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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Opinions:
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
This is your SolarWakeup for December 21st, 2020
The ITC Extension. It wasn’t entirely expected to happen at this point in time but the ITC is likely to be extended for 2 years in a vote later today. The cliff from 26% to 22% will wait until the end of 2022 and 22% will stay through 2023. This will give large scale developers flexibility with placed in service procedures and safe harbor for all tax equity based structures. It also gives the industry another 2 years to get its act together and fight for a longer extension or even the ability to make the ITC permanent. Permanent may seem impossible but alcohol excise breaks were made permanent in today’s extender package. As of this moment, the actual bill language hasn’t been filed yet. We’ll update you when we see it.
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Yann
This is your SolarWakeup for December 18th, 2020
A Message On Policy. If you happened to participate in yesterday’s Roth call you heard me say this live. Companies in solar need to step up and so should everyone reading this. Over the past 15 years years we have transitioned solar from an industry that needs support to prove a point to being the fastest growing energy source with margins throughout the ecosystem. I read almost every form 4, and I don’t mean to pick on executives at public companies, but we are doing much better than ever before. The problem is most companies and executives view policy as charity, not a regulatory necessity or business development. Companies and executives alike should be setting aside 1% of their revenue to invest in policy efforts. That means if your revenues are $200million, you should be spending $2million on policy through staffing, lobbying, trade groups and political contributions. Let’s say that last year the revenues in US solar was $30billion, imagine how powerful solar would be if we spent $300million industry wide on policy efforts and therefore what would you say your salary, equity and net worth growth would be next year. Do you think we would be fighting for a 1 or 2 year ITC extension? Would SEIA and CALSSA have to struggle to find revenues because COVID killed in person events that raise a majority of the small budgets that operate our trade representatives? 1% is the number. I hope that every CEO and executive team at least spend time in a meeting talking about what this would look like on their P&L and what regulations would make that investment worth it and what policies could die if they don’t do it. Here’s my contribution to you, if you’re open to doing this and don’t know how to deploy that money, I will give you unbiased advice on how I would deploy if I were in your shoes.
And The Freeloaders. There is a list of companies in my mind and other policy pros. These companies are growing, profitable and lack participation at any level. You’d be shocked if I named names, which I won’t, of companies that aren’t members at state SEIA chapters or any trade group at all. They also tend to ignore the phone call that asks for their participation in fundraising drives and they definitely don’t have policy staff. If the solar industry has increased your net worth to over $10million, do me a favor and look at your policy spend. SEIA’s budget shouldn’t be $20million (in a normal year) and CALSSA shouldn’t be $2million, they should be 5x that number and would be if everyone participated.
Biden’s Climate Team. Biden has named names, Congresswoman Haaland to Interior, Michael Regan to EPA and Brenda Mallory to CEQ being added to the Granholm, McCarthy and Kerry announcements that came before. These are great names and will have the ability to do good things for the planet and solar. The next level of staffing will be great to see, I assume we will see names from inside our industry fairly soon.
No Spending/COVID Deal Yet. Negotiators continue to hash out the details of the covid stimulus. It is now expected that members of Congress will vote on a deal over the weekend but no word on if extenders get included and whether solar is included if they do.
30 Years Of Solar. In this episode of SolarWakeup (or find it on spotify or Apple), the podcast, I speak with Dan Shugar. Dan is the CEO of Nextracker, one of the largest tracker company in the world, currently owned by Flex. Dan has been thinking about solar for over 30 years and our conversation weaved through many of the periods that led us to where we are today, a mainstream energy generator creating generation wealth opportunities. Conversations like this are difficult to maneuver for me because after 15 years in solar I have a lot of the background that some listeners may not know or recollect but I think this may be a great welcome to solar listen for everyone in the industry. You also get a first attempt at the 10 minute episode of SolarWakeup recap at the top, fast forward to minute 10 to get to the interview. I’d certainly appreciate it if you forward the episode along to friends and colleagues.
Solar For Clubs. My friends at Sustainable Capital Finance (SCF) have seen an uptick in interest for solar PPAs from schools, country clubs, and golf courses, as these off-takers have been impacted differently than other C&I energy consumers during the COVID-19 crisis. Golf & Country Clubs have seen increased revenue from golf and other outdoor activities, while schools would install solar while students aren’t on school grounds. In both scenarios, savings from a solar PPA are extremely attractive. Click here to learn more about how their subscription-free, proprietary software, the SCF suite, can help to speed up your PPA pricing and transaction process.
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Yann
This is your SolarWakeup for December 17th, 2020
What It Means. Today at 11am eastern, join me and Phil Shen as well as our fellow industry insiders for a market update call, particularly focused on residential. You can read Phil’s market analysis on the possible ITC extension here as well as read his weekly market insights by contacting him. Registration for the webinar is here and anyone that’s been listening to the series (this is webinar #10) has definitely been given the most accurate analysis and forecast in the market.
An Early Christmas Gift. When it comes to policy, anything that is not discarded is very much possible. Such is the case, at this moment, that the ITC could be part of the omnibus spending bill. Attached to the omnibus will be a covid stimulus and possibly a tax extenders package where the ITC extension could be included. Congress is on the clock, the government runs our of funds at the end of the day Friday though OMB would consider the timing negligible if it appears a bill is imminent and things could flow into the weekend. Regardless that would require a spending agreement between the four corners and the White House before members vote on the agreed bill since a second go around wouldn’t be allowed by the calendar of events. I don’t anticipate Congress wanting to go home for Christmas without stimulus and a government shutdown so something is going to get done this week, whether tax extenders are included could be known any moment (most likely 5 minutes after you receive this email).
