This is your SolarWakeup for June 5th, 2020
Our Industry. This week has been challenging for many, clearly more for others than for me. As a father of three young kids, I have struggled to explain what is happening and the privilege they are benefitting from when I have to take inventory of it for myself. So I have looked at you, the readers, and industry spokespersons for guidance and leadership and I’ve been happy to listen. That being said, we are at a stage of words and actions must follow. It has also been confirmed that the voices I am hearing from and reading statements from, lack diversity to say the least. We’ve all been to the trade shows and conferences and it’s not representative of America’s diversity. Solar needs to do better and I am optimistic that it will do so, I am proud however that our advocacy always includes activism for diversity and justice. If you didn’t catch Vote Solar’s statement this week, it more eloquently states what I am feeling.
The Platform. On Monday I offered this platform, which is read by most of solar, to readers that have a better perspective on racism, profiling and police brutality than I. Over the next 24 hours, I didn’t receive a single post to publish from readership and I know that is indicative of who I am reaching. I have always wanted SolarWakeup to be a platform that shares it’s reach with the readers, to expand the viewpoints and lived experiences but that requires that I expand the folks that I am reaching.
Germany Will Do It Again. When it comes to scaling solar, Germany was way ahead of the entire world. Now, post-COVID, Germany is expanding subsidies for electric vehicle adopters to ~$6,700 and a reduction of 3% from the sales tax paid. This will increase the total units sold in Germany and lower the cost for the rest of the world. While the US and other Countries have been ahead on this, it is also significant given the German heritage in auto manufacturing. I find EV adoption relevant for solar from two perspectives. First, it increases the total consumption of electricity especially for consumers that think about what type of fuel is powering their car. Second, the batteries used in the cars are also used in our homes, buildings and solar farms. Lowering that cost will pay dividends in our sector for a long time to come.
Forget Societal Benefits. Trump is taking this time to make it easier to build infrastructure without environmental review. These reviews are an obstacle for solar development at times as well but you can’t take a step forward while taking two steps back. It would be best to slow the development of fossil infrastructure knowing that it will be without use a decade from now.
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Yann
This is your SolarWakeup for June 3rd, 2020
Solar Is Back, On The Record. Bloomberg is out with a bit of a recap of the last 90 days in solar from the viewpoint of Sunnova and Palmetto, two companies that you know well and have a good macro view of the solar market. Sunnova was out early with confirmation of its public guidance, the first public company to do so. I expect other public companies to reaffirm 2020 numbers over the next few months as well, much of the underlying data tells us that homeowner interest in solar is higher than ever before and positive economic cases exist in more geographies than ever. While the volume will return, now is the time to focus on margins and make sure they are distributed evenly throughout the value chain. The solar product pricing index for May is now open for installers to submit data and expands beyond modules. With dozens of installers submitting information, they have already seen the ability to negotiate more fair pricing for their purchases.
Loan Markets Agree. Loanpal issued their latest securitization reports through Kroll Bond Rating Agency (KBRA) for about $400million in loans. Two data points that are of interest and reassure the market sentiment. First, commentary is made that while the latter half of March was down in volume, the company is now above pre-COVID levels. Second, a graph showing new originations shows March 2020 as the all time high, crossing $200million in loans in that month for the first time. Sunlight Financial also announced an expansion of its facility with Tech CU to finance over 80,000 solar homes, which equates to over $2billion in commitments.
Vivint Solar’s Double Capital. Not to be outdone, Vivint Solar filed two new financing arrangements. The first is basically a sale of future equity cash flows of their assets. In a deal with Brookfield Asset Management, Vivint Solar monetized a forward strip of revenue to the tune of $200million out of a possible $300million in the facility. The company also increased its warehouse revolver by $245million to $570million. Interest rates are looking quite aggressive as well.
Like I Was Saying. If you listened to SolarWakeup podcast 4 weeks ago, I made a prediction well before it was cool to say this. I said that 2020 is not going to be a down year compared to 2019. Hear that clip here and subscribe to the podcast.
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Yann
This is your SolarWakeup for June 2nd, 2020
My Thoughts. We are all going through the same things right now but all with different perspectives. My point of view is not what I want to hear from so I’ve spent time listening to people I respect with the reality that I would like you to have more diverse points of view as well. While I have the luxury of a voice and a big platform right now, I would rather that platform be used to amplify voices from folks that look different than me and experienced life coming from another set of circumstances. So I would like you, or those around you, to share your opinion with this platform. It can come from you individually, your colleague or even a group of you. I look forward to sharing your thoughts with the rest of the solar industry.
