The Invesco Solar exchange traded fund (ETF) TAN significantly underperformed relative to the S&P 500 and the Dow Jones Industrial Average (DJIA) stock indexes in September. Jesse Pichel, of Roth Capital Partners, puts this down to oversupply in the United States residential sector.
From pv magazine 11-2023
The Invesco Solar ETF fell 11% for September and declined 29% year to date, while the S&P 500 fell 5% for September and rose 12% year to date. The DJIA decreased 4% during the month of September and increased 1% year to date.
Within the United States markets, the top three performing solar stocks for September were Emeren Group Ltd. (up 6%), Enphase Energy Inc. (7%), and Hannon Armstrong Sustainable Infrastructure Capital Inc. (8%). Meanwhile, the three most under-performing solar stocks for the month were Maxeon Solar Technologies Ltd. (down 28%), Sunnova Energy International Inc. (-25%), and Sunrun Inc. (-21%).
Residential solar stocks fell 18% overall in September and decreased 50% year to date. It is important to note that the residential stocks have declined further in October, due to poor market conditions.
The companies included are SolarEdge Technologies Inc., Sunnova Energy International Inc., and Sunrun Inc. Elevated interest rates, insufficient working capital, and surplus inventory are contributory factors adversely impacting the sector.
Our recent checks suggest that there is massive oversupply in the United States residential solar market and there are fears it will continue into the fourth quarter with available stock from both manufacturers and distribution channels.
Some manufacturers are liquidating their inventory, even at prices below cost structure. The disparity of more than $0.10/Wp between residential and utility solar panel prices is pushing commercial & industrial solar developers, as well as PV engineering, procurement, and construction companies, to reconsider and revise projects. Revised projects are aiming to incorporate smaller-footprint modules whenever feasible.
Despite recent customs detentions, pricing for Uyghur Forced Labor Prevention Act-compliant modules has decreased significantly. Our checks suggest that there are indications that demand for utility-scale solar projects might be showing signs of a slight decline.
