Bill Bosway: Yeah.
Walt Liptak: … gets back on its feet?
Bill Bosway: Yeah. I think that’s a fair assessment. As soon as we get clarity there, what that does for everybody that’s investing is boost your returns on that investment, because you get the incremental benefits. So if you think about that, that really helps deal with similar inflationary issues that the industry has dealt with the last couple of years, it offsets that and keep plowing ground. But you had a lot of customers right now that I think we are in a bit of a holding pattern because it felt like that was coming. So go ahead with the project and then some of them paused, because it’s just don’t quite have the clarity. And they don’t want to actually miss out on the opportunity and so that’s where you get a little bit of delay.
But if those things come into play as has been somewhat communicate to the industry, early next year, January, February, it’s going to make a difference obviously going into the construction season in Q2, Q3 and Q4 for Renewables as an industry for sure and for us.
Walt Liptak: Okay. Great. And then maybe the last one from me on Renewables, just the thought, a lot has changed in the last couple of years, I guess, on returns for community solar, you already had the supply chain issues, you get rising inflation, labor costs, rising interest rates and now you have offsets like with the IRA benefits that will happen. Are these — how has the return changed do you think on community solar projects, is it better or worse?
Bill Bosway: Yeah. I don’t — first of all, whether it’s community or utility, I think, it’s the same question. So I will try to answer this in the best way that covers both. But the levers that you would pull if you are investing had to do with, okay, how do you negotiate the right TPA so the power agreement that you are discussing and at what level can you get that. And I think developers, in particular, have worked that pretty hard and so as inflation has come into the fray, they have been able to get higher price points on their PPAs. And that’s effectively what this all means that the end of the day is as the price of energy, any type of energy has gone up, it’s all relative, solar has been able to go up with in terms of the cost of that generation.
So it’s going to be passed on to consumers. But it’s happening regardless of how you are generating the energy. So they have a release out there to offset the other inflationary things you just talked about, now the IRA kicks in and that’s where those incremental tax benefits can make a big difference. So those two levers on the plus side really do kind of neutralize the cost issues on the negative side and as a result, I think, that’s why you continue to see entrants — new entrants into the industry and demand continuing to stay where it is and continue to grow. So I feel like the economics are — and listen, project-to-project it could swing a bit, but in general the folks have been in this business for a long time understand that.
Walt Liptak: Yeah.
Bill Bosway: Our understanding people are continuing to move forward. I would say, on the other side of that, so that’s the kind of returns side, where it’s got more challenging and frustrating for folks is just navigating through some of the administrative things, whether it’s importation process or permitting process and I do think that is easy and will get better. So those are the two buckets that I think about relative to the experience that a lot of our customers have had.
Walt Liptak: Okay. Great. I appreciate that answer. And then just one for me on Residential, you talked about how you are going to have normal seasonality where I guess your box stores bring down inventory levels.
Bill Bosway: Right.
Walt Liptak: I wonder if you could maybe help us gauge that, like, is this going to be a bigger than normal inventory correction because of we are coming to an end of the supply chain inventory buildup or has that happened already, because some of your customers may have to work so hard this year to reduce their inventories?
Bill Bosway: Yeah. No. I think it actually happened last year same time. This year, it’s just a reflection of what you typically would see in a normal demand environment, supply and demand environment. So our point isn’t that, hey, this is a correction because everyone’s overloaded. Our point is construction cycle starts to slow this time of the year and people have traditionally always slowed down here and they will start to ramp up towards the end of Q1 to get ready for the construction cycle next year. So we are just back to normal seasonality, but the real correction occurred a year ago, that’s when we started to see it, if you recall when supply chain start getting better and commodities came down, people really started to flush out in the channel that started really Q3 last year, Q4 and Q1.
So this year we are back to what we would consider to be normal prior to the pandemic. If you go back and look at the data historically, that’s what you would see actually, pretty…
Walt Liptak: Okay.
Bill Bosway: … normal seasonality play in the Residential business over the last, really 50 years.
Walt Liptak: Okay. Great. Thank you.
Operator: Our next question comes from the line of Julio Romero with Sidoti. Please proceed with your question.
Julio Romero: Good morning. How are you guys doing?
Bill Bosway: Good. How are you?
Julio Romero: Good. I guess, my question is, can you — on Renewables, can you talk about your efforts, the efforts that you have made to make the Renewables segment less volume-dependent and one way for further improvement operationally to that hand?
