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Why Solar Stocks
Skyrocketed Friday
First Solar, Array Technologies,
SolarEdge, Enphase, and other solar stocks
are rallying after big news from the Treasury Department.
By Todd
Campbell
May 13, 2023
Solar projects have
been slowed by uncertainty regarding if using panels produced in the
U.S. containing Chinese solar cells would still qualify for
the entirety of a 40% investment tax credit included in last year’s
Inflation Reduction Act. The U.S. Treasury Department addressed those
concerns with new guidance on Friday, sparking a widespread rally.
First Solar FSLR was the biggest beneficiary, rising over 25%. Array
Technologies ARRY, SolarEdge Technologies SEDG, and Enphase Energy
ENPH also traded higher.
The Inflation Reduction Act includes a 30% investment tax credit for
new solar renewable energy projects and facilities. It also includes
an additional 10% credit if facilities are built using a required
amount of U.S.-produced steel, iron, and manufactured products.
A "farm" of solar panels. Image source: Shutterstock
Treasury Dept. Delivers Good News for Solar Stocks
The Treasury said that as long as 40% of the total cost of components
used in the project are made with domestically produced materials, the
project will qualify for the perk. Previously, it wasn’t clear if that
would be true if 100% of the solar cells were manufactured overseas.
The news encouraged investors because clarity into the rebate should
allow projects to move forward this year, boosting solar suppliers'
top and bottom lines.
In the first quarter, First Solar’s sales rose 49% to $548 million;
however, that was a steep decline from the prior quarter’s $1 billion
due to “an expected shift in the timing of module sales as we
increased shipments to our distribution centers, both to mitigate
logistics costs as well as to align future shipments to customers with
contractual delivery schedules,” according to management.
Earlier this year, First Solar began production of its latest series 7
module at its third manufacturing plant in Ohio. The Series 7 is
designed for large projects, and it’s manufactured mainly using U.S.
components, including glass and steel, to take advantage of the
credit. The company is targeting initial shipments next month.
A fourth factory expected to be finished next year is under
construction in Alabama. On the company’s first-quarter earnings
conference call, First Solar said, “Excluding India, we are now sold
out through 2026.”
Separately, First Solar announced that it's acquiring thin-film solar
play Evolar AB for $38 million upfront, plus up to an additional $42
million to be paid upon achieving milestones.
Green Play Ammonia™, Yielder® NFuel Energy.
Spokane, Washington. 99212
www.exactrix.com
509 995 1879 cell, Pacific.
exactrix@exactrix.com
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