This is your SolarWakeup for March 3rd, 2020
Happy Super Tuesday. 14 States are voting today and almost 1,400 delegates are up for grabs. Tomorrow we will have a better view on what the rest of the year looks like. That being said, without doing a play by play on what’s happening with coronavirus, we are bound to get a lot of unknown unknowns coming at us as well.
A Climate Policy Point. Axios is making the point that no matter what happens in November, climate policy is going to be difficult to get through Congress and don’t expect much to happen. Whether something passes, something progressive has legs or if DC will just shut down is a scenario that will play itself out. Also, expect that much of anything that gets passed to get the judicial examination we’ve come to get used to.
The Counterpoint. On the other hand if the White House were to switch sides, would mean a significant boost to markets like solar. For one, the ITC wouldn’t have been removed from the extenders package like it did last year. If Trump has taught us anything, it is the power of the presidential pen especially for items labeled as a national emergency. Under a national emergency, the President would have the ability to shuffle dollars in a way to achieve the goals of the White House. My point is that a democrat in the White House could prove to be a climate policy by itself, without thinking about the broader, but much needed, congressional legislation.
But Wait. As we’re arguing about what happens post-November, there is a climate bill going through the Senate. Nothing entirely aspirational about the bill but it is a climate bill in name. Let’s see if anything more tangible gets attached to the legislation if it sees a floor vote and time in the House.
Impact Of The Day. Sir Christopher Hohn made headlines a few months ago when his hedge fund argued that they would target directors of companies that are not doing right by climate policies. Taking this one step further, Sir Christopher wrote a letter to major banks about their coal financing activities. The letter outlines the poor fiduciary responsibility that the banks are showing but in an interview revealed plans to mount legal challenges against the boards of the banks. These legal challenges could prove to have the type of impact directors view as existential to their decision making and oversight activities.
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Yann
This is your SolarWakeup for March 2nd, 2020
Happy Monday! What news is driving your business this week? As always, you can be in touch with me and the SolarWakeup team by writing us at yann@solarwakeup.com or reaching out on Twitter @yannbrandt or @solarwakeup.
Touching Base On Coronavirus. The virus is now geographically everywhere including most States in the US. Testing is slow to get started so expect that number to jump significantly once the broader reach of testing has occurred. The question is how this will affect everyday life until it is contained, major conferences are already being canceled and companies are talking about remote work for all. The solar industry should prepare for some disruptions as well given that many modules have origins in Asia where factories may be slow to get up and running.
Pennsylvania Solar Development. Development is all about getting the timing right and showing the path to investors for a project that has land rights, interconnection and revenue stream. If the economics work out and risk is properly mitigated, the project can move forward. Pennsylvania is the Texas of the Northeast. Land is plentiful and regulations are more lax to get a project approved for land use. Most importantly, you can install solar about 25% cheaper than New Jersey and still access the PJM market. Stay tuned for more action in PA.
The Nuclear Myth and Challenge. Supporters of nuclear energy tout the carbon free nature and the 24/7 ability to produce electricity. This isn’t wrong but the problem with nuclear is more fundamental. Can someone build a nuclear plant that can be built without priceless subsidies like insurance and waste mitigation and be built on time and on budget without the need for early cost recovery. Put those pieces in place and maybe there is something to talk about.
No More Subsidies. Solar has an internal talking point that rarely makes the headlines, maybe one of the many reporters will come out and steal it from here. All energy sources should lose access to subsidies, all of them. Tax incentives, land use, rate base, fuel cost guarantees, mineral rights, exploration and right of ways to start. Get rid of that and the market will be free to let consumers choose!
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Yann
This is your SolarWakeup for February 28th, 2020
Friday Rundown.Big news on the rundown today, moving parts all over the Country in markets and issues within supply chains and DC. It’s always helpful to read what public companies are saying to get a grip of the market and risks around our market. Now that Sunrun, Enphase, Solaredge, SunPower and Sunnova have reported, take the weekend to read some filings..
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Have A Great Weekend!
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Yann
This is your SolarWakeup for February 27th, 2020
US Cell Manufacturing Ending. The news broke yesterday that Panasonic is planning an exit of their partnership with Tesla’s Buffalo factory which manufactured PV cells. This may cause the end of the domestic manufacturing of solar cells even with the import quota put in place by the 201 tariffs. At the end of the day, it appears that Tesla will meet their promise to New York State in terms of the jobs created and Tesla may hire many of the jobs impacted by the Panasonic exit. The market is creating an obvious reality that domestic assembly of modules could be the future that the solar market seeks, much like the auto sector solar could be big enough that that logistics savings outweigh the domestic cost increases.
