Tag Archives: Daily Rundown

This is your SolarWakeup for January 11th, 2020

Is 2021 About Supply Chain? Solar may be growing but the bumps in the road will continue. The forced labor issue in Xinjiang was covered in the New York Times, solar glass costs are rising with limited supply and global demand is higher than ever. There is also a global boom of EVs impacting the battery supply that also provides for energy storage which we are already feeling in solar. Supply chain should be agenda item number one in your management meetings not only understanding what to buy but also expanding the time horizon on when you should purchase goods. That’s the point to consider, materials are available but it takes longer to get those goods.

A Finance Pulley. When you pull on something through a pulley, you get twice as much as you expect. That’s what is happening in the banking world. Shareholders are pressuring banks to stop financing fossil fuels, the economic indicators are showing that those assets are bad investments while renewables are desired for inevitability and ESG purposes. This means that banks not only want to stop financing old assets but expand what they are investing in new energy. Good thing is that solar, in particular, is rapidly increasing both the values that investments generate as well as total investment potential.

201 Tariff Without Plaintiffs. Sunpower is closing the Hillsboro manufacturing facility in line with their work to stop producing modules after the spinoff to Maxeon. This factory is the original SolarWorld factory that sold me modules at $4/watt but more importantly SolarWorld started the global trade war in solar. The AD/CVD, in the Obama years, caused China to retaliate with tariffs against US silicon. Then came the 201 tariff brought by Suniva and SolarWorld, both companies now long gone and remnants of their domestic manufacturing gone. What’s next? That’s my question this morning.

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Opinion

Best, Yann

This is your SolarWakeup for January 8th, 2020

247GW Of Rooftop Solar. Last year I interviewed John Farrell from ILSR to talk about his plan to put solar on 30million homes. The impact of such a concept, putting solar on rooftops around the Country, has been modeled in a recent study which is covered in the LA Times. If were were to get to over 200GW on rooftops, it would save half a trillion in other grid infrastructure and generation costs.

Big Alpha In Solar. Unless you live under a rock you’ve seen the gains solar stocks have made in the past 12 months. Some stocks are up 1000% since April. More than anything, look at the rise in stock price since the Democrats won the Senate in addition to the White House. Policy, more than anything else, has doubled stock prices in the past 90 days. Take two 2021 policy initiatives for example. FERC 2222 is going to create a marketplace for behind the meter resources including solar and storage, a good policy could double the value of solar/storage on homes versus a weak policy that doesn’t move the needle. NEM 3.0 in California can also go two ways, utilities will fight to the tune of $50million plus to remove the benefit of rooftop solar versus a strong NEM 3.0 that values solar and solar plus storage the way that DERs are needed to aid in grid resiliency. I am going to personally set aside time to take meetings with anyone that wants to discuss how to budget 1% of revenue for policy and how to spend it to maximize your enterprise value.

What Biden Thinks Of Tariffs. I don’t have the answer for that but this administration stance is going to be of great interest to me and many others I am sure. How will Biden, his trade representative and advisors advance solar while maximizing made in America solar jobs.

Consolidate Your Power. As you walk back into your offices (remote or otherwise) you will realize that the conversation is about what isn’t available. Modules, inverters, wires, tax equity, labor and other core requirements are in high demand and short supply. On product supply look towards consolidating your purchasing with similar companies to maximize your access and keep your pricing competitive. We’d be happy to give you more information at the SolarWakeup Buyer’s Group.

Opinion

Best, Yann

This is your SolarWakeup for January 7th, 2020

Senate Switches Control, Goes 50/50. Early this morning and again this afternoon, news outlets confirmed the New York Times needle. Warnock and Ossoff have been elected as the next Senators from Georgia pushing the balance of power to 50/50 with the democrats controlling the floor with the Vice President breaking the tie. Solar stocks had one of the biggest days ever, some going up as much as 25% before an attempted insurrection at the Capitol brought the market down a bit.

What It Means. Functionally the biggest change with the gavel going to Senator Schumer is being in control of what legislation reaches the floor for a vote. It also makes every Senator the most powerful Senator because one vote swinging to the other side is meaningful. That one vote swing may mean that more Senators get what they want when legislation moves especially on the 20 Senators that are in the center of both sides of the aisle. More to come on policy punditry but not today. In the short term, as you saw with the Garland nomination as AG, Schumer is going to be much more powerful pushing Biden’s cabinet nominees through the Senate.

