This is your SolarWakeup for October 26th, 2020
Tiny Windows. This was the first Presidential debate that had a planned segment on climate change and it did not disappoint. Trump continued to look at climate change as a building code issue, which provides the segue to say that building codes are one of the most powerful, yet under appreciated policies affecting climate change and solar. On the other hand, Biden talked about methane, batteries and transition in the most progressive way we’ve seen out of a candidate. You can read the entire debate transcript here.
Batteries In The Basement. In several interviews, town halls and debates, Biden has brought up the need for both a smart grid and solar plus storage. He’s been talking like many of us when we explain the needs for our market to a family member. The baseline for all of the policies I would expect in a Biden administration is the goal of 100% net zero by 2035 (though 2025 would be fine) in electricity generation. How to achieve this 15 year transition will be the makeup of many trade groups’ 100 day policy papers you will see the day after the election.
Solar Is (Isn’t) A Pipe Dream. “Solar. I love solar, but solar doesn't quite have it yet…So, it's all a pipe dream,” Those are the words at the debate by Trump before also saying that solar can’t power America’s factories. Tell that to the developers, investors, manufacturers, EPCs, lawyers and union workers that have installed solar that sit on rooftops or solar farms across the Country. This is not due to a lack of effort by SEIA, solar companies and republican senators that have met with Trump and his senior advisors over the past 4 years to educate the administration about solar. So here we are after 4 years, solar isn’t ready for prime-time coming from the leader of the free world. So here’s a headline from last week, after IEA said solar is the cheapest source of electricity in the world.
The Oil And Gas Isn’t (Is) A Pipe Dream. The hottest part of the debate was when Biden said, slipped, or was misunderstood (depending on how you stand on the politics) that he was looking to end oil and transition them to renewable energy. Couple of notes on this topic. 1. Oil and renewable energy don’t directly intersect. Oil is losing market share to electricity, competing with utilities but not any particular type of generation. 2. Biden’s campaign was saying that he meant he wanted to end oil’s federal subsidies to which I say, don’t get rid of them but add solar to them instead. Particularly carrybacks for tax credits and ability to offset active income tax liabilities. 3. This is what the Biden administration really should be saying, Biden didn’t say or propose anything that the CEO of BP and other oil majors aren’t already saying themselves. They are already transitioning the business because the market has spoken, something republicans should understand.
Must Listen Conversation. Biden talked with hosts of Pod Save America after the debate in this interview. The interview leads with climate change and goes from 4:17 to 13:15. The 11:30 mark talks about smart grids and solar plus storage gets the nod at 11:50.
The 2021 Foundation. 2021 is the year that will highlight either an amazing decade for solar that passed or set the foundation for a decade of domination. Regardless it will break records and SolarWakeup has always had one of the most aggressive forecasts that also had the benefit of being the most accurate. 2021 will bring a residential market of over 3.6GW, over 20% growth over 2020. A lot of that backlog is already in the books and consumers’ appetite for solar power is bigger than ever before. A Biden victory will set the foundation for many more years at this scale and higher but will also take away the ITC cliff driving more capacity at the end of the year. If Trump wins again, it will depend on how the House and Senate play out whether there is an ITC deal but we can expect more tariffs and less focus on renewable energy which makes solar policy advocates focus on States instead.
The Buyer’s Group Grows. We’re into our second month at the Buyer’s Group and we’ve added another top supplier to the product portfolio. REC modules are now available at an amazing pre-negotiated rate for buyer’s group members. Both Alpha and N-Peak products are on the list. You can get some price discovery for REC or other products on our members page.
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Yann
This is your SolarWakeup for October 23rd, 2020
On Monday. I’ll have some commentary about the debate on Monday. Politico’s Michael Grunwald chimes in with a view of Biden’s choices if he wins. You’ll also get my 2021 expectations for the market, SolarWakeup has been pretty spot on with 2019 and 2020 forecasts. We’ll include a great new product addition to the SolarWakeup Buyer’s Group showing the momentum that comes from helping installers increase margin.
