Thứ Năm, 29 tháng 9, 2016

SolarCity (SCTY) part 208

  • 1/1/2015
    guest
    That was good to hear, thanks for sharing the link! So when will SolarCity start using these new panels? Not until they build the plant in NY or will they go ahead and use what's available already from Silevo? I've had a SolarCity quote and est. but haven't jumped on solar for the house yet. Would love to get these new ones from them.
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  • 1/1/2015
    guest
    My guess is that it will take a while before SolarCity is able to use Silevo's panels. It appears that Silevo has a small plant in China that does 32 MW, but they've been planning a much bigger plant in the Buffalo NY area which SolarCity will be spearheading now. They seem to be targeting it to be completed in 2 years.

    - - - Updated - - -

    Thanks for your thoughts. Going out 20+ years I figure there's a lot of room for error. Electricity cost IMO will be more than $0.05/kWh since SolarCity would be competing with the grid/utilities and I don't there's there's any realistic way where utilities will be able to charge $0.05/kWh.

    But I think it's fine to have different numbers. My point being is that if SolarCity installs "tens of GWs a year" then it will be worth a lot more than it is now. I like a company that has a huge vision and a huge addressable market - and SCTY fits this.
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  • 1/1/2015
    guest
    Recent thoughts on Solar PPA/lease vs Purchase

    I've thought about this a lot. I personally don't think the leasing model will be dead in 5-10 years. I there's there's a strong likelihood that it will remain indefinitely. I liken it to a subscription model where people are paying for a service. But let me qualify this some.

    I understand the appeal to outright purchase a solar system. I've looked into both leasing/ppa and purchasing, and if one has cash to spend the purchasing works out to be the better deal. The thing is the market is so big and while many people will purchase, I think the PPA model might address a larger market than purchasing (as it is currently doing so). But I think the PPA model needs to grow and adapt in order to do so. Perhaps Solarcity's bigger competition might be some companies that offer affordable financing to purchase and are as relentless as SolarCity to drive down the costs of solar. But SolarCity will have plenty of time to adapt and make their PPA program much better than it is now.

    I actually had a great idea (at least in my opinion) yesterday when I was talking a walk. I was thinking how can SolarCity scale their PPA model and compete effectively if/when solar becomes much more affordable to outright purchase and there are compelling financing vehicles available to do so. Here were my ideas:

    1. SolarCity should adapt their model to allow the customer to scale up or down their system when they want.
    The idea is similar to Amazon Web Services (AWS) which allows developers to scale up or down computing power whenever they want. In SolarCity's case, if they can allow a customer to start using their service by installing a very small system (ie., 2kW solar system) just so that the customer can avoid the high tiers their paying (ie., I'm paying $0.33 for tier 3 energy). And then SolarCity could allow the customer to "scale up" the system whenever they want. In other words, if the customer wants to add solar power, SolarCity would come by and install more panels (of course this could be complicated with mounting, permits, install... but this is the magic that SCTY will have to create and solve). So, if I wanted to scale up my 2kW system to 5kW, SCTY would be able to do so seamlessly (they would just come by within a month or so and do it in a few hours). Now, this is going to take some major innovation from SolarCity to be able to do this type of "scaling" or "adding" to an existing solar system in a cost-efficient manner. Perhaps they can make their mounting system more modular (if it isn't already enough so) and they can streamline the permit processes even more.

    2. SolarCity should offer customers to remove the solar system at any time at no cost.
    So, if I wanted to remove my solar system, I should be able to request that from SolarCity and they do it (ie., within a month) and at no cost. Sure, it will cost SCTY to do so (man-hours, etc) but they could recycle the panels, inverter, mounts, etc.

    The reason why I think SolarCity needs to offer this is because there are situations where a customer might want that kind of flexibility to remove the system. One example is I might want to rent out my house but I don't think the tenant will appreciate/use solar (who knows who's out there). Another example, if if I'm selling my house and the next owner doesn't have good credit so it might be difficult to transfer the currently structured PPA over to the new owner. In this case, I could just request SolarCity to remove the system at no cost to me.

    3. IMO the ability to scale up/down a solar system and the ability to remove it at no cost would allow expand SolarCity's addressable market.
    One example, is I would immediately get started with SolarCity and have them install a 2kW system at my house and get out of any Tier 2/3 usage, so my electricity bill will drop substantially. I'm thinking of perhaps moving in the next year or so, so that's why I wouldn't want to buy/purchase a system outright. And if SolarCity could offer this on-demand scaling service where I could scale up or down my system size at anytime (and remove it at no cost), then I probably would be tempted to forgo purchasing a system completely and just use SolarCity. Sure there will always be people who will outright purchase their system, but if SolarCity's PPA program offered this scalable optionality (with no-cost removal) then it would make it much more appealing to even more people.

    Imagine if SolarCity offered this scaling up/down feature, no-cost removal and no-commitment approach. SolarCity could get people started with a small 2kW system to get people off high utility tier usage. And if it was no-commitment (no-cost removal) and free scaling up/down, I would imagine a flood of people (1m+ this year alone) would take SolarCity up on this offer.

    Now some people might say that what I'm proposing is impractical or impossible. But as SolarCity scales, their cost improves and their able to improve their product services. What I'm proposing might not happen overnight but it might be where SolarCity is headed. Especially so, since Elon Musk is SolarCity's chairman and he likes to view things with First Principle. And what I'm proposing is what I think solar ought to be:
    - no commitment, no initial cost
    - can start off with a small 2kW system (or even smaller) to get off high utility tiers
    - can scale up my system at anytime for no cost
    - can scale down my system at anytime for no cost
    - can have my system removed at any time for no cost

    Compare this to outright purchasing/financing a solar system. Outright purchasing/financing a solar system might be the better option for those who are confident they're going to be staying in their current house for the next 10 years. But for those who think they could move in 2-5 years, they might want more flexibility and convenience. Also, purchasing/financing could require additional complexity (longer applications, credit checks, etc).

    Right now, SolarCity probably doesn't need to focus on offering what I'm proposing since their currently addressable market is so huge that they just need to provide energy for less than what the utility offers it for. As long as they do that they can probably continue to grow rapidly for the next several years. But at some point as solar costs come down, SolarCity will need to make their product/service more compelling (more convenient, more flexible, etc) than what will be offered for those who outright purchase/finance their systems from other companies. I'm fairly confident that SolarCity will be able to do this... especially with Elon as Chairman and SolarCity following the Musk Ethos of relentlessly cutting costs and improving their product/service.
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  • 1/1/2015
    guest
    for what it's worth- in 20 year time frame, given the current trajectory on both panel/battery; I don't see how the Utility (as currently defined) survives as a producer at any price- they'll be more of a grid operator probably sinking more power than producing; the consumer of power will have it available for nearly free grid or no-grid; As opposed to a communication network, the purpose of the power interconnect disappears when the Sun is the distributor - agree with Sleepy on this one and maybe even a step further. I see in 20-30 years a virtual no cost for electrical power as we know it- that's going to become a major disruptor of it's own as the Solar industry essentially eats itself into the same position PC manufactures have created for themselves- precisely because they achieve the mission- making limitless power available to everybody, everywhere for next to nothing
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  • 1/1/2015
    guest
    In a utopian society, energy (and food, eduction, healthcare, housing, etc) is all provided for free-of-charge. But in reality, it's not going to happen. Energy costs money and for the foreseeable future will cost money. There are too many costs associated with harvesting, storing and delivering energy for energy to be free. Somebody has to pay for those costs. Now if you say the government will step in and subsidize energy to make it free, that's a different story (albeit a very, very unlikely one).
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  • 1/1/2015
    guest
    What about using roofing companies to tie in a solar system installation with getting a new roof? The average roof lasts between 20-40 years depending on material. I think a good time for people to consider putting solar on their roof is when they have to get a new roof installed, which if 30 years is the average, means that about 3.3% of 'used' houses will need their roof replaced each year. This is a huge market for potential solar installations and tying in solar installation with the roofing companies somehow (discount if packaged together or something) could be huge. Roof companies could get a 'finder's fee' for every successful referral they make, which would make them motivated to sell the idea of solar to customers. The basic cost savings on electricity could be shown and I am sure lots of people would be willing to chip in more on their roof to get solar installed at the time for huge future cost savings. People would know that the panels won't have to be taken down and replaced (which I am sure has a significant cost to do + potential for damage) with a new roof so they would be more willing to do it. If someone knows their roof will need to be replaced in the next 5 years or so, most would not consider getting solar installed before the change (this is the situation I am in and the reason I thought of this). The goal would be to try to make solar an automatic consideration every time someone needs a new roof. I think now any time a new house is built, solar is at least considered by most builders. If this same consideration could be made every time a new roof is installed, then the demand would be much greater.
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  • 1/1/2015
    guest
    not free- virtually free relative to today;
    strongly disagree with "Energy costs money and for the foreseeable future will cost money"; In 30 years, it'll cost so little money, you won't think any more about it's cost than you do a cup of coffee (and not Sbux)- standard issue on every home/apt/office building built into the amortized costs of whatever you live and work in. Similar to WiFi today- in 30 years- cost of electrical power will be a non-issue. Not much more than the cost of sunlight is today- just my opinion of course
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  • 1/1/2015
    guest
    While there are certainly discerning buyers, the vast majority of solar power purchasers consider their electric bill a "monthly bill". SolarCity's PPAs sell to that mindset. Most residential customers will not "burn the calories" to evaluate the differences between purchasing and leasing.

    It boils down to "can you lower my monthly payment?"
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  • 1/1/2015
    guest
    First, I don't think energy and WiFi are good comparisons in terms of cost. But even if you do compare them, people still pay similar prices for the internet connection now compared to 15 years ago. And similar prices for their cell phone plans now compared to 15 years ago (in fact, people probably pay even more monthly now). Cable TV, probably people pay the same or even more today.

    WiFi, cable/sat TV, cell phone, etc. all have infrastructure and service costs associated, so even though the bandwidth speeds have increased at an impressive rate the companies providing those services still need revenue to pay for their associated expenses.

    With energy, for the foreseeable future (ie., next 30 years) there will be required infrastructure needed to harvest, store and deliver energy and those infrastructure and servicing costs are not trivial.

    Also, technologies like bandwidth, cpu speed, etc. benefited from tremendous exponential growth in speed (ie., Moore's Law, Nielsen's Law, etc). But with solar the rate of improvement is not as fast (ie., panels aren't doubling in efficiency every 18 months). Also, solar has a lot of associated fixed costs that are unavoidable like the cost of materials for the panel/module, mounting, inverter, permits, etc.

    The point being is that I fully expect energy to not be "virtually free" in 30 years. Rather, we'll probably pay less per kW for it but we'll probably use a lot more of it (ie., average 2 electric cars per household, etc) so the average we spend on electricity in 20 years might actually be similar to what we spend now... maybe a bit less but definitely IMO not virtually free.
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  • 1/1/2015
    guest
    I just need to vent. I am short SCTY now after this run up and I can't stop second guessing myself, that I am going to be slaughtered tomorrow as it runs another 5 dollars up.
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  • 1/1/2015
    guest
    Then this is not the game for you. The only way to win is not to play.
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  • 1/1/2015
    guest
    I am going to have to agree with kenliles on this one:

    My solar system cost me $1.15/W out of pocket and at that rate it costs 2.5c/kWh to produce electricity assuming that it lasts 30 years (I have a 25 year warranty).

    Right now small business installers are installing systems for as little as $2.50-$2.75/W. 5 years from now we will see systems installed at under $1.50/W. 10 years from now at under $1/W.

    At $1/W you will be paying about 2c-3c/kWh depending on where you live.

    At $1/W the average solar system size (installed by SCTY) of 6kW will cost only $6000. Nobody is going to pay $150/month or $1,800/year or $36,000 over 20 years for a $6,000 system. You can easily finance a $6,000 system over 5 years and pay $100/month (if 0% interest).

    The solar industry is really not much different from the semi-conductor/computer industry: it just keeps getting cheaper and cheaper.

    20 years from now solar will be a lot cheaper than $1/W. BTW, JKS built its recent power plant at $1.13/W, so we are already there.

    I still think that SCTY will grow into a huge company, but that it will require huge dilution (which we have already seen over the past year and will continue). It is also operating in an industry where its revenue per watt will decline by 75% in 5-10 years. Elon Musk IMO does not care about how much money we make on SCTY or TSLA shares. It has become very obvious to me that his only goal is to save humanity and he doesn't care about shareholders at all. The only reason he wants the share price to go up is to be able to raise more capital to grow as fast as possible (for humanity's sake). This strategy will definitely deliver outsized returns for TSLA shareholders going forward. But when it comes to SCTY, there just isn't as much upside as in TSLA. It will probably do better than 10% per year going forward, but I am not sure. I don't think that SCTY will come close to TSLA when it comes to shareholder return from this point in time.

    There is a lot of extremely exuberant valuation methodologies applied to SCTY in this thread and I fear that a lot of people are ignoring the economics of the solar industry.

    If 10 years from now SCTY is installing 10GW's per year, then that is $10b in revenue. Applying a very generous 10% net profit margin gives them $1b in net income. 15x PE is a $15b market cap. Share count will most likely double, which means that SCTY would still be trading under $100/share 10 years from now, which would be an awful return on investment. I have purposely ignored battery and other potential business opportunities just for illustration purposes to show how much everyone here is overvaluing SCTY's stock price appreciation potential from the solar side of things.
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  • 1/1/2015
    guest
    If I t goes up $5 tomorrow I will join you :smile:
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  • 1/1/2015
    guest
    I'm really confused here. Ken, so can you clarify what you mean by energy being "virtually free" in 30 years? Do you mean people will have a $5 monthly electricity bill in 30 years? I'm trying to clarify into numbers here because I'm having a hard time grasping your reasoning and what is "virtually free".

