The Solar Industry During COVID: A Conversation with Yann Brandt
Yann Brandt knows solar – he’s been in the industry for 15 year with experience in growth marketing, sales and turn-arounds. He also publishes SolarWakeup, a popular daily news digest of insights and curated content about all aspects of the industry. Yann offered us his observations and predictions about the US solar and related markets during COVID, touching on topics like permitting, legislation and the international response to the pandemic.
Where do you think solar is headed in the next few months and into 2021, given the impact of COVID? You’ve talked about the industry’s resilience in the past few months and that solar will see an upswing this year. Can you detail new developments around this?
When the pandemic first began I talked a lot about the depth and duration of the impact that COVID would have on the industry. There are two sides to that. How many projects would no longer be able to close because of the lack of face to face communication between customer and installer/developer? And how many projects wouldn’t be able to get installed, given the inability to get a permit or even finish the installation if you can’t get an inspection?
What resulted relatively quickly, like from around mid April, was that the impact was half of what we in the industry expected it to be. We were expecting new sales to go to almost zero. That never happened – the worst we got to was about 50% of pre-COVID levels. And we realized there was an opportunity in the industry to shape digitalization both in the sales process and the inspection process. So now imagine a world where people that are selling solar can do so from their home offices, which may not even be in the same state from where the project is being installed. And they don’t have to drive from location to location. This allows them to sell more projects, more efficiently across the country. We are now relatively close to a homeowner being able to get a good understanding of what they want on their house while a contractor is delivering their pitch via a zoom call or an online platform like OpenSolar. There are ways now to be able to go solar without ever actually meeting someone face to face, outside of a zoom call.
The same thing is true for building departments. Some building departments have gotten into digitalization relatively easily by using existing tools. They use email for permitting and FaceTime or Skype-type platforms to do a virtual walkthrough of a site with the contractor, and the inspector doesn’t actually have to drop by the site. He or she is able to do more inspections on any given day. Now we’re in September and many solar companies have adapted, though there’s going to be some geographic pockets where this is less true than others. And nationally speaking, a lot of solar companies had their best month ever in May, and June beat May, and July beat June. So, we’re seeing many companies at their all time peaks in terms of where they’ve been able to grow to.
What about challenges?
The challenges are largely centered around permitting and inspections in many jurisdictions. Some have done really well in this but many have been unwilling or unable to move into a world where we file for permits digitally, which can include emailing a set of plans.They’re still looking for hard copy, hard stamps, wet signature applications from installers, and some building departments are still at the point where they won’t go onsite to inspect for projects. Basically they’re shutting down altogether. We need state or national standards for permitting solar and getting interconnected approval in a way that allows the speed of the market to keep up with the speed of the interest from the customers.
There’s a venture called SolarApp, run by the Rocky Mountain Institute and NREL, that is working to automate and standardize solar permitting or even allow for instant solar permits in particular situations where system design is standardized. So we definitely have glimpses of what would happen if there was a national standard for solar permitting. And there is reason not to have this – there’s no state regulation that warrants a different rule for solar than in another state.
What do you feel are the top concerns and short term goals for commercial solar contractors and the related industries like panel/inverter manufacturers, software vendors and investors?
In California and nationally, C&I buildings represent 50% of energy consumption and less than 10% of the solar market. That has a lot to do with the way things are financed. It’s a complex underwriting process for many contractors when it comes to figuring out how to get corporate customers or nonprofits that are able to pay for or finance solar. CollectiveSun is a good example of taking a subset of the C&I market and getting comfortable with the credit class of non-profits and offering another option for solar at no cost upfront.
So manufacturers end up in a world where they largely cater to residential solar because they can’t necessarily build a business around C&I. It takes a lot of money to start and open up a factory or even get some minimum order quantities with third party suppliers. So we in the industry aren’t necessarily putting our best foot forward when it comes to C&I because the scale doesn’t make sense. And we’re really going to run into this in a big way with energy storage because energy storage either focuses on utility scale or being in a garage in a home, and not necessarily in a parking lot at a commercial building. While there are some deals that are trying to be made in C&I, such as with Geli, C&I solar lacks the maturity that we’ve seen in residential and utility scale markets.
Also, it’s expensive to develop. The cost of electricity for C&I is so cheap – in most places commercial customers pay half of what residential customers pay. So companies end up in a situation where they have to do this high cost development at really low margins once they gain a customer.
We need to build the scale in the market in order to get the innovators, the investors, the people that are shooting for the moon to say, ‘I’m going to develop a better widget for the C&I market because it’s such a great opportunity.’ This is achievable because there’s always a point where solar gets cheaper, and there’s hundreds of billions of dollars of potential investment in C&I solar. Right now the problem is that the risk faced by having one project go sideways into default is too great. But what’s going to happen eventually, and you see some startups working on this, is that there’s going to be portfolios of massive C&I development and the risk is going to be mitigated by the scale. So I think that ultimately the right kind of capital coming into C&I solar is going to solve it. And it’s going to be further helped by lower costs of installation and the value of energy storage in a commercial setting.
