This is your SolarWakeup for August 16th, 2019
A Must Read. A Director of Finance at NRG Energy wrote a contributing article for Utility Dive with the thesis of the impossibility that 100% renewable energy by 2050. I can only assume that the author was looking to show his bosses that he’s going public for the team, a rallying cry of sorts. Unfortunately, this is going to fall flat and make his name known in Princeton in a way that he probably wasn’t hoping for.
What Happened? According to comment I received from an NRG spokesperson late last night, “What is written in the piece is solely the author’s opinion, not NRG’s.” Based on what I write below, I question his overlap with renewable energy projects within NRG because I know that the former renewable energy team at NRG was more than capable. In fact, the solar and wind portfolio was sold for over $1.3billion. I believe the company’s statement because there is no way that the company would make this bold statement, which is against the thesis of most major IPPs, without such a statement coming from the very top.
Checking The Facts. Here are the big statements that are made. First, solar and wind are not ‘controllable’ assets, i.e. they are not dispatchable. Second, wind and solar are too expensive and energy storage still needs to ‘evolve.’ Last, “initial capital cost ($/kWh) of renewables is high.” Starting with the last statement, you can clearly see the missed $/kW knock against renewables by stating kWh but reading past that, the author does say that LCOE of renewables is cheaper than gas. For comparisons and a sample project, the article uses a 500MW solar and 1.2GWh energy storage install for a whopping $1.2billion price tag using $1.50/watt and $400/kWh for storage.
Reality Check. Clearly the facts are wrong and the thesis is wrong. It is absolutely achievable to get to 100% RE by 2050 and I would guess if asked, NRG Energy would agree that it is not only possible but also likely. Solar in Portugal is contracting for under $0.02 per kWh. Solar plus storage is cheaper in almost every RFP in utility procurement in the US. Even a 10MW solar plus storage plan in Minnesota is cheaper than the co-op continuing to buy from their generating partner. Solar is installing for under $0.75/watt in Texas and storage is well below $300/kWh in most instances. It also excludes any price declines that the industry will see over the next 3 decades and ignores the reality that most fossil plants will be at or beyond retirement age by 2050.
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Yann
This is your SolarWakeup for August 15th, 2019
#DefendTheITC
Show Me The Money. If the ITC drops by 4% that means investors will lose more than 5% of their capital stack. In most cases that number could be well over 7%. The same thing will happen again the following year meaning the value chain has to figure out how to find an extra 10%. For homeowners they will lose all of it in just a few years and that’s bad news for everyone.
Network Effect. I hear this often, utility-scale developers don’t think about the residential and DG market as it relates to policy. This is the most dangerous misconception. If homeowners can’t put solar on their home, solar gets the label of not working or being too expensive. If homeowners can’t get solar they are unlikely to call their politicians and ask for solar policies. You won’t get an RPS or grassroots support if you don’t have a viable residential solar market. Every utility scale developer should sponsor a residential solar installer to join SEIA or the State chapter. Like a big brother/big sister relationship that allows both segments to lean on each other.
Energy Fair Panel. Check out the latest SolarWakeup podcast. This was a great discussion between a developer, utility exec and advocate deep in the Wisconsin back country. We kept things flowing and lively. I hope you enjoy and share the episode with your friends.
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Yann
This is your SolarWakeup for August 14th, 2019
The Power Consolidation. Brookfield is said to be interested in acquiring Pattern Energy which signals that institutional investors are looking for more capital deployment opportunities. Look for this to continue.
MIT Finds Value. Putting a price on the societal benefits of renewables has been hard to do but now MIT shows that increasing renewable energy in the communities forgotten by coal means not only job opportunities but also health benefits far surpassing the cost (which has been argued to be exaggerated).
Michigan Deal. Big release of PURPA queue in Michigan. I should have bought some of those pipelines that came across my desk. If you need some capital for your project, I don’t mind brokering those for you :).
Climate Change. Washington Post is out with a major data driven story on climate change. If you can stomach it, it’s worth the read.
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Yann
This is your SolarWakeup for August 13th, 2019
Power To The People. Now that the earnings have come in, it’s a decent prediction to say that residential solar will have its best year ever in 2019 and 2020 shows no signs of slowing down. We get a look at the market through the largest installers, where volume was strong and financial structuring was the hurdle for stock pickers but we also see the overall market strength through the lens at both Enphase and Solaredge. At the end of the day, how many homeowners would choose not having solar if given the opportunity.
