The Grid Needs. Let’s keep it simple, in order to accelerate the deployment of capital we need: improved interconnection process, faster permitting and more price signals.
Interconnections. No deal can get to ready to build and certainly not to notice to proceed without access to the grid connection. This isn’t a simple process to fix but removing the complexity with a bunch of baby steps would come a long way.
Permitting. I’m not advocating for today’s story from Germany but too much home rule may be a problem. Land owners want to monetize their land but being stopped to do so by third parties that slow the development of solar farms. Solar farms don’t impact the neighbourhood with traffic nor change the vista, instead they create new tax revenues and jobs. Permitting and zoning for solar farms ends up being just as important as interconnections but far more arbitrary.
Price Signals. If project cost X, the revenue must be X + Y in order to make an investable return. The higher that the certainty on Y is, the lower the return has to be in order to get an investment committees approval. Solar development has to negotiate decades long revenue certainty in order to get past this step, which isn’t easy while storage is often left working on merchant revenue streams that weren’t really signaled for storage specific reasons. Power markets could create a solar plus storage rate price signal that would drive faster paths to construction for one example or could create storage specific price signals for faster deployment as well.
Managing Installer Cash Flow. Interest rates are the highest in 22 years, increasing solar financing costs and softening consumer demand for loan products. Businesses are feeling the pain of strained cash flows, labor costs and profitability pressures. Palmetto, a B2B technology company accelerating the adoption of clean energy, has announced a new partnership offering for solar installers to help stabilize cash flows and grow faster in today’s market. Built on top of Palmetto’s Clean Energy Operating Platform, this is a comprehensive suite of tools and services enabling installers to streamline operations, optimize performance, and increase profitability. Visit https://www.palmetto.com/finance or contact capital@palmetto.com for more.
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Opinion
Best, Yann