A Feel Good Story. The CEO of a Los Angeles based installer has the story that we want to hear in solar. Kenneth Wells didn’t have it easy growing up and after 6 years in the criminal system found himself entering the solar workforce through a program at Grid Alternatives. That training led to more solar jobs before ending up at Sunrun as a construction manager. Today he’s his own boss running O&M Solar Services. There isn’t enough funding for solar groups like Grid Alternatives and training centers, and stories like Kenneth’s help tell the solar success story.
Solar Is Misunderstood. The headline pulled me in, I wanted to read more analysis on what folks thought about Sunrun’s acquisition of Vivint Solar. Reading the article, I was shocked by the confusion. In short, the author says that Sunrun bought Vivint Solar because more homeowners are buying solar instead of leasing it and Sunrun wanted to more share of the “shrinking slice of the pie.” Cash, loans and leases are democratized. Most installers have access to all three financial products today and this deal isn’t about leases.
PacifiCorp Responds To Solar. Two days in a row for the Northwest utility on SolarWakeup. The 58th largest utility in America filed their IRP and is readying an RFP for 1.8GW of solar and 595MW of energy storage to be installed in the next 3 years. Not too shabby.
Capital Dynamics Wants It All. When MISO releases their recent interconnection data, we will likely see record applications that may reach over 2GW in applications, maybe much more. Capital Dynamics, the asset manager with a record of execution, is now partnering with Tenaska on a portfolio of 24 projects coming online by 2023. The total capacity is estimated to be 4.8GW.
Nonprofits Want Solar Too. My friends at CollectiveSun can help you sell more solar to nonprofits. By working with CollectiveSun your nonprofit prospects get easy $0 down financing and a 12% or more tax-like credit for their systems. Now, more than ever, solar can help nonprofits save on their critical operating expenses. If you are a solar installer or developer, this is a great solution for you to sell more solar and ignite more deals with nonprofits. Click here to learn more about working with CollectiveSun.
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59th Largest IOU. The combination of Sunrun and Vivint Solar, from hereon out called Sunrun will have over 500,000 residential customers. According to EIA, that makes Sunrun the 59th largest investor owned ‘utility’ nestled between Duke Energy South Carolina and Pacificorp. For reference, it is 1/7th the size of PG&E and 1/9th Florida Power & Light which sits at 4.3million customers. At the point of IPO, Sunrun had 80,000 customers and adds about 40,000 customers per year. In comparison, many of you residential solar installers are considering yourself huge when you reach 1,000 installs per year, something less than 50 companies in the US can say.
Installer Trivia. Sunrun will be the largest by far followed by other public companies, Tesla and SunPower. Can you name the next largest installer measured by number of permits pulled?
Management Talking Points. The companies hosted a conference call yesterday morning led by Lynn Jurich (CEO), Ed Fenster (Executive Chairman) and Tom vonReichbauer (recently new CFO of Sunrun) joined by CEO of Vivint Solar, David Bywater. The call started with highlights of the synergies and complementary nature of combining the companies. Sunrun is adding direct to home sales engine and the combination will save $90million in overhead. Wall Street analysts are focused on the $90million in cost synergies which was frustrating for me on the call because it misses the larger point. The combination is 500,000 customers and while the company isn’t focused on the ability to add storage to those customers, it remains an asset. Behind the scenes analysts tend to view the deal in a positive light. The optimism comes in the form of short-term, refinancing the debt of the entire portfolio, and longer term partnering with low cost of capital, pension fund type, investors to create a competitive edge. The real value and reason for scale is that the residual income that the general partner (Sunrun) can create from these portfolios could be enough to fund the overhead of the platform. That would bring Sunrun into the public company glory land of positive earnings per share. More to come on this, particularly from financial analysts.
The Nodal Impact. Most regulatory risk will talk about antitrust approvals, I don’t worry about that especially since Sunrun and every solar installer compete against electric utilities which are you know, monopolies. Also not a risk, but interesting to talk about is what happens when Sunrun and solar companies in general control energy storage all over the residential grid. Imagine Sunrun with 500k storage units across the Country, will utilities ask regulators to oversee that control? Nationally it’s diverse enough but think about it at a nodal level.
IPO To Quasi-Merger. In 2014, Vivint Solar went public with my writeup on the S-1 and in June of 2015, Sunrun filed its S-1. A month later, Sunedison entered into terms with Vivint Solar to acquire the company for $2.2Billion. It has taken exactly 5 years from that moment for the Utah based company to enter into a new agreement. This all-stock acquisition feels a bit more like a merger to me but now you have the fruits of over a decade of labor. Someone could and should write a book about Sunrun from the early days of resi solar, lots of fun stories involving startups, SolarCity, race cars, rocket ships and of course American Idol. This feels like a summit of sorts, but we know that much more work is to be done by the industry.
Pipelines And Politics. A lot of talk about pipelines this week and how the potential Biden presidency impacts the development of those. That logic is flawed. Pipelines are financial investments that span decades, you need a consistency of policy not a momentary positive followed by a negative. Even if the next decade only feature republican presidents, would pipelines continue to be built? The trend on this is the direction away from the fossil fuels in oil and gas pipelines and towards transmission, especially HVDC. The trend line is more important than the election.
