Solar profits drying up

Trouble for sea freight and other logistical issues made their mark on solar stock prices at the beginning of 2024. The Invesco Solar ETF fell by 21% for January 2024, while the S&P 500 increased by 2% and the DJIA increased by 1%. Within the United States, the top three solar stocks for the month of January 2024 were Atlantica Sustainable Infrastructure plc, down 11%, and ReNew Energy Global Plc and Clearway Energy Inc., which both fell by 12%.

The worst performers in January 2024 in the United States markets were Emeren Group Ltd, SunPower Corp., and Maxeon Solar Technologies, Ltd., which all fell 37%. Residential solar stocks, overall, fell 27% for the month of January 2024. Companies included in the residential measure were Enphase Energy Inc., SolarEdge Technologies Inc., Sunnova Energy International., and Sunrun Inc.

Utility-scale solar stocks – Array Technologies Inc., Shoals Technologies Group Inc., NEXTracker Inc., FTC Solar Inc., and First Solar Inc. – decreased by 17% in the first month of 2024.

Logistical challenges emerged within the solar market, potentially bolstering pricing dynamics. That, coupled with liquidity issues, seems to be causing unease in the solar industry, as demonstrated by the sharp decline in the Invesco Solar ETF.

Roth Capital’s checks suggest that module vendors are contemplating price elevation strategies, as security concerns in the Red Sea and a drought in the Panama Canal are presenting logistical hurdles that could additionally bolster pricing. The Panama Canal drought is forcing ships bound from Asia to the eastern United States to divert their routes, circumnavigating Africa and traversing the Atlantic Ocean instead, which could also push small-scale, “distributed-generation” PV module prices up.

Due to liquidity issues, dealers are currently awaiting payment, with some encountering liquidity challenges as a result of this delay.

Article by Jesse Pichel, managing director, Roth Capital Partners.