    - - - Updated - - -

    1. I doubt that in 10 years the average cost to install solar will be $1/W. If you said $1.5/W in 10 years I might say it's possible, but $1/W is really pushing it.

    2. Electricity usage will likely go up in 10 years (i.e.., people having electric cars, etc). It might boost the average size of a system to 10kW. So, $15,000 (for a 10kW system at $1.5/W) is still a hefty amount to finance and while there might be compelling financing vehicles for people to purchase, it doesn't mean that SCTY can't compete with extra convenience and flexibility (like the options I've listed prior like free scaling up/down, free takedown, etc).

    3. If SolarCity reaches $10b in revenue within 10 years, the market will likely give them a much higher P/E than 15 since the SolarCity model is a subscription-type model with recurring revenue (ie., Netflix) so future revenues are more secure. Also, if they reach $10b in revenue in 10 years, their growth rate will be very high and it'll warrant a higher P/E multiple, maybe 20-30x.
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  • 1/1/2015
    guest
    1. The DOE Sunshot Scenario is looking at $1/W by 2020 for power plants and $1.50/W for residential. The avg. residential installation cost was $2.20 in Germany 1 year ago. I have no doubt in my mind that we can get to $1.50/W by the end of this decade, so $1/W 10 years from now is reasonable although high inflation would put a dent of course.

    2. 10kW is not possible IMO since SPWR avg. system size is about 8kW and they said that the limiting factor is constrained roofs. New housing will have to be built with solar friendly designs in mind, i.e. lots of southern facing roof space. At $1/W SolarCity will not be able to afford to scale up/down, free takedown, etc. Way too labor intensive, i.e. expensive.

    3. PE ratio's in the solar industry are going to fall below 10x PE, since it is a commodity business with small margins. If SCTY can do $10b 10 years from now, and then $15b in year 11, $20b in year 12, then yes it will deserve a high PE ratio, but it will not be able to grow that fast. Chinese solar companies are growing revenues over 50% YoY and they are getting 6x PE ratios right now.

    Anyway, my numbers are just hypothetical and for academic purposes to show that the future earnings potential in the solar industry is not that great. I am not talking about $10b from revenue from customers who make monthly payments. I am assuming $10b in revenue from selling systems, since I don't think that leasing is going to make much sense 10 years from now. If they are leasing 10GW 10 years from now then they will only have $1-2b of revenue at best and not $10b. You are misinterpreting my numbers here: I am using a 100% cash sale, while you are applying my numbers to a lease scenario.

    Also, as I posted in the other thread: SCTY's SG&A and interest exp. is over $1/W right now (82MW installed last Q and $88m in SG&A+interest exp), and this is going to be a big problem if they can't get it down to $0.10 - $0.20/W (which seems pretty impossible right now). A mom and pop shop would be less than $0.10/W on these unnecessary costs. So if SCTY can't bring the costs down then it could be a huge problem. If they do install 10GW per year, then they will need to keep corporate expenses at under $2b per year. It could be doable, but they are already at $0.5b/year while doing 20x less than 10GW.
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  • 1/1/2015
    guest
    The balance of system costs for residential solar are still very high in the U.S. I've read some case studies on Germany's solar history and it appears they have a much more streamlined permitting process. Also, in Germany after they reached a certain cost per W, the low-hanging fruit to reduce costs was taken so they've been experiencing a much more difficult time to decrease costs. I would imagine a similar thing to happen in the U.S. Once cost per watt falls below $2/W, then it becomes increasingly difficult to reduce costs. Although it will happen, it might not happen as quickly as some people want/expect. Although the drop to $2/W might happen faster than some think. So overall, I think the drop to $2/W is low-hanging fruit but after that it gets tougher. So I definitely wouldn't expect $1/W in 10 years for residential solar in the U.S. Anyway, it's probably semantics we're dealing with in some ways because it's tough to forecast that far out.

    In 10 years, it's likely that they can pack more watts in each panel so 10kW might be possible.

    If SolarCity offered me an on-demand no-commitment PPA with the ability to scale up/down w/o additional cost and free takedown, then I would definitely pay a premium for that service and probably would choose it over outright purchasing a system (considering I plan to move in the next several years). I'd start with 2kW and scale up from there. And if I ever wanted to move, I would have them take it down for free. The more I think about it, SolarCity will have to more in this direction of offering superior service/flexibility/scaling to customers to make it more attractive than outright purchasing/financing. But for now they have more than enough addressable market competing with utilities.

    Thanks for the clarification. I don't think SolarCity will sell many systems in the future. I think they've dropped that business model in favor of a PPA/lease model. In the future I hope they adapt it further into something even more flexible like I've described.

    Regarding SolarCity's revenue 10 years out, if they reach 1 million customers in 4 years then it's possible they could reasonably reach 5 million in 10 years. If each customer pays $130/month ($1560/year), then that's $7.8 billion in revenue. I'd give them a 15% operating margin (I know you give them a 10% but I think as a service business they can get fairly high margin of at least 15%). So, $1.17b of profit. Since they'd be growing very fast still and it's a subscription business (future revenue is more or less guaranteed), I'd give them a 30x multiple at that time. $35b market cap (or course there will be some dilution due to secondaries, but still not bad for a market cap 10 years out).

    I'm not too worried about SolarCity's expenses. They are growing 100% per year and are bound to have very high expenses. They are scaling out their warehouses, equipment, teams, R&D, etc. However, as they ramp up installations to reach 1 million customers in 4 years, those expenses will drop significantly on a cost per watt basis as they reach greater scale.
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  • 1/1/2015
    guest
    Dave, to get this reference (and I fully admit, not an easy picture to draw from our current context for power), it's important to return to first principles. There is no inherent 'cost of energy'- it's everywhere for the taking by anyone. And it's already distributed. You receive it everyday in the form of heat when the sun's photons hit your face and those molecules convert it to heat- how much do you pay for that heat? the cost of being alive whatever that is- it's virtually free.

    Let's try to paint a picture for the image I'm describing:
    The transition I believe we are making over the next 30 years, is akin to discovering how to use fire (think Castaway here). Long ago that used to cost a lot- it's now free (I call the current cost of manufacturing and distributing matches free- because it's so small the cost is barely more than breathing). When I say virtually free, I mean so small that, for example, the average person will pay for all their energy use for a year with 2 days labor. The cost will be as low as you consider matches today- or pencils- or perhaps a cell phone if we include storage for overnight usage; The point is not whether it takes 2 or 4 days to pay for your yearly energy use- the point is it's so low, it's no longer considered a human want or even concern, it's considered a given (because frankly it is by the Sun fusion reactor). And inevitably(I'm saying 30 years), except for a tiny cost to manufacture a deck of playing cards, there is no inherent cost required.

    This comes about because it's already there- the photons that impend on the space you occupy contains more energy than you can ever use, you won't pay more for it than you pay today to breath and be part of society. We have crossed the threshold now technologically to convert a tiny tiny number of the free photons to electrons as a useable form. It's already there, pre-distributed to every sole for free- with the current trajectory of both technology and cost to manufacture the 'convertors' to produce the 'matches' for everyone to purchase for pennies per day.

    I'm trying to form an image here of what I believe is inevitable. The flat panels today are sufficient to make this inevitable, but later they will be micro-mirror concentrating(within the panel) and convert many times more photons per square meter than today- exactly like the semiconductor path- The energy captured in a few square meters will OVERpower everything you'll need for a household. The problem will reverse itself and the issue will be how to safely sink that much power- which likely as not will REQUIRE DETACHMENT from the grid rather than attachment- the sun has already resolved both production and distribution for free. The cost of the convertors(photon>electron) will fall to the equivalent of picking up a couple of plywood panels at home depot- so yeah, there's a cost, it's not free, and yes it's virtually free.

    You'll pay more for the plywood roof over your head that today shields that head from getting burned by too many photons slamming on it every day, than you'll pay for panel surface area sufficient to convert some of those photons to electrons for you're own use. In fact, it's will be part of the same cost integrated into the material protecting you from the very energy you used to pay for- you'll now pay more to protect yourself from it than to collect it for use in a different (electrical) form. And I'll go a step further, the technology for this is already known, the scaling of manufacturing and distribution channels for those 'matches' is all that remains- only this time it will happen in compressed time- more like the cell phone did- 30 years or less. It's already done and baked in my opinion there's no way to stop it now.

    that's what I mean when I say 'for free'
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  • 1/1/2015
    guest
    I would say that SCTY is also looking beyond installation of residential solar. From the comments by Elon, JB, the cousins it seems that they are looking at what it will take to move the entire grid to renewables (not just solar). This includes batteries and, very importantly, grid level capabilities to generate and shift power. I think this is what Elon was discussing the other day with his comments about software.

    Right now SCTY is focusing on leasing and end to end installations at home and business level because it's the easiest money for them. I'm sure, later, they will be happy to sell you batteries, panels and monthly subscriptions to their management software that probably will buy/ sell power for you automatically.


    I also disagree that this will all come at massive dilution. There is plenty of profit available and Elon also realizes that he can't do this by himself. He has to show others how to make reasonable margins in order to get other companies to contribute to scale - similar to Tesla.

    Just like all all growth companies returning dividends to shareholders isn't the primary goal. It is to grow value in the overall business including using growing cash flows to finance expansion.

    in other words when it comes to Elon - think BIGGER!!

    after all he seems to have set himself a goal of saving the earth so he can start colonization of Mars.
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  • 1/1/2015
    guest
    SolarCity finally did something to make me interested in them, so I'm going to dive right in with my "expert" opinion after having started my Solar research by reading the last two pages of this thread (because reading just one page wouldn't be very thorough). Though, I suppose that technically I just skimmed the last two pages.

    Still, given my vast insights on this subject, and the maybe one word in three that I actually read over the last two pages, I would say that the one statement that I know I agree with is the one I highlighted. I would contend that at no time in the next trillion years will Humanity say "oh hey, this is enough energy, lets call it a day".

    And the maximum amount of insolation available to any homeowner probably will be insufficient to that homeowner's needs even in the relative near term. To the extent that there are periods where typical homeowners have excess capacity, there will always be a buyer for the energy.

    How SolarCity itself fits into all of that is much more problematic, and one reason why I haven't invested before now. But with this vertical integration into panel manufacturing they are well positioned to be able to control their destiny to an extent they were not before. I always hated how they seemed to be mainly a finance company peddling risky securities based on an untested business model.

    With the moves they are announcing to massively ramp up production capacity and their commitment to become the IP leader in the industry they are much better positioned to switch up their business strategy if their leasing model goes south on them.

    - - - Updated - - -


    Yes, what we've seen over the past 6 months is Elon publicly committing to a program to take over the world, where previously we had just speculated that he was planning to take over the world.

    Specifically, he is going to leverage the "Musk Mystique ETF" effect to finance an endless number of battery and solar module plants to vertically integrate the competition into flaming dust bunnies.

    He already has the dominant IP (which he just semi-open sourced) in the energy storage side of things, and he has just committed to acquire whatever IP he needs to acquire on the solar generation side, while simultaneously installing one of his signature ultra-R&D/engineering teams into SolarCity so that he can replicate his IP success in Tesla and SpaceX.

    In fact, this announcement just constitutes Musk deciding to import Musk Industries "Best Practices" of vertical integration and R&D/Engineering into SolarCity. He is fundamentally changing the nature of SolarCity from some hinky finance and installation company into a technology and manufacturing powerhouse.

    I was always fuzzy on what the fundamental identity of SolarCity was going to be moving forward. Not any more. It's going to be just like Tesla or SpaceX, only for solar technology.
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  • 1/1/2015
    guest
    $1/W is unrealistic unless you assume that the solar components are free and labor costs don't go up. In the $2.50/W that an installer charges, 75c/W for panels, 40c/W for inverter, ?c/W for other components. Can't be much less than <1$/W for labor.

    Personally, I highly doubt that the pre-rebate price can go much under $2/W. 1$/W for total system components and 1$/W in labor/permits etc. Also comparing JKS building a utility scale project in China at just over $1/W is not comparable to a retail rooftop installation. For the price to hit that kind of low we need to see something radically different like using panels as the roof material in new construction/roof replacement. I say even if total component cost goes down to 50c/W, labor will rise enough to keep the cost around $2/W.
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  • 1/1/2015
    guest
    I think it would be wise for SCTY to think longer term and become a roofing company. If the PV system $/W keeps falling (and SCTY's move to produce is clearly focused on keeping that going through cost-efficient improvements in panel efficiency), and rooftop solar becomes as ubiquitous as I think it will be, then to minimize overall $/W they need to apply Muskian holism and think about the whole issue of roof installation, maintenance and replacement. With that approach, plus their storage arm, they would be able to get in on new construction.

    I think that holistic thinking on solar could drop the labor costs significantly. Historically the roof just kept the elements out: with active components there, we just need to start building with the expectation that people will need to be up there. Easy access and a safe environment (railings anyone?) would make labor a lot cheaper. Enclosed ladder and railings, anyone?
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  • 1/1/2015
    guest
    And I disagree with you:

    They already diluted shareholders 100% in the past two years alone. And their balance sheet is still really ugly. They have a very capital intensive business, and their cash flows are extremely negative which means a lot more capital raising required.

    They issued ~3m additional shares to purchase Silevo and will issue another ~2-3 million in the future. That is an extra 5-7% dilution just to buy the Silevo technology. They will have to dilute another 10-15% just to build out 1GW of manufacturing capacity. Building out 10GW's will dilute a lot more in the future.

    SCTY has been diluting shareholders to the extreme over the past 2 years. So now that they are entering panel manufacturing, which is extremely capital intensive, you are saying that there will not be a lot of dilution required? It just doesn't add up to me and sounds like a lot of wishful thinking.

