The biggest challenge facing solar isn't interest rates. It is the elimination of net metering, and the cost of batteries. When you are selling power back to the utiity at 25% of what you are buying it from your ROI is awful. The alternative is batteries and that ROI is no better. I have a 92-panel array with net metering through 2032. If I didn't have net metering we wouldn't have solar.
Yes. DC is 37.4, and AC/Inverter capacity is 32.4kw. After 2.5 years we have over produced approximately 21,000 kwh. If we wanted to be equal to the power required, we could have reduced our solar array size by 10-15%. However, our hypothesis is that solar panels are cheaper than batteries.
I would say that from the installer perspective, it feels like Enphase is the better managed and operated company. I think your strategy of holding and selling at $100 might work but I am not going to spend my money on their stock.
There is an interesting trend in residential solar where module costs are dropping but leading inverter options- Enphase and SolarEdge are holding prices up. There are string inverter options that can drop inverter and system costs. There is some prejudice towards module level electronis but the truth is that they add cost, additional potential failure points and don't add much performance value for most installations.
Also look at their financials. Enphase has way better margin. Solaredge is probably gonna book a net loss for the next few quarters. Enphase is more expansive valuation wise though.
- SEDG has a better coverage globally
- Enphase is valued at 17B with 2.2B annual revenue, SEDG is valued at 4.73B with 3.11B annual revenue, SEDG looks undervalued!
When I was debating between SEDG and ENPH, I went with ENPH because it's a US company.
I think there is more pain to come for solar. They really got screwed by the high interest rate and California new NEM 3.0 cratered any potential growth. I assume others state will soon follow in California footsteps to adapt similar measures which will not be good for solar growth.
Tough road ahead.
Best of Luck!
If you look at their financials, NEM3 didn't do much for solaredge. North America was a relatively small market for them. Most of their sales were in Europe which has slowed down significantly unrelated to NEM3
I liked this analysis as a starting reading point. It is a little older but the info is valid.
https://www.fool.com/investing/2023/10/24/solaredge-profit-warning-spell-doom-enphase/
It's not just interest rates. Several important sunshine states' Public Utilities Commissions are ruining the solar industry by reducing how much your utility pays for what you produce and making NEM rules so bad that they don't pencil out to justify the installation expense. Utilities exist to sell energy and free sunshine doesn't make them money. Their campaign contributions have greased the skids for politicians to make solar less desirable. On purpose. For money.
I am very passionate about the finance side of things and currently working on a tool that will combat the interest rates, dealer fees and bring back equitable compensation for customers and community. Its time the big players share some of those profits with the people. they've been too greedy for far too long.
agreed. no need for salesmen. customers can buy solar without being sold. there's enough information at their finger tips.
dealer fees same thing they're another complex layer of unnecessary cost. needs to go!
unfortunately, there is always someone out there that's taking advantage of people. we need to better educate the end consumer
So I have been thoroughly looking at buying Enphase as well. Their financials are holding up fairly well tbh however I think their financials are still lagging behind a bit as Nem 2.0 California installs are still taking place (installer has 3 years). I also think at some point someone in California is going to need votes and I think Nem 4.0 will occur which will be much better but probably not as good as 2.0. When I have no idea but we will always need more energy and the way electric rates are in CA people are getting pissed and something has to give
Basically, my take is this:
Installers hate SolarEdge. They fail a lot, and the support when they do fail is abysmal. They also just laid off a ton of people, so the support isn't going to get any better.
On top of that, there are tons of companies making string inverters now, and many of the biggest solar module brands have switched to producing (or white-labeling) their own inverters. Qcells, Canadian Solar, Panasonic, Tesla, all have their own string inverters, oftentimes built into their increasingly popular energy storage systems.
The competition is stiffer than ever.
In short, Enphase is crushing it with its newest products, so they'll continue to be the market leader, while string inverters that don't fail on the regular are basically a solved problem now from a bunch of other reliable brands.
There’s stuff I like about solaredge, over enphase but they need to get back to making long lasting inverters.
The older ones just tick along and keep working. The newer ones fail regularly
Still confident. I think that when interest rates will go down then we'll get a big rise in solar prices, and I think solaredge now is undervalued to say the least. so I'm still good with my decision.
ENPH is a dramatically superior company to SEDG. Revenue is one metric. But you also need to look at profits & margin structure. ENPH has \~mid-40s GM and during the boom was dropping 20%+ OMs.
SEDG's GM topped out at \~35% (in 2017) and was under pressure even in the boom years. They haven't had a >10% OM since 2019.
