Greentech Media Solar Summit Recap

Greentech Media Solar Summit Recap

By: Kacie Peters

Director of Business Development

Image Source: Greentech Media

“It’s always fitting to attend a solar conference in Arizona – the sun’s energy is more tangible in 100-degree heat.” – every attendee at the GTM Solar Summit 2019

As I write this, the Pivot Energy team is on our way home to Denver from the 12th annual Greentech Media Solar Summit in Scottsdale. The event attracts the industries leading experts in solar and storage finance, technology, and software. Here are some of the “hottest” topics tending at the event:

The ITC Phasedown Is Top of Mind

Thanks to an extension of the federal tax credit in 2015, the solar industry has a softer landing with reductions in the federal tax credit rather than the steep cliff the industry once faced. In 2020, the credit drops from 30% to 26%. In 2021, the credit falls to 22% and finally to 10% for commercial projects beginning in 2021. Next year is the first year that we’ll face this deadline, and discussion surrounded how to compensate and which markets may suffer:

  • Developers and asset owners are once again trying to save their ITC eligibility by procuring modules. However, this strategy can be risky in itself; increasing demand for modules increases prices and long development timelines may mean that companies buy too many modules and high rates. There is also a “risk” that the ITC is extended and you now have a stock of high priced mods collecting dust.
  • Initial markets may shrug off the ITC phasedown, and some developers are happy to see it go. Complex capital stacks that include tax equity can bog down projects with high return requirements, so it’s understandable that some are welcoming the exit of the tax equity investor. Still, tax equity will be a (limited) part of commercial projects for the foreseeable future, so the complexity isn’t going away. And, reducing the incentives can hurt marginal markets.
  • There was a lot of buzz about opportunity zone investing to cushion the blow of the ITC stepdown. Investing in projects in specific geographies can juice the returns for projects. High net worth individuals will likely replace cash debt, rather than tax equity in the capital stack thanks to some complex accounting rules.

Everyone is *still* Trying to Solve for Storage

Every energy conference since 2017 has featured at least one panel on solar + storage, and the general thesis remains the same “we need to do storage, but no one has figured out how to finance it.” That thesis remained the same for this GTM Summit, but instead of storage being relegated to one or two talking heads, batteries made their way into every panel (and every happy hour conversation too). Here were what people were saying:

  • Unlike solar, which carries simply maintenance risk, batteries must be operated actively. If they aren’t managed properly, at best the project simply misses price signals, but at worst the asset could die early. This risk has prompted some financiers to request 10-year operational guarantees, but most developers probably don’t have the balance sheets to support a meaningful assurance.
  • Current storage markets are succeeding with the help of additional incentives to act as training wheels. SGIP in California and SMART in Massachusetts are helping to reduce some of the risk to finance batteries, but outside these areas, behind the meter storage struggles.
  • The residential market can be the most bullish on storage. Resi leader Sunrun is making solar plus storage the leading offer in every market. Although, these smaller systems have an additional selling point of resiliency for the homeowner, and in markets like CA where blackouts are predicted, consumers are more likely to pay more to keep the lights on.

Other Interesting Stray Takeaways

While much of the questions and panels focused on the risks we face in the market, there were a few other cool tidbits that stood out:

  • A lot of companies are developing software solutions in-house to solve specific challenges rather than buying something off the shelf. Software providers looking to service the space should include API interface capabilities to make sure tools can work together with these niche products.
  • There was a lot of talk about solar reaching grid parity in much of (if not all of) the country for utility scale assets, and a lot of growth is happening in states with no RPS.
  • Community solar was noticeably absent from the software discussion and relegated to two presentations on day two (with one focused entirely on LMI). It sticks out as strange, given that it’s the fastest growing sector of the market.
  • Soft costs and customer acquisition still seem to be an issue, even as component prices have dropped dramatically.
  • The 201 trade tariffs on modules aren’t top-of-mind any longer. People seem to be used to the price increases, and manufacturers seem to be footing part of the bill.

The Pivot team is heading back to headquarters a little warmer (and tanner) than before, but with a lot of optimism for the future.