The Yang Gang +1. Elon Musk is public with his support for Andrew Yang. Let’s see who his next tweet of support goes to. 

Solar Without Term. Late last week Tesla rolled out its next offering meant to jumpstart their solar division. The offer is that homeowners can get solar installed for as little as $50 and choose between three system sizes, small, medium or large. At any moment the homeowner can cancel and have the solar removed for $1,500. The monthly fee is able to go up according to early reviews of the offering. Before touching on the obvious questions, I love the idea. It’s simple and easy to understand for the homeowner. They’ll save money and produce solar without feeling the uneasiness of a 20 year deal. Tesla does take the ITC and would have to deal with the clawback if the system is removed in the 5 year period. I also have questions about the roof condition after the system is removed, caulk the holes? Color me curious to see how this plays out. Would love to hear from some of the finance folks though on how this could work on traditional structures. 

Where Else? Speaking of terms in solar contracts, I want to see this happening with community solar. I want to interview the solar developer that signs subscribers up without asking for credit score or requiring a term on the contract. Month to month and if you don’t pay then your spot goes to the next person. If you know such a daring individual, introduce me. 

Situational Awareness. This is DC inside baseball but Neera Tanden is important in the world of progressive politics. Yesterday she tweeted about the idea of putting solar almost everywhere in America and I gave my political blueprint. If she’s saying it out loud, don’t be surprised if campaigns are listening. 

Hot Out There. July was the hottest month in history and ERCOT is calling its second emergency in a week. Earlier the market hit highs of $9,000/MWh. Wonder if any merchant solar or storage operators were in the market during those highs and if they’re year has been made. 

Friday Checkback. Since many of you skip the Friday newsletter I wanted to make sure you went back and read the story about 100% RE in Utility Dive. It has generated many conversations in solar circles and well worth the read. 

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Yann

A Must Read. A Director of Finance at NRG Energy wrote a contributing article for Utility Dive with the thesis of the impossibility that 100% renewable energy by 2050. I can only assume that the author was looking to show his bosses that he’s going public for the team, a rallying cry of sorts. Unfortunately, this is going to fall flat and make his name known in Princeton in a way that he probably wasn’t hoping for.


What Happened? According to comment I received from an NRG spokesperson late last night, “What is written in the piece is solely the author’s opinion, not NRG’s.” Based on what I write below, I question his overlap with renewable energy projects within NRG because I know that the former renewable energy team at NRG was more than capable. In fact, the solar and wind portfolio was sold for over $1.3billion. I believe the company’s statement because there is no way that the company would make this bold statement, which is against the thesis of most major IPPs, without such a statement coming from the very top. 


Checking The Facts. Here are the big statements that are made. First, solar and wind are not ‘controllable’ assets, i.e. they are not dispatchable. Second, wind and solar are too expensive and energy storage still needs to ‘evolve.’ Last, “initial capital cost ($/kWh) of renewables is high.” Starting with the last statement, you can clearly see the missed $/kW knock against renewables by stating kWh but reading past that, the author does say that LCOE of renewables is cheaper than gas. For comparisons and a sample project, the article uses a 500MW solar and 1.2GWh energy storage install for a whopping $1.2billion price tag using $1.50/watt and $400/kWh for storage. 


Reality Check. Clearly the facts are wrong and the thesis is wrong. It is absolutely achievable to get to 100% RE by 2050 and I would guess if asked, NRG Energy would agree that it is not only possible but also likely. Solar in Portugal is contracting for under $0.02 per kWh. Solar plus storage is cheaper in almost every RFP in utility procurement in the US. Even a 10MW solar plus storage plan in Minnesota is cheaper than the co-op continuing to buy from their generating partner. Solar is installing for under $0.75/watt in Texas and storage is well below $300/kWh in most instances. It also excludes any price declines that the industry will see over the next 3 decades and ignores the reality that most fossil plants will be at or beyond retirement age by 2050. 

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Yann

#DefendTheITC

Show Me The Money. If the ITC drops by 4% that means investors will lose more than 5% of their capital stack. In most cases that number could be well over 7%. The same thing will happen again the following year meaning the value chain has to figure out how to find an extra 10%. For homeowners they will lose all of it in just a few years and that’s bad news for everyone.

Network Effect. I hear this often, utility-scale developers don’t think about the residential and DG market as it relates to policy. This is the most dangerous misconception. If homeowners can’t put solar on their home, solar gets the label of not working or being too expensive. If homeowners can’t get solar they are unlikely to call their politicians and ask for solar policies. You won’t get an RPS or grassroots support if you don’t have a viable residential solar market. Every utility scale developer should sponsor a residential solar installer to join SEIA or the State chapter. Like a big brother/big sister relationship that allows both segments to lean on each other.

Energy Fair Panel. Check out the latest SolarWakeup podcast. This was a great discussion between a developer, utility exec and advocate deep in the Wisconsin back country. We kept things flowing and lively. I hope you enjoy and share the episode with your friends.

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Yann

The Power Consolidation. Brookfield is said to be interested in acquiring Pattern Energy which signals that institutional investors are looking for more capital deployment opportunities. Look for this to continue. 

MIT Finds Value. Putting a price on the societal benefits of renewables has been hard to do but now MIT shows that increasing renewable energy in the communities forgotten by coal means not only job opportunities but also health benefits far surpassing the cost (which has been argued to be exaggerated).

Michigan Deal. Big release of PURPA queue in Michigan. I should have bought some of those pipelines that came across my desk. If you need some capital for your project, I don’t mind brokering those for you :).

Climate Change. Washington Post is out with a major data driven story on climate change. If you can stomach it, it’s worth the read. 

CA Lobby Day. Join me next Wednesday in Sacramento for CALSSA’s lobby day. You need to advocate and invest your time, bring a check while you’re at it. Give me your card at the event for a SolarWakeup shout out. Register here 

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Have a great day!
Yann