What It Doesn’t. Don’t expect giant climate bills to the tune of $2trillion to be made into law anytime soon. A 50/50 Senate is a balancing act including the effort to make sure Manchin doesn’t switch parties. I would expect Manchin to be heard loud and clear on energy issues and retain his chairmanship of the Senate Energy Committee.

The Platform Value. Carlyle’s infrastructure fund is investing $374million into Amp Energy’s platform for projects around the world. The investment highlights not only the strong desire to invest in renewable energy infrastructure but to do so in partnership with platforms like Amp. Just a few years ago, private equity was interested in projects but not the team and company that makes sure those projects are investable. I think this is a nod to all of you developers and analysts that have been arguing for more value to be put on the platforms.

Highlighting Permitting. I would appreciate your social media elevation of the op-ed on the need to remove permitting barriers for solar. You can find the article here and tag me on Linkedin/Twitter and I’ll make sure to return the favor.

Consolidate Your Power. As you walk back into your offices (remote or otherwise) you will realize that the conversation is about what isn’t available. Modules, inverters, wires, tax equity, labor and other core requirements are in high demand and short supply. On product supply look towards consolidating your purchasing with similar companies to maximize your access and keep your pricing competitive. We’d be happy to give you more information at the SolarWakeup Buyer’s Group. 

Opinion

Best, Yann

This is your SolarWakeup for January 6th, 2020

The Senate Hangs. Yesterday, Georgians went back to the polls in their dual Senate run-off election. At the time of my writing this at about 2am Eastern, it seems a distinct possibility that the Senate will end up in a 50/50 split with Vice-President Harris breaking the tie. IFF (sorry to the non-engineers) that were to happen, you ask yourself what the Biden policy impacts would be since we largely assumed McConnell retaining the gavel. First and foremost, it provides a more realistic path to Biden to confirm his cabinet including those that are focused on climate. It does not however, in my mind, change much on the policy initiatives on energy with Manchin in the middle. Senator Manchin was the ranking member for the Senate Energy Committee and Schumer is unlikely to do anything that helps McConnell’s effort to have Manchin switch parties which he has been telling donors is the plan in the case of a loss in Georgia. So we wait and see for these results as well as the final confirmation later tonight that Joe Biden will be President come January 20th.

Shoals Files IPO Papers. In week 1, one of my predictions is coming true from my year in review last week. Shoals Technologies, the Tennessee manufacturer of balance of system components (and solar expo exhibitor expert), has filed for their IPO. The S-1 filed is a placeholder in advance of their roadshow and final fundraising document. It does give us some of their financial results through Q3 2020. The profitable manufacturer is smaller than many expected at sub $200million in revenue with 30% margin but keeps their overhead low with a great net income number relative to the revenue. If Shoals IPO is successful, and there is no indication of it failing, it opens the doors to many more IPOs at this scale which is much lower than previously assumed by solar companies. In short, if a $25million earnings company can be valued north of $750million or more then hold on to your horses because there is quite a pipeline of solar companies that will want to follow suit. Here’s a word of caution though, $200mm of revenue with north of 10% margin is different for a company with a track record of success and market share growth with the professionalism gained by having a seasoned executive team and owned by someone like Oaktree versus a company that just reached that amount, is growing exponentially with a team that has little track record of previous exits and investors that aren’t on JP Morgan’s speed dial.

It’s All About the Home. Grid planners, investors and realtors are coming together to assess the next decade. In a strange combination of circumstances, the focus on the home has never been greater and the electrification of the homes has never been more apparent. Additionally, the use of the home’s electric system is rapidly increasing with work from home/virtual schooling/gaming/streaming and shifting the gas station to the driveway with electric vehicles.  They say home is where the heart is, but soon we will find that home is where the market is too.

Supply Or Demand. California is leading this discussion but FERC isn’t far behind. Should electricity grid reliability be managed on the generation (supply) or building (demand) side of the meter. I.e. do we need peaker plants or the ability to manage the electricity in your battery or refrigerator? The answer is all of the above, negative electrons through demand response, virtual power plants through distributed resources in solar or storage and stored energy in a renewable generation portfolio. Best of all, the entire demand response market is built without the need for ratepayers to carry the burden because if the market creates a pricing signal the market will respond with many GW of flexible capacity.  

Consolidate Your Power. As you walk back into your offices (remote or otherwise) you will realize that the conversation is about what isn’t available. Modules, inverters, wires, tax equity, labor and other core requirements are in high demand and short supply. On product supply look towards consolidating your purchasing with similar companies to maximize your access and keep your pricing competitive. We’d be happy to give you more information at the SolarWakeup Buyer’s Group. 

Opinion

Best, Yann