This is your SolarWakeup for April 28th, 2020
Talking Solar(Wakeup) Live. SolarWakeup Live! The podcast is back. A returning guest in Tom Matzzie joins me for the first episode of the relaunch. This is a straight to tape conversation about solar, power markets and politics. Tom plays in all three sandboxes and he’s really good at them. He points to the erosion in commercial power demand and the nuances of those contracts, definitely something to watch. Please find the podcast on Apple Podcast and subscribe and rate 5 stars. If you have interesting guests that want to talk solar, regulations, finance and climate tech, send them my way.
The Resi Market Fragmentation. With the Q1 PV leaderboard out in public, manufacturers are taking their moment in the sun. This time Q Cells took that top spot in resi modules with market share in the 20’s. The fragmentation in every other segment is also very real except for the duopoly in the inverter market. Software is a segment in the market that has attracted enormous investment and almost every installer uses something but the interesting thing is that none of the platforms are getting any real traction taking share. In the latest poll, we saw over 10 software platforms mentioned for use by installers. Pricing for software is as different as it is in modules. In the ongoing solar module index, the above mentioned Q Cells modules have a price range of 15% between installers for the same module. The are 3 spots left in the initial batch for residential installers looking to learn more about how their module pricing matches up.
Buy The Dip. Large investors in solar assets are frothing at the mouth for the buying opportunity which may have already come and gone. The same is true for hedge funds buying stocks and private equity firms looking to buy companies. Prices are going to be much more attractive in a space that many passed on because they weren’t sure it was going to be sustainable. Watching the solar industry’s resilience now makes everyone look at the fundamental strength of the market and consumer. Solar has a product market fit while also achieving product market cost fit and that’s the trifecta. Look at my point above about software. The segment is completely fragmented but new entrants into the US space that have achieved great scale overseas (and lessons learned) like OpenSolar are providing user friendly and robust software at no cost to solar installers. Their CEO, Birchy, is a good friend of mine and he knows what it takes to build the business as a founder and CEO of Sungevity. Hard to imagine that installers aren’t going to give the free product a few looks.
My Bullish Take. I am increasingly optimistic that the consumer behavior is going to get back to where we were with a potential increase in adoption with a definite increase of interest in solar. Putting solar on your house fits with the mold of being stuck in the home more than before. My bullishness goes further than that in three parts. First, the solar salesforce is going to be able to meet with more customers and be geographically separated from the company. This means you can live in Iowa and sell solar in California while also meeting with two or three times as many customers in any given day. This will lower acquisition costs in a big way. Second, building departments aren’t going to be in person for the foreseeable future and likely never go back to the slower way of doing things. This means that the speed from sale to installation could be cut in half or even better improving cash flows and standardization in the industry. Lastly, remote inspections are likely to gain traction across the board. An inspector goes to the site to ‘see’ what is done. For solar, a geotagged video with accompanying images can let the inspector do this much faster without the cost of driving. I’m hopeful that the days of waiting all day for the inspector could be gone for good.
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Yann
This is your SolarWakeup for April 27th, 2020
Sales And Leads. In last week’s survey we saw what the future in solar may look like. Sales were down from pre-covid levels by 39% holding flat week over week remaining an improvement from the bottom 3 weeks ago. On the other hand, lead volume is up 18%. We are starting to see companies pivoting into the new normal and some executing better than others, some investing into the transition while others are waiting. Close rate will likely drop across the board but your sales force will be able to meet with double or triple the customers than before, more to come on this.
A Growing Backlog. With sales continuing and installations slowed or stopped, there was a concern in my mind that the gap in solar would prolong beyond shelter in place orders. This would happen if companies built out their pre-covid backlog and didn’t add new projects during the current worst times. Good news, 45% of residential installers report that their backlog is growing. This is bad for current revenues but creates an optimistic outlook as business resumes in some fashion.
Look At Building Departments. The issue of getting and closing permits is now split into two concerns for me. Over 50% of building departments are presenting options for digital permitting, some even doing instant permitting. This is a great sign and potentially permanent improvement to make solar installation processes more efficient. On the other hand less than 10% of the AHJs are doing remote or video inspections. I am being told by those that are working on this with inspectors that we can foresee many AHJs moving into this direction soon. We will track this again next week when the bi-weekly survey reopens.
Disconnected Charging. Congrats to FreeWire for raising $25million of new capital. Not a great time to do that but their business is fascinating to me.
