This is your SolarWakeup for December 21st, 2017

Tax Reform. No substantive changes from the conference bill to the one signed into law yesterday. I’ve done some back of the envelope modeling and it looks like the values are in line with where they were, depending of tax investors’ circumstances of course. On the other hand, I do worry about the lack of liability in the overall market and how that will impact the pricing. There could be an interesting uptick in the C&I cash market for companies looking at the immediate depreciation, especially paired with things like PACE to defray the non-tax cash needs.

Get Me Pipeline. Greenskies has been acquired by Clean Focus in what looks like a path to more pipeline for the IPP. The competition for utility scale is strong and it makes sense for some to look for scale in the C&I markets. None of the deal terms were released but I would be surprised if this is more than an acquihire and acquisition of assets that may be on the balance sheet. Glad to see the transaction happen though.

Future Of Gas Power. The gas as a bridge fuel is going to have different shelf lives across States, each having their own sets of variables to drive the adoption beyond gas towards renewables. In California, the high energy prices and a group of regulators that looks beyond the short term has viewed the construction of gas plants (not just gas peakers) as unneeded, or at least it looks like they are implying this. The long term view on this is exacerbated by the next point below and when other power plants shut down.

More Mobility. I was a bit shocked by this number, BMW sold over 100k plug in vehicles in 2017. The i3 has always been underwhelming considering the skinny tires and strange design but I guess consumers are taking an interest to it. What happens to all of this when battery prices cut in half? What happens when more people drive an electric car (you should try if you haven’t) and realize it’s a better driving experience. The grid is going to finally see growth in demand and that demand will likely be matched by renewable generation dispatched through the batteries.

SolarWakeup Live New York. I am biased but I am excited about this event already. There will be a mix of public sector and private sector speakers on topics like REV, community solar development, big capital and blockchain innovation. The details are getting setup now and will be published here when they are finalized.

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Have a great day!
Yann

This is your SolarWakeup for December 20th, 2017

Grid Scam. Resiliency, as the word defines, is a misnomer for what the coal lobby is trying to message. The coal lobby is trying to say that intermittent renewables cannot be trusted to turn the lights on and gas pipelines can have congestion. As everyone in solar knows, resiliency is based on the wood pole outside of the customer’s home. If it comes down in a storm or a car hits it, the generation means nothing. And as the Atlanta airport learned this week, the cost of energy means nothing if you become detached from the generation. You should spend at least some of your time figuring out how to answer and value the microgram system for your customers.

Energy Subsidy Parity. We always hear about subsidies in energy especially solar and wind. We never hear about it for oil and gas (obviously). Now that storage is gaining momentum, it makes sense for them to get into it as well. It’s time we talk about the utopian vision of getting rid of all subsidies, monopolies and rules that favor century old incumbent entities. DC-coupled energy storage has the built in technical advantage of being behind the point of interconnect that also is better suited to take the solar ITC. Dispatchable solar sounds like it could solve all of today’s news problems.

Legislative Truth. This headline gave truth what we have known for years. There are sometimes extra costs during replacement transitions that drive down costs in the long term and in the case of energy also drive down volatility. As more renewable energy gets into the markets, pricing will absolutely reverse and stabilize the market.

Hopkins Divestment. A point of personal privilege as the Board of Trustees, which I look forward to joining someday, of Johns Hopkins University has voted to eliminate investments in the Carbon Underground 200 companies. This is the third time Hopkins has done this with the last one coming in 1991 when they voted to stop investing in tobacco.

GE’s Fossil Problem. I read the coverage about GE’s changes in energy and I recall my conversation with Daniel Hullah of GE Ventures. In the conversation he mentioned that part of the strategy is to find technologies that can have synergies with GE products to make them more competitive or profitable, i.e. prop up the core business. I could see how that evolves to replacing core revenues with new products and services.

