Is Enphase (ENPH) too dependent on loans?

Forgive me if this has been mentioned, but I don’t see another ENPH thread of recent date.

I have been building a position in this stock for a while, partly because I believe the generous tax credits would create a lot of demand over the next few years.

I am now starting to question my thesis based on a couple things. First, I looked into panels a year or so ago for my house here in Florida. The good news is, most companies I got estimates from used Enphase and not Solaredge. The cold reality is that even with the credits these are very expensive. So what they is try to get you into a low interest rate loan so that the monthly cost is below the amount they predict you will save on your electric bill. When you examine the paperwork, you see that the 1% loan is possible because you are buying down the rate. It is shocking to see an extra $25-$30k added to your price, all to be paid off later. Also, the first 18 months are a teaser rate, and if you don’t use your credit to pay down the loan, the monthly rate will jump on month 19.

I really wanted to pay cash, but my retirement funds had taken a big hit at the time. :wink:

The point is, Enphase and solar panels are highly reliant on people taking out affordable loans. So with interest rates higher the interest rate buy-down is going to be a bigger chunk, and/or the monthly payment will go up. This could really reduce the number of people willing to install solar over the next year or two. There is certainly no hurry at this point and I am not sure it will be a fast grower for this board.

A couple days ago Cramer confirmed Enphase was now highly dependent on loans and was not a good company to own at this time.

I would love for someone to change my mind. Thanks

FYI, FPL just lowered its rates because the cost of fuel has come down. This makes solar panels a little less desirable down here (the salesmen always say that electric rates ALWAYS go up).



Hi Pete,

Please excuse me not being able to answer your question, but I would like to chime in here, because I made similar experiences a couple of months back. I live in Germany and the government is subsidizing the installation of solar panels massively. At least, that was what I was thinking…

I got an estimate from ENPH, because I own the stock, and was disenchanted. Not with the product and the sales experience, but with the quote. Including the heavy subsidies from the government, it would take 16 yrs for amortization. The ROI would be a measly 3-4% p.a. The ROI is not considering a loan, as I wanted to pay cash, but with this ROI the opportunity costs are way too high. Ok, ok, I’m not considering the added value of helping the environment and raising my green footprint, but anyway…

So I pushed that decision out and although I do still hold my ENPH stocks, I’m less convinced in ENPH.

Paying 44k USD for 12 kWp incl. a battery with 10,5 kWh with an amortization of 16 yrs just don’t make sense for me.

I know, it’s just me. But I started wondering, who else might push investing into solar panels out?




Thanks for raising this issue. I raised some adjacent/similar issues previously

Some items in my post that intersect with yours are:

  • Installers (having to figure) out how to adjust their deal parameters to accommodate higher interest rates; specifically by charging lower Installer fees and compensating with higher APR on loans.
  • (…And also as you’ve noted, offering 1% loans which in fact are rate-buydown loans and teaser rates that can jump much higher, which IMO are a little less than…savory)
  • The CEO (Badri) seemed frustrated at the friction in the sales process
  • $ENPH (…it seems to me) is…scrambling…to basically prop up Installers’ Sales processes

I was concerned at the time that evidence was emerging of weaker demand, and your post adds to my concern. Would they have to rely on these compensating tactics if demand were strong in the first place?

Here’s some more evidence of overall weaker demand for solar:

I really like what $ENPH is doing, but we have to be careful to separate that out when assessing as an Investment.

Overall it looks to me like sales are going to be flat in the U.S. for a quarter or two, maybe longer. And therefore for growth they are reliant on Europe; fortunately, sales in Europe are accelerating nicely.

I’m not ready to conclude yet that the long term story has changed.

…then again, on this board, aren’t we more interested in companies that are putting up strong growth NOW vs. companies that MIGHT return to strong growth in a few quarters?


I believe that has a lot to do with the war in Ukraine. An EV youtuber I follow said his solar system (no battery) ROI went from 8.5 years to less than 4 because of the energy rate hikes.


I got my system in the summer of 2021 when Fed interest rates were still near 0%. I received a loan from the Clean Energy Credit Union for 12 years at 5.25% for my system. Out of curiosity, I checked the rates today and it looks like they’re at 7.5% for a new system (Rates & Fees - Clean Energy CU).

My current monthly payment is $211/month, which would bump up to $237/month at the new rate, for an increase of ~$26/month (~12% more). I haven’t been tracking my utility costs closely because they’re basically nothing with the solar system, but I imagine they’ve gone up by more than 12% since 2021 when I got my system installed, which means the ROI would be about the same today as it was in 2021 if you assume a similar future electricity inflation.

Whether the ROI makes sense for a given customer is obviously more complex based on roof sun exposure, electricity usage, utility rates, net metering laws in the state, etc., but the higher interest rates wouldn’t be a deal-breaker for me if I was shopping today.

That being said, I wouldn’t be surprised to see interest rates dragging ENPH a bit in the short term just because systems are more expensive overall. From an investment perspective, ENPH valuation has come down quite a bit to hopefully account for some of these short-term risks, and the long-term outlook is still bright IMO.