Tag Archives: SEIA

EnergyWakeup – Episode 4 – Interview With Conor McKenna From CohnReznick Capital Markets

This episode is sponsored by Conductive Capital, a distributed generation platform with tax efficient capital.

In this episode we speak with Conor McKenna, Managing Director at CohnReznick Capital Market Securities. Conor advised a $78 million tax equity investment for the Crescent Dunes Solar Project by SolarReserve. The innovation here is that the Crescent Dunes solar project uses molten salt energy storage technology from the SolarReserve concentrating solar tower site.

Conor gives us some details on the deal structure, how tax equity got comfortable with the risk of the technology and sponsor. The investors also used a tax equity structure becoming more common than the fixed time flip that many investors have used in the past.

We couldn’t leave the interview without asking Conor about his thoughts on tax reform and how it could impact the markets. What would happen if tax rates are lowered and how investors view that potential risk in their model.

At the end, he shares some thoughts about what gets him most excited in 2017, and it has to do with lowering the cost of capital. Listen now!

EnergyWakeup – Episode 3 – Interview with SEIA President, Abby Hopper, and Bryan explains what NV Energy is really doing

In this Episode, sponsored by Conductive Capital,  Yann and Bryan cover a wide range of important topics for the solar and cleantech industry. Yann interviews Abby Hopper, the new SEIA CEO and President, who joins the solar industry after leading the Bureau of Ocean Energy Management. We cover her vision for SEIA, how to get new members to join and if she sees SEIA working with EEI, the utility’s lobbying group.

Bryan and Yann go into the nominating hearings of Scott Pruitt, and why the environmental groups are trying to make him the target, why the nominees are normalizing Rex Tillerson, a man that is synonymous with Exxon, and Rick Perry’s continuing ability to make soundbites for SNL.

At the State level, Bryan covers what is actually happening in Nevada with NV Energy’s latest filing and if it really matters. Yann argues that the solar industry may be getting too soft when it comes to playing politics.

Listen to the Episode and subscribe on iTunes, Soundcloud or Stitcher. This episode was supported by Conductive Capital, a distributed generation platform looking to acquire your projects.

Solar’s Future May Not Be Pre-Ordained

 

 For virtually everyone who cares about climate change, the election of Donald Trump precipitates an unprecedented crisis. The Paris climate agreement, an extraordinary commitment to global cooperation by more than 200 countries to dramatically curb carbon emissions, is now in grave danger. The Clean Power Plan is almost certainly dead. Our domestic politics are failing us, the world, and future generations yet unborn.

There has been much commentary in the last week that despite the shift in political winds, that solar remains a bright spot (see: “Trump Can’t Stop the Energy Revolution” and “Trump Can’t Stop The Clean Economy”). These articles cite the industry’s commonly accepted wisdom about the inevitability of continued cost reductions. While I fervently hope these optimistic voices prove correct, it would be a dangerous mistake to assume that cost reductions are inevitable simply by extrapolating historical trends.

If the global solar industry could agree on any one thing, it would be Swanson’s Law: the cost of the photovoltaic cells needed to generate solar power falls by 20% with each doubling of global manufacturing capacity. Manufacturing capacity grows to match demand for solar. As a result, continued cost reductions are dependent on global solar demand continuing to grow. So an examination of the top 3 global solar markets that account for 70% of global demand—China, Japan, and the US—provides insight into the ability of the industry to continue to reduce costs.

Last week, China slashed its 2020 solar target by 20%, cutting 40 GW from the expected global market over the next four years. Japan continues to cut its national feed-in tariff. As a result, last week, Orix, a major Japanese financial institution with 1.5GW of solar assets, announced that they are ceasing new investments in solar to focus on other categories. And in the U.S., we all know the challenges that our industry titans are facing. SunEdison is gone. SolarCity is looking to shoreup its balance sheet through a merger with Tesla. The U.S. market, even without president-elect Trump, was faced with the prospect of flat growth, compared to the double-digit annual growth rates the industry has grown accustomed to.

Due to these significant headwinds, it should be no surprise that Greentech Media estimates that global solar demand will actually shrink in 2017, for the first time in the industry’s history–and by a full 10%. If we truly believe in Swanson’s Law, we can no longer blithely assume that cost reductions are inevitable. We must acknowledge our vulnerability. The Solar Revolution has been stopped before: just look at what happened in the 1980s.

The question we must answer as an industry is how do we generate continued cost reductions despite a zero- or negative-growth environment? There are no easy answers.

There is very little left to squeeze out of module costs in the near term. Gross margins for module manufacturers have been compressing and will likely approach zero-margin territory like they did in 2012. Historically, module manufacturers’ profit margins have been the industry’s most reliable target for “cost reductions,” but we are rapidly exhausting this cushion.

