This is your SolarWakeup for February 10th, 2020
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Yann
This is your SolarWakeup for February 9th, 2020
What Is A SPAC? When a company goes public via a SPAC, which is a vehicle that has already gone through an IPO with the intention of acquiring a private company, it does so with the basic intention to raise additional capital. It is not (in most cases) an exit event, it is meant to provide hundreds of millions of dollars to a private company through the acquisition and a PIPE (private investment in public equity). A lot of folks talk about valuations, market caps and stock prices but SPACs are a vision into the future. While public companies are typically thought of as short term, SPACs are meant to make monster companies over the next few years with the fuel of money today. Some will fail, even $200million can’t make unicorns, but others will take the fuel and do big things and that’s the investment thesis.
The GREEN Act, ITC Edition. The House Ways and Means committee has a GREEN act filed with includes a 5 year extension of the ITC at 30%, direct pay at 85% and includes storage. There is also a version of a credit upside if certain labor requirements are followed. This is early and legislation needs a vehicle and momentum but now you have the outline of what the new Congress is thinking about
Midwest Solar Goes Bigger. 195MW in Indiana. Do you need more proof that solar is going to be everywhere?
Ratebase Performance. In many ways Hawaii is looking at utility profits in the way that they should have been since the start, paying for performance instead of simple ratebase spending. Over the past 50 years regulated monopolies have simply become expensive banks that get paid for how much money they deploy and passing along operating costs. The problem with that is some utilities are better than others and the good ones should be rewarded.
Enphase Shops Again. Last week Enphase acquired a software startup that supplies layout and proposal tools to hundreds of installers but today the company announced that it has acquired an India based proposal and design company. It may seem like an overlap but it’s actually that complement to the tech tool. It’s becoming clearer now that Enphase is focused on supporting installers, sales people and homeowners from understanding how much solar fits, how much solar is needed and the financial value proposition to getting the project into permitting. Some companies provide leads to installers, Enphase may be trying to provide contracted projects with permits to contractors. I don’t think installers will mind paying double for inverters if they get a fully permitted project. The question is, how will they fill the remaining parts of the process?
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Yann
This is your SolarWakeup for February 8th, 2020
The SPAC Transparency. Each day this week we’ll cover one part of the SPAC market. Tomorrow we’ll talk more about the basics as I understand them but today, let’s talk about transparency. When a SPAC merger is announced, i.e. a public acquisition corp says it’s acquiring an operating private company, an investor presentation is released. These presentations are gold for understanding where the business comes from, how it is performing financially and where it is going. These decks are almost always well prepared and give you a great outline of how to tell the story of your company, the competition and how you will win. I’ve seen quite a few but if there is one that impressed you, send me the link.
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Yann
This is your SolarWakeup for February 5th, 2020
Market Share Update. On yesterday’s Roth Capital market call, Ohm Analytics reported market share for residential inverter companies Enphase and Solaredge based on actual permit data. In this data set, Ohm showed that Enphase has increased its share in the resi market by 50% year over year to 48% of the overall market, taking a majority of that increase directly from Solaredge. Roth believes that Enphase earnings next Tuesday may show the financial execution of that business success.
Clean Energy for Biden. The incoming Secretary of Energy, Jennifer Granholm, highlighted the influence of the group on a LinkedIn post yesterday. Gone are the days when our industry isn’t in the room where it happens.
No Way Norway. Will Ferrell stars in this GM ad that will run during the Super Bowl announcing GM’s plan to have 30 EV models by 2025. As a marketer, I am in awe how far behind auto OEMs are in their consumer purchasing understanding. I’ve driven EVs since 2012 and not once did I think about the type of battery in the car. GM, call me.
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Yann
This is your SolarWakeup for February 4th, 2020
Green Cabinet Advances. Mayor Pete becomes Secretary Pete and Governor Granholm is on her way to the same. President Biden is getting the cabinet he desired with the executive orders to centralize the effort to fight climate change throughout government. EPA nominee Regan was on the hill yesterday.
Stranded Assets Get Audited. NextEra kicked off the energy earnings season with the first quarterly losses in a decade due to a billion-dollar right down of a natural gas pipeline project. A new report now forecasts over $1 Trillion in losses from these types of delayed and stranded assets. The pain will only get worse if we expect delaying the transition will somehow avoid the pain that is almost guaranteed by poor investments. Part of overcoming the negative financial impact will be creating investment opportunities on the positive side of the ledger.
SEC ESG Advisor. NYU’s Satyam Khanna is joining the SEC as an advisor on ESG and climate issues. With financial firms already understanding that ESG is central to their investment thesis (see stranded assets) it helps to have regulators understand the issue from a regulatory standpoint. Not only to keep clarity on what is ESG but also to ensure that regulations don’t get in the way of this decade’s wealth creation opportunity.
We Ride Together. Late notice but join us this morning at 8 am for a 30-minute ride on Peloton with Ally Love. There are over 60 members in the #ride4solar team and growing. When we can’t network in person, we shall do it virtually on a bike!
