This is your SolarWakeup for July 28th, 2017
Have a great weekend!
A Few Of My Favorite Things. There is an irony in seeing solar skeptics get into solar. Many times this is done quietly until they are successful. I welcome them to the solar industry and I am happy to see a change in perspective. In this case, Calpine won a solar project in Texas.
Something To Ponder. The Kochs have been confusing me recently. Of course, anti-solar (except when it comes to protectionism) but in this case apparently anti-EV. This could be based on the reduction of use of oil. But being anti-EV also means being anti-natural gas becase NG is the fuel of choice for the utility which needs EVs to grow. Maybe it is now a tactic of being anti-Elon Musk.
Arizona Settlements. Regulators recommend accepting the Arizona solar settlement. Next week you will hear from the Arizona SEIA Executive Director on this topic. Stay tuned.
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Yann
This is your SolarWakeup for July 27th, 2017
Now West Virginia Is In The Game! Telling a story is more than having it. We talk over and over again about how solar can be a way out for coal miners that through no fault of their own are out of work. A hundred years ago coal meant an industrial revolution, energy that drove the economy into the 20th Century. Today we have solar, a distributed source of power that will drive us through the 21st Century. I applaud the team for putting together this amazing video. It’s short, less than 4 minutes long, but the message needs to be heard. Please forward this on, so that your friends, colleagues and family can see what our industry is capable of.
Tesla Will Fight 201 Petition. Privately, many solar people have asked me who I think is behind the 201 petition, some throwing out the Tesla name because of the Buffalo Gigafactory. I was always skeptical given the support SolarCity had put early on into the ITC extension when some could have argued that killing off competition could be in their favor, same with net metering. A Tesla spokesperson confirmed to Axios, on the record, that they will be fighting against the 201 petition even with a US manufacturing facility. Heritage is against it, ALEC is against it, SEIA is against it, Tesla is against it. Who is for this except for two bankrupt companies, one owned by Chinese and one drowning in debt from Qatar? How is this good for America and Americans?
Ratebasing It. If your business depends on deploying capital to supply energy to a growing demand, the absolute last thing you want to see is lower demand. Even taking into account the growth of population, energy sales in the US are down 3% since 2010. If you look at it per capita, sales are down 7%. This is very much a lightbulb problem and not a solar problem but it will soon become an EV solution. Utilities have to think about demand and the largest place they’ll get it is in transportation. If I were a utility CEO, which I would love to be (Recruiters: call me, I am available), I would be taking a massive initiative to put charging stations across my territory and incentivize EV purchases. I may even propose a pilot to use my cheap debt to finance EV purchases for Uber and Lyft drivers. (Call me!)
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Yann
This is your SolarWakeup for July 26th, 2017
The Industry’s Eternal Shadow. Reuters does a good job of summarizing the current shadow over the solar industry. It seems that there is always something going on, ITC, net metering, or tariff for the second time. Based on what I heard about InterSolar, the show was smaller (by a whole level), no manufacturers and a general sense of pessimism. More importantly than the tariffs themselves, I think most solar contractors/developers would like some stability in the rules. The delays and unknowns cause more disruption than most policy decisions even when the policy decisions cause a reduction in market size.
The Impact of EVs. Assuming that the full scale of EVs does not include the ability to move energy from the car to the grid, power markets will have to adjust to the needs of transportation fuels. For the first time in the industrial age, utilities will compete with oil companies, two industrial sectors that have kept clear of each other for over a century. More importantly the grid operators will need to create the right price signals so the EVs and generators can adjust to the needs of the customers. If the customers don’t get the right price signals to turn on/off their demand, the market will not be able to brute force supply the needs of a transportation sector.
Well Wishes. Eric Wesoff wrote his good bye letter from Greentech Media. This publication has covered many of the articles over the years and we wish Eric well. There is no doubt that Eric was an editor with an opinion, if you pitched stories to him or his team you have encountered it first hand. We did share the tendency to hide in the press rooms in jeans and boots!
Panda, Panda, Panda!
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Yann
This is your SolarWakeup for July 25th, 2017
The Power Of Policy. After major policy shifts and changes in Nevada and Florida, permitting for solar is through the roof. While the baseline is obviously low and percentages are skewed, a shift up is definitely due to the combination of lower capital costs, reduced cost to install and regulatory frameworks that allow solar to compete. For the contractors that stay out of policy in their States, look at this and ask yourself. “What can I do for Vote Solar or my State SEIA chapter to help my business grow?”
