Residential solar industry in the United States stumbles

By on May 24, 2017 at 10:30 AM

In recent years the residential solar industry has been one of the hottest industries in the United States with the market leader SolarCity growing by 50% yearly. Growth has been driven by falling solar costs as well as tax credits such as the California Solar Initiative, and the Investment Tax Credit.

Solar Energy Remains Popular For Private Homeowners

But that was then and this is now, and with the last year several companies have left the solar industry, reduced their workforce, or gone bankrupt. SolarCity has been absorbed by another of Elon Musk’s ventures Tesla. Now the company has lowered it’s expectations for growth and has refocused its attention toward providing premium service offering infinity warranties on their products.

Some part of the blame for this contraction can be laid at the feet of states tinkering with the their residential solar programs such as Hawaii abruptly removing their net energy metering program. However, the bulk of the solar industries woes stem from difficulties within their core business.

Last year according to their 10k filings, the three largest solar companies in the United States combined lost over $1 billion. The largest company, SolarCity, had revenues of $730 million but lost $820 million. In second, Sunrun with revenues of $454 million still lost $303 million, Finally Vivint Solar earned $135 million but still hemorrhaged $242 million, proportionally the largest losses of any of the three. What is worse, Sunrun is being investigated by the Securities and Exchange Commission regarding “whether the company adequately disclosed how many customers had canceled contracts.” The SEC is also looking at SolarCity.

While the largest players in the industry are undeniably experiencing difficulties, hope remains. In 2016 smaller competitors grew by nearly 20%. Further, Q4 of 2016 was the first time in five years that the customer-owned share of the market was greater than 50%. This trend is expected to continue buoyed by states such as Florida and Texas wherein third-party-ownership loans are not a significant percentage of the market.

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