Happy New Year. Here’s your last rundown of the year, some of the best stories lists and of course the story that gives us a 2-year extension of the ITC courtesy of Trump signing the spending bill. If you read nonsense online about the ITC being bad for solar, remember that while solar is for everyone not everyone is for solar. Stay tuned for my year in review and predictions email before the clock strikes the end of 2020. It’s been a pleasure getting through the year with you (most of you at least) and look forward to what the next year in solar news has in store for us.
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ITC Extension Language. At long last, the bill has been printed. You can read the entire 5500 pages here. Page 4908 for section 48 and 4015 for section 25 extensions.
Breaking It Down. John Marciano of Akin Gump and his colleagues provide some analysis here of the legislation.
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The ITC Extension. It wasn’t entirely expected to happen at this point in time but the ITC is likely to be extended for 2 years in a vote later today. The cliff from 26% to 22% will wait until the end of 2022 and 22% will stay through 2023. This will give large scale developers flexibility with placed in service procedures and safe harbor for all tax equity based structures. It also gives the industry another 2 years to get its act together and fight for a longer extension or even the ability to make the ITC permanent. Permanent may seem impossible but alcohol excise breaks were made permanent in today’s extender package. As of this moment, the actual bill language hasn’t been filed yet. We’ll update you when we see it.
The Policy Pros. Over the past two years the solar industry has figured out that policy is not a sometimes thing and always a full contact sport, spectators need not apply. You met with your representatives on the hill and in their district, educating them about your business, solar and the jobs you’ve created. SEIA worked both sides of the aisle, relentlessly and sometimes with folks, myself included, questioning whether that was the right way to play it. State trade groups worked to ensure that solar expanded within their area and governors were in tune with the policies in DC that ensure jobs are created in their state. CALSSA, for example, worked with members and their customers like schools and farmers to lobby for federal policies like the ITC with members of Congress. And environmental groups, not always kind to solar, have started to recognize that the ITC helps ensure that the energy transition is not only wise for the planet but for consumers’ pocketbooks as well. At the end of the day it was a team effort, congrats to everyone that spends their work fighting the good fight.
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A Message On Policy. If you happened to participate in yesterday’s Roth call you heard me say this live. Companies in solar need to step up and so should everyone reading this. Over the past 15 years years we have transitioned solar from an industry that needs support to prove a point to being the fastest growing energy source with margins throughout the ecosystem. I read almost every form 4, and I don’t mean to pick on executives at public companies, but we are doing much better than ever before. The problem is most companies and executives view policy as charity, not a regulatory necessity or business development. Companies and executives alike should be setting aside 1% of their revenue to invest in policy efforts. That means if your revenues are $200million, you should be spending $2million on policy through staffing, lobbying, trade groups and political contributions. Let’s say that last year the revenues in US solar was $30billion, imagine how powerful solar would be if we spent $300million industry wide on policy efforts and therefore what would you say your salary, equity and net worth growth would be next year. Do you think we would be fighting for a 1 or 2 year ITC extension? Would SEIA and CALSSA have to struggle to find revenues because COVID killed in person events that raise a majority of the small budgets that operate our trade representatives? 1% is the number. I hope that every CEO and executive team at least spend time in a meeting talking about what this would look like on their P&L and what regulations would make that investment worth it and what policies could die if they don’t do it. Here’s my contribution to you, if you’re open to doing this and don’t know how to deploy that money, I will give you unbiased advice on how I would deploy if I were in your shoes.
And The Freeloaders. There is a list of companies in my mind and other policy pros. These companies are growing, profitable and lack participation at any level. You’d be shocked if I named names, which I won’t, of companies that aren’t members at state SEIA chapters or any trade group at all. They also tend to ignore the phone call that asks for their participation in fundraising drives and they definitely don’t have policy staff. If the solar industry has increased your net worth to over $10million, do me a favor and look at your policy spend. SEIA’s budget shouldn’t be $20million (in a normal year) and CALSSA shouldn’t be $2million, they should be 5x that number and would be if everyone participated.
Biden’s Climate Team. Biden has named names, Congresswoman Haaland to Interior, Michael Regan to EPA and Brenda Mallory to CEQ being added to the Granholm, McCarthy and Kerry announcements that came before. These are great names and will have the ability to do good things for the planet and solar. The next level of staffing will be great to see, I assume we will see names from inside our industry fairly soon.
No Spending/COVID Deal Yet. Negotiators continue to hash out the details of the covid stimulus. It is now expected that members of Congress will vote on a deal over the weekend but no word on if extenders get included and whether solar is included if they do.
30 Years Of Solar. In this episode of SolarWakeup (or find it on spotify or Apple), the podcast, I speak with Dan Shugar. Dan is the CEO of Nextracker, one of the largest tracker company in the world, currently owned by Flex. Dan has been thinking about solar for over 30 years and our conversation weaved through many of the periods that led us to where we are today, a mainstream energy generator creating generation wealth opportunities. Conversations like this are difficult to maneuver for me because after 15 years in solar I have a lot of the background that some listeners may not know or recollect but I think this may be a great welcome to solar listen for everyone in the industry. You also get a first attempt at the 10 minute episode of SolarWakeup recap at the top, fast forward to minute 10 to get to the interview. I’d certainly appreciate it if you forward the episode along to friends and colleagues.
Solar For Clubs. My friends at Sustainable Capital Finance (SCF) have seen an uptick in interest for solar PPAs from schools, country clubs, and golf courses, as these off-takers have been impacted differently than other C&I energy consumers during the COVID-19 crisis. Golf & Country Clubs have seen increased revenue from golf and other outdoor activities, while schools would install solar while students aren’t on school grounds. In both scenarios, savings from a solar PPA are extremely attractive. Click here to learn more about how their subscription-free, proprietary software, the SCF suite, can help to speed up your PPA pricing and transaction process.
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Yann