Nonprofits Want Solar Too. My friends at CollectiveSun can help you sell more solar to nonprofits. By working with CollectiveSun your nonprofit prospects get easy $0 down financing and a 12% or more tax-like credit for their systems. Now, more than ever, solar can help nonprofits save on their critical operating expenses. If you are a solar installer or developer, this is a great solution for you to sell more solar and ignite more deals with nonprofits. Click here to learn more about working with CollectiveSun.
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Sunrun And Vivint Solar. The big news of the day, the week and the year is that Sunrun has agreed to acquire Vivint Solar. We’re going to talk a lot going forward about what this $3.2Billion transaction means for the industry. In the meantime, before I get the chance to listen to a call hosted by the companies in 90 minutes, we know that it is an all stock transaction where Vivint Solar shareholders get 0.55 shares of Sunrun. This means that Sunrun shareholders will control 64% of the combined company. All of this has been signed off by the board of directors and is expected to close late this year. Closing will require regulatory and shareholder approvals to get this done.
First Thoughts. This long rumored transaction brings together the two largest residential solar installers. In a year where COVID is hammering markets, residential solar is saying we’re growing, we’re profitable and we’re no longer waiting to get deals done. There are going to be questions by regulators, should the top 2 installers be allowed to merge? Vivint Solar shareholders are controlled by the Blackstone Group but Sunrun shareholders will have to understand the value of the acquisition. It is notable that they are acquiring the VSLR at only 10% premium to yesterday’s close and it’s an all-stock deal. The bet is that scale is a winning variable to the upcoming decade and that having 500,000 customers (many of whom don’t have storage yet) is a value that isn’t being monetized today. I hope all of the service and product suppliers to both companies have a fruitful day of meetings figuring out what this means to their business.
SCOTUS Pipelines. If the Atlantic Coast Pipeline wasn’t enough for oil and gas news, a judge stopped fast track progress for the Dakota Access pipeline and shortly thereafter the Supreme Court affirmed that decision in a roundabout way. Fast-tracking for projects can proceed except for the Keystone XL application requested by the Trump administration.
Stationary vs Mobile. The batteries are the ballgame in this decade. You can look at the key talking points in the Sunrun press release, listen to their messaging, or read the news from car companies. Whether the batteries are stationary or mobile, the only difference is who gets to sell them to homeowners. Keep your eye on the pilots for V2G, vehicle to grid, programs and how they interface with homes and codes.
Nonprofits Want Solar Too. My friends at CollectiveSun can help you sell more solar to nonprofits. By working with CollectiveSun your nonprofit prospects get easy $0 down financing and a 12% or more tax-like credit for their systems. Now, more than ever, solar can help nonprofits save on their critical operating expenses. If you are a solar installer or developer, this is a great solution for you to sell more solar and ignite more deals with nonprofits. Click here to learn more about working with CollectiveSun.
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Buffett Goes Shopping. Berkshire Hathaway is buying the Dominion Energy for $4Billion plus about $6Billion in debt. This is the first deal that Buffett has done since the start of the pandemic and now gets Berkshire control of 18% of the interstate movement of natural gas. That’s something that should be considered. Keep in mind that Berkshire is heavy in the railroads which make a lot of money with coal transportation and natural gas are part of the fuel that is hindering coal’s future success.
Dominion’s View Forward. The obvious question is why Dominion would give up its natural gas assets. After a legal decision regarding the Atlantic Coast Pipeline, Dominion and Duke called the pipeline development off. With electrification and EVs on the horizon, corporate announcements on renewables rising, Dominion saw this as a graceful exit for their shareholders.
Is This A Larger Shift? The headlines will read, “utilities skip the natural gas bridge and go from coal to renewables instead.” I do believe that we are close to utilities saying that natural gas peakers are no longer competitive or the best thing for ratepayers. Most of the coal to gas power plant replacements have already occurred, the majority of ratebase has already funded the construction and we can rotate into solar plus storage mass adoption. I’m all for that last bit but wouldn’t mind regulators doing the math for ratepayers on whether the assets should be built on the utility balance sheet or by 3rd parties with a PPA.
Something I’m Watching. India elevating their fight with China on imports of renewable products amongst others.
Mayor Pete On Clean Energy. Today, Clean Energy For Biden is hosting Mayor Pete Buttigieg on Clean Energy and Climate Change. The event is at 7:30pm EST. You can RSVP on the link and donate here.
Nonprofits Want Solar Too. My friends at CollectiveSun can help you sell more solar to nonprofits. By working with CollectiveSun your nonprofit prospects get easy $0 down financing and a 12% or more tax-like credit for their systems. Now, more than ever, solar can help nonprofits save on their critical operating expenses. If you are a solar installer or developer, this is a great solution for you to sell more solar and ignite more deals with nonprofits. Click here to learn more about working with CollectiveSun.
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