This is your SolarWakeup for February 21st, 2020
Stocks Are Hot. Maybe it’s the hot solar market, maybe it’s the fundamentals but either way solar stocks are on fire right now. There is an overlap of the growth story mixed with the maturity of the stock success. Take Solaredge and Enphase as an example. Both executed against their earnings estimates and are building their cash reserves. Solaredge and Enphase sold more than $2billion worth of solar ‘stuff’ last year at margins over 30%. There will be lows that come with these highs but for now, Wall Street is enamored.
The Great Right Woo. One of solar’s talking points that came out after the ITC loss was that the industry created a good foundation of support on the right. The nuance in my opinion is that relationships in DC are fungible, goes with the saying “what have you done for me lately?.” Passing legislation in DC means you have support based on leverage, situational horse trading and grassroots support. So we will have to look at cards coming into 2020, where do we stand on those issues and what are we doing differently than last year? We don’t want to be doing the same thing over and over again and expecting a different result, that would be ….
A Better Way. The ISO-NE capacity auction cleared the largest coal plant for another year, getting another $8million in capacity contracts through to 2024 year. The problem I have with this is that we already know we can do better than this. Sunrun in partnership with National Grid already won a capacity auction based on distributed energy storage resources. Over the next 3 years, solar installers will build a lot of of what we’ve already done.
Debate The Transition. Speaking of transition, there was an interesting moment during the last DNC debate where Mike Bloomberg labeled natural gas as a transition fuel. I know that this label is a spark of argument and I understand the concern. Clearly there has been a move from coal to natural gas as the utilities have rate based an entire fleet exchange. Now it is the job of regulators and advocates to limit the life span of those plants. The 100% goals and RPS plans are clearly an example of that success.
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Yann
This is your SolarWakeup for February 20th, 2020
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Yann
This is your SolarWakeup for February 19th, 2020
Here Is Your Job Report. For the first time in 3 years, solar jobs great by over 5,000 jobs. The jobs continue to be driven by DG market expansion in markets throughout the southeast and all of the new markets that have been popping up. Diversity continues to be an issue in solar and I hope to be able to host some conversations on how we can do a better job being a growing market for everyone. For more info, click today’s top story.
PG&E Earnings. Not so good, losses of over $3billion for the last quarter. Imagine a market where the company doesn’t get a guaranteed return on its monopoly.
Enphase Earnings. After hours yesterday, Enphase delivered results that the market found enticing (the stock was up over 11% in after hours markets). This was driven based on strong margins and market share gains. More write ups to come from analysts.
Don’t Fall For It. SMUD, the Sacramento Utility, is using its PR department to spin some falsehoods about the new home solar requirement in California. They are pushing for a way for community solar to be used instead of rooftop solar which is clearly out of bounds from the legislative effort. Keep your eyes on this.
South Dakota. Solar in South Dakota is going to get a link and a mention on this platform. I love new markets joining our market.
NIPSCO RFP. Indiana can have cheap solar and storage too, check out these results from the recent RFP that shows how close the energy markets are to getting rid of natural gas altogether. Any bid that includes ‘plus fuel and O&M costs’ is going to have a tough time competing against guaranteed pricing.
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Yann
This is your SolarWakeup for February 18th, 2020
Hello Boston. I am en route to Solar Power Northeast to see what is new and exciting in the staples of the east coast markets. Some of my favorite solar friends are in this market and who doesn’t love complicated regulatory labyrinths? This week is going to bring us the Solar Jobs Census numbers so we will see where the market and States stack up. We also see earnings from Enphase and Solaredge today and tomorrow which will give us an indication of the residential solar market and how global supply chain is fairing right now.
Here We Go! Jeff Bezos is doing what I’ve been hoping for, he is creating a $10Billion (with a B) fund to fight climate change. Funding will go to scientists, activists and NGOs and grants will go out this summer. This has the opportunity to create a generational shift in this fight to transform the market we operate in and the fight against climate change. I hope this starts off with a bang and the people behind the scenes get some of the high octane gas that is $10Billion.
