Solar CEO’s Vision of 3,200% Sector Growth Foiled by High Interest Rates

Will Wade and Mark Chediak
·3 min read

(Bloomberg) -- After taking the reins at SunPower Corp. less than three years ago, Peter Faricy made an audacious claim. The US rooftop solar industry had room to grow by more than 3,200%, he said, leaving companies like his primed to reap the rewards.

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It hasn’t quite worked out that way. The company, which primarily sells rooftop systems, fired workers to cut costs and had to raise $200 million to ease a cash crunch. Following a 75% plunge in shares over the past year, Faricy’s predecessor returned as executive chair this week to help steer SunPower through the turmoil.

SunPower’s struggles reflect, in part, the wider industry’s woes. California — the state with the biggest solar market — has slashed payments to homes, schools and businesses that sell excess power from their panels back to the grid. The state’s decision left the solar industry reeling, triggering bankruptcies and forcing installers to slash jobs. About two-thirds of home solar installers in California, where SunPower is based, are struggling to generate enough sales to operate their businesses.

High interest rates, meanwhile, have made it more expensive for people to borrow to install rooftop solar.

“If not for high interest rates, this industry would be booming like never before” said Pavel Molchanov, an analyst with Raymond James. “That’s the crux of the matter.”

Read more: SunPower’s Former CEO Werner Returns as Executive Chairman

SunPower’s travails are the latest evidence that the road to a greener grid will be bumpy. US clean energy stocks lost $30 billion in value over six months in 2023, a year after President Joe Biden’s landmark climate law promised billions of dollars for the transition. Soaring costs have thwarted a slew of offshore-wind projects. While the shift to renewables hasn’t been derailed, it’s unclear whether it will be fast enough to prevent the worst effects of global warming.

A SunPower spokeswoman declined to comment.

Read more: A $30 Billion Rout in Clean Energy Puts US Climate Goals at Risk

The company’s rivals Sunrun Inc. and Sunnova Energy International Inc. are both scheduled to release earnings later Wednesday, providing more insight on the market for rooftop solar systems.

SunPower has faced some unique challenges. The company in October said it had overstated the value of components of microinverters — small devices that help solar systems produce more energy — and needed to restate financial statements for 2022 and the first and second quarters of 2023. That led to a delay in filing its third-quarter results, prompting a default on a credit agreement by a subsidiary.

The company announced last week a new round of financing from French energy company TotalEnergies SE and fund manager Global Infrastructure Partners, which is being acquired by asset management giant BlackRock Inc. While that will ease its immediate liquidity concerns, SunPower still faces a difficult environment.

Faricy, a former Amazon.com Inc. executive, joined in 2021 with an aim to improve the apps consumers use to monitor their panels and to simplify a solar-buying process that he later described as slow, manual and cumbersome. The vision, he told investors in 2022, “is to make buying solar as easy as it is to buy a book on Amazon.”

But that strategy “hasn’t worked,” said Jeff Osborne, an analyst for TD Cowen. “Solar is a more complicated purchase than buying a book.”

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