This is your SolarWakeup for June 14th, 2023
Relentless Attacks, But Why? The House majority is taking up a repeal of the ITC and PTC in Ways and Means. Solar is supported by both parties and solar manufacturing is opening factories all over America, including many red districts. Yet the leaders of the most powerful committee in the House is taking on the key tax benefit for the fastest growing energy source in the US.
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Yann
This is your SolarWakeup for June 13th, 2023
The Problem That Today’s Grid Presents. The grid can’t handle the energy transition is the biggest talking point that is fed to members of Congress charged with slowing down the energy transition that consumers want. What if every car became an EV, could the grid even handle that? Reality is that people that buy electric vehicles and industry shifting to electric or solar don’t think about the impact to the grid, the grid operators are held accountable for that. Regulators need to accept that and plan accordingly.
Why It’s A Problem And Setting. This is the manifestation of what I said above, coal is declining no matter what happens next. Grids are either going to send the pricing signals to make sure the private investments or they will be left in a painful position with increased costs to consumers. ERCOT is going to hit record demand next week and hopefully will be able to make it work with the infrastructure that’s already in place but it will need far more resilience in the future.
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This is your SolarWakeup for June 12th, 2023
The Domestic Credit Adder. Most of DC is working on figuring out who, how and when the domestic adder will be able to come to fruition. With some guidance creating new questions, it is now up to the tax lawyers to make opinions and get clarifications from regulators on how the market will benefit and how manufacturers must grow domestic factories in order to be compliant. The good news is everyone is on board with the idea of building domestic supply chains, bad news coming from the standpoint that not everyone is sure that their new factory will be enough to satisfy the requirements.
A Smoke Filled Eastern Corridor. Dealing with smoke filled air quality has been largely a California problem, many of us having suffered through terrible air during the Bay Area fires in 2018. It hasn’t been a real thing in New York and DC, which all of a sudden brought back the Bladerunner memes to the internet. Wildfires are a byproduct of climate change but for many Americans could still be too far a connection between their habits and thinking that changing them would help stave off natural disasters. What could I possibly do to help prevent this? Is the ultimate climate change problem, which is why solar, wind and storage are such a great climate change fighting tool. If the economy prospers, people get jobs and money can be made, fighting climate change is a nice side effect.
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This is your SolarWakeup for June 9th, 2023
Can’t Escape It. It was hard to escape the smoke this week, with over 60million Americans affected with poor air quality. Hard to think about how to tackle the wildfire problem but climate change can’t possibly be helping. We’re about to enter silly season where one political party wants to make this a wedge topic to separate us, but in the end we all breathe the same air and drink the same water.
Impact On Solar. Interestingly, this is a concern of the grid operators in California. What happens to the reliability of solar production when wild fires reduce solar radiance across the geography? The entire northeast felt this with the smoke cover lingering for several days bringing this scenario to a new grid.
The US Scale. If you look at the energy storage deployment across the world, you’ll realize that the scale in the US is exponentially bigger.
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This is your SolarWakeup for June 8th, 2023
Domestic Supply Chain Unknowns. Passing the IRA created intentions, rules, guidance and now interpretations. The intention is to make the products that are installed by American workers right here, with many new factories activating to participate in this market. The rules were published by congress and drafted by the agencies that oversee the execution of the law passed by the legislative branch. Now the guidance has come out, meant to create rules of the road so to speak, and enable deployment of billions of capital. However, the interpretations leave some guidance with additional questions that the industry is working through. Part of this is also on the buyers in the industry to choose to go along with a domestic content success, it can’t just be a decision to buy something cheaper made elsewhere. At some point, the market has to decide to make local manufacturing a given, not a choice.
Not Peanuts. Duke’s capital plan includes $65billion of investments in the next 5 years, 80% of which are labeled as low carbon. This isn’t a unique situation, the investments being made by munis, cooperatives, and investor-owned utilities are significant and growing to allow for the grid to become more stable and resilient within the energy transition.
Texas Storage Postcard (From The Future). Texas, with a robust, energy based power market, has been installing storage at quite the pace, especially in the distribution scale because of the quicker permitting process (take note!). As storage has been built in ERCOT, regulators have realized that batteries can do quite a few things that are valuable to maintain grid stability. This realization comes with new services and regulations that storage assets need to conform to, requiring new configurations, upgraded controls package and analytics capabilities. This will be a reality with Federal agencies as well, particularly on industrial controls and cybersecurity protocols. Happy to connect you with folks from our FlexGen team to get more insight on these rather complex and nuanced challenges that the market will maneuver through.