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Yann
This is your SolarWakeup for February 3rd, 2020
Utility Ownership Fallacy. Utility ownership of behind the meter or community level assets reveals the flaw that is the 21st century business model. When it comes to building the most competitive and dynamic energy grid, it requires consumers to be at the center of the services that are provided. Not in a way that is secured by minimum bills or required contracts but by a provider showing the value proposition and actually delivering what was promised. Years from now there will be books written about how PG&E has been able to survive this long as an IOU through two bankruptcies, multiple criminal convictions and an ongoing search for executives. At the center of that story will be the regulatory capture in Sacramento.
Better Jobs. Part of the solar industry’s goal for the next decade is geographically dispersing the job opportunities. Of course the installations are spread around the Country but what about the office jobs? I’d be interested to see trade groups working with local economic development councils to find siting opportunities for solar companies in places that aren’t usually considered or are hard to find.
Plan For Big Solar. Every week passes and the realization comes that for the foreseeable future the limits to the growth in solar will be labor and materials. The pipeline appears endless, consumer demand growing in depth and geography and capital loves solar more each day. Trying to buy materials for a project in the next two quarters however, is far more complicated and unpredictable than ever before and it may get worse before it gets better. Next week, Enphase will report earnings and you may hear that they are sold out and raising margins simply due to fundamental economics of supply and demand.
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Yann
This is your SolarWakeup for February 2nd, 2020
Finishing The Stimulus. DC is back to some standard back and forth. Dems offered a $1.9trillion stimulus and a gan of 10 Senators from the GOP countered with $600billion. If old DC is back, we’ll get a $1.2Trillion stimulus by next week. It does help that the very conservative GOP governor from West Virginia is calling for peak stimulus. One way to know that things are back to some norms, those ten GOP senators met with Biden yesterday and nobody called anyone any names, you probably didn’t even hear about it.
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Yann
This is your SolarWakeup for February 1st, 2020
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Yann
This is your SolarWakeup for January 29th, 2020
Have A Good Weekend. Plenty of news headlines to go back and catch up on from this week. Have a great weekend!
Don’t Miss. I visited with the team from GRNE Solar to talk about soft costs in solar. Catch the podcast here.
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Yann
This is your SolarWakeup for January 28th, 2020
Shoals IPO Boom. It was a 24-year overnight success story for the man you all know, Dean Solon the founder and former CEO of Shoals. Shoals do simple things well and in the past few weeks introduced me to the category of eBOS. I said that it would be a boost to the industry if Shoals IPO went so well that the company would be valued at $2billion, but it closed at over $5billion in market cap on its first day of trading. While Oaktree sold around a 70million shares for a major gain for its investment, Dean Solon appears to be in it for the long run, still holding over a 65million shares of the company started and still operating in Tennessee. Trading under the ticker SHLS, count this as the entry ticket that says to every founder, executive, and operator in the solar industry that the billion-dollar exit and valuation can be in your future as well. Congratulations to the entire team.
Side Note. Shoals has a market cap of $5.2billion as of yesterday close of the market and FLEX has a market cap of $8.7billion. FLEX just happens to also own Nextracker, the largest supplier of tracking in the world.
Biden Climate Orders. There was a waterfall of climate-related activity from the White House yesterday as expected. The executive order for tackling the climate crisis ties in all aspects of the federal government. It also establishes the Office of Climate Justice at the Department of Justice, one of the most consequential paths for achieving the overarching goal of decarbonizing the electric grid by 2035 as called for by the executive order.
Envoy John Kerry Speaks. The foreign policy on climate change was a central part of John Kerry’s tenure as Secretary of State and now he’s taking the issue on full-time. What Biden is creating is a domestic/offshore 1-2 punch on climate policy with two executives that know the issue better than most.
Gina McCarthy Sets Tone. Gina McCarthy unveiled the administration’s tone on climate yesterday and through the accent, the policy tailwinds were loud and clear. It will now be up to the industry to coordinate, plan and lobby the administration in order to set the rules that actually implement the goals ahead. The plethora of goals is too long to handle, releasing more climate positive news in a day than the federal government has done since declaring independence.
Granholm Doubles Down. In her hearing on the hill, Jennifer Granholm explained to the Senators that a climate positive future is exactly what the economy and the Country needs right now. Jobs, from construction, manufacturing to finance and legal, are the lifeblood of the renewable energy markets. If the solar industry is set to sell a million solar homes, we will need to labor and management staff to install it. Granholm looks to join Pete Buttegieg in a quick confirmation in the Senate.
Deal Thursday. Joining the Shoals gangbusters day is EnterSolar and Loanpal. EnterSolar solidified its relationship with EDF by selling its remaining ownership to the company while Loanpal, which is just about 3 years old, raised a new $800million.
A Supply Chain Mess. Solar is growing everywhere and the US market continues to be underestimated. With our path to 1million solar homes installed in a few years, Australia at over 25% penetration, suppliers are having a hard time keeping up with demand. The SolarWakeup Buyer’s Group was meant to not only lower costs but also increase access by consolidating demand amongst its members. We’re doing that now, reducing lead times and saving money. Get in touch with us through our portal or hit reply to this email.
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Yann