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Yann
This is your SolarWakeup for June 1st, 2020
Liftoff In Florida. If you’re anything like me you thoroughly enjoyed and delighted in the SpaceX Demo-2 Dragon launch from Cape Canaveral in Florida this weekend. This included staying up most of the night and watching the crewed capsule approach, dock and equalize with the International Space Station. Whether you are 38 or 3 years old like my youngest, rockets taking off for outer space brings a smile to your face. It all seems too big and too impossible (I still don’t know how they land the rocket on a drone ship) but the combined capability of humans can really do anything.
A Uniquely Terrible Business Model. National Grid published its interconnection study results for 300MW of distributed solar last week. In order to get 90MW of that capacity built, developers would have to pay $75million dollars and wait 5 to 7 years in order to get the upgrades done. This should be part of the obituary of that business, there is nothing to be said about telling customers to wait 5 years to get an upgrade done and have to pay almost $1 per watt to get it. If the infrastructure can’t handle 300MW of solar, the system needs to be rebuilt and I’ve seen most of the infrastructure in Florida rebuilt in a couple months after a hurricane.
China, Modules and More. In China, the government is imposing new restrictions on manufacturing expansion given the delay in demand globally. In the US this means that prices are dropping and catching up to the market that is coming back nicely. Over the past few months, some of you have benefitted from the Solar Module Index which publishes the April numbers this week. The module index will expand into the product index and all installers to add other parts you are buying like inverters and racking per your request. This is data that comes directly from installers and shared with each other, I only play the role to consolidate the data. For the foreseeable future, I am also making the index free to get the margin back in line for installers that are suffering from covid related slow down.
The Margin Stack. I am writing a full blog post on the topic of margin stacking because the overall cost of solar to the homeowner is much higher than it should be and the margin that the installer receives is not reflective of it. Soft costs are a problem but more than a third of the price of solar for a homeowner is neither product, labor or installer profit. More to come.
Big Picture Matters. I am glad to see that solar has for a long time and will continue to view our industry as more than just a market to product clean energy. Without getting into topics much bigger than this newsletter, I now understand more deeply why caring about the big picture matters, access for everyone matters, more diversity matters and ensuring equality matters.
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Yann
This is your SolarWakeup for May 29th, 2020
Per Capita Solar. Solar isn’t always where we think it is. A lot of it is installed in very large cities like Los Angeles and San Diego but when adjusted for population, it could be a lot better. How does your city show on this list?
The Real Pressure in Oil. There is a lot of talk about divesting endowments and pushing major climate goals for the oil majors. In reality, there are hundreds of oil companies in exploration, drilling, pipeline and more that are backed or owned by private equity. Most PE firms will have 20 oil companies for a clean energy investment and that is the real pivot that needs to happen. This isn’t a climate statement, the market is adjusting its goals of where the returns and capital preservation are maximized.
Top Modules Rated. PVEL, whose CEO visited with us on a podcast last year, is out with its annual module reliability scorecard. How does your module stack up and to what extent is your business aligned with a module supplier?
Mailbag Podcast. Send in your topics for next week’s podcast. I’ll be answering your questions about solar, the market or any other things that interest you. Have a great weekend!
Presented By Suntuity. Do you sell solar and see an opportunity to expand the markets you serve in a digital sales environment? Suntuity is expanding its salesforce and looking for more sales leaders to join their growing team. Based in New Jersey and servicing over a dozen States, joining Suntuity could be the sales boost you need. Learn more about our company today.
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Yann
This is your SolarWakeup for May 28th, 2020
Commercial Solar In Trouble. Financing rooftop solar for commercial customers is going to be more complicated than ever before. Putting most companies through a pandemic risk assessment increases the return requirement in a market already tough to make the financials work. This is going to drive more developers to either propose cash purchases as opposed to financing where a third party owns the solar asset. The tax code was amended to allow for the depreciation losses to go back 5 years but this market desperately needs a grant in lieu to kick start again. How the community solar or virtual PPA market adopts these customers will be interesting.
EVs Are Better (And Cheaper). Anyone that has driven an electric car knows that it’s a better driving experience. Even car companies have accepted this and adopting full product lines in this decade. EVs will nationalize once a cultural icon like the F-150 gets an electric version and fleets actually roll out large scale implementation. How regulators and utilities execute on this will be important especially as the market seems to be trending towards utility ownership of charging stations. The best part in this new data set, EVs are drastically cheaper assets to own as well.