Get That Money. What’s better than a solar job? A solar job that pays more than other job.
Supply Chains Will Adjust. Look for solar to quick pivot and make changes to ensure supply chain isn’t entangled with human rights concerns.
Tesla’s Energy Side. “We continue to believe that the energy business will ultimately be as large as our vehicle business.“ The company installed 57MW of solar and says that they did a solar roof install in 1.5 days. Here’s the deck, it’s light on things that aren’t cars or batteries.
Colorado Blaze. Thinking about our many friends in Colorado. This picture showed the gravity of the situation unfolding.
Covering The ITC by M Bar C. In the last 15 years, the Investment Tax Credit (ITC) has allowed organizations to benefit from substantial cost savings to solar installations. This sustainability-driven program has helped revolutionize the renewable energy industry. Regardless, in 2021 ITC benefits will shift; here is what you need to know from my friends at M Bar C Construction and how we can help you and your organization take maximum advantage of these savings while they last.
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Yann
This is your SolarWakeup for October 22nd, 2020
Less Is More. Australia is sending the solar postcard from the future. With over 20% of homes already with solar, storage going through the roof, the market is putting solar on homes at $1/watt with instant permitting and innovative inspection processes. You can order products directly from your software tool and get to work the day after signing the contract with e-signatures. With all of that rooftop solar, look at the demand data that shows an overall reduction.
Oceans Rise, Empires Fall. Some solar EPC is going to be hiring hundreds of workers to install a 400MW solar farm in Indiana, part of NIPSCO’s 900MW solar and storage plan. Indiana is a bellwether for me, and as I talked about with TJ Kanczuzweki, the midwest solar industry is ready to go. So here’s some words of wisdom from Hamilton’s King George of what the fossil empire thought was going to happen, and here we are. “You'll be back soon you'll see, You'll remember you belong to me, You'll be back time will tell, You'll remember that I served you well. Oceans rise, Empires fall.”
The EV Hummer. General Motors is bringing back the off-road line as an electric vehicle. This version misses the consumer but it’s another step towards the EV in every driveway future that will drive more demand in solar.
Why The Down Day? You may have seen your solar portfolio was down a good amount yesterday and that’s because there is a new wrinkle in silicon supply chain. This is largely caused by Obama’s original trade war with China that moved a lot of the silicon manufacturing to the Xinjiang. It appears the labor pool in Xinjiang could include some Uyghur risk. With the House passing a bill requiring supply chains to be clean of this human rights issue, this is going to cause some shifts in solar supply. If you want to get more info on this, Roth Capital is hosting a call with lawyers, silicon suppliers and SEIA this morning. You can register for the Zoom call here.
Covering The ITC by M Bar C. In the last 15 years, the Investment Tax Credit (ITC) has allowed organizations to benefit from substantial cost savings to solar installations. This sustainability-driven program has helped revolutionize the renewable energy industry. Regardless, in 2021 ITC benefits will shift; here is what you need to know from my friends at M Bar C Construction and how we can help you and your organization take maximum advantage of these savings while they last.
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Yann
This is your SolarWakeup for October 21st, 2020
A Look Ahead. With Biden ahead in the polls a lot of talk is heading into the what if and how things would look in solar so let’s partake in the punditry on the various topics in today’s news.
Mad Money Returns To Solar. Jim Cramer is no stranger to talking about the next big thing in solar, here he is with David Crane 5 years ago. Couple of things are different today, solar has a lot more to offer in the public markets and some of the hottest stocks in solar have great positive cash flow, GAAP EBITDA and the benefits of a growing market. No doubt that the solar stocks are benefitting from the what if valuation that expect 2021 and beyond to be the start of the solar decade. If you listened to our market call yesterday you saw the underlying data that showed 2020 was off to a greater than 20% growth and lagged only from April to July and is back to 2019 levels. What’s happened at the same time is a massive growth of backlog both in residential contracts and interconnection queues.
