DC Is Watching. Folks in the White House and those trying to get into 1600 Penn read the same articles then we are. In this case, it’s the impact of climate change on the upcoming election from the perspective of the leaders at Axios. Agree or disagree with the opinion, know what the insiders are thinking.
A Missed Opportunity. Without many of your realizing, a major energy bill is gaining traction with the potential of passage. Senators Murkowski and Manchin brought together several dozen policy proposals that had bipartisan support and got that bill to be debated on the senate floor. Senator Wyden told attendees at an ACORE event that including tax credit extensions is highly unlikely. This means that less than a year after solar touted major inroads with republicans, it has no ability to get support on a bipartisan basis which means the ITC loss talking point is just that, a talking point. It also means that it is time to change tactics, because the methods of the past aren’t working. Second, the house could still scuttle the bill altogether by demanding inclusion of tax credits and building codes as a must have. While it kills some energy policies that are interesting, once those bills get passed it eliminates this vehicle in the future. If you are so inclined, call your member of Congress and have your voice heard.
Contactor Data. Solar installers now have a way to get themselves better data for their business while seeing how they compare to their local competition. Ohm Analytics tracks solar installations through permit data and recently released a contractor portal where you can sign up for free. Contractors provide confirmation of their data in return get to see what is going on in the market. Give it a look here.
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Little Markets, Big Opportunity. The Netherlands represent less than 3% of the European population but in a surprise move, the already great solar market is doubling down on solar by doubling the rebate for installing solar. This is a massive sign of support for distributed generation and an overt statement that everyone should go solar. Imagine if the US supported each block of 17 million people with the equivalent of $4billion in support.
Impact Of The Day. The growth in Netherlands is a sign of the broader market. This is merely the start of the market in Europe that is driving massive growth of solar over the next decade and more. If more than 1GW of rooftop solar gets installed in the Netherlands this year, imagine what this means to every other Country in Europe and around the world. It also reiterates the importance of geographic diversity for solar companies. Some markets may normalize while others grow, whether it’s a Country in Europe or a State in the US. Companies that have geographic diversity can whether potential risks while also having the necessary infrastructure to take advantage of the opportunities that come up.
The Banks Are Lending. Energy storage, EV infrastructure or solar on homes are a growing asset base for many banks or other asset based lenders. This is creating a new level of importance in the market around bankability. Module OEMs have long shown their bankability reports and touted their BNEF tier 1 status. This is also enhancing value in the energy storage market by the majors like LG Chem and Samsung. Investors are also becoming pickier on inverter selection given the decade of changes in the market in that segment, residential solar may as well be a duopoly at this point between Enphase and Solaredge. Loan companies have limited their bankability and code-compliance to modules and inverters only but are learning more about the importance of the mounting and racking equipment installed on customers homes. With billions going into residential solar per year now, expect more scrutiny on product and installation methods used by your businesses.
Continued Growth Of Load. General Motors showed analysts 10 versions of their electric cars ranging from 50 to 200kWh. EVs make up 99% of what we talk about in vehicles but only 1% of total sales. Imagine the change in consumer behavior when every GM dealership has sales people incentivized to actually sell electric cars and trained on the nuance of owning one. EV owners want to charge at the store and at the office, that makes it easiest for them and eliminates the assumed range anxiety that is mostly only reality in the minds of non-EV owners. Watch this space…
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California Dreamin’. Super Tuesday has come and gone and California is going to take its time to give us the results. At the time of this writing it looks like Biden may come out in the lead when all the results are in though the expectations were that Sanders would be ahead by at least 50 pledged delegates. For solar, there is going to be a discussion over the next few months what the trade environment would look like in a Sanders administration versus how aggressive a Biden administration would be on energy topics.
Big Day For Vote Solar. Vote Solar has been actively making its case to advance solar policies in Florida and New Mexico. In Florida the goal was to make the largest community solar program accessible to low income families albeit owned by the utility. First getting the proposal expanded to be more attractive to more people and then having the program approved by the PSC. In New Mexico, the Governor will sign a revival to a modest tax credit which will make solar a little bit more attractive for homeowners, another win for solar.
Hold Your Gas Powered Horses. As Wall Street sours on coal, it’s too far to say that investors are giving up natural gas in favor of utilities. Investors for those two buckets are not interchangeable for one and the sustained low natural gas prices may be what is causing investors to park their money elsewhere. At the same time, investors have an unlimited appetite for renewable energy infrastructure investments. The limitation to total deployment remains project pipelines.
Look Out Global DG. The renaissance happening across the world is happening behind the meter. Consumers have long wanted to add solar and ROI was typically the biggest limitation to that effort. With the global price of solar more likely than not to be less than the cost of the grid, DG solar is booming in the US and abroad. While DG is not without complication, it is ripe to be disrupted in more ways than one and ready to get much bigger than anyone is forecasting.
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Happy Super Tuesday. 14 States are voting today and almost 1,400 delegates are up for grabs. Tomorrow we will have a better view on what the rest of the year looks like. That being said, without doing a play by play on what’s happening with coronavirus, we are bound to get a lot of unknown unknowns coming at us as well.
A Climate Policy Point. Axios is making the point that no matter what happens in November, climate policy is going to be difficult to get through Congress and don’t expect much to happen. Whether something passes, something progressive has legs or if DC will just shut down is a scenario that will play itself out. Also, expect that much of anything that gets passed to get the judicial examination we’ve come to get used to.
The Counterpoint. On the other hand if the White House were to switch sides, would mean a significant boost to markets like solar. For one, the ITC wouldn’t have been removed from the extenders package like it did last year. If Trump has taught us anything, it is the power of the presidential pen especially for items labeled as a national emergency. Under a national emergency, the President would have the ability to shuffle dollars in a way to achieve the goals of the White House. My point is that a democrat in the White House could prove to be a climate policy by itself, without thinking about the broader, but much needed, congressional legislation.
But Wait. As we’re arguing about what happens post-November, there is a climate bill going through the Senate. Nothing entirely aspirational about the bill but it is a climate bill in name. Let’s see if anything more tangible gets attached to the legislation if it sees a floor vote and time in the House.
Impact Of The Day. Sir Christopher Hohn made headlines a few months ago when his hedge fund argued that they would target directors of companies that are not doing right by climate policies. Taking this one step further, Sir Christopher wrote a letter to major banks about their coal financing activities. The letter outlines the poor fiduciary responsibility that the banks are showing but in an interview revealed plans to mount legal challenges against the boards of the banks. These legal challenges could prove to have the type of impact directors view as existential to their decision making and oversight activities.
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Yann