Tesla Partner SolarEdge Joins SunPower, SolarCity In Storage Game
Tesla Motors ( TSLA ) and SolarEdge ( SEDG ) entered the solar storage melee in December and expect to “sell thousands of units” in the first half of 2016, SolarEdge CEO Guy Sella told analysts Wednesday. Their StorEdge solution will join a bevy of products entering the nascent solar storage market. In August, SunPower ( SPWR ) and Sunverge Energy piloted an Australian residential storage project, and SolarCity ( SCTY ) has its own Tesla partnership for battery backup. (SolarCity’s chairman, Elon Musk, is CEO of Tesla.) SolarEdge stock brightened Thursday after the company late Wednesday guided Q3 above the consensus model and posted fiscal Q2 sales and earnings that beat Wall Street views. SolarEdge stock jumped 6.5% to 29.22 on the stock market today , after earlier touching a six-month high of 30.50. For its fiscal Q2 ended Dec. 31, SolarEdge reported 44 cents earnings per share ex items on $124.8 million in sales, up 267% and 70%, respectively, year over year. Both measures topped the consensus views. Current-quarter guidance for $121 million to $125 million in sales smashed Wall Street expectations for $117.3 million. Sales would be up 42% at the midpoint of guidance. Needham analyst Y. Edwin Mok raised his price target on SolarEdge stock to 38 from 34 and reiterated a buy rating. SolarEdge stock became a top pick for FBR analysts on Thursday. Solar Storage Faces Hurdles Near Term Industry watchdogs remain split on the feasibility of solar storage, which would allow some customers cut their utility ties completely by storing the excess energy generated rather than feeding it back into the grid. As it is, solar customers still need utility electricity at night and on cloudy days. In 2014, financial services company CohnReznick, technology firm Homer Energy and the Rocky Mountain Institute, a sustainability organization, called solar storage a “real, near and present” threat to traditional utilities. But on Wednesday, ProVision Solar President Marco Mangelsdorf told Green Tech Media, “It’s not happening now … and it’s not going to happen in the near term.” For SolarEdge, solar storage will drive growth in 2017, Mok predicts. But near-term, technical complexities have forced average sales prices above traditional inverters, he said. (Inverters convert the power in a solar panel into AC electricity.) “Total revenue from those initial shipments is likely very small relative to SolarEdge’s size,” he wrote in a research report. “Nevertheless, we believe there is a good level of market interest in this product and SolarEdge’s first-mover partnership with Tesla should ensure a good ramp-up throughout the year.” During fiscal Q2, SolarEdge saw 17% sequential growth in its U.S. sales, Mok estimated. International revenue fell 10% from the previous quarter, but that followed especially strong 31% growth in the September quarter, he said. Commercial sales outpaced overall growth and comprised about 25% of SolarEdge’s total Q2 revenue, Mok wrote. The segment will continue driving growth, he predicted. “While commercial comes with lower ASPs, it carries higher margins and greater volume potential,” he wrote.