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2026.09.30 | TB | Energy | Nextpower Former Director Expert

原标题：Nextpower – Former Director at Nextracker Inc (Nextpower)

#energy #power

Third Bridge · 2026-09-30

Client-led • 16 Sep 2026

Companies: ARRY US, NXT US, TSLA US

Expert Former Director at Nextracker Inc

Agenda

Questions

00:06:59] We would like to discuss Nextpower. My understanding is that in the US, the growth rate for utility-scale solar is going to be flat because every year, the plan is to add 30-40GW, so 30-40GW in 2026, 2027 and then 2028. Then EIA [US Energy Information Administration] has a flat assumption after that. It doesn't increase the gigawatt after 2028. In Europe, it's a similar story. Every year, it's 30-40GW up until 2030. Is my understanding of the industry expansion correct?

Expert [00:08:16]: I have not heard that. I would find that somewhat surprising given the advent of… I'm sure they factored it in, but to be determined on what AI data centres is doing. Europe, land is obviously a little bit more expensive. They probably have some better laws around it. Certainly, with the US if AI data centres and the demand or the use of AI and that keeps on increasing, that alone has a pretty huge power draw, which co-located with solar, battery storage seems to be a relatively good solution right now, maybe not as good as gas turbines and things like that. Nonetheless, I would personally be surprised that the demand for renewable power plants flattens out. Again, I haven't read that specific report to see what they're basing it off of.

00:09:27] Do you have any understanding of the growth front? How is the industry expected to grow utility-scale solar in the US and Europe?

Expert [00:09:44]: For Nextpower specifically or just general solar growth?

Client [00:09:55]: No, in general, industry level data, like solar, utility-scale solar growth, US and Europe.

Expert [00:10:05]: Europe, I'm not as familiar. You said what, 30-40GW was what you read. What report was that? You said you mentioned you read a report that expected 30-40GW.

00:12:26] Given what we have on the regulatory front, all projects get completed within the four-year timeframe for those whose construction has begun before June and July 2026, right?

Expert [00:13:06]: Those dates have come and gone before. This is not the first time we've seen the tax credit move around. Initially, we started safe harbouring projects in 2019 at a pretty rapid scale and then saw it extended. The price of solar has also been continuously dropping due to module size. Depending on where other forms of electrical generation are at that point, solar is likely still going to continue to be competitive even more so. Then thereafter, I think a lot of it is assumed demand-driven from some of these companies where the scale of what we are seeing in AI right now… What would be a good example? In 2016-18 was more or less the heyday of US solar generation in terms of the hockey stick curve, if you will. The size of projects and demand from AI currently and TBD, what happens with that with public commentary and competition among hyperscalers and colos and everything, but it's a 10x scale. Obviously, not all the power generation demand will be reliant on solar, but I would be surprised if that didn't bleed over. For most of the projects up until '29 or thereafter, those have already been safe-harboured as of this year and likely next.

There's still demand and backlog thereafter. These developers aren't just going to suddenly shutter their doors and stop building solar if public demand hasn't stopped. Does the ITC cliff drop off? Yes. Has the solar industry learned to, how should I say this, be aware, but also, I don't know, prepared for the worst, expect the best, something like that? I don't know. It's surpassed itself every year so far and not to say that it continues at this rapid growth that it's seen in the previous years, but those are the data points that I've heard. I'll be certainly surprised, having worked in the industry for 14 years that it goes past it, but we'll see.

Client [00:16:16]: EIA mentioned the solar part, where you have approximately 47GW, 41GW, everything in the 40s range for the next three years up until 2028. In 2029, it's no addition on the solar front and in 2030, no addition, 1GW or something. At the same time, from Wood Mackenzie, I have 35GW of additions every year. It's 35GW up until 2030. Every year, you add. It's not growing. Both data points tell me it's not growing. This year, if you're planning to add 47GW, next year, the incremental would be 41GW by EIA. You say that it might not be the case. According to you, 42-50GW would be FDR [final design review] until 2029. Going forwards, it will be further more than 50 GW. Is that correct?

Expert [00:17:42]: I can't say past… I wish I could tell you where the solar industry was going to be in four or five years. I think for the next year…

00:19:10] What is your approximate number on the installation front for the next five years or so in Europe? As we are discussing Nextpower, I wanted to touch on the Europe front, given that the company have done the Zimmermann acquisition. How is the market growth looking for utility-scale solar?

