This is your SolarWakeup for March 11th, 2020
Don’t Forget The Survey. One more day to get your survey response in, it takes 3 minutes and helps the entire industry. Here is the link
Solar Power Power. DC is going to pass a stimulus bill in the coming weeks to deal with the economic effects of corona and the oil price wars. Focusing on the second one, oil producers across the US will either stop production or lose money with the low oil price that’s now in the market. The White House is floating and the Senate will try to push into the stimulus bill a bailout or tax credit for oil companies. This is going to be the moment of truth for solar advocates in DC, does solar have any political influence that translates into results? The analysis of that question will be black and white, either the ITC returns and gets extended or solar is left out of the bill. There will be a bill and the answer will be yes or no when it comes to solar.
The Network Effect. The dealer network is a new battleground in residential solar. Module OEMs and financing companies are battling for the primary value creator for solar installers across the Country. At the same time, those that should have a bigger dealer network are underestimating the value that they can provide and in return receive from the dealers.
The Battle Is On. The original dealer network came from SunPower, so powerful that the company’s partners rebranded to SunPower by. Loan companies followed suit, Mosaic taking the lead and Sunnova quickly joining the network creation which made sense given the financial relationship that exists between the installer, homeowner and loan provider. Module OEMs have a network of platinum or elite installers but the relationship is a bit looser at this point, but don’t sleep on this.
Control Of Sales Levers. Yesterday after market close, Vivint Solar released their fourth quarter earnings and held their conference call. The quote of the call was “we like the control of sales” referring to the company’s direct to consumer sales force that allows the company to decide where and how to sell solar. While Vivint believes that they can grow faster, they don’t want to grow for growth’s sake and keep their focus on markets where they can make money and grow faster than the rest of the market calling out MA, NJ and CA. How do you control your sales levers?
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Yann
This is your SolarWakeup for March 10th, 2020
The Market Survey (Click Here). This is your opportunity to participate in a community survey about the current state of solar. While many of us came into Q1 with great anticipation for a record 2020, there have been a few curveballs thrown at us including a global public health crisis that will likely impact us personally in many ways. At the same time we are left with many questions and few answers on what to do. My hope is that we share our individual viewpoints and try to find the best way to move forward. Please share openly so that your industry colleagues can learn and collaborate. Your answers are confidential. Results of the survey will be shared as early as Friday if enough people respond right away, time is of the essence so please take 5 minutes now.
Climate Change Blinders. One of the feelings I’ve been having about coronavirus is that I just want to fast forward and come out with the best possible outcome on the other end. In some ways it reminds me of hurricane preparation, should you put up shutters, buy food and water for two weeks, get a generator, evacuate; and when you are finished with the preparations the hurricane turns and goes another way. With corona it has a similar feeling because what type of preparation should you do, especially when you don’t understand why there is no rice left on the grocery store shelves. Climate change has the opposite problem, we know what to do and what the catastrophic results of inaction could be but we don’t have the ability to grasp the scale of our needed action. The political and personal willpower doesn’t exist today because we assume that the catastrophe is beyond our time span of discretion.
Innovation Among Us. Much like the solar roads project, I like when companies push the envelope into a contrarian perspective. GAF Energy has a thesis that solar will be installed in a BIPV method at the same time as the new roof so that the roofer sells both systems at the same time at a much smaller acquisition cost than solar has today. As an executive in the racking industry, this obviously pushes my thinking in a way that is uncomfortable today. That being said, this is clearly a 20 year transition from one to the other that will get us all to innovate together.
The ISO-NE Queue. 95% of the 21GW in the ISO-NE queue are wind, solar and battery projects. From a grid operation standpoint, it would be crucial to move projects to NTP even if that means putting an operating date out into the future. Developers need time and resources to start construction and ISO-NE needs to get itself acquainted with the process. From my standpoint I would love to see a process that lets developers future bid NTP dates, how great would it be to see a solar plus 8 hours of storage offer (with collateral) for a 2026 placed in service date?
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Yann
This is your SolarWakeup for March 9th, 2020
Covering Corona. I am as much in the dark about what is to come or what to do in our business when it comes to dealing with the coronavirus. There is a humanitarian aspect to the spread of the virus that is best covered by others. My hope is that I can bring together the wisdom of the crowd. This week, I will circulate a survey and ask you to participate so that we can learn from each other about what we are doing as an industry. I hope to learn from you about what you’re seeing in consumer behavior and how you are preparing. More to come.
