This is your SolarWakeup for May 20th, 2020
A Changing World. Here is the long awaited data. Sales are still down 22% when compared to pre-COVID February sales. If you remove NY and MA from the analysis, sales are down only 14%. That being said, 58% of the respondents say that they are at or above pre-pandemic sales levels. 42% are hiring for sales and working capital positions are much better, many thanking PPP.
The AHJ Conundrum. 57% of survey answers say that their backlog is growing which still means that sales are going faster than installations, partly due to shelter in place orders and due to slow moving AHJs not issuing permits or doing inspections. Here’s the good news, 79% of the AHJs are doing digital permitting and 68% are providing options for virtual or video inspections. If this trend keeps up and then sticks around permanently, solar will be much better off for it.
Inverter Landscape. Public markets love the solar industry through inverter companies. Enphase exceed all-time pre-COVID highs by almost 15% today, reaching an all-time high of $70 per share. Solaredge is close to the all-time high reached just prior to COVID starting to impact the market. PV-Tech does a nice job of giving you the global view on the various players that trade publicly.
Enphase Golf Clap. A golf clap is a signal of support and congratulations when everything else is so quiet. The shot, the strategy is all happening in front of us but if you don’t pay attention you may miss it until you hear the applause. What am I talking about? On Monday of this week, Enphase launched an online store for their products in Germany. They had already launched a store in the US in 2019, which you likely haven’t seen because the US store pricing was almost double what you pay when installers buy from distribution. The US platform most likely served as the testbed for everything syncing and working in the back end. The German store is selling product for about 15% less than the US store but with discount code system built into the platform they could be given to installers and bring pricing much closer to current levels. An online platform done right will increase the almost non-existent market share in Europe while also significantly increasing margins.
What It Means. Most manufacturers that sell into distribution don’t test this openly because what happens if distribution gets upset and stops buying from you. Enphase and a few others have the luxury position of being a product that customers want, distribution needs to sell the product in order to be a value added resource to installers. The signal, in my humble opinion, is that Enphase wants to understand the purchasing behavior better. More importantly, the company is kindly telling distribution partners that they need to be more consistent on how they price their products. The inverter index that SolarWakeup has quietly been checking, shows that the same inverter can move by $10 or $20 week by week, which is 3 to 6 cents per watt for most installers. GTM has the residential marketshare for Enphase at about a quarter of the market and Solaredge at more than double that. Look for that to flip in 2020 and 2021 in residential US market segmentation. An online store may seem small and quiet, but trust me when I say that a big and important conversation is being had behind the scenes that could reshape how the solar ecosystem functions and I love this innovation.
Listen Closely. Thanks to all that joined for yesterday’s Roth conference call about the solar market. If you enjoyed that and want to hear more about my live conversations, check out my interview with Rob Newman from Nearmaps about aerial imagery. Please forward this email to one colleague and ask them to subscribe to the newsletter, let’s get everyone in solar reading every morning.
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Yann
This is your SolarWakeup for May 19th, 2020
Join Me This Morning. The solar market is moving quickly and the survey results will be released on a call about the market this morning. Join us, you can register for the webinar here. It’s at 10am EST.
Margin Stacking. I remember 30 years ago going to the travel agent with my father. We sat in a mall, where the nice agent showed us a green screen of flight options, in this case flying PanAm from Hamburg Germany to Florida. There was no transparency in the pricing or competitive options to the PanAm flight and therefore we rarely took the plane. Today, you and I can go on an app and see hundreds of variations of flights by city, date, time or connections before deciding to fly. COVID aside, airlines and travelers won when transparency was created. It also made every level of margin become more transparent, hence the fees for luggage, exit row seats and faster boarding. You get what you pay for. Solar in 2020 lacks that transparency for most market participants at this point and that’s something we should all think about fixing. It is what I am thinking about constantly now as I ponder what’s next, quality and reputation should be the leading drivers of success in solar, not unknown unknowns like margin stacking. More to come.
Measure From 12,000 Feet. In this week’s SolarWakeup podcast I talk with Rob Newman, the CEO of Nearmaps. Nearmap flies planes all over the world including your house, three times per year. These planes fly between 12 and 18 thousand feet and measure your roof with accuracy of a couple of inches. For solar, it enables installers to sell projects with accurate designs without ever stepping on the roof until install day.
