2020 Forecasting. Wood Mackenzie analysts are doubling down on their 2020 revised forecast, saying that cash deals will be down 41%, leases down 21% and loans down by 23%. This downturn would continue through 2021. Here’s the problem with that forecast. Every major public company is telling a different story, private solar installers are reporting months well above pre-COVID and loan companies said that May was the best month in history, June beat May and July beat June. Those data points don’t compute with a down year. While we were hoping for a 25% YoY growth year, 2020 will still be bigger than 2019. I invite the analysts to join our next residential market conference call scheduled for September 1st to hear some great data points.
The Loan Market. The side point of the research spotlight is the state of the loan market. Loans are rapidly increasing in overall financings and I’d like to hear your thoughts on solar loan companies. There is a diverse set of companies offering the product so reply to this email and tell me what makes you pick your loan partner. It’s not the transparent market but maybe SolarWakeup’s mission of shining the light could be helpful.
Utilities Play EV Infra. Ten years ago I told a major IOU CEO that I thought he should ask regulators for the approval to build 10,000 charging stations across their service territory. Maybe that was a bit early but I wanted the utility to front run the demand and removing the biggest hesitation factor for consumers, where do they charge. It would have also locked up the access for the sites and maybe one day EV charging companies end up buying the land rights from gas stations. Private companies now lead the EV charging network and I can’t wait to see how the compete, partner, or rate base discussion goes.
Coal To Storage Transition. Vistra, the IPP know for fossil generation, continues to diversify into battery generation. It already announced a massive storage site in Texas and previous two projects at the former Moss Landing coal plant. Now it received approvals for a 4 hour 1,500MW site near their natural gas plant, which it says it will build once the market data allows for it.
Solar Module Waste. Hard to believe that we are at the point where the market for re/upcycling of solar modules is upon us. For me it was always a problem for another day so educate me on options available or best practices on thoughts for what can be done.
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SPI Goes All Virtual. SPI was pushing to have some portion of the market meet in person until just a few days ago, trying to convince exhibitors to keep their booth space and send folks. The lingering cases, positivity rate and hospitalization surround this pandemic made their best attempts fall short. Most of us were simply unwilling to get on a plane and visit Vegas. I know that many of us can use a few days in Vegas but it will not be. The lack of SPI creates a massive hole in the SEIA budget, nearly $10million of profits from the trade shows goes into the SEIA annual budget to fund solar advocacy and there isn’t a way to make that up. Thus far, PPP funding is not allowed to flow to trade associations.
The Digital OS. Like most of you, SPI will also go virtual. We are nearly 6 months into the pandemic so it’s a good time to look at your digital pivot. What changes did you make, processes adapted in order to meet the new normal? We can now imagine and realize a touchless customer journey except for the ineptitude that most building departments have shown in using email and FaceTime to do their jobs. Some AHJs have simply delayed their processes further hindering economic recovery. Take an hour this week and meet with your leadership team to asses the digital systems you put in place, happy to write more about this if questions arise.
Through, Not Past. Moments ago I had a realization about 2020 and the pandemic. Since the start we’ve been talking about it as a temporary issue facing society and the solar market. It would come and then cases would drop enough for things to go back to normal. Instead we now realize that we are living alongside the virus through 2020 and potentially longer. Our work will adapt to it as well, every company is making masks at this point, I’ve been creating a collection of solar masks at my home with East Bay Community Energy and Utility API coming in early.
SolarWakeup Buyer’s Group. Your competition is joining the SolarWakeup Buyer’s Group, transparent pricing powered by the market. The market is maturing and this is a big part.
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It’s Kamala. The VP pick is out and as predicted here last week, Senator Harris is joining the Biden ticket. The legislative headline right now is her environmental justice bill with AOC that is right down the fairway of solar advocates and our industries broader mission to do good. This opens the Senate seat in California and an interesting pick (though many say unlikely) is Kevin de Leon, former Senate Pro Tem and 100% RPS advocate. The Biden Harris ticket definitely sends a message to our industry that they view environmental issues as top of the to do list and our work is to hold them to it. That being said, you need to be elected before you can govern, which includes raising money. On behalf of the SolarWakeup family, you can show your support to the campaign here. This isn’t an election to sit out.
Time Of Big Modules. SNEC took place in China and PV-Tech visited the show. The story coming from the show is the increase in scale of modules, some doubling the standard 60cell modules in use in the market today. 500w, 600w, and even 700watt modules were exhibited as well as the expansion to 78 cells.
