The Slaughter Precedent. I made some of my viewpoints known about the impacts of the Slaughter decision a few weeks back but now you have the view of a particular expert, the former FERC chair that also happens to work in the solar industry. Worth a read.
Inverter Supply Chain. What happens if Chinese inverters get banned? What happens to how interconnection pipeline gets reviewed if unbuilt systems are being studied with banned inverters, do they go back into a study? Do you need to supply a new engineering report? What happens if an inverter on a site needs replacement, do you use what you have in inventory or do you need to use new options? Policy wise there is an interesting thing happening. It’s actually good policy in my opinion, but it’s also a lobbied position, likely by a newcomer that’s private equity backed and wants to sell and doesn’t have the ability to supply the gap in the market. The largest non-Chinese supplier doesn’t appear to really be involved in this and the second and third level ramifications haven’t fully been better in my opinion. My biggest concern is what happens if there is a different rule set up by each utility and RTO and even worse would be if some areas issue ‘rip and replace’ requirements, which would completely backlog the supply chain. Lots of thoughts, not a lot of answers at this point but worthy of your consideration.
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Yann
Inflationary Loss Of Tax Credits. The loss of the ITC causes the increase of off take cost by something like $20-$30 per MWh depending on where you are. One side will argue that that’s the market cost, i.e. a data center or utility pays for the energy that is produced without influence. On the other hand, if a solar deal goes up by $20, so will the pressure on the wholesale market because the value will levelize across the entire grid. The argument for the ITC extension is straightforward, it lowers the cost to consumers and businesses and spreads that cost, i.e. the cost of the tax credit, across the entire Federal balance sheet.
BYOP. Bring your own power, of course a concept that is helping data centers get connections faster. But I am more interested in the concept that the BYOP is all in DC, solar to the servers with every electron, including the grid (converted to DC), running through giant BESS systems. Batteries aren’t a backup, they are the supply chamber that regulates all of the needs and inputs that alleviates and warns the data center operator well in advance of any issues.
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Yann
The Cost Of Inaction. What happens when cost of solar goes up $20-$30/MWh? Does it slow development? Construction? Legal work? All the while reducing more work from the tax equity bankers and their consultants. This is part to the conversation we’re having about the ITC but some headlines in action.
Deeper On Shoals IP Case. In today’s deeper dive, there’s some messaging from the parties that I want to try to dissect having spoken to some folks close to it. Shoals won the IP case on their BLA eBOS system. Voltage is now prohibited to sell it without security being posted in the form of bonds. The alternative design is really irrelevant to this case. If Voltage releases another eBOS system, it’s kind of like saying a donkey is a replacement for a horse. A new product is a new product, doesn’t mean it’s the same thing, it’s just a new thing.
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Yann
Certainty And Security. This week Shoals won a long fought battle to protect its IP in the eBOS segment at the International Trade Commission. This underpins an important factor that I’ve heard over and over again from IPPs and EPCs alike, the value is in a good product but more importantly for the project execution, it’s the certainty of delivery with minimal risks. Shoals sits at that forefront of having a great product but also mitigated risk in upstream supply chain and delivery given its now expanded domestic manufacturing.
95% AI. Amazon is spending 95% of its time on AI says Jeff Bezos. And that’s a quote from a year ago. Building the compute that it needs for itself and selling the excess compute or enhancing its need by leveraging the needs of others. Yesterday, Meta’s stock popped 10% on the same premise of selling excess compute. The funny thing about excess compute or any compute for that matter is that it is meaningless if the power for the data center isn’t there. And the backup systems, i.e. batteries, aren’t available and working as designed. The entire GDP growth right now is based on power being available for this need, regardless of the growth rate. The value of that compute is many multiples over current wholesale and retail rates, data centers would still get built if electricity prices increased 2,3,4x from current levels and while that’s an interesting signal for our industry, it certainly sucks for the retail consumer.
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Yann