Expert [00:20:10]: For the US, that's what I was referring to. I don't have much experience with Europe. I did earlier in my career and no longer. That's just what I was relaying to you, was they were saying expectations of 40GW with 10% growth the year after for the next, what was that, three years, I believe. That would get you to 2029-30, and that was just what I… They had based their numbers off that. That was the data point that I've been holding in my head without having read these reports. That's not from Nextpower. How they play into this? I don't know how much market share they'll have.

Client [00:20:59]: These are the US figures you gave, right?

Expert [00:21:05]: US.

Client [00:21:06]: You have no pointers on Europe, right?

Expert [00:21:12]: No, I'm not. I don't look into that.

00:21:15] On the tracker business, we know that it has the biggest market share, 55% in the US. Could you share how things might be from here and how saturated or mature the market is? Is there growth potential in volumes for trackers within the US business, the single-axis tracker (inaudible)? Do you think there's still growth potential on that front? How do you see the pricing? How do you expect pricing and volume to trend given the mature market that the US is in for the single-axis tracker?

Expert [00:22:06]: As the good sites, so I guess growth would be, at least from the standpoint of Nextpower, I think last I saw they have 60% of the market share for trackers, I believe, which is going to be very difficult to improve on just by nature of most procurement managers. Are you referring to Nextracker specifically or you want to know about trackers in general as it relates to fixed tilt and land use?

00:22:45] Could you explain what the growth will be for the industry?

Expert [00:23:02]: These days, most of the conversation around tracker vs fixed tilt is related to the availability of land that's suitable for trackers. As companies like Nextracker have procured Ojjo and TrueCapture and XTR, they've been able to access that land better, which has kept allowed more trackers to be installed where places they previously wouldn't have or it just wouldn't have pencilled out. I would imagine that trend continues on for trackers to maintain their percentage of installation compared to fixed tilt. From a renewable energy standpoint, they're definitely the best solution so far. As modules continue to increase in size and power, I don't see any reason why they wouldn't continue to maintain, I guess, their percentage of their relative percentage as the market continues to grow or contract or whatever it does. I guess that would be trackers.

Client [00:24:34]: What is the percentage of utility-scale solar using the single-axis tracker that Nextpower sells vs what is the percentage using a fixed-axis tracker? Do you know the percentage mix by type of tracker?

Expert [00:24:56]: I have not read that report.

Client [00:25:35]: Which particular areas have you worked in?

Expert [00:26:02]: Obviously, worked at Nextpower for about a decade on a number of different teams. I ended with working on basically developing commercial programmes for them. Their VCA programme, I built all the safe harbour commercial and operational approach and then would train the sales team on it. It was commercial programme development and then working cross-functionally with a number of teams within the organisation.

00:26:53] What is the moat of Nextpower? What does the company do differently vs other tracker companies? Where do you place Nextracker vs its peers? What is the moat that helped it to take 55% share in the US?

Expert [00:27:27]: There's a few moats. One is technology. It's a mass balanced [sic] system. Through that and through the basic technology, so lots of its competitors are linked row, which requires more energy, which means you usually have to plug into the grid and you can't have it battery-powered. It also means that you can't drive vehicles down between rows for long-term maintenance. These are all little things that begin to add up to a lot. Due to the fact that it's an unlinked system and that we could then create a self-powered controller for it, which Nextracker, every time, was first to a new innovation in the space compared to its competitors. Then I'll get to why that probably is in a minute. It has a lot of technical advantages. Then, because you have unlinked rows, you can have a self-powered controller. Because you have a self-powered controller, you can now have XTR, which has diffuse and row-to-row tracking. If you have XTR, you can now gain back energy losses that you have from construction and also undulating sites, going back to what I was mentioning about how all the good sites are gone, so technology is accessed open to new sites.

Then from there, Nextracker, building those technological advantages into their flagship product, they then went and acquired things like Ojjo, screw piles. Now you can install with less steel in more difficult geotechs. They came up with hail stow and monitoring, I forget the name of that product. Those now allow insurance companies to be able to basically have lower rates if you have Nextpower on your project because of how they can stow and that mass balanced design allows you to get to, oh shoot, maybe 70 degrees or something. All that to say, they have a few technological advantages that other companies have tried to keep up with. That is your quantitative aspect of their moat, various patents and things like XTR that what's nice about it is that these benefits, they appeal to developers and EPCs and even banks. They did a great job of selling a lot of value to everyone within that vertical from utilities, banks, insurance companies, developers and EPCs. They found ways that all of them benefited from using Nextpower as their supplier.