Roofs And Parking Lots. This is the goal, how do we get solar on every roof and parking lot in the Country that has the technical potential for it. That’s what a Maryland siting report is confirming, we can meet a lot of the goals with existing infrastructure. For presidents, the first 100 days and getting actual results in the first term is key. For Biden, and planet earth, increasing the pace of solar construction at the start of the administration would be a key indicator of a change. And for executives, KPIs are a great way to measure success.
Climate Change, AKA King Tide. Miami has become one of the leading examples of how climate change will impact everyday life, we even have a word for it that doesn’t scare everyone. There are days in the month and times of the year when the water levels are so high that docks are under water and water comes out the storm drains. Right now, we are at the peak season and you wouldn’t believe it but roads to the most expensive beachfront homes in Broward County were closed. Why, you ask? The roads were underwater.
EPA Is Ground Zero. Trump’s EPA may be trying to change coal ash regulations but it’s doubtful that those regs would stay intact if Biden wins in a few weeks. The follow up to that is what might a Biden EPA do for coal ash regulations to have cleaner air and ultimately make sure that coal plants close at a much faster pace. Rumors of Inslee getting tapped for EPA administrator are a signal of where climate would reside from an executive function but names like Mary Nichols also open up the possibility that electrification of transportation is a priority as well.
Covering The ITC by M Bar C. In the last 15 years, the Investment Tax Credit (ITC) has allowed organizations to benefit from substantial cost savings to solar installations. This sustainability-driven program has helped revolutionize the renewable energy industry. Regardless, in 2021 ITC benefits will shift; here is what you need to know from my friends at M Bar C Construction and how we can help you and your organization take maximum advantage of these savings while they last.
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Yann
This is your SolarWakeup for October 20th, 2020
Solar Permits Discussed. This morning at 10am eastern, join me on a conference call with Chris Collins from Ohm Analytics and Phil Shen from Roth Capital to talk about the trend of solar permitting from across the country. You can register (free) here.
More Racking Acquisitions. It looks like there is more welding of racking companies to happen according to reporting by PV-Magazine. This isn’t surprising, especially on the coattails of the Array Technologies IPO. One of the things that I hope gets revisited in the new administration is the removal of the aluminum tariffs for the raw commodity. This artificial increase in price has been the foundational reason for closing of US manufacturing plants by racking companies and that’s been a bad trend. Until recently, my former company (Quick Mount PV) made almost all of their products in their California plant, now closed by the new owners unfortunately. That being said, accessories to the growing solar markets are a great and profitable business.
How To Electrify. SolarWakeup’s friend and fellow CALSSA board member, Barry Cinnamon of Cinnamon Energy Systems, tells his story of electrifying his home in the Bay Area. Personally, I haven’t quite made it to full electrification at my home but anyone that hasn’t tried induction cooking is missing out. If you’re curious but want to be sold on it, you can get a plug in version for under $100. It does pose the question as to how solar installers will integrate (or not) generators in a generac system. It also becomes a topic of discussion for utilities looking for virtual power plants that include residential generators or grid charged electric vehicles.
Imagine The Memo. In a $10billion transaction ConocoPhilips is acquiring Concho Resources, resulting in one of the biggest footprints in the Permian Basin of West Texas and New Mexico. It reminded me of a discussion I had with a former boss of mine about whether we should buy projects in Argentina. He said, we can only buy this project if we get our money back before the next election. Conoco must be asking itself how fast it can get its money out of this project with continued low pricing and a future where methane regulations, flaring prohibition and environmental inspections actually become a reality.
The LCOE Review. Here is your 14th annual LCOE report from Lazard and their 6.0 of the storage analysis. This annual report has been a long time trend line that shows solar getting cheaper. Here’s your prediction for version 15.0/7.0 and 1.0. Not only will things get cheaper, but more valuable. The 1.0 will be the combined value of both and the benefits it creates for their portion of the grid.