Southern Co Wants Headlines. I’d like to fast forward to every utility announcing a 100% clean by 2050 goal. With every coal asset or older power plant to be first moved to a gas investment and then magically by 2050 it will all be renewable. The issue with the headlines and details isn’t the goal, it’s that none of the executives in the board room today will be there in 30 years and the goal doesn’t impact this quarters financial performance. Until the incentive of rate basing a new gas plant next year is removed and replaced by building a better solar plus storage asset, we will get more lofty goals with short term gas power plants being built.
Podcast Mailbag. Make sure you catch my podcast about the 30 million solar roof idea by John Farrell. The podcast is now available on spotify as well as other streaming platforms. Next week’s episode will be a mailbag where I talk about the headlines and answer your questions, send over topics you want me to cover.
Act On FERC. During the coronavirus pandemic, a small shadowy association just launched an unprecedented attack on our solar rights, and we need your help to stop it. This secretive group is trying to end the fundamental, state-based solar energy policy of net metering that allows solar users to earn fair credit for the surplus electricity their solar panels produce. The deadline to stop this attack is in just a few weeks. Tell the Federal Energy Regulatory Commission to immediately reject this destructive and dangerous attack on your solar rights! Thank you for lending your voice to this important issue during this challenging time. If you want more details on the petition before FERC, click here or join Vote Solar on a webinar on May 28th at 3pm MT.
Presented By Suntuity. Do you sell solar and see an opportunity to expand the markets you serve in a digital sales environment? Suntuity is expanding its salesforce and looking for more sales leaders to join their growing team. Based in New Jersey and servicing over a dozen States, joining Suntuity could be the sales boost you need. Learn more about our company today.
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Yann
This is your SolarWakeup for May 27th, 2020
30 Million Solar Roofs. A few weeks ago I linked to an article that talked about using solar to create jobs in the post-COVID recovery. The idea was bold, build 30 million solar roofs (fully funded) in the next half decade. John Farrell from ILSR was the author behind the idea and the subject of this week’s SolarWakeup podcast. I hope you enjoy, subscribe and rate the podcast on your favorite app.
Midwest Solar Rush. Alliant Energy, the Wisconsin based publicly traded utility, is looking to increase solar in Wisconsin more than fourfold. In acquiring 675MW of solar projects, Alliant will expand the 150MW of solar exponentially and looks to be taking some cues from utilities like Florida Power & Light. The announcement talks about asking the regulators to push the docket forward and (I’m assuming) letting the utility rate base the asset. Like in Florida, I am not opposed to the concept of having the utility rate base large power plant, as long as it allows the distributed market to flourish based on market conditions. It can’t be all for one and none for all.
Faster Solar Installs. Hawaii is taking a big cut to the timeline between contract signing and project install for solar. At this point in the market it is one of the most valuable market drivers that politicians and regulators can push forward. We talked about the cost of permitting in the past and how SolarAPP is the tool that enables markets and installers to provide faster solar and a more pleasant customer process for homeowners.
The FERC Fight. None of what the solar industry wants going forward is possible if FERC decides that States no longer have a say in matters affecting electricity rates and rate structures, including net metering. In the biggest attempt to remove States’ rights, the New England Ratepayers Association (NERA), is asking for FERC to remove net metering as a State by State regulation. NERA is likely fronting for someone else, though we don’t yet know who, but this is much bigger than solar alone. Vote Solar is asking you to get involved and make your voice heard, this is your call to action, Tell the Federal Energy Regulatory Commission to immediately reject this destructive and dangerous attack on your solar rights! You can also join Vote Solar for a webinar tomorrow to learn more about this national attack on solar during this pandemic.
Presented By Suntuity. Do you sell solar and see an opportunity to expand the markets you serve in a digital sales environment? Suntuity is expanding its salesforce and looking for more sales leaders to join their growing team. Based in New Jersey and servicing over a dozen States, joining Suntuity could be the sales boost you need. Learn more about our company today.