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    Completely disagree with this one as well:

    SCTY does up to 2 (or even 3) systems per day per crew. Lets assume that a crew is 6 people doing one system in 4 hours. Even if you pay these guys $20/h (which is a huge stretch) then you are only paying $480 for labor. The avg. 6kW system size means that labor costs are $0.08/W.

    Then you have inverters already under $0.20/W and panels are already made at under $0.47/W. Roof racking material is cheap.

    $1/W is very doable in 10 years!

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    Completely agree with you on this one.

    But it raises the question in my head of why am I investing in the solar sector if their won't be any profits in it?

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    Good discussion DaveT and this is what makes a market.

    If you are correct and 10 years from now residential systems still cost almost $2/W or even $1.50/W and SCTY is able to keep its highly profitable leasing model, while doing 5-10GW's or more per year, then the stock will do great and might even be a 3-5 bagger if dilution is kept at bay.

    But if I am correct and the world moves away from the leasing model and installation costs are closer to $1/W, then I can see SCTY still trading under or around $100 10 years from now, especially if my heavy dilution scenario comes into play.

    One other note I wanted to make is that buying a system on your roof is not a liability if you sell your house. If you pay $6000 for a 6kW system 10 years from now and sell your house within 5 years, then 1. it will add value to your house; and 2. it already paid for itself. Your flexible/scaling lease option does not make much sense in my mind and I don't think that they will ever implement anything like this especially since it is really hard to reuse panels since they already suffered degradation.
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  • 1/1/2015
    guest
    I do not quite understand the comparison. A match can light a tiny fire. To keep a substantial fire burning (enough to cook or keep warm), you would need some sort of fuel or firewood. In that sense, fire today is not free. To keep a fire burning is still a noticeable expense today, isn't it?

    You are also assuming demand for energy use will not grow proportional to the ability to supply it.
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  • 1/1/2015
    guest
    Great discussion sleepyhead, DaveT and kenliles. Very interesting to follow. I think sleepy's analysis are the most realistic ones, coupled with ken's where the margins for SCTY will be coming down and where the leasing model will die off. However, it was surprising to many (including my self) to see SCTY aquire a solar panel producer. This means they are agile, forward thinking and hungry for more. If SCTY does become what it looks like it's becoming: a true integrated solar company they will be the first one's to have, within one and the same company 1) R&D 2) Production of panels 3) Sales, installation and maintenance of whole systems 4) Financing. It's hard to gauge the importance of having all of the components integrated in one company - perhaps this gives them possibilities in the market that are difficult to foresee as of today?
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  • 1/1/2015
    guest
    just a metaphor to to paint a comparative picture. It was not meant as a literal regarding the fuel itself.
    The cost to start a fire in early days of humanity was high (hence the reference to Castaway movie)- today the cost is zero and freely distributed. Nothing but a visual metaphor for where I see Solar moving in 30 years from today's position. 40 years ago, your PC filled a room and was much less powerful; today it's in the palm of your hand. That's the same 30 years we'll see in Solar imo. Flat panels using nano-structure short focal length parabolic concentrator channels 'manufactured' with 3D printing is one of several paths (think SPWR C7 in a flat panel made using 3D printing)- just one of many paths. that's my story and I'm sticking to it :)
    Invest now and for the next 10-15 years, then get out because it becomes completely commodity with low and shrinking margins imo. It's the transition investment that will make the money- then move to the next one. These types of disruptions now occur in decades, not lifetimes; those are my thoughts...
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  • 1/1/2015
    guest
    This is my same thought process. Wall St. is very short sighted and has a very hard time of seeing the future more than 3 months out anyway.

    I plan on investing in solar until exuberance hits and that is when I will slowly begin pulling out of the industry. I aslo think that in the long run there will not be that much money made in the industry, since margins will be wafer (pun intended) thin.

    In the mean time though, we are heading towards a supply/demand balance in the industry, which means higher margins and more profitability for solar component manufacturers. Once these prices go up, then those who own the manufacturing will be able to build projects a lot cheaper than those who have to buy panels. This is the reason why I invest in panel manufacturers (SPWR, JASO, CSIQ, JKS, TSL) that are expanding into downstream. SCTY is doing a good move of entering into panel manufacturing but it is a very costly exercise:

    I expect us to hit a recession about 2-3 years from now, which will coincide with the time it takes SCTY to get its manufacturing plant running. SCTY (like all other solar stocks) will tank in a recession, and that is when I plan on getting in to SCTY as a longer term investment; hopefully around $30, while letting today's shareholders hold the bag as SCTY continues raising funds to build out manufacturing. If SCTY takes off and goes to $150 before hand then I will be shorting that stock heavily if a recession is looming.

    That's my game plan for SCTY and I am sticking to it :)
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  • 1/1/2015
    guest
    You are really optimistic :) Just add 0.5$/W profit for company and we'll can meet in the middle at $1.50/W :)
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  • 1/1/2015
    guest
    Take away half the time frame and I will meet you in the middle at $1.50/W by 2020 :) (which coincides with the DOE Sunshot scenario)
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  • 1/1/2015
    guest
    I agree with low margins in the solar industry and I've said this multiple times before. This is the main reason why I don't hold a long-term position in any Chinese solars or other solars besides SCTY.

    Even in low margin industries, a company with stellar management can often find a way to make good margin. Think Apple. While the PC component/manufacturing industry is largely low margin, Apple makes good margin on their PC products (ie., iMac, notebooks, etc). Not only that, but they leveraged their PC/computer experience (think MacOS) and basically ported a computer operating system over to the phone to disrupt the entire cell phone industry and increase their market cap by $350-400b from the iPhone alone.

    SCTY has a stellar management team along with one of the greatest business/innovation minds in Elon Musk. Elon sets the tone, strategy, direction for SCTY and he knows how to push a big move when needed (ie., Silevo).

    If any company in solar will find a way to make good margin in solar, it will likely be SCTY.

    There's a ton of examples of companies coming along and re-inventing a low-margin industry via innovation to make high margin. Even trash cans, Simplehuman came along and recreated the kitchen trash can and charges $200 for it. Their kitchen trash can is the best ever, and to me it's fully worth the $200 I paid for it. Sounds crazy to pay $200 for a kitchen trash can, but they made a product worth it when others gave up on innovating with trash cans. Another example, OXO... they're re-creating every kitchen utensil possible and charging a premium for it, making good margin along the way. Nest re-creates the thermostat and charges $249 for it and people love it.

    Point being is that stellar companies focused on innovation will find a way to re-create, innovate, push the envelope and deliver stellar products/services that are significantly better than what's out there, and they will charge a premium for it and make high margin since they deserve it. I fully believe SCTY is in this camp, and a large part of why I think this is because of Elon's influence and involvement. I wouldn't advise betting against Elon or any of his companies.
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  • 1/1/2015
    guest
    The solar industry is about delivering electrons and there is nothing you can do to make it worthwile to pay more for commodity electrons. Trash cans, kitchen utensils, iphones, etc. are all material items and serve different purposes, so there is a market for high end high margin products, as well as low end low margin products.

    Electrons are electrons and I don't care how I get them as long as I get them at the cheapest cost possible to me and my AC works when I come home. So unless Elon finds a way to deliver an ice cold beer with every electron there is really nothing he can do to make a "premium" product that delivers high margin electricity.

    The only way the SCTY (or anyone else) can make high margins is by being cheaper than everyone else, and I doubt they can get their with their huge overhead.

    I invest in Chinese solar companies, because they were in low margin panel manufacturing business, but are now moving into high margin project business while their valuations are extremely cheap. SCTY might do 500MW of 0.14/kWh projects this year and has a $7b market cap. JKS will do over 400MW of $0.18/kWh projects and has a $700m market cap, 10x less than SCTY. JKS cost to build those plants is about $1 - $1.50/W, while SCTY's cost is double.

    I will gladly stay with Chinese solar stocks over the next couple of years. Their country is actually serious about figthing pollution and making a big push into solar, while the US keeps fighting solar from taking off.

    The battery storage business is the only thing that can make SCTY stand out. But if Tesla fails then so will SCTY. If Tesla succeeds then SCTY will get cheap batteries. Since this is the case, there is no reason to invest in SCTY when TSLA will most certainly outperform it over the next 5, 10, 15 years.

    I would not recommend being a buy and hold SCTY investor. Trading in and out of it makes a ton of sense. But if you are going to buy and hold, then buy TSLA instead; much more upside with a ton less risk.
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  • 1/1/2015
    guest
    I think you're grossly overestimating the rate of progress with solar technology. You're largely comparing solar to high-tech products like chips/cpu and internet bandwidth. CPUs were doubling in processing power every 18 months via Moore's Law. Internet bandwidth probably increasing 50% every year. However, solar technology is advancing much slower. I would compare it more to batteries, which is more like a slow but steady improvement where you see the improvement more in decades rather than over a few years. This is important because it's the rate of progress that will determine the speed of the disruption. Your "30 years" projection where energy is "virtually free" is way too optimistic and is based one the false premise that solar tech will mimic the pace/speed of innovation in other high-tech industries like Moore's Law ... it hasn't happened and it's not happening. Solar is innovating but much slower than Moore's Law.

    You're also overlooking the fact that just because solar energy exists (via the Sun), that doesn't make it usable by any means. To make that energy usable it needs to be:
    1. Harvested
    2. Stored
    3. Delivered

    1. Harvesting energy
    In order to harvest the sun's energy, massive amounts of investment in infrastructure (panels/modules, systems, etc) need to be set up. And that infrastructure is far from free. It's very costly and it needs to be paid for. Your premise seems to presume that this infrastructure cost will drop within 30 years to become a trivial amount, thus making energy "virtually free". However, again you're I think you're overestimating the rate of progress in solar technologies. Infrastructure costs will drop but it won't be anything near as dramatic as what you're alluding to when you claim it'll be "virtually free". Another obstacle is the cost of materials which isn't going to zero. Panels, modules, investors, mounts, wiring, etc all cost money and no matter how cheap you make it it still has cost of materials and a markup. Barring a revolutionary breakthrough in energy generation what we have is more of a slow but steady progress in solar innovation that not only includes the panels but also the balance of system costs, and this will lead to a gradual reduction in the costs of solar over time. But no where close to the "virtually free" you're hoping for.

    Another caveat is I think that energy usage will go up over time probably to match the efficiencies gained via innovation. In 15 years, people might consume double the energy they do now. Add in two electric cars per household and extra convenience items and a typical household might be consuming double in 15 years. This might offset any reduction in energy prices. Thus, the typical family in 15 years might actually have the same or similar monthly electricity bill as they do today. Fast forward another 15 years, and I can see new products consuming more energy and driving up average household energy consumption (ie., if someone makes a flying car, people will travel more and use more energy). The point being is when energy becomes cheaper there is room for more new products to take advantage of that energy and provide new experiences and value and this drives consumer behavior to consume more energy over time as the cost of energy drops.

    2. Storing energy
    You also seem to be assuming that the cost to store energy will be negligible. I don't see much evidence to that assumption.

    As more houses go solar, there will be a greater need for stationary storage to balance the load of high energy production during the day. If a typical household has a 100 kWh stationary storage battery, that will add significant costs to the cost of energy. Sure, battery costs will go down (ie., 7-8% per year) but still it takes 10 years to halve the cost.

    3. Delivering energy
    If households have stationary storage coupled with panels, then the delivery mechanism will largely be built into the house. But it will be a long way off before the grid completely disappears and even in 30 years, I still think there's a need for the grid and the grid is very expensive to operate. I don't think you can ignore the cost to deliver energy.


    Let me take another angle with this. Just people solar energy exists doesn't mean that in 30 years that the mechanisms will be place to harvest, store and deliver that energy at a negligible price. The reality is that battery improvements and solar improvements are taking time and will continue a slow and steady march to increased efficiency and lowered costs, but I don't see any evidence or clear facts that lead me to think that your time frame is reasonable by any standard.

    If anything in 30 years I expect people to be paying a similar monthly bill in energy as they do now but their energy consumption usage will likely be much, much greater (ie., maybe 4x as it is now). Sure, in 30 years energy to charge my laptop might be "virtually free" but if I'm using 4x the energy I do now, I'll likely be spending the same amount on my energy bill as I do now.

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    I disagree with this. Creative/innovative companies always seem to find a way to differentiate their products by adding additional high value. I remember when people were saying that Apple was doomed with their PC business because computing was going to be a commodity and laptops were going to cost $100 eventually. But Apple found a way to de-commoditize the computer by adding extra additional high value to the product. SCTY can find ways to do this as well. Whether solar panels are ugly or look amazing is actually important to people and adds high additional value. Whether I can scale up/down my system when I want adds high additional value. Whether I can start with a super small system (ie., 2 kW) at no cost and no hassle adds high additional value. The way I interact with my energy usage and costs (ie., similar to what Nest is doing with their product) also adds high additional value. The list goes on.

    My "long-term" perspective is 5-10 years. I think solars overall will probably do well over the next 2-3 years and have no issues with people riding the wave while they can. But I like the have a safety of margin with my long-term investments where I believe the management is stellar, their addressable market is huge, and their business model is strong, so in case of a recession I'm confident that this company will overcome the hard times and emerge as even stronger. I don't have that confidence in any other solar company besides SolarCity.

    Regarding TSLA, I think it's an investment in it's own league. That's why my long-term stock position is 90% TSLA and 10% SCTY. I would caution people though against chasing momentum stocks when the mood is exuberant. I like accumulating when the mood is foul and the stock has been hammered (ie., 40%+ drop) but the fundamentals haven't changed. I also think a future recession is always something to keep in mind as all/most-all high-growth stocks will likely be hit hard.

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    I wouldn't be surprised to see SolarCity making innovations with how solar is integrated into roofs over time. Stellar companies have a way of surprising people with the innovations they come out with, but it'll take time.