Will SPI Happen? While early spring events like GTM’s Summit had to move to the fall and Midwest Solar Expo has gone virtual, no word on SPI in September. SPI is a crucial source of funding for SEIA and SEPA but this year’s event is in California where distancing protocols will be stricter than other States. SPI’s website still appears all systems go but the survey respondents, by a margin of 74%, said they would not be comfortable attending.
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Yann
This is your SolarWakeup for May 18th, 2020
Forecasting 2020. There are two rules in being a public company that executives can live by both driven by overdelivering. In a crisis like COVID, most companies will underpromise publicly and then quietly spread whispers about positive outlook. This ensures that expectations are reachable but no investor thinks the company cannot weather the storm. The other way is to be contrarian and that is more situationally accurate for solar right now. Almost every solar company has withdrawn guidance and spoken with optimism. Sunnova is taking the other path by reaffirming their 2020 guidance. In a single sentence during the earnings call, Sunnova put it on the line in 2020 and putting their teams on notice. This is the year that execution is key because underdelivering on expectations is a Wall Street sin you don’t want.
My Take. If you want to know what is going on in the solar market and my update on the survey data that will be released on Tuesday, you can register for the webinar here. It’s at 10am EST on Tuesday.
SunPower Enhances Focus. It was a big week for SunPower gaining regulatory approval for the split between the module business and the ’services’ platform/dealer network. The company also sold its O&M business which goes further in raising funds and reducing operational expenses at the company. In a few quarters it will be difficult to differentiate between SunPower and Sunrun and to a certain extent Vivint Solar and Sunnova. Each has one or more of the following attributes: direct sales, dealer network, self install, outsourced sales channels, subcontracted installers and all have their own funding structure. Game on…
Big Modules. 400W, 500W. Pretty soon we’ll be talking about real modules. The first ever quote for modules I got was in 2006 for $3.95/watt for a 195W module (sans tariffs).
Supercharge Use Drops. Elon tweeted a graph of Supercharge usage that spans the past year and peaks in December/January. A few weeks ago charging usage went to 30% of the peak in both North America and European geographies. It’s on the way up again, close to 50%. But will it ever go back to the 100% mark, adjusting for the increase in cars on the road? Utility planners around the Country are studying this image to understand consumer behavior post-COVID and if they are honest with regulators will likely have to ask that homes install more solar. Why? Even if 20% of those in the workforce transition to working from home, grid infrastructure is going to have to adapt quickly and likely cost ratepayers billions. More to come
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Yann
This is your SolarWakeup for May 15th, 2020
Press Release Day. If you’ve been reading SolarWakeup for awhile you know that I avoid press releases like the plague but not today. There are three announcements that came out yesterday (don’t release news on Thursdays) that you need to know about.
Tax Equity Getting Done. Sometimes the most interesting stories in the news don’t actually get covered in a meaningful way. $40million was raised in a tax equity partnership to own DC solar projects, a niche market that has its complications but can be profitable for those that do it right. Mike Healy of New Columbia Solar has been a longtime solar professional is behind the interesting transaction that is getting done right in the middle of a pandemic. So while you may not see it in regular coverage, trust me when I say that this deal getting done now is a strong message of optimism for solar. Not just that it’s getting done now but it’s DG, portfolio of assets and a market with policy complexity. Go into the weekend with a positive outlook.
Enphase Goes Commercial. Just when you’re getting used to the way things are, a headline makes its way to your screen. Enphase has been laser focused on residential market share growth and currently sits in second place according to GTM. Then comes this headline for a portfolio of commercial and multi family projects that is being designed with the flexibility of micro inverters. In a market that has been dominated by string inverters, the need for rapid shutdown and desire for unit level monitoring/optimization, is opening engineer’s minds to other options. I’ve spent the last week asking people around the industry, what solar looks like in 3 years but reading the headlines may be setting that stage.
