Tag Archives: Daily Rundown

This is your SolarWakeup for August 4th, 2021

Enough Infra Talk. It seems like the one topic that should be bipartisan is getting stuck in the hamster wheel. The problem with big bills that have little price tags is that nobody really gets what they want and they become hard to fight for. Interestingly, it’s the politics of the two infrastructure bills that will either pass both or perhaps tank both. Even the manufacturing tax credit got left out of the bipartisan bill. Schumer’s threat to cancel the August recess seems to have folks’ attention however, we’ve got an Obama birthday party to attend!

Local Manufacturing. One of the best operating roles I had in my career was running a company with domestic manufacturing. Not only did I have the exposure to US manufacturing in clean tech but it was also domestic manufacturing in California. Domestic manufacturing has massive benefits for businesses except for the labor cost. That’s why the best way to drive up US manufacturing is to turn the payroll expense from a deduction to either a credit or multiply the deduction by 3x or 4x. If you want more of something in America, incentivize it with the tax code, that’s why we have one-year depreciation on private jets!

Let’s Be Optimistic. Over the past 20 years the amount of capital that has come into renewables has skyrocketed but the chart that shows the total dollars only tells a tiny story. Pre-2010, so much of the money was going into projects in a few Countries at ridiculously high unit prices and stunning venture capital investments into thin films or other breakthrough tech. The reality is that the $150bb plus that were deployed last year represent over a trillion in unit adjusted deployment compared to a decade ago. Here’s the kicker, there is no limit to how much money would invest in this sector, available capital is endless. It’s the pipeline of available projects that is capped by incumbents slowing development and more importantly the limit to how many development platforms that can reliably deploy that limitless capital. Finding and making the project investable is the gating item to deploy money, having the money is the commodity. Time to pay up fund managers!

Flexible Transmission Assets. Transmission upgrades are now more than wires and substations. One of the uses in the first infrastructure bill is to make the grid more ready for renewables and that includes transmission and distribution level energy storage. Adding the flexible power to the substation should significantly raise the amount of variable generation that a substation can manage. How to drive that investment or send a price signal for that investment is the key question I have now. 

SPI Ready. Louisiana, site of SPI in 7 weeks, has one of the lowest vaccination rates in the Country and has now reinstitute their mask mandate. We’re back to the what if questions about SPI from where we were last year but it still seems like everyone is ready to get rolling in NOLA. 

Opinion

Best, Yann

 

This is your SolarWakeup for August 3rd, 2021

RFP Support. As more and more development opportunities and RFPs include energy storage, it’s important to understand the systems that drive the investment model in front of you. While FlexGen leads the Country in integrating energy storage projects and building the leading software platforms that operate them, FlexGen also provides engineering services for the pre-development work that determines if a project should be built in the first place. As you support RFP responses, let FlexGen support you. Hit reply and I’ll connect you to the team. 

Opinion

Best, Yann

 

This is your SolarWakeup for August 2nd, 2021

Talking Infrastructure. Mayor Pete (now Secretary) goes on Preet Bharara’s podcast to talk about infrastructure. There is no real news here but listen to how Pete answers the questions, pivots to how this is infrastructure and layers in climate/energy almost every time. Which other cabinet secretary does Pete work with the most? You’ll nEVer guess!

Guess Who Is Back! Comical at this point and apologies for those of you new to the industry. Suniva has filed to extend the 201 tariffs alongside Auxin Solar. Suniva hasn’t been producing solar panels since before the Trump era but here they are once again.

A Post For Staffers. This is your quarterly reminders about subisidies for oil and gas and solar being unequal. Solar tax equity investors must satisfy passive/active loss rules from which most oil and gas investors are exempt. This inequity should be solved by also exempting solar and storage tax equity investors.

Delays Means Profits. When a utility project is delayed and goes over budget, the utility shareholders make more money and consumers are stuck with the costs. That sort of alignment of interest is going to provide the best execution in the field. 

Opinion

Best, Yann

 

This is your SolarWakeup for July 29th, 2021

Infra Step 1 Of Many. The bipartisan infra bill has gone through procedural step 1 but the real interesting part of the saga is contained in this article. While the bipartisan bill will pass the Senate and clear the filibuster hurdle, the same moderate democrats that negotiated the bipartisan bill are also saying that they will water down the $3.5trillion reconciliation bill. House progressives are hitting back though, saying that the House only has a 3 vote majority when their support is removed from the bipartisan bill all while the Speaker has said that the bipartisan bill won’t go to the floor without the reconciliation bill. We have an old-fashioned standoff at this point and we need to raise the debt ceiling soon too….

Consumers Should Be Paid. Power market operators continue to ask consumers to shed demand in order to keep the grid operating during more common weather events. The issue with this strategy is that it doesn’t actually put the financial pressure on those that are getting the capacity contracts at the benefit of those being asked to provide the flexibility. This comes back to letting the market create the right pricing signals. Load shedding at the peak, creating flexibility, should be monetizable by those that actually create that flexibility without being paid a standby fee to do so. Pricing signals, not requests, should be the driver of market behavior in power and pretty much anything else.

More On Platform Capital. Yesterday, I talked about the flow of capital to the energy market, most of that allocated to renewables. I want to shed more light on the capital that’s newer for the space. As a reminder, most of the capital has always been for the actual projects, infrastructure capital to be specific. The question is how do the tens/hundreds of billions of dollars actually source, vet and deploy their capital, and that is the platform plays. Taking a project from a piece of land without a lease, approvals or customers to the hopeful notice to proceed (NTP) is where the juice is made. Many infrastructure investments hope to partner with developers early in the process but few have historically wanted to actually be in this game and that is changing. Why? Money can be a commodity when everyone is bidding on an NTP project and winning a project just because you have the cheapest money can also make you feel like you missed something and won by accident. The other side of the pre-completion platform side is how these projects actually get done on time with quality. The integrators, the EPCs, the hardware providers have seen tremendous amount of new capital flow their way because getting it done right (especially on 25 year+ assets) is more important than ever. Investors always want quality, cheap and fast, but even in solar and storage, you can only pick two. Hope that gives you a bit more clarity on what I’m thinking about, shoot more of your questions my way.

Opinion

Best, Yann