Robert Lane: That covers it.
Ben Kallo: Thank you. That’s a great answer, detailed answer. Now, just on the ITC sales versus tax equity, Rob, maybe if you could just go into kind of the decision, if you’re giving up something if you do ITC sales versus going the traditional route to tax equity and how you make that decision? And then I had just one follow-up.
Robert Lane: Yes. Yes. I think there’s a bit of a misconception here that you, if one just sells an ITC credit, there’s probably some value being given up. You’re not able to take full advantage of all the tax attributes. If an ITC, if a tax equity fund sells the ITC credit, then you really are getting just about all the advantages. There’s very little friction. And that’s the route we’ve chosen to take. So we’re always going to generate a few tax credits directly, pardon me, directly into our balance sheet, just because maybe we have some assets that don’t fully qualify for some of our tax equity funds. And that just because of concentration limits or whatever that’s a number that’s very small. It’s less than one half of 1% of our total TPO [ph] assets.
But the nice thing about the agreements is that we now have a home for that as well instead of just piling that onto the balance sheet. But the vast majority, over 99% of what we’re going to be doing that is those are credits that can be sold out of the tax equity fund. So there’s very, very little friction there with regards to overall liquidity. And in fact, it becomes an accretive on the P&L.
Unidentified Analyst: Got it. And then just maybe John, just on working capital efficiency and as it relates to your dealers, does it impact the relationship with your dealers? And then maybe if you could just talk about the health of dealers just because of the overall economy? Thank you.
John Berger: Yes, sure, Ben. Well, look, I think that a lot of our dealers run very good shops and businesses, and some of those businesses are quite large. And all of them are that I can think of are entrepreneurs that started the business. So they know what they’re doing and they can run a business through this environment, and we’re certainly in this together. And then I want to stress that they need something, we’ll be there, we need something, they’ll be there for us. Is that everybody in the network? No. But our core dealer base is certainly of that ilk. I would say, look, in terms of payment terms being reduced and so forth, you can certainly navigate it, and frankly, you need to. I mean the cost of money is really high, and it is what it is.
We can certainly push pricing up, which is another thing that obviously they’re not waiting by the phone. Like, oh, I’m so glad you called, you’re pushing price up again. I said, well, call Chairman Powell. I’ve got a line into them as well as like stop the spending – reckless spending from the federal government to push inflation up that was begun by Trump and continued in the Biden administration. So we need – there’s a lot of things that we all can complain about. But we’re here and what are we going to do? Well, thankfully we got these utilities and monopolies that just want to push up price on, no matter what the fuel input costs are. And so, we’ve got a nice price to sell against, and that continues to rise at a faster clip than I think a lot of people really understand, frankly.
And then the other side, we’re getting a lot more scale globally, and the technology is improving in both efficiency and obviously and cost. And so these falling of those. So all of our dealers can navigate that this, and they, some do better than others. Will we lose a few dealers?
Unidentified Analyst: Sure.
John Berger: So that happens, but we’re – nobody’s better at making sure that we’ve been kept hold and manage that risk than us, frankly. I mean, a lot of the industry has adopted the guidelines that we set forth and put in place years ago. So we feel very comfortable about all of our liquidity exposure there and credit exposure really sorry. And lastly, I would say that, my feeling is that we are probably approaching a Q1 trough as far as equipment sales pricing point, it won’t be this quarter and it probably will be next quarter. And then I think we can firm things up. Will it always be a more challenging environment on the equipment side globally, just given the amount of competition that’s come to fore? Yes. Who’s going to come out of that?
I have some ideas. No, I’m not going to say them publicly. But I do think that at some point here like I said, my best guess is in the Q1 timeframe, we do see somewhat of a troughing. And it may stay at that point for a while as far as equipment goes. But I think the volume of – in terms of pricing, but I think the volume of the equipment purchase starts to move up at that point in time. So I don’t think it’s not – it just like, it doesn’t grow to the sky. This is not going to fall through the floor as far as the equipment part of the market. And that’s I think going to take some folks by surprise. There’s a lot of value to be had for consumers both in price and reliability, and I keep pointing to that wedge and the value’s there for the taking.
Unidentified Analyst: Thank you guys.
Operator: Our next question comes from Pavel Molchanov with Raymond James. Please go ahead. Your line is now open.
Pavel Molchanov: Thanks for taking the question. You’ve talked a lot about the cost of capital. Maybe talk a little bit about equipment. We look at benchmark kind of module pricing down 30% in the last six months, lithium ion batteries down about a sharply. In your specific supply relationships, are you observing the same kind of rate of decline as the benchmarks?
John Berger: Probably more, but as I just answered a question Pavel, I think that probably trough somewhere in the Q1 timeframe would be my best guess. But it’s possible in certain these components, like for instance, batteries and inverters rather than panels, it – I think we’ll start to firm up particularly on some of the larger and more better technology players. And in terms of pricing, it probably stays where it’s falling at some point, right? So I think the pricing troughs at some point in the Q1, Q2 timeframe, and I think volume, my best expectation starts troughing where you start to move up volumes in the Q1 timeframe. One thing that’s interesting is a lot of people are starting to look at in terms of investors with trepidation to the election.
I think all Americans look at with trepidation to the election next year. I certainly do. One thing I’d put out there for people to ponder is it’s not going to get any better to, in terms of tax credits in the IRA credits as it is now, certainly in Q1, when we get the final guidance out of domestic content hopefully by the before the end of the year out of the treasury get, make a decision on batteries, let’s go. But wouldn’t it be make more sense is that people start to book and contract ahead of the election so that what are you waiting on? The only thing that could happen is it gets somewhat, maybe a little bit tiny worse. I don’t think the IRA’s going to get repealed or anything like that for the reasons we’ve talked about.
But I do think that you would see some at least incremental pull forward in demand because what are you waiting on.
Pavel Molchanov: Right. Can we get an update on where things stand with your commercial opportunity?
John Berger: Yes. That continues to move forward. We’ve signed a number of deals, some – with some high profile companies. I don’t think any of which we’ve made public. But it’s a nice business. It will throw off cash next year. And so, again, it falls in the side of we’re not going to grow it really crazy. There’s an ample amount of opportunity there. There’s more opportunity than what we’re going to take advantage of, frankly. And that’s okay. It’s a part of our capital expenditure budget that we’ve laid out. And I want to make that point there is, in this industry from now on, the customer count is one budget and in forecast, and the capital expenditure budget is another. Are they related? Yes. But they’re not going to be one for one. And I think we need to start talking about in terms of capital expenditure budgets and the business markets as a part of that capital expenditure budget that we’ve laid out for you all for next year.
