the solar tax credit from 26% to 30% and extends it until 2032, which also means that the United States government could have to bear $8 billion a year for at least a decade.
However, even with subsidies, the fundamental problem of the residential solar industry in United States remains unsolved – high upfront costs.
A new 7.5 kilowatt residential rooftop solar system costs between $20,000 and $45,000. The tax code mitigates this cost to some extent, but applying for federal subsidies isn't straightforward. The Individual Federal Tax Credit eventually returns 30% of the tax to the homeowner, but the credit is nonrefundable, meaning you can only claim the credit on the income tax you paid or owed in the year the solar panel was installed. While you can't receive a subsidy from the United States government, you can carry forward unused credits to offset taxes for future years. The result is that most households can't or won't pay for the installation out of pocket.
solution
Currently, there are two universal solutions for the United States residential PV market:
1. Residential PV installers provide loans for full installation costs to reputable homeowners; Theoretically, they can pay for it with a lower electricity bill and the tax credit they eventually receive (usually more than 20 or 25 years).
(Installers can be very lucrative in offering loans that sometimes offer below-market rates and include an additional interest charge in the upfront fee and then securitize consumer loans for sale.) ）
Second, the rental is carried out by the homeowner, the installer has the ownership of the PV system, and the installer or its investors can claim the 30% Investment Tax Credit (ITC).
(This type of financing was originally losing market share, but the Inflation Reduction Act allowed for the direct sale of renewable energy tax credits, which gave it a boost.) ）
It should be noted that both models are highly susceptible to changes in lending rates, and it is no wonder that lending is the real pillar of the development of the residential PV market in the United States.
Multiple factors
Since 2023, the Federal Reserve has raised interest rates frequently to fight inflation, and the sharp rise in interest rates has weakened demand growth for new residential systems, and has also caused widespread financial constraints and cash flow difficulties for residential solar companies. Sunlight Financial, a residential solar financial institution, attributed high interest rates when it filed for bankruptcy last October. Two days after Sunlight sought bankruptcy protection, Sunrun, a San Francisco-based residential solar leader with $2.3 billion in annual revenue, said it would write off $1.2 billion of goodwill, largely from its $3.2 billion acquisition of Vivint Solar in 2020.
In addition to soaring interest rates, policy changes are also a "big mountain" hindering the development of United States residential PV.
On April 15, 2023, United States' California Solar Energy New Deal NEM (Net Energy Metering) 3.0 officially came into effect, which significantly reduces the compensation for local rooftop PV owners for surplus electricity to the grid, extends the return on investment period, and reduces the attractiveness of PV installation.
As a result of NEM 3.0, PV demand in California has plummeted, and rooftop PV installations have fallen by 80%. The local photovoltaic and energy storage association reported that thousands of projects have been put on hold, more than 17,000 employees have been laid off, and a large number of high-profile companies have declared bankruptcy.
In addition, there is the market chaos caused by the lack of regulation. Salespeople do whatever it takes to sell products, give various promises but can't fulfill them, have no after-sales guarantees, and so on.
The analysis believes that although the Biden administration is adopting the Inflation Reduction Act (IRA) to subsidize the United States photovoltaic market, the business model of subsidies alone is difficult to sustain; Coupled with the new import tariffs of United States photovoltaic products to China, the world's most complete and lowest-priced photovoltaic products cannot smoothly enter the United States market, and the manufacturing cost remains high, and the United States residential solar market will still face pressure.
The future is uncertain
With the announcement of United States President Joe Biden on July 21 to withdraw from the 2024 presidential election, the United States household photovoltaic on the verge of collapse may be worse.
Republican presidential candidate Trump has made it clear that after being elected, he will increase investment in traditional energy in United States and reduce subsidies for new energy. Previously, its senior campaign officials and advisers had also mentioned that Trump would seek to overhaul United States' climate and energy policy in his second term to "maximize fossil fuel production." And as the centerpiece of Biden's economic strategy, the Inflation Reduction Act (IRA) will be Trump's target.
However, it is too early to tell.
There is a famous saying in United States politics, "Politicians campaign with poetry and govern with prose." Many of the promises made on the campaign trail will eventually be diluted or even discarded when political realities hinder them.
As we all know, Biden's Inflation Reduction Act (IRA) involves more than $300 billion in clean energy investment, tax credit programs, and many of these projects happen to be located in Republican states with powerful vested interests that support them. Attempts to weaken or repeal the Inflation Reduction Act (IRA) will be resisted in the United States Congress, which will also include members of Trump's party.
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Review: Lao Zhang
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