This is your SolarWakeup for January 13th, 2020
Proterra SPAC. The electric bus manufacturer is going public via SPAC, the Arclight SPAC and taking additional capital from Chamath Palihapitiya. The total deal represents a $1.6B value for Proterra. Proterra has a foundational company, as a manufacturer and system provider for other OEMs. What Proterra hasn’t figured out yet is a lesson learned by the solar industry, it’s not about the hardware but the capital used to deploy it. One of Arclight SPAC’s board members is Audrey Lee, formerly the head of grid services at Sunrun. I’m not saying that Proterra is a non-stationary energy storage company but I’m not saying they couldn’t be either.
Impeachment, Inauguration and Climate Change. The election was early November, electoral college voted on December 11th, Congress passed a omnibus spending bill in late December and on January 6th Congress certified the election. Of course we know what happened next on the day when all things fell apart and in a world where we don’t want bad news, America kept moving forward. Today, the House is preparing to start voting on impeachment which will have a record bipartisan support. That means that the Senate will start a trial on the day Joe Biden and Kamala Harris are sworn into office, a trial to convict then former President Trump. I say all of this because Schumer will be the majority leader on January 21st and Congress has an ambitious agenda ahead including climate change. Schumer says Congress can walk and chew gum at the same time, wait and see.
Will Storage Save C&I? C&I solar has struggled for as long as I can remember with low electricity prices. It’s not that commercial properties pay less on their electric bills, their bill tends to be more skewed to the demand charges that until now were not reachable by distributed generation like solar. The difference today and tomorrow is that energy storage is getting cheaper than ever, a level that makes demand charge reduction possible and desirable. In reality it’s what got Stem the valuation it got in their SPAC. This optimism is voiced in the op-ed from our friends and fellow CALSSA board member at Energy Toolbase.
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This is your SolarWakeup for January 12th, 2020
More Tomorrow. No column today, enjoy the top news in solar and make sure to send news my way to round out the rundown.
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Join The Residential Solar Rocketship. Suntuity Solar is one of the fastest growing solar companies in the Country and we’re looking to hire the best to join us. Our executive team is hiring for VP of Operations, HR Director, Director of Talent and more positions at all levels of experience. If you or someone you know is looking to expand their career, send us an email!
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This is your SolarWakeup for January 11th, 2020
Is 2021 About Supply Chain? Solar may be growing but the bumps in the road will continue. The forced labor issue in Xinjiang was covered in the New York Times, solar glass costs are rising with limited supply and global demand is higher than ever. There is also a global boom of EVs impacting the battery supply that also provides for energy storage which we are already feeling in solar. Supply chain should be agenda item number one in your management meetings not only understanding what to buy but also expanding the time horizon on when you should purchase goods. That’s the point to consider, materials are available but it takes longer to get those goods.
A Finance Pulley. When you pull on something through a pulley, you get twice as much as you expect. That’s what is happening in the banking world. Shareholders are pressuring banks to stop financing fossil fuels, the economic indicators are showing that those assets are bad investments while renewables are desired for inevitability and ESG purposes. This means that banks not only want to stop financing old assets but expand what they are investing in new energy. Good thing is that solar, in particular, is rapidly increasing both the values that investments generate as well as total investment potential.
201 Tariff Without Plaintiffs. Sunpower is closing the Hillsboro manufacturing facility in line with their work to stop producing modules after the spinoff to Maxeon. This factory is the original SolarWorld factory that sold me modules at $4/watt but more importantly SolarWorld started the global trade war in solar. The AD/CVD, in the Obama years, caused China to retaliate with tariffs against US silicon. Then came the 201 tariff brought by Suniva and SolarWorld, both companies now long gone and remnants of their domestic manufacturing gone. What’s next? That’s my question this morning.
Join The Residential Solar Rocketship. Suntuity Solar is one of the fastest growing solar companies in the Country and we’re looking to hire the best to join us. Our executive team is hiring for VP of Operations, HR Director, Director of Talent and more positions at all levels of experience. If you or someone you know is looking to expand their career, send us an email!