Now on the qualitative side, I would argue that Nextpower's team is the reason why they are staying so far ahead. Most of the executives at Nextracker have experience from PowerLight, SunPower, SunEdison and… Oh, what's the third one? PowerLight, SunPower, SunEdison. It's probably those three. They had 10-15, maybe sometimes 20 years of experience prior to starting Nextpower, Nextracker at the time. Most of them, if not all of them, I think actually all of them are still there. Their level of industry knowledge is just like the Rolodex, the how-to, the operational excellence, all those things, it's just they're an incredible team when it comes down to it. I don't see how any other team in the industry is going to somehow manage to collect that level of experience and implement it. If you look at ATI, their whole exec team has flipped over maybe twice now. GameChange just doesn't have the same calibre.

So long as those folks stay at Nextpower, they're just obsessed with the industry. They love trackers and building solar. That's just their goal. Dan Shugar, their CEO, he's brilliant at what he does. He's so strategic and engineering-focused when he needs to be, can flip-flop and it's crazy how much he can do. It's really impressive to be around him. Those are, I would say, the two. They have a pretty good technological moat. By now, they've done such a good job of blocking out sunlight on smaller tracker companies to come in because they have all these VCAs set up with these developers, these long-standing relationships. When you get into these billion-dollar projects, no new entrant is going to be able to chew those projects off. You're going to have to start in the DG market. That's pretty difficult to do because you just don't get the volume in the door at the prices you need to be able to have the lessons learned. Fortunately, for when Nextracker started, it was only us and ATI really. You could go to one of two people or one of two companies.

00:34:02] On the technology front, do you think Array Tech or GameChange can offer something? GameChange also does the single-axis tracker, but what is the quality or tech difference? As you mentioned, TrueCapture and NX Horizon-XTR are probably the other two software services Nextpower is offering. Can the two companies replace what Nextpower is offering sooner, or are they already playing in that particular front in tracker technology and the services around it?

Expert [00:34:53]: To answer that question, ATI can offer 50%. TrueCapture, which is a very powerful selling tool for Nextracker, it relies on two separate approaches, one being to individual row-to-row tracking and the second would be to diffuse. If cloud coverage comes over, the light becomes diffused and it doesn't make sense to track to where the sun is. It makes sense to flatten the modules out more to capture more light. With individual row-to-row tracking, effectively, if you were to imagine the sun coming up in the morning shining on the array, the first row of modules would block the subsequent row modules. What you do is you actually tilt that one down. For Array specifically, because they have a linked row system, they cannot do row-to-row tracking. All their rows, not all of them, but in sets of probably 17-20 now are linked so that they all have to move at the same angle, so they can't get as much energy back as Nextpower can. They can do diffuse tracking, so they get that back, but the real energy capture from the TrueCapture technology is in row-to-row. It's in the early morning and the late evening and then also for construction tolerances. ATI just will never be able to get there to the same level.

Client [00:36:28]: Is it impossible for them to do the delinked rows like what we have for Nextracker? Is it impossible for them to improve that technology and not link the rows, then ultimately, they can also do something very similar over the next few years?

Expert [00:36:49]: They certainly could. I would be surprised for them, seeing Nextracker success for the last decade. They've known about this a long time. Maybe they get to a point where they want to try it. There's also some benefits to a linked row system. It's generally cheaper. You don't have a self-powered controller for every row, that's an onboard battery system, which Nextracker has. They could definitely hire some engineers or whatever and figure out how to do it, but they're going to be 10 to whatever, they're going to be 14 years, 2023, so 13 years behind.

Client [00:37:31]: Do you have something similar for GameChange?

Expert [00:37:37]: GameChange, I would imagine they have some sort of TrueCapture technology. However, I haven't read about any acquisitions that they've done. Unless they've hired some really smart software engineers. Nextracker acquired a company, BrightBox, in order to be able to do this. It took us years of figuring out and tinkering with this to get it right and then to have it backed and bankable. I'm sure that GameChange has tried it, but I would be surprised if they see the same results that Nextpower does, just given how much I know went into that and the quality of our team at the time. They could. GameChange could certainly… They have the architecture to be able to develop a software platform that can track individual and row-to-row. Do they have the expertise and the executives and the capital to be able to go and do that? I don't know. I would be surprised. They're known as a low-cost leader, GameChange.

Client [00:38:49]: According to you, Nextpower really has exclusive and top-notch technology, one of the best, it's the best in the industry in terms of the tracker plus the software, right?

Expert [00:39:07]: Yes.