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    I largely agree with this. I think it's largely "can you lower my monthly payment" and also "is it super convenient and flexible with no strings attached". On the second point, SolarCity has some work to do.

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    I completely agree that Tesla, SolarCity and SpaceX are more similar than most realize. They are/will leverage each other technology, expertise, business models, cost-cutting ethos, etc. I don't think this is a new thing, it's just being progressed at a faster rate and being made more public.

    I do also see SolarCity becoming heavily involved in R&D. The mounting company they acquired was best of breed. This solar company they acquired... I've been impressed by with the limited research I've done on them. And SolarCity will add more and more engineering resources to make better panels and equipment. This model of constant innovation at high velocity is something that others will have a difficult time catching up to, especially with the tight vertical integration.

    In the conference call (for Silevo's acquisition), it was mentioned briefly that Tesla and SolarCity are cooperating regarding inverter technology. This is the next vertical integration move in my opinion. SolarCity will release a best of breed inverter, or will acquire a company to achieve this.

    I also think what some/most skeptics are missing is that momentum that SolarCity is picking up, and with "momentum" I mean they are acquiring and growing their technological portfolio and starting to really focus on engineering. I agree that SolarCity is looking like it'll become a "technology and manufacturing powerhouse" along with a tightly integrated customer experience (from customer acquisition, install, financing, maintenance, etc). IMO, it's by far the sexiest play in solar long-term.

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    I agree with both points. Energy ain't cheap... it needs to be generated/harvested, stored and delivered.

    Also, demand for energy will grow as greater availability of lower cost energy will drive further innovation in products/services that will increase standard of living. Man's constant drive to improve their lives and live better will lead to new products/services that require more energy as energy costs decrease.

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    SolarCity has been acquiring best of breed technology/companies as it expands it's vertical integration. I see this is just early stages of the bigger plan. As SolarCity sets itself up for full vertical integration (ie., with inverter technology coming up next), SolarCity will apply it's religious fervor to drive innovation faster in each of the areas they're involved with (ie., similar to SpaceX driving down the costs of rocket launches by religiously innovating on all aspects of the launch).

    Google does this well with their ethos focused on execution and velocity. They focus on quickly iterating products to get them better and they measure the rate at which they're able to do that.

    Elon Musk is applying this concept of velocity in innovation to all his companies. This is why I think it's still very early stages for SolarCity in what it is becoming. I can see SolarCity iterating their solar panel technology and manufacturing to the point where they become far ahead of all its competitors. The same will go for inverters, mounting racks, and the rest of the balance of system costs/processes. It'll just take time.

    Elon even mentioned in the recent conference call regarding Silevo, that SolarCity is working on making the panels look aesthetically really good. That's the Elon way. Continuously innovate on all aspects of the product/service, and then some.
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  • 1/1/2015
    guest
    Not counting or expecting a moor's law doubling for every 18 months; It's not required for the goal I describe - largely because most of the work is already done;
    The more we use, the cheaper and 'freer' it will become- that's a counter argument that will prove the case in my opinion
    Regarding the infrastructure required
    Here's one of the most recent studies I saw posted, that draws a good visual
    We're projected to use 44% more by 2030 and assuming panels don't get any more efficient than the current 20% or so in that time. And forget about electrical power usage - this is for all power used from all sources for all purposes, including you're cars and planes;
    Here's the infrastructure needed
    AreaRequired1000.jpg
    Land Art Generator Initiative

    Of course you can just as easily install that surface area across the entire country on roofs and other- distribution is already provided.
    It's certainly possibly I'm over estimating our ability to reach the point I describe in that time- even if I'm off by a decade, does that really matter to the inevitability of the conclusion. I think not. All power for our uses is destined for commodity food-stuffs

    Also, the Apple example you use is nearly a polar opposite. Apple garners high profit margin by appeal of product function and aesthetic- they apply the same scale of software to hardware making that possibly; They are akin to Tesla in that regard. There is NO premium in electrons - they're all the same - the cheaper the better and the cheapest will win the day with the customer of electrons. Other than perhaps an aesthetic of the panel, there are no premiums (beyond the cost per sq foot to produce electrons from photons). I do agree battery storage will delay the goal of my description- but not by much imo.

    I guess we'll likely disagree in the end on this- hopefully we'll be around to watch the development play out and see where it goes. I do enjoy the discussion! thanks
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  • 1/1/2015
    guest
    Just because energy becomes cheaper doesn't mean it become "freer" or "virtually free", especially if you consider that energy usage will grow over time (probably much more than 44% by 2030 in my opinion if you just factor in electric cars). It'll probably just mean that people's monthly energy bills remain similar as they are now (more energy used at lower cost per watt). I'm not seeing any precedent or hard data facts that support the notion that energy could by virtually free in 30 years. Doesn't make sense to me at all.

    I think you're completely missing the point here. Yes it's true that you don't need that much surface area (compared to world's total surface area) of panels to supply the world's energy, but the problem is even if you create those exact areas filled with solar fields, there still is a huge storage and distribution problem. You need to get that energy stored in massive amounts and then distributed to each person around the world. The cost is enormous and vastly prohibitive. That's why there are no plans to make one massive solar plant field to supply all the U.S. energy needs. It's impractical and vastly cost-prohibitive.

    Energy harvesting/generation, storage and distribution needs to happen at a somewhat distributed scale, whether that be on a rooftop or at a local solar plant connected to the grid. The local solar plant is relying on the grid, which is very, very costly to maintain and operate and will continue to cost a lot in the future. Getting solar panels on rooftops is costly and even after you do that, you still need a way to store the energy... thus most are connected to the grid, which again is very costly. You can go stationary storage, but that is very costly.

    Whatever way you look at it, we're not going to get to the "virtually free" price of energy you're hoping for in 30 years. No where close.

    Further, whatever reduction in energy costs that are realized will likely be completely (ie., 100%) offset by the increased usage in energy consumption driven by new products/services that require more energy (ie., think of how much more people would travel is fuel costs were lower, or how many more products would be shipped if shipping costs were lower, or how many products could be created if cost of creating those products were lower via lower energy costs, etc.), so that the monthly energy bill of a person will likely be similar as it is today. Far from virtually free.

    Can you clarify this?

    Let's expand on the Apple example. A computer is a computer, made of mostly low-margin commodity components... providing computer power. What Apple did was add value on top of that.
    1. Aesthetics
    Apple's computers not only look better, but are smaller/lighter etc. In a similar way, SolarCity can eventually make panels/modules/systems that are super sexy and blow away all their competitors. Electrons are electrons, sure just like computing power is computing power. But looks matter on your roof. It affects how your neighbors think of you and your house, and how you look at your house as well.

    2. Easy service
    Apple provides easy customer service (ie., genius bar, etc). Much better than anybody else in the industry. Other PC manufacturers went cheap (thinking a computer is a computer) even with service but Apple focused on quality. In the same way, sure a solar system might need servicing that often but it is does require occasional servicing (ie., roof might get bunch of leaves or something stuck on panel, or inverter goes bad, etc). SolarCity provides a full-service model. Again, if you add the potential of SolarCity to provide on-demand scaling up/down your system at no cost, this is something that is very difficult but could provide super high value to people. To me as a homeowner, "electrons are electrons" doesn't mean much and it really isn't true. I want convenience - to be able to install a small 2 kW and scale up whenever I want at no cost. I want the ability to get my system removed at any time at no cost. I don't want to put any money down. I don't want to borrow money. I want to give a quick signature and get it done. This is beyond "electrons".

    3. Better customer experience
    Apple has better advertising, better store experience, better buying experience, better servicing experiencing, better OS updates, etc. Overall, they provide a better customer experience than their competitors. In a similar way, this is what SolarCity is driving at - better marketing, better signup, better/easier financing, better/easier install, better maintenance, etc. The overall customer experience matters a lot. Again, electrons are not just electrons... it's more about my overall experience with energy generation and usage.

    Add in stationary storage, and experience matters even more.

    It's not just about providing the cheapest electrons or computing power (or etc) possible (that's one part of the puzzle), but it's about the overall customer experience and ensuring that every part of the picture is stellar and better than the rest of the competition.
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  • 1/1/2015
    guest
    I believe that's exactly what it means. There is nearly no bottom to the cost, and concurrently there is no top of availability (I say this with the understanding of practical in mind- yes there will always be a small cost, and yes there is photonics impingement maximum). But there is more radiant energy from the 'free' source, distributed to you for free than you will ever use, almost no matter how much you can engineer into useful purposes. The physics is irrefutable - and the cost of the energy and its distribution to you, wherever you are is free. The only cost is to convert photon to electron and intermediate storage. My supposition is that there is nearly no bottom to the cost of that process. I use examples of other leverages mankind used to make the similar advancements.

    It's my supposition those bills (measured in equivalent dollars of course) are due to come down drastically - furthermore, the more energy we use, the more they will reduce. The cost reduction will exceed for example the net reduction in your transportation bill that today's hard evidence shows is imminent between use of fossils-ICE and use of Electricity-EV - even if electricity is generated from fossils, much less that from Solar. -Due to the physics behind efficiency of EV motor vs ICE at the source of use coupled with the leverage of an already in place electrical distribution scaled cost.
    The cost reduction we are to experience from Solar will be several times greater than that in my estimation. Because the power generation itself AND its distribution system are both free; This induces a feedback cost loop that (similar to moore's law you quoted) results in a LOWER cost with HIGHER usage- because the only cost is production of the (photon>electron)convertor and storage(which will end up as Super Capacitor cost structure in 30 years). In other words the increased scale of it's production (and technology) more than compensate for the larger number of conversions being done to accommodate your usage increase, precisely because there is no (practical) limit to the number of photons available to convert, nor is there any increased cost in it's distribution to you.

    Wouldn't be the first time, but I'll take a shot just in case I didn't
    The map and associated article wasn't presuming those specific spots as the only solution- it used those as a way to make the calculations and illustrate a visual on one possible. And this does get to some of the heart of the disagreement- those areas are there to depict what needs to be distributed. The point is, that distribution is (almost) no cost- because the source of the power travels with the panel. Applying the equivalent panels across the country IS the distribution- It distributes the convertors(photon-electron) directly to the source of usage (as does the EV). And it does so for (almost) no additional cost and much less net cost (no grid required with associated losses)- It can do so precisely because the Sun performs the distribution for us. Generation is free - distribution is free; Convert and store at the point of usage.

    It's my supposition the physics underlying those costs are gone; manufacturing/scale of the local photon convertors/storage in 20-30 years will be no more costly than a cheap appliance is today. Not free but nearly so when amortized over its useful life. Agree we will use more energy because it's available; that's part of why it will be so cheap to convert and store- the cost is (largely)not a function of amount used because at the site of usage, there is no limit of availability nor cost to distribute - the grid becomes superfluous as it was originally needed to distribute from a concentrated source. If it survives it will be for other purposes such as sinking excess power, local grids in downtown areas and security - supported largely by taxes would be my guess

    yes the reference to food-stuffs was a quick metaphor for what we went through in the agricultural age. The cost of food used to be nearly 100% of our daily cost structure - still is in some places of the world. Applying scale of production and leveraging given energies, it's now a small cost in relative terms. I believe Energy via Solar will exceed that transformation by several times, both in magnitude and time compression. Just another example I was pointing to, in an attempt to portray harder facts for a future supposition where hard facts are of course impossible without extrapolation of past facts.


    Disagree on that as well. The experience is not with energy generation and usage; it's with the product that uses it. I'll give you an aesthetic for the panels on the roof- that won't be a premium for any company in my view. And I take your points regarding customer service quality etc. But in my view we are talking past each other here. Apple makes and missions making very personal, tactile, and interactive functional devices (ala Tesla for that matter). The vision I'm protracting is a semiconductor based convertor sheet and a super capacitor panel in the garage that requires little or or no service. None of the items you list are value add in the scenario I picture 30 years from now; the maytag-panel man will most assuredly be lonely :)

    Using your description- "the overall customer experience" is best deployed as a non-experience all together. Leave that to the 'living-products' of human interaction.
    thanks for the discussion
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  • 1/1/2015
    guest
    Just because an energy source exists doesn't make it virtually free (ie., in 30 years) unless you can extract/harvest that energy, store it and distribute it in a manner that is virtually free. That isn't going to happen in our lifetime and most likely won't happen ever.

    It takes a lot to extract/convert energy, store it and deliver it. Taking solar energy and converting it to usable energy takes a lot of equipment/infrastructure cost (think trillions of dollars for the world) and somebody's going to be paying for it - namely, the end consumer/user. No investor is going to invest trillions of dollars over the next 30-40 years as the world's energy generation industry transitions to renewables, only to give away energy for free. Those trillions of dollars invested in solar/renewable infrastructure over the next 30-40 years will need to be paid for. And more tens of trillions of dollars of investment will be required to meet the growing energy consumption of the world as well. It makes no economic sense to me how you're claiming energy will be virtually free.

    You state several times that the sun gives free radiant energy. That's true. But everything in this universe holds energy. Even an atom contains/holds vast amounts of energy. The tricky and costly part is extracting the already available energy sources around us. The sun's solar energy is just one form of energy available to us and like all forms of energy it requires vast/immense amounts of infrastructure/cost to harvest that energy, store it and distribute it.

    It's also possible, the more energy we use and the more new products/services that are created and made available due to lower energy costs, that our actual monthly energy bills will increase over time.

    I think of energy as a huge part of every part of the economy. If you lower the cost of energy, it creates vast incentive for new products/services that weren't possible before and lowers the cost of virtually every existing product/service. Think if energy costs were free, most of the products we have today would cost less than half of what they do today (negligible shipping costs, negligible factory energy costs, etc). This opens up a whole new world of innovation and increase in standard of living.

