In this note, we are updating our monthly residential solar permit data. In total, June rooftop permits declined compared to May for the first time since 2020 and landed down 15% y/y. July has started off even worse, with the July 4 week down 20% compared to the same week a year ago. The next few weeks are pivotal, in our view, as we get into the peak solar season with a cleaner perspective of California data (bulk of old NEM 2.0 permits have been largely flushed).


June permits very soft
As we wrote here, residential solar permits started taking a hard turn down a few weeks ago. Through the rest of June, permits continued to get worse, with full month permits down 15% compared to June 2022 (vs May that was up 20% y/y and Q1’23 up 30% y/y). This is especially disappointing considering that June is historically one of the best months, for residential solar permits.


Last week got even worse.
So far, July has not been any better with permits falling to down 20% y/y last week (both years included July 4 holiday). In fact, last week was the lowest for permits since early January, which is historically the worst week of the year.

California still bleeding lower…
Since the April 14th NEM switch, California permit filings have dropped by more than 60% and have average down 25% y/y for the last 4 weeks. As a reminder, despite the April 14 deadline many companies had continued to file NEM 2.0 permits with local jurisdictions during May and June as long as an interconnection application had been filed with the utility. Based on review of these filings, we believe a lot of the NEM 2.0 backlog has been cleared and go forward data is likely more reflective of NEM 3.0 (Net Billing Tarriff) activity.

… and ex-California also very weak
In non-California areas, many markets have also continued to deteriorate in recent weeks. The Texas is the weakest according to our data, but also seeing weakness across the southeast and Midwest. In total, non-California was down -15% y/y in June and fell to -20% y/y last week.

Next few weeks pivotal
The next few weeks will be the cleanest look we have had yet for U.S. residential solar. July is typically peak permit and installation time, California data has mostly flushed through NEM 2.0 permits, and non-California areas have digested the impact of higher interest rates. In our model, we are assuming the next few weeks get better than last week, but still land down 15% y/y for Q3’23E.

If July doesn’t bounce, 2023 estimates need to go lower, AGAIN
If July remains down 20% y/y, we would likely be revising down our full year and 2024 estimates, again. Our current model assumes H2’23E permits are down 15% y/y and 2023E installations are up 5% y/y (H1’23 permits were up 20%y/y).



RS-1: Weekly Permits
RS-2: Monthly Data

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