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Vivint Solar, one of the United States' leading residential solar installers, announced its first-quarter earnings this week, posting lackluster growth and a larger-than-expected net loss, causing the company's shares to tumble until investors took notice of California's new building regulations mandating solar on all new residential buildings from 2020 onwards.

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California’s New Solar Regulations Prop Up Vivint Solar’s Lackluster First Quarter

Vivint Solar, one of the United States’ leading residential solar installers, announced its first-quarter earnings this week, posting lackluster growth and a larger-than-expected net loss, causing the company’s shares to tumble until investors took notice of California’s new building regulations mandating solar on all new residential buildings from 2020 onwards.

Vivint Solar, one of the United States’ leading residential solar installers, announced its first-quarter earnings this week, posting lackluster growth and a larger-than-expected net loss, causing the company’s shares to tumble until investors took notice of California’s new building regulations mandating solar on all new residential buildings from 2020 onwards.

The first three months of 2018 were a mixed bag for Vivint Solar, which insists it is prioritizing higher profits over large capacity expansions. The company installed 40 megawatts (MW) worth of residential solar in the first quarter across 5,813 installations, hitting its previous guidance exactly, but down on the 46 MW installed in the first quarter of 2017 and the 45 MW installed in the fourth quarter of 2017. Vivint Solar also took in bookings worth approximately 52 MW, the same as Q1’17 but down on the 55 MW from Q4’17.

Cost per Watt for installations in the first quarter was $3.15, an increase from the $2.98 it posted in the first quarter of 2017 and the $2.95 it recorded in the fourth quarter.

Total revenue for the quarter was $68.3 million, well up on the $53.1 million taken in during the first quarter of 2017, but only marginally up on the $66.8 million taken in during the fourth quarter. The company also posted a larger-than-expected net loss for the quarter of $13 million, compared to a profit of $13 million in the first quarter of 2017 and a stunning 107% decrease from the $183.9 million recorded in the fourth quarter of 2017.

Despite all this, the company executives expressed enthusiasm for the current position and future of the company. Speaking on the company’s earnings call, Vivint Solar’s Chief Executive Officer David Bywater said, “The first quarter came in as we expected at a bit over 40 megawatts installed, consistent with our guidance. We are continuing to see momentum building in the business, and we’re excited about the second quarter and the remainder of the year. I feel the enthusiasm within Vivint Solar is at an all-time high since I have been the CEO.”

Despite executive confidence, however, investors were less impressed, and Vivint Solar’s shares tumbled 10% the moment trading opened and wandered untethered for a few hours before confidence was restored in the wake of a decision made by the California Energy Commission (CEC) to mandate solar PV installations on all new residential buildings starting in 2020.

The news was not a surprise, with multiple reports leading up to the Wednesday Commission meeting predicting that the CEC would approve the modifications to the Golden State’s 2019 Building Energy Efficiency Standards voted unanimously on Wednesday which would require all new residential buildings to install solar panels or to connect to a community solar project. And, as predicted, the Commission voted to approve the modifications, which also include energy storage and energy efficiency requirements and encouragement.

“This is an undeniably historic decision for the state and the US California has long been our nation’s biggest solar champion, and its mass adoption of solar has generated huge economic and environmental benefits, including bringing tens of billions of dollars of investment into the state,” said Abigail Ross Hopper, SEIA’s president and CEO in response to the news. “Now, California is taking bold leadership again, recognizing that solar should be as commonplace as the front door that welcomes you home.”

Vivint Solar also praised the efforts, congratulating “the state of California for building the foundation to adopt a forward-thinking approach to its renewable energy initiatives.”

“After a unanimous vote, we believe this will be a great first step that all homeowners should support. Helping homes produce clean energy and utilizing smart home products is a win for consumers’ wallets, local air quality and a greener world. Vivint Solar applauds the decision from the California Energy Commission to move forward and will continue to provide solar PV and home batteries to California residents. California has demonstrated its commitment to building a clean energy-powered future, and we hope its leadership inspires other states to follow suit.”

In the wake of the CEC announcement, Vivint Solar’s share price returned to traditional levels, but it is likely a wake-up call for the company that will shake a few nerves.

 

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