The solar panel industry is performing worse than coal stocks so far in 2016, despite benefiting from billions of dollars in government subsidies.
Stocks in SolarCity Corp., the largest rooftop installer in the U.S. and the brain child of Elon Musk, tumbled by as much as 27 percent Tuesday — this, after the government subsidized company scaled back its installation projections several times since the beginning of the year.
One of SolarCity’s primary competitors, and once considered the fastest-growing renewable energy company, SunEdison Inc., filed Chapter 11 bankruptcy in April and is now teetering on the verge of irrelevancy.
Meanwhile, coal prices are evening out after several years of pro-longed price tumbles. In fact, according to the U.S. Energy Information Administration, the spot price for Central Appalachian Coal, as well as other coal regions, is keeping the line at $40.50.
Hedge fund manager Jim Chanos said last week SolarCity, which is mired in 50 percent losses this year, will likely face substantial “financial trouble” in 2016 as the company continues to bleed money on each solar panel installation.
The downturn reflects investor concerns that solar power is being propped up primarily by massive amounts of debt, as well as by billions of dollars of taxpayer subsidies, rendering the solar panel industry unprofitable.
The industry relies largely on solar investment tax credits for their success, which allow residential and commercial units to take 30 percent tax credits for solar panel installations. The issuance of these credits has resulted in massive increases in solar panel installations.
The solar industry receives nearly multitudes more in subsidies than fossil fuel companies — in fact, green energy producers gobbled up $13 billion in subsidies during 2013, according to data from EIA.
SolarCity is not the only solar panel company taking it on the chin — Bloomberg index of the 20 largest major solar panel firms in the country showed a 30 percent downturn.
Even as Musk and his fellow solar panel makers continue to champion what they call a revolt against fossil fuels, investors are quick to point out that solar power’s debt-engorged tactics are dangerous and turning off shareholders.
“They call it the solarcoaster for a reason,” Nancy Pfund, the managing partner of DBL Partners and a SolarCity director, told reporters. With all of the up and down swings in the solar panel market, Pfund said, “it’s been hard for investors to follow.”
Investors remain worried, even after the global climate plan forged in Paris, which theoretically could boost stock in solar panels. So far, they have not seen any indication that these companies can make and install panels profitably.
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