00:39:07] On the low-cost front, it's been 2-3 years, and GameChange came in and reduced prices. On the moat front, you mentioned technology in terms of the tracker and the services around it, and you mentioned the management team. As you know, companies are diverting from trackers to having a very solid non-tracker portfolio. Do you think it's a declining market for trackers? Is there a volume might decline after 4-5 years, and prices are on the decline for every other solar technology, as we have seen historically? Is that why the company is moving on to the non-tracker portfolio? GameChange Solar is breaking the prices, although it is selling a cheaper version of the technology, but it's still breaking the market by giving prices which are at a 15-20% discount to the normal tracker. How do you see the tracker market? Is it all shaking up now? Is it stabilising, or all mature and probably on the declining front?

Expert [00:40:28]: We've thought in 2016, we would run analysis, I don't remember the exact details, but there was an idea that eventually panel efficiency and size becomes so great that you can… Given cost of land, trackers require more land. The idea was that eventually fixed tilt or even I think there was a company out there that was basically just putting panels flat on the ground that that would pencil. The market share has only slipped since. It's got to be tracker… I would say it does have potential to decline. You probably know this number better than I do, but what trackers are probably 90-95% of the total installation of PV panels in the US, maybe. It's got to be crazy high. Maybe that becomes true where efficiency and size becomes so great that it then makes sense to do more fixed tilt. The developers that I used to chat with, their fixed tilt portfolios were zero to maybe some on certain sites where you just simply cannot install a tracker. I find it hard to believe that the tracker market is going anywhere. They're going to just continue to find ways to install it more efficiently, bend it over hills. With GameChange, PV Hardware, ATI, all that sell at lower prices, there's always going to be developers.

An important distinction to make is between developers and IPPs. IPPs tend to own their projects long-term, or at least 5-7 years and then likely flip it or sell it. Developers generally focus on obviously developing a site, but then doing a BTA, build transfer agreement, something of that sort. Developers don't really care too much about the product they use. However, IPPs, your Arevon, NextEra, a number of companies like that, these very large IPPs, most of them focus on quality if you need to use your product for a long period of time and you don't plan to sell it. GameChange will always have a place in the market, so will ATI, so will PV Hardware, likely even more so, some of them in international markets where competition is stronger, given there's no ITC, things like that. They'll always be able to chew off a chunk of market share because there will be some company that needs a cheap product based on the PPA that they signed or their model for whether if they want to do a merchant project.

Then also every procurement manager wants to keep Nextracker honest, so to speak, and not have one tracker company in their portfolio. As much as Nextracker wants to have 100% of everyone's portfolio, the smart procurement managers won't let that happen. There's always going to be a spot for those guys. We thought the GameChange and those guys were going to continue to take market share back when I was working there, and we had 30-40% market share. Then obviously, they've only done to improve that.

00:44:45] Could you share whether more projects are under IPPs [independent power producers] or developers? They have to sign a PPA [power purchase agreement]. Until they get a long-term PPA, they are okay with using GameChange Solar. The more data centre-related projects there are, will they be under IPPs or developers? If the growth goes for the developer projects, then that's a little negative for a product such as Nextpower because it's an expensive product. Is that correct?

Expert [00:45:48]: The flip side to that or just playing devil's advocate, yes, correct. Developers tend to care less. That doesn't mean they don't use Nextracker. It's not like they're all 100% GameChange. It would help you to sell your project if you have a high quality. You sell a high-quality home vs a low-quality home, someone is more likely to purchase it or at least want to purchase it. For the data centres, I don't know that percentages that have co-located with solar, but the uptime guarantees for data centres are even more rigorous than what solar is. I would actually think you would want high-quality products because those things have to stay on. That's how you see these emerging technologies emerging, I guess, like Bloom, On.energy that's basically battery backup for instantaneous power.

With that, having issues on your solar site and not being able to feed those batteries, I would imagine, is going to become very important. I don't know the mix of developers, percentage of developers vs IPPs that are chasing after data centres. One good case study that you might want to look into is Intersect and i3. They were purchased by Google, Intersect was, and they were an IPP, but then I believe built some merchant projects down in Texas or whatever. They're now owned by Google. Google has that arm to do their development. I'm assuming that's what they're going to use them for. They used to be an IPP, that's a good case point. Those folks, there's press releases all over (talking over each other).

00:48:08] I would like to divert into the non-tracker businesses that Nextpower is trying to expand into – frames, inverter, battery, the Zimmermann acquisition and the eBOS [electrical balance of system]. How does the EPC [engineering, procurement and construction] contractor see it when you give them a quotation? Do they like getting all services and products from one place or company? I know you have to quote for everything, and then there's an overall quote. Then are they happy to get different vendors for all products and services, or are they okay to hire one vendor? What's the mindset? How do you see it, given that you already like the management and it's moving from non-tracker? Is it a smart decision? How do you see it going forwards?