Oil Wars. The headlines are busy this weekend, stock market futures have triggered a stop to stop a free fall ahead of the open and oil is trading down almost 40% from Friday morning’s price. While global uncertainty is driving people into their corners, OPEC and Russia have a disagreement that caused the Saudis to increase production and lower global pricing. Maybe it’s time to charge our cars with solar instead.
The Good News. Virginia is joining the yearlong stampede to 100% policies enacted by States around the Country. Some estimates have the impact at an increase of more than 50GW of solar nationally. That means that the policies pushed by groups at the State level, led by local installers and pushed by homeowners that went solar are now helping the entire solar industry. I’ll restate this, grassroots solar supporters have pushed more solar in the US in the past year than ever before. This isn’t a statement about us versus them or me versus you. It’s a statement meant to create clarity for those that investment into DG or grassroots is a waste. Reality is that $1 into either of those segments creates 100X the impact than another report into the tariff impact.
Looking Ahead. This week we will get the earnings report from Vivint Solar that gives us the comparison between them, Sunrun and Sunnova and a great look into the residential solar market. Not a great week to have an earnings update but the data is from Q4 which will put a bow on the great 2019. I’m looking to hear whether Vivint Solar says anything about a dealer network, more thoughts on this topic soon.
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Yann
This is your SolarWakeup for March 6th, 2020
DC Is Watching. Folks in the White House and those trying to get into 1600 Penn read the same articles then we are. In this case, it’s the impact of climate change on the upcoming election from the perspective of the leaders at Axios. Agree or disagree with the opinion, know what the insiders are thinking.
A Missed Opportunity. Without many of your realizing, a major energy bill is gaining traction with the potential of passage. Senators Murkowski and Manchin brought together several dozen policy proposals that had bipartisan support and got that bill to be debated on the senate floor. Senator Wyden told attendees at an ACORE event that including tax credit extensions is highly unlikely. This means that less than a year after solar touted major inroads with republicans, it has no ability to get support on a bipartisan basis which means the ITC loss talking point is just that, a talking point. It also means that it is time to change tactics, because the methods of the past aren’t working. Second, the house could still scuttle the bill altogether by demanding inclusion of tax credits and building codes as a must have. While it kills some energy policies that are interesting, once those bills get passed it eliminates this vehicle in the future. If you are so inclined, call your member of Congress and have your voice heard.
Contactor Data. Solar installers now have a way to get themselves better data for their business while seeing how they compare to their local competition. Ohm Analytics tracks solar installations through permit data and recently released a contractor portal where you can sign up for free. Contractors provide confirmation of their data in return get to see what is going on in the market. Give it a look here.
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Yann
This is your SolarWakeup for March 5th, 2020
Little Markets, Big Opportunity. The Netherlands represent less than 3% of the European population but in a surprise move, the already great solar market is doubling down on solar by doubling the rebate for installing solar. This is a massive sign of support for distributed generation and an overt statement that everyone should go solar. Imagine if the US supported each block of 17 million people with the equivalent of $4billion in support.
Impact Of The Day. The growth in Netherlands is a sign of the broader market. This is merely the start of the market in Europe that is driving massive growth of solar over the next decade and more. If more than 1GW of rooftop solar gets installed in the Netherlands this year, imagine what this means to every other Country in Europe and around the world. It also reiterates the importance of geographic diversity for solar companies. Some markets may normalize while others grow, whether it’s a Country in Europe or a State in the US. Companies that have geographic diversity can whether potential risks while also having the necessary infrastructure to take advantage of the opportunities that come up.
The Banks Are Lending. Energy storage, EV infrastructure or solar on homes are a growing asset base for many banks or other asset based lenders. This is creating a new level of importance in the market around bankability. Module OEMs have long shown their bankability reports and touted their BNEF tier 1 status. This is also enhancing value in the energy storage market by the majors like LG Chem and Samsung. Investors are also becoming pickier on inverter selection given the decade of changes in the market in that segment, residential solar may as well be a duopoly at this point between Enphase and Solaredge. Loan companies have limited their bankability and code-compliance to modules and inverters only but are learning more about the importance of the mounting and racking equipment installed on customers homes. With billions going into residential solar per year now, expect more scrutiny on product and installation methods used by your businesses.