How To Run PG&E. PG&E is starting a search for a new CEO as the bankruptcy comes to a close. The business is still complicated and very regulated, with oversight by courts and state regulators in partnership with legislators, employees and unions. The new CEO should have the resume strong in power generation especially as it pertains to competitive power markets. At the same time the values of the new executive team should align with those of the consumers and legislated goals set forth by the State of California. Getting to 100% clean energy shouldn’t just be a task for the CEO, it should be a value that they also believe in.
News And Happenings At Wakeup HQ. Last week, the SolarWakeup podcast kicked back off with fantastic interviews with the CEOs of CleanChoice Energy and Palmetto Clean Technology. In both episodes, we talk about their business and how the new norms are changing market conditions and how they are adjusting. This summer we will also be launching some new products that go to the core of empower solar companies across the ecosystem. Much more to come on this…
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Yann
This is your SolarWakeup for April 24th, 2020
Stay Tuned. For reasons outside of your control, there will not be a column today. Stay tuned for the survey results and a new survey link on Monday. Good news, things are improving.
Stay Safe. I hope you make the best of the situation and by all means use the sunshine to absorb some vitamin D and create some electricity. Thanks to your advocacy friends you can even inject excess electricity into the grid. Please don’t attempt other uses of sunshine however.
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Yann
This is your SolarWakeup for April 23rd, 2020
Creating Shared Experiences. Solar advocate, Alex McDonough, joins in an editorial about the need to fight climate change. Flattening the curve is a term that 6 weeks ago meant nothing to most and living the life of a less habitable planet was a figment of an unreachable imagination. Now that our living situation has surpassed the wildest Hollywood script, can we learn and prevent the climate crisis collision course we are steaming towards.
UN Has A Thought. On the 50th anniversary of Earth Day the UN is calling for an economic recovery rooted in environmental benefits. Similarly to the statement by Tom Steyer I covered yesterday, the opportunity to build new jobs in building an expanded climate positive economy.
Let’s Build, Smartly. Marc Andreesen has been quieter when it comes to his digital footprint. As the author of ‘Software will eat the world’ and perhaps the father of tweet threads, when Marc writes it gets talked about. In his article ‘It’s time to build’ he makes the case that we do too little thinking and even less doing when it comes to the big issues facing our Country. I agree with his general thesis and note that the reason may not be doing these things is that capitalism doesn’t reward that kind of execution.
Take The Helm. “The CPUC will closely monitor the selection of PG&E’s next CEO” is the comment that caps the news that PG&E’s Bill Johnson, formerly of the TVA as the highest paid federal employee and formerly of Progress Energy Florida, is leaving this summer. I definitely have some hopes and recommendations for PG&E’s shareholders on how to maximize their value. Here’s the thing, Nextera beat expectations and is going to invest billions on solar and storage and their Governor doesn’t even really care. In California, Governor Newsom not only cares, the legislature has passed policy saying that the goal is 100% renewable energy. Imagine being able to do good, follow policy and maximize shareholder value at the same time.
What Is Climate tech? Alternative energy, renewable energy, clean tech and now climate tech. What does that mean and “what’s in a name? That which we call a rose By any other name would smell as sweet.” That’s the real trick here, I’ve been in solar for 15 years and some of you much longer and it’s always been a market that generally moves up and to the right even as punches and bruises happen along the way. Climate tech has the ability to make the smell a rose because when it comes to free market capitalism, the hope for enormous return requires sentiment on our side. Climate tech is the name today for what we already know but this time everyone wants to get on the train.
Get Involved. Yesterday, many of you started to get involved and some reached out to learn more. The solar module index is exactly what the name says, you (the installer) will share confidentially information about what you’re paying and in return get to see (without names) what everyone else is. It’s like buying an airline ticket online, you have information to make better decisions. I expect that the free slots in the index will run out today so if you’re interested, head to the survey or get more info on the website.
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Yann
This is your SolarWakeup for April 22nd, 2020
Product Pricing Volatility. Solar products, especially modules, are constantly changing prices. In a global market, the price being quoted to installers and developers is only good for a very short period of time. This can be harmful when they are going up but can also cost companies tens of thousands of dollars if pricing is dropping like it is now. This is especially true when volumes are at the residential scale. Over the past week, you may have seen the link at the bottom of the newsletter about the solar module index. Even at this early level of participation, I can assure you that the range in pricing for the same module is double digits and volume is not as big of a factor as you would assume. I invite residential installers to join the index so that you can learn what others are paying for the modules you are buying as well. During these uncertain times, you can see that the headlines are tracking pricing volatility as well, make sure you benefit.
