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Collapse of Titan Solar Power Highlights Challenges in U.S. Residential Solar Market

published: 2024-06-19 18:00

Another Leading Company in the U.S. Residential Solar Market Goes Bankrupt.

On June 18, according to foreign media reports, U.S. residential solar installer Titan Solar Power recently sent an email to its employees, informing them that the company failed to sell its equity and will permanently shut down.

According to public information, Titan Solar Power was founded in Arizona in 2013 and is one of the largest residential solar installers in the U.S. In 2023, Titan ranked sixth in the U.S. residential photovoltaic market.

In fact, as early as six months ago, Titan began negotiating with an anonymous buyer to sell its residential photovoltaic business. These negotiations were announced to have failed on June 11.

As a veteran U.S. residential solar company operating for 11 years, its closure reflects issues both with its business model and the impact of the Federal Reserve's interest rate hikes.

According to an analysis by U.S. residential solar insurance provider Solar Insure, Titan's problem lies in its over-reliance on third-party dealers for sales, while it focused solely on residential photovoltaic installations. This resulted in communication difficulties with customers and widely varying customer service experiences. Consequently, Titan accumulated a large number of negative reviews and legal disputes, dragging down its business operations and growth.

Another reason is the impact of inflation in the U.S. Since last year, the Federal Reserve has frequently raised interest rates to combat inflation, increasing borrowing costs and inadvertently affecting the U.S. residential photovoltaic market. This is because the U.S. residential market often relies on loans to reduce customers' initial investments. The Fed's frequent rate hikes have led to higher loan interest rates, raising the investment costs for residential photovoltaics and reducing their appeal.

Furthermore, the higher interest rate environment has increased the capital costs for installers and raised the risks of solar loan plans, tightening operating cash flows. Policy changes in major markets like California have exacerbated this difficult financial environment, as California's transition to Net Energy Metering (NEM) 3.0 has reduced solar export compensation rates.

The Fed's rate hikes have impacted not only Titan but the entire U.S. residential solar market. According to Roth Capital Partners, over 100 residential solar companies and dealers went bankrupt in 2023 alone, six times the total in the previous three years. Roth expects more than 100 additional companies to face bankruptcy.

Besides Titan, leading companies in the U.S. residential solar market, including Sun run, SunPower, and Sunnova, are also facing similar difficulties. Since their peak stock prices in 2021, the stock prices of these three leading companies have continuously declined for nearly three years, dropping by 87.41%, 95.34%, and 91.25%, respectively. Their market values have shrunk by 79.81%, 94.90%, and 88.43%, respectively.

Although President Biden is taking measures to subsidize the U.S. solar market through the Inflation Reduction Act, the domestic production capacity has not yet ramped up. Under the recent new tariff regulations on Chinese photovoltaic products, the U.S. residential market may still face pressure in the near term.


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