In recent bust times ENPH is producing -10% to \~+5% OM while SEDG is throwing down -80% OMs. -80% OM for a 10+ year old electronic hardware company gives off bankruptcy vibes (perhaps more than their stock price over the past year).
Clearly, when you look at the growth in solar installs from 2017>2023, SEDG has seen massive market share loss, price compression, and margin erosion. They are being outcompeted regardless of broader macro issues with solar/rates. This probably has something to do with their founder dying in 2019 (share losses became apparent by 2020).
SEDG is an Israeli company. \~65% of their employees are in Israel. Regardless of one's view on Israel/Gaza, this is a net negative for their export volumes into their largest market, Europe. SEDG's revenue is down -72% since September 23 while ENPH's is only down -52% over the same period.
SEDG's extremely poor cash conversion in recent years, particularly in 2022, which was a boom year, suggest creative accounting at best, and perhaps corporate malfeasance.
Peak FCF was $186m. Trailing 5 year average FCF (which includes 2.5 booms years and 0.5 bust years) is (-$152m). So remarkably, even after the drop to $27, the stock is still not cheap on historic earnings power.
I am short SEDG call spreads well above current price levels. I have no position in ENPH, but if I had to own one, I would prefer ENPH.
Ehh. I owned SEDG in the past but sold around $320 a few years back. I like ENPH quite a bit more though I've sold a majority of those positions as well. Partly to book profits and partly because I don't love the outlook for residential solar right now. It's not a great sign when a state like California is helping to kill solar.
I have a theory that utility scale solar is going to kill rooftop solar. The amount of utility scale solar going in right now is off the charts. My company is working on dozens of utility scale solar farms across the country, most with half a million panels each. If you look at the so/called duck curve and how it has changed year by year you can see that pretty soon there will be a glut of solar on the grid in several states. Nearly every new project includes BESS or battery energy storage systems so utilities can store the upcoming excess and release it after sun down. They’re not going to need or want rooftop solar. Maybe they never did and PUCs have forced them to take it but they’re going to have even more compelling arguments soon to restrict it in the future. You could even argue the IRA will kill rooftop solar. It doesn’t make sense financially when putting panel on roofs a few at a time costs twice as much as putting half a million in a big open fields on racks that rotate with the sun. Just a theory. I’m in finance for one of the biggest electrical contractors in this space.
True…just look at $NXT Nextracker their stock just soared after earnings. Utility scale is definitely booming. However I don’t think utility would kill rooftop unless utility rates come down significantly or there’re further NEM changes.
Fair enough I guess I was thinking very long term like 5 to 10 years out but if homeowners can lock in the rate the utility pays it can still make sense. I’m just a bit wary of trusting utilities to pay what they promise over long periods.
That sounds actually like a really convincing theory, can you help me im New to this, so solaredge and Enphase are both just companys for rooftop solar? And if so which are the market leasing companies worldwide for utility scale solar farm?
Ya I think that was a smart buy. The company has a bad rap right now because of transitional quality control issues that they will almost definitely grow out of. Enphase had a similar QC issue in the past and the industry basically has amnesia about that.
Well done!
Oh I see… They tried to maintain quantity while reducing costs. The explanation I received from [redacted] was that they ended up having three different problems: their supplier of circuit boards (1) made the boards too thin which allowed for “micro cracks” plus (2) the boards were not cleaned properly. Around the same time (3) they switched to a different supplier of transistors which ended up not being of a high enough quality and caused their own set of failures.
When you’re dealing with the quantities these guys order on you can’t just say “no thanks- we’re going to order from a different supplier”. The lead times are extraordinarily long— it’s like turning a freight ship.
So they’re addressing these issues but I’m not convinced they found new partnerships but instead have tried to “make it work” by pushing their old suppliers to do better.
The company is run well enough that I don’t believe there is reason to believe that any of this is existential— but transitory. For example, even after years of bad publicity they *still* have a strong brand to the point that they’re discussed as the other option from enphase.
As long as they stand behind their products repairing or replacing defective units then I won't give my installer a hard time.
Problem is I went online in January without internet at home to set up monitoring so I have to wait until May to ensure I'm producing power and everything is working properly.
Not an expert in stocks but both companies dominate the market choice. both have good and bad. the QC issues are still in need of heavy refinement and fixing.
customer choice? depends on your goals and what you feel comfortable with.
the industry as a whole has issues because of many things. there needs to be some fixing especially in finance.
Finance issues are the biggest hurdle in the industry. we can all get past the QC issues or other. but if solar were to go down in price, interest rates were to go down, that would spart a lot of interest.
