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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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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Defining ClimateTech. ClimateTech is the nexus where technology meets software to aid in the fight to reverse climate change. The ‘tech’ sector is largely software and at some point it meant having a photo sharing app to become a billionaire but it also brings us to what I’m learning about energy storage. Batteries systems are a set of hardware parts which include the battery racks, power electronics, inverters and transformers but they are complemented by controls run by software. In reality, no battery project is complete without that software component meeting the need of your project, i.e. what do you plan on doing with the battery post install, and qualifying that software with the ISO/RTO and potentially meeting the NERC regulations depending on how big the project is or your portfolio is. For solar plus storage projects, you need to install the site software, beyond the battery EMS, to coordinate the generation on site and plan, sometimes daily based on forecast, when to charge and discharge the system. My point is that we, as a solar industry, have jumped into the deep end of the ClimateTech sector. But that’s a good thing because we will become key market makers instead of constantly being at the mercy of whatever the market price for energy is. More to come…
Infra Bill Path. Biden’s infrastructure proposal includes a corporate tax rate increase to 28% which Joe Manchin has said no to. He did open the door for a 25% tax rate which is a preview to how Biden could get his vote. A tax increase means that this is unlikely to be bipartisan but Schumer got the green light for a third reconciliation this year thus creating the path for the infrastructure bill. Wait and see…
Canary In The CleanTech Mine. It wasn’t long since GTM shut down the news site for the team to get back together. Supported by RMI, the one and only Eric Wesoff is leading the team as Managing Editor and is joined by former GTMers Emma Foehringer Merchant, Jeff St. John, and Julian Spector. Additionally, former Grist/Vox climate journalist, David Roberts, is added to the group as Editor at Large. Canary Media will be a new name you see most days on the SolarWakeup, a rather poorly edited newsletter which I’ve known since Eric told me I need an editor 8 years ago. Great to see this effort get off the ground and hats off to RMI for their continued leadership in the sector. Between this and SolarApp, RMI is at the center of the more important efforts in our industry. Eric writes their mission here.
Electric Pick Ups. I’m all in on the EV Silverado and F150 face off. The Rivian and Cybertruck are due to hit the streets before Detroit’s OEMs do but pick up trucks are the key to America’s hearts.
Back To Court. PG&E has been charged criminally for their role in 2019 wildfires.
It’s Official. Forbes billionaire list was released this week and we have our first US billionaire from solar on the list. Shoals’s Dean Solon hits the list at #1444. Congrats Dean!
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