After hot rally, solar shares turn ice cold

Tue May 10, 2016 2:32pm EDT
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By Caroline Valetkevitch

NEW YORK (Reuters) - After their hot rally at the end of last year, shares of solar energy firms have turned ice cold as concerns about slower growth and regulatory uncertainties plague the group.

SolarCity SCTY.O led the sell-off on Tuesday after the company cut its 2016 forecast for solar panel installations late on Monday and posted a larger-than-expected quarterly loss. The stock, down 25 percent at $16.94, was on track for its worst decline in three months and is down 66.8 percent for the year.

Shares of Sunrun (RUN.O: Quote) lost 12.1 percent to $6.49 and are down 45 percent for the year. Vivint Solar (VSLR.N: Quote), which also announced a first-quarter loss after the bell on Monday, shed 4 percent to $2.38 on Tuesday and is down 75 percent since Dec. 31.

Investors have been worried about the outlook for growth for the solar sector, especially following a pullback in an important Nevada solar support policy and uncertainty about pending regulatory decisions in other states.

Nevada regulators this year announced changes that mean new tariffs that will raise fees solar customers pay to use electric grids. Reimbursements to users are also being cut and investors fear such moves could be repeated in other states.

"For the longer term, solar is still viable, but right now on Wall Street, no one has any confidence in the regulatory environment for the state level," said Robert Lutts, president and chief investment officer at Cabot Money Management in Salem, Massachusetts.

"Are we encouraging future solar growth, not only on the residential side but on the utility side? That's a question that nobody knows the answer to until we see more regulatory changes," said Lutts, who sold his solar shares last year.

SunEdison, once the fastest-growing U.S. renewable energy company, filed for bankruptcy protection last month after some debt-fueled acquisitions proved unsustainable.   Continued...

Lyndon Rive, SolarCity co-founder and CEO, speaks at SolarCity's Inside Energy Summit in Manhattan, New York October 2, 2015.  REUTERS/Rashid Umar Abbasi