This is your SolarWakeup for December 7th, 2023

Modeling Demand Increase. LCOE has been solar’s favorite metric ever since it was the lowest of all LCOEs but let’s talk about it amongst our echo chamber. The solar LCOE is ignored because, like it or not, it’s also the LCOE with the least amount of leverage. And when I say least, I mean zero. Let me explain. The marginal cost of solar product is essentially zero. It’s the first kWh that costs all of the capex and related return expectation but after you’ve made the installation and turned the site on, all you have is the contract that buys your energy. That doesn’t mean that the production is worthless, we’re just in a crappy negotiating position in case the counterparty wants to hose you. On top of that, solar farms can’t provide the kind of grid services that sometimes get more revenue than the generation itself. Sometimes buying negative rate energy is more valuable than the 3 cent PPA. But that’s all about to change with the massive expansion of storage. Solar doesn’t just get to produce energy, it gets to control energy delivery and even absorb excess production when the pricing signals say it makes financial sense. So let’s look at the global market LCOEs and you’ll find that solar plus storage and a grid with a lot of solar and storage will have a stable and low cost of energy environment for consumers.

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.

Opinion

Best, Yann