What Is A SPAC? When a company goes public via a SPAC, which is a vehicle that has already gone through an IPO with the intention of acquiring a private company, it does so with the basic intention to raise additional capital. It is not (in most cases) an exit event, it is meant to provide hundreds of millions of dollars to a private company through the acquisition and a PIPE (private investment in public equity). A lot of folks talk about valuations, market caps and stock prices but SPACs are a vision into the future. While public companies are typically thought of as short term, SPACs are meant to make monster companies over the next few years with the fuel of money today. Some will fail, even $200million can’t make unicorns, but others will take the fuel and do big things and that’s the investment thesis.
The GREEN Act, ITC Edition. The House Ways and Means committee has a GREEN act filed with includes a 5 year extension of the ITC at 30%, direct pay at 85% and includes storage. There is also a version of a credit upside if certain labor requirements are followed. This is early and legislation needs a vehicle and momentum but now you have the outline of what the new Congress is thinking about
Midwest Solar Goes Bigger. 195MW in Indiana. Do you need more proof that solar is going to be everywhere?
Ratebase Performance. In many ways Hawaii is looking at utility profits in the way that they should have been since the start, paying for performance instead of simple ratebase spending. Over the past 50 years regulated monopolies have simply become expensive banks that get paid for how much money they deploy and passing along operating costs. The problem with that is some utilities are better than others and the good ones should be rewarded.
Enphase Shops Again. Last week Enphase acquired a software startup that supplies layout and proposal tools to hundreds of installers but today the company announced that it has acquired an India based proposal and design company. It may seem like an overlap but it’s actually that complement to the tech tool. It’s becoming clearer now that Enphase is focused on supporting installers, sales people and homeowners from understanding how much solar fits, how much solar is needed and the financial value proposition to getting the project into permitting. Some companies provide leads to installers, Enphase may be trying to provide contracted projects with permits to contractors. I don’t think installers will mind paying double for inverters if they get a fully permitted project. The question is, how will they fill the remaining parts of the process?
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Yann
The SPAC Transparency. Each day this week we’ll cover one part of the SPAC market. Tomorrow we’ll talk more about the basics as I understand them but today, let’s talk about transparency. When a SPAC merger is announced, i.e. a public acquisition corp says it’s acquiring an operating private company, an investor presentation is released. These presentations are gold for understanding where the business comes from, how it is performing financially and where it is going. These decks are almost always well prepared and give you a great outline of how to tell the story of your company, the competition and how you will win. I’ve seen quite a few but if there is one that impressed you, send me the link.
Been There, Done That. Champa Bay Buccaneers owner, Joel Glazer, said in signing Tom Brady. If you want to get to the top, ask someone who’s been there before. As a Dolphins fan, I have suffered at the hands of Tom Brady for 20 years and thought that this year I’d simply sit back and admire the fact that Brady knows he’s great and then shows it off by executing. Some of us are wired that way but no-one quite like Brady. If you want to get to the top in solar, maybe you too can find your Tom Brady.
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Yann
Market Share Update. On yesterday’s Roth Capital market call, Ohm Analytics reported market share for residential inverter companies Enphase and Solaredge based on actual permit data. In this data set, Ohm showed that Enphase has increased its share in the resi market by 50% year over year to 48% of the overall market, taking a majority of that increase directly from Solaredge. Roth believes that Enphase earnings next Tuesday may show the financial execution of that business success.
Clean Energy for Biden. The incoming Secretary of Energy, Jennifer Granholm, highlighted the influence of the group on a LinkedIn post yesterday. Gone are the days when our industry isn’t in the room where it happens.
No Way Norway. Will Ferrell stars in this GM ad that will run during the Super Bowl announcing GM’s plan to have 30 EV models by 2025. As a marketer, I am in awe how far behind auto OEMs are in their consumer purchasing understanding. I’ve driven EVs since 2012 and not once did I think about the type of battery in the car. GM, call me.
What’s Your Forecast? In the coming weeks, I’ll be running a new market survey to get your take on the market forecast. The numbers are all over the place and few people are seeing a utility scale market and resi market growing north of 30% like I am plus a C&I market that feels to be accelerating even more than that. Get your thoughts in order, the wisdom of the crowd is calling soon.
Global PPAs. Power purchase agreements are a fairly American solar transaction but other markets are looking at the concept as well. American developers could be called upon to educate solar pros in other geographies on the structure and execution.
Virtual No More. Door to door selling, meeting in person and travel all appear to be regaining some momentum. Not to pre-pandemic levels but you can see the masks replacing zoom. Yesterday, Solar Power Northeast announced the return to the Boston Westin in June for an in-person solar conference. What business aspects are you back to in person versus the ones you are keeping remote?
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Yann
Green Cabinet Advances. Mayor Pete becomes Secretary Pete and Governor Granholm is on her way to the same. President Biden is getting the cabinet he desired with the executive orders to centralize the effort to fight climate change throughout government. EPA nominee Regan was on the hill yesterday.
Stranded Assets Get Audited. NextEra kicked off the energy earnings season with the first quarterly losses in a decade due to a billion-dollar right down of a natural gas pipeline project. A new report now forecasts over $1 Trillion in losses from these types of delayed and stranded assets. The pain will only get worse if we expect delaying the transition will somehow avoid the pain that is almost guaranteed by poor investments. Part of overcoming the negative financial impact will be creating investment opportunities on the positive side of the ledger.
SEC ESG Advisor. NYU’s Satyam Khanna is joining the SEC as an advisor on ESG and climate issues. With financial firms already understanding that ESG is central to their investment thesis (see stranded assets) it helps to have regulators understand the issue from a regulatory standpoint. Not only to keep clarity on what is ESG but also to ensure that regulations don’t get in the way of this decade’s wealth creation opportunity.
We Ride Together. Late notice but join us this morning at 8 am for a 30-minute ride on Peloton with Ally Love. There are over 60 members in the #ride4solar team and growing. When we can’t network in person, we shall do it virtually on a bike!
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