Hanwha Solutions Expected to Benefit from Growth in U.S. Residential Solar Market

There are rising expectations that the U.S. residential solar market will return to a growth trajectory starting this year, and Hanwha Solutions, which has the capability to produce its own solar modules, is anticipated to benefit from this market improvement. In particular, the residential solar lease business (TPO) is expected to establish itself as a model that generates stable cash flow.

According to industry sources on the 8th, the U.S. residential solar market is projected to grow by 14% this year compared to the previous year. A key factor driving this growth is the expansion of the residential solar lease business (TPO). TPO involves corporations directly installing decentralized solar systems for homes without the upfront cost to consumers, while taking advantage of investment tax credits (ITC) and bonus incentives.

Hanwha Solutions is focusing on the U.S. residential solar energy business as a new growth engine. After launching the TPO product last year, the company’s U.S. subsidiary, Enfin, has signed over 10,000 contracts in six states. Consumers can use solar equipment without the initial installation costs, while Hanwha Solutions generates long-term revenue from electricity sales.

While U.S. residential solar market revenue fell by 19% last year, this is seen as a temporary phenomenon. It is believed that external factors, such as the bankruptcies of major U.S. installers like SunPower and lower-than-expected interest rate cuts, played a role. However, the growth of the residential solar lease business and the ITC tax credits are expected to accelerate the widespread adoption of residential solar systems.

Some industry observers argue that while the U.S. residential market is recovering, the TPO business is still in the stage of building its foundation, meaning its immediate profitability may be unclear. Nonetheless, considering the market structure shift and the growing share of residential solar, many in the industry believe that Hanwha Solutions is likely to benefit in the medium to long term. Hanwha Q Cells, a subsidiary of Hanwha Solutions, has maintained the number one market share in the U.S. residential solar market since 2020, and is expected to have significant growth potential moving forward.

Moreover, with the recent surge in home electricity bills due to inflation in the U.S., demand for residential solar systems is expected to rise further.

In addition, Hanwha Solutions saw a year-on-year increase in both revenue and operating profit for the renewable energy sector, posting KRW 1.5992 trillion in sales and KRW 136.2 billion in operating profit for the first quarter. The U.S. residential energy business has played a key role in improving profitability.

Expectations are also high for the operation of new U.S. factories later this year. Once the Hanwha Solutions Gasturbine plant is completed, the company is expected to strengthen its competitiveness through vertical integration in the solar business. As the U.S. continues to tighten its stance on China, the "manufacturing vertical integration" approach is expected to enhance the credibility of Hanwha Solutions and increase preference for its products.

An industry official commented, "TPO is significant because it has transformed the solar module business into a subscription-based model. Previously, solar companies generated revenue through one-time installations, leading to significant fluctuations in income. Through this business, Hanwha Solutions can now establish a stable income base."

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