First For Everything. The City of Tallahassee has its own power company. Not driven by shareholders, the City is looking to lower the cost of their energy by (wait for it), swapping solar for their existing hydro plant. At $85/MWh, Tallahassee sees $50/MWh solar being a better deal for the customers.
Pushing Back On Rate Increases. Normally a ratecase goes to the regulators and the Office of Public Counsel pushes back. It is becoming more and more politically acceptable and positive for politicians to make rate increases political. Prior to the availability of distributed generation that is cheap, politicians didn’t have a second option. The conversation is now changing.
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Yann
This is your SolarWakeup for July 24th, 2017
Energy Trade Action Coalition. As I was flying home on Friday, I saw a tweet from The Hill announcing a new coalition to fight against the solar tariffs. In reading the article, I was surprised that the quote didn’t come from SEIA or SEPA, but instead of the Heritage Foundation. One main aspect of the tariff petition that has scared me is that it creates a vehicle for Kochs et al to push solar backwards. Before Friday I would have assumed that Heritage would fall into that category regardless of the protectionism argument. Now things are a bit different, this could evolve into a globalism versus protectionism versus renewables argument.
Battery Chemistry. Whether we are talking about solar or battery technologies, the lab often times trails the market. We’ve spoken about this when Bill Gates talks about solving energy through R&D, I caution the reader to think about the underwriter and independent engineer. You can have great technology delivering better outcomes, but without capital backing the project you have nothing.
Solar in the Energy Portfolio. We are going to get to a spot in energy development where all fuel sources cost the same (for arguments sake). Why is it that solar plus storage is assumed to win above all other available sources? It isn’t because fuels have to be transported, stored and burned. It really comes to the flexibility in scale and profile that solar brings to the market. On the roof, on a parking lot, on a landfill; solar wins.
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Yann
This is your SolarWakeup for July 21st, 2017
Have you booked your trip to SPI yet? Should make for a good event, make sure you remember that it is at Mandalay Bay and not the convention center.
Would You Like A Flux Capacitor With That? Growing a bit tired of the solar wall articles given that the notion combines something that is a rather dumb use of solar plus the fact it should never happen. Unless the wall ends up with 1.21GW that allows us to go back in time, I hope reporters stop giving coverage to this. (I win)
Stacking Additional Reasons For California Investments. Governor Brown seems intent on making some lasting changes in energy in California. Creating an uncertainty on storage, transmission and supply of natural gas in California added with lack of extensions of contracts to peaking plants, California is all but putting an ad out for more solar plus storage in the news.
Renew Your Office Energy. Microsoft joins a long list of corporates that seeks to leave the grid and become more of a market maker and taker. When large users no longer align their values with monopolies, they will exercise their ability to create their own contracts much to the renewable energy industry’s wishes.
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Yann
This is your SolarWakeup for July 20th, 2017
Why Didn’t Retail Energy Solar Work? As I started hearing news from people in Mass that Direct Energy was folding its solar unit, I was a bit surprised. I have long thought that retail energy providers would do very well in residential solar. They know marketing and customer acquisition extremely well and they know what customers pay better than solar companies. Or at least that’s the theory because it isn’t working out that well. In thinking about why the exits, I have to think that the sales force signing up retail customers don’t want to sell less electrons or selling retail contracts is hard enough without confusing the customers with solar.
This Is Dumb, Exhibit 742. Zuckerberg continues his campaign tour of America, this time visiting Glacier National Park. Everyone with half a brain knows that the National Park will need a new name soon because the glaciers are disappearing at an alarming pace. However, on this trip the ranger with climate science background was not allowed to tour with Zuckerberg. This is like the Nevada PUC trying to kill solar and is then surprised when thousands of Nevadans protest the change. You can’t hide reality, because it’s real.
Are We Getting Arrogant? There is no secret that our new solar policy theory is to find the common ground with companies trying to stop solar. Part of it is the financial commitment to policy has been reduced, part of it is that we may not be scared anymore because we have storage. I may be overstating this but let’s not get too comfortable because getting back something that you give away is very hard in policy.
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Yann
This is your SolarWakeup for July 19th, 2017
Going Underground. Shoutout to the awesome team at Dandelion for their launch. It’s not solar but solar has given these awesome people a baseline of knowledge that will surely change the world. Go Katie and Jake!