Solaria Is Coming To Play. Solaria, the module manufacturer of aesthetically pleasing black modules, is adding senior leadership. In what seems like a change of leadership, it is, the new CEO and President actually represent a shift towards business strategy and execution. Like a choreographed business plan, Solaria released a 400W module a few months ago and now Tony Alvarez takes the CEO spot and Howard Wenger becomes President. Many of you know Wenger as a longtime staple in solar, former President of SunPower and one of the original solar policy advocates dating back to the 90s. Alvarez increases the Cypress Semiconductor leadership in solar adding to the many executives that joined Enphase from Cypress. Big moves for a big module, add this variable to your vision of the solar future.
So Is Solar. EIA data is showing that coal is on a major decline this year and renewables are adding to their gains in the energy mix. The data is compelling enough that New York Times covered the shift. That doesn’t stop a US Senator from North Dakota from publicly tweeting about saving a coal plant that neither ratepayers want to pay for (it is a financial loser) nor the utility wants to keep open. With Great River Energy planning the closure of the plant, Cramer wants to keep it open. First, I empathize with the community, the plant is in the middle of North Dakota and must be one of the major economic drivers of the community. That being said, what does it say about the coal industry that is bankrupting in real-time and does not answer any question related to capitalism? Even with its struggles, the industry is able to push political power to a US Senator’s twitter account.
What Do You Need? I’ve spoken to between 30 and 40 solar installers this week to answer this question. What is the biggest issue facing your business as you rebound and grow post pandemic? The industry is facing MAJOR margin stacking against it while also being the lifeblood to everyone in the ecosystem. Without a strong installer community no-one succeeds including distributors, financing companies, manufacturers or consumers. I’m one person with a newsletter but if I learned anything over the passed 15 years, we need a strong market to be a profitable market.
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Yann
This is your SolarWakeup for May 14th, 2020
History Lesson. David Freeman wasn’t a name that I was familiar with before yesterday but the name means a lot to those that have been in solar longer than me and they shared some of those thoughts with me and I thought you should hear them as well. David passed away this week at the age of 94. He led TVA, LADWP and SMUD during his career in power. The solar overlap includes the original SMUD PV Pioneer program which started the path to the million roof initiative that California celebrated late last year. Some have told me that much of California’s solar success wouldn’t have been able to get to where it is today without his leadership.
Job Growth Halted. The pandemic is having its impacts on jobs around the Country including clean tech. According to the latest report by ACORE, 600,000 jobs have been lost in the industry. Not only is it impacting those sidelined from the construction jobs but it is also impacting really good employees on a more than temporary basis. We need to find the bold policy initiatives that will catapult the market back into growth mode and get people back to work as soon as possible.
AOC Picks Climate. There was question about if and how AOC would get involved in the Joe Biden campaign and we got the answer. She is co-chairing the climate change campaign committee with John Kerry. It highlights the importance that the issue has in the campaign especially for the ‘young people’ that AOC and Sanders were targeting during the campaign. It also means that Biden is willing to be pushed far on energy/climate change issues.
The Pod On Spotify. For those that asked, and thank you for doing it, SolarWakeup Live! The podcast is now available on Spotify. Do your thing and share it with friends and colleagues. We had an informative and forward looking interview with Andy Klump from CEA this week and next week will have my interview with Rob Newman from Nearmap to talk about how you never have to get on a roof to measure again.
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Yann
This is your SolarWakeup for May 13th, 2020
This Week’s Podcast. I talk with Andy Klump from Clean Energy Associates (CEA). CEA works with companies to help them procure and quality check equipment like modules and batteries. Andy usually lives in Asia but is currently stateside while the pandemic keeps most of us in our homes. I spoke to him about the status of factories, how to make sure you get the best quality equipment, and what would happen if the ITC grant requires domestic content. He also makes some bold predictions about where prices for modules could go. Check out the episode and do us a favor by subscribing and rating.
Elon’s Alameda Drama. There is going to be a time in 2020 where the location of your business has an outsized impact on the success of your business. Tesla’s Fremont factory is going through that now. I’m not saying that Alameda is right or wrong, that’s for others to opine on, but the fact that the factory is in Alameda versus Michigan or 30 something other California Counties means that the factory is still not operational. The same is true for solar installers which lacks coordination with science. Bay Area counties are letting solar with storage be installed but not without storage. That means that installing solar in this area is locationally bad for business.