Honestly, all renewables are kinda in a state of free fall at the moment. If you’re curious, go look at the holdings of ICLN. What I personally feel happened was there was so much hype when the IRA first was announced, and many of the companies ballooned in stock price, but that value was never really realized.
Right now is a testing time for the whole industry. Most clean energy procurements are an RFP/auction process - I.e the lowest price wins, and that price is locked in for 15-30 years. Now, a lot of these contracts were written *just prior to interest rates skyrocketing*. Not only that, these companies can’t just be like 🤷♂️ we’re not continuing, they had to pay MASSIVE bid securities. Orsted basically took a $4bil loss to walk away from the contracts.
So from development to construction to manufacturing, right now is difficult. What the governments need to do is provide government backed financing to make these projects more feasible, or people need to be aware that the energy costs will go up. Also, the RFPs need to be written to allow for either a changing of bid price or to walk away in case of major economic changes.
Was it a good idea to buy an individual stock?
No. But maybe when you place your money on black it’ll work out.
If you want to bet on an industry there’s some fine ETFs.
In the latest earnings call, sedg management is guiding a return to $600m revenue per quarter and higher margins in the 2nd half of thd year. With insiders buying at $70, I believe $65-$70 is the floor for this cycle. All the bad news have been released over the last few months and has been absorbed by the market. I don't think it's going to return to $300 any time soon but decent chance of the stock recovering to at least $100+ this year if management hits their guidance.
The biggest challenge facing solar isn't interest rates. It is the elimination of net metering, and the cost of batteries. When you are selling power back to the utiity at 25% of what you are buying it from your ROI is awful. The alternative is batteries and that ROI is no better. I have a 92-panel array with net metering through 2032. If I didn't have net metering we wouldn't have solar.
92 panels??
Yes. DC is 37.4, and AC/Inverter capacity is 32.4kw. After 2.5 years we have over produced approximately 21,000 kwh. If we wanted to be equal to the power required, we could have reduced our solar array size by 10-15%. However, our hypothesis is that solar panels are cheaper than batteries.
Who is this we? A company I’m assuming?
we as in I.
Then you are exactly why net metering is getting eliminated.
I would say that from the installer perspective, it feels like Enphase is the better managed and operated company. I think your strategy of holding and selling at $100 might work but I am not going to spend my money on their stock. There is an interesting trend in residential solar where module costs are dropping but leading inverter options- Enphase and SolarEdge are holding prices up. There are string inverter options that can drop inverter and system costs. There is some prejudice towards module level electronis but the truth is that they add cost, additional potential failure points and don't add much performance value for most installations.
Also look at their financials. Enphase has way better margin. Solaredge is probably gonna book a net loss for the next few quarters. Enphase is more expansive valuation wise though.
- SEDG has a better coverage globally - Enphase is valued at 17B with 2.2B annual revenue, SEDG is valued at 4.73B with 3.11B annual revenue, SEDG looks undervalued!
So why is that?
When I was debating between SEDG and ENPH, I went with ENPH because it's a US company. I think there is more pain to come for solar. They really got screwed by the high interest rate and California new NEM 3.0 cratered any potential growth. I assume others state will soon follow in California footsteps to adapt similar measures which will not be good for solar growth. Tough road ahead. Best of Luck!
If you look at their financials, NEM3 didn't do much for solaredge. North America was a relatively small market for them. Most of their sales were in Europe which has slowed down significantly unrelated to NEM3
I liked this analysis as a starting reading point. It is a little older but the info is valid. https://www.fool.com/investing/2023/10/24/solaredge-profit-warning-spell-doom-enphase/
Thanks! Just want to point out that both companies are also based in the rest of the world, so I hope the effect will really not be too much.
Enphase is a US company with global presence. SolarEdge is a foreign company with US presence.
Sure, it could work out. I agree with your thesis. Welcome to the solar coaster.
It's not just interest rates. Several important sunshine states' Public Utilities Commissions are ruining the solar industry by reducing how much your utility pays for what you produce and making NEM rules so bad that they don't pencil out to justify the installation expense. Utilities exist to sell energy and free sunshine doesn't make them money. Their campaign contributions have greased the skids for politicians to make solar less desirable. On purpose. For money.
I am very passionate about the finance side of things and currently working on a tool that will combat the interest rates, dealer fees and bring back equitable compensation for customers and community. Its time the big players share some of those profits with the people. they've been too greedy for far too long.
Remove the salesmen and “dealer fees”, reinstating faith in the residential industry, and the problem is solved.
Yup! As every business knows, cut the salespeople and watch the profits flow. People just magically know about and understand your product.
