Brian Lee: Hey, guys. Good afternoon. Thanks for taking the questions. Kudos on the solid execution. First question I had was just around NEM 3.0. I think there is different implications of that policy uncertainty near term and medium term from what we’re hearing. So maybe just wanted to get your thoughts near-term, some views out there that maybe there is a pull forward on demand in California would be curious what you’re seeing with respect to that? And then kind of in the medium term, we’re hearing the industry is still maybe trying to figure out how to navigate this. So curious how you specifically are thinking about the second half of 2023 in the U.S. you kind of base case in California to be down significantly? And then how do you see yourself navigating that, if that’s the case?
Are you driving more product to other states, focusing more in Europe? Just curious just how you’d be thinking about planning into that period of higher policy uncertainty in the back half? And then I had a follow-up.
Badri Kothandaraman: Yes. On NEM 3.0, we aren’t really seeing any pull forward right now. But in talks with few installers in California, both big and small, like what I said, the originations are up strongly. They are all quite optimistic. And maybe we will see something soon that’s why I talked about an optimistic Q2. But so far, we haven’t seen any pull forward demand yet. Now on talking about NEM 3.0 in general. NEM 3.0 is going to be incredibly positive for us. Because NEM 3.0, I mean, just so everybody gets it, I’ll talk about NEM 3.0, the features of NEM 3.0. Basically, the €“ previously, the import and export rates were the same. So therefore, when you exported electrons with the solar system didn’t really matter. As long as you exported, it got directly subtracted from what your input.
That’s why it’s called net metering, and that was net metering 2.0. With NEM 3.0, it matters when you export these electrons. So you have 24 hours a day, 365 days a year. So basically, 8,760 data points, and there is an export rate for each of those data points. Each of those hours, there is an export rate. And €“ but what it works out to be is if you are interested in a pure solar system, your payback dropped understandably from, let’s say, 5 years, it increases actually to something like 7 or 7.5 years with the pure solar system. But the moment you add batteries, you can add batteries in steps of 5-kilowatt hour, 10-kilowatt hour, 15-kilowatt hour, the moment you add batteries, that payback comes right back in to that 5 to 6-year time, to that 5 to 6-year period.
That is the stock difference with NEM 2.0. With NEM 2.0, the grid was the battery. Batteries didn’t have an ROI because batteries were primarily for resilience only. With NEM 3.0, batteries are going to be financially attractive. But it is complex. NEM 3.0 is definitely complex. So the installers need to demystify it for the homeowners. And that’s where an engine like solar draft and other engines come in, where if we are able to show this to the homeowner, we think it is a no-brainer. The homeowner will always pick solar plus storage. Now to add some more variance to it, Germany, for example, if you look at Germany, this is exactly what happened. They call it as a feed-in tariff where €“ so that is not 8,760 different rates for those hours, but they have one rate, which is a much reduced rate.