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This is your SolarWakeup for January 8th, 2020
247GW Of Rooftop Solar. Last year I interviewed John Farrell from ILSR to talk about his plan to put solar on 30million homes. The impact of such a concept, putting solar on rooftops around the Country, has been modeled in a recent study which is covered in the LA Times. If were were to get to over 200GW on rooftops, it would save half a trillion in other grid infrastructure and generation costs.
Big Alpha In Solar. Unless you live under a rock you’ve seen the gains solar stocks have made in the past 12 months. Some stocks are up 1000% since April. More than anything, look at the rise in stock price since the Democrats won the Senate in addition to the White House. Policy, more than anything else, has doubled stock prices in the past 90 days. Take two 2021 policy initiatives for example. FERC 2222 is going to create a marketplace for behind the meter resources including solar and storage, a good policy could double the value of solar/storage on homes versus a weak policy that doesn’t move the needle. NEM 3.0 in California can also go two ways, utilities will fight to the tune of $50million plus to remove the benefit of rooftop solar versus a strong NEM 3.0 that values solar and solar plus storage the way that DERs are needed to aid in grid resiliency. I am going to personally set aside time to take meetings with anyone that wants to discuss how to budget 1% of revenue for policy and how to spend it to maximize your enterprise value.
What Biden Thinks Of Tariffs. I don’t have the answer for that but this administration stance is going to be of great interest to me and many others I am sure. How will Biden, his trade representative and advisors advance solar while maximizing made in America solar jobs.
Consolidate Your Power. As you walk back into your offices (remote or otherwise) you will realize that the conversation is about what isn’t available. Modules, inverters, wires, tax equity, labor and other core requirements are in high demand and short supply. On product supply look towards consolidating your purchasing with similar companies to maximize your access and keep your pricing competitive. We’d be happy to give you more information at the SolarWakeup Buyer’s Group.
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Yann
This is your SolarWakeup for January 7th, 2020
Senate Switches Control, Goes 50/50. Early this morning and again this afternoon, news outlets confirmed the New York Times needle. Warnock and Ossoff have been elected as the next Senators from Georgia pushing the balance of power to 50/50 with the democrats controlling the floor with the Vice President breaking the tie. Solar stocks had one of the biggest days ever, some going up as much as 25% before an attempted insurrection at the Capitol brought the market down a bit.
What It Means. Functionally the biggest change with the gavel going to Senator Schumer is being in control of what legislation reaches the floor for a vote. It also makes every Senator the most powerful Senator because one vote swinging to the other side is meaningful. That one vote swing may mean that more Senators get what they want when legislation moves especially on the 20 Senators that are in the center of both sides of the aisle. More to come on policy punditry but not today. In the short term, as you saw with the Garland nomination as AG, Schumer is going to be much more powerful pushing Biden’s cabinet nominees through the Senate.
What It Doesn’t. Don’t expect giant climate bills to the tune of $2trillion to be made into law anytime soon. A 50/50 Senate is a balancing act including the effort to make sure Manchin doesn’t switch parties. I would expect Manchin to be heard loud and clear on energy issues and retain his chairmanship of the Senate Energy Committee.
The Platform Value. Carlyle’s infrastructure fund is investing $374million into Amp Energy’s platform for projects around the world. The investment highlights not only the strong desire to invest in renewable energy infrastructure but to do so in partnership with platforms like Amp. Just a few years ago, private equity was interested in projects but not the team and company that makes sure those projects are investable. I think this is a nod to all of you developers and analysts that have been arguing for more value to be put on the platforms.
Highlighting Permitting. I would appreciate your social media elevation of the op-ed on the need to remove permitting barriers for solar. You can find the article here and tag me on Linkedin/Twitter and I’ll make sure to return the favor.
