Coming Up On 5 Years. In about 3 weeks, I will have published this newsletter for 5 years. Starting with an initial list of less than 50, there are now almost 5,000 of you that read the newsletter or website on a daily basis. More importantly I get to have amazing conversations with many of your every day. It has made me a better solar executive and consultant and for that I am thankful. Next week, I will be sending you a survey to learn what more this platform can do for our relationship. What do you think SolarWakeup should do next or what information do you want to see?
Solar Goes Bipartisan. SEIA did good work and got 69 members of Congress to write a letter against the trade case. 16 Senators from both sides of the aisle led by Tillis (R-NC) and Heinrich (D-NM). On the House side, the name that stands out to me is Mark Sanford (R-SC). Sanford is known for his conservative credentials and carries real weight in the GOP on the budget policy front. VP Pence’s Chief of Staff thought Sanford was a strong contender for VP in 2008 when he was Governor of SC. Let’s get some more members to sign on, if you have a relationship, use it now.
SolarWorld In Name Only. CEO, Frank Asbeck, with the help of the Qataris is buying the SolarWorld assets. Unknown from the reporting if that includes the SolarWorld USA entity or just the manufacturing assets that will be put into a new holding company. This makes me wonder what and how this impacts that original tariff money and this new 201 petition. Either way, this makes SolarWorld modules essentially unbankable in my opinion.
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Yann
Happy Friday. Don’t forget, if you need money for good deals, let me know!
ITC Staff Report. The process is playing out as we speak. The trade commission staff has put a report together, essentially a review of the filings ahead of the September 22nd hearing. The petitioners seemed happy about the report which did highlight that US manufacturers have struggled over the past decade. I’d like to add some caveats in the form of questions because I think Suniva/SolarWorld should answer them. How much market cap/valuation has been lost by US manufacturers versus Chinese manufacturers? How much value has been lost in the downstream/development side of solar while panels dropped in price? Are publicly traded Chinese solar manufacturers lying when they say that $0.35/watt modules generate a profit?
SEIA Chimes In. I’m a fan, SEIA should do this more often. I applauded it when Tom Kimbis was CEO and wrote public comments. Keep doing it please.
National Labs On Notice. There is a war on science and we should not allow it.
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Yann
It Was Marketing, Not the Market. Over the past decade, you can pick the moments when SolarWorld and Suniva went down a path that led to the less lucrative outcome. You can also pinpoint the moments when both companies were given above market income due to Buy American policies. At the end of the day, cheap Chinese product did not impact either company’s bottom line. I don’t hear LG and SunPower making that argument. At the same time, a big loss could be the fact that SolarCity decided to build a factory instead of going to the market. There are a lot of reasons why these companies failed, but they failed at the same time that multiple Chinese manufacturers also failed so the complaint fails the logic test.
If You’re Faking, At Least Fake Well. It’s no secret that people get paid to consult towards a specific result all the time. I’ve consulted to an IOU, so I get it. But when the 201 petitioners approached Mayer Brown to do an economic analysis that shows the positive results of their 201 request, it went into a new stratosphere. The request was to write 8 pages, single spaced on creating jobs that should be higher than 88,000 using data from companies that said the 201 petition is bad. 2 blank pages and lots of graphs gave us an analysis that is laughable at best and must be disappointing to academics and experts throughout the Country. Manufacturing barely creates any jobs, these are mostly robots both in the US and China.
New Capital Needs Old Capital. There has been more ‘patient capital’ coming into solar which is good for everyone. However, the process to get to this money remains the same. You need to put early stage development money to work. Find takeout capital that is tax efficient to buy the deal and then your project could find its way to long term, low cost money. I.e. you need to take all of the risk out of the project before this money gets excited, at scale.
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Yann
The second half of 2017 continues the trend of projects seeking capital. SolarWakeup is made possible by putting projects and capital together. If you are seeking capital, our clients may be interested. Note that our capital providers are cash in hand family offices. Email us by hitting reply to this email or forward it to your project finance colleagues.
2017 Tax Equity. Part of the difficulty of solar project finance is tax equity, especially mixed with expensive sponsor equity. We’ve been working hard on finding tax efficient money that does not require the complexity of a multiple member flip structure. When sponsor and tax equity is the same fund, everything gets done quicker and you make more money. It has taken a decade to drive appetite of this kind of investor to solar but here it is. There is still money available for about 20MW of projects that are built in 2017. I know you have projects that have investors bullshitting you, time to get something with certainty to the table.
Development Capital. Are you working on deals that need money for development? One of our partners added a development equity fund to help you with this. This is a capital partner I have personally used and want to introduce to the SolarWakeup family. As a developer you should focus on development without needing to use your children’s college fund to get the deal to NTP.
Delay With Certainty, Please. To continue the topic from yesterday, which many of you commented on. Moving the on peak from 11am to 4pm is troublesome because it doesn’t allow for sufficient transition time from the current times. Yes, solar knew the time would change but the CPUC has taken some time to get to this point. Customers have been standing back from doing deals given the uncertainty, especially in the C&I market. If customers don’t know the rules, they don’t know the risks and they are unlikely to sign up. The CPUC should set the new times but should delay the changeover date to allow industry to get ready with technology and financing to align with the new systems that will be needed.
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Yann