By Sourasis Bose
(Reuters) – SolarEdge Technologies said it was not looking to cut prices for its solar inverters till the end of the year despite a dip in near-term demand from Europe, betting on cheaper panels to increase affordability for consumers.
Energy costs in Europe, the company’s largest market, have spiraled since Russia invaded Ukraine, leaving households with high electricity bills and straining power grids across the region.
This drove a sharp acceleration in installation of solar power units across the continent to avert an energy shortage.
But prices have since come down, thanks to members of the European Union pouring hundreds of billions of euros into tax cuts, handouts and subsidies to tackle the crisis and analysts feared that demand for renewable energy would take a hit.
However, a drop in prices of the most expensive part of a residential solar installation unit, solar panels, is proving to be a boon for consumers.
“Over the past 90 days – since mid-May – module prices have fallen by about 25%. This is the steepest decline, in such a short period of time, in more than a decade,” Raymond James analyst Pavel Molchanov said.
Solar companies are also betting on long-term demand for solar inverters in Europe, as solar power is particularly suited to cope with heat waves, which have become hotter and more frequent in the continent.
Demand for photovoltaic power systems in Germany, the largest solar market in Europe, is expected to grow at a double-digit rate this year, the BSW solar power association said in June.
“Right now we see us growing between 30% and 40% in Europe, depending on countries, and not by 50% to 60%, but it’s still a great underlying demand,” SolarEdge Chief Financial Officer Ronen Faier said.
However, the company faces immediate headwinds, forcing it to forecast downbeat current-quarter revenue.
High inventory levels in Europe, as well as a new metering policy in California – the largest U.S. solar market – have weighed on near-term outlook.
Faier said the company remains “cautiously optimistic” going into the fourth quarter but expects strong demand heading into 2024.
Interest rates in Europe still remain comparatively lower than the United States and that, coupled with higher electricity prices, make it more attractive for solar adoption, Faier said.
(Reporting by Sourasis Bose in Bengaluru; Editing by Maju Samuel)
