E030: GE Invests In Renewable Energy To Grow Its Power Business With Daniel Hullah of GE Ventures

Who: Daniel Hullah, Managing Director at GE Ventures, focused on investing in the energy space. With a Phd in in Chemistry, Daniel has a unique view of clean energy in addition to 10 years of clean energy venture capital experience. What: How does the grid of the future evolve from central, fossil fuel power plants? We have this discussion during our live recording at SolarWakeup Live! Boston. With several investments in energy storage and grid technologies, Daniel’s looking to grow GE’s footprint in the energy space as it continues to evolve. Your Takeaway: GE is in the middle of a … Read More →

This is your SolarWakeup for December 18th, 2017

Tax reform isn’t passed yet but the language is basically done. As I tweeted yesterday (follow me @YannBrandt) there is a solar victory lap happening right now. It’s not deserved given what we are up against and while I and most in solar expect SEIA to be in charge of this, I also ask you to look in the mirror. We are all a bit apathetic, less so recently, but unless the job is to do policy, few other solar folks get involved. Maybe these are tough words, but we all need to do a bit more, myself included. In the meantime, stay up to date by subscribing to EnergyWakeup and make sure your colleagues are subscribed to this newsletter. On to the news.

10/10/10. Before we get to the news, start thinking about what your company is doing for policy. I agree that it needs to be easier for you, easier to give what is needed, easier to make the calls you want to make and easier to meet with your legislator. That’s on us - the people that think about this full time. Your job is to execute on the tasks that keep your company growing and profitable. Policy isn’t just about creating a market, its about eliminating the market delays/uncertainties and reducing margin pressures enacted by incumbent utilities. In the new year, I and some other folks will be rolling out the 10/10/10 plan and expect your participation. 10 hours (at least) of policy outreach per employee, $0.10 an hour ($4 per week) per employee and $10/kW going towards a solar policy PAC. A 2MW per year company with 10 employees  should be able to provide 100 hours of policy outreach and $22,208 in policy budget. If your company can’t, then I assure you that policy isn’t your company’s biggest problem. More to come - just remember 10/10/10.

BEAT It Back. As we outlined in our tax reform discussion last week, BEAT had to be in the bill to stop offshore capital from staying offshore but it had an unintended consequence in punishing tax equity investors. The pushback shows the power of large scale renewables, looking at Cornyn (TX) and Grassley (IA) comments and groups like NextEra that really focus on the multinational investors. It’s a win but don’t get too excited because a good chance that this didn’t impact you as much as…

The Corporate Rate. Have you plugged 21% into your model yet? Depreciation gets hit and you started to think about showing an after tax IRR, not a pre-tax after tax benefits IRR like we’ve done for years. In other words, we are selling tax exempt muni bonds now. The cash flow also regains some value (crazy statement). But most of all, about 40% of the tax equity market is gone because the total liability is going from 35% to 21% (broad statement) and your cash customers owe less to the IRS. I’ll be looking into how companies use the lower rate for things like inverted leases to shield EPC revenues in some cost-basis appraisal situations. I do expect to see more foreign capital flowing into projects with this tax reform given the lower taxation on the cash flows and low cash yields in other economies.

White House Docs. Someone in the White House leaked this document to the reporters at Politico and it doesn’t read well for solar with regard to the 201 case. It could be a way to signal the parties to find a way to a settlement and it could be a test to see if the public has a backlash to the idea of solar tariffs. You should be calling your local TV news and telling them to report on this because I doubt this bubbles anywhere near the other things being talked about on national TV and that’s bad for solar. The 201 process and how it has evolved shows how much more influence our industry needs to get.

BP Goes Solar. BP took 10% of its last quarters profits and bought 43% of one of Europe’s largest developers. If your market is putting fuel into transportation and transportation is becoming electrified, you better think of a way to defend yourself. This isn’t the first oil company in solar and it won’t be the last. Expect more.

Presented By GAF. With our relentless pursuit of quality, combined with industry-leading expertise, and proprietary commercial financing initiatives, GAF is working to make solar part of every roof. GAF has also launched the innovative DecoTech™ roof integrated solar system for every residential home and will continue to find solutions for the solar industry.

News

Have a great day!
Yann

This is your SolarWakeup for December 15th, 2017

Getting It First. Covering news is easy, finding the information you need is hard. That’s what I try to get with this platform and why I focus my time on finding interesting information from leaders across the solar space to bring you. This week you heard a senior executive from Engie tell you that the future is without coal or gas power plants. Take that piece of information and wrap it in the context of the second story today and it gives you a better view of what is actually happening. The full recording of the conversation with Thierry from Engie is now online and in your favorite podcast app. CPUC Gets It. In a filing from the regulatory body, CPUC wants PGE to focus on energy storage to replace needed power. This is a move into the clean energy system but it also represents that long term nature of ratepayers having to pay for gas assets over the next 30 or 40 years. Gas plants are going away, not just peaker plants but also those that are scheduled to be built in the upcoming years.

