This is your SolarWakeup for November 12th, 2019
Out Of One, Come Two. Yesterday Sunpower announced that the company will be splitting into two separate entities. By bringing in $298mm in new capital into the module manufacturing business, Maxeon Solar is born. Maxeon will take over the manufacturing side of the Sunpower business, based in Singapore, and trade on the NASDAQ. The $298mm investment comes at a valuation of ~$1bb and is made by China’s TZS Zhonghuan Semiconductor. The transaction was unanimously approved by the board and is expected to spin off in Q2 2020. Maxeon will retain exclusive supply to Sunpower in the US and Canada. For more on this transaction, Sunpower was kind enough to explain it all in this presentation.
The Downstream Play. Sunrun, Vivint Solar and Sunnova have a new publicly listed competitor. Sunpower is now fully committed to the DG segment. Slide 31 of the above presentation shows that we are thinking the same thing. Sunpower is also telling shareholders that they think they should be valued closer to $3bb from the $1bb they are currently trading at which is the entire purpose of this split. Sunpower has a tremendously loyal dealer network that co-brands their companies as ‘by Sunpower’ which is a powerful marketing tool. There is still some work to be done but in a world where module and inverter supply is constrained, Sunpower dealers now have priority supply agreements with Maxeon and Enphase.
Changing New Home Solar. Here is the scoop about the work around that the utilities and some home builders are trying when it comes to the new home solar mandate. To start, an important note, home builders have no additional cost to add solar to the new homes. Solar financing companies will cover those costs for the builder and still pass along savings to the new home owners. Through a filing by SMUD, they are attempting to let home builders achieve the requirement for solar by allocating the homes to solar farms labeled as ‘community solar’ well away from the community. This will in no way help achieve more distributed generation and allow the future of micrograms to be built out. As the California Energy Commission votes on this proposal on Wednesday, it appears that the California home builders association is split on this. One of the largest homebuilders, Lennar, is against this broad proposal to eliminate the rooftop solar mandate and is expected to speak out against it at the hearing.
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Yann
This is your SolarWakeup for November 11th, 2019
Thank you to all the veterans reading right now. My family and I greatly appreciate your service to the Country.
Thank You! With your support I was elected to the board of CALSSA. I’ve had the pleasure of working with CALSSA over the past decade and in the past year even more so. Bernadette and the CALSSA team do amazing work creating the largest State market in the US and I’m excited to get involved with more responsibility. Policy is business development as we work together to advance the markets.
The Next Decade. We are going into the next decade with unprecedented public support, cost competitive systems, and more than 3.3GW of required additional capacity in the California power market alone. We know how to solve these issues as a team, through DG, community solar and large scale solar with a sprinkle of storage everywhere.
Undermining Intentions. The politics in our market continue to get a bit more complicated but we are well prepared for them. One example is how SMUD is trying to circumvent the new home solar mandate by trying to take the solar panels off the roof and solve it with what amounts to SREC purchases. There was no legislative intention to allow this to happen but rule making is always an important time for executing on new laws. I’ll be digging further into this since there appears to be more to the story.
Don’t Hold Your Breath. SEIA was granted a temporary restraining order (TRO) by a judge to hold the repeal of the bifacial module exemption for a few weeks but all indication is that it will not hold longer than that. There are some messy politics at play in the tariffs in an ever changing landscape. It’s too early to really assign much of the blame but the picture seems to be clearing up. At some point, however, we will need to understand that the industry that works together will succeed together. It will not have a winner take all scenario, people should stop trying for that.
More Demand. I’ve written about this in the past. When there is going to be a real choice of EVs in the market, with the ever expanding charging infrastructure, we will enter a new era of electric demand for transportation.
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Yann
This is your SolarWakeup for November 8th, 2019
All About Scaling. Groups like REBA are working to make the corporate procurement deals repeatable and less scary. This effort would drastically expand the customer base and speed up the development process for renewables.
The LCOE Report. The annual LCOE report from Lazard is out. It is reaching levels of importance within even Lazard that makes headlines. The report is always informative and shows the progress of renewables based on the basic tenet of cost per kWh. This year it also resulted in an op-ed in Bloomberg written by former head of CBO and OMB, Peter Orszag.
Election Consequences. As you’ve seen, the State of Virginia has shifted to democrat control by a slim margin, something that happened for the first time in a long while. This means that the legislature will be choosing the members of the corporation commission. Dominion may desire to build 1.5GW and the legislature may want to review that choice.
Big Congrats. Congrats to Vote Solar for their new partnership with Bloomberg’s Beyond Fossil Fuel campaign. Maybe their first stop will be Virginia? Also, congratulations to the SEIA board members that won last week’s election. A passionate and diverse group of solar professionals that will do a great job moving the solar industry forward.
National RFP. This is a message for the plethora of utility scale developers and investors that read this newsletter. An informal poll if you will. Let’s assume a 100MW project anywhere in the continental US with the output sold to a creditworthy entity, like the State’s university. Which State would have the highest price and what variable is the most impactful? What would you think is the highest rate that such a project would need?
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Yann
This is your SolarWakeup for November 7th, 2019
Back For More. More column coming tomorrow.
Let’s Do Something. Really frightening data coming out about rising oceans already being locked in.
Earnings. What’s it going to take to get a public solar company to be valued the same way as Uber?
Chapter 11 Impacts. PG&E being in bankruptcy is a problem for lots of businesses, including SPVs that own solar projects that sell energy to PG&E.
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Yann
This is your SolarWakeup for November 6th, 2019
Storage Day. Lots of storage news today, an RFP from Bay Area CCAs, large IPPs getting involved and a review of the blackouts from NPR. How much cheaper does residential storage need to get before it becomes an automatic addition? Is there a tariff arbitrage range where the time of use pays for it?
