This is your SolarWakeup for August 18th, 2017
This week has been tough on news. A ton of coverage on the 201 petition hearing and Monday’s solar eclipse. One story line that is prevalent is that the industry is fighting against itself and there is a civil war. This could not be farther from the truth in my opinion. Two companies are supported by a third. All three seem to be in financial trouble and stand alone to say that they need to be saved. Everybody else is on the side of the table saying that the industry is growing, competing and consolidating to the companies that are able to generate a profit or raise money effectively. Solar is coming together in a way that it has rarely done. Let’s change the narrative that solar is fighting because that isn’t the case. Keep your eyes and ears open on the hearings and lobbying that will start soon. We are seeing which companies are looking to compete in solar versus those that are hoping you don’t realize that they don’t care about your success. We need win-win situations to mature as an industry and the 201 is anything but that.
Big News Next Week. I am working on something exciting and hope to share this with you next week. I will need your help to execute and look forward to it.
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Yann
This is your SolarWakeup for August 17th, 2017
The 201 Petition PR Tactic. The hearing at the trade commission had the solar industry outnumbering the bankrupt petitioners by a 10 to 1 ratio. As I read the quote from Suniva, ““We’re not out to kill the industry,” said Matt Card, Suniva’s VP of commercial operations. “We are very open to a solution that works for all parties.” I realized that the company is trying to position itself post 201 petition as a company that can still do business in the market. It’s hard to understand what it is that the petitioners want because they’ve already called for an insanely high minimum price that would cripple our market. If they really mean what they said, then they should propose something else. How about $0.03/watt tariff on foreign modules that is given back as a subsidy to US manufacturing in the form of payroll adjustments? In a 10GW market, that would be a significant amount of money to create local manufacturing jobs.
SolarWorld Goes To Market. As an update to the previous comment about SolarWorld assets being purchased by the CEOs new company, the US entity was not yet purchased and represents the key subsidiary of SolarWorld. The administrator will focus on this now and try to find a buyer for the company. Interesting opportunity for the company to decide how the 201 petition impacts the ability to market the company.
Nevada Netmetering Nightmare. I don’t know if the Nevada regulatory fight will ever end but the market will keep moving in the forward direction including the restructuring of the energy market.
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Yann
This is your SolarWakeup for August 16th, 2017
The 201 Hearing Thus Far, a New Player Chimes In. If you have never heard of Stion, a thin film solar manufacturer, you are not alone. Until yesterday, I had never heard their name but I was curious when I saw that they were testifying in favor of the 201 petition. Stion has raised nearly a quarter billion dollars and seems to have managed to spend it all given that they have fallen short on their property tax payments to property tax collectors. The Mississippi Development Authority has notified and amended the arrangement for the company that originally promised to create 1,000 jobs in MS. See, Stion isn’t against subsidies, they have taken grants including from DOE, they are against other companies receiving economic development. As Stion, Suniva and SolarWorld go through this process to attempt to kill the US solar market, I urge each company to think about their supply partners. Are their values and interests aligned with yours? Would their hopes hurt your bottom line? The market gives you the flexibility to choose what products you buy, choose wisely. I contacted Stion for comment yesterday. After receiving a template quote from Stion, I asked for a specific result that the company would like to see the ITC order. If and when I receive it, I will update you.
Uniting For Common Good. I am proud of what I saw yesterday. The largest crowd in ITC history according to the commission staff. Three overflow rooms at the hearing and positive stories about the jobs and impacts companies are creating in the US. Large and small companies from across America spoke about what the solar industry means to them and how harmful tariffs would hurt the fastest growing energy market with jobs paying well above national averages. We’ve had tariffs in the US for years on foreign modules. Solar manufacturers in the US weren’t alone in struggling with our fast moving market, that is part of growth. SunEdison even went bankrupt regardless of how cheap solar panels were. In our business, if you do not execute flawlessly, you will have troubles running your business. Regardless of the bumps we have faced, companies came to DC, with the help of SEIA, and spoke out. That is a maturing market.
Micro Product Wars. A video in the microinverter/optimizer market has created a bit of an internal fight. In short, Enphase made a video comparison of AC modules being installed versus SolarEdge and SolarEdge didn’t like it. They sued and asked for the video to be barred from marketing and the judge apparently said no. When I lead a PR and marketing team, bad stuff would happen and I felt like sometimes doing nothing was a lot more effective than being defensive or offensive. I wish someone would have said to SolarEdge, “Do you know how difficult it is to get people to watch a video on YouTube? It will never get mass market views.” Because then I would have never seen, cared or commented and you would get the last 60 seconds of your life back.
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Yann
This is your SolarWakeup for August 15th, 2017
Hearing Number 1. Tomorrow you will see the first hearing in the 201 petition process. Complete with public comments and potentially some questions from the ITC commissioners, some parts of the story may become clearer. SEIA has organized hundreds of solar executives and workers to come to the hearing to show what this means to all of us. Times like these show the importance of taking a day to tell your story to politicians and regulators. Another opportunity is in California, organized by CalSEIA, to speak with over 20% of the legislators about solar and storage. I encourage you to invest your time to go to Sacramento, reach out to CalSEIA to do so.