Trade Group Splits. BP and other oil majors are conducting formal reviews of their trade group memberships. BP has released their results and is leaving three trade groups that no longer align with their views as they relate to climate. They are also staying in influential groups that hold opposition to climate policies like the Paris Agreement. A process that begins with some victories is not a war on climate change lost. It is another opportunity to educate and create more understanding of what could be if the conglomerates move further towards policies in line with solar. I’d welcome their policy budgets to solar trade groups including their understanding that spending money on policy is not money wasted.
Oil Companies’ Solar Hedge. At the same time that oil companies are reviewing their trade group involvement, they are using their billions of cash and investing it into solar portfolios, pipelines and platforms. Their involvement in the industry could be interesting given their long term view on development and understanding with free markets. Taking a 50 year view on land acquisitions means that an oil major could acquire 1 million acres of land and continuously plan on mining it for solar energy, building plants over time as the revenue streams appear favorable. Moreover, many of the majors have robust trading desks that view the risk related to commodity trading par for the course, different than infrastructure funds that look for physical assets to be locked up for the term.
Voters Wish For Change. One topic where Trump voters disagree with him is his rollback of environmental policies. In States like Florida, voters voice concern about climate change and how it could impact their State and don’t see the positive argument for making these changes. That being said, it doesn’t look like it could switch their vote away from Trump. At the same time, polls are rarely a good argument for not making an argument, we need politicians to make their case to those voters and create a change in their opinion. You lose 100% of the fights you don’t get into so let us get into this one, I think it’s a winner.
Go OG&E. There’s a special place in my heart for Oklahoma Gas and Electric and OG&E going solar is a notch on the belt that I’m hoping to see more of.
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Yann
This is your SolarWakeup for February 26th, 2020
Decentralized Futures. Sunnova published its earnings and Sunrun published a white paper. Both companies show you what the future could look like.
Their Way. On the other hand, look at the disagreement between a major manufacturer that goes solar and the utility that is hoping regulators don’t let them actually turn it on.
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Yann
This is your SolarWakeup for February 25th, 2020
Repower Solar. The existing solar PPAs around the country are on a clear path to be replaced by better technology. Especially the projects that don’t have production caps and high PPA rates. At the same rate, distributed solar will be retrofitted with energy storage at a high rate. Both of these markets will test how the solar channels attempt to create new avenues for growth.
No Money Left. JP Morgan is going to limit its financing activities for some fossil fuel projects including coal plants. As you read the details of the new limits, it seems like more of an underwriting criteria than an environmental statement.
The Missed Military Opportunity. As one of the largest users of energy in the world, the US military has the trifecta of land (buildings), credit rating and energy consumption. This makes the military one of the best places to build renewable energy and work on microgrids on a national defense basis. Unfortunately this market is slower than it should due to politics or perceived political direction.
Faster Permitting. There is no doubt that larger projects need to get their approvals faster. With the flow of NTP (notice to proceed) projects limiting the deployment of capital, faster permitting means more jobs and growth for the industry. Not just large projects but imagine the limitation of approvals for residential projects. Like you I was skeptical about the instant permitting in the US for residential solar but why not? This is a process that could easily be streamlined and lower the cost of rooftop solar by a huge amount.
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Yann
This is your SolarWakeup for February 24th, 2020
Get Ready To Play. I’m a big hockey fan and this weekend an amazing thing happened in the NHL. During every NHL game, there is a guy that sits in the stands. He has received free tickets and is getting a complimentary meal because he is at some level a good hockey goalie. Since NHL teams only travel with two goalies, there is a need for an emergency goalie just in case. Keep in mind, this almost never happens and when it does it rarely means that this person actually plays. On Saturday night, David Ayres, the professional zamboni driver from Toronto, had to suit up and play half an NHL game. The 42 year old has never played against professionals but here he was, ready to play. He got on the ice, let two goals in and then he turned into a brick wall stopping the remaining shots on goal. You never know when you’re getting called up to the big leagues but just like that, it may be your turn to step up.