    There's no way if energy costs decrease that energy consumption rises minimally. Energy consumption will increase in proportion to energy costs decreasing, and probably even more. I wouldn't be surprised if the rate of energy consumption actually increases faster over the next 30 years than the rate of energy costs decreasing. It's possible that our monthly energy bills could actually be higher as a proportion of our household spending compared to today.

    Power generation is not free. Distribution is not free. Just because solar energy exists in the format of the sun's solar radiant energy doesn't mean it's harvesting, storage or distribution is free. Just like there are atoms everywhere filled with vast amounts of energy, but that doesn't make that energy free. We need to account the costs to harvest, store and distribute that energy. The costs are immense.

    The technology to harvest solar energy (ie., solar panels) are not improving at a pace that even can compare with Moore's Law and computing power. The improvements to solar panel efficiency has been much, much slower. Maybe akin to battery tech. And as we know, battery tech (although it improves 7-8% a year) is not where improving at a 50%+ annual rate like cpu's did with Moore's Law.

    I think you might be looking at solar innovation and thinking that it's advancing as fast as other high tech innovations in the past have (ie., cpus, internet bandwidth, etc). But that's simply not the case.

    Again, using an example of an atom... the energy is already there and we have it all around it. So does that make it's generation and distribution free? Similarly, the sun's energy is all around us but it's not until we harvest/convert, store and distribute that energy does it become useful to us.

    You mention all we need to do is "Convert and store at the point of usage." And that's what I'm saying is going to cost the world tens of trillions of dollars over the next 30 years and the investments will likely just expand over time. Converting and storing solar energy (or any energy) is not easy or cheap.

    I think the logic you're using might compare to internet bandwidth which you mentioned before. The cost to deliver a 1 mbs internet connection has fallen so dramatically in the past 10 years, that providing a 1 mbs internet connection into a home in 10 years might be a negligible cost (ie., under $10/month). However, that analogy might work if people didn't need/require higher and higher internet speeds as the pace of internet innovation correlates with the increase speed of bandwidth. So, now that I have a 50 mbs connection at my home, I'm actually using all of it and I want a faster connection. When I have a 500 mbs, I'll use all of it (since the Internet will evolve) and I'll want more. in 10-15 years (?) when I have a 10 Gbps connection, I'll still want more since the Internet would have evolved. The end result is that I'm still paying $40-100/month for my home internet connection.

    While the cost to deliver 1 mbs of bandwidth falls to negligible, that doesn't mean that savings is passed on to the consumer's monthly internet bill. Rather, the monthly consumer bill largely stays the same, and the drastic drop in cost to deliver 1 mbs of bandwidth is largely translated in a bigger/faster connection.

    In a similar way, just as companies innovate to create needs for people to have more and more internet bandwidth, companies will also innovate to create needs for people to consume more and more energy in various forms (ie., conveniences, travel, shipping/delivery, products, services, etc).

    There are a lot of assumptions here. You're assuming solar panels (ie., local photo converters and storage) will drop in price to the point where it's negligible (at least when amortized over useful life). I don't see that kind of drastic cost reduction as you. Let's look at battery storage. Improving at 7-8% a year. In 30 years, the stationary storage required to power most households will cost a decent amount of money - definitely not negligible. Also, there are so many surrounding costs to solar (ie., balance of system, permitting, mounting, etc) and there are limitations with solar as well (ie., limited roof space, sun/shade, etc). Also, if you look at the efficiency improvements in solar panels over the past 30 years, it's slowly improving but not at a rate like other high-tech.

    My rough guess is that in 30 years, we'll be consuming as an average household 4x the energy we do now, and our monthly energy bill will be roughly the same as it is now.

    It seems like you're looking at energy based on how it has been provided in the past by utilities as a commodity, unsexy item with no added value beyond electrons. Just because the utilities provided it like this, doesn't mean that all energy in the future will also be provided like that as well.

    Stellar companies have an unusual tact at getting into industries that appear commoditized but adding additional high value via innovation and charging a premium that's well-deserved.
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  • 1/1/2015
    guest
    well we definitely have some fundamental differences. sounds like we have a market! :)
    without quoting all points above; just the heart of the disagreement- I'll choose 2:
    1)
    "Just because an energy source exists doesn't make it virtually free (ie., in 30 years) unless you can extract/harvest that energy, store it and distribute it in a manner that is virtually free. That isn't going to happen in our lifetime and most likely won't happen ever."

    That's true- and the heart of the difference. I believe the 'unless' part of your supposition is already inevitable
    I do in fact believe we are entering another super-disruption that indeed does convert energy from one form to another at quantum level in a semiconductor based format- destined to achieve the associated cost structure, amplified by a no cost source and distribution. The technology will in fact accomplish that in the field.
    I'm a little uncertain as to your distribution concept- but once conversion and storage at the point of use is deployed- the distribution is concurrently accomplished in my view (and so free)

    2)
    "There are a lot of assumptions here. You're assuming solar panels (ie., local photo converters and storage) will drop in price to the point where it's negligible (at least when amortized over useful life). I don't see that kind of drastic cost reduction as you. Let's look at battery storage. Improving at 7-8% a year. In 30 years, the stationary storage required to power most households will cost a decent amount of money - definitely not negligible."

    yes- we disagree; I believe those prices will in fact drop to (amortized)negligible - storage will not be battery (although will be initially at a very attractive price), but will be capacitive hybrid, produced with 3D printing at an extremely low cost, completely dislodging the 7-8% per year (although that alone largely turn the trick over 30 years.)

    anyway- definitely a different vision - and relative to investment patterns- short term, probably doesn't make a market difference. But over time your belief system, might point toward the YieldCos and similar investment vehicles with emphasis on recurring revenue from system deployment and service, power generation and distribution revenues.
    My investment scenario would take (after initially being similar of course) a different path that eschews the power revenue based path, instead deploys against the disruptive application of extreme DG (down to individual & business), followed by a withdrawal to other industries- as I believe inevitably the user will generate/store their own power beyond their ability to use it- even at 4x current levels, disrupting the market for sale and purchase of power.

    that's the way I see it anyway
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  • 1/1/2015
    guest
    It definitely does look like we have some big differences in opinion, but it's understandable considering 30 years out is a very long way away.

    I do agree that the core of our disagreement is how quickly costs for solar harvesting/converting and storage can decrease over the next 30 years. I'm assuming that solar continues it's pace of innovation as well as battery technology and leads to lower costs over time but will likely be offset by the increase of energy used per household so that the average monthly energy bill for a household remains relatively the same (or could even higher). The reasoning I gave was "It takes a lot to extract/convert energy, store it and deliver it. Taking solar energy and converting it to usable energy takes a lot of equipment/infrastructure cost (think trillions of dollars for the world) and somebody's going to be paying for it - namely, the end consumer/user. No investor is going to invest trillions of dollars over the next 30-40 years as the world's energy generation industry transitions to renewables, only to give away energy for free. Those trillions of dollars invested in solar/renewable infrastructure over the next 30-40 years will need to be paid for. And more tens of trillions of dollars of investment will be required to meet the growing energy consumption of the world as well." Basically, even with solar costs decreasing, we're still going to be spending tens of trillions of dollars transitioning to renewables over the next 30 years and it needs to be paid for. And even after 30 years, we'll still be spending trillions of dollars in energy infrastructure as energy needs grow.

    Your stance is "    I do in fact believe we are entering another super-disruption that indeed does convert energy from one form to another at quantum level in a semiconductor based format- destined to achieve the associated cost structure, amplified by a no cost source and distribution. The technology will in fact accomplish that in the field." - It appears that you're expecting a major breakthrough in solar energy conversion, so dramatic that it lowest the cost of harvesting/converting energy so low that the costs become negligible. I'm not expecting that dramatic of a breakthrough. I lean toward a steady march of innovation that lowers costs steadily over time. New technologies tend to be integrated over time. Consider the battery field... there's so much talk about revolutionary breakthrough in cell technology. But usually how it works is that new technology has holes and it takes time to mature and eventually gets integrated into the product to make things more efficient. The level of breakthrough required to bring down the cost of energy to near zero is unrealistic IMO.

    Let's say there's a revolutionary/historical fusion breakthrough and it brings down the cost of electricity in 30 years to 1/20 of the cost of today (note: there will still be costs because fusion reactor/plant, storage, distribution, etc still needs to be paid for). In this scenario, I personally think that households will just use 20x the amount of electricity/energy they do now. It won't all be in the form of electric outlets in the house. But there will a myriad of applications. For example, my personal drones would fly to LA to pick up dinner from the best chef in the city and bring it to my house by dinner time. I could send my drone to practically anywhere to pick up practically anything. I could even have a drone pick up every piece of a new house I'm building, one little piece at a time. I could have robots create things for me - ie., they can farm food for me, become my own personal industrial robot force, build a business with them, etc. If I had a flying car, I would travel a lot more and use more energy as well. Personally, if energy was cheap enough I think humans can use 1000x+ the amount of energy that we use now, and that would just be a beginning.

    The point being is that I think there will always be a healthy market for energy. It will likely remain one of the largest markets in the world (like it currently is). And it will be probably one of the most important markets (as it currently is) as well.

    In other words, I think SolarCity has a bright, blue ocean to swim in for many, many decades to come.
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  • 1/1/2015
    guest
    I think that kenliles and I are saying the same thing in a different way. "Virtually free" does not mean $0.37/month electricity bill. It just means that the cost of electricity will be inconsequential:

    In today's dollars, 10 years from now solar will be at $1.00/W installed, so 30 years from now it might be $0.50. A 10 kW system would cost you $5,000, and is enough for 10,000-18,000 kWh per year. With better technology it might last 40 years or 500 months. That is $10/month, I.e. virtually free. Another $10 for battery storage and you have your car as backup storage too.

    But who knows what kind of technology we might see. If SPWR can scale C7 technology to fit on roofs, then electricity might become extremely cheap soon enough. I am sure that we will see a lot better technologies 30 years from now.
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  • 1/1/2015
    guest
    Agreed we have different visions of end point. The 1/20th cost is already baked in for my scenario and may be more like 1/100th and provide near endless power available to every individual/business.
    I couldn't agree more that we disagree! :)

    SCTY is it's own issue within the context of our disagreement
    However, I'm currently uncertain as to SCTY because I don't know which direction they will head. In many ways they are on my side of the argument, eschewing Utility scale power and distribution in favor of individual rooftop DG with higher efficiency panels. On the other hand they charge exorbitant fees to own the power, modeling as a power generator which I do not adhere to. As an investment they are fine for a time. Under my model they will have to adjust rapidly, but that's down the road a bit. Remember my supposition is 20+ years out when Elon is on Mars.

    That said I really like the catalyst of rooftop and storage SCTY has ascribed and applaud that strategically. I'm currently agnostic SCTY, but with a slight long bias pending more clarification. I really like the new direction of adding high efficiency panel production in house. I'll point out though they are very late to that recognition. It's couched in massive expansion that others have already achieved and are engaged. Others are already (correctly in my view) projecting in a few years that panel production will consolidate to massive outsourced capital outlay. The only way they maintain a viable position in that endeavor is to massively dilute to catch up, then abandon to others. Where as Tesla is ahead of the game via GF. SCTY is playing catchup to others who already have those for panels.

    In short, I'll be using SCTY for a trading mechanism. Agree with Sleepy on that count, but with a long bias to the trade given Elon involvement and integration of storage from Tesla. Thought s are highly dynamic on that though, so reserve the right to change at any moment. SCTY for my vision, is schizophrenic - ahead in certain aspects, way behind in others. Thats a market!


    Anyway. Really enjoyed the conversation Dave. Thank you

    Cross posted with Sleepy. So quick edit from his post. Yes I agree with that position. The cost in my model becomes inconsequential relative to other life costs at the time - doesn't mean exactly free, but it's simply a non issue and no longer an investable growth channel. It's simply water from an appliance To our everyday lives. My time frame for that is 30 years, but investment wise, 10-15 and move on.
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  • 1/1/2015
    guest
    $10k for a 10 kW system plus stationary storage is not negligible in my opinion. That's quite a large expense. Further, no way that it can be amortized over 40 years. More like 10 years for the individual consumer, maybe a bit longer if there are creative financing vehicles.

    Add to this that in electricity usage will likely increase dramatically (if costs per watt decreases dramatically), people might need a 30+ kW system, which only dramatically raises the costs for the system and storage. So, for a 30 kW system costing let's say $25k, amortized over 10 years, that's $2500/year (not including interest). That's $200/month for the consumer to pay. Or if we amortize it over 20 years, then that's $100/month... but that's not including interest payments over 20 years. Add in interest payments and for a 20 year loan for $25k at 5% interest you'll have a $165/month payment. Far from trivial.

    - - - Updated - - -

    Regarding SCTY specifically, I would suggest researching the company more in-depth. The recent Silevo conference call with Elon Musk is a great call to listen in on. From the call, you can feel the confidence, clarity/focus, and how the management team (Rive brothers with Elon as Chairman) are completely on the same page, following the Musk way as demonstrated by Tesla and SpaceX:
    http://www.media-server.com/m/p/sfwejz2i

    I've also gained a lot of insight listening to all their quarterly conference calls and interviews with management. The more I learn about SCTY and their management, the more confident I become of where they're headed. They are top notch and really a stellar team, guided and inspired by the leadership/vision of Elon. They are truly unique in the solar industry, and IMO best of breed. They will continue to surprise people by their innovation and out-of-box thinking/ways.