California Goes For It. Cap and Trade gets the extension that Governor Brown argued for very publicly in the legislature. SB 100, the 100% RPS bill, looks like it is making good progress clearing some hurdles in the assembly. California will keep tracking forward regardless what DC and Red States argue for. Oklahoma announced a 10MW yesterday, woohoo!
NRG Assets Get Interest. Maybe when NRG thought about raising money to appease the activist investors, it didn’t choose renewables because of the image it created for the company. Maybe the choice was based on the ability to actually sell the assets. Think about it. What if NRG had decided to sell its coal power plants instead? How much interest for those assets and how much cash would it generate after paying off the debt? Solar is simply more valuable at this point and easier to trade.
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Yann
This is your SolarWakeup for July 18th, 2017
Show Off Your Solar. We are all fans of SunShot and their work. Now they want YOUR help to show off the best solar images you can find. In the contest titled, Hit Me with Your SunShot, you can win cash prizes and help create a solar awesome portfolio of images for everyone to use.
Don’t Do As I Said, The Outside Inside NRG Story. Don’t shy away from the length of this article because it tells you what David Crane thinks about NRG’s decision to eliminate his strategic vision for the company. I don’t want to give away the essence of the article because if you care about how solar fits within an IPP, there are great points in here. Couple of things I would like to add. From a carbon standpoint, the overall carbon footprint of the assets will stay the same given the solar portfolio will keep operating. NRG’s footprint will go terribly in the wrong direction however and I expect the post divestment cash flows won’t look good for long, especially as energy storage crushes slow moving power assets. I think NRG should continue the splitting up of the company however, much like Engie decided to focus on consumers. NRG should sell the retail business or sell the power assets. Surely Dynegy would continue to double down on power assets and then NRG would be left with a consumer facing business.
Throw Out The Rulebook. Forget the title and most of the content of the article about court rulings. The interesting story is the business dynamics of who sued and why. When Illinois passed their energy bill it did so as a cover for subsidies to be paid to the nuclear power plants that Exelon planned on closing if the subsidies did not come through. The energy sector got together and the price to get the subsidies were a variety of renewable energy policies that move the solar and efficiency markets forward. This caused other power plant operators to sue the State of Illinois for unfairly subsidizing nuclear power plants which they were hoping would be closed to remove generation from the wholesale markets.
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Yann
This is your SolarWakeup for July 17th, 2017
Hope everyone enjoyed some Summer time off, I sure did. Now back in action and refreshed, many big things happening in the SolarWakeup world which I hope to share with you relatively soon. Time for some news updates.
Before and After (Lobbying Edition). A draft of the now famous DOE grid study has come out that finds, "The power system is more reliable today due to better planning, market discipline, and better operating rules and standards." Of course this is a draft that the politicians have likely not seen and edited yet, likely leaked to a lobbying shop by staffers to attempt to stop the political changes from happening. Call this the ‘deep state’ of energy science in the Government, an action I am thankful for. Don’t hold your breath that this will not be changed, dramatically perhaps. The grid does need changes, primarily in the speed and quantity of pricing signals. The market moves far too slow still, and once it speeds up with the right buy/sell signals, generators will be able to invest more capital.
Let’s Talk About NRG. The headline many solar people saw about NRG shedding its renewables business was perceived as a negative. So here is reality. First of all, the assets aren’t getting torn down or taken out of service. They are being monetized. Why? Because Wall Street doesn’t really feel like long term, stable returns produced by solar is very exciting or create much upside. Take the NPV of the asset and generate some cash and debt availability. Look at NRG as a bank that has to continuously dole out money (invest) and make a return. Letting it sit there in perpetuity is not what public equities are made for. The political/corporate reality was that NRG really had no choice. Elliot Management is a hedge fund that has taken an activist position and now sits on the board. A depressed stock with assets will often face these issues where a fund sees a way to find value by making different decisions. Recall Carl Icahn forcing Apple to issue a dividend. The NRG management team could have taken the position that renewables are core to the business and they didn’t want to sell them. Likely they would have been shown the door and someone else would have executed the sale. Now who will buy the assets? That is the interesting story in my opinion because someone can quickly challenge some of the big players currently aggregating assets.
SB 700 Gets Punted. The CSI for storage will happen, but this year the agenda for climate related policy was quite full and maybe the wrong time to invest $1.6billion in energy storage when the contractor community was largely still on the sidelines. The policy teams pushed this hard and created a great jumping off point for next year where the chances will look better to enact this law, likely with much cheaper battery prices and an exhausted SGIP.
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Yann