Emptying our coronavirus notebook: Solar ITC update, industry concerns and practical steps from here for installers, developers
Sheesh. The COVID-19 pandemic has left little time for the Solar Builder editorial staff (me) to keep up with and report on solar industry fallout and impacts while also keeping the rest of our editorial plans on the tracks (from home, of course) and launching a wacky new video idea. Now that I have a clear head, post dog walk, here are some scattered notes on how the solar industry is being hit by (and adjusting to) our COVID-19 reality.
Stimulus passage react
Congress passed a $2 trillion COVID-19 stimulus package late last night that includes some things that will help solar businesses and workers – long-term unemployment insurance, business loans and provisions that support employee retention and other employee protections.
Cool for sure, but short of the ever-present goal of the Solar Energy Industries Association to extend the Investment Tax Credit — a reasonable ask considering the time being lost right now to take advantage of it.
“Congress can provide immediate relief to solar families by allowing our companies to utilize the support Congress has already provided to the solar industry and make the Investment Tax Credit either refundable or payable directly to our businesses and customers,”stated Abigail Ross Hopper, president and CEO of SEIA, prior to the stimulus package being complete.
Biggest concerns from SEIA members right now are …
1. Construction delays
2. Customer acquisition (substantial drop in new contracts from residential respondents – customers don’t want sales staff in houses, or their investment accounts have taken a big hit and can no longer do the purchase right now.)
3. Supply chain concerns (these concerns started back in mid-January.
4. Disruptions of permitting – quarantining paperwork for two weeks before handled in one location.
UPDATE: check out this rundown of anecdotal evidence from SEIA members:
- Cancellation rates for residential solar systems are now extremely high, hitting upwards of 50% in some sectors. This is leading to jobless installers, which was previously America’s fastest growing profession.
- One company today told us they have already seen a 60% drop in sales.
- Companies are reporting complete work stoppage and sales lost for six months to a year.
- One company with 350 employees completely shut down this week.
- Orders for shipments are being cancelled left and right, hurting manufacturers. Companies are reporting 90- to 130-day delays for products.
- In Pennsylvania, a company laid off all of their field staff and is concerned about their ability to re-mobilize after the crisis subsides, underscoring the need for immediate relief for longer-term economic stimulus measures to be effective.
- Financing is freezing for some. More than 63% of respondents are concerned that they can’t get access to tax equity.
Slowed business, job cuts
According to a recent SEIA survey, some sectors in the solar industry could see a 50% reduction or more, up from BNEF’s estimate of 16% to 30% just a week ago. 554 solar companies sent a letter to Congress underscoring the impact COVID-19 is having on the solar industry.
“As a result of this pandemic, the solar industry stands to lose half of our jobs — that’s 125,000 families who will no longer receive a paycheck,” Hopper has stated.
Speaking of the ITC
Way back on last Friday, March 20, SEIA held the first of what will now be an ongoing webinar series — Implications for the U.S. Solar+ Value Chain. For large-scale solar developers, John Marciano, chair of the tax and accounting committee for SEIA, had some valuable advice concerning the ITC.
“If you started construction in 2019 and were going to finish by the end of 2023, you can qualify for 30 percent regardless of panel delivery. … the rules say pay by end of the year and reasonably expect delivery in 3.5 months or accept the equipment by end of the year. If you took delivery and finish by 2023, then you are good.
“… Those who are into a slowed supply chain, and don’t know if they can get stuff in a 105-day window, doesn’t necessarily matter from a tax qualification standpoint. And no one knew COVID existed on Dec. 31. The first case in China was Dec. 30. So, to say we didn’t reasonably expect it is ridiculous.
“Offering indemnity could be a path forward. .. or you can have title or rush of loss transfer or take delivery if it exists today — it doesn’t have to be in the United States.”
On Force Majeure (unforeseeable circumstances that prevent someone from fulfilling a contract).
“Most contracts for 2019 constriction start projects required delivery within 3.5 months. Tax equity and financiers will need to be convinced to loosen constraints or contracts will need to be renegotiated to allow title transfer / deliver by the deadline. Some will include a force majeure out for damages. Construction contract and supply contract force majeure notices have been widespread (some have been withdrawn).”