Mayor Pete’s Infra Week. The Department of Transportation is not one steeped in glamour but it offers Mayor Pete, one year my senior, a platform for the future. Over the next four years we will undoubtedly get an infrastructure week and with Granholm at DOE as well as unstoppable market forces see major shift on how we move as Americans. Infrastructure is the government spending bill that is hard for any members of Congress to deny and Pete will have the chance to visit many airports, train stations, and factories around America to spread his message. I’ll tell you another secret how this overlaps with our industry. Highways and railroads have the best easements in America, imagine high voltage DC transmission alongside roads and railroads to move renewable energy around the Country. This may seem far fetched but alas it has been worked on for a decade and needs action to get executed.
30 Years Of Solar. In this episode of SolarWakeup (or find it on spotify or Apple), the podcast, I speak with Dan Shugar. Dan is the CEO of Nextracker, one of the largest tracker company in the world, currently owned by Flex. Dan has been thinking about solar for over 30 years and our conversation weaved through many of the periods that led us to where we are today, a mainstream energy generator creating generation wealth opportunities. Conversations like this are difficult to maneuver for me because after 15 years in solar I have a lot of the background that some listeners may not know or recollect but I think this may be a great welcome to solar listen for everyone in the industry. You also get a first attempt at the 10 minute episode of SolarWakeup recap at the top, fast forward to minute 10 to get to the interview. I’d certainly appreciate it if you forward the episode along to friends and colleagues.
Solar For Clubs. My friends at Sustainable Capital Finance (SCF) have seen an uptick in interest for solar PPAs from schools, country clubs, and golf courses, as these off-takers have been impacted differently than other C&I energy consumers during the COVID-19 crisis. Golf & Country Clubs have seen increased revenue from golf and other outdoor activities, while schools would install solar while students aren’t on school grounds. In both scenarios, savings from a solar PPA are extremely attractive. Click here to learn more about how their subscription-free, proprietary software, the SCF suite, can help to speed up your PPA pricing and transaction process.
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Yann
This is your SolarWakeup for December 16th, 2020
Taking A Victory Lap. 2020 numbers for Q3 are out from SEIA in their Solar Market Insight. Spoiler, they are really good and I get to take a victory lap alongside this network we’ve created. When the pandemic struck in February, I spent hours talking to you, conducting surveys and trying to put results over sentiment. This led to a SolarWakeup prediction in May where I said that residential solar would not decline by 20%+ but instead grow in 2020. Most were skeptical about that forecast but here we are, prediction is true thanks to you.
The Market Speaks. 2020 has been a year for all of us and somehow in the middle of it the solar industry is going to grow like crazy, including in a residential segment that was originally expected to shed 1GW from 2019 levels. With 69GW of utility scale solar already contracted, we’re entering the SEIA dubbed solar decade. This means that solar, as an industry, is ready to let Joe Biden put sunshine on our panels (we need a wind in our sails analogy) and supercharge what’s ahead. The energy and transportation transition needs solar to work hard to do it all. Jobs and opportunity lie ahead, you should all take a moment and thank each other for the work you’ve done to get us here.
Hear More. Tomorrow at 11am eastern, join me and Phil Shen as well as our fellow industry insiders for a market update call, particularly focused on residential. You can read Phil’s market analysis on the possible ITC extension here as well as read his weekly market insights by contacting him. Registration for the webinar is here and anyone that’s been listening to the series (this is webinar #10) has definitely been given the most accurate analysis and forecast in the market.
An ITC Inside Straight? Late yesterday evening, at the time of this writing, there seems to be a narrow window for a 1-year extension of the ITC. This extension would be included within a broader extenders bill inside the omnibus spending bill. The omnibus will also get a ~$700b covid stimulus attached to it, making it too big to fail at final vote. Whether solar gets included during the legislative drafting and negotiation is likely to occur overnight and maybe announced by the time you read this.
The DOE Secretary. Now officially the President-elect, Joe Biden is naming Governor Granholm as the next Secretary of Energy. SolarWakeup proposed the Governor for the position 4 years ago (see here). Granholm was Governor of Michigan from 2003 to 2011, close to the domestic auto sector and big supporter of solar. She was a big fan of Uni-Solar and courted companies like Suniva to open plants in Michigan. She personally bragged about the manufacturing plants to me in 2010, I will vouch for her enthusiasm for the solar sector. She joins the administration from her current post at UC Berkeley moving to DC from Oakland, where many of you are reading this newsletter from. A company she sits on the board of, ChargePoint, recently announced that it was going public via SPAC. They can definitely contact me to fill that board seat.
30 Years Of Solar. In this episode of SolarWakeup (or find it on spotify or Apple), the podcast, I speak with Dan Shugar. Dan is the CEO of Nextracker, one of the largest tracker company in the world, currently owned by Flex. Dan has been thinking about solar for over 30 years and our conversation weaved through many of the periods that led us to where we are today, a mainstream energy generator creating generation wealth opportunities. Conversations like this are difficult to maneuver for me because after 15 years in solar I have a lot of the background that some listeners may not know or recollect but I think this may be a great welcome to solar listen for everyone in the industry. You also get a first attempt at the 10 minute episode of SolarWakeup recap at the top, fast forward to minute 10 to get to the interview. I’d certainly appreciate it if you forward the episode along to friends and colleagues.
Solar For Clubs. My friends at Sustainable Capital Finance (SCF) have seen an uptick in interest for solar PPAs from schools, country clubs, and golf courses, as these off-takers have been impacted differently than other C&I energy consumers during the COVID-19 crisis. Golf & Country Clubs have seen increased revenue from golf and other outdoor activities, while schools would install solar while students aren’t on school grounds. In both scenarios, savings from a solar PPA are extremely attractive. Click here to learn more about how their subscription-free, proprietary software, the SCF suite, can help to speed up your PPA pricing and transaction process.
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Opinions:
Have a great day!
Yann