Troubled Times For US Solar PV Industry?

• Enphase Energy will be laying off about 10% of its global workforce in an effort to streamline its operations 
• It will cease to operate contract manufacturing facilities in Romania and US' Wisconsin 
• Equipment from these 2 sites will be redeployed at its US facilities in South Carolina and Texas 
• Another US solar company SunPower has also cautioned that it may not be able to continue to stay in business after breaching lending agreement 

One of the largest solar PV markets globally, the US seems to be going through a rough phase as microinverter manufacturer Enphase Energy has announced plans to lay off 10% of its global workforce. Residential solar installer SunPower Corporation has also cast doubts on its ability to be a going concern. 

In a letter to its employees, Enphase President and CEO Badri Kothandaraman shared that the exercise will impact close to 350 contractors and employees. The plan is to cease contract manufacturing operations in Romania's Timisoara and US' Wisconsin. It will undertake resizing other contract manufacturing sites as well to streamline operations. 

It will bring down the company's total global manufacturing capacity to approximately 7.25 million units/quarter, from the current 10 million units/quarter. Production equipment used in Timisoara and Wisconsin will be redeployed at its 2 existing contract manufacturing partners in South Carolina and Texas in the US. Both of these will then account for a capacity of 5 million units/quarter. 

Kothandaraman blamed turbulence in the global solar market over the last 12 months for the decision to cut costs, especially mentioning high interest rates bringing down consumer demand in the US. Additionally, the uncertainty related to California's NEM 3.0 transition is also cited as a reason. 

"We saw tremendous growth in Europe until the middle of 2023, when demand slowed, and interest rates led to high inventory levels. These challenges have caused our topline revenue to decrease," added Kothandaraman. "In response, we must right-size the company and get our non-GAAP operating expenses to be within a range of $75 million to $80 million per quarter in 2024. We expect these changes to allow us to get our non-GAAP operating expenses closer to our financial operating model."  

The company exited Q3/2023 with a 22% YoY drop in revenues, citing net metering in California and high inventory in Europe as the major factors (see Enphase Energy's Q3/2023 Revenues Impacted). 

Enphase's strategy in 2024 will be to clear excess inventory worldwide while pinning its hopes on the US Federal Reserve lowering interest rates next year. 

SunPower, on the other hand, said it has substantial doubts about its ability to continue as a going concern after breaching a credit agreement. In a regulatory filing, it warned that lenders may demand immediate payment of $65.3 million. It is in talks with the lenders for a waiver, which may or may not be obtained. 

Now a law firm called Bragar Eagel & Squire (BES) has issued a statement for SunPower investors announcing a class action lawsuit against the solar installer in the District Court for the Northern District of California. 

For the uninitiated, SunPower's troubles started ever since it announced plans to restate financial statements for FY 2022, Q1/2023 and Q2/2023 after finding the value of consignment inventory of microinverter components to have been overstated. Following this, it received a notice from the Nasdaq (see North America Solar PV News Snippets).  

For SunPower, Q3/2023 was the 2nd consecutive quarter of net loss for which it blamed lower consumer demand and high interest rates (see US Residential Solar Company Lowers 2023 Annual Forecast).