SolarEdge shares tumbled this week after the company’s second-quarter results showed a hit to margins from factory closures, higher transport costs and currency headwinds from the weakening Euro.But SolarEdge CFO Ronen Faier said lower margins now is the price to be paid for long-term growth in a market where demand is skyrocketing. “We have demand that is far beyond anything that we could plan for, expect for, and even grow,” he told CNBC.SolarEdge reported record revenue of $727.8 million during the second quarter, slightly short of the $730.7 million analysts surveyed by StreetAccount were calling for.The company’s non-GAAP gross margin came in at 26.7% during the latest quarter, down from 33.9% in the same quarter during the prior year. For the current quarter, the company expects its gross margins to be between 26% and 29%. Shares tumbled 19% on Wednesday as investors reacted to the light guidance. The stock made back some ground on Thursday and Friday, but remains 10% lower on the week. Over the last month, however, the stock is up 17%.Faier noted that roughly 47% of the company’s revenue comes from Europe, meaning the company has quite a bit of exposure to the declining Euro. Additionally, a factory in China had to temporarily close during the country’s strict Covid lockdowns, stalling production at a time when supply chains are already tight. In an effort to fulfill orders in a timely fashion, SolarEdge ultimately chose to ship some goods via air, which is ten times more expensive than shipping by sea.The company’s executives saw it as a savvy long-term business decision. In addition to fostering customer loyalty by sticking to delivery schedules, it’s a way to maintain market share in an ultra-competitive market.”The market doesn’t live in a vacuum,” Faier said, describing it as a “battle about market share.” Europe: a key growth areaGrowth in Europe is a huge opportunity for solar companies as the bloc scrambles to move away from dependence on Russian energy. The European Union has laid out plans to rapidly expand renewable energy through its REPowerEU Plan. Germany alone is expected to triple its annual solar installation rate within two years, making the country larger than the U.S. market, according to Faier.As power prices in Europe surge to record levels, solar energy is also a way for consumers to lessen the inflationary burdens.”You want to be very strong in those markets that are poised for very nice growth in the future,” Faier said.SolarEdge is not the only company looking to seize on Europe’s energy crisis. Competitor Enphase saw its second-quarter revenue from Europe jump 69% quarter over quarter.Enphase CEO Badri Kothandaraman said he thinks the company’s international division will grow from 20% of the company’s revenue today to roughly 50% over the next few years, mainly due to European expansion.Getting into a customer’s house is especially important as solar companies — including SolarEdge and Enphase — look to offer more products. In a bid towards whole home electrification, getting that first product in the door can then mean the customer uses the same company for a backup battery system and an EV charger, for example. U.S. climate package: a catalyst for domestic production? Earnings season and the surprise announcement that Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.V., agreed on new climate funding has jolted solar stocks after a period of lackluster performance. The Invesco Solar ETF is up 16% over the last month, and now in the green for 2022.Faier said if passed, the package will bring some much-needed stability to the market. The bill proposes extending the Investment Tax Credit, which has been instrumental to the solar industry’s growth, for 10 years. The ITC was last extended in 2020, and was slated to begin stepping down at the end of this year. The proposed bill, called the Inflation Reduction Act, also seeks to spur domestic manufacturing. Faier said the incentives in the bill could make manufacturing in the U.S. economically worthwhile for the first time. The company currently has facilities in Mexico, China and elsewhereUltimately, he thinks the outlook looks favorable going forward as Europe’s energy crisis and surging power bills prompt consumers, businesses and utility companies to go solar. “We live in an era that is good for companies like us,” he said.