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HomeMarketSolar Stocks Tumble as California Cuts Incentives for Rooftop Panels

Solar Stocks Tumble as California Cuts Incentives for Rooftop Panels

SunPower, Sunnova, and Sunrun were among the solar stocks declining Friday.

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Andreas Rentz/Getty Images

Solar stocks were falling Friday after the California Public Utilities Commission passed a plan that limits how much people with solar panels on their homes will receive in repayments from returning their surplus energy to the grid.

The CPUC announced Thursday that it implemented changes to the Net Energy Metering (NEM) solar tariff. Net metering allows solar panel customers who generate their own electricity from solar power to sell the surplus electricity they don’t use back into the grid. The new plan will pay those customers at a lower rate.

The decision doesn’t impact existing rooftop solar customers, who will maintain their current compensation rates.

California Public Utilities Commissioner John Reynolds said in a statement that the decision “will bring rooftop solar into a new and more sustainable age. NEM has left an incredible legacy and brought solar to hundreds of thousands of Californians, but it is also profoundly expensive for non-solar customers and was overdue for reform.”

The California Solar & Storage Association said in a written statement that the decision would reduce the amount paid to customers returning surplus energy to the grid by 75%. Bernadette Del Chiaro, executive director of the California Solar & Storage Association, said the plan was “a step backwards when we really need to be moving forward with solar and battery storage. It is a dark day in California when the utility regulators try to block out the sun.”

Solar stocks were falling Friday, led by
SunPower
(SPWR), which fell 6%. Sunnova Energy International (NOVA) tumbled 5.4%,
Sunrun
(RUN) sank 5.5%,
Enphase Energy
(ENPH) dropped 4.2%, and
First Solar
declined 2.7%.
Array Technologies
also fell, down 1.1%, and
NextEra Energy Partners
(NEP) declined 2.3%.

Guggenheim Securities analyst Joseph Osha wrote Friday that he wasn’t surprised with the outcome. He said his attention was shifting to the impact the plan will have on residential solar developers.

“With California at about 30% of U.S. residential solar installations in 2022, according to our estimates, we think it’s likely for developers to see their overall businesses decline in the second half of 2023 …,” Osha wrote. “That said, California’s share of the U.S. residential solar market has been declining as other regions see growth.”

He added that a reduced dependence on California’s “volatile regulatory environment is probably a positive development for the longer term.”

Write to Angela Palumbo at angela.palumbo@dowjones.com

Credit: marketwatch.com

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