What have you seen developing around impact investing?
We’re definitely entering an era where someone will look at opportunities and solar because they call themselves an “impact investor.” Impact investing is a misnomer because they are still looking for the return. Impact investing is not philanthropy, which is giving money simply to do good. What’s going to happen is people will feel guilty about making money in things that don’t have a good impact and more and more people will lose money by investing in things that don’t have a positive impact, especially in energy. I mean, we’re talking today as Exxon gets kicked out of the Dow Jones Industrial Index! We’re in a different era such that impact investors are just smart investors. They’re covering themselves just in case things go bad. But solar remains, and we’ll be the best investment in this decade.
What is the status of the barriers, regulatory and otherwise, faced by the states across the nation seeking to increase their solar adoption rates, particularly given recent events? How do you think federal and state legislation will impact this?
This whole industry needs to do more to become part of the bureaucracy that manages the energy markets. We need more solar professionals to be part of the public utilities commissions’ different regulatory bodies, part of the regulatory process. They need to join the state chapters, for those that are naive enough to think that they don’t need to do that. We need to become part of the bureaucratic process not just remain on the outside of it looking in. For example, this week I wrote about needing to put solar professionals on the board of the TVA, the public utility in the southeast.
In terms of federal legislation, there’s kind of the dream scenario of a democratic sweep and control of both houses of Congress and the White House and what happens in a world where Joe Biden becomes president. The federal side of things has a lot of opportunity to drive settlements and, using existing environmental policies like The Clean Water Act and The Clean Air Act, impact the solar industry.
We could build more transmission and, through Congress, tweak sections of PURPA. This would be big for commercial solar given what we could do with electricity that’s generated on rooftops that isn’t being used by the buildings, beyond net metering. I’m talking about covering a million square foot warehouse with solar when the consumption below it is for only 20,000 square feet of office. How do we look at the rooftops of our buildings as the land of opportunity and as underutilized real estate, as opposed to just roofs that we fly over? That’s where advocates in the federal legislation can have an impact, besides extending the ITC or tweaking some tax rules. There’s so much opportunity to be done at the federal level in legislation and in the executive branch through administrative action.
Is there anything we can learn from the international response to COVID and developments in solar or clean energy in general around the world?
I think the world is aligned about what the COVID recovery should be, especially from an economic standpoint. If you remember, a few weeks after the stay at home orders were in effect no one was driving. And we were seeing the mountains in India for the first time, the sky in LA was the bluest it’s been in 100 years. 2020 is going to have the lowest amount of coal consumption in the US since the first time we used coal. A real change in the economy is the fact that you and I are most likely sitting at home right now talking with each other.
These times have fundamentally changed the way that we use energy. And therefore it means that we will be revisiting what our energy system looks like, especially as we try to get people back to work. There is an enormous opportunity economically, when it comes to the COVID recovery, to tap the best parts of the solar industry and this mitigation of pollutants. We could put this side by side with our use of electricity, our use of cars and see how it all has a real impact on our way of life and our clean air. This could be the test that we never could’ve been able to run otherwise.
Are you feeling optimistic that this kind of understanding about our impact, and the corresponding changes, will happen?
I’m an eternal optimist about the fact that people will end up doing the right thing. And if they’re not going to make change for the purpose of doing the right thing, especially in America, people will end up doing the thing that makes them the most money. Right now electric cars and solar are doing that. If you look at stocks as one economic indicator, though not the best one, no one has made more money in the stock market over the past three months than people who invested in solar or Tesla. That’s where the money is being made. And that makes me optimistic that people will be moved to innovate in the market. But I guess ask me this again on November 4, to see if Americans understood what it all meant.
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Yann Brandt is a 15 year veteran of the solar industry with expertise in growth marketing, sales and turn-arounds. Most recently, Yann led the turn-around of the leading solar hardware company, Quick Mount PV, where the company doubled revenues and was acquired by private equity within 14 months of his engagement.
Yann came to Quick Mount PV from Conergy, where he joined as the Global Chief Marketing Officer to rebrand the newly acquired company into a leading IPP. Adding to the role, Yann became the President for Americas acquiring over 100MW in assets and 1GW of pipeline with transactions of over $1Billion in M&A.
For the past 8 years, Yann has published a daily news digest, SolarWakeup, which is read throughout the global industry and often cited by major equities analysts. He is married with three children and resides in Fort Lauderdale, Florida. His degree in Mechanical Engineering comes from The Johns Hopkins University in Baltimore, Maryland.