Solar’s Time To Get In. I tell this long story because it’s our time as an industry to get in the game. The solar industry isn’t getting an explicit call but every signal is coming into our direction. The key is that we are ready to play, at every level, and to do so in a very focused way. 2020 is shaping up to be a political shit-show and as much as I try to keep my views on politics out of this newsletter it will get a bit more complicated.
State Issues, Federal Issues. Here is why politics matter and the election in November matters. When solar advocates and State regulators get on a page to move solar and energy storage forward, a market is created. Until now, there was little to no consideration given to the possibility that FERC would get involved and try to stop the State from moving forward. Solar is in the precarious position where some associations already try to do too much. While the focused groups do well, this is an example of why we also need FERC representation on a full time basis. More importantly, the regulators appointed need to be on our page which means the election matters.
Federal Goals, Local Examples. Senator Sanders floated the idea of turning utilities into public entities in order to achieve faster renewable deployment across the Country. With SMUD’s actions dividing the home solar mandate, TVA’s continued inability to do anything pro-solar and munis across the Country failing to think ahead, I see plenty of examples of why not to pursue that. At the same time, IOUs like PG&E and DTE aren’t the examples to strive after either.
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Yann
This is your SolarWakeup for February 21st, 2020
Stocks Are Hot. Maybe it’s the hot solar market, maybe it’s the fundamentals but either way solar stocks are on fire right now. There is an overlap of the growth story mixed with the maturity of the stock success. Take Solaredge and Enphase as an example. Both executed against their earnings estimates and are building their cash reserves. Solaredge and Enphase sold more than $2billion worth of solar ‘stuff’ last year at margins over 30%. There will be lows that come with these highs but for now, Wall Street is enamored.
The Great Right Woo. One of solar’s talking points that came out after the ITC loss was that the industry created a good foundation of support on the right. The nuance in my opinion is that relationships in DC are fungible, goes with the saying “what have you done for me lately?.” Passing legislation in DC means you have support based on leverage, situational horse trading and grassroots support. So we will have to look at cards coming into 2020, where do we stand on those issues and what are we doing differently than last year? We don’t want to be doing the same thing over and over again and expecting a different result, that would be ….
A Better Way. The ISO-NE capacity auction cleared the largest coal plant for another year, getting another $8million in capacity contracts through to 2024 year. The problem I have with this is that we already know we can do better than this. Sunrun in partnership with National Grid already won a capacity auction based on distributed energy storage resources. Over the next 3 years, solar installers will build a lot of of what we’ve already done.
Debate The Transition. Speaking of transition, there was an interesting moment during the last DNC debate where Mike Bloomberg labeled natural gas as a transition fuel. I know that this label is a spark of argument and I understand the concern. Clearly there has been a move from coal to natural gas as the utilities have rate based an entire fleet exchange. Now it is the job of regulators and advocates to limit the life span of those plants. The 100% goals and RPS plans are clearly an example of that success.
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Yann
This is your SolarWakeup for February 20th, 2020
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Yann
This is your SolarWakeup for February 19th, 2020
Here Is Your Job Report. For the first time in 3 years, solar jobs great by over 5,000 jobs. The jobs continue to be driven by DG market expansion in markets throughout the southeast and all of the new markets that have been popping up. Diversity continues to be an issue in solar and I hope to be able to host some conversations on how we can do a better job being a growing market for everyone. For more info, click today’s top story.
PG&E Earnings. Not so good, losses of over $3billion for the last quarter. Imagine a market where the company doesn’t get a guaranteed return on its monopoly.
Enphase Earnings. After hours yesterday, Enphase delivered results that the market found enticing (the stock was up over 11% in after hours markets). This was driven based on strong margins and market share gains. More write ups to come from analysts.
Don’t Fall For It. SMUD, the Sacramento Utility, is using its PR department to spin some falsehoods about the new home solar requirement in California. They are pushing for a way for community solar to be used instead of rooftop solar which is clearly out of bounds from the legislative effort. Keep your eyes on this.
South Dakota. Solar in South Dakota is going to get a link and a mention on this platform. I love new markets joining our market.
NIPSCO RFP. Indiana can have cheap solar and storage too, check out these results from the recent RFP that shows how close the energy markets are to getting rid of natural gas altogether. Any bid that includes ‘plus fuel and O&M costs’ is going to have a tough time competing against guaranteed pricing.
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Yann