Consolidate Your Power. As you walk back into your offices (remote or otherwise) you will realize that the conversation is about what isn’t available. Modules, inverters, wires, tax equity, labor and other core requirements are in high demand and short supply. On product supply look towards consolidating your purchasing with similar companies to maximize your access and keep your pricing competitive. We’d be happy to give you more information at the SolarWakeup Buyer’s Group.
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Yann
This is your SolarWakeup for January 6th, 2020
The Senate Hangs. Yesterday, Georgians went back to the polls in their dual Senate run-off election. At the time of my writing this at about 2am Eastern, it seems a distinct possibility that the Senate will end up in a 50/50 split with Vice-President Harris breaking the tie. IFF (sorry to the non-engineers) that were to happen, you ask yourself what the Biden policy impacts would be since we largely assumed McConnell retaining the gavel. First and foremost, it provides a more realistic path to Biden to confirm his cabinet including those that are focused on climate. It does not however, in my mind, change much on the policy initiatives on energy with Manchin in the middle. Senator Manchin was the ranking member for the Senate Energy Committee and Schumer is unlikely to do anything that helps McConnell’s effort to have Manchin switch parties which he has been telling donors is the plan in the case of a loss in Georgia. So we wait and see for these results as well as the final confirmation later tonight that Joe Biden will be President come January 20th.
Shoals Files IPO Papers. In week 1, one of my predictions is coming true from my year in review last week. Shoals Technologies, the Tennessee manufacturer of balance of system components (and solar expo exhibitor expert), has filed for their IPO. The S-1 filed is a placeholder in advance of their roadshow and final fundraising document. It does give us some of their financial results through Q3 2020. The profitable manufacturer is smaller than many expected at sub $200million in revenue with 30% margin but keeps their overhead low with a great net income number relative to the revenue. If Shoals IPO is successful, and there is no indication of it failing, it opens the doors to many more IPOs at this scale which is much lower than previously assumed by solar companies. In short, if a $25million earnings company can be valued north of $750million or more then hold on to your horses because there is quite a pipeline of solar companies that will want to follow suit. Here’s a word of caution though, $200mm of revenue with north of 10% margin is different for a company with a track record of success and market share growth with the professionalism gained by having a seasoned executive team and owned by someone like Oaktree versus a company that just reached that amount, is growing exponentially with a team that has little track record of previous exits and investors that aren’t on JP Morgan’s speed dial.
It’s All About the Home. Grid planners, investors and realtors are coming together to assess the next decade. In a strange combination of circumstances, the focus on the home has never been greater and the electrification of the homes has never been more apparent. Additionally, the use of the home’s electric system is rapidly increasing with work from home/virtual schooling/gaming/streaming and shifting the gas station to the driveway with electric vehicles. They say home is where the heart is, but soon we will find that home is where the market is too.
Supply Or Demand. California is leading this discussion but FERC isn’t far behind. Should electricity grid reliability be managed on the generation (supply) or building (demand) side of the meter. I.e. do we need peaker plants or the ability to manage the electricity in your battery or refrigerator? The answer is all of the above, negative electrons through demand response, virtual power plants through distributed resources in solar or storage and stored energy in a renewable generation portfolio. Best of all, the entire demand response market is built without the need for ratepayers to carry the burden because if the market creates a pricing signal the market will respond with many GW of flexible capacity.
Consolidate Your Power. As you walk back into your offices (remote or otherwise) you will realize that the conversation is about what isn’t available. Modules, inverters, wires, tax equity, labor and other core requirements are in high demand and short supply. On product supply look towards consolidating your purchasing with similar companies to maximize your access and keep your pricing competitive. We’d be happy to give you more information at the SolarWakeup Buyer’s Group.
