Renewable energy stocks hit slump on higher interest rates
Shares of wind and solar companies continue their slide lower as interest rates stay higher for longer and rising costs stall new projects. Yahoo Finance’s Ines Ferre reports on oversupply and how this could impact energy stocks into 2024.
Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.
Video Transcript
AKIKO FUJITA: Renewable energy stocks continuing to get hammered this morning. The biggest manufacturers among wind turbines and solar panels. We're talking about Enphase, Sunrun, and SunPower, just to name a few, are at risk of facing some of its biggest financial challenges in years thanks to volatile costs and high interest rates.
So the question here is how and when will the sector see a long-term rebound? Yahoo Finance's Ines Ferre has the details. Do you have an answer for us, Ines?
INES FERRE: Not right now. But I do have some information about what's happening in the industry overall, and what we're seeing with these energy initiatives. Look, when we talk about energy initiatives, we're talking about-- with these renewable companies, we're talking about basically two categories here. We're looking at wind, and we're also looking at solar.
So let's first take a look at what's happening with wind, because there have been wind projects around the world and here in the US that have been going on. And those are facing some headwinds with those higher interest rates, Akiko, that you had mentioned, the higher cost of capital, inflation, supply issues in the industry as well.
And you don't have to look that far in the northeast. There's some wind-- offshore wind projects that have been initiated. And those are stalling. In fact, you had some governors recently sending a letter to the Biden administration asking for more clarification on tax credits from that Inflation Reduction Act that was passed last year, basically saying that they need more help to get these projects off the ground since they've been agreed upon because of higher costs, higher labor costs, supply issues, lags with permits, et cetera.
Then, we're talking also about solar energy. And in the solar energy, those companies that you mentioned, Akiko, being impacted by lagging demand because of these higher interest rates. So let's take a look at what's happening with the solar panel space.
Enphase, for example, reported its quarterly results recently. And they're the maker of microinverters. And those are attached to solar panels. So that stock is down, by the way, about 70% year-to-date. And the company talking about falling demand in Europe, and also falling demand in the US driven by California.
There's also happening-- something happening in the overall solar panel space. And that is that there's been a glut of solar panels. So you're seeing some record low margins for companies. It's very difficult for them to make a profit when the cost of those products is continuing to drop. And analysts are saying that panel prices are likely to continue to drop into 2023.
RACHELLE AKUFFO: Fascinating stuff there. We're looking at some of these green energy investments. Appreciate that breakdown. Our very own Ines Ferre.