The Eclipse Hype. We’ve seen the unease about solar energy during a solar eclipse in Germany a few years ago. With proper planning, the grid operators were able to handle the few hours without problems. Keep in mind that even though solar will be leaving the grid for a few hours, demand response and peak power pricing will ensure that the grid remains stable and operating.
You’ve Got To Read This. A story about nuclear power plants that have some interesting (plentiful) talking points. Keep in mind that these power plants are being built with ratepayer pre-payment and guaranteed return on the investment. In short, there really is no risk to the shareholder of the public company except if the company fails to execute (without regard to schedule or budget) and regulators revoke the ratebasing of the sunk costs. Legislators are talking about: 1. A production tax credit (don’t ask me for what), 2. Expansion of the loan guarantee program, 3. Inclusion of societal benefits to view benefits of new plants. The irony is thick in this one.
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Yann
This is your SolarWakeup for August 14th, 2017
Coming Up On 5 Years. In about 3 weeks, I will have published this newsletter for 5 years. Starting with an initial list of less than 50, there are now almost 5,000 of you that read the newsletter or website on a daily basis. More importantly I get to have amazing conversations with many of your every day. It has made me a better solar executive and consultant and for that I am thankful. Next week, I will be sending you a survey to learn what more this platform can do for our relationship. What do you think SolarWakeup should do next or what information do you want to see?
Solar Goes Bipartisan. SEIA did good work and got 69 members of Congress to write a letter against the trade case. 16 Senators from both sides of the aisle led by Tillis (R-NC) and Heinrich (D-NM). On the House side, the name that stands out to me is Mark Sanford (R-SC). Sanford is known for his conservative credentials and carries real weight in the GOP on the budget policy front. VP Pence’s Chief of Staff thought Sanford was a strong contender for VP in 2008 when he was Governor of SC. Let’s get some more members to sign on, if you have a relationship, use it now.
SolarWorld In Name Only. CEO, Frank Asbeck, with the help of the Qataris is buying the SolarWorld assets. Unknown from the reporting if that includes the SolarWorld USA entity or just the manufacturing assets that will be put into a new holding company. This makes me wonder what and how this impacts that original tariff money and this new 201 petition. Either way, this makes SolarWorld modules essentially unbankable in my opinion.
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Yann
This is your SolarWakeup for August 11th, 2017
Happy Friday. Don’t forget, if you need money for good deals, let me know!
ITC Staff Report. The process is playing out as we speak. The trade commission staff has put a report together, essentially a review of the filings ahead of the September 22nd hearing. The petitioners seemed happy about the report which did highlight that US manufacturers have struggled over the past decade. I’d like to add some caveats in the form of questions because I think Suniva/SolarWorld should answer them. How much market cap/valuation has been lost by US manufacturers versus Chinese manufacturers? How much value has been lost in the downstream/development side of solar while panels dropped in price? Are publicly traded Chinese solar manufacturers lying when they say that $0.35/watt modules generate a profit?
SEIA Chimes In. I’m a fan, SEIA should do this more often. I applauded it when Tom Kimbis was CEO and wrote public comments. Keep doing it please.
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Yann
This is your SolarWakeup for August 10th, 2017
It Was Marketing, Not the Market. Over the past decade, you can pick the moments when SolarWorld and Suniva went down a path that led to the less lucrative outcome. You can also pinpoint the moments when both companies were given above market income due to Buy American policies. At the end of the day, cheap Chinese product did not impact either company’s bottom line. I don’t hear LG and SunPower making that argument. At the same time, a big loss could be the fact that SolarCity decided to build a factory instead of going to the market. There are a lot of reasons why these companies failed, but they failed at the same time that multiple Chinese manufacturers also failed so the complaint fails the logic test.
If You’re Faking, At Least Fake Well. It’s no secret that people get paid to consult towards a specific result all the time. I’ve consulted to an IOU, so I get it. But when the 201 petitioners approached Mayer Brown to do an economic analysis that shows the positive results of their 201 request, it went into a new stratosphere. The request was to write 8 pages, single spaced on creating jobs that should be higher than 88,000 using data from companies that said the 201 petition is bad. 2 blank pages and lots of graphs gave us an analysis that is laughable at best and must be disappointing to academics and experts throughout the Country. Manufacturing barely creates any jobs, these are mostly robots both in the US and China.
New Capital Needs Old Capital. There has been more ‘patient capital’ coming into solar which is good for everyone. However, the process to get to this money remains the same. You need to put early stage development money to work. Find takeout capital that is tax efficient to buy the deal and then your project could find its way to long term, low cost money. I.e. you need to take all of the risk out of the project before this money gets excited, at scale.
