PG&E Will File For Bankruptcy. PG&E announced yesterday, behind a wall of barricades, that it would file for chapter 11 protection by the end of the month. In terms of process, the advance notice was required per the legislation that passed last year during the bailout. You can expect PG&E to seek DIP (debtor in possession) financing over the next few weeks and the stock price and corporate bonds to crater. Just yesterday the stock price was down 50%, leaving the company’s valuation under $5billion. PG&E needs a new leader that is more of a restructuring officer than a traditional CEO, but more importantly the customers need a representative at the table on a daily basis as well. While PG&E is a private utility, and this fact is true for most IOUs around the Country, they serve the public as a monopoly under regulator oversight. In bankruptcy and matters that impact the health of the public, like this one, Governor Newsom should appoint a consumer advocate to oversee the restructuring and make recommendations to the Governor, legislature and the CPUC. I don’t know if there is a legal precedent for this but the consumers need to know that the next steps are not simply for the benefit of the DIP lenders or shareholders but the greater good as well. 

Does Anything Change, Yet? The short answer is no, not yet. I do expect to see the impact stop some financings in the short term while investment committees try to understand the credit scenarios going forward. My hope is that the CCAs come to Sacramento with a legislative support proposal to back the CCA counterparty risk while also fixing the community solar rules in California. Community solar allows the off taker to be changed in a default scenario, which by definition will always be a partial default of the solar asset since many off takers are sitting side by side. Now is the time for industry to put forth strong proposals and show that clean energy including solar is ready to lead California forward. 

My Proposal. I mentioned yesterday that I was asked by a legislator what I would do if I were in a situation to write one rule for solar. My answer was to lock in uncapped net metering away at retail rates without time of use restrictions. If the future of includes one or more EVs in every driveway and monopolies serving as wire companies, then distributed energy needs a simple and efficient way to do its part, which will be a necessary component of 100% renewable energy. Other States have this rule written and should be preserved. Those that do not need to take the leverage provided by monopolies looking for a handout to get back to where we came from. 

Crossing the EV Chasm.  EVs need mass market SUVs and pickup trucks to really make a dent in american transportation numbers. Like I said last week, An electric Ford Explorer or Chevy pickup would change the game and that can’t happen fast enough.

• Vox: California’s largest utility just declared bankruptcy. Hello, climate change.
  
• San Jose Mercury News: PG&E bankruptcy Q&A – What does it mean for me?
  
• Axios: SUVs and trucks will drive the electric vehicle revolution
  
• Quartz: Solar plus batteries aim to retire natural gas plants in 2019
  
• Scientific American: Solar Farms Shine a Ray of Hope on Bees and Butterflies
  
• Renew Economy: Booming solar market triples in 2018, set to deliver “Hazelwood + Liddell” by 2020
  
• PV-Tech: Astronergy ends manufacturing at former Conergy factory

Opinion

• GreenBiz: Shareholders are looking for value, not pushing politics

Have a great day!

Yann

PG&E CEO Leaves, Notices Coming? Geisha Williams, CEO of PG&E, has stepped down after running the company for less than 2 years. This comes amid speculation that PG&E will be providing notice of potential bankruptcy filing to the employees as required by the legislative bailout that passed the State legislature last year. The company is looking for a new CEO but from my perspective this is all about dumping the problem on Sacramento. Yes, the company doesn’t have $30billion in capital to pay for potential liabilities but I don’t see why today or next week the problem needs to be solved. PG&E as a monopoly is looking for the CPUC, State Legislature and Governor Newsom to make their move and show their hands. 

What Happens Next? Wall Street is selling the news, see the chart below that shows the 60% declines in a few months, erasing billions of market value. PG&E will get out of this but the question is what opportunity is presented to consumers, including myself, about the type of company that PG&E can become. PG&E is private but it’s a monopoly. Newsom has the ability to fast-track his climate vision including transportation, solar and more, right now. I know who the next CEO should be, a CEO that believes that the future of PG&E is entirely clean and provides a service, not a hindrance, to all clean energy assets both distributed and centralized. I’ll be watching, eagerly, to see what happens next. 

Solar Impacts. In the short term, expect solar to push hard for bailouts on the solar PPAs that lock in the solar capex from 5-10 years ago. PPA rates in the double digits but those projects are already paid for and bondholders bought into that pro forma. There are gigawatts of solar projects with PG&E as the off taker and solar can’t afford to show this downside scenario which would result in a capital markets tax for all other solar projects. 

King For A Day. A legislator asked me last week what is the one thing that I would change if I were the Governor of a State and could pass a rule unilaterally. It was an obvious but interesting question, a question that we should probably all have answers for. What is your answer? You’ll get mine tomorrow. 

