Residential solar, energy storage, electric vehicle charging and home energy management have had a bumpy road this year, particularly in both the United States and Europe. Demand has fallen restrictive, reeling from policy changes such as the transition to net metering in California, utility rate changes in Europe and macro conditions such as high interest rates.
Publicly traded solar stocks have plunged in 2023, particularly in the residential sector, and Enphase has been no exception to this trend. The Invesco Solar exchange-traded fund is down 35% year-to-date.
“However, we could be starting to see some bottoming,” said Raghu Belur, co-founder and chief product officer of Enphase Energy in an interview with pv magazine USA.
He said the California market could be one to two quarters away from reaching the demand floor, and Europe has begun to stabilize and empty channel inventories. France, in particular, is showing market strength, while countries such as the Netherlands and Germany have had a modest recovery from the recent demand implosion.
“I feel 2024 will be a recovery year,” Belur said. “I don’t see the market getting worse, but I don’t see it improving dramatically either. We won’t get back to 2022-type growth. This will probably require one more year. But in 2024 we will see things start to change and already slowly recover.”
pv magazine USA asked Belur about his outlook for the California market, which often serves as a benchmark for other U.S. states as more mature markets. Recent data from California’s interconnection queues has shown that the state, which is responsible for approximately 40% of the U.S. solar market, has seen demand fall off a cliff. Installations have fallen 80% since NEM 3.0 and more than 17,000 jobs have been lost due to layoffs, said the California Solar Energy and Storage Association (CALSSA).
While Enphase is a major player in the California market, it is a diversified global company, stands as the dominant global supplier of solar microinverters and has expanded into a full energy services provider, with storage, electric vehicle charging . . . and energy management software.
Belur acknowledged that it has been a difficult year for California rooftop solar, but said he remains confident that financial fundamentals will recover customer demand. According to California NEM 3.0, what used to be a four- to five-year payback period, or return on investment, for rooftop solar is now seven to nine years.
“But you’re buying a 25-year asset, so you’re still coming out way ahead,” he said.
He points to the financial fundamentals of rooftop solar, storage and electric vehicle charging. Interest rates will eventually come down and, in the meantime, utility rates are rising much faster than inflation . This is particularly true in California, where the Public Utilities Commission approved a 13% increase in electric utility rates in 2024. Combine these changing forces with falling solar module prices, and suddenly the recovery period looks solid and demand picks up.
While solar and storage buyers typically use a rule of thumb of 3% to 4% annual rate increases by the utility to estimate long-term savings, Belur said that assumption no longer applies. “Double-digit rate increases are common now,” he said.
Belur noted that adding energy storage to your home’s solar panels serves as an ideal hedge against utility rate increases and policy changes such as NEM 3.0. Enphase continues to introduce intelligent software that interacts with grid price signals, essentially turning your battery into an energy market broker.