News

Have a great day!
Yann

E029: Engie Executive Sees The End Of Coal, Gas and Nuclear Power – Interview with Thierry Lepercq

Who: Thierry Lepercq, EVP of Research, Development and Innovation at Engie. Member of the executive committee. Engie is a global energy company with $78billion in revenues and 150,000 employees. What: A discussion about the future of energy regarding the use of traditional power plants, transition to renewables and investing in innovative companies around the world. Impact to You: Engie has sold its US portfolio of coal and gas power plants. It closed a 45 year old coal plant in Australia and sees mobility as a massive impact to the energy system. If they view the future to be without central … Read More →

This is your SolarWakeup for December 14th, 2017

End of Power Plants. In an exclusive interview with SolarWakeup, Engie’s EVP of Innovation sat down with me and told me that coal, gas and nuclear plants are going away - This is a given. Engie is a global company with $78billion in revenue and Thierry Lepercq is a member of the executive committee that drives strategy for the entire business. In some ways, Engie has executed on the vision David Crane had for NRG and sold all of their coal and gas plants in the US. Engie also invested in several efficiency and storage companies. When a company like Engie says that the end of power plants is near, the pieces start to align with the capital and views from the investment community. Our industry should listen and think of how solar plays in that new future. These are big news - so big we even wrote an article about it.

Engie’s Future. In our discussion about the future, the intersection of mobility and energy. I asked him if power companies would get into transportation the same way that transportation companies have gotten into the energy business. We also discuss how the business future of energy storage plays into the power markets and how regulators should align themselves with the right policies. The full interview will be released on solarwakeup.com this week.

Alabama Politics On Energy. Interesting reporting on Senator Doug Jones’s positions on clean air and clean energy. I get that he’s aligned with our industry when it comes to those policies but not a single vote came to him because of that.

Fixing The Tax Bill. News out of DC appear to be aligning with the conversation we had at SolarWakeup Live! DC. The corporate AMT is out and the rate is going up to 21%. BEAT is still in but John Cornyn is on the record saying they want to figure out a way to fix it. The rate is really the biggest impact to the solar industry. Lower rates means less demand for tax credits and less value for depreciation and interest deductions. On the other hand it increases after tax returns which could drive more foreign money into the market. We will see what capital stack looks like at the 21% rate.

Power Of Gas. Normally, companies have to pay big bucks to have their VPs fly to another country and sell their products to a ministerial audience. In the case of the LNG industry, they send over the EPA administrator who should probably have gone to Germany instead of Morocco. Regardless, it’s strange and abnormal for this to happen but I guess nobody is surprised.

News

Have a great day!
Yann

Engie Executive Sees The End Of Coal, Gas and Nuclear Power Plants

Who: Thierry Lepercq, EVP of Research, Development and Innovation at Engie. Member of the executive committee. Engie is a global energy company with $78billion in revenues and 150,000 employees. What: A discussion about the future of energy regarding the use of traditional power plants, transition to renewables and investing in innovative companies around the world. Impact to You: Engie has sold its US portfolio of coal and gas power plants. It closed a 45 year old coal plant in Australia and sees mobility as a massive impact to the energy system. If they view the future to be without central … Read More →

This is your SolarWakeup for December 13th, 2017

Pruitt Is Lobbying. Of all of the countries that can benefit from natural gas exports from the United States, Pruitt picked the one place that is the Saudi Arabia of solar and wind. Morocco has insane solar and wind resources as one of the few arabic countries without oil reserves. Natural gas is a bridge to nowhere in Morocco and I doubt any power company would invest a dollar in non-solar or wind generation in that Country.

Puerto Rico Report. Interesting how this came about but a group of power folks wrote a 63 page report to the Governors of Puerto Rico and New York on how to rebuild the grid in Puerto Rico post Irma. I interviewed the Congresswoman of Puerto Rico last week and I’ve tried to do business in Puerto Rico. This report is a little more than dressing on the real issue. Everyone knows how to rebuild and it doesn’t cost 18billion. It requires the PREPA balance sheet to be fixed and the private investment will come. Donating solar to a homeowner with a 500 FICO score doesn’t do anything to help that homeowner. PREPA needs to be a creditworthy counterparts, until then nothing sustainable happens. The PREPA advisory council also seems like no more than bureaucracy.

Get Out Of The Way. Governor LePage is annoying and solar folks have had enough. This case is going to the courts and hopefully will get fixed.

Reclaiming Coal. I’ve been involved in a few solar plants on retired coal plants and have been fascinated with the shift it represents. It’s been a tough market to focus on because the ground is tough to connect to but with floatovoltaics, flooded coal mines could present a great second life.