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Yann
This is your SolarWakeup for January 5th, 2020
Losing Money Redefined. If you buy a house and you make that mortgage payment every month, your checking account balance goes down. Would you consider that losing money? The money that the bank invests in you by providing that mortgage, is that money lost by the bank? If you were to read the New York Times article below, you would get the sense that Sunrun and Sunnova are losing hundreds of millions. In reality, their income statements have always been misunderstood by reporters because every dollar that goes into a solar project results in another 20 year contract that generates cash flow. There will come a time when the cash flow from those assets will generate more cash than the companies are investing and there will be GAAP EBITDA but even then it’s a dumb argument and I’m annoyed that the New York Times can’t report this accurately. Solar shouldn’t be made to be a bad investment by the pre-eminent newspaper in the Country, editors need to do better.
Will Government Contract Fast Enough? Biden is set to take the reins and he’s spoken at length during the campaign about government contracting. It is true that the military and GSA are enormous energy users spending billions for electricity and I hope that they are part of the solution. We need a project warp speed at the GSA and DOD to enter into PPAs for on and offsite renewable power purchasing. This can’t drag out and bureaucracy can’t get in the way this time.
Oil, Gas And Coal. If you’re an oil executive, where do you focus in the next 4 years? You’re losing your market share to EVs, so how do you play that? The harder question is for the gas executives, who are looking at their coal colleagues and see the writing on the wall.
Expanding Portfolios. Gibraltar, which trades publicly as $ROCK, has acquired Terra Smart to add to its portfolio alongside RBI Solar. Making portfolios of solar manufacturing companies is going to build great investments. Congrats to the team.
Consolidate Your Power. As you walk back into your offices (remote or otherwise) you will realize that the conversation is about what isn’t available. Modules, inverters, wires, tax equity, labor and other core requirements are in high demand and short supply. On product supply look towards consolidating your purchasing with similar companies to maximize your access and keep your pricing competitive. We’d be happy to give you more information at the SolarWakeup Buyer’s Group.
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Yann
This is your SolarWakeup for January 4th, 2020
It’s A New Year. We’re headed into 2021 but in reality we’re going into a three part series. With some certainty on the federal policy front for the ITC, DC will refocus on trade issues which causes modules and inverters to cost more than any other market in the world. Solar is also going to have a conversation at the State level starting with the NEM 3.0 battle in California which affects half of all solar revenues. Every manufacturer in America should be on the phone with CALSSA this week to talk about how they can help ensure that solar in California keeps the industry moving forward.
All About Permitting. Today’s top story is an op-ed co-written by Mike Casey and myself on the topic of permitting, expanding some views on the issue that you’ve read here. Our hope is to broaden the conversation beyond solar so that legislators, county officials and city politicians participate in the dialogue as well. Reality is that most people don’t know it costs a fortune in time and money to get a permit for solar and it doesn’t actually help the homeowner get better solar. I see plenty of poor installations that paid thousands in permitting fees. What have you seen and what do you pay for permits?
Welcome To The S&P 500. Congratulations to the Enphase team for going into the S&P 500, officially joining the index later this month. From written off at under $1 per share, execution led the company to new heights with some exciting homeowner focused initiatives well under way including direct to installer sales in Europe.
Consolidate Your Power. As you walk back into your offices (remote or otherwise) you will realize that the conversation is about what isn’t available. Modules, inverters, wires, tax equity, labor and other core requirements are in high demand and short supply. On product supply look towards consolidating your purchasing with similar companies to maximize your access and keep your pricing competitive. We’d be happy to give you more information at the SolarWakeup Buyer’s Group.
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Have a great day!
Yann
This is your SolarWakeup for December 30th, 2020
Happy New Year. Here’s your last rundown of the year, some of the best stories lists and of course the story that gives us a 2-year extension of the ITC courtesy of Trump signing the spending bill. If you read nonsense online about the ITC being bad for solar, remember that while solar is for everyone not everyone is for solar. Stay tuned for my year in review and predictions email before the clock strikes the end of 2020. It’s been a pleasure getting through the year with you (most of you at least) and look forward to what the next year in solar news has in store for us.
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Yann
This is your SolarWakeup for December 22nd, 2020
ITC Extension Language. At long last, the bill has been printed. You can read the entire 5500 pages here. Page 4908 for section 48 and 4015 for section 25 extensions.
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Yann