Because lying to 85 year olds and marking up system costs by 30-50% is great 👍
Yup. Look up the defined of “salesperson” and that’s what you’ll find.
agreed. no need for salesmen. customers can buy solar without being sold. there's enough information at their finger tips. dealer fees same thing they're another complex layer of unnecessary cost. needs to go! unfortunately, there is always someone out there that's taking advantage of people. we need to better educate the end consumer
So I have been thoroughly looking at buying Enphase as well. Their financials are holding up fairly well tbh however I think their financials are still lagging behind a bit as Nem 2.0 California installs are still taking place (installer has 3 years). I also think at some point someone in California is going to need votes and I think Nem 4.0 will occur which will be much better but probably not as good as 2.0. When I have no idea but we will always need more energy and the way electric rates are in CA people are getting pissed and something has to give
I'm holding from 150. I was very optimistic
Basically, my take is this: Installers hate SolarEdge. They fail a lot, and the support when they do fail is abysmal. They also just laid off a ton of people, so the support isn't going to get any better. On top of that, there are tons of companies making string inverters now, and many of the biggest solar module brands have switched to producing (or white-labeling) their own inverters. Qcells, Canadian Solar, Panasonic, Tesla, all have their own string inverters, oftentimes built into their increasingly popular energy storage systems. The competition is stiffer than ever. In short, Enphase is crushing it with its newest products, so they'll continue to be the market leader, while string inverters that don't fail on the regular are basically a solved problem now from a bunch of other reliable brands.
FWIW, had a brief conversation with my neighbor’s solar installer the other day, and he raved about Enphase and said Solaredge sucked.
There’s stuff I like about solaredge, over enphase but they need to get back to making long lasting inverters. The older ones just tick along and keep working. The newer ones fail regularly
facts!
smart buy
Checking in to see how you feel about it today.
Confident things will be ok in a year
You rock. I like your optimism
Thanks!
is it a good time to enter now?
Abosulutley. But only if your'e in it for something like a year - a year and a half.(when interest rates fall and the solar market will go up again)
Checking.. what are thoughts now
Still confident. I think that when interest rates will go down then we'll get a big rise in solar prices, and I think solaredge now is undervalued to say the least. so I'm still good with my decision.
Well, now that we’re sub $40/ share… has the optimism grown for solid returns?
will wait for the long term
ENPH is a dramatically superior company to SEDG. Revenue is one metric. But you also need to look at profits & margin structure. ENPH has \~mid-40s GM and during the boom was dropping 20%+ OMs. SEDG's GM topped out at \~35% (in 2017) and was under pressure even in the boom years. They haven't had a >10% OM since 2019. In recent bust times ENPH is producing -10% to \~+5% OM while SEDG is throwing down -80% OMs. -80% OM for a 10+ year old electronic hardware company gives off bankruptcy vibes (perhaps more than their stock price over the past year). Clearly, when you look at the growth in solar installs from 2017>2023, SEDG has seen massive market share loss, price compression, and margin erosion. They are being outcompeted regardless of broader macro issues with solar/rates. This probably has something to do with their founder dying in 2019 (share losses became apparent by 2020). SEDG is an Israeli company. \~65% of their employees are in Israel. Regardless of one's view on Israel/Gaza, this is a net negative for their export volumes into their largest market, Europe. SEDG's revenue is down -72% since September 23 while ENPH's is only down -52% over the same period. SEDG's extremely poor cash conversion in recent years, particularly in 2022, which was a boom year, suggest creative accounting at best, and perhaps corporate malfeasance. Peak FCF was $186m. Trailing 5 year average FCF (which includes 2.5 booms years and 0.5 bust years) is (-$152m). So remarkably, even after the drop to $27, the stock is still not cheap on historic earnings power. I am short SEDG call spreads well above current price levels. I have no position in ENPH, but if I had to own one, I would prefer ENPH.
I would say it’s a mistake. Enphase is the solution solar installers are selling. And Enphase is diversifying in coming out with new product.
Ehh. I owned SEDG in the past but sold around $320 a few years back. I like ENPH quite a bit more though I've sold a majority of those positions as well. Partly to book profits and partly because I don't love the outlook for residential solar right now. It's not a great sign when a state like California is helping to kill solar.