The Top 3. Here’s where I would start, knowing that $10B is a longer vision number meant to be global. First, State level advocacy groups in solar, efficiency and consumer protection. Don’t fund the State level fights, but fight groups that are already fighting in the dirt at State capitols. Second, let’s get funding into groups hoping to reshape the energy markets. This is research based advocacy that will allow for the markets to drive change in how we consume, generate and monetize energy. Third, let’s build the solar grassroots organization that supports all of the other advocacy we are working on. 10 million members and more! And one more for good luck, let’s build the SolarAPP that will make instant solar permitting feasible across the Country. Solar installers shouldn’t have to spend thousands of dollars and wait months to get a permit.
But Don’t Forget. Fighting climate change is fundamentally a policy fight. And politics is a different type of battle field and energy is filled with monopolies and oil majors that have trillions to lose. That’s why I would advise Jeff (we’re on a first name basis) to allocate $1B to the Energy Battle Super PAC. It’s not about using the funding as much as knowing that someone has that kind of support backing it, especially when matched with the 10million members.
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Yann
This is your SolarWakeup for February 17th, 2020
A CODEL Success. A congressional delegation is on its way to Puerto Rico to see what the State of Puerto Rico’s infrastructure is after years of natural disaster including earthquakes over the past few months. One of the major power plants on the island is offline and power lines are still struggling to keep up. Solar with storage is playing a big role to keep essential operations running but we still need to do more for the people.
Coronavirus’ Unknown State Or Impact. I try to ignore things I can’t control and epidemics tend to scare me even more than other things. It’s hard to understand how the tragedy is unfolding in China and how it will be solved with minimal loss of life. On the other hand, there is a potential and likely impact to the solar market due to delays and slower reopening of Chinese factories post Chinese New Year.
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Yann
This is your SolarWakeup for February 14th, 2020
Happy Solar Valentine’s Day. What in solar makes your heart flutter right now? For me it’s earnings season and it gives me an opportunity to reflect on the companies that are public and the decisions they are making.
New Home No Brainer. As the California new home mandate rolls out, the market will discover how easy and cheap it is to put solar on a home while building it. Wait to see how many other States look at this and say, of course we should do that. More importantly, builders are going to realize that they don’t need a mandate to make it their standard process.
Doubtful With A Chance? Senators from both parties sat down with advocates of the carbon tax/carbon dividend. This is one of those policies that would be great to see but I have no idea how it would ever get into law. But here we are on Valentine’s Day, taking an arrow to the heart.
Change One Legislator, Change The Future.Virginia is about to pass its most prominent energy policy ever. All because voters and organizers moved the State legislature over to the other party. As an industry, we should be selfish this election season. SEIA should send out surveys to every candidate in America just like the Realtor’s do and the NRA does. They should also include the Solar Pledge in the survey for the candidates that want to stand with us and in return we will stand with them.
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Yann
This is your SolarWakeup for February 13th, 2020
More Tomorrow For Friday Rundown. Lots in corporate news today, need to reflect on what if anything this means.
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Yann
This is your SolarWakeup for February 12th, 2020
Growth Without Pollution. With positive GDP growth across the world last year it is a departure from the norm that global emissions were flat. Still, with 33.3 gigatonnes of CO2 output, there is more work to do but when the economy grows it has always been the case that emissions do as well. This means that business health is diverging from climate sickness and that’s a step into the right direction.
The Kitchen Sink SolarCo. Real Good Solar has tried it all in the nearly 50 years that it has been around. Going public more than 10 years proved to change the path for the company from which it had difficulty recovering from and ultimately led it to the end last month when it closed the doors and filed for bankruptcy. Over the past decade the RGS got into solar shingles/tiles and even hoped to be a reverse merger vehicle for utility scale solar companies hoping to get public quickly. The OG solar guard will remember RGS as something much bigger and important than those that only encountered the most recent iteration but future solar pros will have to read the history books to learn the name.
4X But More To Come. New estimates show a step growth in residential energy storage in California this year up to 50,000 units to be installed. Let’s be real, that’s nothing compared to where we are going. First, the attachment rate is going to continue to climb but more importantly the retrofit market for adding storage to existing solar is going to be huge. Look to see what percentage of storage goes to existing solar.
