Future Of GE. A few weeks ago I interviewed Daniel Hullah, Managing Director at GE Ventures. He has investments in some energy storage and grid technology companies and is doing more. This was a discussion about the role of corporate venture capital and the future of the grid. I could have spoken to Daniel for many hours because this transition is amazing to be apart of and Daniel is trying to do his part to keep GE in the lead within the power sector. The podcast audio is here.
Tax Reform Review. This is as good of a writeup on the tax reform bill I have seen. Keith Martin gives an easy to understand breakdown of each subsection and highlights something missed by many regarding the depreciation which could alleviate the cash sale community.
Blockchain. On LinkedIn, I asked my network what would be an out of the box topic to discuss at SolarWakeup Live! New York and blockchain was mentioned by a few people. I have to admit that my knowledge is limited but if you know this space and can educate me a bit, please reach out. If you want to hear about something specific in New York, let me know. Buy your tickets here.
National Security. Pushing energy in the traditional agencies makes lobbying sense, I understand that the game is played by the winners and their supporters. Dropping climate change from national security threats is silly politics. DOD has to deal with real life issues and changing weather, rising oceans and the impacts it causes on military operations has no party affiliation. If access to a base is impacted by surrounding conditions, then the military chain of command will make appropriate changes, regardless what the document says.
Australian Turn Around. A few years ago, most politics from Australia seemed backwards, less solar and more coal. Fast forward to now and the biggest solar and storage deals are getting done in Australia while 25% of homeowners have solar as well. There are even plans to build a solar plant in Australia and export the power to another Country with an underground transmission line. Great job Australia! Show us how its done.
Presented By GAF. With our relentless pursuit of quality, combined with industry-leading expertise, and proprietary commercial financing initiatives, GAF is working to make solar part of every roof. GAF has also launched the innovative DecoTech™ roof integrated solar system for every residential home and will continue to find solutions for the solar industry.
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Tax reform isn’t passed yet but the language is basically done. As I tweeted yesterday (follow me @YannBrandt) there is a solar victory lap happening right now. It’s not deserved given what we are up against and while I and most in solar expect SEIA to be in charge of this, I also ask you to look in the mirror. We are all a bit apathetic, less so recently, but unless the job is to do policy, few other solar folks get involved. Maybe these are tough words, but we all need to do a bit more, myself included. In the meantime, stay up to date by subscribing to EnergyWakeup and make sure your colleagues are subscribed to this newsletter. On to the news.
10/10/10. Before we get to the news, start thinking about what your company is doing for policy. I agree that it needs to be easier for you, easier to give what is needed, easier to make the calls you want to make and easier to meet with your legislator. That’s on us - the people that think about this full time. Your job is to execute on the tasks that keep your company growing and profitable. Policy isn’t just about creating a market, its about eliminating the market delays/uncertainties and reducing margin pressures enacted by incumbent utilities. In the new year, I and some other folks will be rolling out the 10/10/10 plan and expect your participation. 10 hours (at least) of policy outreach per employee, $0.10 an hour ($4 per week) per employee and $10/kW going towards a solar policy PAC. A 2MW per year company with 10 employees should be able to provide 100 hours of policy outreach and $22,208 in policy budget. If your company can’t, then I assure you that policy isn’t your company’s biggest problem. More to come - just remember 10/10/10.
BEAT It Back. As we outlined in our tax reform discussion last week, BEAT had to be in the bill to stop offshore capital from staying offshore but it had an unintended consequence in punishing tax equity investors. The pushback shows the power of large scale renewables, looking at Cornyn (TX) and Grassley (IA) comments and groups like NextEra that really focus on the multinational investors. It’s a win but don’t get too excited because a good chance that this didn’t impact you as much as…
The Corporate Rate. Have you plugged 21% into your model yet? Depreciation gets hit and you started to think about showing an after tax IRR, not a pre-tax after tax benefits IRR like we’ve done for years. In other words, we are selling tax exempt muni bonds now. The cash flow also regains some value (crazy statement). But most of all, about 40% of the tax equity market is gone because the total liability is going from 35% to 21% (broad statement) and your cash customers owe less to the IRS. I’ll be looking into how companies use the lower rate for things like inverted leases to shield EPC revenues in some cost-basis appraisal situations. I do expect to see more foreign capital flowing into projects with this tax reform given the lower taxation on the cash flows and low cash yields in other economies.
White House Docs. Someone in the White House leaked this document to the reporters at Politico and it doesn’t read well for solar with regard to the 201 case. It could be a way to signal the parties to find a way to a settlement and it could be a test to see if the public has a backlash to the idea of solar tariffs. You should be calling your local TV news and telling them to report on this because I doubt this bubbles anywhere near the other things being talked about on national TV and that’s bad for solar. The 201 process and how it has evolved shows how much more influence our industry needs to get.
BP Goes Solar. BP took 10% of its last quarters profits and bought 43% of one of Europe’s largest developers. If your market is putting fuel into transportation and transportation is becoming electrified, you better think of a way to defend yourself. This isn’t the first oil company in solar and it won’t be the last. Expect more.
Presented By GAF. With our relentless pursuit of quality, combined with industry-leading expertise, and proprietary commercial financing initiatives, GAF is working to make solar part of every roof. GAF has also launched the innovative DecoTech™ roof integrated solar system for every residential home and will continue to find solutions for the solar industry.
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Yann
Getting It First. Covering news is easy, finding the information you need is hard. That’s what I try to get with this platform and why I focus my time on finding interesting information from leaders across the solar space to bring you. This week you heard a senior executive from Engie tell you that the future is without coal or gas power plants. Take that piece of information and wrap it in the context of the second story today and it gives you a better view of what is actually happening. The full recording of the conversation with Thierry from Engie is now online and in your favorite podcast app. CPUC Gets It. In a filing from the regulatory body, CPUC wants PGE to focus on energy storage to replace needed power. This is a move into the clean energy system but it also represents that long term nature of ratepayers having to pay for gas assets over the next 30 or 40 years. Gas plants are going away, not just peaker plants but also those that are scheduled to be built in the upcoming years.
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