Discussing The Market. Join me tomorrow in a discussion with Roth Capital’s Philip Shen about the SolarWakeup Tracking Survey results. If you’re interested in joining and reading Phil’s excellent coverage of the solar universe and public solar companies, email him at pshen@roth.com.
Adjusting The Forecast. WoodMac released an adjustment to the 2020 forecast for distributed solar. Their belief is that the 2020 forecast needs to be adjusted down by 31%, likely putting 2020 down from 2019. The public analysis doesn’t differentiate between residential and commercial but my view is that this is conservative and assumes a total shutdown for 4 months. The data we are seeing in our surveys and conversations with the market is one of resilience. Yes, 2020 won’t be 25% growth from last year but solar installers are finding ways to continue selling and using self-reliance as a purchasing motivation. We’ll get more into remote sales over the next few surveys and how you are adjusting the forecast.
Building Department Insight. Last week’s tracking survey showed a potential problem in the market with building departments closing. On the other hand, there has been a lot of talk about FaceTime inspections and email permitting so let’s see what the rest of you are seeing. So in this week’s tracking survey, we ask a few questions on the topic as well as updating the week to week changes. Respondents to the survey get the full data summary in advance of the rest of SolarWakeup subscribers. Click here to participate.
The States and Cities. Here is some reality to everyone in every industry. Cities and States are fighting the pandemic which is costing them money in addition to focus. Unlike the federal government, these bureaucracies can’t print their own currency and don’t operate at a deficit. In fact, they will have to raise debt or tap into emergency pools. This means that solar and renewable goals will take a backseat to the current emergency. My hope is that in package 4 stimulus, Congress includes aid to the local level in some form (treasury debt perhaps).
Preview Of Climate Change. Not to be alarmist but you’ve seen the climate change headline about mass migration or release of gases from the permafrost. Yes, this reads like a Dan Brown novel but there are some scary thoughts of what a global climate change event looks like. Our work is as important as ever, keep up the optimism and energy!
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Yann
Sales Continue To Slow. As expected, this week’s SolarWakeup tracking survey shows that sales have dropped compared to pre-corona levels. Installers say that sales are down 33.5%, a deterioration from the 25% reduction our survey showed last week. Anecdotally, a few installers are seeing an opportunity in the market due to their online or telephone based sales process. Installers that relied less on the face to face sales tactics are seeing minor increases in sales volumes.
Installers Prep To Tough It Out. Door to door sales have stopped across the board, with no installer reporting business as usual. With the backlog of projects keeping some installation crews operational, 62% of the installers have already or plan to terminate employees. Next week, we will test this given the loan forgiveness passed by the Senate this if employees are retained.
Another Barrier Arises. While most companies across the country (and many of the respondents) have transitioned to the Zoom economy (including my children and their teachers) building departments were not prepared for not being able to process digital permit sets or inspections. 24.1% of the installers are seeing delayed inspections and 44.8% report that some or all of their building departments are closed. Even if installers are able to sell projects right now, unless building departments move online (touches permitting) projects will wait for things to normalize.
Trade Group Support. Thanks to memos by groups like CALSSA, joining today would mean a lot, installers are considering themselves essential or critical in order to continue installations. 68.9% of them are doing so with over 50% officially labeling themselves as essential.
Survey Results. This week’s survey included responses from 74 companies whose primary markets spanned 20 states. Included in these companies were 29 residential solar installers. Responses spanned from March 23rd to March 26th.
Market Chatter. In discussions this week, companies are saying that they have had record attendance on webinars and software companies are able to guide installers, developers and companies through the digitization of their processes. There are bright spots in the market as the underlying reasons for solar’s success continue to exist.
Next Week. Look out for next week’s survey which opens on Sunday afternoon, as you can see the data is helpful to your business and respondents got many more data points than this short summary.
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Yann
Building Departments. Over 60% of this week’s survey respondents say that building departments are either closed or delaying inspections. There are also talks about departments not taking new applications because they aren’t taking hard copies. Just as there is a time to start selling remotely this is also the time to do digital permitting. Instant permits will allow solar to recover from this standstill while also give building departments the process to overcome the current situation. SolarAPP was already in the works in an orderly fashion, I hope that the process and pilot cities is drastically sped up and expanded in light of the current times.
$2.2 Trillion Dollars Unlevered. Honestly, I don’t want to talk about it. In the biggest economic stimulus and bailout by a factor of many, solar didn’t get what it tried to squeeze in. The political gamesmanship was interesting between Schumer and McConnell. Schumer’s leverage was the money needed for the strategic petroleum reserve purchase and pushed for the tax credit extension but it was McConnell’s elevation of the solar ITC that got even solar professionals to think industry went too far at the wrong time. The bailout left the ITC, 1603, storage, safe harbor out with the hopes getting pushed to the next bill, stimulus package #4. This time it wasn’t enough, hard to believe with the trillion dollar price tag.
But Wait. Couple of things to watch, there’s some talk that treasury could be asked to reinstate the 1603 program without new legislation, lawyers were quick to through cold water on that idea however. Late yesterday, Trump signaled that he would find the money for the oil purchase for the SPR by reassigning funds from the Department of Energy. This removes the biggest leverage point in stimulus #4 if Trump is successful.
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Yann
Last Day. This week’s survey ends at noon today, head there now and you receive full results tomorrow in a special email. Link
Sell From Home. My FaceTiming comments from yesterday reconnected me with my good friends at SolarGraf. They have some experience and best practices on how solar installers can sell remotely from start to finish. The company is sharing some of those in a blog post and hosting a webinar today as well. Head to the blog if you want to get some of their tips. I’ll share others when I get them. Link
A Deal In The Senate. Forget billions, we’ve graduated to trillions. Early this morning, a handful of Senate negotiators came to terms on the $2trillion stimulus package (#3). At this point the only language that we know of is around small business loans and industry grants/loans plus unemployment benefits. At the time of this writing, there is no word whether the ITC is in this bill. Insiders are hedging success for this bill and more optimistic about ITC being in package #4. What, for how long, with what conditions will all be known when words actually meet paper. No point in being first here, this all takes time. Look to the Senate to vote today and see if the House has to travel back to DC (they’re on recess) if someone objects to unanimous consent.
My Optimistic View. From a market standpoint, solar companies were way too oversold and I got myself back into the market over the past few days. It could go down further but these valuations are more than fair. My position is that years from now the market will be exponentially bigger, better and more mature than today. I’ve been in solar for over 15 years and I feel better even today than ever before in this market. Things are tough but they are tough for everyone, when we come out on the other side of this societal wide crisis, homeowners will want solar on their roofs and farmland. They will want cleaner and cheaper electricity, the fundamentals will not have changed. My future is in this market, no matter what.
Welcome To SolarWakeup. The past few weeks have brought a large number of new subscribers, welcome to the SolarWakeup family. You can reach out to me anytime at yann@solarwakeup.com or contact me on LinkedIn. Like most readers, I work every day in the solar market (selling innovative racking to solar installers) but this platform is a community to works together for the betterment of the solar industry.
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Yann