Utility and renewable energy provider executives are using third-quarter earnings conference calls to reassure analysts and investors they can ride out supply chain and inflation concerns dominating the second half of 2021.

For Enphase Energy Inc., which makes power electronics used primarily in rooftop solar installations, those pressures weigh heavily on the sector amid skyrocketing material and shipping costs that require passing them on to customers.

"Some of the component costs have gone up by over 100%, and because the supply chain is so tight, I have to air ship many microinverters, which cost a lot of money," Enphase President and CEO Badri Kothandaraman said Oct. 26. "On top of that, ocean freight ... is eight times more expense, so you cannot hide here, right? Wherever I go, the costs are going up tremendously."

Kothandaraman remains uncertain whether supply chain disruptions will continue into 2022, but noted that "the situation is probably not going to die down" over the next two or three quarters, even as a global semiconductor chip shortage affecting its microinverters begins to abate.

Wind turbine manufacturer General Electric Co. is similarly concerned about the macroeconomic outlook for 2022.

"Next year, we anticipate a more challenging inflation environment," GE Senior Vice President and CFO Carolina Happe said Oct. 26. "The most adverse impact is expected in onshore wind due to the rising cost of transportation and commodities, such as steel and resin, impacting the entire industry."

Combined wind and solar power purchase agreement prices jumped 19.1% in the third quarter of 2021, compared with a year ago, according to LevelTen Energy Inc.'s national index, with those prices increasing 5.4% in just three months. The data provider, which runs an online marketplace for renewable energy buyers and sellers, emphasized in an Oct. 14 report that the renewables market is experiencing "an unprecedented mix of regulatory headwinds, supply chains challenges and demand outstripping supply."

Still, Sunnova Energy International Inc. already sees a battery shortage "materially changing now" as more equipment becomes available and competition among manufacturers increases. In fact, Sunnova Chairman, President and CEO John Berger said he expects to double the company's total customer count by the end of 2023 and triple adjusted EBITDA along with the principle and interest it collects on solar loans.

"I do expect to beat this growth profile that we laid out, and it's already very, very aggressive," he said Oct. 28.

Larger companies more comfortable

Avangrid Inc., which has several solar and wind generation projects under development, said customers are taking longer to consider any impacts from rising purchase agreement prices even though the utility and renewable energy owner wants to "go faster." At the same time, however, the company can lean on sponsor Iberdrola SA to blunt that uncertainty.

"Being part of this large organization with significant buying power is a tremendous benefit, helping to mitigate our exposure to rising prices and access to supply," Avangrid CFO Douglas Stuver explained Oct. 27. "In networks, our largest business segment, our exposure is not material. Energy supply is either sourced directly to customers by third parties or pass-through costs for us."

Renewable energy giant NextEra Energy Inc. reached a record for origination in the third quarter and is looking to capitalize on its scale as smaller competitors face more challenges from supply-chain disruptions and rising costs.

"It's good to be us," NextEra Energy CFO Rebecca Kujawa said Oct. 20. "Having significant capital dollars to put to work enables us to have strong relationships and extensive relationships ... to help navigate these uncertainties."

While a few projects moved up or were pushed back because of the macroecnomic environment, NextEra Energy President and CEO James Robo added that rising costs for other generation also continue to benefit NextEra. With the 10-year strip "up a buck since January — it's hugely positive for the renewable business," he said.