Shares in Elon Musk’s solar energy company SolarCity have fallen more than 24 percent in trading today, and since the start of the year have fallen more than 66 percent. That’s a precipitous decline for a company that’s received plenty of media hype in recent years for its rapid growth in the fledgling solar development market, and it raises new doubts over the health of solar power. Reuters reports:
SolarCity Corp cut its forecast for solar panel installations this year and reported a bigger-than-expected quarterly loss, sending its shares down nearly 20 percent in extended trading on Monday…A pullback in a key solar support policy in Nevada, a January price increase on residential systems and a redesign of its solar loan product were among the reasons SolarCity cited for the lowered forecast. […]
The slower growth, combined with complex financials that rely heavily on renewable energy subsidies, has spooked some investors. The company’s stock is 65 percent below its 52-week high set nearly a year ago.
SolarCity isn’t the only company in the solar industry that’s struggling in 2016, either. SunEdison, the world’s largest renewable energy developer, filed for Chapter 11 bankruptcy protection three weeks ago after limping along and struggling with mounting debt for months. SunEdison overreached—it grew too much too fast, and took on too much debt snatching up subsidiaries all around the world—and it paid the price. The comparisons to Icarus write themselves.
Solar’s struggles don’t end there, either—San Jose-based SunPower stock prices are down 44 percent this year, while shares in Tempe-based First Solar and China’s Trina Solar have both fallen more than 22 percent. The Guggenheim Solar index fund, a key metric for the health of the industry, is down more than 30 percent on the year.
Solar power can’t compete with fossil fuels without substantial government assistance, and this reliance on subsidies places it in the unenviable position of being at the mercy of political support. Given how plentiful and cheap oil and natural gas are these days, that support is looking increasingly shaky. It’s no wonder then that investors are running for the hills.