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Yann
This is your SolarWakeup for November 5th, 2019
Utility Reform Megathread. Much has been written about the issues that caused the PG&E blackouts, a culmination of decades of issues surrounding the utility, the regulations and environment. While some of us are inside the bubble that hopes for solar to be the savior in this story, and we will be, David Roberts goes on a Twitter megathread to give you insights on how he came to his conclusions. While David is a writer on the topic, he doesn’t work in the sector and would have come to the end of the story without bias regardless of where it led. So as you try and frame your argument to legislators and outsiders, here’s a good glimpse with deep dives into how we could go about solving this problem that was created by barely regulated monopolies.
Midwest Goes Solar. Alliant Energy in Wisconsin wants to add 1GW of solar in the next few years. Let’s hold our breath for consumer choice to do the same. What do you think about rate based solar? Is all solar good solar and we should applaud it or does utility owned solar at the cost of a solar market make it less good solar?
Stifling DG Solar. Speaking of solar markets lacking DG capacity, what is going on in Georgia? Some insiders make their case in their article.
Au Revoir Paris. A few years after declaring that he would, Trump is officially starting the process to leave the Paris climate accords. It’s a charade and would kill the economy, republicans are having a hard time finding their argument.
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Yann
This is your SolarWakeup for November 4th, 2019
A Governor’s Roadmap. Things are escalating in l’affaire PG&E. Late Friday, Governor Newsom published a post outlining the roadmap on utility regulation which included naming Secretary Ana Matosantos as the state’s Energy Czar. The Governor also says that if PG&E isn’t ready to comply with legislation and prioritizing safety after the bankruptcy process, the State is ready to take over.
The Leads Are In. Reuters wanted to check on the solar leads created by the blackouts and found that solar sales are up and storage numbers are up 5x compared to forecasts. I would be surprised if this is only true for PG&E customers, I would assume that other utility service areas are also benefitting from the headlines. Question for C&I developers is whether blackouts have caused businesses to adjust ROI calculations when looking to go solar.
Rising Electricity Prices. Just this weekend we see headlines that APS and Xcel are filing to increase their rates. Death, taxes and rising utility costs.
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Yann
This is your SolarWakeup for November 1st, 2019
CALSSA Board Votes. If you are a member of CALSSA, please vote for me for the board. It’s one set of votes per member company so make sure my name makes it to your designated contact. If you are not a member, you should be!
Solar Boom. It is no surprise that the blackouts has caused customers across the Country to look for solar and storage solutions. Installers are telling me every day that their business is through the roof. Blackouts are the symptom of monopoly control and solar takes some of that power back for the consumer.
Storage Boom. The combination of big and small storage demand is driving the investment case up for manufacturers. Expect cells to sell for well below $100/kWh regularly in just a few years. Cheap storage is the ballgame folks!
DG Boom. One of the best pivots in solar over the past few years is how Sunpower has refocused its business on distributed generation. I think this is a positive driver for the entire market and while DG only represents a fraction of the US market, it is the biggest driver of public and political sentiment. DG is also the value chain where every participant makes money, from module maker to consumer, everyone is adding money to the bank account and growing organically.
The Win-Win. There is always a whisper in the background that DG or utility scale needs to win out. This is a circular argument because one does not grow without the other. Honestly, we would do great things if we spent a day lobbying for the main request of the other segment. We need to act on behalf of solar, not a segment of solar. A utility that lives with performance based ratemaking is going to make consumers happy and buy a ton of solar from utility scale solar farms.
Have a great weekend!
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Yann
This is your SolarWakeup for October 31st, 2019
Consensus Support. Over 70 associations have sent a letter to Congress asking for their support on the ITC. Here is the letter and make sure to transmit this within your circles.
Board Votes. Two items for your trade group votes. I am running for the board of CALSSA in my capacity as CEO of Quick Mount PV, if you are a member of CALSSA, please vote for me! My friend Kendra Hubbard is running for the board of SEIA, she’s done a great job as chair of the DG division and I would love for her to make the board again. Please vote for us!
More coverage tomorrow, Happy Halloween!
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Yann
This is your SolarWakeup for October 30th, 2019
Bad News For Coastal Folks. A new report in Nature magazine highlights the risk for coastal communities by the year 2050. Don’t take my hyperbole for it but it is going to be really bad for many, especially some of the world’s poorest communities. Miami Beach may have spent a billion dollars building a pumping system under the roads but this says that those pumps will basically be sitting in the ocean by then.
Enphase Exec Experiences Blackouts. The VP of Marketing at Enphase has been without power at home for over 3 days. This means that he’s working in his car at night and his kids are doing homework by lantern light. We exchanged some messages to compare blackout notes (mine ended at hour 44) and how our kids may be shocked that this is a normal situation for many in the world and that our work fixing our first world problems has positive ramifications to climate change and millions of lives around the world if we do it well.
Markets Go As Insurers Do. In 1957, Congress passed the Price-Anderson Nuclear Industries Indemnity Act. The act provides for government insurance for nuclear power plants above $12.6billion in liabilities, the rest is self insured. Even in 1957, regulators, industry and governments knew that no power plant would be built without sufficient insurance and no plant could be affordable with private insurance. The same is true today, if insurance providers stop insuring ocean front homes, prices will drop. If they stop insuring gas plants, they will go away as well.
No, It Can’t. PG&E cannot stay in the status quo, there will be changes. An interesting argument is coming out that the public advocate has blame for the wildfires because they opposed rate increases. PG&E rates are well over double that of Florida Power and Light and FPL has to deal with hurricanes every year, spending billions on infrastructure. Execution was the failure point, not the public advocate.
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Yann