2018 Changes. Every year I try to do something different with the SolarWakeup platform, always iterating to improve on the product. Late this year I started the Live! events and in the new year hope to improve on the analysis of the day’s news a bit, creating a way for you to find the business impact of the news. What would you like to see different? Any tips or complaints?

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Have a great day!
Yann

This is your SolarWakeup for December 19th, 2017

Future Of GE. A few weeks ago I interviewed Daniel Hullah, Managing Director at GE Ventures. He has investments in some energy storage and grid technology companies and is doing more. This was a discussion about the role of corporate venture capital and the future of the grid. I could have spoken to Daniel for many hours because this transition is amazing to be apart of and Daniel is trying to do his part to keep GE in the lead within the power sector. The podcast audio is here.

Tax Reform Review. This is as good of a writeup on the tax reform bill I have seen. Keith Martin gives an easy to understand breakdown of each subsection and highlights something missed by many regarding the depreciation which could alleviate the cash sale community.

Blockchain. On LinkedIn, I asked my network what would be an out of the box topic to discuss at SolarWakeup Live! New York and blockchain was mentioned by a few people. I have to admit that my knowledge is limited but if you know this space and can educate me a bit, please reach out. If you want to hear about something specific in New York, let me know. Buy your tickets here.

National Security. Pushing energy in the traditional agencies makes lobbying sense, I understand that the game is played by the winners and their supporters. Dropping climate change from national security threats is silly politics. DOD has to deal with real life issues and changing weather, rising oceans and the impacts it causes on military operations has no party affiliation. If access to a base is impacted by surrounding conditions, then the military chain of command will make appropriate changes, regardless what the document says.

Australian Turn Around. A few years ago, most politics from Australia seemed backwards, less solar and more coal. Fast forward to now and the biggest solar and storage deals are getting done in Australia while 25% of homeowners have solar as well. There are even plans to build a solar plant in Australia and export the power to another Country with an underground transmission line. Great job Australia! Show us how its done.

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.

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Have a great day!
Yann

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 power transition itself with major layoffs announced at the power unit. Power plants are being closed and new builds are slowing due to the major increase of new and cleaner technologies. GE is investing in hardware that is participating in this market and Daniel walks through the thesis on some of those investments. Please review the podcast on itunes.com/energywakeup Make sure to check out SolarWakeup Live! in New York on 1/31. If you enjoyed this episode as much as I did, make sure to subscribe on your favorite podcast platform including iTunes, SoundCloud and Stitcher radio. Please subscribe and share with your friends how much EnergyWakeup is helping you. [soundcloud id='371365319' height='false']  

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.

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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.

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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 power fueled by fossils, what does that mean to your business and your customers? Thierry may be paid to be a futurist but getting Engie to turn its business strategy into this direction matters to you. Sometimes while in deep conversation with a leading energy executives, they say something extraordinary in such a casual way that unless you are paying attention, you might miss it. I had that experience the other day when SolarWakeup had an exclusive conversation with Thierry Lepercq of Engie’s Executive Committee and the company’s EVP of Research, Development and Innovation, in which he made a bold prediction: Rotating-machinery electricity production—meaning all fossil-fuel and nuclear plants—are going away. “That’s a given,” he said matter-of-factly, as if this as if it were common knowledge. I can attest, however, that I had never heard anyone say it out loud before—especially from someone leading the future for an energy company with 150,000 employees and over $75billion in 2016 revenues. After all, the Department of Energy and the Federal Energy Regulatory Commission are on a fast-tracked course to bail out failing and dissipative nuclear and coal plants at an enormous cost to taxpayers. Listen to the episode to hear all of the other forecasts Thierry makes. Make sure to check out SolarWakeup Live! in New York on 1/31. If you enjoyed this episode as much as I did, make sure to subscribe on your favorite podcast platform including iTunes, SoundCloud and Stitcher radio. Please subscribe and share with your friends how much EnergyWakeup is helping you. [soundcloud id='369523274' height='false']  

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.

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Have a great day!
Yann

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

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.

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Have a great day!
Yann