Practical calls to action for permitting offices and AHJs
So, OK, the country is shutdown, and the stimulus bill is passed with no direct help for the solar industry. Time to get practical. As always, progress at the local level can have a huge impact on the growth and stability of the solar industry.
Question to ask: What are some antiquated laws or regulations or process areas where this crisis has shown it to be non-essential?
This can start with modernizing permitting processes that should have been modernized long ago. SEIA as usual has some good recommendations for doing so (many of which are part of its SolarAPP initiative), such as moving the application process online (via email or a web platform), and accepting application fees online.
“Some jurisdiction have an inbox for permits by email,” noted Sean Gallagher, Son the webinar. “Some are accepting permit fees over phone. … Others are accepting inspections virtually. Some are using Skype with an installer on the roof or at the panel showing it on their phone. Others accepting photos.”
While doing so, maybe those permit applications could be simplified for faster and easier filing and approval.
No one has to reinvent the wheel to do this. Here’s one from Oceanside, Calif.
Another great idea is conducting plan checks and inspections post-install. Plus, those inspections can often be accomplished via Skype or emailed photos. Benefits of this approach from this handy page from SEIA:
• Same safety and design protocols followed before the system is activated, just in a different order and without emphasis on applications that are not actually installed.
• Installers take risk that they are out of compliance, which would be flagged by inspectors.
• Permitting authorities can keep working by email and maintain vital fee revenue.
• Solar workers can continue working and installing systems.
Seeing solar investment as essential
Been thinking: This coronavirus-caused era of communities both coming together for a common purpose — while also prioritizing social distance – sounds like a great call for more decentralized, independent sources of renewable energy. Right? Lachlan Fleet, CEO of SolarReviews, agrees with me at least.
“The utility sector is observing a decrease in demand for power from commercial and industrial enterprises, and a rise in consumption from the residential sector, with schools and businesses closed and people ordered to work from home,” he noted.
Consider Italy, one of the epicenters for the coronavirus outbreak, saw an 18.1 percent drop in power demand from Feb. 21—the day before the country instituted a nationwide lockdown—through March 16. The lockdown keeps people in their homes, with all nonessential businesses closed.
“As U.S. officials ponder more measures to prevent the spread of the virus, beyond the closure of schools and businesses, we are bound to witness a shift in power demand,” he said. “With residential electricity demand on the rise, consumers are going to see an uptick in energy bills. People across America are going to take this time to think about what things they could have done to be better prepared for a pandemic like this. Meanwhile, their electric bills will likely increase due to being home all day.
“These increasing electric bills will jump out to Americans as an obvious area for improvement in their budgets. Having a solar system saves money in the short term, makes you money in the long term as an investment, and helps you become more self-sustainable. With lowered interest rates, solar loans are now an affordable option as most people can install a solar system with no money upfront and see instant savings.”
What’s a solar installer to do?
This is a fairly impossible question to answer, but here are some ideas to consider.
If business has indeed slowed down, maybe take advantage of the extra time to revamp your marketing efforts. We chatted about some ways to do with in episode 2 of our Social Distancing video series with Andrew Azure from Outback Power.
Suntuity Solar launched a really cool new initiative in response to the COVID-19 pandemic that offers services and support to organizations affected in the local communities across New Jersey, Maryland and Florida.
“The Suntuity Pledge” offers fleet, logistics and call center services to support community organizations that need it most, whether it be meal delivery for children to groceries, medical kits or other logistics support during this time of uncertainty.
Goldin Solar in Florida started a new Facebook group for employees, friends, and fans. It will be posting regular updates to the group and hope that it can be used as a discussion board for all things solar and climate, particularly in Florida.
Minnesota’s solar industry is coming together to try and use the pandemic as further evidence that local incentives need to be extended.
Stellar Solar in San Diego launched a super cool lead-generating marketing program that’s also designed to help San Diego County restaurants generate extra revenue — a mutually beneficial concept to help both small businesses during these difficult times.
I’d also recommend getting into more remote PV solar design, sales and marketing. Our Residential Rooftop Report this year had some solid advice on how to do just that from Aurora Solar in the article “Modern Solar Sales: How top teams use software to win”
Download that for free below: