Tumult in residential solar

Latitude Media, covering the new frontiers of the energy transition. I'm Shail Khan and this is Catalyst. What I would argue is it was somewhat counterintuitive post-IRA. It was almost like the best day was day one after IRA. And after that, there was just an ongoing like train of challenges, whether it was the the wider trade narrative or frankly as you put your finger on a second ago, the the NEM3.0 changes in California and how much that pulled back participation. Coming up.

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So it has been kind of a rough run for Residential Solar dating back uh well before Trump's recent budget bill, actually. We've seen bankruptcies from major players like Sonova and Mosaic, and many smaller players have exited the market as well. This also extends to equipment suppliers like Enphase, whose shares are down forty percent this year as of this recording.

Not everyone is quite as battered though. Sunrun, for example, the market leader is actually up year to date in the public markets after taking more of a beating in twenty twenty four. Anyway, it was clearly already an industry in somewhat choppy waters, and then the one big beautiful bill hit. So what's the outlook now? I decided for this one to bring on my favorite watcher of public markets in this space, Julian DeMolan Smith of Jeffries.

He's been covering all the public rese solar companies and has a clear view of the world they've been navigating. Also, before we begin, uh, we're gonna do another Ask Me Anything episode where I attempt to answer whatever questions you have about these markets, these technologies, these companies, investing in them.

juggling, whatever you want. Uh just email us if you have a question at catalyst at latitudemedia.com. That's catalyst at latitudemedia.com. I always really enjoy getting these questions, so please send them in. And in the meantime, here's Julian. Thank you very much for having me. All right, let's talk about residential solar, which has been a market that has experienced a lot of tumult, I would say, over the past couple of years. I wanna start by having you kinda walk me through

the state of the market and the major players in the market prior to the the budget bill that recently passed. So like talk me through what's been happening in that market over the past, I don't know, year or two. Yeah, look, I if I were to step back and talk about residential solar at the highest level of the you know, kind of the run up here. Look, it's been a fairly t uh tumultuous backdrop already, right? I mean you've seen

a lot of shift in market share, a lot of shift in technology. I mean look, fundamentally solar is a technology sector, whether it's the electrical equipment or the panels themselves. And frankly, even the financing piece of it has been evolving too, right? So It you know, you had ups and downs in the years going into this to be sure, but I think at a highest level, you know, post the enactment of IRA, you all of a sudden opened yourself up to a lot of different

positive angles, right? Principally domestic contents adder, the ability to tap energy communities as supplemental adders to the core ITC. That really was a watershed moment to try to enable like real profitability in the space. Right. I think that is At its core, what transpired in 22 onwards. Now, look, it's not lost on me and probably you that like, look, you also had a lot of Tumult and exits across residential solar in the run up to IRA. And I and frankly, IRA never got reformed.

And yet you still had a number of bankruptcies and and the like in the last couple of years. So don't get me wrong, it has not been a panacea, and I don't want to characterize it as such. And that's why I say in some respects, you know, many people uh term this a solar coaster. I think the pe the the example uh of the solar coaster is residential solar in many different ways.

You talk more about those I mean, th y you sort of made a good point there, right? Like the IRA passed and that provided a bunch of tailwinds for Resi Solar amongst a bunch of other sectors. You said the energy communities and domestic content bonus means that like some projects could get forty, fifty percent tax credit, et cetera. And yet, again, even prior to

this budget bill getting passed, um, it had actually been a pretty tough ride for a lot of the companies and we had seen some bankruptcies and so on. So what was driving that? I mean, it I can name at the really high level like two things that seem like they were fundamental drivers, which was basically interest rates. Rose, and that seems to have a pretty meaningful impact on adoption of residential solar or possibly profitability of the companies.

And then net metering changes, particularly in in California, just making it less lucrative. So was it a was it a a thing where all of a sudden companies couldn't sell profitably? Was it the consumer demand started to dry up? Was it that they were financially mismanaged? Like what was going on there?

I mean, I think at its core to be honest with you, I mean I think this is competition, it's probably the single best way to summarize it. I mean again I d I don't mean to be that that to be a cop out per se. Like Your core uh response, your initial response is right, right? Interest rates going up, of course, right? Like, yes, this is an incredibly interest rate sensitive product. Interest rates go up. That is the principal driver of right raising prices. Now, look.

You talk about competition. Like in theory, if it was less of a competitor space, you would say interest rates go up, the cost of solar goes up to um homeowners, and ergo it's just effectively passed along, right? We talk a lot about inflation in the current environment, and we talk a lot about saying, hey, well, consumers are just gonna take it.