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This is your SolarWakeup for June 7th, 2023
SEIA Clout Expansion. Having spent the last few days in DC for the SEIA board meeting and administration briefings, I’m in awe of how far this industry has come. SEIA’s leadership under the stewardship of CEO Abby Hopper makes the calls and gets calls back from the agencies doing the hard work of implementing the IRA. On Monday, positive feedback was heard from Departments of Labor, Interior, Energy and Treasury on how and when the rules would come out. The ended with a grand finale with John Podesta, who’s running the IRA implementation for President Biden, speaking to the board for over an hour. This administration cares about the solar industry, what it takes to get it right and how to do more. In short, solar is doing more than we ever thought possible 15 years ago.
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This is your SolarWakeup for June 6th, 2023
Would You Rather? It’s still hard to understand what causes pushback to solar project developments. Farmland that’s used for solar means that the farming isn’t able to pay the same rent. People don’t want to see it? But they still want their lights to turn on. Ultimately it becomes an exercise of staying in the dialogue as long as possible because homeowners also don’t want a gas, coal or nuclear plane near their home either, they probably pick solar over all their options.
You Get A Battery (Plant). France gets it, someone in the EU needs to be building battery factory ecosystems and Macron seems to setting his Country up for success. The reality is that engine manufacturing is getting replaced by battery manufacturing and the best way to build a battery plant is to lean in and create a market beyond EVs. Manufacturing plants are all about the throughput, that is where “we make it up through volume” comes from, an EV plant that doubles as a storage product is also important.
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This is your SolarWakeup for June 5th, 2023
What’s In The Debt Deal? Headlines highlight environmental permitting for energy projects as being included in the debt ceiling deal. First, getting debt ceiling issue behind us creates an economic certainty that is a pre-requisite for anything that is to follow in terms of private capital investments. What the deal also brings to the forefront is the need to talk about permitting as something that hinders the type of private investments that our infrastructure needs and time kills deals (as well as returns). The deal does not actually deal with the issue of permitting and interconnection in the way that is really needed but more of a down payment for further discussions.
Almost $2 But Need $4. Trillion dollars per year, that is. The amount of capital that needs to be invested annually according to the IEA in order to meet the climate and energy needs that come with the energy transition. New generation, new resilience, new fuel delivery mechanisms, are all part of the global picture as we transition more and more energy usage from molecules to electrons. But at $1.7trillion this year, that’s not a bad market to serve of be investing out of.
You Snooze, You Lose. The UK has a good idea when it comes to clearing interconnection queues. When it’s your turn to step you, you better be ready to move or you’ll lose your turn. Innovators could be disadvantaged because selling or raising money for a project without interconnection is hard which means that large corporations with captive capital sources could benefit from a quick turn around. The intention to move through the queue faster is the right idea and that envelope should be pushed.
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This is your SolarWakeup for June 2nd, 2023
A Global View. 2023 is likely to be a banner solar and wind year globally, expected to add over 400GW of total capacity around the world. With Russia’s invasion of Ukraine taking a volatility mallet to the EU gas market, it was just yesterday that Ukraine saw defensive positives in the distributed nature of wind farms. In total that brings the installed capacity to 4,500GW globally for wind and solar. The as available nature is going to require some storage I presume…
Permit Expediting. Europe is tired of waiting for projects that they want, and investors are willing to invest in, to get built because the permits aren’t getting approved. A new directive is going to make it 2 years maximum to get a project approved and 1 year for a repower. With as much existing capacity that exists, I can see colocation of some batteries in the future as well, given the success we’ve seen in the UK market. There are 58GW in permitting stages awaiting approval, possibly igniting a new stage of growth in the EU markets.
Taking A Manufacturing Victory Lap. Treasury released additional guidance for the $10billion in manufacturing tax credits this week and trade groups can take a victory lap for bringing the US manufacturing sector back to life. Press releases barely get highlighted anymore but that’s exactly what this exciting market needed after years of advocacy to get the IRA done.
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This is your SolarWakeup for June 1st, 2023
DC Work Remains. Next week I’ll be in Washington DC at the Secure Renewables conference. Solar used to be the niche, I recall a legislative effort to get solar to 2% of the portfolio. It’s more than just niche now that hundreds of billions flow into the sector annually. With the addition of energy storage, the role that our generation plays with our grid security is enhanced and widely underreported. How to control, manage and monitor these assets has to be given due regard and I look forward to hearing from the experts next week while in town. You can find more about the conference here.
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