Expert [00:49:22]: Something to help you frame it perhaps is it's the developers really making the technology decisions these days on anything major. That would be modules, inverters, trackers for the most part and then certainly battery tech. The EPCs, due to the advent of the VCA programme, we effectively, unfortunately, for them, just carved them out. The developers would sign these agreements with multi-gigawatt backlog, etc, and then just tell the EPC like, "Hey, you're going to be using Nextpower." What you're really doing is Nextracker is selling this to developers. One thing that developers love is they don't want headaches. That's why the VCA programme works so well in the beginning because they're relatively small teams, and they obviously want their sites to continue working. One thing that Nextracker can do now and I would imagine they're doing this and it's part of their whole plan, I'm sure, would be they can wrap these projects from various technologies perspectives and you can go back to potentially one supplier for your battery, your inverter, your tracker, your piles and anything else that they come up with, and that has a ton of value.

That's a soft value, if you will. I think the hard value that Nextracker will be able to provide there is looking and being able to turn over all the stones to find efficiencies in supply chain and technology as you consider the design of a tracker, with the design of an inverter, with the batteries on site. They are going to be one of the few companies so far that gets to actually look in at the design of all these products and how they come together. They should be able to figure that out so long as they keep the key personnel. I agree with your assessment that it seems a little scary of acquiring a tracker company, acquiring a battery company, an inverter company. At least in my view, so long as they keep enough smart people from those companies and retain them, which Nextracker, I will say, has done an amazing job about employee retention. It's like a big part of why they're so successful. Then I think they will be able to figure it out and go get the right people. You look at some of the executives they're hiring as well, and it's just a different level than the guys I worked with. We were sandals and candles people who managed to build a decent company.

One of the hesitations I have for Nextpower and why I get to have my popcorn here and watch it from the sidelines is they didn't purchase any companies that were super high quality or industry leaders. To me, it's a curious experiment to see was it the technology that was keeping these companies back or the personnel and the balance sheet and then the reach, because Nextracker will have an opportunity to sell all these products through their VCA programme to developers. Their Rolodex is second to none in the industry. I think that they're going to at least have a chance in how they respond, which historically they've always been very customer-centric on responding to issues. That's what I'm curious to see, because they didn't buy an LG, they didn't buy a TMEIC. They obviously couldn't afford any of those companies. They obviously didn't buy Tesla or any of Tesla's tech. It's interesting to me to see if you take a bunch of what I guess you could say are B-rated products that weren't industry leaders and you put them together, what was the reason for those being B-rated?

I think that's to me, my big hesitation to their success of I don't know enough about, unfortunately, battery tech and inverters to be like, "This is why Apex and Zigor doesn't work or this is why Prevalon wasn't a market leader." I think that's a potential roadblock for Nextpower of not buying top-tier industry products. You see that with Bentek as well. They didn't purchase Shoals. They probably could have.

Client [00:54:50]: How do you see these companies? None of these companies is really the top leader in their own markets, although frames is a very small market. Similarly, the cabling business, the electrical eBOS is similarly a smaller market, but it has Shoals as the market leader. I think having, 50% market share, but Nextracker acquired Bentek. Over the past two years, it has done 7-8 acquisitions, and none of these companies, except for Zimmermann, which is the European company, are in the US market. Why did it take smaller companies? Most of these markets are fragmented. Except for eBOS, I couldn't find a market leader. Maybe in the battery, it's Tesla, and you have a list of 10 companies before. I don't think Prevalon is even there in the top 10 or 20.

Expert [00:56:01]: No, it's not.

00:56:02] Nextracker is an asset-light model. It uses contract manufacturers. Prevalon is a system integrator. It buys cells, and then it has its own facility to make the battery. Across frames, inverter and eBOS, will it make the company more asset-heavy because there will be more CAPEX for the next few years while Nextpower is integrating these companies? Does the model shift from asset-light to being asset-heavy?

Expert [00:56:57]: My hunch is that there are certain aspects. I would love to know the answer to that question from Dan and Howard. Their expertise, what has allowed them to do work so well, I think, is that they have stayed away from that and they find good partners. Their sourcing and operations team is very, very, very talented, which is US sourcing folks aren't usually that great, to be honest. If you go international, they tend to get pretty good and most of Nextracker's sourcing team is international. Dan always used to say basically just try to keep things simple and do what you're good at. I would imagine they would try and avoid going asset-heavy for the same reasons that you obviously surmised and just partnering with good partners and finding ways to have back-to-back contracts that move them like 45X, that was a huge benefit. Nextracker, obviously, when they built US steel manufacturing, and I believe inverters are also subject to 45X. I don't know how much Zigor or Apex was really doing in the US, but that's something where Nextracker's expertise, they can figure that out 100% if it's not already happening.

