Sea Of Green, 950 Below. Yesterday was not a great day for stocks, market closing down 950 points and the VIX reaching near April levels. Except for solar companies trading in the public markets. At the start of the day Generac joined Enphase and First Solar to publish their Q3 earnings since the close on the previous day. The positive numbers, beating estimates and highlighting growth ahead which pushed almost every solar stock upward.
Beyond Stock Prices. Stock valuations are not everything but they do tell a story about sentiment and future growth analysis. This positive view on the ability to perform is a signal that the market is demanding more opportunities to invest. More importantly, it means that more private companies are going to reach for the markets for exits or liquidity event. Over the next few months you’ll see acquisitions by private equity, SPACs and new IPO announcements. Not all deals will be met with positive commentary, at least on this platform, but they are becoming increasingly obvious. If you’re involved in any of those transactions, feel free to give me the heads up.
Earnings Slides. Generac, Sunnova, SunPower
Today’s Earnings.
Another Public Tracker. Following the ridiculous performance in and following the Array Technologies IPO, Soltec went public in the Spanish stock exchange. According to estimates by Wood Mackenzie, Soltec is a top 3 supplier of tracking equipment in the European market alongside the US based competitor Nextracker, which until now remains a subsidiary of Flextronics (reporting later today).
Watch This. Bloomberg is putting $2.6million behind a railroad commission race in Texas which oversees the oil and gas sectors amongst other things. This is how solar should think about regulatory races.
The Buyer’s Group Grows. We’re into our second month at the Buyer’s Group and we’ve added another top supplier to the product portfolio. REC modules are now available at an amazing pre-negotiated rate for buyer’s group members. Both Alpha and N-Peak products are on the list. You can get some price discovery for REC or other products on our members page.
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Yann
Earnings Season Is Here. First Solar had strong earnings last quarter and the stock jumped after hours by over 10%. This comes on the heels of the analyst upgrade by Roth Capital. I’ll let PV-Magazine give you the breakdown of that earnings report because I spent time listening to what happened on the Enphase call. Today, we start with Generac earnings pre-market and SunPower and Sunnova reporting after market close. This will be SunPower’s inaugural report without the module business. Sunnova announced this week the addition of a former FERC commissioner to their board of directors and I expect lots of grid service talk on that call.
Enphase Reports. Before we talk about the dollars, I want to highlight the R&D excitement that often comes out on the Enphase calls. Badri, CEO of Enphase, broke script and gave some highlights of the IQ9 which will follow the IQ8 into the market, which isn’t shipping quite yet. The company hired 140+ engineers last quarter to focus on R&D. The company outperformed expectations in Q3, with $60million in free cash flow and improving international revenue by nearly 50%, making up 22% of the total revenue. Margins also exceeded forecasts. This is on the strength of their supply chain higher than their 8-10 week target inventory levels. I.e. a lot of product is hard to find right now but they are working on it. September had a 49% increase over June, the rebound you wanted to hear in this earnings call regarding the COVID situation and in line with what we’ve seen in finance documents and SolarWakeup market surveys. Some fun quotes from the call. A123 Systems was the supplier of batteries for the Encharge system (they are adding others), which also sounds sold out in Q4. A123 was the US based battery maker that went under and patents were acquired by Chinese investors.
Only $11 Trillion. BNEF is forecast the capital needed for the energy transition based on their energy outlook. That number is an $11 Trillion opportunity over the next 30 years and here’s the operator’s caveat. Uber was misvalued by early investors because they viewed the taxi market as too small to disrupt but now Uber’s revenue is multiples higher than that original market opportunity. Clean energy will also be multiples higher than this because the enterprise around the conversion of brown kWh to clean kWh will present market segments well beyond the replacement. Kara Swisher has bene saying for a year that the world’s first trillionaire will come from the fight against climate change.
CO Now OC. Thoughts are with our readers in Southern California, specifically Irvine area that are dealing with their wild fires and horribly strong winds.
Insider Blog Of The Day. Obama’s former senior advisor and communications direction, Dan Pfeiffer, writes about the oil gaffe or gift from Biden’s last debate. Dan is the highest level of politics, outside of our echo chamber, so it’s worthwhile to read his thoughts on this.
The Buyer’s Group Grows. We’re into our second month at the Buyer’s Group and we’ve added another top supplier to the product portfolio. REC modules are now available at an amazing pre-negotiated rate for buyer’s group members. Both Alpha and N-Peak products are on the list. You can get some price discovery for REC or other products on our members page.
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Yann
The Public Equity SPACs. I have spoken to several SPAC executives over the past few weeks that are actively looking for investments in the clean tech space. There have been several announcements recently in the broader market but none that close to home yet but I don’t expect that to last for long. With great success in the Array Technologies IPO, the way solar has performed in the public markets, and an energy transition well on its way, the only thing missing is finding companies large enough to fit the mold.