    Same here. Good opportunity to think through things, hear different perspectives, and write ideas down. Best of luck.
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  • 1/1/2015
    guest
    I did exactly that and they have been a very strong part of my investment (small part currently). And there we agree. They have an excellent management team and I give high marks to their ability to adjust and maneuver. Probably one of their best assets frankly Based on that alone, I can understand those who invest. And to be clear I swing from bullish to bearish with SCTY, but much of the bullish comes from the excellent management quality. No issue there. And I really admire the aggressive mission. With the recent run up I'm very light SCTY, but on pull backs will add. I'm basically with a Sleepy on this one, it's a good trading vehicle with a bullish bias for this early Solar stage. Will evaluate continually. The recent move is a good one IMO and long overdue, but if aggressive enough (and sounds like it is) will work out well

    Thanks again, for a great debate and conversation - one of the reasons I really like this forum and the people on it. Regardless of right or wrong, it's going to be a blast to be a part of this important set of events for all of us. :)
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  • 1/1/2015
    guest
    Did anybody else catch on the SCTY's Silevo conference call last week that they mentioned that Tesla and SolarCity were cooperating on inverter technology? I want to go back and transcribe that part of the conference call but I don't want to listen to the whole thing over again. So, if anybody remembers when in the call it was mentioned, I'd appreciate your help. Thanks.
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  • 1/1/2015
    guest
    ** It's right in the first few mins, where Musk started explaining the acquisition.

    Elon R. Musk:

    Thanks. So I think this acquisition will come as unexpected to some probably maybe to most, but SolarCity has decided to go into the actual solar panel production, which is something we'd stayed away from for a while. We do think though now there was really a need to do this. But Lyndon and Peter and Tanguy and the team actually came to me and said that they thought the timing was right to make an acquisition and go into advanced solar panel manufacturing, because if we don't do this, we felt that there was risk of not being able to have the solar panels we need to expand the business in the long-term.

    So we ultimately expect to be installing tens of gigawatts a year. And if you look at the capacity in the world, it's simply not going to come online to be able to do that, and moreover the rate at which solar panel technology is advancing, at least the panels that are being made at large scale, it's really not fast enough. But we're seeing high volume production of relatively basic panels, but not high volume production of advanced panels. So we think it's important that that should be combined in order to really have dramatic impact on solar power, and in particular in order to be able to have solar power compete on an unsubsidized basis with the grid, with fossil fuel energy coming from the grid, it's critical that you have high efficiency solar panels at a total installed cost which is as low as possible. And there are really just two key levers for that; one is economies of scale and the other is making sure the fundamental technology that's being scaled is as best as it can be. So with the Silevo acquisition, that's what we believe we can do and are doing.

    So we expect in the future to build solar panel plants that are an order of magnitude bigger than any plants that exist in the world today to assure we're taking maximum advantage of scale, and then we intend to put a lot of effort into R&D on the panel side as well as into the mounting hardware, which we already own and into inverter technology in partnership with Tesla, as well as battery pack technology to provide an overall solution that gives someone electric power at a price that is less than if they were drawing it from fossil fuels burned over the grid; that's really the key threshold. And obviously the demand grows exponentially as the price drops and you can imagine that it really grows at an enormous pace if we're able to compete with grid-powered electricity with no government incentives and that's really the goal, and that has to be the goal in order for the world to have sustainable energy future.

    Thanks. Now, I'll turn it over to Lyndon and Pete.
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  • 1/1/2015
    guest
    Thanks, SBenson. That's a very inspiring Solarcity vision/mission statement by Elon.

    Looks like Solarcity is working with Tesla on both inverter and battery technologies. Exciting times ahead. I'm very interested in the inverter solution that they're working on. Originally I thought they might acquire a company but from this it appears that they're working on this in-house with Tesla. My speculation is that they will release an innovative inverter solution, a sort of hybrid between microinverters and regular inverters that will allow them the flexibility to scale a system that microinverters give but the stability and reliability of a regular inverter. Also positioned where it'll be easy to access as well.
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  • 1/1/2015
    guest
    The inverter thing is a bit confusing. Here is another snippet around 27mins.


    <Q - Pavel S. Molchanov>: Okay. And then just one kind of higher level question if I may, you guys obviously bought a mounting systems company last year. You've now bought a module company. Are you looking to get into other parts of the hardware value chain, and I'm particularly thinking inverters or power optimizers perhaps?


    <A - Lyndon R. Rive>: The way I'd like to answer this is, we will continue looking at ways to reduce our cost per kilowatt hour. And so we're always out in the market to find out anything that will reduce our total installed cost or cost per kilowatt hour, we will be interested in acquiring.

    - - - Updated - - -

    On a different note here is a snippet on battery partnership.

    <A - Elon R. Musk>: Yeah. The crazy thing is gigawatt plant is almost like the pilot plant for what will come. Obviously, the bigger plants to come beyond that will as we start to deploy a lot of solar panels, we'll need to start adding in stationary storage, so battery packs, Tesla is certainly working on that in partnership with SolarCity.
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  • 1/1/2015
    guest
    Finally, here is a Lyndon Rive interview on Bloomberg TV explaining the acquisition. A couple of good points here:

    Why Elon Musk's SolarCity Agreed to Acquire Silevo: Video - Bloomberg

    The one thing I found interesting was how these guys think they can manufacture at prices competitive to chinese standard panels. Apparently energy costs are lower in US than in China. Also it would be highly automated. Add to that, low freight costs and no tariffs. It all seems to add up quite well.
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  • 1/1/2015
    guest
    From their Q4 2013 conference call (Feb 24, 2014):
    Pavel Molchanov - Raymond James
    "And then let me ask something on a related point. You guys have historically been avoiding the use of microinverters in your systems. Any change in your stance on that?"

    Peter Rive - Chief Operations Officer, Chief Technology Officer
    "No, we are fans of local DC optimizers, but have not changed our position in regard to providing an inverter that is coupled directly to the module on the roof."

    In other words, I take this to say they like the idea of "local DC optimizers" (meaning having the inverter closer to the module and smaller) but they don't like the current microinverter that are "coupled directly to the module on the roof." So, I'm thinking they'll have another place where they're pool all the microinverters together (rather than having one microinverter coupled directly with a module), and maybe each microinverter might be for 4 panels rather than 1. So, you could have the microinverters installed altogether on the side of the roof, maybe one one side of the mounting racks. That would make it easy to access in case the system needed to be scaled up/down or if an inverter failed.
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  • 1/1/2015
    guest
    No, that's not what that means. Local DC optimizers are not the same thing as micro-inverters. Optimizers have lots of advantages over micro-inverters including better efficiency, cost, and serviceability.
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  • 1/1/2015
    guest
    Thanks for pointing that out. Just did some reading and learned the following: (Power optimizer - Wikipedia, the free encyclopedia)
    "A power optimizer is a DC to DC converter technology developed to maximize the energy harvest from solar photovoltaic or wind turbine systems. They do this by individually tuning the performance of the panel or wind turbine through maximum power point tracking, and optionally tuning the output to match the performance of the string inverter. Power optimizers are especially useful when the performance of the power generating components in a distributed system will vary widely, differences in equipment, shading of light or wind, or being installed facing different directions or widely separated locations. Power optimizers for solar applications, can be similar to microinverters, in that both systems attempt to isolate individual panels in order to improve overall system performance. A smart module is a power optimizer integrated into a solar module. A microinverter essentially combines a power optimizer with a small inverter in a single case that is used on every panel, while the power optimizer leaves the inverter in a separate box and uses only one inverter for the entire array. The claimed advantage to this "hybrid" approach is lower overall system costs, avoiding the distribution of electronics."
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  • 1/1/2015
    guest
    that was great, thanks. question for anyone....why are they so concerned about getting to a point where the price of solar will be lower than normal electricity without tax incentives? is it for psychological reasons for the public? because oil still gets and will be getting massive subsidies.
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  • 1/1/2015
    guest
    It's practical.

    The key is that once you reach parity with the marketplace you can eliminate the subsidies and get political consensus.

    You can then have PV installations crank up the renewable percentage, and there's enough room for a huge market up to whatever the ceiling is for each local grid.

    Then the attention shifts to storage technology. That's where Tesla's focus on lowering storage costs comes in. As long as Tesla-Panasonic can lower the cost of storage enough, they raise the potential renewable percentage and lower the effective price ceiling on electricity.
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  • 1/1/2015
    guest
    ah, that's it. so basically psychological reasons. hahaha. I understand though. solar shouldn't have to lean on something to make it noticeable.
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  • 1/1/2015
    guest
    I disagree. Not psychological.

    When a technology becomes market competitive without government involvement, that's a very significant milestone.
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  • 1/1/2015
    guest
    True. Wonder when Oil will ever reach that one. I'm guessing Solar gets there first
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  • 1/1/2015
    guest
    Nice one!

    Is there anywhere data on just how much or what % oil is subsidized? Anti-solar people live to trot out solar subsidies but it would be nice to have the counter-argument for oil with actual sourced numbers.
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  • 1/1/2015
    guest
    In the US something like $35B per year, some estimates up to $50B.
    $500B globally
    Energy subsidies - Wikipedia, the free encyclopedia

    Guess they still need help starting up. Soon they'll want the help to shut down. ;)
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  • 1/1/2015
    guest
    Maybe not real soon, but still ROFLOL. :)

    GSP
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  • 1/1/2015
    guest

    I played golf with two oil and gas guys a couple of weeks ago; and they invest a lot of their money in those industries. I asked them why are they investing their money in a dying industry? Their response was that Houston can't find enough CNC specialist to work in oil and gas.

    Then later they started talking about Russia cutting off gas supply to Europe and the conversation looked like this:

    Oil and gas guy - "we can start exporting our LNG to Europe."
    sleepyhead - "...or Europe can simply go solar."
    Oil and gas guy - "I knew you were going to say that."
    sleepyhead - "because it is the obvious solution."

    End of discussion...

    This conversation I had, just strengthened my investment thesis in solar. People are so far behind that it will be a very investible industry for the next decade.

    Side note: one of the oil and gas guys said that he played options in those companies because those stocks have extremely predictable intraday movements. He would buy front month slightly OTM call options and try to cash out same day with a 40% gain. He said he turned $20k to $120k in a few short months doing this.
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  • 1/1/2015
    guest
    very interesting- thanks for that perspective. I agree, the blind spot currently is massive and will apply it's Solar-short for years to come, while collection of squeeze will be a continual support;
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  • 1/1/2015
    guest
    I've followed this discussion. I feel that SCTY has popped and its future growth is limited. Today I sold the shares I purchased the week of their IPO . I will be redeploying that capital to increase my position in TSLA.
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  • 1/1/2015
    guest
    Will SolarCity partner in the GigaFactory? I see that as a significant catalyst.
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  • 1/1/2015
    guest
    I believe Lyndon answered this in the last conference call. Basically that is the point in which you have "unlimited demand".

    When you can install solar with battery backup for less than normal electricity you are literally talking about every home/building in America. Or at least where the Sun shines a lot.
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  • 1/1/2015
    guest
    I think the better question is "what company can install beautifully architectured solar systems?" The man who takes Steve Jobs obsession for beautifully designed computers and applies it to solar will become incredibly wealthy.
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  • 1/1/2015
    guest
    The cheap panel will be installed on most roofs though. If you can make it cheap and beautiful even better.
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  • 1/1/2015
    guest
  • 1/1/2015
    guest
    I can't help being skeptical about research like this. There's little doubt that SolarCity is the largest single installer but given their current coverage in 16 states then to have a 29% overall market share they'd have to be closer to 100% in some of those individual markets. It's worth noting that much of the data is based on state rebate numbers which are simply not available in many states.

    SCTY's coverage map:
    sc-regions-map.png

    The next question would have to be: If SC has a 29% national market share they should be hugely profitable without facing downward margin pressure, no?
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  • 1/1/2015
    guest
    Actually, no.

    Solar Market Insight Report 2012 Q3 | SEIA

    SCTY's coverage includes states with the clear majority of installations and the vast majority of residential PV installations.
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  • 1/1/2015
    guest
    Seems like Mr. Rive has been cashing out a substantial amount of shares the last 5 weeks. Net proceeds of ~$9,000,000.

    I'm out of SCTY right now but watching and I don't like this.
    Now if I were able to buy at .87/share and sell at $71/share I would not be complaining! And in this case i don't think its healthy diversification...












































    Date NAME TRANSACTION SHARES PRICE VALUE
    7/3/2014 Mr. Lyndon R. Rive Sold 30,293 $71.58 $2,170,000
    7/3/2014 Mr. Lyndon R. Rive Bought 25,964 $0.81 ($21,031)
    7/3/2014 Mr. Lyndon R. Rive Sold 12,982 $71.58 $929,240
    6/27/2014 Mr. Lyndon R. Rive Bought 153,450 $0.81 ($124,295)
    6/27/2014 Mr. Lyndon R. Rive Sold 76,725 $70.76 $5,430,000
    �
  • 1/1/2015
    guest
    Absolutely nothing to worry about. Those trades were automatically executed under his 10b5-1 plan which was discussed up-thread here. You can see the SEC filings here.
    �
  • 1/1/2015
    guest








    How many shares does Mr. Rive have?

    It looks like he's exercised some options and NOT sold shares. Why isn't this "healthy diversification"?
    �
  • 1/1/2015
    guest
    Do you mean profitable now? I believe that SCTY would be profitable now, and for the next 15 to 20 years, if they'd just stop spending money on doing new installations! Of course, then they wouldn't be growing or even maintaining market share. They're definitely riding a tiger here.
    �
  • 1/1/2015
    guest
    Yes, he exercised options and bought shares. He could have held them. Instead he sold them. I don't think its healthy diversification when the company is still young and not profitable. His trades netted him $9-Million while the company lost ($56 Million) in 2013 and ($100 Million) in 2012. Sure they may have good reasons for the losses but I personally don't like it when CEO's do this.
    �
  • 1/1/2015
    guest
  • 1/1/2015
    guest
    There is also the yelp effect going on where a lot of reviews are hidden or don't count.
    �
  • 1/1/2015
    guest
    Interesting, how does Yelp decide which reviews are hidden or don't count?
    �
  • 1/1/2015
    guest
    So no substantive answers to the actual questions. Got it.
    �
  • 1/1/2015
    guest
    Ok sure, if that's what you think. I gave my reasons for my opinion and you go all snippy.
    What do you think would happen if Musk sells the shares he gets from is next options tranche windfall? He already said he will hold them...first in last out.
    �
  • 1/1/2015
    guest
    apparently they have some controversial secret proprietary algorithm and have been sued by businesses a couple of times because they hide good reviews. but Yelp afaik won all those lawsuits.
    �
  • 1/1/2015
    guest
    I have first hand experience. I had a system installed by Solar City and everything went very well. The city inspector told me that Solar City "always does the job right the first time". He said most other companies have to return a few times until the city requirements are met.
    �
  • 1/1/2015
    guest
    I've had experience with both ends of this.