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Yann
This is your SolarWakeup for May 26th, 2020
Things Will Change. As the weeks of the pandemic move along, I am coming to realize that we don’t know what is going to happen in the future. There are predictions about peak carbon, peak oil and I’ve personally written about how the energy use will be redistributed with more people working from home. When will you get on a plane again and do you expect to work from home in 2021? These questions will drive much of what changes or not. For the solar industry, there is little that points to lower energy consumption in the home as opposed to the past. Self-reliance and backup generation will likely grow in importance during the sales cycle but the solar industry will not be alone in approaching this market with solutions. Utilities, generators and efficiency will also pursue the opportunity, look at how quick Generac was to get into California with generators during the wildfire crisis last year and with two acquisitions made themselves a real player in solar as well. The point is that every data point from every over analyzed consultant is based on a changed set of variables and the oil companies are front and center as well. No-one is driving and planes are grounded, oil usage is down and the postcard from the future has arrived in the form of a Mack truck. A world that doesn’t use oil at the same levels was something ESG and sustainability executives have been saying for years and predicted it would come some day. Oil companies must adjust they said, invest in solar and wind and batteries. How does an oil company get into the renewables space overnight and replace billions in quarterly profits? How would you do it? Can it be done? I don’t know who and how and where the battle by the big market will play out, but here is one thing that I am certain about. Those of you that service the homeowner, whether as a local installer, a regional one or a national player on the top 10 list, that market is going to top $20billion, $50billion and more. Today that market is slow, inefficient and lacks the transparency you expect in vibrant marketplaces. That will change with the growth and success of many, so things will change for everyone everywhere. For those of us fortunate enough to be in solar, hang on tight.
Catch Up. Subscribe to the podcast, no pod released today. Download the full survey results from the past 8 weeks. Catch the webinar with OpenSolar about digital solar operations and virtual selling.
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Yann
This is your SolarWakeup for May 22nd, 2020
A Favor. If you enjoy this newsletter, please forward it to one or two solar friends. You’d be surprised how many people don’t get the daily solar news. If this email was forwarded to you, you can subscribe here.
Rumor Has It. You may have seen that Enphase stock slipped by over 10% at the start of trading yesterday. A major company shareholder is Chilean investor South Lake One LLC, an entity controlled by Quiroga Moreno Isidoro. Controlling as much as 13.5million shares after a buying spree of over 1.2million shares in November 2019 at a price just under $20. Isidoro participated in a fundraising round in February 2018 when he purchased 9.5million shares for $2.10 a piece. The rumor, which is well sourced at this point, is that he has sold his entire stake in Enphase for around $61 per share. This is typical, many early investors will sell some or all of their stake in companies when they have completed their phase into success. $2 to $61 is quite the investment for a 2 year period and his shares found new investors at these levels. This marks a key date in the corporate history of Enphase, what will the company do in their next growth phase?
Because You Asked. Not that it matters because it doesn’t influence my writing nor the stock prices. I own shares in basically every solar company including Enphase and Solaredge. I don’t pick winners, I am picking the solar industry as a winner and believe that those investments will be worth a lot more when my kids go to college than today. So if you work at a solar company, public or private, I’m rooting for your success at all times.
Tesla Energy Trading. Here’s the answer to anyone asking whether Tesla or any other battery company is better on energy trading. The answer is yes, absolutely. They are also betting and advocating that the grid will reward speed of power generation, revenue stacking and growth of monetization for microgrids. As revenue streams for batteries increase so does the development and integration of those technologies.
Have A Great Weekend. Stay safe and if it weren’t for the COVID situation I would invite you all over to help me pack the container!
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Yann
This is your SolarWakeup for May 21st, 2020
Go West, Then Back East. Last week I told you about the end of my tenure as CEO of Quick Mount PV, by far the highlight of my career and a great sign that residential solar is a booming part of the market. Many of you have asked me what’s next and that answer will be clearer to me over the summer. What I do know about what’s next is that my family and I are moving back to Florida. We love California and loved being at the center of the solar industry. In a world where you live near your work, living in Walnut Creek was perfection. In a time of COVID, and flying cross-country is not feasible, we are choosing to live closer to family. So in a few weeks we will be trucking across the Country back to the Sunshine State. Over the coming weeks, I plan to spend as much time as possible talking to you about the market, what’s working, what’s not and look to identify the question about what’s next professionally. In the meantime, I want to help you in any way possible whether that is helping you refine your procurement strategy, connecting you with new capital sources or if you lost your job find a new one.
Full Survey Results. After 6 weekly tracking surveys over the past 8 weeks, the full result tabulation is available for review. You can see them here.
Early Stage Investments. Looking ahead beyond 2021, I realize that the reality of ITC sunset to 10% is possible. So I ask the many investors and IPPs on this distribution list, who is funding and taking a long term view on greenfield development for large scale solar. The strategy was a gold mine for many ten years ago, I want to hear from those with the thesis that it will be once again going forward.
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Yann