Covering The ITC by M Bar C. In the last 15 years, the Investment Tax Credit (ITC) has allowed organizations to benefit from substantial cost savings to solar installations. This sustainability-driven program has helped revolutionize the renewable energy industry. Regardless, in 2021 ITC benefits will shift; here is what you need to know from my friends at M Bar C Construction and how we can help you and your organization take maximum advantage of these savings while they last.
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Yann
This is your SolarWakeup for October 19th, 2020
Solar Permits Discussed. Tomorrow morning, join me on a conference call with Chris Collins from Ohm Analytics and Phil Shen from Roth Capital to talk about the trend of solar permitting from across the country. You can register (free) here.
Monopolies Bank Political Power. Even when consumers have the ability to choose a retail electricity provider, they typically don’t. According to the EIA, less than 20% of consumers with choice actually participate. This makes the absurdity of monopoly protection by politicians even less palatable. There is no political reality where Governors of North Carolina, Florida and South Carolina agree that one corporation has massive control over their infrastructure and Georgia would clearly expect them to be next. The only way that this actually happens is if Nextera is willing to expand consumer choice with retail energy choice. Doing the math, they are likely to only lose a small percentage of their customer base and still control a huge amount of infrastructure.
A Failure Of Resiliency. In engineering school you learn a lot about the weakest link, even more so when you go through fire academy. The key is to plan for the weakest link to fail and make sure it doesn’t have an outsized impact on the rest of the system. What I’m referring to is the sudden shutdown of Diablo Canyon nuclear plant unit 2 last week, right as CAISO was headed into another weekend of potential issues and new fire starts. That’s the problem with nuclear, it’s too big to fail but more often than not, it isn’t there when you need it and you can’t make that up with adequate reserve margin leaving only demand response, and yes, blackouts are a form of demand response. That’s why part of the equation has to be the aggregation of large scale with long duration storage, as we see in the RFP today, with the cumulative scale of millions of rooftop solar. As grid operators we have to start thinking about the C&I roofs as well, they represent the most underutilized real estate that already has interconnection and demand on site.
The EV Platform. My favorite company in the clean tech space has long been Proterra. It’s scrappy and big in potential. Now it’s getting its balance sheet ready for more with Blackstone coming back fresh off the Vivint Solar sale. Look for this company to do much more.
Sentiment Is Everything. Sentiment can create trends and traction in public markets but that trickles down every other part of the investment world. This is positive and watch for these numbers to get even better.
Covering The ITC. In the last 15 years, the Investment Tax Credit (ITC) has allowed organizations to benefit from substantial cost savings to solar installations. This sustainability-driven program has helped revolutionize the renewable energy industry. Regardless, in 2021 ITC benefits will shift; here is what you need to know from my friends at M Bar C Construction and how we can help you and your organization take maximum advantage of these savings while they last.
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Yann
This is your SolarWakeup for October 16th, 2020
The $ARRY IPO. It was a big day for solar, New Mexico and the venture founded by Ron Corio in 1989. Array Technologies went public yesterday at $22 per share, pricing $1 above the $19-$21 range. Underwriters also upsized to the maximum levels. At the close of the after-hours market, $ARRY was trading just north of $38, an amazing 73% IPO day pop. Some of you got in at the first print of around $30, still a nice return. This also means that Ron is the first known solar billionaire, he sold 23 million shares at the IPO and still holds ~21.7 million shares. #solarwealth is the word of the decade because not only are we leading the energy transition, this is the single largest wealth creation opportunity of our collective lifetimes. Congrats to Array, the team and Ron for sticking to the vision.
What It Means For Sector. Array is a pure play solar company that makes the underlying structure needed to get the most out of solar modules. It manufacturers principally in the US and the majority of its revenue comes from the US market. There are dozens of solar trackers in the market but what sets Array apart along with Nextracker is the team and execution. I spent two years in racking on the resi side and this is exactly the type of exit that could have been possible if the focus weren’t on near term, consultant driven margin. Here’s what happens next, two predictions. I think Nextracker is going to have to look at spinning out from Flex and being a standalone. As the market share leader, Nextracker drives a global business into the public markets. Oaktree, the majority shareholder of Array, also owns Shoals Technologies. I wouldn’t doubt that Shoals is far behind on their S-1 filing and don’t be shocked when you see the margins of the widget manufacturer. Every asset manager and investment bank is meeting this week looking to get smart and get into solar, and that’s great for all of us.
