Repower Solar. The existing solar PPAs around the country are on a clear path to be replaced by better technology. Especially the projects that don’t have production caps and high PPA rates. At the same rate, distributed solar will be retrofitted with energy storage at a high rate. Both of these markets will test how the solar channels attempt to create new avenues for growth.
No Money Left. JP Morgan is going to limit its financing activities for some fossil fuel projects including coal plants. As you read the details of the new limits, it seems like more of an underwriting criteria than an environmental statement.
The Missed Military Opportunity. As one of the largest users of energy in the world, the US military has the trifecta of land (buildings), credit rating and energy consumption. This makes the military one of the best places to build renewable energy and work on microgrids on a national defense basis. Unfortunately this market is slower than it should due to politics or perceived political direction.
Faster Permitting. There is no doubt that larger projects need to get their approvals faster. With the flow of NTP (notice to proceed) projects limiting the deployment of capital, faster permitting means more jobs and growth for the industry. Not just large projects but imagine the limitation of approvals for residential projects. Like you I was skeptical about the instant permitting in the US for residential solar but why not? This is a process that could easily be streamlined and lower the cost of rooftop solar by a huge amount.
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Get Ready To Play. I’m a big hockey fan and this weekend an amazing thing happened in the NHL. During every NHL game, there is a guy that sits in the stands. He has received free tickets and is getting a complimentary meal because he is at some level a good hockey goalie. Since NHL teams only travel with two goalies, there is a need for an emergency goalie just in case. Keep in mind, this almost never happens and when it does it rarely means that this person actually plays. On Saturday night, David Ayres, the professional zamboni driver from Toronto, had to suit up and play half an NHL game. The 42 year old has never played against professionals but here he was, ready to play. He got on the ice, let two goals in and then he turned into a brick wall stopping the remaining shots on goal. You never know when you’re getting called up to the big leagues but just like that, it may be your turn to step up.
Solar’s Time To Get In. I tell this long story because it’s our time as an industry to get in the game. The solar industry isn’t getting an explicit call but every signal is coming into our direction. The key is that we are ready to play, at every level, and to do so in a very focused way. 2020 is shaping up to be a political shit-show and as much as I try to keep my views on politics out of this newsletter it will get a bit more complicated.
State Issues, Federal Issues. Here is why politics matter and the election in November matters. When solar advocates and State regulators get on a page to move solar and energy storage forward, a market is created. Until now, there was little to no consideration given to the possibility that FERC would get involved and try to stop the State from moving forward. Solar is in the precarious position where some associations already try to do too much. While the focused groups do well, this is an example of why we also need FERC representation on a full time basis. More importantly, the regulators appointed need to be on our page which means the election matters.
Federal Goals, Local Examples. Senator Sanders floated the idea of turning utilities into public entities in order to achieve faster renewable deployment across the Country. With SMUD’s actions dividing the home solar mandate, TVA’s continued inability to do anything pro-solar and munis across the Country failing to think ahead, I see plenty of examples of why not to pursue that. At the same time, IOUs like PG&E and DTE aren’t the examples to strive after either.
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Stocks Are Hot. Maybe it’s the hot solar market, maybe it’s the fundamentals but either way solar stocks are on fire right now. There is an overlap of the growth story mixed with the maturity of the stock success. Take Solaredge and Enphase as an example. Both executed against their earnings estimates and are building their cash reserves. Solaredge and Enphase sold more than $2billion worth of solar ‘stuff’ last year at margins over 30%. There will be lows that come with these highs but for now, Wall Street is enamored.
The Great Right Woo. One of solar’s talking points that came out after the ITC loss was that the industry created a good foundation of support on the right. The nuance in my opinion is that relationships in DC are fungible, goes with the saying “what have you done for me lately?.” Passing legislation in DC means you have support based on leverage, situational horse trading and grassroots support. So we will have to look at cards coming into 2020, where do we stand on those issues and what are we doing differently than last year? We don’t want to be doing the same thing over and over again and expecting a different result, that would be ….
A Better Way. The ISO-NE capacity auction cleared the largest coal plant for another year, getting another $8million in capacity contracts through to 2024 year. The problem I have with this is that we already know we can do better than this. Sunrun in partnership with National Grid already won a capacity auction based on distributed energy storage resources. Over the next 3 years, solar installers will build a lot of of what we’ve already done.
Debate The Transition. Speaking of transition, there was an interesting moment during the last DNC debate where Mike Bloomberg labeled natural gas as a transition fuel. I know that this label is a spark of argument and I understand the concern. Clearly there has been a move from coal to natural gas as the utilities have rate based an entire fleet exchange. Now it is the job of regulators and advocates to limit the life span of those plants. The 100% goals and RPS plans are clearly an example of that success.
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