Attack Is Coming. I had not seen Tom Pyle’s name quoted since his involvement with the EPA transition. He’s been actively trolling folks on Twitter and now an oped on The Hill website. This is in relation to tax reform and I stay on the record stating that solar and wind would gladly compete without tax credits if all other energy credits also disappear - I say this with apologies to my tax equity friends. Have no fear because other segments would never let go of their tax benefits and they don’t want to have this argument and are glad to see solar and wind retain their tax credits.

News

Have a great day!
Yann

This is your SolarWakeup for December 12th, 2017

Short update this morning as my California jet lag and upcoming interviews are messing with me. Make sure to catch up on previous podcasts and my tax reform conversation, there are a bunch of conversations that will drop over the next week that will give you something to listen to and learn from over the holidays.

Going Private. Canadian Solar got an offer from its CEO. Part of the strategy may be to get off the New York market and go public in the Chinese stock exchange instead. This isn’t the first company to go this route.

Deploying Capital. Big numbers coming from EDF on deploying capital to solar projects. The headline is nice but let’s be real, there is unlimited amount of money available for solar projects at the yields that projects currently go to market. However, it is always nice to see these types of announcements.

Business Interest Allocation. Pay particular attention to the comment in the tax reform video of about a business interest change in the tax reform bill. Catch it towards the of the video.

Solar In Florida. There are some unhappy executives in Florida this week. Between the article yesterday on the nuclear cost recovery clauses and this natural gas boondoggle in Florida, public opinion on monopolies will test the single digit approval marks. Let’s see how politicians react.

News

Have a great day!
Yann

This is your SolarWakeup for December 11th, 2017

I am on my way to San Francisco for a few great interviews. Always good to travel into the center of the solar industry universe.

Tax Reform Explained. The tax reform bill is in conference committee and no one really knows what will come out of this step. Whatever has been voted on can get completely rewritten and come out looking different. But the core pieces will get put into the final version that goes to both houses to vote on. Last week, at SolarWakeup Live! DC, I sat down with tax lawyer, Greg Jenner, and project finance lawyer, Audrey Louison, to go through the main provisions. The entire interview is available in podcast or video format. If this interview feels different than what you typically get at a solar conference it’s because I come at it from your side of the table. I have to make the same business decisions based on political and regulatory issues that you do and know what information I need to make that decision. My interviews come from a different perspective to drive information to you, not to fluff up the news. Hope you enjoy it.

BEAT Provision. In the interview you’ll find my discussion with Greg Jenner about the BEAT provision and he explains why BEAT, or some version of it, needs to be in the bill. Think of it as a way to stop companies from parking cash abroad. The House version uses a more piecemeal approach but in my conversation with multiple sources of tax equity, they seem to be unaffected thus far. That being said, the rules aren’t final and as Greg said, they have to do some form of BEAT. Don’t expect it to go away.

Corporate AMT. It was thrown back into the Senate version at the last minute. It’s causing a stir with donors/lobbyists and it’s going to be taken out and ‘fixed’.

Rates. Probably the most overlooked part of the bill and the most obvious is the impact of lower rates on the tax equity market. First, less tax liability means less tax equity supply. Second, lower rates means that depreciation is worth less and your projects will have to be repriced with the new rates in mind. All of these issues could cause contractual problems which we also discuss in the interview under the ‘change in law’ provisions of your agreements.

Will It Pass. Yes, says Greg Jenner. I tend to agree that it has to pass because as more political folks have called it, the ‘donor relief act of 2017’ is a political must have for the GOP. Let’s see where it goes from here, because in DC nothing is ever certain (except that SolarWakeup Live! DC will always get you the info you want to hear).

Don’t Miss. A great highlight of the power the utilities have pushed at the State legislature level across the South, harmful to consumers and hopefully the end of the monopoly system. A single city aims to be all EV mass transit in China. McIntyre takes over as chairman and promptly delays the NOPR decision by 30 days. As Phoenix files for insolvency, I want to talk about the downstream pains in solar in more detail this week.

SolarWakeup Live! New York. Tickets going on sale shortly but book your day to join us in New York on January 31^st. The first 50 tickets will be 50% off, so get them quickly. If you are interested in sponsoring, hit reply to this email and I will get you more info.

News

Have a great day!
Yann

SolarWakeup Live! Video: Tax Reform Bill Explained by DC Lawyers from Stoel Rives and Mintz Levin

In this episode of SolarWakeup Live! I talk about the current Tax Reform Bill with Audrey Louison from Mintz and Greg Jenner from Stoel Rives. The tax reform bill was in conference committee at the time of this recording and had several issues that impacted the solar industry. The corporate AMT, a lower corporate tax rate and the BEAT provision. I walk through each of the items with Audrey and Greg, get an explanation (because nobody understood the BEAT provision) and how it impacts solar project financing going forward. Greg has been around tax law for many years, including as a … Read More →