Not The Pipeline. The Trump White House is scrubbing some of the regulations in the endangered species act. While some large scale solar developers will silently agree with this move, the regulatory change is meant to help pipeline companies. I wish there was a desire to build HVDC transmission with the same steadfastness as fossil fuel pipelines.
At Work Too. After you power your home with solar, make sure that your company is also getting solar either with onsite generation or through an offsite energy contract. It has never been easier for this to happen and my hope is that the markets adapt to the potential of retail choice by deregulating more markets. The choice creates competition and is helpful to our market. We are close to the future were retail energy providers and solar policy advocates are aligned in policy making.
And At School. There is an interesting question about the value of the Mayor’s commitment to renewable energy. Cities, their school districts and colleges are actually some of the largest users of electricity and more importantly have some of the best credit in the energy market. Cities across America should be opening RFPs to see what is available for them and act as quasi developers. The same is true for schools and universities, use your buying scale and credit to create markets without the need for legislation.
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Yann
This is your SolarWakeup for August 12th, 2019
Save The Planet By Making Money. It’s a fact checking day. We start with Michael Moore’s takedown of the capitalism inside the alternative energy industry. I haven’t seen the movie but I can imagine it involves a bit of wall street’s involvement in project financing, corporations buying little companies and cutting overhead, and other things that go into the world of competing with monopolies in order to save the planet. One of the takeaways is probably going to be that making money shouldn’t be the goal, but if we are going to save the planet then we need financial sustainability.
No Credit, No Future. PG&E said in its latest restructuring plan that it would not touch the existing PPAs on the solar projects. That’s great news and PG&E is spinning it as an act of goodwill. This is an act over survival. If they were to renegotiate those deals, every future solar project would increase in cost, a cost that consumers would have to pay for. PG&E would be hard pressed to explain to legislators that bankruptcy meant a more expensive path to 100% RE.
Post-PPA Assumptions. Newsflash. Every solar project has a healthy post-PPA assumption. Do you really think that those 15 year PURPA deals in North Carolina were homeruns? They were base hits even when you include the standard Ventyx price curve and added some financial engineering to them. Look at the resi lease companies, they all include some layer of lease renewals to the deal. The logic is that the interconnection continues in perpetuity and therefore the deal has long term value as long as you have site control. This isn’t new and it has always been necessary.
Wrong Target. This is how much energy storage is going to have to cost in order to get to 100% RE is the wrong analysis. They key is what adder to a solar or wind PPA do you need to create enough dispatch ability in the local network. You don’t need 24 hours of energy storage, the generating asset can’t keep those batteries full. We are already well below 2 cents per kWh to give a ton of flexibility to operators and soon we’ll be at under a penny per kWh.
Still A Problem. The San Jose CCA signed a massive solar plus storage deal, which is great to see. There is still a massive disconnect which costs time and money between solar projects and off takers. This problem is even bigger in the corporate off take world where they have to find the structure, analyze the price that they can afford and then find the solar project to match. That’s a gap that needs to be fixed.
Presented By Solargraf. Solargraf is the software you need for your residential solar business. From layouts, payback analysis and proposals, Solargraf does it all and best of all the low monthly price includes unlimited projects. Save time and money with Solargraf and with SolarWakeup you can unlock a special offer. Give it a try today at solargraf.com/solarwakeup
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Yann
This is your SolarWakeup for August 9th, 2019
Have a great weekend!
Presented By Solargraf. Solargraf is the software you need for your residential solar business. From layouts, payback analysis and proposals, Solargraf does it all and best of all the low monthly price includes unlimited projects. Save time and money with Solargraf and with SolarWakeup you can unlock a special offer. Give it a try today at solargraf.com/solarwakeup
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Yann
This is your SolarWakeup for August 8th, 2019
Smart Energy Week. We are just over a month out from Smart Energy Week, formerly known as SPI. This year in Salt Lake City and hotel bookings show that some of you plan on attending, would love to know if the location is making you skip this year? You may have been surprised by the change in name, just as I was, given that the companies that make this event possible represent the solar market, many of you either SEIA or state chapter members. The front lobby will be greeting visitors with a hydrogen sector (newsflash: booths still available!) while the main floor is completely booked with solar companies investing to exhibit. Even meeting rooms at the hotels are almost fully booked with solar companies at a whopping $18k for the three days! After the event, about $10million in profits will go to the organization that produces the show, SETS, which will then split it amongst its owners, SEIA and SEPA. Smart Energy Week, relabeling the solar industry, taking our money and then passing it along half of it to a (largely) utility membership. See you there!
