The ups and downs of solar stocks continued this week, with shares falling sharply on Tuesday, rising on Wednesday, and trading wildly Thursday and Friday. Amid the market turmoil, there was once again notable progress in the solar industry's development. Here are the items investors should know about this week.
World's largest battery
If current plans hold, AES Corp. (NYSE:AES) will build the world's largest energy storage system for the Los Angeles market by 2021. The 400 MWh battery will replace natural-gas-burning plants that are expensive and used for supplemental electricity during peak summer hours (also known as peaker plants).
This is the biggest endorsement and test for battery storage and could be a blueprint for how to build systems in the future. One of the best economic cases for energy storage today is replacing rarely used peaker plants and adding value to smooth out demand in off-peak times of the year. This plant is still five years away, but it could be a sign that energy storage is reaching a level of maturity renewable energy advocates have been hoping for.
Home energy storage is getting a lot cheaper
You've probably heard about Tesla Motors' (NASDAQ:TSLA) Powerwall, but it could be Sonnen's energy storage systems you'll want to keep an eye on instead. The company announced a 40% price reduction in its integrated energy storage system. Affordability could help increase installations in the U.S. and around the world. For $5,950, plus installation, customers will get a 4 kWh energy storage system with an inverter, control system, and a warranty for 10,000 cycles. The system is expandable to 16 kWh as well.
I recently wrote that commercial energy storage company Stem has seen battery costs fall 70% in the past 18 months. Those cost decreases are helping Sonnen as well, and could help drive home energy storage into the mainstream.
Does SolarCity need a reboot?
One of the notable analyses this week came from David Crane, the former CEO of utility NRG Energy. He wrote about SolarCity's (NASDAQ:SCTY.DL) challenges that may have led to Tesla Motors' acquisition offer (see the full article here).
Crane argued that SolarCity needs a "reboot" to transition away from leases and door-to-door sales to a more sustainable business model. He called $0-down solar financing the "crack cocaine of home solar companies that still depend upon it."
Crane's words may seem harsh, but they echo a lot of the criticisms I've made about SolarCity in the past (see here, here, and here). To adjust to the trend in residential solar away from leases and toward local installers, SolarCity needs to transition its business model rapidly to stay alive. Perhaps the best way to do that is under the Tesla Motors umbrella. But if that's the case, Tesla Motors shareholders should wonder why they're footing the bill for the reboot when there are problems and capital needs on the car-manufacturing side. In any event, a former industry executive's point of view is worth considering, whether you love or hate SolarCity.
SunPower wins French tender
The final notable development this week was SunPower (NASDAQ:SPWR) winning 27 out of 33 awards in a French tender for the country's non-interconnected zones for a total of 20.7 MW of solar plus 18.4 MW of solar and energy storage. The projects will be built by mid-2019 in Corsica and the French West Indies.
SunPower has been aggressive in winning bids to build solar projects in Mexico and Chile, and now France, which is a sign that it might become highly competitive in establishing a diverse project pipeline. Since investors are worried that 2017 will be a down year, they should be encouraged that the company is signing projects to fill demand in 2018 and 2019, which could lead to a lot of growth by the end of the decade.