Time To Buy. Engie is out and public about wanting to do more in US energy storage, renewables and offshore wind. Engie has been one of the most active corporate investors in the market and if anything they see now as an opportune time to do more.
The Pivot Is On. The biggest reason there is a delay in getting you the results from last week’s survey is that there is now a distinct difference between installers that are investing in pivoting to new tools and processes while spending more on lead generation. The good news is that we are seeing the best levels of sales since the start of the pandemic. As installers, now is the time work together in friendly competition and find that the combined volume of the marketplace gives you the power.
SolarWakeup Is Hiring. Early bird gets the worm, a job posting will be going live next week for inside sales at SolarWakeup. If you know someone interested or interested yourself, send me a note.
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Yann
This is your SolarWakeup for May 12th, 2020
Post Pandemic Impact. In reality the entire rundown today could have been some version of ‘COVID recovery needs to be climate solution’. This is the overlap of politics, regulations and economics that has an impact on our work beyond the recovery. Realists will say, nothing will change, I even said it to someone on a call yesterday. But the answer is that there is more to politics than what Senator McConnell wants because 50 States also look to find a way to get Americans back to work. Permitting can be a federal act of congress or it could be driven by your state and local leaders as one example.
Buffett’s Day In The Sun. A week after Buffett said he regrets his $10billion oil investment there is a double headline day for Berkshire, both from an off taker perspective. NV Energy’s project with Arevia Power got the green light from the feds while Pacificorp is readying a huge RFP for renewables. While this isn’t the sunniest region for the most part, there is no doubt that the storage aspect of the RFP is going to be breaking records and could make for interesting timelines and modeling around the ITC.
It’s a Global Market. I looked at the global inverter market share and had to do a double take for two reasons. First, 2019 found 126GW of solar installed around the world. Second, there are a lot of names on the list that don’t make a mark in the US market. That either means there is much more upside for US leaders abroad or for the market share list in the US to change.
Talking Solar. Join me next Tuesday on a call with Roth Capital’s Phil Shen. This is the 4th call we’ve had together since the pandemic started and created a lot of clarity for those that dialed in including a Q&A segment. You can register for the free call here.
Sending Good Thoughts. All of you know Frank Andorka, long time solar writer and former rock star solar correspondent at SolarWakeup. Frank has been in a battle with COVID-19 for over a month including a multi-week stay in the ICU near his home in Ohio. Frank recently moved out of the ICU but remains in the hospital. Please keep Frank in your thoughts and prayers, remembering that this pandemic is indeed close to us all in one way or another. Find him on Facebook, if you wish to reach out directly and leave him a kind note.
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Yann
This is your SolarWakeup for May 11th, 2020
My Update. Just over 22 months ago I joined the team at Quick Mount and moved my family to the Bay Area. After 13 years developing, financing and leading teams in C&I and utility scale solar, I joined the residential solar segment. Quick Mount revolutionized the mounting space going back to 2006 and in a competitive market I was asked to get Quick Mount back to its leadership position. What originally was estimated to be a 3 year process, ended up in a sale of the company in 14 months from the moment I arrived. The team was best in class and ownership trusted us to grow it with great additions and success followed with a new strategy implemented. With the turnaround and sale complete, I remained with the acquiring company to help with the integration and now is the time to move on to find the next great company in solar. The past 2 years have been the greatest time in my professional career and a real sign of the maturity in solar today. In the meantime there will be time to catch up with family and consulting while the opportunities present themselves as they have in the past.
The People. If I learned one thing in the last 2 years it is that the people in residential solar are amazing and what’s proof in the past month is that their resilience is like no other. I’m overjoyed to have had a chance to work with this group of solar professionals and look forward to doing much more with you.
The Market. I published my bullish outlook of the market a few weeks ago which has now been confirmed by half a dozen public companies during their earnings calls. In my interview with Palmetto’s CEO and President we talked about how the company had some of their best sales in the past month and I predicted that 2020 wasn’t going to be a down year compared to 2019. I believe that not only is 2020 going to be a better year than expected but I see great promise in the years ahead, investors are saying the same by buying in on the company stocks. Whether it is public or private markets, solar’s investment environment has never been better.