So where can solar companies drive down cost? The answer lies in solutions addressing the ubiquitous “soft costs” that now account for the lion’s share of total solar project costs. Firms like mine must redouble our efforts to scale our solutions. Whether our collective efforts are to help through new insurance products, smarter risk management, more efficient O&M, improved system designs, innovative sales strategies, or streamlined installation processes, we all need to double down, now. Improving the business of solar needs to become the primary business of our industry.

Unlike my software engineer colleagues, I studied international relations in college. One of my favorite political thinkers, Alexis de Tocqueville, made an observation about the American national character in the early 1800s that still resonates today. He noted that in times of adversity, Americans look to their communities to jointly create their own solutions, rather than looking for a solution handed down from their government. In Trump’s America, we who care about climate change are now forced to look to each other for our solutions—we cannot expect any answers from this government.

No one should expect the next few years to be easy. But I’m optimistic that by working together, we will come through on the other side of this uncertainty stronger than before. We have to work harder and smarter to drive down costs, even when Swanson’s Law is (temporarily) not working for us. That is what I’m committing to and I hope you will join me.  Let’s get back to work. We have a planet to save.     

By Richard Matsui; November 17th, 2016

Richard Matsui is the CEO and co-founder of kWh Analytics, a risk management data platform for solar energy assets. For his work at kWh, Richard was named one of the Forbes “30 Under 30” for energy. Richard has more than 10 years of experience in solar, including as a founding member of McKinsey & Company’s solar practice in their Greater China office where he was the firm’s leading expert on the global PV industry.

7 People President-Elect Trump Should Consider For Secretary of Energy

 With Steven Chu and Ernest Moniz as Secretaries, the Department of Energy (DOE) under Obama has done much good work to support advanced energy: the creation of the Advanced Research Projects Agency-Energy (ARPA-E), major investment in smart grid under the stimulus package, the SunShot initiative, new appliance and fuel efficiency standards, a loan guarantee program that has supported solar, wind, biofuels, nuclear, battery storage, and advanced vehicles, and more. Though the Obama Administration exhibited a favoritism towards renewable technologies, it still embraced an “all-of-the-above” energy strategy. In fact, EIA data shows that natural gas production is up over 25% and at all-time high since Obama took office. And the Administration managed this diversified energy approach while still pursuing such goals as leading the world on climate change, mitigating harmful environmental pollutions from fossil fuels, and building on America’s growing energy independence.

It is unclear exactly what goals President-elect Donald Trump’s DOE will be designed to pursue, and so it becomes difficult to say who exactly he will choose to lead it–the only certainty is that the DOE will continue to perform its main function of managing the nation’s nuclear program. We do, however, have some clues as to who he’ll pick. Befitting of both his anti-establishment views towards the political class and his comfort with the business world, Trump is likely to select a significant share of his cabinet from the corporate executive class–a fact apparent in the New York Time’s Trump cabinet shortlist. And, he won the election on his platform of lifting up those blue collar Americans in the middle of the country that have been suffering economically and feel forgotten, which indicates a rhetorical shift in policy back towards fossil fuels at the expense of environmental and climate change-related goals.

At the same time, Donald Trump the businessman would be hard pressed to roll back measures supporting the massive investment and job growth occurring in the clean energy industry – clearly an industry of the future with unbelievably high opportunity. And not only would he be unwise, he may not be able to at all. Though Trump’s Republican Party holds Congress, renewables appeal strongly to the constituents of those States that are seeing massive investment in them–Texas and Iowa for example. And solar policy is a rare issue that transcends political lines. 84% of Trump supporters want more solar energy to be deployed, which is in line with 91% of Clinton supporters. For what it’s worth, early indications say that energy will not be the primary focus of the Trump administration.

So, given the above, and with President-elect Trump’s erratic nature always in play, it is difficult to say who he will pick to lead the DOE. But one question we can answer is: given the above, who should he pick to lead the DOE? On his shortlist are familiar names: Harold G. Hamm, Robert E. Grady, Donald Hoffman, and Mike McKenna. It would be expected that, with some exceptions, these choices would take the same approach to leadership at the DOE as they did to their business careers: dig up America’s fossil fuel resources and burn them. But to do so would be a major step backwards for America.

