High Interest Rates Affect Solar Stocks, Future Cuts May Help

NEW YORK (AP) — Solar power companies, including SolarEdge Technologies and Sunrun, are grappling with the impact of high interest rates, which have reached a two-decade high. This environment has made borrowing more expensive, hindering financing for residential solar projects and contributing to significant inventory backlogs. As a result, the stock prices of these companies have suffered, with SolarEdge's shares plummeting 76% in 2024, contrasting sharply with the rising fortunes of traditional energy giants like Exxon and Chevron. The Solar Energy Industries Association has projected that 2024 will be a challenging year for the residential solar market, following a weak first quarter that marked the lowest performance in two years. The financial struggles are exemplified by SunPower, a former leader in solar technology, which recently filed for bankruptcy after its stock fell 73% in 2023 and an additional 90% in 2024, now trading for less than $1. Despite the overall downturn in the sector, FirstSolar has emerged as a notable exception, benefiting from subsidies provided by the Inflation Reduction Act of 2022. This has allowed the company to maintain a more stable position in a turbulent market. Looking ahead, the Energy Information Administration forecasts a significant growth in U.S. solar power generation, predicting a 75% increase between 2023 and 2025. While solar and wind power are expected to lead this growth, traditional power sources like coal are projected to decline, with natural gas and nuclear power generation remaining stable.