That would be my hunch on the route that they take is they have the expertise. They know what's valuable from an ITC perspective, 45X, IRA, etc, and they continue to push the buttons to where they can keep their team relatively lean without having to suddenly own a bunch of manufacturing plants. What they actually do or what those companies had to begin with, as you pointed out, Prevalon is more of an integrator. I think this is more relative to Apex. Ojjo and the other ones, obviously, those guys were… Actually, I don't know, actually, obviously, they manufactured a product, a specific product. I'm not sure if they're actually contract manufacturing that or not. That would be interesting to know. My gut is that they've maintained the paradigm that they've always had.

00:59:42] About Nextpower now being the one-stop shop giving everything around solar, except for the module business. You mentioned it's not the EPC contractor, but the developer that makes the call and directs the EPC contractor that you should buy this brand. Was that the case all along? Do you think the developer would choose a one-stop shop such as Nextpower vs GameChange, which, unless they care about the price, GameChange would be 20% cheaper? Is it always the case that EPC doesn't have the power, or is it a mix of both? Are both EPC and the developer happy with the one-stop shop solution, or are they more looking forwards to having various quotes from various vendors, specifically for everything? Is the offering solid given the environment there is in the US with regards to the stakeholders?

Expert [01:00:56]: The answer to the first crux of that question, which would be, it can always be the developer's call. Sometimes developers, IPPs don't care. They're agnostic. They're like, "Hey, Nextracker or ATI for this site, either way, you pick." EPCs certainly have a say. They also have preferred trackers that they use because they know how to install them faster. Some EPCs only use GameChange. There's a few out there that they have a relationship, they install at cheap sites. They have their developer partners, and they just pretty much barely even look at Nextpower. That is to say it's not 100% of the time that developers or IPPs dictate it.

Historically, EPCs made the call on trackers. That was back in the mid-2000-teens. Developers eventually got smart of like, "Hey, we can set up these agreements with tracker companies, module companies, etc, to where we sign a purchase agreement or an MSA of some sort, and then we dictate the EPC to install it and we get to cut out that mark-up the EPCs have." Now EPCs just have basically a construction fee, if you will. You are correct in that differentiation that it's not 100% all the time just developers.

More often than not now, by and large, the volume from a volume perspective is certainly dictated though pre-emptively. Maybe you bring up a great point of exciting. I think a lot of engineers would love to have various procurement arms, but when you get to the executive level, the reduction in headache and the wrap on a project is very valuable, especially coming from a company like Nextpower to where you have one phone call to make, enter into one ticket system and then your issue could be solved for a number of different items. I think that is going to be something that the market will really eat up. Obviously, it's going to take some time. They just acquired Prevalon, etc. They'll have to build this out. Down the line, that will have a huge value. To your point, the EPCs, they still get to say. Some of them don't like Nextpower. Some of them don't like ATI. They will still have their preferred partner and be able to sway the influence. They're not totally shut out in the cold.

01:03:46] Regarding the China-based businesses, which are low-cost providers and leaders. Given that we have a very favourable credit system for domestic manufacturers, given that on the commercial projects involved, is there good-quality China-based competition in the tracker space? On the non-tracker front, which competes head-to-head with Nextracker, do they have a very good reputation, or are they picked out? How does the China-based competition affect the US market?

Expert [01:04:32]: Within the US, I can't say for sure, but my gut would be no Chinese competition, at least for trackers. Obviously, given the current administration and how that goes, there's a lot of FEOC concern for an entity of concern where that's prohibitive. Even before then, the US market is somewhat unique in that it's very relationship-based. It would have to be a very, very robust, powerful tech, not great tech, with solid relationships in the US for them to break in. They certainly have the know-how because there is a tracker in China that looks shockingly similar to Nextpower's tracker, if not identical. I'm sure you know how all the manufacturing facilities over there work. You can make 20 versions of the same thing with 20 different companies. I think the other aspect that would really concern a lot of these companies is the enforceability of contracts when things go wrong and the ability to service them. It helps that the CEO of Clēnera or any of these other companies, Bryan Martin at DESRI, if something goes wrong he can call Dan. They have that ability to solve it. The US market has always been very handshake relationship-oriented. There's a strong moat, I guess, maybe not a technological moat, but there's a strong cultural moat around the US market for sure.

Client [01:06:37]: Arctech Solar which is China-based, is it there in the US? Are they selling trackers in the US or any other solar-related product?

Expert [01:06:51]: I never physically saw them, but I have not heard anything about… I know they exist for sure.

