This is your SolarWakeup for December 12th, 2017
Short update this morning as my California jet lag and upcoming interviews are messing with me. Make sure to catch up on previous podcasts and my tax reform conversation, there are a bunch of conversations that will drop over the next week that will give you something to listen to and learn from over the holidays.
Going Private. Canadian Solar got an offer from its CEO. Part of the strategy may be to get off the New York market and go public in the Chinese stock exchange instead. This isn’t the first company to go this route.
Deploying Capital. Big numbers coming from EDF on deploying capital to solar projects. The headline is nice but let’s be real, there is unlimited amount of money available for solar projects at the yields that projects currently go to market. However, it is always nice to see these types of announcements.
Business Interest Allocation. Pay particular attention to the comment in the tax reform video of about a business interest change in the tax reform bill. Catch it towards the of the video.
Solar In Florida. There are some unhappy executives in Florida this week. Between the article yesterday on the nuclear cost recovery clauses and this natural gas boondoggle in Florida, public opinion on monopolies will test the single digit approval marks. Let’s see how politicians react.
Have a great day!
This is your SolarWakeup for December 11th, 2017
I am on my way to San Francisco for a few great interviews. Always good to travel into the center of the solar industry universe.
Tax Reform Explained. The tax reform bill is in conference committee and no one really knows what will come out of this step. Whatever has been voted on can get completely rewritten and come out looking different. But the core pieces will get put into the final version that goes to both houses to vote on. Last week, at SolarWakeup Live! DC, I sat down with tax lawyer, Greg Jenner, and project finance lawyer, Audrey Louison, to go through the main provisions. The entire interview is available in podcast or video format. If this interview feels different than what you typically get at a solar conference it’s because I come at it from your side of the table. I have to make the same business decisions based on political and regulatory issues that you do and know what information I need to make that decision. My interviews come from a different perspective to drive information to you, not to fluff up the news. Hope you enjoy it.
BEAT Provision. In the interview you’ll find my discussion with Greg Jenner about the BEAT provision and he explains why BEAT, or some version of it, needs to be in the bill. Think of it as a way to stop companies from parking cash abroad. The House version uses a more piecemeal approach but in my conversation with multiple sources of tax equity, they seem to be unaffected thus far. That being said, the rules aren’t final and as Greg said, they have to do some form of BEAT. Don’t expect it to go away.
Corporate AMT. It was thrown back into the Senate version at the last minute. It’s causing a stir with donors/lobbyists and it’s going to be taken out and ‘fixed’.
Rates. Probably the most overlooked part of the bill and the most obvious is the impact of lower rates on the tax equity market. First, less tax liability means less tax equity supply. Second, lower rates means that depreciation is worth less and your projects will have to be repriced with the new rates in mind. All of these issues could cause contractual problems which we also discuss in the interview under the ‘change in law’ provisions of your agreements.
Will It Pass. Yes, says Greg Jenner. I tend to agree that it has to pass because as more political folks have called it, the ‘donor relief act of 2017’ is a political must have for the GOP. Let’s see where it goes from here, because in DC nothing is ever certain (except that SolarWakeup Live! DC will always get you the info you want to hear).
Don’t Miss. A great highlight of the power the utilities have pushed at the State legislature level across the South, harmful to consumers and hopefully the end of the monopoly system. A single city aims to be all EV mass transit in China. McIntyre takes over as chairman and promptly delays the NOPR decision by 30 days. As Phoenix files for insolvency, I want to talk about the downstream pains in solar in more detail this week.
SolarWakeup Live! New York. Tickets going on sale shortly but book your day to join us in New York on January 31st. The first 50 tickets will be 50% off, so get them quickly. If you are interested in sponsoring, hit reply to this email and I will get you more info.
Have a great day!
SolarWakeup Live! Video: Tax Reform Bill Explained by DC Lawyers from Stoel Rives and Mintz Levin
In this episode of SolarWakeup Live! I talk about the current Tax Reform Bill with Audrey Louison from Mintz and Greg Jenner from Stoel Rives. The tax reform bill was in conference committee at the time of this recording and had several issues that impacted the solar industry. The corporate AMT, a lower corporate tax rate and the BEAT provision. I walk through each of the items with Audrey and Greg, get an explanation (because nobody understood the BEAT provision) and how it impacts solar project financing going forward. Greg has been around tax law for many years, including as a … Read More
This is your SolarWakeup for December 8th, 2017
Tax Reform Explained. A quick turnaround for this important issue, a podcast on the tax reform bill. On December 6th, I was joined on stage at SolarWakeup Live! DC by Greg Jenner, a tax lawyer at Stoel Rives, and Audrey Louison, a project finance attorney at Mintz Levin. Greg did a great job of explaining the various issues, from the corporate AMT, tax rates, BEAT and business income allocations while Audrey translated the potential effects on the partnership contracts. As someone that has had to live inside these agreements, I tried to get the information you need to think about as you raise capital for your projects – this was not a typical fluffy interview. Thanks to Audrey and Greg for bringing their knowledge to the SolarWakeup family.
The Goose Rule. Duke Energy is making a big deal as they acquire the remaining shares of REC Solar. Part of their commentary is how they plan on servicing the C&I segment. The irony is thick here as Duke brings a PPA case in North Carolina to the supreme court to stop a church from being able to buy solar energy while benefitting from the same policy in areas outside of its service territory. The rules of the monopoly should require consistent regulatory positions from the utilities. The deregulated side of the house benefits from the cost of capital provided by ratepayers but does not have to live within the same rules and that needs to change. I would like to see a regulatory body require the deregulated side of a monopoly to live by the same rules.
US Manufacturing. As the USTR held a hearing on the 201 issue to decide on tariffs, First Solar was updating its investors on the impressive Series 6 module. While First Solar has a factory in Ohio, it is also exempt from the 201 case which only pertains to crystalline technology. As First Solar has come out in support of tariffs, it is also adding another 1.2GW factory…in Vietnam. Great for America, I guess, as an American company innovates and develops in the US while manufacturing around the world.
GE Power. GE is active in renewable energy on the hardware and finance sides of the market. They are well aware that traditional power is changing and new energy sources like wind, solar, energy storage and efficiency are replacing the load and generation. Now the impact is felt widely by the power unit with layoffs which is unfortunate given the many attempts by GE to lead in the solar space.
Energy Lobbying. Name 4 companies that lobbied hard for tax reform and I wouldn’t have listed NextEra as one of them but Vox has reporting stating it was. I’d like to hear what solar lobbyists would say about that.
Sponsored by Mintz Levin. Mintz Levin is an Am Law 100 law firm with a nationally recognized Energy & Sustainability Practice that has completed more than 500 transactions across energy sectors totaling over $7.5 billion since 2006.
Have a great day!