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Solar shares sell off after SolarCity forecast

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

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) lost 12.1 percent to $6.49 and are down 45 percent for the year. Vivint Solar (VSLR.N), 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.

Solar shares were among Wall Street's darlings in previous years, with some companies posting triple-digit annual gains.

Just last December, solar shares rallied after federal lawmakers reached a deal to extend investment tax credits beyond 2016.

The Guggenheim Solar Invest exchange-traded fund (TAN.P) was down just 1.6 percent in early afternoon trading on Tuesday but appeared to be resuming its bear trend, down 56 percent from its early 2015 peak. SolarCity is its largest holding.

At least six brokerages cut their price targets on SolarCity following the company's results.


(Reporting by Caroline Valetkevitch; additional reporting by Terence Gabriel; Editing by Dan Grebler)

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