Uh not so much as it turns out, right? I mean go to going back to your point. The problem was having inputs that um ultimately weren't necessarily passed along. I would throw in another twist there that, you know, frankly, tax equity in its various permutations uh also was really styming um or styming a number of companies uh within the space as well. Right. I mean

Look, in many instances, I don't think you can blame tax equity in as much as it was sort of an output or the specific manifestation that that drove companies to their end, right? In in in many in many ways. That sort of relates to one question I wanted to ask you, which is a little bit more than a little bit. What? is or was the financial structure of the major players, the published say the public players in the in the market companies like Sunrun and

And Sonova and so on. Like w how are they structured financially? And when things happen, like I don't know, tax equity becoming more expensive, interest rates going up, like how does that flow through to the economics of those businesses? Look, uh to be fair, I mean, I think, you know, you you hit on another core point. Like if you're to focus on the existing large companies that are public, I mean, look, I think a lot of the story there was just leverage, right?

How they financed themselves gave them much less latitude when things went against them, right? Let's let's call spade a spade. And this is true across any sector we cover. I mean, we you and I have uh talked over the years, you've seen a lot of these different permutations. is uh is a real killer over the years. And look, uh to be honest with you, I think that is definitely a contributing factor as we saw here yet again in in recent months. I mean, th to to cut to the chase. Like

one should have had more of an equity structure given the volatility. And again, you could talk about the volatility, you're like, what are you talking about? You customers sign up for a twenty plus year term, volatility. What do you I mean that that doesn't resonate.

Yeah, yeah, my point to you is you don't necessarily know how many customers you're gonna be signing up. You just you don't know the discrete terms that you're gonna sign up that next customer, the volatility of the business that we just described, whether it's interest rates or otherwise.

That's where there's the ambiguity in the business model. It's not in the discrete um decision of like, hey, a customer signing up for 20 years does contract a cash flow. Cool. That's great. That's the core tenet of the business model. Sure. But you know, the

sort of the supplementary piece of holding leverage at the parent company is really what we're talking about here is having a company that goes out and effectively finances and develops residential solar. That has a certain limitation on the amount of leverage it can take. and making sure that you're very diligent to keep the maturity profile and and give yourself a lot of latitude.

Um, is is truly important. I think that's really what ended up being um a critical factor for at least uh a couple of the major bankruptcies in the last few years. Just diligence in rolling debt. is is at its core. Now you could also go back to it and say like wait

Leverage, come on. Now you can't blame leverage. No, you're right. You can't just blame leverage uh naively. The ability to refinance, the ability to roll forward your debt. If I have maturity, if I have a home or whatever, I'm just gonna roll it forward. The the problem here.

was that you couldn't necessarily when you needed to, right? You need to proactively follow your debt. And more to the point, the economics of the business or go go back to that core mantra of competition wasn't necessarily working in your favor, right? You had a number of new entrants, right? Think about this.

If you want to talk about like probably the unsung story of what's going on residential story um in the last couple of years, it's been you have a number of different novel competitors out there. Right. You've got this uh next era subsidiary. You've got um you you've got various private folks from abroad coming in.

um with their own equipment, tethering, leasing terms to that equipment, right? There's the lots of di look, and I I would call that innovation. I would call that, look, I mean in in a world of of solar and understanding that look, it's it's it's sort of like up to consumers to slack. I get it. Um, I really do. Uh but again, I I would also emphasize uh it it's been brutally competitive at times. And I think in many ways, I think that's um that that's the culmination of what we've seen out there.

Is in in the inability to pass along in a in a linear fashion, price. And I could argue even from today, regardless of what's happening with O Triple B, um, is that You know, frankly, the the competitive landscape could get worse. I mean, you could see a declining volume environment in the next years against the backdrop of having, you know, still a landscape of different solar vendors.

And frankly, the prospects there become a little bit more of a knife fight in the sense that like, yeah, we're we're competing over a greater number of customers, right? Like how does that evolve? How do how do other players fall out of this market? That's the open question. But we c we can talk about that. There's a lot to unpack there, frankly.

What do we know about consumer adoption and like I guess demand elasticity? Like, one of the things I don't really have a clear handle on is okay, obviously at the margin, It becomes if solar becomes more expensive because we have import tariffs, because uh interest rates go higher, whatever it is, like obviously at the margin that should impact.