Solar Vs Climate Policy. Biden talks a lot about climate change and even renewable energy. He has a multi-trillion dollar plan to combat climate change (the issue) and knows how he wants to solve it (the plan) but what does that mean for the actual execution. How does solar and storage fit into climate policy from a legislative perspective? Last night, Biden took a question about fracking and he did something that should be positive news for all in clean tech. He pivoted from fracking to solar panels on rooftops and batteries in the basement (his words) while highlighting the entire program as a jobs plan. We’ve come a long way. That being said, I still don’t have a clear vision for how his administration plans on getting us there though I hope that folks I know and perhaps read this newsletter will be doing so from 1600 Pennsylvania Ave. Here’s the clip on the issue from last night’s town hall.
Storage and Grid Wars. Fluence (a Siemens and AES venture) has acquired AMS. This follows Generac’s acquisition of Enbala, LS Power’s acquisition of CPower and evGo, Engie’s acquisition of Green Charge, Enel’s acquisition of Demand Energy and Enernoc, Wartsila’s acquisition of Greensmith and I’m sure some that I’m missing. That leaves Stem as one of the remaining grid/storage companies, but having raised $371million, the price of entry will be hefty. Your thoughts and missing acquisitions are welcome.
State Capital Battles. The BP CEO talked a bit about climate advocacy in State capitols, which is my signal to remind you of the biggest head to head contests about to meet state legislators. With oil in transportation at record low levels and the electrification of buildings and transportation, oil companies and utilities are meeting head to head for the first time. They’ve mostly managed to ignore each other’s issues for a century but that’s changing. Look out for major battles and unlike utilities, I see some alignment of interests between our industry and oil that could benefit us.
Philly Gets Permits. Faster and cheaper permits in Philadelphia? They get it, let’s help them get to instant permits.
Thank You! Yesterday, CALSSA members stood up and raised $195 thousand dollars to keep the policy wheels moving. After a motivational, NBA Championship caliber speech from Hall of Famer Bill Walton, members dug into their pockets. We are $5k away from our goal of $200k and I’m hoping that you can help make up the gap. You can make a donation today!
Get The Power. Later this year, the residential solar market is going to get some major savings with most of their balance of systems when the shift to higher power solar modules really gets going. With power density going up more than 10%, those savings will trickle down to mounts, rails, inverters, labor and wire and hopefully into installers’ wallets. Make sure you are getting the best modules and pricing possible by joining the SolarWakeup Buyer’s Group. You can see the pricing on our price discovery page.
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Yann
This is your SolarWakeup for October 15th, 2020
Array Tech Prices Above. ARRY is pricing at $22, a bit above the range listed in the filing. Congrats to the New Mexico based team for what starts a great future as a public company. Note that most of the capital is going to shareholders selling shares.
CALSSA All-Member Meeting. Join us this Thursday for the largest membership meeting ever held by a solar trade association. If you’re not a member of CALSSA, it’s easy to join and I’m happy to help you do just that. Register here for the all-member meeting.
Get The Power. Later this year, the residential solar market is going to get some major savings with most of their balance of systems when the shift to higher power solar modules really gets going. With power density going up more than 10%, those savings will trickle down to mounts, rails, inverters, labor and wire and hopefully into installers’ wallets. Make sure you are getting the best modules and pricing possible by joining the SolarWakeup Buyer’s Group. You can see the pricing on our price discovery page.
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Yann
This is your SolarWakeup for October 14th, 2020
IPO Pricing Day Super Sized. Array Technologies, soon to be ARRY, increased the share sale that could reach nearly $1billion if underwriters exercise the options, which they are likely to do. Today we get the IPO pricing and expect the company to start trading on Thursday. Here’s a SolarWakeup prediction, with the success of Array’s IPO I think we will see Flex spin NexTracker out into its own public company.