Client [01:07:03]: On the market share front, it's just the three companies.

Expert [01:07:11]: Maybe they got 50GW or something, I don't know, but not much.

01:07:17] On the non-tracker front, is the inverter business the same as Chinese competition vs US companies, concerning relationship-based aspects, contract enforceability and handshake understanding between the companies? Is it similar across all other parts of the value chain in the solar space?

Expert [01:07:59]: I don't know for sure, but what I can say from understanding the market a bit is, if you look at other main, let's just take, inverters, TMEIC is a Japanese company. Yes, they have a US arm, but that's ultimately a foreign competitor. They're one of the leading inverter providers. SMA, I believe, was originally a German company with a long-term presence in the US. I don't know if it's Japanese, German, maybe good engineering firms that they were able to crack that code, but there doesn't seem to be quite the same… Panels, for instance, as well, the US would love to be able to use overseas panels. Maybe that has to do more with cheap manufacturing overseas for high-technology products. A module is a bit more complex to manufacture, and I would argue so is an inverter and a bunch of parts that you throw together. While Nextracker would always source a lot of its material overseas until 45X and IRA came around, that's a great distinction actually is that a lot of that moat does seem to be applied mostly to trackers. My gut would be that it has to do with the fact that it's much more associated with construction.

The plant is ultimately really built around a tracker. That's what's going in the ground. It's the framing for a house, the foundation, etc. Trackers break in small ways. Serial defect isn't a super large concern. My hunch is that a lot of it is associated with the construction industry, EPCs, etc. Now there's certainly administrative apprehension and things like that, tariffs, etc, to not use them. If those were removed, I think you might be on to something that it could be based on EPC and good old boy, quote, unquote, relationships. There's a lot of foreign companies that do very well in the US market for other technologies, inverters, batteries like Tesla, I think those were historically Samsung batteries as well. Their tech is obviously developed here, but LG, Korean company. You go down the list, a lot of the major players in other segments are overseas companies with just a US office. That's a great point.

Client [01:11:14]: I think batteries in themselves are universal, right?

Expert [01:11:19]: That's true, Samsung, I don't know how much they make, but I'm sure it's a lot. Whatever that percentage is of.

Client [01:11:27]: After the safe harbouring, with that 5% of the project cost started before June, and now you have four years within which you need to get the project ready. Do you think after that, the domestic manufacturers will not have leverage anymore because right now, what Nextracker has been trying to do is acquire all and have that domestic manufacturing capability? That's why we benefited from the 45Z and 48, I think, Y and E (ph)? Do you think after the regulation, the international competition might hinder and then capture the market share from these domestic players?

Expert [01:12:25]: It's just basic. It's like stick and carrot, which is what helps a lot in the US. The current administration, not two or three weeks ago, released something about transformers from overseas and basically just brought that to a grinding halt. There's the stick and then there's obviously the carrot with 45X and IRA. To your point, if you were to remove both of those and just have your, quote, unquote, free market, open market with no regulatory inhibitors or accelerants, I would say, yes, I don't see any reason why it would not stiffen competition for Nextracker and foreign competitors would come over at super cheap prices. I can't imagine that the single reason that the tracker industry has such a moat is because folks in the US shake hands. That's just a function of diversified executives coming in, realising that it doesn't make sense and that you can install something for 30%. If GameChange is 20% cheaper, Arctech is probably 40% to whatever percent cheaper.

I agree with you that if you were to remove all those, like as I said, regulatory accelerants or inhibitors, I think you would definitely see a more competitive market and harder for Nextracker that they would probably lose market share. Trying to understand the US political sphere is an interesting game. TBD, what happens there. In so far, there always seems to be something on either side of the aisle that protects it or deter competition. I don't know. I think your observation is correct in that if you were to allow foreign competition, there would be no incentives for US trackers or disincentives for foreign companies. I don't see how it wouldn't become more competitive and Nextracker would lose market share.

01:15:00] How do you see Nextracker?

Expert [01:15:37]: The general market, I'm not even getting into that, but wherever that swings and general sentiment and all that, that will obviously have an effect on it. At least looking at Nextpower, I do think from a gut perspective and knowing these guys that I think they can figure this out. There's not a company that's done it before, but I do think they have the drive, the team, the expertise, the business savvy to be able to provide… I always used to joke that it's like a Home Depot of solar, but it's not really. They're kind of providing prebuilt homes, prefab homes or have the ability to. I think they can figure it out. I do think that with all the relationships in the market and being the market leader, they will have, quote, unquote, at bats to sell a lot of their additional value chain in products. I think they'll be successful in that. They'll at least have the next two years of runway unless these technologies [are poor], but it's going to take a while to build out the tech and make sure it's all integrated and all that.