Customer demand and volumes. But I don't really have a sense of, you know, like back in the day when I was paying more attention to residential solar, the magic. Uh there was some magic point you had to hit where you had to offer like a 20-year lease or PPA with a three percent escalator that gave you fifteen percent year one savings or whatever the number was, something like that.

Um, is there do we have evidence of sort of how much demand elasticity there is? In other words, do small changes in price to the consumer really drive meaningful demand? changes or is the market less elastic than that? And what's actually happening here is more about like the profitability of the individual unit for the supplier, for the installer. Yeah, I mean look, I'm not gonna try to argue that this is uh like a truly competitive landscape. Um What I would argue is

You're right. Like there's a lot of different inputs that are going against companies and their inability to, in a linear fashion, pass those along to customers has been unfortunate. Um, not to rehash too much from the last second. I mean, and and frankly, we've seen uh a lot of different oscillations in the last years. It has been strike I think what what I would argue is it was somewhat counterintuitive.

To the cumulative challenges that we've seen post-IRA. It was almost like the best day was day one after IRA. And after that, There was just an ongoing tra like train of challenges, whether it was the the wider trade narrative or frankly, as you put your finger on a second ago, the the NEM3.0 changes in California and how much that pulled back.

participation um in California. And that was a big volumetric impact that really cascaded not just across the the actual lesseurs and and installers, but also across the equipment manufacturers, right? That really challenge the system, um just from a volumetric perspective for for quite some time. And I think we were just coming out of that last year and then we started talking about, oh, and now we've got the CRA quest.

Right. And I think that's really what's w what is in front of us now. It's like how you think about um what is to come is really gonna be dictated by all variety of interpretations, not just under O Triple B, but really where this administration wants to go in terms of interpreting policies. That's so critical here as far as I'm concerned. But look, I want to make sure I'm answering your question directly.

Yeah, I mean you alluded to the key thing of the moment, which is the uh the budget bill, O Triple B as you call it. Um, all right, so let's dive into that a little bit. Can you just walk through what that bill does? two and four residential solar relative to status quo beforehand. Way to frame what's happening under this bill now is not just in a linear sense, okay, yeah, they've shortened and and and accelerated the phase out of IRA, right? Like

Okay, sure, I got it. And in fact, in many ways, where that ended up at the at the end of last week was actually um frankly at the better end of the spectrum of what fears were. Again, everyone understood right at the outset that there was going to be some pain to be taken.

And frankly, when you saw the house and the house freedom caucus come out a few weeks ago, it was like, oh my, they are really taking a hatchet to the residential solar space in particular. So you've seen a lot of major gyrations in the space.

that aren't over yet and I we'll get to that in a moment, but I really would emphasize that a few like literally a month ago, you were staring at this being like, wow, like you could see a precipitous decline in residential solar as of next year, right? I mean, whoa.

Okay. But really what's transpired is like, no, actually, leasing companies can be eligible to continue participate through 2027. Residential storage is in theory extended through the full life of IRA as as you saw folks chiming in saying, look. firm capacity deserves to get the full IRA benefits, got it. And then ultimately look, the biggest dynamic for residential solar that we're looking at right now is really consumer solar in the context of this 25 DP.

Right. Like to the extent to which that consumers can no longer qualify themselves for um the uh the tax credits, that's a game changer. Right. I mean, if you want to talk about being pro-consumer or not, I mean the nuance here is like look. You're gonna only limit the ability to tap tax credits to corporate entities and commercial entities and you're gonna take it away from consumers directly?

Again, not exactly intuitive, but has major changes for the underlying landscape that we're looking at here, right? And I think that's the most important point is as you roll forward to 2026 when you have this requirement go into effect.

The open question is, well, so uh d so leasing companies effectively take over this market. Now, again, broad stroke. So you've got a two to one ratio. um already of leasing companies versus folks doing um you know loans already and and and doing their own financing, right? So again, I think the the backdrop and the trend was already going towards uh leasing arrangements, right? Like that that that shouldn't be lost on people.