California’s Opportunity. Governor Newsom has tapped Tom Steyer to co-chair the task force looking at reopening the economy in California. Part of the work is to understand where the growth can be long term while also understanding the short term impacts to industries like oil. Part of what I’ll be looking for is how California creates a roadmap for the rest of the Country on issues in solar. For example, there appears to be widespread understanding on permitting and inspections in an environment of social distancing. Agencies have released information on how remote inspections occur through continuous video and geotagged photos. If supported legislatively, you could see a solar industry no longer having to wait a day for an inspector to show up and you could see services where homeowners can hire solar experts to review project quality remotely. Better solar, done faster and more cost effectively for consumers. Count me in. The data in the survey this week also highlights the building departments adaptations. I’ll be discussing them at 10am EST this morning with Roth Capital.
Clear Skies, More Sun. Production data from solar projects around the world show higher output with cleaner skies. Less pollution means higher capacity factors for renewable energy, one more reason to make the transition go faster.
Storage Attachment Rises (In Value). One of the questions I asked you this week was how storage is playing in the recovery of solar post-pandemic. We already see very high rates of attachment in California and nearly 100% in Hawaii but the rates of storage utilization is also rising in places like Florida and the northeast. On the other hand, the value of storage in solar is also going up. Here is an interesting view of what that looks like when you dig into the numbers.
Liquidity And Comfort. There are two capital markets deals that caught my eye this week. Mosaic, the residential solar loan company, has expanded its warehouse facility by $50mm with additional length on their term. This should allow the company to go longer between securitizations or moving the loans in larger tranches saving on transaction cost amongst other volume based benefits. Hannon Armstrong was also able to raise new debt for their capital pool at strong rates, in fact able to upside their raise from their anticipated $350mm to $400mm. One concern I had coming into the pandemic was the loss of credit markets a la 2009 but it appears thus far that capital and loans will remain in the market with little change.
DC Headlines. Stimulus package #4 has been replaced with a mini deal of $484billion to refill the PPP funds. For the 20% of you that have not received PPP funds due to fund depletion should be able to benefit from this move. The larger stimulus package now loses some time sensitivity that was politically unappealing given the PPP issue now starts up for debate between Pelosi, Trump and McConnell. Package #4 will be most interesting for solar if oil bailout funds are argued for, that is the opportunity for our market to get stimulus as well. Note that the jobs lost in oil are in line with our losses at this point in the crisis, the need is similar our sector with a much higher upside potential to get folks back to work going forward.
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Yann
This is your SolarWakeup for April 21st, 2020
The Positive Outlook. I am pleased to see some positive signs that the solar industry is adapting to the new normal, some of which could make the industry more resilient in the future. Don’t get me wrong, the work ahead is going to be grueling and long but the work has begun. In this week’s survey I ask where the leads are compared to before the pandemic because word has it that leads are up, including based on recent polling done by LG Solar. Participate in this week’s survey so that we get a clear view of the market and can act accordingly. More on the positive future outlook on building departments coming this week.
What Are Your Questions? Wednesday, bright and early, you can join me and other residential solar execs as we discuss the state of the market. This is the third such call which covers distribution, loans and installations. I’ll also be going over the results from this week’s survey. Like all the cool cats and kittens today, you can join the zoom call by registering here.
SunPower Idles Plants. In an already challenging year for SunPower, they have to contend with the pandemic while still carrying the manufacturing capacity. This is the downside of controlling both the supply and demand of your business since the SunPower downstream business makes up most of the demand for the factories. That being said, the dealer network appears to be building new momentum as sales are picking up for the downstream side of the business. What this means for the split is yet to be determined.
Options Fireworks. The oil markets made for great television yesterday as expiring May crude contracts were left without anyone to actually use the oil. Without a place to put the oil, those futures (which are current) went negative, i.e. whoever took the oil got paid to take it. I enjoy trading options and the upside of those is that worst case scenario, they go to zero. In physical commodities, traders now learned that negative pricing is possible.
Not NEM, Just Federalism. Last week I wrote about the FERC filing asking for energy sale to be considered a federal issue. Here’s the thing though, this has very little to do with net metering regardless of intention. This is a broader statement that most of what State regulators oversee is actually a federal issue. With this case, FERC is being asked to render utility commissions meaningless for pretty much any issue (maybe a good thing I didn’t take the Florida PSC job). I’ll be looking for some regulators to interview on the topic to see how they feel about this.
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Yann
This is your SolarWakeup for April 20th, 2020
State Of The Solar Market. This Wednesday at 10am EST, I’ll be going over the current state of the market. The discussion will highlight the results from this week’s survey which you can participate in by clicking here, it takes a few minutes and is completely confidential. Register for the discussion here. And here is the survey link, please feel free to forward it to partners and colleagues.
