This is your SolarWakeup for August 11th, 2020

The Edge Of Scale. Selling solar to homeowners is an even playing field. Of course there are some advantages to those with more cash in the bank or purchasing volume but nonetheless a small company can compete with the biggest installer. In the world of virtual power plants, contracts with utilities, that changes. This was the quote from Sunrun CEO, Lynn Jurich, on the earnings call yesterday, “We have the contract with the utility for grid services which gives us a customer acquisition edge.” To their credit and that of utilities, it is still early in this newly created market. There is a future where utilities engage in virtual power plants with consumers without the installers. The highlight of the call came from Ed Fenster (Executive Chairman) on the discussion of tax equity. “We prefer a high corporate tax rate,” Ed said then explaining that tax liabilities increase and create more supply in tax equity markets. It also improves the value of depreciation by about ten cents per watt. At the end of the day, Sunrun posted a strong quarter, 78MW installed which is 24% lower than the same quarter in 2019. Given that the entire quarter was under the weight of a pandemic, I’d say it’s better than expected. The company did lowball estimates for the rest of the year, seemingly tempering investor expectations for future upside surprise in my opinion. Earnings Slides. 

COVID’s Impact In Q2. We now have the public earnings reports from solar players for the COVID quarter, Q2 2020. None of the reports show the worst case we saw in the SolarWakeup surveys, down 50%+, instead the worst was about 25% down year over year. Europe is showing a stronger solar market and stronger COVID recovery which we saw in the SolarEdge earnings. None of the solar companies were willing to talk about backlog but we know that backlogs were growing through the quarter. Halfway through Q3, those that have made the pivot to the new way of doing things have figured it out versus those that are struggling. Q2 also gave coverage for one time costs, Sunrun had over $15million and Enphase had significant convertible note costs, but that’s not buried in the reports of a quarter we will all hope to forget.

At Home Microgrid. Generac quietly announced the microgrid in a box. A transfer switch and brain system that seamlessly integrates a generator, battery and solar production. In this design, the generator and battery can be smaller and therefore more cost effective. Generac has two inherent advantages to Enphase and SolarEdge, they have the generator market cornered and millions of existing customers that have a transfer switch installed.

East & West Coast Acquisition. Sunworks, the publicly traded solar company based in California, has been acquired by Vermont’s Peck Company. The combined companies represent about $88million in revenue according to company statements. Without too much detail, this was a share transfer and thus leaves the combined company as a publicly traded one.

Bill Walton Comes Back. SolarWakeup friend, NBA Hall of Fame, all time best NCAA player, solar expert and CALSSA’s annual dinner motivational speaker, Bill Walton, is back in solar. He is the recently engaged spokesperson for San Diego’s Stellar Solar. If you’ve never heard Bill talk about solar, you’re in for a treat. Here we go!!!

Out of Many, You Benefit. Every major industry has group purchasing cooperatives and now solar does as well. More importantly than a lower price point, SolarWakeup Buyer’s Group gives installers transparency and removes other costs from the price. Credit terms, warehousing, rebates and shipping are all packed into the price which removes the transparency you need to operate your business. This isn’t a replacement, it gives you an option to the norm. More info, price challenge and sign up on our website.

Opinion

Best, Yann