The Co-Op Canary. Tri-State is a large entity that many co-ops across the West/Mid-West are members of and buy their energy and transmission through. Tri-State has long required that individual co-ops cap their renewable energy purchasing outside of the Tri-State relationship. Last year, when I spoke to the CEO of Connexus Energy, he told me that they were capped in renewables and could not give its membership more of what they want. Now it looks like Tri-State is realizing that the future requires that it changes and with that a large number of co-ops may become possible markets for solar and storage developers.
Resi Cost Of Capital. During yesterday’s earnings call by Sunrun, CEO Lynn Jurich highlighted the company’s achievement of the lowest cost of capital in company history. At the same time, a day before earnings, Vivint Solar enters into a $325million debt facility. Mosaic, the residential loan provider, also announced a relationship with SunTrust (soon to be BB&T) to expand their offering.
Roll The Eyes. The future of solar in Virginia is bright led by the growth of residential solar and corporate purchasing of solar from large solar farms. Dominion has a strong presence at the Capitol and is hyping its new energy storage plan. The plan is to build 4 pilot projects and study them for 5 years. Pardon me while I yawn at the idea that Virginia should study batteries for 5 years.
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Yann
This is your SolarWakeup for August 7th, 2019
Farmers For Solar. With the farmers across America getting hurt by the trade war even worse than the solar community, now is the time to help them farm a new crop, solar panels. This is obviously a more nuanced statement but solar developers and farmers have had a bond for over a decade as the two sectors align perfectly. Going back to the last ITC extension, California farmers played a central role to explain the value of solar to Kevin McCarthy and helped create a path to the extension. This time we need local political influence from the farming community to work with solar advocates to open up new markets. Across the midwest, there are viable solar markets were it not for bad local policies that monopolize the opportunity for the powerful corporations.
Political Statements. I’d like to see a Senate campaign make a case to lure independents and conservatives with solar. In Kentucky for example, why not showcase the success that solar has had in Texas or South Carolina and ask why solar isn’t prevalent in Kentucky creating job opportunities especially for those harmed by coal markets imploding. The ad campaign could even use the words of conservatives, like Rep Tom Massie (known for his attack on John Kerry’s Poli Sci degree), who is both a solar and EV owner.
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Yann
This is your SolarWakeup for August 6th, 2019
Mayors Of America, A New Pod. I had the pleasure of interviewing Mayor Rhodes-Conway of Madison, Wisconsin a few weeks ago. If I could interview every mayor in America, I would and this interview explains it. First, we get through 10x the content in 16 minutes and the Mayor knew what she wanted which was more solar. Give it a listen and leave a 5-star review!
Losing Solar’s Gains. I don’t know if anyone is winning the trade war but apparently, consumers, farmers and solar stock investors are going to be hoping for it to end soon. The treasury department labelled China a currency manipulator yesterday and the market didn’t like that, erasing some of the gains we talked about last week.
Rooftop Solar Is King. I wish we could call for solar on every house in America and more importantly find a way to put it on every warehouse while we’re at it. The benefits of distributed solar are incredible but it’s still a way too expensive to get it there. Not the hardware costs but the sales, marketing and financing costs are still way too high and we need a big initiative to get us there.
SC Is Key. The growth of solar in South Carolina is an important evolution for our industry. Combined with Florida, Texas and Georgia, the southeast could make a statement about what solar stands for politically. Solar stands with everyday, hard-working Americans that just want to generate their own electricity and not rely on the corporate monopoly anymore. That message resonates in South Carolina and I hope the growth ahead will get us into more limelight in the future.
Presented By Solargraf. Solargraf is the software you need for your residential solar business. From layouts, payback analysis and proposals, Solargraf does it all and best of all the low monthly price includes unlimited projects. Save time and money with Solargraf and with SolarWakeup you can unlock a special offer. Give it a try today at solargraf.com/solarwakeup
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This is your SolarWakeup for August 5th, 2019
Solar In Coal Country. Coal is dying and that’s good for the environment but it’s bad for some hard-working Americans. What would it take to get solar going in Kentucky and West Virginia?
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Yann