Solar Company Execs Offer 2023 Industry Outlook
March 10, 2023
Originally published on San Antonio Business Journal.
Bret Biggart, CEO of Austin-based Freedom Solar, predicts his company will do $1 billion in revenue in the next two years.
With energy costs rising and green energy incentives multiplying, industry leaders are making bold predictions about the future of solar in the Alamo City.
From January 2022 to January 2023, the average combined residential electric and gas bill went up from $152.89 to $175.93, CPS Energy shared in a Feb. 27 presentation with its board of trustees.
Meanwhile, in August of last year, Congress passed an extension of the Investment Tax Credit, raising it from 26% for solar systems installed in 2020 and 2021 to 30% for systems installed between 2022 and 2032.
The marriage of these circumstances is what led Freedom Solar Power CEO Bret Biggart to predict that his company will cross the billion-dollar threshold in the next two years.
“Solar adoption is still in the early days. We’re still at 5% penetration across the U.S.,” Biggart said. “We expect with the passing of the IRA (Inflation Reduction Act) and the extension of the tax credit that allows customers to have a 30% tax credit for the next 10 years, the market is going to catch fire even more than it has in the past.”
Biggart told the San Antonio Business Journal that Freedom Solar did $255 million in revenue last year and is expected to do $405 million in revenue in 2023. Much of that growth comes from the San Antonio area, which accounted for approximately 10% of Freedom Solar’s revenue last year spread across 11 different markets.
“We basically doubled the company every year for the past four or five years,” Biggart said.
Freedom Solar focuses on the commercial market, which is “a much better economic story than the residential market,” Biggart added. “The economics of commercial projects include depreciation, and so when you factor that in, the return profile for commercial projects across most markets (is) three to four years in terms of a payback.”
Freedom Solar completed 100 commercial solar projects last year, 70 of which were in the auto industry, according to Biggart. The company is also seeing increased interest in solar from multifamily developers.
“That’s a revenue generator for those complexes,” Biggart said.
The San Antonio Business Journal also spoke to Big Sun Solar co founder and CEO Robert Miggins, who said his company is experiencing similar trends across the solar market. He said manufacturing, automotive and hospitality industries are all hot markets for solar right now.
“Each of those types of companies would have a really big, expensive electricity bill, right?” Miggins said. “If you’re manufacturing something in a big plant, your price of electricity is going up. So, they’re looking to offset that.”
While Miggins declined to go into specifics regarding last year’s revenue, he said it’s a “safe bet” that Big Sun Solar will double its revenue in 2023.
“Demand has never been stronger,” Miggins said. “We’re looking at projects for us that are bigger, more ambitious and more expensive than ever before.”
One of those projects was for privately held real estate company Hixon Properties Incorporated, which partnered with Big Sun Solar to install rooftop solar on its multifamily complex, resulting in a cost savings of $23,889 per year, according to the company.
Miggins predicts low-to-moderate income(LMI) multifamily housing is soon to be another desirable market for solar, “because some of the tax incentives, without getting into too much granular details, can actually get to even greater than 40%.”
“You can get even to 50 or potentially 60% tax credit if you’re operating multifamily in a low-to-moderate income census tract,” he said.
Not only are solar companies taking on more projects, but environmental, social and corporate governance (ESG) initiatives are becoming more popular among publicly traded companies, according to Miggins.
Miggins said they’ve been receiving a lot of inbound calls from companies who want to make progress on sustainability so they can report it back to their shareholders.
“This is something that’s not quite required by the SEC, but a lot of people are expecting that it’s soon to become a requirement,” Miggins said.
While many companies are expressing heightened interest in solar, Miggins pointed out that others are pulling out over concern about rising interest rates.
“If there’s a disruption, if that company is thinking about their business slowing down, if rising interest rates are going to make the financing of that project more expensive, some folks are just putting the brakes on some of those projects,” Miggins said. “It’s happening, but there [are] a lot more projects that are being initiated. I think the optimism outweighs the pessimism.”
On Dec. 16, 2022, CPS Energy announced the end of its solar rebate program that began in 2007.
As the rebates trickle down, so has the cost of solar installation, to the tune of 60% over the last decade, according to the Solar Energy Industries Association.
“It was great to start the market and get it going,” Biggart said. “But we haven’t seen a slowdown in the market.”
He added, “Our biggest market is Houston. Houston has no local incentive and [a] very low cost of power, and we’re still seeing that market take off. I think what we’re finding is that the market wants solar, and we’re here at the right time and the right place to provide that.”