This is your SolarWakeup for July 17th, 2017

Hope everyone enjoyed some Summer time off, I sure did. Now back in action and refreshed, many big things happening in the SolarWakeup world which I hope to share with you relatively soon. Time for some news updates.

Before and After (Lobbying Edition). A draft of the now famous DOE grid study has come out that finds, “The power system is more reliable today due to better planning, market discipline, and better operating rules and standards.” Of course this is a draft that the politicians have likely not seen and edited yet, likely leaked to a lobbying shop by staffers to attempt to stop the political changes from happening. Call this the ‘deep state’ of energy science in the Government, an action I am thankful for. Don’t hold your breath that this will not be changed, dramatically perhaps. The grid does need changes, primarily in the speed and quantity of pricing signals. The market moves far too slow still, and once it speeds up with the right buy/sell signals, generators will be able to invest more capital.

Let’s Talk About NRG. The headline many solar people saw about NRG shedding its renewables business was perceived as a negative. So here is reality. First of all, the assets aren’t getting torn down or taken out of service. They are being monetized. Why? Because Wall Street doesn’t really feel like long term, stable returns produced by solar is very exciting or create much upside. Take the NPV of the asset and generate some cash and debt availability. Look at NRG as a bank that has to continuously dole out money (invest) and make a return. Letting it sit there in perpetuity is not what public equities are made for. The political/corporate reality was that NRG really had no choice. Elliot Management is a hedge fund that has taken an activist position and now sits on the board. A depressed stock with assets will often face these issues where a fund sees a way to find value by making different decisions. Recall Carl Icahn forcing Apple to issue a dividend. The NRG management team could have taken the position that renewables are core to the business and they didn’t want to sell them. Likely they would have been shown the door and someone else would have executed the sale. Now who will buy the assets? That is the interesting story in my opinion because someone can quickly challenge some of the big players currently aggregating assets.

SB 700 Gets Punted.  The CSI for storage will happen, but this year the agenda for climate related policy was quite full and maybe the wrong time to invest $1.6billion in energy storage when the contractor community was largely still on the sidelines. The policy teams pushed this hard and created a great jumping off point for next year where the chances will look better to enact this law, likely with much cheaper battery prices and an exhausted SGIP.


Have a great day!