Talking Market. Today at 11am eastern, join me and the Phil Shen from Roth Capital as we continue our monthly conversation about the market. It’s been an entire year since the pandemic sparked the market survey index that told us that 2020 wasn’t going to be as bad as predicted. One year later, much has changed including my role in the market. Register here and make sure you subscribe to Phil’s newsletter as well.
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The Venture Effect. The term ClimateTech is the vertical made in Silicon Valley. Adding tech to a vertical, fintech, agtech, climatetech to name a few, indicate the ability to invest into companies with the objective of creating a 10x return on that invested capital. It used to be hard to imagine this, I first heard the 10x objective circa 2008 and thought that it was crazy. The reason it’s hard to create is the market has to be big enough for an idea to reach a tall objective, but the TAM (total addressable market) for our industries has crossed the threshold of everyone realizing it’s a big market. Can venture save the planet? Yes, if infrastructure capital deployment stands alongside, which it is.
Fall Short On What. After a miss on market forecasts in 2020, I am fearful that we are misunderstanding the market for renewables globally over the next decade. We are entering an era where renewables, depending on the resource/geography alignment, is cheaper than anything else available. Solar also has the advantage of being liked and preferred by everyone regardless of political belief. So take all forecasts with a grain of salt, especially any year over year declines, they will prove to be wrong.
Rolling Up Resi. Sunworks has acquired Solcius, a large residential solar installer. This follows the companies pivot towards residential from the ag sector it had been targeting previously. Last year, Sunworks had agreed to be acquired by The Peck Company but that merger failed due to a lack of vote participation by shareholders. The bigger story is the acquisition of a residential installer which had been complicated to value previously due to a lack of transactions. Expect the consolidation of installers to gain some traction as close rates continue to accelerate and geographic opportunity for solar grows.
Solar To WV. The state legislature is working to approve the solar lease for West Virginians. Enabling solar access to homeowners is a key step to gaining more positive views of the sector for those that have been largely impacted by oil, gas and coal market declines.
Talking Market. Tomorrow at 11am eastern, join me and the Phil Shen from Roth Capital as we continue our monthly conversation about the market. It’s been an entire year since the pandemic sparked the market survey index that told us that 2020 wasn’t going to be as bad as predicted. One year later, much has changed including my role in the market. Register here and make sure you subscribe to Phil’s newsletter as well.
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Yann
The Storage Division. This week Nexamp announced the addition of Mark Frigo as the VP of Energy Storage. If you’ve read this column for sometime, you know that I rarely talk about jobs and who starts where but Mark is an indication of a bigger trend so I spent some time talking to him about the move from RWE to Nexamp. From a macro viewpoint, we agree that having energy storage knowledge internally to a solar development business, or more broadly any generation business, is going to be a normal occurrence. Given his experience in storage I asked what some of the misunderstandings are about storage and where we are at in the ballgame. First, Mark believes that there is a lack of appreciation for the technical complexity in energy storage. Second, storage is additive to solar in almost every case but that continues to be expanded depending on the market and price signals that are delivered by the power market operators. We also talked about bankability, risk and market forecasts but I’ll get to that part of our conversation next week. In the meantime, I’d love to talk to more of the energy storage unit leaders in solar.
Level The Market. Treasury’s Janet Yellen is making the case for leveling the playing field for subsidies between fossil fuels and renewables. I am a lone soldier barking up this tree but we really deserve to have equal treatment on active/passive income rules in renewables especially in a market where corporate tax rates, therefore tax liabilities, were cut.
Investment Grade Monopolies. California is going to help PG&E get back to an investment grade credit by aiding in the securitization of certain wildfire related costs. The argument is that higher interest costs are passed along to consumers and therefore this isn’t exactly a subsidy to the utility. It would be equitable to enforce some level of coordination in support of solar and storage in return for the government support given that California is trying to get to 100% clean energy.
A Loanpal IPO. The worst kept secret in resi solar has been the Loanpal IPO. Over the past year, the company has been rumored to be moving to Texas and recently did a raise that very much felt like a pre-IPO round. The largest lender for resi players with a unique focus on sales team channels has been strong at building the market share without giving up margin according to those in the know. This is expected to be priced well above $10billion and should add a few folks to the Forbes list we highlighted yesterday.
Open Up The Weekend. Enjoy the weekend and if any of you find yourselves in Florida, give me a shout.
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