Everywhere You Land. Every person in solar has looked at the giant roofs without solar when they land at major airports, naked roofs. These naked roofs are a major dilemma for solar pros because putting solar on them is much harder than you think. Energy consumption is generally lower than potential output, tenants have leases less than the life of the solar plant, energy rates are low and many are owned by SPV holdcos. The market development needed to target this market is to view these roofs as land where the plant does not typically serve the consumer below. So we can talk about the 145GW market potential but reality is more complicated than technical potential.
Free Solar For Everyone. The lead generation ads are largely annoying, my friends send me the latest government program guaranteeing free solar all the time. But reality and lead gen is getting closer together with the latest loan product from Mosaic that is no payment for 12 months, not much different from other consumer products. Here is something you wouldn’t see though, the loan is provided by Webbank (per press release) which is owned by Steel Partners, which also owns roofing/solar player OMG. There is no market impact of that relationship but I thought it was interesting that a industrial public holding company is in solar with two portfolio companies and most executives wouldn’t even realize it.
Duke Earning Call, Tweet. Goldman Sachs analyst asked Duke executives a solar question, hat tip to Ben Inskeep for catching this tweet.
Tweet Of The Day. From Dave Pomerantz, it involves utilities, CEOs, private jets and safety.
Buyer’s Group. Your competition is joining the SolarWakeup Buyer’s Group, ask them if you don’t believe me. The market is maturing and this is a big part.
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The Edge Of Scale. Selling solar to homeowners is an even playing field. Of course there are some advantages to those with more cash in the bank or purchasing volume but nonetheless a small company can compete with the biggest installer. In the world of virtual power plants, contracts with utilities, that changes. This was the quote from Sunrun CEO, Lynn Jurich, on the earnings call yesterday, “We have the contract with the utility for grid services which gives us a customer acquisition edge.” To their credit and that of utilities, it is still early in this newly created market. There is a future where utilities engage in virtual power plants with consumers without the installers. The highlight of the call came from Ed Fenster (Executive Chairman) on the discussion of tax equity. “We prefer a high corporate tax rate,” Ed said then explaining that tax liabilities increase and create more supply in tax equity markets. It also improves the value of depreciation by about ten cents per watt. At the end of the day, Sunrun posted a strong quarter, 78MW installed which is 24% lower than the same quarter in 2019. Given that the entire quarter was under the weight of a pandemic, I’d say it’s better than expected. The company did lowball estimates for the rest of the year, seemingly tempering investor expectations for future upside surprise in my opinion. Earnings Slides.
COVID’s Impact In Q2. We now have the public earnings reports from solar players for the COVID quarter, Q2 2020. None of the reports show the worst case we saw in the SolarWakeup surveys, down 50%+, instead the worst was about 25% down year over year. Europe is showing a stronger solar market and stronger COVID recovery which we saw in the SolarEdge earnings. None of the solar companies were willing to talk about backlog but we know that backlogs were growing through the quarter. Halfway through Q3, those that have made the pivot to the new way of doing things have figured it out versus those that are struggling. Q2 also gave coverage for one time costs, Sunrun had over $15million and Enphase had significant convertible note costs, but that’s not buried in the reports of a quarter we will all hope to forget.
At Home Microgrid. Generac quietly announced the microgrid in a box. A transfer switch and brain system that seamlessly integrates a generator, battery and solar production. In this design, the generator and battery can be smaller and therefore more cost effective. Generac has two inherent advantages to Enphase and SolarEdge, they have the generator market cornered and millions of existing customers that have a transfer switch installed.
East & West Coast Acquisition. Sunworks, the publicly traded solar company based in California, has been acquired by Vermont’s Peck Company. The combined companies represent about $88million in revenue according to company statements. Without too much detail, this was a share transfer and thus leaves the combined company as a publicly traded one.
Bill Walton Comes Back. SolarWakeup friend, NBA Hall of Fame, all time best NCAA player, solar expert and CALSSA’s annual dinner motivational speaker, Bill Walton, is back in solar. He is the recently engaged spokesperson for San Diego’s Stellar Solar. If you’ve never heard Bill talk about solar, you’re in for a treat. Here we go!!!
Out of Many, You Benefit. Every major industry has group purchasing cooperatives and now solar does as well. More importantly than a lower price point, SolarWakeup Buyer’s Group gives installers transparency and removes other costs from the price. Credit terms, warehousing, rebates and shipping are all packed into the price which removes the transparency you need to operate your business. This isn’t a replacement, it gives you an option to the norm. More info, price challenge and sign up on our website.
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