They're going to have two years and they have a very, very strong exec team and sales team. They'll give themselves the opportunity. I think that seeing it at 80%, TBD, what the overall market does, it could drag it down. I look at it, and I'm like, I think that company can actually do it and become…When you look at the SunPower, SunPower started as a module company, bought an EPC, bought PowerLight, built out all this stuff, really tried… I think they started to develop rooftop panels, all these fancy other things and then they failed and fell apart and now are nowhere to be seen. SunEdison got way too big, owned a tracker company, tried to develop basically. They ended up crashing and burning, too. There's a lot of companies that have burned. Then we would always debate this of, "There's also companies like ABB, Siemens, things like that that then became huge conglomerates." That's obviously not the exact path for Nextpower, but they've got a strong balance sheet, and they've got a great Rolodex, and they have a fantastic exec team that has done this before and is now continuing to do it. I just don't think they lose.

01:18:52] If you're doing a 40GW project, basically inverter or for a frame business, what is the attach rate for that particular project? You're doing 40GW of trackers, but then if you're selling 10GW, for the 10GW project, you're also selling battery or inverter. That means you have an attach rate of 25%. What are the attach rates for the software business, eBOS and inverter businesses?

Expert [01:20:27]: If I had access to that data, I would love to share it in some way, but I don't… To your point, with Prevalon and Apex, they're going full bore right now. They're probably still focusing on how to integrate their ERP systems. Man, for them to immediately get in and attach it, I wouldn't want to steer you in the wrong direction by just throwing… It would be a wild guess. I guess I'm curious because I don't have the analyst brain, not from any investment sense or anything. How do you guys see it? I see it from having worked there for a long period of time, and I can confidently stand on my soapbox and say they have undisputedly far and away the best team in the space, maybe even the entire solar industry. I'm not kidding when I say that. Go to a trade show and walk around and ask, "Hey, who do you think what company has the best team?" I bet you, I can list three of the five or get three of the five and if Nextpower is not at the top one every time. Mine is obviously a lot more qualitative, I would say. Then obviously, I understand the tech pretty good and how big that moat is. That's easy enough. I'm just curious, how do you guys view Nextpower?

Client [01:22:00]: Historically, we quite like it, how Nextpower has done over the years. Now the challenge for us at this point is really to see how the estimates look going forwards for how the company is going to do in the next five years. It comes from the top, how the industry is going and how much the company can really capture from rest of the world business and the US business. The bad thing about it is only that it doesn't disclose a lot of metrics. It never tells me what the attach rate has been, even in the businesses it acquired two years ago. I really don't know how much margin they are making on the non-tracker business. I just know overall margins.

Expert [01:23:12]: I cannot imagine that more so inverter and integrator, I don't think industry margins are as high as Nextpower and certainly not on batteries, which, as you pointed out, it's buy-resell and basically an integrator. I think they're going to have to start breaking these things out because in so far, they've bought onesie-twosie companies, Bentek, Ojjo, these are pile manufacturing fit that within the tracker architecture really nicely. They're ancillary items or accessories, if you will. Batteries and inverters are not that. They are very much standalone independent parts of the site.

Client [01:24:48]: It's like a secret box, and it's so hard to even guess the attach rates and the margins and the performance of the non-tracker. That's the (audio cuts out) we are depending upon because, as we spoke, 80-90% of the US power plants already have the trackers installed. It's a mature market. The expansion we saw was mostly from the Europe business. The second was from the non-tracker business. For me, it's very hard at this point to model the non-tracker. This call has really been helpful because it reinforced my ideas and then added a few more, especially on the developers plus IPP perspective and then the moat for the company and the management. I think it was really helpful.

Expert [01:25:52]: Do you ever go to the trade shows to do on-the-ground assessment? I think some on-the-ground research, bring your colleague who you're trying to convince maybe even if you like the name. You think I'm kidding. I'm not saying this is going to make you want to buy it or not. Obviously, marketing efforts can be illusionary in some cases. However, to me, I've been in the industry so long, you just hear it all. For someone new who hasn't been there, RE+ is in November in Las Vegas, fun excuse to get out anyway. You should go to a show and you should bring a colleague and check it out. Just whether it's GameChange or ATI or whoever you want to invest in, you could get so much qualitative data just from people's opinions. Obviously, if you guys are investors, I don't know, you maybe grease the wheels a little bit and you're just like, "Hey, we're these investors looking around," everyone is going to want to talk to you and then do some on-the-ground research.