Continued Growth Of Load. General Motors showed analysts 10 versions of their electric cars ranging from 50 to 200kWh. EVs make up 99% of what we talk about in vehicles but only 1% of total sales. Imagine the change in consumer behavior when every GM dealership has sales people incentivized to actually sell electric cars and trained on the nuance of owning one. EV owners want to charge at the store and at the office, that makes it easiest for them and eliminates the assumed range anxiety that is mostly only reality in the minds of non-EV owners. Watch this space…
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Yann
This is your SolarWakeup for March 4th, 2020
California Dreamin’. Super Tuesday has come and gone and California is going to take its time to give us the results. At the time of this writing it looks like Biden may come out in the lead when all the results are in though the expectations were that Sanders would be ahead by at least 50 pledged delegates. For solar, there is going to be a discussion over the next few months what the trade environment would look like in a Sanders administration versus how aggressive a Biden administration would be on energy topics.
Big Day For Vote Solar. Vote Solar has been actively making its case to advance solar policies in Florida and New Mexico. In Florida the goal was to make the largest community solar program accessible to low income families albeit owned by the utility. First getting the proposal expanded to be more attractive to more people and then having the program approved by the PSC. In New Mexico, the Governor will sign a revival to a modest tax credit which will make solar a little bit more attractive for homeowners, another win for solar.
Hold Your Gas Powered Horses. As Wall Street sours on coal, it’s too far to say that investors are giving up natural gas in favor of utilities. Investors for those two buckets are not interchangeable for one and the sustained low natural gas prices may be what is causing investors to park their money elsewhere. At the same time, investors have an unlimited appetite for renewable energy infrastructure investments. The limitation to total deployment remains project pipelines.
Look Out Global DG. The renaissance happening across the world is happening behind the meter. Consumers have long wanted to add solar and ROI was typically the biggest limitation to that effort. With the global price of solar more likely than not to be less than the cost of the grid, DG solar is booming in the US and abroad. While DG is not without complication, it is ripe to be disrupted in more ways than one and ready to get much bigger than anyone is forecasting.
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Yann
This is your SolarWakeup for March 3rd, 2020
Happy Super Tuesday. 14 States are voting today and almost 1,400 delegates are up for grabs. Tomorrow we will have a better view on what the rest of the year looks like. That being said, without doing a play by play on what’s happening with coronavirus, we are bound to get a lot of unknown unknowns coming at us as well.
A Climate Policy Point. Axios is making the point that no matter what happens in November, climate policy is going to be difficult to get through Congress and don’t expect much to happen. Whether something passes, something progressive has legs or if DC will just shut down is a scenario that will play itself out. Also, expect that much of anything that gets passed to get the judicial examination we’ve come to get used to.
The Counterpoint. On the other hand if the White House were to switch sides, would mean a significant boost to markets like solar. For one, the ITC wouldn’t have been removed from the extenders package like it did last year. If Trump has taught us anything, it is the power of the presidential pen especially for items labeled as a national emergency. Under a national emergency, the President would have the ability to shuffle dollars in a way to achieve the goals of the White House. My point is that a democrat in the White House could prove to be a climate policy by itself, without thinking about the broader, but much needed, congressional legislation.
But Wait. As we’re arguing about what happens post-November, there is a climate bill going through the Senate. Nothing entirely aspirational about the bill but it is a climate bill in name. Let’s see if anything more tangible gets attached to the legislation if it sees a floor vote and time in the House.
Impact Of The Day. Sir Christopher Hohn made headlines a few months ago when his hedge fund argued that they would target directors of companies that are not doing right by climate policies. Taking this one step further, Sir Christopher wrote a letter to major banks about their coal financing activities. The letter outlines the poor fiduciary responsibility that the banks are showing but in an interview revealed plans to mount legal challenges against the boards of the banks. These legal challenges could prove to have the type of impact directors view as existential to their decision making and oversight activities.
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Yann
This is your SolarWakeup for March 2nd, 2020
Happy Monday! What news is driving your business this week? As always, you can be in touch with me and the SolarWakeup team by writing us at yann@solarwakeup.com or reaching out on Twitter @yannbrandt or @solarwakeup.