    I help run a restaurant in my semi-retirement; Yelp is reputed to slant the display of reviews one way or the other depending on how much the business spends on advertising. They only "slant" the reviews, which means that businesses with consistent (good or bad) reviews still come across that way, but most have mixed reviews and the slant can be bad for the business.

    We have a Solar City installation, and it was great, and we're currently negotiating to expand it. That's a positive review.
    �
  • 1/1/2015
    guest
    Sorry for any snippiness.

    I was asking for facts and figures as I think it would help discern whether this is a serious concern or noise.

    How many shares does he own and how much do these exercised options represent of his holding?

    80% 50% 5%, 1%?

    That's a much more important piece of information.

    Were these part of a timed sale?

    That we see an insider selling shares isn't very helpful.

    As far as "losses", SCTY is making 20 year contracts that pay off over time. There are often investments in infrastructure in heavy growth phases of a business.

    SCTY buys a marketing firm Paramount, for $120M.

    Then they buy ZEP, a quick install hardware company helping them "double throughput" for $158M.

    Then buys SILEVO, solar panel technology (with tax package), from the State of NY for $350M.

    32% US Market share (both MW and % of customers) and addresses less than two tenths of 1% penetration.

    Regardless of whether the PPA or outright sales model is adopted, Tesla is in the driver's seat to be one of the largest producers and storers of renewable energy in the US.
    �
  • 1/1/2015
    guest
    How come this is important? Almost certainly these sales are his major source of income. And what make you think that he is in position to invest ANY money into SolarCity or any other company?

    From what we know he could be very well just spending them now instead of waiting till he be 80yo retiree.
    �
  • 1/1/2015
    guest
    Guys, if you're not familiar with them read up on 10b5-1 plans. It's good corporate governance to have one and Rive filed his last year to make the sales now; it's sensible for him to diverse a little or maybe he's building a house or something, the point is that there's nothing ominous in the recent trades.

    Federal Regs/SEC/10b5-1
    Investopedia.com/terms/rule-10b5-1
    Wikipedia.org/SEC_Rule_10b5-1

    Now if the trading was happening without a 10b5-1 in place that would be a different story...
    �
  • 1/1/2015
    guest
    I don't really agree that since he is not breaking the law all is rosy. A CEO or insider can file his/her sales plans via 10b5-1 in accordance with the laws and still make millions when shareholders are left holding shares in a sinking ship. I think it requires more analysis than blindly accepting all is good because is was done by the books. CEOs and board members can and do get relieved of their positions by making out like bandits when shareholder don't see good returns. (Not saying that will happen with SCTY.)


    And in the case of SCTY I sold at 72 because I felt that compared to their peers SCTY had popped and future growth was limited. Whereas TSLA or other Solar companies are at a fraction of the market cap they will eventually be awarded. I decided to realize my 350% gains in SCTY and plan to reinvest elsewhere. For the record I did not sell because of the insider selling, I've followed them closely since the IPO and happen to agree with Sleepyheads and think some others here are a bit too exuberant.
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  • 1/1/2015
    guest
    It's not about "not breaking the law"; Rive 10b5-1 was put in place last August. I've run public companies and there's not a CEO on earth who can predict his share price 9 months out; you just have to plan your personal finances the best you can and then commit to your plan.
    �
  • 1/1/2015
    guest
    I don't want to add to the snippiness of this thread since I'd rather be engaged in constructive dialogue. First, congrats on your SCTY gains.

    Regarding other solar companies vs SCTY, SCTY in my opinion has the following advantages:
    1. Stellar management - includes Elon Musk as Chairman and strategic advisor
    2. Fastest growing mainstream solar company - growing at 100% per year in terms of installs, customers, personnel.
    3. Most complete vertical integration of any solar company - from marketing, permitting, install, maintenance, mounting equipment, now panels, and eventually inverters. This allows SolarCity to continue to drive down costs (along with economies of scale) and offer an unique value proposition from which they can and are accruing good margin.

    But I'm not going to knock other solar companies, as I've mentioned on this thread that there are some that I find as decent investments (though I don't hold any long-term positions).

    All in all, solar is a massively growing industry and there are going to be multiple investment opportunities. I just haven't found a better opportunity than SCTY (but I advise SCTY holders to have a very long-term outlook, ie., 10-15 years).

    ps., I have to admit, and I've said this before on this thread, that I'm a fan of CSIQ. I think they might have the best management out of the non-SCTY solar companies, and they've proven that they can grow their company in a smart way. I don't have a long-term position in CSIQ (currently), but I respect that company a lot.

    Here's a link to CSIQ's latest investor presentation. It's notable that they're projecting revenue growth of 75% YOY (from $1.6 billion in 2013 to $2.7-2.9 billion in 2014). Impressive.
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  • 1/1/2015
    guest
    - - - Updated - - -

    Fantastic! so how big is your solar system and how much savings do you realize on your monthly electricity bill? Also, what type of maintenance work does SCTY need to perform on your solar system? and how often?
    ?

    - - - Updated - - -



    ?
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  • 1/1/2015
    guest
    We currently have a 6-year-old 3kW system. I can't remember what our electricity bill used to be, but we now pay a bit over $1k/year (SDG&E sends an account monthly but you only have to settle once a year) to support the house and two Teslas and a pool; I also work from home now so power usage has gone up. The pool has its own solar heater, but that's old and starting to leak, so we are looking to replace/move it, and put PV on that part of the roof for an additional 3.75kW. The estimates are that that will pretty much zero out our bill. Payback (after tax rebate) will be about 6-9 years.

    As for maintenance, we had an inverter failure about a year into ownership. I got a call from Solar City's monitoring people, they organized a time to have it replaced... all perfectly simple. Nothing else needed except some tree trimming.
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  • 1/1/2015
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    Thanks a lot! Your electricity bill is exceedingly low. I got a house+pool without any heater in Dallas, and my annual bill is more than $4K. So the ROI is really impressive. So how often do you need to wash the panels to get rid of dirt and dust and how much does it cost to hire some one to do it?
    �
  • 1/1/2015
    guest
    NigelM - I agree with you that 10b5-1 sales are nothing to worry about and good corporate governance. Heck, I just put half my money in GTAT, right after the CEO sold about 100,000 shares via a 10b5-1. But in the case of SCTY, I see something EXTREMELY WRONG with Lyndon Rives sale of 120,000 shares; let me connect the dots for you guys:

    You guys remember last October when SCTY was trying to raise capital, and they couldn't get enough interest from people to buy the shares (not sure if the last part is true, but my understanding was that they couldn't get interest)? So SCTY, completely out of left field, decided to issue 2015 guidance in order to jack up the stock price to raise more capital. On top of that Elon Musk and Lyndon Rive agreed to buy 560,000 shares of SCTY as part of the capital raise to show the rest of the investment community that they have faith in SCTY. Well in the end the bought less than 400,000 shares, o/w Lyndon Rive bought 107,434 shares.

    If what NigelM says is true that Lyndon Rive put his 10b5-1 plan in place last August (just a couple months before the capital raise) to sell 120,000 shares of SCTY (just 8 months after the huge "vote of confidence" :rolleyes: that Lyndon Rive gave SCTY by buying 107,434 shares), then this whole thing is a slap in the face for SCTY shareholders and Lyndon Rive is a joke and making a complete mockery out of investors and shareholders.

    SCTY already diluted the heck out of shareholders by doubling share count over the past 2 years, and now we see that they are dishonest and misleading shareholders by playing these "vote of confidence" games. I am sure that Elon does have confidence in SCTY, and probably will not be selling his shares. But what Lyndon, the CEO, did is completely unethical and the guy is a joke in my book for trying to fool shareholders. The truth always comes out, and I am always happy to do the detective work to point out these jokesters.

    Disclosure: I just recently cashed out my deep ITM SCTY J15 30/40 Bull Call Spread for 92% of max value (I wanted to hold to maturity, or at least Sep. for LTCG, but I needed to raise capital somehow to buy more GTAT on this illegally fabricated pullback by UBS, who had notes due July 10-15 that cost UBS a lot more money the higher GTAT's stock price was. This is another example on Wall St. how the big players, i.e. CEO's and investment banks, screw over the little guy, i.e. retail investor. But I digress). Therefore, I now do not have any SCTY positions, and absolutely do not have any short positions in the stock either. But I do hope that the stock keeps going up, because I will be looking for an entry point to short once it goes all bubbly again. At the same time, I will go long the stock if it crashes another 30%. I think that SCTY is a good trading vehicle. I actually think that the stock will be a lot higher 5-10 years from now, but fear that there is a 20%-30% chance that the business model will fail the shareholders, i.e. not deliver decent returns, and therefore I don't buy as a long-term investment due to huge perceived risks.

    But the main reason I am not a fan of SCTY is because they are an unethical company as proven by this whole capital raising mockery they made out of shareholders, ripping off customers by pocketing the whole benefit of installing a solar system for themselves while the customer is left holding the bag on a lease in the form of depreciated home value due to solar lease (yes your house may lose as much as 10% in value due to solar lease, while owning a system can increase your property value by up to $25,000); note I am not a fan of SPWR (or any other company) leasing either. On top of that they screw over the taxpayers by jacking up the "appraised" system value price in order to maximize MACRS depreciation, so that Goldman Sachs can pay less in taxes and screw over the taxpayers (just what we need: an investment bank screwing over the taxpayers even more).

    I am sorry, but SolarCity is a complete joke of a company to me! Extremely unethical in my book...

    edit: jacking up the "appraised" solar system value price also means that SCTY is screwing the taxpayers over by pocketing 30% on this higher "appraised" value than the actual value of the system, which would be a much lower value; but that would mean less taxpayer dollars for SCTY to pocket for their own coffers, so that the executives can get their tens/hundreds of millions of dollars.

    Also, make sure to read my hyperlink in the last paragraph about how solar leases can significantly lower the value of your home during resale, and how owning a system can actually increase the value of your home (I point I have been arguing here for over a year).

    I am not a solar installer, and I have no positions in SCTY. Everything I write here is my own, unbiased, and honest opinion on this matter; and I understand that many people will disagree with me. That is what makes a market...
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  • 1/1/2015
    guest
    Laziness wins... they get washed once a year, when it rains... :-/
    �
  • 1/1/2015
    guest
    I'm my case that's daily lol
    �
  • 1/1/2015
    guest
    This do sounds like California:)
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  • 1/1/2015
    guest
    If you live in Dallas, then you are in the Oncor TDSP service area. Oncor is offering a very generous rebate for installing solar panels right now (at least they were 3 months ago when I installed mine, and the program has been going on for at least a couple of years).

    If you get a lease with SCTY, then they will pocket your 30% tax credit, they will take away your generous Oncor rebate, and you will be left holding the bag when you try to sell your house and have to lower your asking price by $10k - $20k just to get people interested in buying your home.

    But ignoring the home resale part, I also live in ONCOR TDSP area and just installed a 7.7kW solar system on my roof and it only cost me $9k out of pocket. This will give me a cost of about 2.5c/kWh ($0.025/kWh). Whereas, if I went with a solar city lease, I would probably have to pay 3x-6x (300% to 600%) more per kWh.

    Do not lease a system from nobody, especially since Oncor offers very generous rebates. Find a reputable local installer that will do a solar system for around $3/W and then get your 30% tax credit and an Oncor rebate (mine was over $1/W) to bring your system cost down to about $1.30/W out of pocket.

    BTW, ggr lives in San Diego, where the temperature is 75* year round and is nowhere near comparable to Texas. Get the biggest system that you can fit on your roof while Oncor is still offering these generous rebates. That way you will have about a 6 year payback period, and get to keep your solar system 30+ years. With a SCTY lease, you will have a 12-13 year payback period and then have to return the system to SCTY at the 20 year mark.

    It is a no-brainer to buy in your situation if you are considering solar. Leasing a system in Dallas (with Oncor's generous solar rebate) is the worst financial decision you can make (unless you get an extremely good offer, such as $0.03/kWh on pre-paid lease or $0.06/kWh on a 20-year no money down lease).
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  • 1/1/2015
    guest
    I worked for three years as a "Solar Rebate Inspector" at the Los Angeles Department of Water and Power. In this capacity I was privy to both system financial data as well as technical data. I am in complete agreement with Sleepy regarding the advantages of purchasing vs leasing. Shop prudently and you will miles ahead for years to come.

    I am vested in SolarCity because of their accomplished sales and marketing organization. Most residential solar customers will not burn the calories to ferret out the best terms and deals. That said, SolarCity provides an incredible turnkey solution. They simply reduce your monthly power bill.

    - - - Updated - - -

    Just a couple thoughts on panel orientation. The ideal stationary (static) panel installation is facing due South, with the array pitched roughly at the latitude of the installation.

    LADWP has used a couple variances. First, they consider everything from due South to due West as optimal, this favors afternoon production. Secondly, they consider everything from a horizontal pitch to installation latitude as optimal, this favors summer production. The idea being to produce the greatest amount of energy at peak loads. We all turn our air conditioning units on in the summer afternoons.