The Private Equity Investments. Imitation is the best form of flattery and investments are like the heat seeking missiles of imitation. Exits are that target, so whether you look at the Blackstone liquidity event from Vivint Solar, Oaktree’s with Array, or Tiger’s with Sunrun amongst many others, capital is seeking new ways to get equity participation in our space. All of that is positive but solar still has an early stage issue, getting investments big enough to get to the dreaded “check size” that PE firms always highlight. That is the metric to watch in 2021, how much startup momentum gets funded in the solar and storage industries.
A Look At Home Monitoring. Sense is a Boston based startup that measures home energy consumption that has raised $47million. The reality is that the market hasn’t quite adopted this or any other energy monitoring technology in a big way. While it would make sense for home owners to have both sides of the energy equation on their phone, you have to wonder how to do this so that more solar installers adopt the concept.
Why Bury Reports? Grist alongside an investigate reporting outlet says that the Department of Energy has been withholding the publication of over a dozen reports that show renewable energy in positive light.
A Sustainable Pallet. Wood pallets are a costly and wasteful part of solar logistics, they tend to be one directional, fragile and inefficient. So let’s highlight the PVPallet, a reusable pallet that appears to also improve the ability for modules to withstand the rigors of logistics and warehousing, particularly with partial pallets. Going forward, my hope is to highlight some startups to get them attention from you all and maybe even drive growth and capital their way.
The Buyer’s Group Grows. We’re into our second month at the Buyer’s Group and we’ve added another top supplier to the product portfolio. REC modules are now available at an amazing pre-negotiated rate for buyer’s group members. Both Alpha and N-Peak products are on the list. You can get some price discovery for REC or other products on our members page. You can also reach out to Libby Koenig from our team at libby@solarwakeup.com
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Yann
Tiny Windows. This was the first Presidential debate that had a planned segment on climate change and it did not disappoint. Trump continued to look at climate change as a building code issue, which provides the segue to say that building codes are one of the most powerful, yet under appreciated policies affecting climate change and solar. On the other hand, Biden talked about methane, batteries and transition in the most progressive way we’ve seen out of a candidate. You can read the entire debate transcript here.
Batteries In The Basement. In several interviews, town halls and debates, Biden has brought up the need for both a smart grid and solar plus storage. He’s been talking like many of us when we explain the needs for our market to a family member. The baseline for all of the policies I would expect in a Biden administration is the goal of 100% net zero by 2035 (though 2025 would be fine) in electricity generation. How to achieve this 15 year transition will be the makeup of many trade groups’ 100 day policy papers you will see the day after the election.
Solar Is (Isn’t) A Pipe Dream. “Solar. I love solar, but solar doesn't quite have it yet…So, it's all a pipe dream,” Those are the words at the debate by Trump before also saying that solar can’t power America’s factories. Tell that to the developers, investors, manufacturers, EPCs, lawyers and union workers that have installed solar that sit on rooftops or solar farms across the Country. This is not due to a lack of effort by SEIA, solar companies and republican senators that have met with Trump and his senior advisors over the past 4 years to educate the administration about solar. So here we are after 4 years, solar isn’t ready for prime-time coming from the leader of the free world. So here’s a headline from last week, after IEA said solar is the cheapest source of electricity in the world.
The Oil And Gas Isn’t (Is) A Pipe Dream. The hottest part of the debate was when Biden said, slipped, or was misunderstood (depending on how you stand on the politics) that he was looking to end oil and transition them to renewable energy. Couple of notes on this topic. 1. Oil and renewable energy don’t directly intersect. Oil is losing market share to electricity, competing with utilities but not any particular type of generation. 2. Biden’s campaign was saying that he meant he wanted to end oil’s federal subsidies to which I say, don’t get rid of them but add solar to them instead. Particularly carrybacks for tax credits and ability to offset active income tax liabilities. 3. This is what the Biden administration really should be saying, Biden didn’t say or propose anything that the CEO of BP and other oil majors aren’t already saying themselves. They are already transitioning the business because the market has spoken, something republicans should understand.
Must Listen Conversation. Biden talked with hosts of Pod Save America after the debate in this interview. The interview leads with climate change and goes from 4:17 to 13:15. The 11:30 mark talks about smart grids and solar plus storage gets the nod at 11:50.
The 2021 Foundation. 2021 is the year that will highlight either an amazing decade for solar that passed or set the foundation for a decade of domination. Regardless it will break records and SolarWakeup has always had one of the most aggressive forecasts that also had the benefit of being the most accurate. 2021 will bring a residential market of over 3.6GW, over 20% growth over 2020. A lot of that backlog is already in the books and consumers’ appetite for solar power is bigger than ever before. A Biden victory will set the foundation for many more years at this scale and higher but will also take away the ITC cliff driving more capacity at the end of the year. If Trump wins again, it will depend on how the House and Senate play out whether there is an ITC deal but we can expect more tariffs and less focus on renewable energy which makes solar policy advocates focus on States instead.
The Buyer’s Group Grows. We’re into our second month at the Buyer’s Group and we’ve added another top supplier to the product portfolio. REC modules are now available at an amazing pre-negotiated rate for buyer’s group members. Both Alpha and N-Peak products are on the list. You can get some price discovery for REC or other products on our members page.
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Have a great day!
Yann