Um, but if you think about rolling forward next year, like you're basically gonna have two options. You can buy this thing outright, but realistically you're gonna forego the tax credits. Or B, you can continue to lose uh leasing companies and they can qualify for the tax credits and they can indirectly flow that back to you in the form of a lower offtake arrangement and offtake price. So that's that that's really where the industry model's going. And the question is

Um, how is uh you know, how much demand erosion are you gonna see writ large on the back of that? Like how much of that one third ish of the industry are you gonna say, well, look, that's just demand that evaporates versus simply saying, look, they're just gonna pivot to a different financing structure. And and now you're gonna have like effectively market share capture by a variety of the incumbents, principally, as far as I'm concerned. And and how are the installers themselves gonna pivot?

um to adapt that new reality. So for as much as we've seen a lot of gyrations, 2026 is gonna be ex i again, I would call it extraordinarily dynamic. Um, in a market which you could argue the market itself is going to decline in absolute terms. And yet for the incumbent leasing companies, arguably their volumes on a discrete basis are going to go higher.

Right. Because they're going to capture the market share that I didn't previously have that was going directly to consumers. So that's like one of the single most important dynamics as you roll forward. And then if if you'll permit me, the other important piece here that like you gotta talk to is like, wait a second.

So that's only twenty six and twenty seven. In theory the tax credits, the IT C rolls off at the end of twenty seven, under the deal cut with Aus Freedom Caucus and Lisa Murkowski and all that across the House and the Senate. And then there's this nuance of like, wait, wait, wait, wait. It's not technically the end of 27 because it was this so-called thing called the safe harbor.

Right, you have this dynamic where um in theory, if you commence construction, and again, that commenced construction is a really technical legal term. Um in theory, you can buy equipment and some permutation and effectively extend out the life and the eligibility of that ITC beyond that 27 cliff, if you will.

And so, yes, technically the two-year period, 26-27, is gonna be dominated by leasing companies. But the question thereafter is really going to be dominated by, well, how does this administration seek to change? those safe farmers, right? Because the day after, I mean almost literally the day after, as in um we're literally sta staring at, you know, Monday, July seventh, days after this thing was formally signed on July fourth.

The administration administration comes out immediately and issues an executive order and says, actually, we're going to rethink how we're doing this commenced construction in Safe Harbor. And that's a big question mark here on what this means for residential solar in twenty eight and twenty-nine and twenty thirty. Um and that's unresolved, right? If you catch yourself up to the story today. And that's the single biggest sitting at the edge of our chairs question mark.

For enabling and giving some degree of visibility, right? Cause these business models want visibility. I'm building a business with two years of visibility on solar, and then I'm gonna sort of roll the dice on how this evolves further. Are you tired of overpaying for big name PR firms but not really knowing what they're delivering? Is your comms team wasting time reviewing lengthy messaging briefs and decks?

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Correct me if I'm wrong though, the degree to which the commenced construction rule and any changes Treasury might try to make to it affects like huge business decisions today feels to me more significant, more dire for utility scale than it does for Resi. For Resi, because because this 2027 place in service rule, which exists if you don't successfully start quote unquote start construction by mid-2026,

That's really, really hard to hit in utility scale because you're subject to like interconnection timelines and all this other stuff. Whereas in Resi, you're just kind of like rolling doing installations. Not that it's not important and as you said, it like it affects the twenty eight, twenty nine volumes, but it feels to me like it's You know, if you're in utility scale This you're like eyes glued to the treasury process because it's all that matters, less so in Resi. Am I wrong?

Look point counterpoint right look you your point's made but I'll give you the counterpoint on that Look, utility scale solar. Look, the reality is that market is principally driven by CNI demand, co commer commercial and industrial demand. What is that? Effectively it amounts it amounts to tech companies, data center demand, right? Like, am I really worried?

substantively that someone's not gonna step in and want to enter the utility scale market to buy renewables in the future, we've already got a clear deficit of supply um to meet what effectively is is tech and CNI demand out there. Right. So

If I were to summarize it this way, the ability to pass along the inflation X tax credits in that market, which is the bulk of the renewable market, is fairly transparent. It's going to be there. In fact, that that's what makes this IRA conversation, IRA reform conversation. so readily ha happening, right? It's like there's a

A growing in implicit acknowledgement of like if these IRA credits are going to tech companies, why do we need this? That's the tension at its core of how this came to be today. But if I were to think You're arguing that like uh the the the ITC PTC is more existential for residential than it is for utility scale. And thus like You don't have Get it in twenty eight, twenty nine matters.

Yeah, l well let's put it this way. I wouldn't use the word existential. I would say it this way. It's much more transparent to me sitting here today in twenty twenty five that I've got a buyer, aka supposed future data center company or the like. Um, who's keen to procure that at not any price, but at a price, rather than saying, look, I'm gonna jack the price up of residential solar by X percent.