Touching Base On Coronavirus. The virus is now geographically everywhere including most States in the US. Testing is slow to get started so expect that number to jump significantly once the broader reach of testing has occurred. The question is how this will affect everyday life until it is contained, major conferences are already being canceled and companies are talking about remote work for all. The solar industry should prepare for some disruptions as well given that many modules have origins in Asia where factories may be slow to get up and running.
Pennsylvania Solar Development. Development is all about getting the timing right and showing the path to investors for a project that has land rights, interconnection and revenue stream. If the economics work out and risk is properly mitigated, the project can move forward. Pennsylvania is the Texas of the Northeast. Land is plentiful and regulations are more lax to get a project approved for land use. Most importantly, you can install solar about 25% cheaper than New Jersey and still access the PJM market. Stay tuned for more action in PA.
The Nuclear Myth and Challenge. Supporters of nuclear energy tout the carbon free nature and the 24/7 ability to produce electricity. This isn’t wrong but the problem with nuclear is more fundamental. Can someone build a nuclear plant that can be built without priceless subsidies like insurance and waste mitigation and be built on time and on budget without the need for early cost recovery. Put those pieces in place and maybe there is something to talk about.
No More Subsidies. Solar has an internal talking point that rarely makes the headlines, maybe one of the many reporters will come out and steal it from here. All energy sources should lose access to subsidies, all of them. Tax incentives, land use, rate base, fuel cost guarantees, mineral rights, exploration and right of ways to start. Get rid of that and the market will be free to let consumers choose!
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Yann
This is your SolarWakeup for February 28th, 2020
Friday Rundown.Big news on the rundown today, moving parts all over the Country in markets and issues within supply chains and DC. It’s always helpful to read what public companies are saying to get a grip of the market and risks around our market. Now that Sunrun, Enphase, Solaredge, SunPower and Sunnova have reported, take the weekend to read some filings..
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Have A Great Weekend!
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Yann
This is your SolarWakeup for February 27th, 2020
US Cell Manufacturing Ending. The news broke yesterday that Panasonic is planning an exit of their partnership with Tesla’s Buffalo factory which manufactured PV cells. This may cause the end of the domestic manufacturing of solar cells even with the import quota put in place by the 201 tariffs. At the end of the day, it appears that Tesla will meet their promise to New York State in terms of the jobs created and Tesla may hire many of the jobs impacted by the Panasonic exit. The market is creating an obvious reality that domestic assembly of modules could be the future that the solar market seeks, much like the auto sector solar could be big enough that that logistics savings outweigh the domestic cost increases.
Trade Group Splits. BP and other oil majors are conducting formal reviews of their trade group memberships. BP has released their results and is leaving three trade groups that no longer align with their views as they relate to climate. They are also staying in influential groups that hold opposition to climate policies like the Paris Agreement. A process that begins with some victories is not a war on climate change lost. It is another opportunity to educate and create more understanding of what could be if the conglomerates move further towards policies in line with solar. I’d welcome their policy budgets to solar trade groups including their understanding that spending money on policy is not money wasted.
Oil Companies’ Solar Hedge. At the same time that oil companies are reviewing their trade group involvement, they are using their billions of cash and investing it into solar portfolios, pipelines and platforms. Their involvement in the industry could be interesting given their long term view on development and understanding with free markets. Taking a 50 year view on land acquisitions means that an oil major could acquire 1 million acres of land and continuously plan on mining it for solar energy, building plants over time as the revenue streams appear favorable. Moreover, many of the majors have robust trading desks that view the risk related to commodity trading par for the course, different than infrastructure funds that look for physical assets to be locked up for the term.
Voters Wish For Change. One topic where Trump voters disagree with him is his rollback of environmental policies. In States like Florida, voters voice concern about climate change and how it could impact their State and don’t see the positive argument for making these changes. That being said, it doesn’t look like it could switch their vote away from Trump. At the same time, polls are rarely a good argument for not making an argument, we need politicians to make their case to those voters and create a change in their opinion. You lose 100% of the fights you don’t get into so let us get into this one, I think it’s a winner.
Go OG&E. There’s a special place in my heart for Oklahoma Gas and Electric and OG&E going solar is a notch on the belt that I’m hoping to see more of.
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Yann