Jobs Are Going To Be Lost. It’s hard to gloss over this in a headline or a brief paragraph because there is a real impact on the livelihoods of many in our industry. The pandemic crisis hit the industry like a brick wall at a terrible moment and is beating us up on both ends of the spectrum. Every company in the market was planning on growth this year, investing in it and in some instances stretching themselves to take advantage. Now the industry has to deal with the inability to meet the customers in person and building departments unable to provide permits and inspect projects. Summary, the industry has lower revenues and can’t collect on the backlog. What’s coming next is a potential cash crunch and consumers that can’t take advantage of the tax credit because 2020 liabilities are going to be down significantly.
Empty Offices. On Friday I joined Tigercomm in a panel discussion with other clean tech journalists and editors. In that discussion I posed the question I want to ask you. Isn’t it hard to imagine that the commercial office use will be the same a year from now than it was 3 months ago? What’s going to happen with the energy consumption in buildings and how is that consumption going to change the load in the residential sector with people staying home?
Hearing From Public Companies. Over the next month or so, we will hear from many public companies when they hold their earnings call. This is an ideal time to hear how they are impacted by the pandemic and how they plan on working with their customers to get through this. This is a topic I am interested in hearing more about, many of these companies will be able to make it through the moment but if their customers or customer’s customers can’t then they will have a market problem.
The Installer Base. One of the reasons I started the survey was to make sure I understand what installers are going through. This gives me data and perspective when I speak to suppliers and investors in the space about what you need to get help with especially through this moment. Installers have felt the margin squeeze even as the market was growing leaps and bounds. Competition is tough and you’re all in this fight in a way that feels lonely. You don’t have the information and leverage you need to make your point heard and I hope to play a role to help you do just that. The survey is step one. For 8 years I’ve published this newsletter and today more than ever I understand how I can help the market most, by helping the installers. If there is particular idea you need help with hit reply to this email or go to the survey.
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Yann
This is your SolarWakeup for April 17th, 2020
Survey Is Back. This week brought us movement on three topics that allows this survey to give better insights. Companies know whether they are receiving PPP funds from the first tranche, how building departments are coping and how sales and leads are shaping up. Submit your input in this 4 minute survey available here. Please forward it to your trade association and other solar colleagues.
EEI Comes In For Strike. A small and unknown group called New England Ratepayers Association has filed a rather advanced docket with FERC. While the group spends about $40k per year on legal matters, this filing, seemingly prepared by an EEI associated lawyer, is seeking to put net metering under FERC’s jurisdiction. You read that right, in the middle of a pandemic, utilities are seeking to federalize state energy affairs. Harvard’s Ari Peskoe explains the filing in this twitter stream which is summarized in the article in the rundown.
FERC Says No Thanks. In case you were wondering how FERC was feeling with regard to renewable energy measures, the controversial MOPR was denied further hearings. While New Jersey is threatening to leave PJM due to the policy, renewable energy advocates had asked for additional opportunity to argue against the ruling but keeping coal plants operational won out. FERC could view this as a way to push their will on an issue largely considered out of their jurisdiction. I’d like to hear from SEPAs board, many of whom are EEI members how they feel about this filing and how it could affect a slew of other DER topics the group claims to support.
PG&E Sees No Pandemic. Many of San Francisco’s commuters live in lovely Marin County and while they are stuck at home due to stay at home orders, PG&E continues their network upgrade work. Imagine being stuck at home, working remote and losing power multiple times because PG&E can’t get their act together. At this point PG&E should give up residential service and pay for everyone to get solar with storage.
Talking Solar. Join me Wednesday, April 22nd at 10am EST, I will be speaking with Phil Shen from Roth Capital to update on the current trends in residential solar. You can register for that call here and you should join Phil’s mailing list by emailing him at pshen@roth.com. We’ll be discussing the results of the survey which opens today.
Solar Stimulus $0 Year 1 PPA. My friends over at Sustainable Capital Finance are offering an extremely beneficial financing option for businesses & non-profits looking to adopt solar. Their Solar Stimulus PPA offers a $0 solar energy spend for the first year of operation, helping organizations redirect those dollars towards payroll and other critical operating expenses. If you are a solar installer or developer whose potential clients have voiced concerns over COVID-19 in relation to adopting solar, this is a great solution for you.
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Yann
This is your SolarWakeup for April 16th, 2020
ACORE Takes Charge. Finally someone in DC took charge on the issue pressing solar companies and that’s that reality that the clean energy economy is being hurt by the pandemic. In a one-two punch, solar lost the ability to sell door to door and in person consultations as well as closing building departments for permits and inspections. ACORE released the report that highlighted the numbers and the press coverage reflects that.
