The first half of 2024 looks rough for solar in America. Sunpower’s stock crash? Numbers for residential solar installations look worse and worse? Panels are getting more expensive? Are we in trouble? Let’s go over the situation in detail.
The US home solar market that was doing so well in 2023 is slowing down a bit. Residential solar installations will decrease by 20% in 2024, according to Ohm Analytics forecast. Homeowners installed 1.3 gigawatts in the first quarter of 2024 which is a 25% decrease year-over-year and the segment’s lowest quarter since Q1 2022.
32.4 GW
solar capacity added in US in 2023 — more than ever before
California, the solar leader of America, in particular, isn’t doing too well. Experts project that installations in the state will drop more than 40% in 2024 and continue to decline through 2028. The reason behind this is the NEM 3.0 electric policy adopted in 2023 — and we’ll come back to that.
With the market slowing down, some American companies start to struggle. SunPower's stock dropped 70% over the 15-19 July week, with nearly a 50% fall on July 19 after the company announced it would stop offering lease and power purchase agreements and would no longer ship new products.
The company has been in a hard spot in 2024. In April, the company said it would close some installation service centers across the country and lay off about 26% of its workers. In July, SunPower told employees it would pause several key operations, stop signing new agreements, and stop supporting installation services for shipments currently in transit or already delivered, according to Reuters. SunPower is known for premium-class solar products with a higher-than-average price. With inflation being high in the United States, homeowners look for cheaper alternatives.
SunPower Corporation is an American company that provides solar energy systems and batteries, mainly for homes. The company is based in San Jose, California, and was founded by Richard Swanson, a professor of electrical engineering at Stanford University. SunPower used to make solar panels, but in 2020, it spun off that part of the business into a new company called Maxeon Solar Technologies. Sunpower is often highlighted for its high staying power — the company has been around since 1985.
What holds solar back? Most experts see interest rates as the primary reason for the market slowing down. Federal Reserve kept the federal funds rate at 5.25% to 5.50% in June 2024 in an attempt to combat high inflation. That’s the highest it has been since January 2001. High upfront costs are one of the main drawbacks that slow the adoption of solar. A high interest rate means that it is harder for consumers to get a loan to buy a solar system for a home.
Read our article about ways to finance a solar system!
Higher tariffs on Chinese products will likely contribute to the market slowing down. President Joe Biden increased import tariffs for EVs, batteries, and PV products from China in June. Chinese solar panels represent about 70% of all PV modules made around the world. The prices for them will go up anywhere from 90% to 280% in the US and it might make Chinese panels trickier to get in America.
In California specifically, another obstacle to solar growth is the transition to a net billing program. Net Energy Metering 3.0 (NEM) program approved on December 15, 2022, reduced net metering compensation rates by around 75%. This policy doubled the payback time of a solar system in California, making investing in solar significantly less lucrative.
American PV utility sector, on the other hand, is doing well. Almost 10 gigawatts of solar were installed in the first quarter of 2024, SEIA reports. In total, the US solar industry installed 11.8 gigawatts of solar capacity, making it the second-best quarter for the industry, surpassed only by the final quarter of 2023. So far, photovoltaic solar represented 75% of all new electricity-generating capacity additions, continuing to be the leading source of new generating capacity in the US.
The residential solar market is to recover gradually as well: home installation will grow 5-10% in 2025, Ohm Analytics anticipates. Experts believe in the stable growth in the market over the next five years. Bottomline: solar is not going anywhere. If you have the means, then it’s better not to wait: read more in our article “Should you wait to go solar? Let's ask the experts”.
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Andrey had been a news editor and freelance writer for a number of medias before joining A1SolarStore team. Climate change and its impact on people's lives has always been among his interests and it partially explains his degree in Philosophy and Ethics.
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