This is your SolarWakeup for January 9th, 2017

Sentiment matters. Journalists are trying hard to find trends in thoughts when stories don’t exist in news. I appreciate that the New York Times is trying to showcase that investors are looking at cleantech as the wise investment going forward, that’s not news however. The problem is that in every regulation, an additional level of doubt will be priced in. What if this, what if that? A dollar here, a dollar there and you may start talking about real money.
What is happening in storage? Seriously, I want to know. I get the trend in residential but what is the market? How big is it? Where does it make financial sense for the consumer? The money for 3^rd party products is crazy expensive still, so the scale must be small. I want you to tell me where that market is going because as much as it seems to be solar in 2007, I feel like we are skipping over a few steps.
If A then B, maybe. I am fairly certain that no new coal power plant will be built in the US, ever. (send me a note if you disagree) I also think that outside of some constraint electricity markets, a deregulated natural gas power plant will have some trouble getting money. How would the fuel hedge happen, if at all? So obviously, the focus of new power is in the regulated power markets where consumers provide the fuel hedge free of charge. I caution anyone in solar to mistake the concerns in the fossil markets to mean that the money will automatically flow to renewables. I don’t see that happening because the investor mindset is completely different.

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Yann

This is your SolarWakeup for January 6th, 2017

Recapping the crossed chasm. Obama released cabinet exit memos yesterday including the one from the Secretary of Energy. Moniz highlights the market leap in solar over the past 8 years under the Obama administration. I’d add that the Bush admin gets some credit for signing the original 30% ITC into law a decade ago. Now let’s push Perry to let the markets thrive. Let all energy compete like in ERCOT.
It wasn’t a secret. I guess we need to send the next EnergyWakeup podcast to Bloomberg because it wasn’t a secret to anyone that listened who Thomas Pyle was. The associations he leads are a front for the free market, read anti-solar, dreams of some in the coal and gas sectors. DC works in weird ways, often associations have the insight pathway to influence the right offices and staffers.
Good news for climate ratings. Bill Nye is getting his own climate change show similar to Years of Living Dangerously on Netflix. This means that the second season of Years is doing really well in the ratings with the demographics that are attractive to Netflix. If climate documentaries are driving viewers to the networks, expect more of them which is a welcome sight for this writer.

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Yann

This is your SolarWakeup for January 5th, 2017

The Association shuffle. January will have plenty of news when it comes to national trade associations but for now the small ones (SEFA) will become part of SEIA. This is in line with what happened to the Solar Alliance a few years back. The trade association game is difficult and mostly about fundraising especially in an industry like ours where policy is defensive and margins are slim.
Optimism be damned. Focus on rhetoric. Brad Plumer is right, the climate activists are trying to find the positive side of the Trump administration. The issue with that approach is that it assumes no political action from the minority side. Energy and climate advocates should focus on three things: more solar, clean air and clean water. Anything else becomes a debate, the only ones against those three things pay off politicians and that’s a fight we can win.
California keeps plugging in. Through the first 10 months of 2016, 128k systems were interconnected in California. Now comes NEM 2.0 and energy storage in the Country’s leading market. There could be a dip coming out of the first quarter as consumers are educated on the new policies. Keep watching the CSI numbers to see if the trajectory trends in a different direction.
Getting into the global markets. As Innogy finishes its acquisition of Belectric, you can expect more of this to happen across the world. Access to retained dealflow across global markets ensures that companies can whether the ups and downs of the individual solar markets.

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Yann

This is your SolarWakeup for January 4th, 2017

Welcome to 2017. This could be a year that defines our industry for years to come. While it does not have the variables that were anticipated, they are now constants. Let’s make some predictions for the year to come.
Federal politics will be noise, focus on States. Whether Tillerson, Perry, Zinke and Pruitt will be the final confirmed group is to be determined. Nonetheless, 2017 will likely not be affected by anything on the federal level. Your business is affected by policy and there is a great likelihood that your State will do something that affects it. Tons of whispering going on about grand bargain energy bills so get your coalitions ready. Solar will likely play softball this year and suffer some defeats so don’t let anyone speak for you if you disagree with them.
10GW, but the hard way. The megawatts will be there, I don’t doubt that. But I assure you that capital deployment will drop in a big way on a per watt basis. With the Sungevity merger off, rumors which were circling over the summer already, there will be tremendous consolidation across the board. Steeped in pipeline acquisitions, private equity firms will make moves to buy market share as cash balances get tight.
Deals with deep, diversified pockets. Solar balance sheets are small compared to diversified global conglomerates. Deals are going to get made that look at the long term and the ability find an exit for investors. Given that solar companies also raise capital at steep costs of capital, bringing in cheap corporate capital from those that can raise it makes a lot of sense if you can get a deal that works for you.
Passing $1 per watt. A few years ago, I was pondering with friends how cheap modules could get and we all agreed that the asymptote was at a $1 per watt. I am fairly certain that we are blowing passed the $1 per watt system cost and heading into the $0.80s at scale. The winter season is a refresh for everyone so getting that done by the end of the year shouldn’t be a surprise to you. The question is how to leverage this centralized solar power to reflect savings at the retail level or value to the wholesale market.
The output is a commodity, don’t commoditize talent. Nobody wants to pay for energy, that’s why you have penny PPAs in New Jersey. While that will remain true going forward, it is important to do things the right way for the right reasons. It is a rat race industry, don’t let 2017 be the year that you get away from the basics.

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Yann

These are the top 10 most read solar articles by your peers this week!

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Yann

This is your SolarWakeup for December 23rd, 2016

Hawaii will make solar easier. HECO is looking to increase rates by almost 7% to invest in some grid infrastructure. As rates increase, the proposition for the new version of net metering, which favors storage implementation, will become more attractive. As energy rates increase consumers will be more attractively compensated to produce their own energy, and coupled with dropping costs in energy storage should make the market interesting again.
Brazil solar market auctions. Companies have been hoping for positive results in Brazil for several years. Starting with auctions in 2014, Brazil was looking to break through as the largest market in South America. Combined issues in the political and economic sectors, ability to execute on the contracts were hindered. Those same conditions are leading a lag in growth in energy demand. Companies appear to be bullish on the future of the market nonetheless.
Solar’s competition. The headline may lead you to think that some slides will be explaining solar’s rapid cost decline which it does but the main takeaway from the article is more important. Who is solar’s actual competition? When was the last time solar competed against a natural gas plant? Utility scale solar has a different value proposition and competes against avoided cost while rooftop solar competes against delivered energy. Comparing rooftop to utility scale solar costs makes as much sense as comparing avoided to delivered energy.
Let me add one more. I think this is a pretty good list but there is another policy topic I look forward to. What State(s) will be seeking to do a nuclear bill in 2017? We have seen a rather attractive environment to push microgrid, efficiency, and RPS topics in those bills. As is true in most policy, compromise legislation yields happy parties on both sides of the issue.

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Yann

This is your SolarWakeup for December 22nd, 2016

Arizona goes full tilt. The ACC is accomplished its long standing mission. Net metering in Arizona will be replaced with some version of export pricing under the cover of value of solar pricing that stops the ‘cost-shift.’ This could spell the end of mainstream solar in one of the largest States in residential solar. The first half of 2017 could be interesting for the public companies as the various changes are implemented.
The breakthrough fund explained. Kleiner’s John Doerr explains the new Bill Gates fund to Fortune. Some interesting items of note. This is an extremely long dated investment fund. Call it 20 years to make some breakthroughs to solve the energy problem. A big opportunity is in electrifying transportation by causing drastic efficiency improvements in batteries. And policy matters, while the fund is not an advocacy group, it will push investments to be active participants in the policy process.
Community solar still weening. In Minnesota, the expectation was to have 250MW installed by the end of this year, yet it seems that number is just 55MW. There was a lot of activity in the development process but as these things go, things went slower than expected. I don’t expect that it will remain low into 2017 as projects should proceed after the ground allows for installs to proceed.

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Yann

This is your SolarWakeup for December 21st, 2016

Politics is full contact. The solar wars have been a rough fight. They’ve been rough because it is David vs Goliath in more ways than one. Unfortunately we may be seeing what happens when solar policy goes into minutiae and policy folks want to play nice. Every political outcome is a compromise, it has to be with the process we have in America. The only question is whether you are going to be in the room where it happens, because I want to be in the room where it happens.
The GROWth markets for energy. As consumers become more efficient in their energy consumption, power plant operators have to look for other growth markets. We already knew that electric vehicles are a promising energy consumer market especially as the mid-market priced vehicles hit the streets. We are also seeing the marijuana markets (the original solar pioneers I may add) increase the energy consumption. Lighting, air control, and irrigation are all energy intensive and when margins are good, then the meter can spin.
Something I did not know. I had no idea that General Mattis, the next Secretary of Defense, was an advocate for taking the military off fossil fuels. It makes a lot of sense that he would feel this way as he led the Marines in Iraq. Fuel supply was difficult and dangerous and Mattis pushed to make the utilization more efficient as early as 2005. As the former President of ACORE, Dennis McGinn, has been back in the Navy as the Assistant Secretary of the Navy for Energy. ACORE may have an interesting angle to push the Defense Department into renewable friendly policies.
Challenges for all. The biggest challenge in the solar game going forward is a realization of the challenge we have all lived through in the past few years. The market where deals get bought is not necessarily higher than the market where deals get held. The cheap money isn’t so cheap when you take into account the cost of acquisitions leaving few avenues to make profits. So as offtakers drive the price down on the PPA just to get the deal done, where will people squeeze the margin to make the profit they need to survive?

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Yann

This is your SolarWakeup for December 20th, 2016

Can Rex represent us all? We covered it in the EnergyWakeup podcast, Rex Tillerson may be the most qualified person in the US to be Secretary of State. He has only ever worked for one company and that is Exxon. As CEO and region President, he has traveled the world and made deals with many heads of state. The problem is that he represented Exxon for 41 years. An oil company that never even faked an interest in renewables, quite the opposite, they are under investigation for covering up their scientific knowledge of climate change. So after 41 years, can Rex Tillerson change his views?
The rural coops lead the pack. We have seen this across the country, coops that are governed by members, i.e. consumers. When shareholders are the consumers there is sometimes a bit more flexibility to change the status quo. This one example is from a smaller coop in New Mexico but with today’s pricing everything is modular.
Will the Paris agreement stand? One positive note on the Paris agreement is that even Bill O’Reilly said the new administration should leave it alone. It also seems to make little sense to unravel it because what would be gained given that the goals will most likely be met regardless due to economic conditions. The biggest problem with the article is that it highlights Rick Perry as Secretary of Energy and not Rex Tillerson as Secretary of State, because it was an accord negotiated through the State department.
America made a choice in solar. It was SPI in Orlando, circa 2012 when Bill Clinton spoke as the Keynote. He said America needed to make a choice, do we want to have the development, legal, finance jobs or do we want the manufacturing. At that point this was already decided, China would drive the global price of solar down while the 200k+ jobs in the US would be high end install, development and professional services. So I disagree with the premise that China is dominating. This is a global market and we all benefit from each other’s expertise.
SolarWakeup gets Political Cartoon. The idea came and I couldn’t resist. Hope you like it, feel free to download and share amongst your networks.

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Yann

This is your SolarWakeup for December 19th, 2016

Storage is upon us. I agree with Julie Blunden that storage is coming, and it is coming fast. While storage players are making many of the same mistakes solar did, i.e. selling hardware, expensive money, confusing pitches and strange executive choices, the learning curve will go much faster than solar. It took us about 10-11 years to get to 10GW. Storage has the cumulative installed solar capacity to go work with and is waiting in line to see regulatory changes that may or may not come. I’m looking at storage in depth currently on a personal level, and you will see much more storage coverage here.
Omnibus energy bills, tis the season. It was Michigan’s turn this time and again distributed generation faired well. The attempt to eliminate net metering failed and the RPS was increased by 50%. It was one of the first open attempts to increase retail energy choice which has long been an interesting catch-22 for republican legislatures across the Country. Utilities are big donors and require monopolies for access to super cheap money but take away competition from the market. The GOP loves free market capitalism, how much longer can they fight consumer choice without a political price?
Take your PURPA somewhere else. This shouldn’t be that surprising given that the complaint from FLS came in the middle of a lame duck Presidential transition. Why start Federal fight on PURPA now given that some members of Congress have been wanting to get back into the legislation. I’ve said it before, any reopening of PURPA is going to be a huge can of worms with power plants across the Country basing contracts on the rules governed by this. FLS could proceed to take the issue to Court but at what cost?
Take your Value of Solar back to the PUC. Apparently legislators don’t want to feel the wrath of the solar wars in their political campaigns. It seems that a trend is starting where legislation keeps NEM in place and instead asking the PUC to create a docket to calculate the value of solar for NEMish type policies. These dockets are going to overlay politics, mathematics and valuations in the next battle in the solar wars.

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Yann