Um and twenty eight or twenty nine, depending on exactly how a safe harbor and depending how much if they buy storage with it. Um, and I there's sort of an uncertain elasticity on pricing that that you're walking into, right? Clearly there's a market for solar, for residential and for util scale, ex-tax credits, and without knowing who that buyer is, right? Like clear, transparently.

But there's a much greater degree of uncertainty on the residential side, given how much more meaningful on a relative basis the value is of that tax credit in residential solar versus utility solar. On a percent basis, the tax credit's more valuable.

Right, fair enough. So I want to go back and unpack for a minute just some of the other dynamics that you you laid out there. So basically the what the what the bill does is it says if you are uh doing h homeowner ownership.

of residential solar, whether through direct purchase or a loan, which is the two ways that you do that, you're not gonna get the tax credit after the end of this year. So it it kind of ends tax credits at the end of twenty twenty five, right? For for anything that is owned by the homeowner. And then meanwhile, it allows the tax credits to continue in the same manner as you get for utility scale.

um if it is third party owned, which is where you're saying the leasing companies in theory PPA as well would would qualify in the same manner. And so it really advantages Anybody who can offer a third party owned solar. And I guess this is my question for you. Does the bill does the the dynamic of qualifying for the credits for a lease versus ownership? Probably result in an even bigger incumbency advantage. Do you have to be a big player to take advantage of those credits?

rather than being a small local installer. Look, let's be honest, right? That trend towards consolidation has been going on for years. And look, I will like firmly agree with your characterization. What we are poised to see, whether it's 25 into 26, whether it's 26 going into 28, we're going to continue to see the consolidation. Now, again, let's be careful.

There's a s like depends where you are in the value stack, right? Like in the financing terms and effectively who's originating these leases, sure, that's gonna continue to consolidate. What is the interesting question? Who's gonna win in that race? And what are the what is the innovation there? Is it just be a race to the bottom on cost of capital for?

But look, I think separately and distinctly from that as you frame is like look, the individual installers who had been principally selling loans and had sidestepped this whole conversation to a large extent. Um, that's really going to continue to be phased out. And in many ways, what I would argue to you is like when you look at, you know, the the trend over the last years where you've seen um

Residential solar companies take advantage of the IRA, which only authorized domestic contents and only authorized energy communities to lease in companies. You know, frankly, that already shifted the market share away from loans. The higher interest rates. themselves shifted people away from loans, right? That has been the story.

of consolidation for the last two years running. And that's only gonna be magnified here from what we can tell with the twenty five DPs phasing out at the end of the year. Now look, there could be like a pull forward, there could be some dynamics. where you see folks say, actually I'm gonna run in, I'm gonna, I'm gonna buy it while it's hot, I'm gonna get it before the end of the year. Do you see a little bit of a pop? We've been asking ourselves that for a little while here.

Okay, two other dynamics that I want to talk about with you.

Um, one is the effect of likely rising electricity prices. I mean, we're already in an environment where retail electricity prices have been rising, more so in some places than others. But but significantly. And I think general expectations are that a variety of factors, including removing tax credits for utility scale renewables, will probably cause electricity prices to rise.

Even more in the future. How do you think about that in the context of residential solar? Obviously, the the whole the dynamic of The economics to a customer of residential solar are a function of how much does the solar cost versus how much does your grid electricity cost. So if electricity prices are like inflationary across the board, presumably that a helpful signal for Resi Solar, but I don't know how quickly that flows through to actual demand.

If I were to answer the question directly, I would say look. We ran this math uh a month ago as we were looking at the prospects of OEEB phasing out IR uh the IRA incentives and said, Look, utility rates are going up. So when we ran our math, right, assuming that you benefited on a you know, your starting point was Um an ITC that includes some degree of domestic contents in energy communities. The point is if you're talking roughly 40% tax credit to begin with, and you roll that off.

You know, you're effectively talking about ballpark a three cent a kilowatt hour increase in pricing, right? So again, is that the end of the world? No, not necessarily. Is that if I were to use kind of like uh a tri you know, year over year uh bill increase, uh you're talking about uh call it almost a seven percent

um five year trajectory, right? If you think about like this phase that happening cumulatively over a five year period or something like that, we're talking about this being like a seven percent per annum increase over a five year period, right? So it's not trivial. And you know, are we expecting utility rates to increase at that rate? No.

But I think the historical growth rate of utility rates at two to three percent, could we expect that to, you know, increase relatively speaking? Sure. Um, I think that's um that's that's certainly in the cards. And I think a further nuance here, and a really important nuance, is look.