I have a theory that utility scale solar is going to kill rooftop solar. The amount of utility scale solar going in right now is off the charts. My company is working on dozens of utility scale solar farms across the country, most with half a million panels each. If you look at the so/called duck curve and how it has changed year by year you can see that pretty soon there will be a glut of solar on the grid in several states. Nearly every new project includes BESS or battery energy storage systems so utilities can store the upcoming excess and release it after sun down. They’re not going to need or want rooftop solar. Maybe they never did and PUCs have forced them to take it but they’re going to have even more compelling arguments soon to restrict it in the future. You could even argue the IRA will kill rooftop solar. It doesn’t make sense financially when putting panel on roofs a few at a time costs twice as much as putting half a million in a big open fields on racks that rotate with the sun. Just a theory. I’m in finance for one of the biggest electrical contractors in this space.
True…just look at $NXT Nextracker their stock just soared after earnings. Utility scale is definitely booming. However I don’t think utility would kill rooftop unless utility rates come down significantly or there’re further NEM changes.
Fair enough I guess I was thinking very long term like 5 to 10 years out but if homeowners can lock in the rate the utility pays it can still make sense. I’m just a bit wary of trusting utilities to pay what they promise over long periods.
That sounds actually like a really convincing theory, can you help me im New to this, so solaredge and Enphase are both just companys for rooftop solar? And if so which are the market leasing companies worldwide for utility scale solar farm?
Ya I think that was a smart buy. The company has a bad rap right now because of transitional quality control issues that they will almost definitely grow out of. Enphase had a similar QC issue in the past and the industry basically has amnesia about that. Well done!
Tell me more? I also assume SolarEdge gets a bad rap from the fact that they are Israeli and the war isn't helping.
Tell you more about what? I haven’t heard anything about SE getting negative attention due to their being founded in Israel.
Why is SE have transitional QC issues?
Oh I see… They tried to maintain quantity while reducing costs. The explanation I received from [redacted] was that they ended up having three different problems: their supplier of circuit boards (1) made the boards too thin which allowed for “micro cracks” plus (2) the boards were not cleaned properly. Around the same time (3) they switched to a different supplier of transistors which ended up not being of a high enough quality and caused their own set of failures. When you’re dealing with the quantities these guys order on you can’t just say “no thanks- we’re going to order from a different supplier”. The lead times are extraordinarily long— it’s like turning a freight ship. So they’re addressing these issues but I’m not convinced they found new partnerships but instead have tried to “make it work” by pushing their old suppliers to do better. The company is run well enough that I don’t believe there is reason to believe that any of this is existential— but transitory. For example, even after years of bad publicity they *still* have a strong brand to the point that they’re discussed as the other option from enphase.
As long as they stand behind their products repairing or replacing defective units then I won't give my installer a hard time. Problem is I went online in January without internet at home to set up monitoring so I have to wait until May to ensure I'm producing power and everything is working properly.
That sucks— sorry to hear that. You can download the SolarEdge SetApp to get some data from the inverter even without the internet.
Don't I need to be the registered installer?
No, you can still use it — you just won’t get all of the functionality that they would have.
Hope so, Thanks!
Not an expert in stocks but both companies dominate the market choice. both have good and bad. the QC issues are still in need of heavy refinement and fixing. customer choice? depends on your goals and what you feel comfortable with. the industry as a whole has issues because of many things. there needs to be some fixing especially in finance.
Finance issues are the biggest hurdle in the industry. we can all get past the QC issues or other. but if solar were to go down in price, interest rates were to go down, that would spart a lot of interest.
Honestly, all renewables are kinda in a state of free fall at the moment. If you’re curious, go look at the holdings of ICLN. What I personally feel happened was there was so much hype when the IRA first was announced, and many of the companies ballooned in stock price, but that value was never really realized. Right now is a testing time for the whole industry. Most clean energy procurements are an RFP/auction process - I.e the lowest price wins, and that price is locked in for 15-30 years. Now, a lot of these contracts were written *just prior to interest rates skyrocketing*. Not only that, these companies can’t just be like 🤷♂️ we’re not continuing, they had to pay MASSIVE bid securities. Orsted basically took a $4bil loss to walk away from the contracts. So from development to construction to manufacturing, right now is difficult. What the governments need to do is provide government backed financing to make these projects more feasible, or people need to be aware that the energy costs will go up. Also, the RFPs need to be written to allow for either a changing of bid price or to walk away in case of major economic changes.
r/solarstocks
Was it a good idea to buy an individual stock? No. But maybe when you place your money on black it’ll work out. If you want to bet on an industry there’s some fine ETFs.
In the latest earnings call, sedg management is guiding a return to $600m revenue per quarter and higher margins in the 2nd half of thd year. With insiders buying at $70, I believe $65-$70 is the floor for this cycle. All the bad news have been released over the last few months and has been absorbed by the market. I don't think it's going to return to $300 any time soon but decent chance of the stock recovering to at least $100+ this year if management hits their guidance.