Axiom's Gordon Johnson On Why PV Installations In The U.S. Could Be Cooling

Data released by the U.S. Energy Information Administration indicated impressive growth in PV installs through November 2016. Despite this, growth in U.S. solar installations may actually be cooling, Axiom's Gordon L. Johnson said in a report.

According to PVInsights data for this week, average prices for poly, wafers and cells remained flat week-on-week, while prices for modules were down 0.3 percent.

Growth In U.S. PV Installations

The U.S. EIA’s Electric Power Monthly report showed total PV installations through November 2016 of 29.5GW. Netting cumulative installations from earlier reports, the United States had installed 774MW in November 2016, representing a 6.6 percent month-on-month decline, but 40.7 percent year-on-year growth, Johnson mentioned.

Despite this impressive progress, Johnson commented that growth in U.S. solar installations could be cooling. He mentioned the reasons as:

  • Enphase Energy Inc ENPH, a market leader in micro-inverter manufacture, generates about 85 percent of its sales in the United States. Enphase Energy has announced a voluntarily restructuring plan, including an ~18 percent reduction in its workforce. The analyst mentioned that this suggests the company sees cost cuts, rather than growth, “as the way to profitability.”
  • There is positive seasonality in Q4. With a record 3.2GW installed in Q3 and a combined 1.6GW installed in October/November, December installs would need to have been more than 1.6GW for US growth to be sequentially positive in Q4. This is “by far a new monthly record — a bigger base may imply slowing growth,” Johnson wrote.
  • Californian’s rooftop apps, which is a leading indicator of DG [distributed generation] demand, were down 55.7 percent year-on-year in November.

Sell Solar Stocks

Johnson has a Sell rating on the following companies:

  • JA Solar Holdings Co., Ltd. (ADR) JASO.
  • Meyer Burger Technology AG.
  • Solaredge Technologies Inc SEDG.
  • Sunedison Inc SUNEQ.
  • Trina Solar Limited (ADR) TSL.
  • Yingli Green Energy Holding Co Ltd (ADR) YGE.
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