I’m Not A Scientist. Louisiana Senator Kennedy asked the SCOTUS nominee if she believed in climate change, but she’s not a scientist and has no firm view on the issue.
New Lipstick, Same. PG&E headlines tend to repeat themselves. It seems like the wildfires may have overlapped with some equipment issues and a judge wants to hear more as regulators investigate. Governor Newsom will soon realize that the path forward means turning PG&E into a wires only company and letting CAISO expand its DER pricing signals.
Solar Policy Is Climate Policy. Axios’ Amy Harder has a thorough interview with BP’s CEO. Amongst many topics, he outlines the company’s focus on advocating for climate policy. Whether it’s BP or Amazon, it’s time to understand that the best way to drive climate policies forward is to invest in solar advocacy. Bloomberg understood this with the beyond coal campaign. This generation’s way forward is with solar advocates.
CALSSA All-Member Meeting. Join us this Thursday for the largest membership meeting ever held by a solar trade association. If you’re not a member of CALSSA, it’s easy to join and I’m happy to help you do just that. Register here for the all-member meeting.
Get The Power. Later this year, the residential solar market is going to get some major savings with most of their balance of systems when the shift to higher power solar modules really gets going. With power density going up more than 10%, those savings will trickle down to mounts, rails, inverters, labor and wire and hopefully into installers’ wallets. Make sure you are getting the best modules and pricing possible by joining the SolarWakeup Buyer’s Group. You can see the pricing on our price discovery page.
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Yann
This is your SolarWakeup for October 13th, 2020
Solar Access Requires Regulators. Anti-solar advocates often attach solar for helping the rich only and not democratizing the benefits to everyone. This is especially aimed at low-income residents or renters that may not be the typical single family solar customer. The responsibility for this disparity mostly falls on regulators that do not open the market to all property types. Tools like community solar easily solves this, like is has done successfully in several markets. More importantly, regulators could take a new look at the excess production rate which is well below market value for energy costs. The problem with solar financing is the requirement for long term contracts secured by appropriate credit. For low-income or renters, it doesn’t match the solar financing. If regulators had a backup energy rate in case of default or vacancy, more competition over that market would follow.
The Work On Climate. Since it’s often lost on us that we are working on a bigger issue that affects everyone, I thought I would share an interesting realization I had over the weekend. Climate change sometimes seems too big for us to impact, what could one of us possibly do to help. The impacts from climate are serious and we have all felt them over the past few years. But, a few months ago when the national shelter in place was happening, we saw how fast the climate can change in a positive direction. We don’t have to believe a thesis, no cars on the road gave us the cleanest air we’ve seen in decades. We are so close to having a grid without coal and vehicle electrification on the way, it is possible that we will see immediate impacts from the positive gains our industries are making.
The Price And Compensation Signal. Grid operators and utility executives manage their work based on signals. Grid operators look at reserve margins within generation to match demand forecasts while utility executives look at the share price. On the technical side, we’re realizing that we cannot manage a grid only on the generation side, our reserve margin through demand shaping and demand response needs to be much closer to 20% or more. Same goes for executives, regulators have the opportunity to hold them to their climate goals and tie rate of return to achieving the decarbonization that is needed. If the utility profits drop when they fail to meet climate goals, executives will lose money because the share price will drop.
Diversity In Solar. Solar CEOs from several prominent companies are looking to improve the diversity in solar. The CEO collective has written the note linked below outlining their thoughts and actions.
Get The Power. Later this year, the residential solar market is going to get some major savings with most of their balance of systems when the shift to higher power solar modules really gets going. With power density going up more than 10%, those savings will trickle down to mounts, rails, inverters, labor and wire and hopefully into installers’ wallets. Make sure you are getting the best modules and pricing possible by joining the SolarWakeup Buyer’s Group. You can see the pricing on our price discovery page.
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Yann