California’s solar proposal could cut residential market in half – WoodMac (NYSEARCA:TAN)

California’s residential solar market could be cut in half by 2024 if state regulators proceed with a proposal that would cut incentives and add fees for rooftop systems, according to a new analysis from Wood Mackenzie.

The proposed changes to California’s net energy metering tariffs, released last month, would more than double the payback periods for home solar to more than 10 years, which the Wood Mackenzie report says would make residential customers less likely to invest in solar systems and installers less motivated to sell them.

“Our analysis for the two largest utilities, PG&E (NYSE:PCG) and Southern California Edison (NYSE:EIX), reveals payback periods for typical residential solar projects built this year will increase from 5-6 years under current net metering to 14-15 years, depending on the utility,” report co-author Bryan White said.

Solar advocates have held rallies and launched a new ad campaign to oppose the proposed reforms, while California’s top investor-owned utilities including PG&E and SoCal Edison have been lobbying in support of the changes.

Potentially relevant tickers could include SPWR, FSLR, ENPH, SEDG, RUN, CSIQ, JKS, NOVA, MAXN, TAN. ICLN, ACES

As solar stocks have been burned by a range of problems including California’s potential subsidy cut for homeowners’ solar systems, the Invesco Solar ETF suffered $417M of outflows in December, the worst month in its 14-year history.