Evolving SMART. MA has released the next segment of SMART which received praise from advocacy groups with the message from Vote Solar that more can and should be done.
Get Involved, Exhibit A. You don’t have to be a regulatory lawyer or a large corporation to explain common sense policies that benefit consumers to the public service commission. Any single person or company can intervene in a docket and make an argument to the commission when a utility files something that just doesn’t make sense. Congrats to Scenic Hill Solar for making a clear case in Arkansas that the utility is not helping the consumer with their ideas.
Inside Texas Oil. A rare view into the Texas oil industry as it cuts product for the first time in half a decade. I believe it is the White House Director of the National Economic Council that says “Free market capitalism is the best path to prosperity” but I guess producing at a cost higher than market price doesn’t really work. Who said that the free markets should actually help consumers? Good thing that the solar industry is crushing it in Texas so that consumers can lock in that sunny solar price.
Residential Solar Resilience. First, community solar and residential solar are complementary. Anyone that can put solar on their roof likely wants to and then supplements with community solar. If you can’t then just sign up for a community contract. Here’s my thesis for residential solar in the time of COVID, take it for what it’s worth. While residential solar is completely locked out of in person sales, over 75% of sales come from referrals. Lead generation appears to be holding at normal levels which means that installers need to learn to sell remote and they are. It also helps that selling remote is the only way for a consumer to buy, which means there is no objection to the lack of personal contact. During this transition, some companies will stumble but as a result acquisition costs will come down in the long run. Paired with instant/digital permitting, which could become a permanent feature, you remove the two biggest obstacles to acquiring solar. The current reductions in forecast have nothing to do with solar, they are based on the expectation of economic malaise and while some consumers will struggle to buy now, others will seek ways to lower operating expenses and go solar.
Talking Solar. This Friday at 2pm EST you can join in on a discussion I’ll be attending with other clean tech news outlets, register here. And on Wednesday, April 22nd at 10am EST, I will be speaking with Phil Shen from Roth Capital to update on the current trends in residential solar. You can register for that call here and you should join Phil’s mailing list by emailing him at pshen@roth.com.
Solar Stimulus $0 Year 1 PPA. My friends over at Sustainable Capital Finance are offering an extremely beneficial financing option for businesses & non-profits looking to adopt solar. Their Solar Stimulus PPA offers a $0 solar energy spend for the first year of operation, helping organizations redirect those dollars towards payroll and other critical operating expenses. If you are a solar installer or developer whose potential clients have voiced concerns over COVID-19 in relation to adopting solar, this is a great solution for you.
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Yann
This is your SolarWakeup for April 15th, 2020
Bernie, Obama and Biden. Within the last week Bernie Sanders suspended his campaign and endorsed Joe Biden. Obama joined with his endorsement yesterday as well. Part of the Sanders endorsement comes with moving the Biden campaign into a more progressive platform including on climate. I look forward to seeing policies like Jay Inslee’s climate plan make an appearance but it is important to remember that the election between Biden and Trump will probably not have much policy depth.
Steyer Weighs In. The former presidential candidate writes in an op-ed that DC shouldn’t keep throwing good money after bad when it comes to oil infrastructure (my summary). I assume he is referring to a possible deal around infrastructure that bails out bankrupt oil companies. Reality in this scenario is not whether one gets the other, its whether both or neither happen.
Solar Pennsylvania. Pennsylvania solar development is the next frontier, like Texas before it was. Yesterday we saw an announcement from UPenn that it signed a 220MW solar deal. The School District of Philadelphia is hiring a new Solar Energy Teacher for Pennsylvania's first Solar Energy Career and Technical Education program. The Bright Solar Futures vocational training program is the first of its kind in the nation and will kick off at Frankford High School this fall. The job post can be found here.
Talking Solar. This Friday at 2pm EST you can join in on a discussion I’ll be attending with other clean tech news outlets, register here. And on April 22nd at 10am EST, I will be speaking with Phil Shen from Roth Capital to update on the current trends in residential solar. You can register for that call here and you should join Phil’s mailing list by emailing him at pshen@roth.com.
Solar Stimulus $0 Year 1 PPA. My friends over at Sustainable Capital Finance are offering an extremely beneficial financing option for businesses & non-profits looking to adopt solar. Their Solar Stimulus PPA offers a $0 solar energy spend for the first year of operation, helping organizations redirect those dollars towards payroll and other critical operating expenses. If you are a solar installer or developer whose potential clients have voiced concerns over COVID-19 in relation to adopting solar, this is a great solution for you.
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Yann