A Changing World. Here is the long awaited data. Sales are still down 22% when compared to pre-COVID February sales. If you remove NY and MA from the analysis, sales are down only 14%. That being said, 58% of the respondents say that they are at or above pre-pandemic sales levels. 42% are hiring for sales and working capital positions are much better, many thanking PPP.
The AHJ Conundrum. 57% of survey answers say that their backlog is growing which still means that sales are going faster than installations, partly due to shelter in place orders and due to slow moving AHJs not issuing permits or doing inspections. Here’s the good news, 79% of the AHJs are doing digital permitting and 68% are providing options for virtual or video inspections. If this trend keeps up and then sticks around permanently, solar will be much better off for it.
Inverter Landscape. Public markets love the solar industry through inverter companies. Enphase exceed all-time pre-COVID highs by almost 15% today, reaching an all-time high of $70 per share. Solaredge is close to the all-time high reached just prior to COVID starting to impact the market. PV-Tech does a nice job of giving you the global view on the various players that trade publicly.
Enphase Golf Clap. A golf clap is a signal of support and congratulations when everything else is so quiet. The shot, the strategy is all happening in front of us but if you don’t pay attention you may miss it until you hear the applause. What am I talking about? On Monday of this week, Enphase launched an online store for their products in Germany. They had already launched a store in the US in 2019, which you likely haven’t seen because the US store pricing was almost double what you pay when installers buy from distribution. The US platform most likely served as the testbed for everything syncing and working in the back end. The German store is selling product for about 15% less than the US store but with discount code system built into the platform they could be given to installers and bring pricing much closer to current levels. An online platform done right will increase the almost non-existent market share in Europe while also significantly increasing margins.
What It Means. Most manufacturers that sell into distribution don’t test this openly because what happens if distribution gets upset and stops buying from you. Enphase and a few others have the luxury position of being a product that customers want, distribution needs to sell the product in order to be a value added resource to installers. The signal, in my humble opinion, is that Enphase wants to understand the purchasing behavior better. More importantly, the company is kindly telling distribution partners that they need to be more consistent on how they price their products. The inverter index that SolarWakeup has quietly been checking, shows that the same inverter can move by $10 or $20 week by week, which is 3 to 6 cents per watt for most installers. GTM has the residential marketshare for Enphase at about a quarter of the market and Solaredge at more than double that. Look for that to flip in 2020 and 2021 in residential US market segmentation. An online store may seem small and quiet, but trust me when I say that a big and important conversation is being had behind the scenes that could reshape how the solar ecosystem functions and I love this innovation.
Listen Closely. Thanks to all that joined for yesterday’s Roth conference call about the solar market. If you enjoyed that and want to hear more about my live conversations, check out my interview with Rob Newman from Nearmaps about aerial imagery. Please forward this email to one colleague and ask them to subscribe to the newsletter, let’s get everyone in solar reading every morning.
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Join Me This Morning. The solar market is moving quickly and the survey results will be released on a call about the market this morning. Join us, you can register for the webinar here. It’s at 10am EST.
Margin Stacking. I remember 30 years ago going to the travel agent with my father. We sat in a mall, where the nice agent showed us a green screen of flight options, in this case flying PanAm from Hamburg Germany to Florida. There was no transparency in the pricing or competitive options to the PanAm flight and therefore we rarely took the plane. Today, you and I can go on an app and see hundreds of variations of flights by city, date, time or connections before deciding to fly. COVID aside, airlines and travelers won when transparency was created. It also made every level of margin become more transparent, hence the fees for luggage, exit row seats and faster boarding. You get what you pay for. Solar in 2020 lacks that transparency for most market participants at this point and that’s something we should all think about fixing. It is what I am thinking about constantly now as I ponder what’s next, quality and reputation should be the leading drivers of success in solar, not unknown unknowns like margin stacking. More to come.
Measure From 12,000 Feet. In this week’s SolarWakeup podcast I talk with Rob Newman, the CEO of Nearmaps. Nearmap flies planes all over the world including your house, three times per year. These planes fly between 12 and 18 thousand feet and measure your roof with accuracy of a couple of inches. For solar, it enables installers to sell projects with accurate designs without ever stepping on the roof until install day.
Will SPI Happen? While early spring events like GTM’s Summit had to move to the fall and Midwest Solar Expo has gone virtual, no word on SPI in September. SPI is a crucial source of funding for SEIA and SEPA but this year’s event is in California where distancing protocols will be stricter than other States. SPI’s website still appears all systems go but the survey respondents, by a margin of 74%, said they would not be comfortable attending.
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Forecasting 2020. There are two rules in being a public company that executives can live by both driven by overdelivering. In a crisis like COVID, most companies will underpromise publicly and then quietly spread whispers about positive outlook. This ensures that expectations are reachable but no investor thinks the company cannot weather the storm. The other way is to be contrarian and that is more situationally accurate for solar right now. Almost every solar company has withdrawn guidance and spoken with optimism. Sunnova is taking the other path by reaffirming their 2020 guidance. In a single sentence during the earnings call, Sunnova put it on the line in 2020 and putting their teams on notice. This is the year that execution is key because underdelivering on expectations is a Wall Street sin you don’t want.
My Take. If you want to know what is going on in the solar market and my update on the survey data that will be released on Tuesday, you can register for the webinar here. It’s at 10am EST on Tuesday.
SunPower Enhances Focus. It was a big week for SunPower gaining regulatory approval for the split between the module business and the ’services’ platform/dealer network. The company also sold its O&M business which goes further in raising funds and reducing operational expenses at the company. In a few quarters it will be difficult to differentiate between SunPower and Sunrun and to a certain extent Vivint Solar and Sunnova. Each has one or more of the following attributes: direct sales, dealer network, self install, outsourced sales channels, subcontracted installers and all have their own funding structure. Game on…
Big Modules. 400W, 500W. Pretty soon we’ll be talking about real modules. The first ever quote for modules I got was in 2006 for $3.95/watt for a 195W module (sans tariffs).
Supercharge Use Drops. Elon tweeted a graph of Supercharge usage that spans the past year and peaks in December/January. A few weeks ago charging usage went to 30% of the peak in both North America and European geographies. It’s on the way up again, close to 50%. But will it ever go back to the 100% mark, adjusting for the increase in cars on the road? Utility planners around the Country are studying this image to understand consumer behavior post-COVID and if they are honest with regulators will likely have to ask that homes install more solar. Why? Even if 20% of those in the workforce transition to working from home, grid infrastructure is going to have to adapt quickly and likely cost ratepayers billions. More to come
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