The hope, rather, is that Trump will appoint someone with a more holistic view of the sector. Given that DOE is likely to have lower funding over the next few years, Trump could play a political card to appoint an open-minded Secretary of Energy that continues the private sector economic growth in all energy segments. SolarWakeup has some ideas on who that pick should be, outlined below:

Elon Musk, Chief Executive Officer of Tesla Motors and SpaceX, Chairman of SolarCity

Clearly the number one choice, a non-partisan innovator like Musk makes perfect sense. While Musk is the most non-traditional option on here due to his unabashed, aggressive push towards a clean energy future, there is no doubt he’d make a fantastic Energy Secretary. Musk is a not only a scientist through and through, but he should have by now earned the respect of Trump for his business acumen and wealth. Musk has an electric personality, and although his vision for the future could be construed as misaligned with Trump’s, he knows energy very well. Musk is currently building the largest building in the world in the gigafactory plus US based manufacturing for SolarCity in Buffalo. Plus, he commented that we should nuke Mars, and Mr. Trump respects that kind of wild ambition.

David Crane, former Chief Executive Officer of NRG Energy

David Crane has been nothing short of an energy visionary throughout his career. During his successful tenure at NRG, the largest independent power generator in the Country, he guided the company out of bankruptcy, launched a retail business, and completed several major acquisitions. Though the clean energy arm he introduced performed well, the coal-fired division struggled in the face of economic and regulatory forces, and his bid to prove that a traditional fossil fuel company could also be a clean energy company was cut short. He should be given that same chance to prove that America can be both a fossil fuel titan while embracing clean energy. His vision of a distributed future matches with one of the most holy, time-honored conservative principles: free market competition.

Ernest Moniz, current Secretary of the Department of Energy

Sometimes the best choice is to stick with the status quo, especially when you can make the transition a bit easier given the expectation of massive overhauls in every other Federal department. Donald Trump is pro-nuclear, and Moniz is a Nobel Prize-winning nuclear physicist. And though Moniz has been the Energy Secretary in a Democratic Cabinet, Moniz is decidedly not a political creature. He’s energy agnostic and holds the interest of scientific and technological advancement highest above all—whether that be with clean coal technologies, wind or solar.

James Connaughton, former Chair of Council on Environmental Quality under George W. Bush

James Connaughton is on Trump’s actual shortlist, and though he is a climate change believer, his rhetoric should resonate well with Trump, notably his positive views towards nuclear, his preference towards allocating federal dollars towards research & development, and his thoughts on getting the government out of regulation and embracing more of a free market approach. Connaughton has been public about his position that cap-and-trade should be done, if done correctly. Lastly, he is a fan of markets before mandates and believes that the Country should move from regulated monopolies to a regulated competitive market like the PJM Interconnection.

Susan Kelly, Chief Executive Officer of the American Public Power Association (APPA)

As the association of more than 2,000 community-owned electric utilities, the APPA is one of the most powerful associations in Washington. And, in terms of being a strong choice for Trump, it is especially apt that the APPA represents utilities that employ tens of thousands of blue collar Americans, and service 48 million more with electricity. In addition, the aggregate portfolio of generation that Sue Kelly represents is majority coal, natural gas, nuclear, and hydropower, aligning closely with what is ostensibly Trump’s favored portfolio. In addition, Kelly is in favor of withdrawing the Clean Power Plan which, although unimportant to the position of Energy Secretary, is a view she shares with Trump. The APPA also seems bullish towards solar, though they typically fall in line with the investor-owned utility point of view on net metering, in which solar owners should “pay their fair share” of grid costs. However, that view is not uniform across the organization.

Jennifer Granholm, former Governor of Michigan

The hyperpartisan former Governor of Michigan was a Clinton surrogate and may not like being on this list but there is good reason to consider Governor Granholm. As Governor of Michigan in a post-NAFTA manufacturing environment, Granholm focused on bringing energy manufacturing to her State. Companies like Uni-Solar spent hundreds of millions there while Suniva opened a plant a few years ago. Now a professor in public policy, a Granholm appointment would be quite the olive branch to the Democrats. This is an unlikely choice but as someone long mentioned to be Secretary of Energy, a largely non-political office, Granholm should be considered.

Jim Rogers, former Chief Executive Office at Duke Energy

At the opposite end of deregulated energy markets, you find the former CEO of the largest utility in America. A famed energy executive, Jim Rogers spent half of his career litigating on energy issues at the Federal Energy Regulatory Commission (FERC) until he became President and CEO at multiple energy companies and went on to retire from Duke Energy in 2013. FERC, while not reporting directing to the Secretary, is in the DOE organizational chart. The Public Utility Regulatory Policies Act (PURPA) and FERC could be legislative agenda items in Congress and having someone that understands both would be helpful. Of course, Rogers also ticks experience with nuclear, coal, and gas off the list. From a solar perspective, Duke wasn’t the most progressive, but also wasn’t non-existent. Rogers currently sites on the board of the Smart Electric Power Alliance (SEPA) and has been quoted saying he sees business potential in the rooftop solar market.

By Dustin Thaler and Yann Brandt; November 16th, 2016