More tomorrow. By the way, Xi Jinping is coming to the climate summit.
Leading Off. Dean Solon, from Shoals, comes in at the top with a great rundown of what it takes to be successful. Looking back, you could always see Shoals standing out from the rest of the pack.
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Yann
Quick Hits, Fire Season. Washington State has fought 91 wildfires this week, not a great start.
Cyber And Regulatory Compliance. More to come on this topic but get ready to worry about how your assets, especially storage, comply with NERC standards and power market requirements. Software is at the core of everything we are about to do, hence ClimateTech.
Everyone Wants Roads. What will it take to get the infrastructure bill to be bipartisan? Biden is having the meetings to find the unicorn in today’s political arena.
Platforms To Applaud. Congrats to the team at DESRI for turning on a new asset and CleanCapital for bringing $300mm new dollars to their platform from Manulife. That capital will be used for solar and storage assets and expand their platform once again. Also, the company is led by some of the coolest folks in the market so if you don’t find an opportunity to work for me, work for them!
Engie Sells Storage Stake. The investment activity in energy storage continues, this time Engie bringing on a partner in their energy storage division.
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Yann
Coal, Unions and Renewables. After my post from yesterday, we get big news from DC on the topic. The coal miners’ union is backing legislation that would create tax credits for the investment of manufacturing for renewable energy products like solar panels and wind turbines in Appalachian coal country. This would be a great feature that tackles the problem of climate change while creating jobs in the right place. One thing to note, the value of tax credits is directly correlated to the total market of tax liability. Now that the corporate tax rate has been nearly halved, so has the demand for tax credits. To make credits more valuable, backstop them with a refundability or direct pay mechanism.
Manchin Headlines. Senator Manchin is backing the bill, which is still short of the 50 votes held by the Democrats in the Senate.
Introducing FTCI. FTC Solar, the Austin based tracker company, has filed for its IPO. Some tidbits, that you can find in their S-1 that popped out to me. The company is planning on raising about $350mm, using about half of it for their balance sheet and some to buy back shares, i.e. create some liquidity for shareholders. Last year the company earned $187mm in revenue with a net loss of $15mm. If the IPO is successful at the range of pricing, expect the market cap to be about $1.6bb, 82mm shares at $19 per share. The folks at FLEX will be watching the valuation considering they have stated NEXTracker is north of a billion in revenue, imputing a value near $10bb for the global leader. Question is, which innovator is coming for this incredible market?
Same Action, Same Results. The CPUC is worried about the PG&E wildfire preparation work and is exercising a higher level of oversight. This is in anticipation of one of the worst fire seasons given that moisture levels is one of the lowest in history. Will the CPUC work to get DERs ready to help as wildfire shutoffs appear on the horizon?
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Yann
Joint Talks Agreed To. John Kerry is proving himself a deft handler of diplomatic processes. His counterpart in China and he have issued a joint communique on potential opportunities to raise the ambition on solving climate change. This comes ahead of the virtual climate change summit hosted by Biden later this week. Joint communiques ring hollow in the business world but in the sensitive process of US/China diplomacy, it has meaning. The undercurrent of all things climate for China is that they have spent the last 20 years investing in the infrastructure to be a central player providing the technology needed to solve the climate crisis. The US had much of the technology for solar, silicon and energy storage but thought about the market too short term and ended up ceding the manufacturing leadership to China many years ago.
Will Xi Show? It was largely expected that Xi Jinping would not be at the summit this week but the communication says that China will participate. A visit by the Chinese leader would be meaningful.
The Coal Towns. The role and responsibility for the renewable energy industry in the rebuilding of coal country has long been a complicated thought process. It’s not solar that made coal unwanted, in reality, the resource has been undone by both the emission as well as the volatility created by short term capitalism in that market. However, the opportunity for the energy sector to play a role in rebuilding is greater than trying to ignore the blame. We have spent the last year learning which jobs can be remote and building the systems to allow that to happen. Why couldn’t the tens of thousands of operations, design and back office functions be built out and trained for these towns? We are already sending installation crews to build out the pipelines, why can’t we focus our training dollars to do that for ex-coal miners?
Pay Now Or Pay More Later. Winterization in Texas is a pay now or more later problem. Or stated more simply, the design requirements have changed, will the design?
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Yann