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Yann
This is your SolarWakeup for August 9th, 2017
The second half of 2017 continues the trend of projects seeking capital. SolarWakeup is made possible by putting projects and capital together. If you are seeking capital, our clients may be interested. Note that our capital providers are cash in hand family offices. Email us by hitting reply to this email or forward it to your project finance colleagues.
2017 Tax Equity. Part of the difficulty of solar project finance is tax equity, especially mixed with expensive sponsor equity. We’ve been working hard on finding tax efficient money that does not require the complexity of a multiple member flip structure. When sponsor and tax equity is the same fund, everything gets done quicker and you make more money. It has taken a decade to drive appetite of this kind of investor to solar but here it is. There is still money available for about 20MW of projects that are built in 2017. I know you have projects that have investors bullshitting you, time to get something with certainty to the table.
Development Capital. Are you working on deals that need money for development? One of our partners added a development equity fund to help you with this. This is a capital partner I have personally used and want to introduce to the SolarWakeup family. As a developer you should focus on development without needing to use your children’s college fund to get the deal to NTP.
Delay With Certainty, Please. To continue the topic from yesterday, which many of you commented on. Moving the on peak from 11am to 4pm is troublesome because it doesn’t allow for sufficient transition time from the current times. Yes, solar knew the time would change but the CPUC has taken some time to get to this point. Customers have been standing back from doing deals given the uncertainty, especially in the C&I market. If customers don’t know the rules, they don’t know the risks and they are unlikely to sign up. The CPUC should set the new times but should delay the changeover date to allow industry to get ready with technology and financing to align with the new systems that will be needed.
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Yann
This is your SolarWakeup for August 8th, 2017
Net Metering Time Shift. In what appears to be a more substantial story, the SDG&E rate case is moving forward with an important data point that many in CA have been waiting for. The 11am-6pm on peak window will apparently shift to 4pm-9pm. That’s a duck curve phenomenon that will be taking out on distributed generation which doesn’t even get counted in the State’s RPS. I don’t know what the delta is between the 11am rate window and the 4pm rate window but I wonder if CPUC will give that delta to the utility scale projects? If I were to add storage to the large projects, will the PPAs be allowed to monetize that time shift in response to the new rate windows? I think not. On the other hand, the load shifting will be cheered by the storage companies because their value proposition is now quantifiable above and beyond the demand reduction.
The Berkshire Energy Headline. Tagging on to the next story, Berkshire made news with the increase in net income to the renewable energy unit. Interestingly, Berkshire owns PacifiCorp which owns Rocky Mountain Power, the same utility that was afraid of a few solar homes. After NV Energy’s stance on solar it seems that Berkshire may want their cake and eat it too just depending on which business unit is active in the State. I welcome Berkshire in utility scale but wish they and other IOUs would realize that solar homes mean more reliable grids for large solar and solar homes mean more homeowners that buy electric vehicles.
A Deal in Utah? A bit of a surprising turn in news regarding the Utah fight around net metering. I doubt the net metered solar market is large but solar is taking the fight anywhere that solar is under attack. This week there is a public hearing and solar was mobilizing, I received an email early yesterday. Part of the conversation with Rocky Mountain Power was apparently about reopening their ratecase to see if they were overcharging the consumers due to lower fuel costs. Executives would have quickly done the math to see what was larger, solar losses (which are probably nothing) or return of dollars for lower fuel costs.
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Yann
This is your SolarWakeup for August 7th, 2017
Sunny Side of Residential Storage. Residential storage has a certain allure to me. It merges marketing with the technical side of our industry, in many ways making tech companies turn into sales organizations. Unlike residential solar, the starting capex is already much less and dropping while one could make the case that the value is greater. Storage creates this comfort if built for backup and a certainty around knowing when it will be discharged. Sonnen is taking on the beast that is Tesla with Powerwall and others like LG Chem are certain to play as well. Keep your eyes on resi storage, this market could grow rather quickly in the near future.
Where Should Utilities Go? The General Manager of Wartsila is asking (rhetorically I presume) what is next for the American utility. Of course Wartsila has been a giant in generator and power plant construction but more importantly they recently bought Greensmith, the storage company. In many ways, IPPs are welcoming the IOUs to the party when it comes to the risk/reward that has and should be part of the energy system. In my opinion, IOUs with ratebase, should (and in some cases have) become transmission companies. Generators and retailers need to compete in the market to give customers the product and pricing they want. Owning all parts of the value stream fails to align the interests of the company and customer, never a good thing in a free market.
The Policy That Created The Nuclear Boondoggle. Ten years ago, I met a Florida State Senator that was on a mission to eliminate a policy appropriately named “Early Cost Recovery.” This policy allowed IOUs to charge ratepayers for costs associated with developing and building nuclear power plants before and during construction. Since utilities make a return on capital deployed, you could see how cost increases may actually work in their favor if regulators grant those increases along the way. What we have seen throughout Florida, Georgia and South Carolina is that the policy has resulted in a lack of risk and cost awareness. There are greater parts at play here but the consumer seems to be universally hurt by the policy. Senator Mike Fasano is now the tax collector in Pasco County but could be so much more.
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Yann