SolarWakeup. SolarWakeup will continue publishing the newsletter and expand into serving the solar market with reports and information. Many of you have already participated in the module index which will expand its reach and value that it creates for manufacturers and installers alike. Just like Expedia expanded air travel, so will a transparent marketplace for installers. You already see manufacturers expanding clarity with online stores and dealer networks as proof of the path forward. More to come on this tomorrow.
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Yann
This is your SolarWakeup for May 8th, 2020
Virtual Edition Rewind. You can catch yesterday’s virtual edition of SolarWakeup Live! About virtual sales and digital operations here. Thanks for all that joined.
Big News Monday. Stay tuned for some big news on Monday. In the meantime, here is the one thing that caught my eye in reviewing the earnings slides for each report outlining the performance in Q1 this year. Note that COVID impact largely started with two weeks left in the quarter and the commentary is more indicative of what the future holds. That being said, there is a consistent message that Q2 will be 30% of 2019 and we have already hit bottom.
Sunrun. 2020 brings thus far the highest percentage of leases as a function of total projects, back to early 2018 levels. Q1 this year was bigger than Q2 2019. Slides.
Vivint Solar. The company also exceeded Q2 of 2019 and every quarter in 2018. System installation cost are the highest they’ve been in years, unsure what would have caused that. Company now has cumulatively installed 1.3GW of solar on homes. Slides.
SunPower. Slides are showing the company in a quasi split environment, anticipating the manufacturing to go away in 2020 to the Maxeon entity. The manufacturing plants are either back up and running or scheduled to. Balance sheet still shows the 2 million shares of Enphase the company owns from the sale of Solarbridge a few years ago. Note to SunPower execs, anything you want to do for my Solarbridge inverters on my house circa 2012 would be appreciated. Slides
Enphase. In Q1 2019 the company generated net income of $2.7million. In Q1 2020 that increased to $68million with margins at almost 40%. The stock is trading nearly at pre-COVID levels while upside is still huge given revenues are less than half that of Solaredge and GTM reports market share to be about half in US residential. Slides
Solaredge. The company shipped more optimizers and inverters and delivered higher revenues in Q1 2020 than in Q4 2019. In this quarter that company shipped 1.8GW of inverters. Slides
First Solar. Here’s some scale for you, the First Solar pipeline is over 12GW now and their module roadmap presents a 500W module in the near future. Not too bad for low efficiency thin film. The manufacturing plants are up and running at nearly full capacity. Slides
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Yann
This is your SolarWakeup for May 7th, 2020
Last Push. Fill out the survey which closes today at noon. We’ll be releasing the data next Monday.
Podcast. Would love to hear your thoughts on the podcast, where we focus on the content and not so much on the production. A great episode with a big prediction from me at the end, check it out here, rate and subscribe.
Cleanup At Oil Well #4. Oil wells are apparently being abandoned by companies and unfortunately causing many to lose their jobs. It is also causing environmental disasters in rural communities across the Country which are asking for government to hire those workers and cap the wells. Right after they do that, they should pay them to go through a solar training program and we can help place them into installation jobs in solar.
Solaredge and Sunrun Report Earnings. A trend is coming out in the earnings calls that the bottom in residential solar may be behind us and Q3 could be better than expected. A few more companies need to report so we get the whole picture but I tend to agree with the positive sentiment going into the second half of the year. The difference will be seen in how companies adapt to the way of working in their areas and how well their building departments react.
What’s Your Virtual Future? I am starting to hear from many of you that working from home is the long term normal for you regardless of the shelter in place rules. Now that you have seen how it is possible, as soon as the kids go back to school, you don’t want it any other way. This is also going to impact the conference circuit we’ve been on in the past decade. One trade show, Midwest Solar Expo is going virtual. I toured the concept yesterday and I was impressed. It’s an environment where you can walk through exhibits and auditoriums like you do at shows. The coolest part is the 3D sound of conversations as you walk through the floor.
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Yann