Happy Monday! What news is driving your business this week? As always, you can be in touch with me and the SolarWakeup team by writing us at yann@solarwakeup.com or reaching out on Twitter @yannbrandt or @solarwakeup.
Touching Base On Coronavirus. The virus is now geographically everywhere including most States in the US. Testing is slow to get started so expect that number to jump significantly once the broader reach of testing has occurred. The question is how this will affect everyday life until it is contained, major conferences are already being canceled and companies are talking about remote work for all. The solar industry should prepare for some disruptions as well given that many modules have origins in Asia where factories may be slow to get up and running.
Pennsylvania Solar Development. Development is all about getting the timing right and showing the path to investors for a project that has land rights, interconnection and revenue stream. If the economics work out and risk is properly mitigated, the project can move forward. Pennsylvania is the Texas of the Northeast. Land is plentiful and regulations are more lax to get a project approved for land use. Most importantly, you can install solar about 25% cheaper than New Jersey and still access the PJM market. Stay tuned for more action in PA.
The Nuclear Myth and Challenge. Supporters of nuclear energy tout the carbon free nature and the 24/7 ability to produce electricity. This isn’t wrong but the problem with nuclear is more fundamental. Can someone build a nuclear plant that can be built without priceless subsidies like insurance and waste mitigation and be built on time and on budget without the need for early cost recovery. Put those pieces in place and maybe there is something to talk about.
No More Subsidies. Solar has an internal talking point that rarely makes the headlines, maybe one of the many reporters will come out and steal it from here. All energy sources should lose access to subsidies, all of them. Tax incentives, land use, rate base, fuel cost guarantees, mineral rights, exploration and right of ways to start. Get rid of that and the market will be free to let consumers choose!
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Yann
Friday Rundown.Big news on the rundown today, moving parts all over the Country in markets and issues within supply chains and DC. It’s always helpful to read what public companies are saying to get a grip of the market and risks around our market. Now that Sunrun, Enphase, Solaredge, SunPower and Sunnova have reported, take the weekend to read some filings..
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Have A Great Weekend!
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Yann
US Cell Manufacturing Ending. The news broke yesterday that Panasonic is planning an exit of their partnership with Tesla’s Buffalo factory which manufactured PV cells. This may cause the end of the domestic manufacturing of solar cells even with the import quota put in place by the 201 tariffs. At the end of the day, it appears that Tesla will meet their promise to New York State in terms of the jobs created and Tesla may hire many of the jobs impacted by the Panasonic exit. The market is creating an obvious reality that domestic assembly of modules could be the future that the solar market seeks, much like the auto sector solar could be big enough that that logistics savings outweigh the domestic cost increases.
Trade Group Splits. BP and other oil majors are conducting formal reviews of their trade group memberships. BP has released their results and is leaving three trade groups that no longer align with their views as they relate to climate. They are also staying in influential groups that hold opposition to climate policies like the Paris Agreement. A process that begins with some victories is not a war on climate change lost. It is another opportunity to educate and create more understanding of what could be if the conglomerates move further towards policies in line with solar. I’d welcome their policy budgets to solar trade groups including their understanding that spending money on policy is not money wasted.
Oil Companies’ Solar Hedge. At the same time that oil companies are reviewing their trade group involvement, they are using their billions of cash and investing it into solar portfolios, pipelines and platforms. Their involvement in the industry could be interesting given their long term view on development and understanding with free markets. Taking a 50 year view on land acquisitions means that an oil major could acquire 1 million acres of land and continuously plan on mining it for solar energy, building plants over time as the revenue streams appear favorable. Moreover, many of the majors have robust trading desks that view the risk related to commodity trading par for the course, different than infrastructure funds that look for physical assets to be locked up for the term.
Voters Wish For Change. One topic where Trump voters disagree with him is his rollback of environmental policies. In States like Florida, voters voice concern about climate change and how it could impact their State and don’t see the positive argument for making these changes. That being said, it doesn’t look like it could switch their vote away from Trump. At the same time, polls are rarely a good argument for not making an argument, we need politicians to make their case to those voters and create a change in their opinion. You lose 100% of the fights you don’t get into so let us get into this one, I think it’s a winner.
Go OG&E. There’s a special place in my heart for Oklahoma Gas and Electric and OG&E going solar is a notch on the belt that I’m hoping to see more of.
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Yann
Decentralized Futures. Sunnova published its earnings and Sunrun published a white paper. Both companies show you what the future could look like.
Their Way. On the other hand, look at the disagreement between a major manufacturer that goes solar and the utility that is hoping regulators don’t let them actually turn it on.
Muni Corporates. Thanks to the big tech companies, the City of Charlotte had an option to buy green energy from their utility. What will it take for more municipalities to go solar through offsite agreements?
The Big Banks. The news cycle from yesterday included JP Morgan’s announcement about their new underwriting for some fossil based projects. The sentiment means that smaller financiers will also eliminate their capital from the market. At the same time, banks are looking at the US deal flow of solar projects to return yield to their investors.
Chime In. SEIA members are being asked to sign on to a letter to the administration to stop solar tariffs, in line with this press release. Let me know your thoughts on the strategy that looks to eliminate the costly taxes on solar. Hit reply and give me you’re two cents.
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Yann