Social Equality In Solar Lacking. Tufts is out with a study on the access and adoption of solar by socio-economic standings including race and ethnicity. There is a lot of data there and I hope you will find a time to read it. This is in line with the speakers’ messages at the Vote Solar Equinox event in DC.

• Bloomberg: PG&E CEO to Leave With Utility at Brink of Bankruptcy
  
• San Franciso Chronicle: Possible bankruptcy for PG&E – Company may notify employees Monday
  
• Nature: Disparities in rooftop photovoltaics deployment in the United States by race and ethnicity
  
• Greentech Media: Will the Renewables Industry Seize the Opportunity of Opportunity Funds?
  
• PV-Tech: Regional issues plagued global solar funding in 2018 – Mercom
  
• mLive: Residents worried proposed solar farm will disrupt scenery
  
• CleanTechnica: Solar + Storage Half The Cost Of Gas Peaker Plants — 8MinuteEnergy
  
• Vox: Texas’s wind and sunlight complement each other exceptionally well. That’s huge for its grid.

Opinion

• Axios: Thousands of GM engineers reassigned to work on EVs

Have a great day!

Yann

Massachusetts.SolarWakeup is coming back to Boston, stay tuned for date and location to be announced. With SMART in full effect, we look forward to catching up on the most important updates to the solar market. Can’t wait to be back!

• Vox: “Innovation” – the latest GOP smokescreen on climate change policy
• Fast Company: California’s rooftop solar mandate will normalize clean energy
• Greentech Media: Tesla’s New Products and Challenges in 2019
• Utility Dive: 2019 Solar Outlook – Making ambitious state policy into a reality
• PV-Tech: China reveals new subsidy-free solar and wind policy
• Axios: The race to shape the Green New Deal
• The State: Solar advocates renew push in State House. Will SC ratepayers see more choices?

Opinion

• EDF: Without the right policies, energy storage could increase emissions

Have a great day!

Yann

Trade Talks. You recall the name Robert Lighthizer, the US Trade Representative, from the 201 solar tariff discussions. Solar advocates met and advocated on our behalf in front of him and his staff. He has made a play to be the lead negotiator on the China trade talks that were started on December 9th when Trump and Xi came to a 90 truce. (Here is a great deep dive on Lighthizer). In the meantime, one of the biggest issues facing the solar industry is the potential escalation of the trade war instead of a deal. Solar is a global market place and the US is not in a position to keep our growth on the same track without the global supply chains even beyond China. Look for Lighthizer to give more updates on this topic, we are all watching closely. 

EV Growth, What It Means. 2018 was a banner year for electric vehicle adoption in the US. It reached 361,000 up from 200,000 in 2017. The key here is that the number of available EV’s in the market is still minuscule, Tesla offers just 3 models and most Detroit OEMs have one or two at most. Consumers love the electric experience and the curve of adoption will skyrocket from here and we will reach over a 1 million new EVs on the road by 2021. All of this adoption will change the way the grid moves electricity and how much electricity is needed. Stay tuned…

PG&E Rating. A day after the Newsom inauguration, S&P cut the credit rating for PG&E to B from BBB- which means the corporations debt is now junk. In response, several executives retired and left their posts. This isn’t the end of the story but instead is the start. The market is saying that they are unsure of what the legislature will do given that PG&E is going to need policy action in order to potentially stave off bankruptcy or other restructuring. 

Utility Risks For Solar. When utilities change their credit rating that affects anyone that sells to that utility because their receivables insurance could be lost or the receivables line of credit adjusts the available capital. For solar, changes in the IOU credit means more expensive debt, if it is available at all. At a B rating, solar projects under PPA with PG&E for example will have a hard time to refinance or find debt. This means that projects could be sidelined or the price per kWh will have to increase. A worse credit rating means more expensive solar for consumers. 

Colorado Coal Costs. $2.5billion in savings if Colorado shutters its coal plants while increasing solar and wind from its current levels. That’s a solar spill that pays for its own cleanup!

• CNBC: Analysts see ‘several signs of modest progress’ in latest US-China trade talks
• Greentech Media: US Electric Vehicle Sales Increased by 81% in 2018
• Reuters: PG&E falls further after S&P cuts credit rating to junk
• Los Angeles Times: What would happen if PG&E sold its gas business or filed for bankruptcy?
• Vox: Colorado could save $2.5 billion by rapidly shutting down its coal power plants
• Utility Dive: 2019 Storage Outlook – Utility procurement will drive deployments, analysts say

Opinion

• CleanTechnica: Solar Investment At $9.7 Billion Globally In 2018

Have a great day!

Yann