Can’t Escape It. It was hard to escape the smoke this week, with over 60million Americans affected with poor air quality. Hard to think about how to tackle the wildfire problem but climate change can’t possibly be helping. We’re about to enter silly season where one political party wants to make this a wedge topic to separate us, but in the end we all breathe the same air and drink the same water.
Impact On Solar. Interestingly, this is a concern of the grid operators in California. What happens to the reliability of solar production when wild fires reduce solar radiance across the geography? The entire northeast felt this with the smoke cover lingering for several days bringing this scenario to a new grid.
The US Scale. If you look at the energy storage deployment across the world, you’ll realize that the scale in the US is exponentially bigger.
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Domestic Supply Chain Unknowns. Passing the IRA created intentions, rules, guidance and now interpretations. The intention is to make the products that are installed by American workers right here, with many new factories activating to participate in this market. The rules were published by congress and drafted by the agencies that oversee the execution of the law passed by the legislative branch. Now the guidance has come out, meant to create rules of the road so to speak, and enable deployment of billions of capital. However, the interpretations leave some guidance with additional questions that the industry is working through. Part of this is also on the buyers in the industry to choose to go along with a domestic content success, it can’t just be a decision to buy something cheaper made elsewhere. At some point, the market has to decide to make local manufacturing a given, not a choice.
Not Peanuts. Duke’s capital plan includes $65billion of investments in the next 5 years, 80% of which are labeled as low carbon. This isn’t a unique situation, the investments being made by munis, cooperatives, and investor-owned utilities are significant and growing to allow for the grid to become more stable and resilient within the energy transition.
Texas Storage Postcard (From The Future). Texas, with a robust, energy based power market, has been installing storage at quite the pace, especially in the distribution scale because of the quicker permitting process (take note!). As storage has been built in ERCOT, regulators have realized that batteries can do quite a few things that are valuable to maintain grid stability. This realization comes with new services and regulations that storage assets need to conform to, requiring new configurations, upgraded controls package and analytics capabilities. This will be a reality with Federal agencies as well, particularly on industrial controls and cybersecurity protocols. Happy to connect you with folks from our FlexGen team to get more insight on these rather complex and nuanced challenges that the market will maneuver through.
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SEIA Clout Expansion. Having spent the last few days in DC for the SEIA board meeting and administration briefings, I’m in awe of how far this industry has come. SEIA’s leadership under the stewardship of CEO Abby Hopper makes the calls and gets calls back from the agencies doing the hard work of implementing the IRA. On Monday, positive feedback was heard from Departments of Labor, Interior, Energy and Treasury on how and when the rules would come out. The ended with a grand finale with John Podesta, who’s running the IRA implementation for President Biden, speaking to the board for over an hour. This administration cares about the solar industry, what it takes to get it right and how to do more. In short, solar is doing more than we ever thought possible 15 years ago.
Government Role In Insurance. State Farm has decided to stop writing new policies in some parts of California but long before this headline, disaster risks have made premiums incredibly high, too high for many. Florida had a similar issue because of hurricane risk and that’s why the State of Florida created a public option, so that everyone has access to relatively affordable hurricane insurance. California will have to do a similar thing and so will other states that suffer from climate risk because the private insurance market can’t mitigate losses year after year.
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Would You Rather? It’s still hard to understand what causes pushback to solar project developments. Farmland that’s used for solar means that the farming isn’t able to pay the same rent. People don’t want to see it? But they still want their lights to turn on. Ultimately it becomes an exercise of staying in the dialogue as long as possible because homeowners also don’t want a gas, coal or nuclear plane near their home either, they probably pick solar over all their options.
You Get A Battery (Plant). France gets it, someone in the EU needs to be building battery factory ecosystems and Macron seems to setting his Country up for success. The reality is that engine manufacturing is getting replaced by battery manufacturing and the best way to build a battery plant is to lean in and create a market beyond EVs. Manufacturing plants are all about the throughput, that is where “we make it up through volume” comes from, an EV plant that doubles as a storage product is also important.
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