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Yann
This is your SolarWakeup for February 11th, 2020
Sentiment Scares CEOs. There is a reason that economists measure consumer sentiment. The feeling of optimism or pessimism affects everything from market share and price, or in this case value. Pure analysts would say that oil companies are undervalued, Exxon trades at 18x but Enphase trades at 109x. While stock price is a rather bad indicator of value, it does create a real-time metric of where someone is willing to buy and someone is willing to sell. When it comes to oil and gas companies, the sentiment is bad. When folks like Jim Cramer comes out and says they are bad investments, it doesn’t help create comfort. Warren Buffet says that if you’re not comfortable owning a stock for 10 years, you shouldn’t own it for 10 minutes. So while Blackrock raised their ownership levels in several solar companies in the past few weeks, you have to ask yourself what’s ahead for the oil majors.
Safe And Predictable Solar. Fitch found that 86% of solar project performed to their P50 forecast. At the end of the day the modularity and simplicity of solar matched with the predictability of the sunrise to sunset timing makes solar an incredibly secure asset. As investors are trying to drive down the price of solar equity investments which are largely still double that of mortgages, developers are trying other ways to squeeze more out of the solar panel. I expect Solaredge to announce some initial traction with utility scale projects during their earnings call in a few weeks. This comes as some projects appear to be using optimizers on the solar farms when they’ve traditionally been used on residential installations. Of course, solar output can also be insured against through innovative financial products like the solar revenue put by kWh Analytics.
Definition Of Insanity. Is doing the same thing over and over again. The USITC published its review of the 201 tariffs which found increases of cell imports in light of the tariffs placed on them while module assembly in the US increased over the past few years. Tariffs are obviously the most self-imposed headwind to solar in the US and the job creation that would come with removing all 5 levels of tariffs impacting our industry. That being said, it’s time to take a different political approach with this White House. Trump doesn’t want to work together, he wants credit and praise. So let’s do that, let’s credit him with the module assembly factories in Georgia, Alabama and Florida thanks to his 201 tariff and then praise him for reviewing the anti-dumping tariffs that are hurting further growth of jobs. I don’t know if it would work, but when in Rome…
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Yann
This is your SolarWakeup for February 10th, 2020
Board Room Showdown. The CEO of Engie, Isabelle Kocher, was unceremoniously pushed out in a board meeting last week. Engie is the French utility that is 23% owned by the Government and has been pushing the 3 D’s, decarbonization, digitalization, and decentralization. The stock has been underperforming in recent times as the company has exited fossil generation in the US and elsewhere.
Why It Matters. Kocher is the only female CEO in the CAC 40, the largest companies in France. More importantly, it’s hard to imagine that the government wasn’t aware of the board room move in advance. Insiders are saying that the CEO was not doing enough to maximize the value of the power generation assets and too slow to move into renewables. Herein lies the problem, CEOs can’t be seen to look too far into the future, embracing the next era of clean economy for utility CEOs practically means that they are ready to leave their post. Much like David Crane during his time at NRG, Kocher was driving Engie into the future and it looks like half a decade of time passing and a Paris climate accord couldn’t give her the cover she needed to see the strategy unfold.
What Happens Next. I look forward to hearing what President Macron has to say about l’affaire Engie. If a quasi-governmental corporation with a global mission of the 3 D’s can’t give the CEO room to operate, no other CEO will take action. If Larry Fink’s BlackRock letter was meant to push executives and board directors into a clean economy, the move by Engie’s board is a big rebuttal. There are going to be a lot of powerpoint decks shown to board rooms putting the decision on the directors to point the ship in a direction of either status quo versus making a move towards fossil free. What does Kocher do next? Maybe there’s a private equity fund to look into the future backing Kocher/Crane for activism inside utility board rooms. Too bad I didn’t attend L’Ecole Polytechnique in Paris so I could put my hat in the ring at Engie.
The Takeover. Another week has passed in the PG&E negotiations that are happening behind the scenes. The debtors, courts, PG&E and State of California are talking about how the utility emerges from bankruptcy if at all. From a purely financial standpoint, the utility could emerge but the company knows it needs buy in from the State on the plan. Talk about a brilliant opportunity for the State to counter the failure by the Engie board and say, we want the utility of the future and we want the shareholders to put an executive in charge that lost their job trying to create one at the wrong place at the wrong time. It’s time to name some names and outline the plan, get the consumers to buy into a vision because when it comes to Government run utilities, PG&E already has the CEO of TVA at the helm and that won’t get us anywhere.
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Yann