Enough Infra Talk. It seems like the one topic that should be bipartisan is getting stuck in the hamster wheel. The problem with big bills that have little price tags is that nobody really gets what they want and they become hard to fight for. Interestingly, it’s the politics of the two infrastructure bills that will either pass both or perhaps tank both. Even the manufacturing tax credit got left out of the bipartisan bill. Schumer’s threat to cancel the August recess seems to have folks’ attention however, we’ve got an Obama birthday party to attend!
Local Manufacturing. One of the best operating roles I had in my career was running a company with domestic manufacturing. Not only did I have the exposure to US manufacturing in clean tech but it was also domestic manufacturing in California. Domestic manufacturing has massive benefits for businesses except for the labor cost. That’s why the best way to drive up US manufacturing is to turn the payroll expense from a deduction to either a credit or multiply the deduction by 3x or 4x. If you want more of something in America, incentivize it with the tax code, that’s why we have one-year depreciation on private jets!
Let’s Be Optimistic. Over the past 20 years the amount of capital that has come into renewables has skyrocketed but the chart that shows the total dollars only tells a tiny story. Pre-2010, so much of the money was going into projects in a few Countries at ridiculously high unit prices and stunning venture capital investments into thin films or other breakthrough tech. The reality is that the $150bb plus that were deployed last year represent over a trillion in unit adjusted deployment compared to a decade ago. Here’s the kicker, there is no limit to how much money would invest in this sector, available capital is endless. It’s the pipeline of available projects that is capped by incumbents slowing development and more importantly the limit to how many development platforms that can reliably deploy that limitless capital. Finding and making the project investable is the gating item to deploy money, having the money is the commodity. Time to pay up fund managers!
Flexible Transmission Assets. Transmission upgrades are now more than wires and substations. One of the uses in the first infrastructure bill is to make the grid more ready for renewables and that includes transmission and distribution level energy storage. Adding the flexible power to the substation should significantly raise the amount of variable generation that a substation can manage. How to drive that investment or send a price signal for that investment is the key question I have now.
SPI Ready. Louisiana, site of SPI in 7 weeks, has one of the lowest vaccination rates in the Country and has now reinstitute their mask mandate. We’re back to the what if questions about SPI from where we were last year but it still seems like everyone is ready to get rolling in NOLA.
- Energy Storage News: US bipartisan infrastructure bill supports energy storage although ITC excluded
- Vox: One policy that could challenge a century of fossil-fuel dominance
- Canary Media: Here’s how we can build clean power infrastructure at huge scale and breakneck speed
- Axios: The glass is barely half full on clean energy capital
- Reuters: Democrats aim to boost solar roof tiles in U.S. budget bill
- PV-Tech: Companies petition US trade commission to extend tariffs despite industry warnings
- PV-Magazine: Invenergy boosts battery energy storage component in Wisconsin solar project
Opinion
Best, Yann