Is the cost structure gonna come down on residential solar? I mean, like that's the other elephant in the room, right? To be honest with you guys. Like we talk about competition and s this may really not sit with people because people, what do you what are you talking about? Like there is still a lot of value.

that is caught up at various points in the supply chain that you know what honestly if you look internationally you would ask why is US residential solar so expensive versus say Australia? We ask this a lot. And arguably, as we see the tax credits come out, you're gonna see that spread, that difference in how you, you know, you price residential so on US start to come off, right? The the dealer markups and the like.

start to come down. I think that's the principal metric variable here that you're going to be looking towards. And that could actually mean that that 7% impact, right, or you think about that three cent a kilowatt hour is blunted as it like makes its way to consumer price. And so you could make a as you kind of allude to, you can make a much more cogent argument saying, Well, look.

Utility rates two to three percent. Ah, not sure that's really the case perspectively. I'm not gonna say it's five plus by any means, to be sure, but I'm also gonna not gonna tell you that seven percent is gonna be, you know, right going right to the consumer either. I think as you look at it, like you're gonna be parsing details. And yes, indeed, as I go back to initially, X tax credits, there is still clearly a market.

Right. And the fact that the ongoing tax credit for the storage, which we haven't even talked about separately, is still there only adds to that conviction. Again. The question is for a sector that has otherwise been a growth market, right? Like residential soil has been very much viewed as a growth sector at large, which is difficult to stomach entirely in an infrastructure world. You're like, wait a second.

Um, so it doesn't it doesn't appear to be a gross sector anymore. It's a sector in you know overall volumetric decline potentially for several years in a row. And how does the industry adapt around that? That's the new bigger reality that we should be addressing and talking to here.

Okay, so you alluded to my last thing to talk about, which we maybe shouldn't have saved to the end, but is but is super important, which is storage. Um So uh you know, obviously the storage credits will persist longer than the the solar credits will. So there will be a particular incentive to continue to attach storage. I guess I'm curious about two things. One, how

central has storage already become for these residential solar companies? Like is the attach rate so high now that we should actually be thinking of them as solar plus storage companies or or is it still kind of a a side business for them. And then two, do you foresee a future wherein there's a these some of these companies at least pivot to a storage only business or at least significant storage only installations? Is there a world for resi storage?

in the absence of Resi Solar, we have seen those deployments happen in some places already. Yeah, um lots to unpack there, but I'll try to be concise. Uh number one, storage. Look, I don't necessarily think there's a sizable storage standalone business.

Uh at least relative to the size and scope of what we're looking at today in, you know, solar and storage and solar only, right? Like that's it, like obviously it's there. It's just as a relative percentage of people who are gonna do solar and solar and storage, I think the storage only markets mod.

A B look I think when you think about the business model, yeah, clearly. I mean the fact that you can still sell solar and storage and then take a tax credit only on the storage piece, which conceivably also includes the power electronics, mind you. Critically, um, that's actually a real value proposition there. So I think you're gonna see an evolution of sort of like a cash sale plus a lease sale.

or a like uh you know some sort of lease that effectively um embeds the tax credit on the storage piece, but then also has an ongoing solar you know lease in there as well that just doesn't have a tax credit. So I think you're gonna see like again, we talk about the evolution of the business model, the leasing terms are gonna evolve.

to encapsulate and effectively price up modestly, but keep embedded the implicit tax credit that stays with the inverter and the underlying power electronics to integrate the storage as well as the storage solution itself. Right. And I don't think that that that piece is going away. And I think those are gonna, you know, folks are gonna innovate to get there.

in the next couple of years. That's where people are gonna have to win. Right. And we see new and novel business models emerging around storage as well. And I'm I'm sure you've you've seen some of these different um anecdotes around Texas and and how this is being sold, right? Um to consumers. Right. So Stay tuned is what I would offer, right? In terms of storage being the linchpin of how solar is sold and having imagination of how that can shift and create stickiness.

Well, stay tuned. I would say is a good coda to this whole conversation and a good way to end it. So, Julian, thank you so much. As always, really fun to talk to you. Thank you, sir, so very much. Appreciate the time.

Julian DeMolin Smith leads power, utilities, and clean energy equity research at Jeffries. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Daniel Waldorf. Mixing a theme song by Sean Marquon, Stephen Lacey is our executive editor, I'm Shale Khan, and this is Catalyst.