This is your SolarWakeup for February 9th, 2023

Too Successful? The IRA is driving so many investments in the local infrastructure that estimates on the tax benefits that will be used were too low. To call them a cost however is quite flawed as they represent a percentage of the capital investments made for infrastructure and desired behavior by private industry. If we wanted to track costs, then the government could have said, we’ll be spending a billion dollars on this or that but instead they built a market using tax incentives. Not for nothing, that’s also how we built the US oil and gas markets (now the largest around the globe) and how we funded fire departments or incentivize charitable giving. Let’s stop calling tax credits a cost, it’s called success.

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Yann


This is your SolarWakeup for February 8th, 2023

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Yann


This is your SolarWakeup for February 7th, 2023

The Fundamental Dilemma. Europe is currently debating the basic issue between policy and capitalism. In solar’s case it’s the value of low priced solar panels and the ability to build super cheap solar farms that benefit the utilities and consumers with the energy cost that everyone wants. On the flip side, everyone also wants to have a local/domestic supply chain. The EU commission is warning regulators that additional tariffs will put solar targets at risk, since it will both increase the price and decrease the available supply of modules to the market given that the local supply chain is not there. I don’t have a good answer to this, I want to see local supply chains but I also worry that local supply chains created in momentary policy decisions are hard to maintain sustainably for the long term.

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Yann


This is your SolarWakeup for February 6th, 2023

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This is your SolarWakeup for February 5th, 2023

Local Trackers. The 45X credits are making a real impact to the supply chain in trackers, importantly partnering innovating tracker manufacturers with existing steel companies and allowing them to expand. This is allowing an even landscape between large incumbents and new entrants with innovative tech to benefit at the same level without massive capex disadvantages. Trackers have been on a 20 year innovation curve and it seems like it’s just beginning to gain hold.

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Yann


This is your SolarWakeup for February 2nd, 2023

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This is your SolarWakeup for February 1st, 2023

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This is your SolarWakeup for January 31st, 2023

Get What We Expect. My frustration with policy is that it rarely states the intention or goal of the legal words that go into the bill. The reason for that is some version of diplomacy or political nature of not wanting to offend anyone. This leads to investments being made to meet customer demand with the expectation of some underlying support and yes, I’m talking about domestic supply chains. Europe’s manufacturers need support from governments because local content isn’t finding enough demand in the market. Of course, as projects get built, demand is going to balance price, quality and other factors. While the individuals may desire to support domestic content, the price also has to be there which causes the rub between trade policies and/or local support of domestic content. Solar panels and batteries have some similarities in that respect but also some large differences. Solar panels will not degrade at nearly the same pace of battery containers, which are largely made to order. At the same time, battery containers weigh over 70 thousand pounds and shipping them is it’s own major challenge, giving local supply a built in benefit. We’ll see how markets evolve, but in the meantime if Europe wants any domestic supply chain, they’ll have to decide if that goal is worth building policies around. 

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Yann


This is your SolarWakeup for January 30th, 2023

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This is your SolarWakeup for January 29th, 2023

Tax Equity Rules. Based on some bad ideas, the Basel 3 rules are considering tighter balance sheet requirements for banks that participate in tax equity. Doing so would obviously put tax equity in a less preferential spot even though the risk to the balance sheet has always been minimal. Advocates continue to lobby hard to make sure these draft rules are changed for the market’s sake.

Political Risk? Hundreds of billions have been invested thanks to the IRA and some are starting to be concerned if the IRA could be a political football if the party in power changes in November. Here’s my thoughts…First 2016 had similar thoughts and ultimately (with a lot of noise) solar continued to grow between 16 and 20. Both parties have been hard on solar with tariffs for well over a decade. A republican President brought the ITC to 30% originally and I can give you examples where a republican governor vetoed an anti-solar net metering bill and where a democrat governor let anti-solar net metering rules be implemented. While there is noise in the system to extend the tax policies currently in place that will sunset next few years, which will need pay-fors, many of the popular IRA policies are likely very safe. And at the end of the day, the grid needs energy and power to continue this extensive economic and manufacturing growth we’ve seen over the past few years.

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Yann