    The devil in in the details is your utilitity company's "Time of Use" rate plan. The installation will affect production year after year. Plan your production to match the highest price power.
    �
  • 1/1/2015
    guest

    Wow and well said.
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  • 1/1/2015
    guest
    So since you hate leasing so much, what would you suggest someone like me to do? I dont have $9,000 just sitting around, but could get on solar immediately from someone like SolarCity. So do you want more people to move to sustainable energy or not?
    �
  • 1/1/2015
    guest
    *note This was not a complete quote

    I don't agree that it is a no brainer. Depending on someone's situation I would argue there could be much better uses for that 9k depending on the person. For instance possibly buying 9k worth of Tesla Stock. Over the life time of the solar panels the stock could arguably go to 2000 a share which I think would be better than any additional savings you got from buying Solar vs Leasing.

    I think for many people buying solar might be the best option but I think Lease will be the way to go for many other people.
    �
  • 1/1/2015
    guest
    Sleepy - I'm not sure if I understand what you're trying to get at. Would love a clarification.

    Here are all the Lyndon Rive stock transactions I could find from the SEC filings since IPO:

    7/3/14 - Lyndon Rive exercises 12982 shares for $1.62 and sells those shares and 30293 more shares for an avg of $71.57. (The sales reported on this Form 4 were effected pursuant to a Rule 10b5-1 trading plan adopted by the reporting person on August 30, 2013)

    6/27/14 Lyndon Rive exercises 76725 shares for $1.62 and sells those shares for an avg of $70.75. (The sales reported on this Form 4 were effected pursuant to a Rule 10b5-1 trading plan adopted by the reporting person on August 30, 2013.)

    5/6/14 Lyndon Rive exercises 89,580 shares for $1.62 and sells those shares and 30,420 more shares for an avg of $54.15. (The sales reported on this Form 4 were effected pursuant to a Rule 10b5-1 trading plan adopted by the reporting person on August 30, 2013.)

    4/19/14 Lyndon Rive sells 160,000 shares for an avg of $52.25. (The sales reported on this Form 4 were effected pursuant to a Rule 10b5-1 trading plan adopted by the reporting person on August 30, 2013.)

    10/21/13 Lyndon Rive acquires 107,434 shares for $46.54/share during SCTY secondary offering.

    6/11/13 Lyndon Rive sold 220,743 shares at $14/share. (As previously disclosed in the Issuer's Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 30, 2013, and in the Issuer's final prospectus dated December 12, 2012, filed with the SEC pursuant to Rule 424(b), on December 30, 2011, the reporting person granted an option to 137 Ventures, L.P. to purchase 330,520 shares of reporting person's common stock at $14 per share. On June 11, 2013, 137 Ventures, L.P. exercised such option on a cashless basis, resulting in the reporting person transferring 220,743 shares to 137 Ventures, L.P. and withholding 109,777 shares to cover the exercise price.)

    Note: From the 12/12/12 sec filing, Lyndon Rive had about 3 million shares (1,000,000 personally and 1,952,378 in a family trust). In addition to these 3 million shares, he has 2 million more shares that he could own via options (presumably milestone/achievement based). 1,000,000 of those shares have a $1.62 strike price (10 year period from 2009-2019), and the other 1,000,000 has a strike price of $5.07 (2011-2021 period).

    In context, here's what I'm seeing:
    1. Lyndon Rive had 3 million shares at IPO and an additional 2 million shares in options.
    2. Lyndon Rive sold 220,000 shares in June 2013, apparently Lyndon Rive sold some options on Dec 2011 to a company and they exercised them.
    3. On August 30, 2013, Lyndon Rive submits a 10b5-1 to sell some shares.
    4. On October 21, 2013, Lyndon Rive buys a bit more than 100,000 shares in SCTY's secondary offering.
    5. From April to July 2014, according to the 10b5-1 plan he sells about 400,000 shares. (There could be more shares he's selling in coming months, I haven't seen the 10b5-1 plan.)

    Lyndon Rives still has 2.6 million shares as well as a possible 1.8 million options (until 2021).

    It's also likely that SolarCity will give him (and other executives) more incentive plans in coming years as well. So he'll likely end up with more shares than he currently has.

    If things are strange with insiders selling, then I'm definitely a person that would point that out. (see Short-Term TSLA Price Movements - 2013 - Page 376 and Short-Term TSLA Price Movements - 2013 - Page 377.)

    But in this case, it looks like a normal selling of a small portion (ie., 10%) of Lyndon Rives holdings. To sell 300,000 shares (since he bought 100k and sold 400k shares) at let's say $50/share is just $15 million. After taxes, it's probably under $10 million. Probably just enough to buy a nice house in the Bay Area.
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  • 1/1/2015
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    l
    - - - Updated - - -

    looks like little maintenance work is needed in many parts of CA and FL. This is great!
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  • 1/1/2015
    guest
    Thanks a lot, I'm indeed in the Oncor service area. A few questions for you:
    1. Any idea why Oncor is so generous?
    2. At cost of around $3/W?who is the manufacturer of your panels?
    3. how often do you need to wash the panels?
    4. Any other maintenance so far?
    �
  • 1/1/2015
    guest
    Answer: Use common sense!!!

    I really can't believe that this question keeps popping up, and I apologize if my response comes off as rude, since I am annoyed having to answer this same question every month. The reason I post all of this stuff is because I am trying to help you guys make sound financial decisions, so that you can save yourself tens of thousands of dollars. I have no other agenda behind this stuff. Seriously people, this is not hard. Every time I bring up the topic how much better it is to buy vs. lease, I always get this exact same annoying question. I have already answered it at least a handful of times in this thread.

    What do you do when your car breaks down and you don't have $20k to buy a new one? What do you do when your AC/furnace breaks down and you don't have $8k to buy a new one?

    The answer is simple: you get a loan!

    Step 1: Go ahead and google "solar loans" or "credit union solar loans" (or something similar to find CU's or banks in your area that give out these loans). You can find loans for up to $60,000 (or more) and 4%-7% interest rates. My loan was for $21k at a 3% interest rate with $0 down:

    Step 2: Apply for loan

    Step 3: install solar system

    Step 4: Sign up with Green Mountain Energy that offers net metering.

    Step 5: Make payments on loan

    It really isn't that hard and I feel like there is a lot of willfully ignorant SCTY investors here pretending that if you don't have money to buy a solar system that your only option is to lease. Banks are one by one finding out that solar is an extremely safe investment and there are more new loan products coming out every single day. SPWR for example just announced a partnership with Admirals Bank for loans up to $60k. But if you go with a local installer then get a loan at a credit union to pay off the solar system.

    The only caveat is that you have to pay the full price of the system, and then wait a few months for your rebate as well as tax credit. But this is not a problem:

    E.g. For someone who lives in the Oncor TDSP area (which is what this discussion is about): Say you want an 7.7kW (same size as mine) solar system at $3/W = $23,000
    1. Take out a loan for $23,000 at 5% interest rate over 5 years.
    2. Now you have a solar system on your roof and a $434 monthly payment
    3. You will get your $8,000+ rebate check by the time your second (or 3rd) payment is due
    4. You will get your $5k ((23k-8k)*30%) tax credit when you prepare taxes in less than 12 months.

    Side note: if you don't have tax liability to take advantage of tax credit then you most likely can't afford a home anyway (unless retired or some other uncommon circumstances). If you don't have good credit to qualify for a solar loan, then you most likely will not be able to qualify for a solar lease either.

    So you have a $23,000 loan and $13,000 cash back. You can use that $13k to pay down your loan principal and you are left with a $10k loan to pay off over 5 years, which knocks your payment down to $188/month. After 5 years, your loan is paid off and you are free and clear receiving free electricity for the next 20-30 years (might possibly need inverter replacement, but those have 10 year warranties and should last).

    A 7.7kW system here in Texas produces on average 1000kWh/month, so you will be saving about $120/month on electricity. So effectively you have a $68 ($188-$120) monthly loan payment for 5 years. And then you will be saving $120/month (or more due to most likely higher electricity costs in the future) for the following 20 years.

    Buying a system will cost you $68*60 = $4,080 over the first 5 years and then save you $28,800 over the next 20 years for a total savings of $24,000 over the life of the system. Leasing a similar system from SCTY might save you $30/month on electricity, which over 25 years would save you $9,000.

    So you decide, do you want to save $24,000 or $9,000?

    And before I get the next annoying question about "what if you sell your house...?" I recommend reading this Bloomberg article from last month:

    Rooftop Solar Leases Scaring Buyers When Homeowners Sell

    http://www.bloomberg.com/news/2014-06-23/rooftop-solar-leases-scaring-buyers-when-homeowners-sell.html


    If you lease a solar system you might have to lower your home resale value by $15,000. But if you own a solar system then it could increase your home resale value by up to $25,000. That is a $40,000 difference!!!

    This why I always say that SolarCity's business model is built on preying on the uneducated customers. If people knew everything I said here then the lease model would not be so successful. I understand that people will most likely remain uneducated for a long time and most likely SCTY will be successful for many years to come. But I am not willing to bet my money on that.

    The reason I make all of these posts is because I am trying to help my friends here at TMC make smart financial decisions when going solar. A lot of people here at TMC make great contributions and this is my way of giving back.

    If you can find a way to buy a solar system then please do not lease one. It can give you huge headaches and cause big losses when selling your house, and it won't save you anywhere near as much money as buying a solar system outright...
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  • 1/1/2015
    guest
    1. I really don't know the reason for this, maybe they had some kind of deal signed that they had to earmark dollars for solar systems. I think that they set aside something like $8m for this program last year, and I really can't believe that it hasn't been exhausted (it is possible that they renew the program every year, I am not sure; what I do know is that I got a rebate check for more than $8,000 for a 7.68kW system or more than $1/W).

    It is very possible that this is simply good business. In Texas the high cap price for electricity is going up and will be $9,000/MWh very shortly and I heard they are trying to raise it to $14,000/MWh. My solar system offsets peak load perfectly, which means less investment necessary in transmission lines and other power plants. So if my system is producing 6kW's during a time when prices are at $14,000/MWh or $14/kWh, then I am saving that company $84/h. You get a couple hundred hours like this over the next few years and I saved them over $2,000. Then at other times when electricity is less expensive I am still saving them money at a lower rate.

    IMO, the $8k that they gave me for this solar system will create a lot more value than $8,000 to Oncor. It truly is a win-win situation here.

    2. I actually paid $2.50/W for a Sunpower solar system (best that money can buy). I got a great deal since a family member of mine works there and I got "scratch and dent" panels that have no downside at all (just aesthetic, but you can't see them anyway; I inspected them before they went up and wouldn't have known they were scratch and dent if I hadn't been told).

    I would say that you can't go wrong with any tier 1 Chinese solar panel supplier. They all buy cells from Taiwan to ship to US to circumvent 2012 tariff scheme, so they are all similar in quality; and the Chinese do make high quality panels). With this new round of tariffs, the Chinese might start shipping using home made cells. In this case I would recommend using JA Solar (JASO) panels, since it appears that they put the most effort and pride into quality compared to peers. But in the end, I think that all should be similar. I am not an expert in this field, but a solar installer here on TMC said that you should stick to the tier 1 solar panel producers and you will be fine.

    3. I don't wash my panels at all and let the rain wash them. It doesn't rain here much recently so I probably need to wash them. But all you do is hose them down and voila. I once had back to back 0% cloud cover days and did a test (since it hadn't rained for a month and the panels looked dusty): On day 2 I hosed them down and got about 5% more production. So you may want to hose them down from time to time if it doesn't rain, but no washing is really necessary (maybe once every 3-5 years). Note: it is possible that I get better production due to cooling the panels with cold water as much as washing off the dust. I really don't know, but did get 5% more for sure on virtually exactly similar days with 0% cloud cover.

    4. No maintenance on solar is necessary, and that is why you don't need to lease a system to get the benefit of no additional cost for service and maintenance. I have only had my system for 4 months, but a solar installer here on TMC has installed many systems over the years and never had to perform any maintenance on any systems. That speaks louder than any one persons testimony. He said he only got called out once because of a faulty inverter, but that was the manufacturers fault for supplying a bad inverter. He replaced it with a new one and that is it.

    The only problem with buying over leasing is if the inverter breaks down you have to pay for replacement. But you get a 10 year warranty and these things go for $0.15 - $0.25/W today, so for a 5kW system it is only $1000 to replace if necessary, and these things might get cheaper in the future too.

    I think that if you shop around, you can get a system installed for $3/W minus $1/W rebate minus $0.60/W tax credit = $1.40/W out of pocket cost. I got a flyer from some random solar installer called longhorn solar and they were advertising prices of ~$3/W. But go to the SEIA or other solar websites to find reputable and accredited installers. I can't remember what the other website/organization was called.

    I can get you a discounted deal on a SunPower solar system for $4.40/W installed. So after rebate and tax credit that is about $2.30/W out of pocket. But you can get a solar system for $3/W elsewhere from a reputable dealer then it probably isn't worth paying 80% more for a SPWR system. SunPower makes by far the best systems and if you want to build a forever home that could withstand a zombie a apocalypse and keep your AC running, then definitely go with SPWR (and buy a bunch of backup inverters). I recommend SPWR even if you have to pay 30% or more for it, since you will get your money back over time due to lower degradation, better performance, and most likely significantly longer useful life). But it is hard to justify a SPWR system at $4.40 vs. $3 for Chinese if you are not planning in living in that home for 30+ years.

    Good luck with your research and let me know if you have any other questions.

    Cheers,

    sleepyhead.

    - - - Updated - - -


    That's why you take out a loan to pay for the system if you are worried about applying your cash elsewhere.

    You may think that lease is the way to go for many people, but I know for sure that buying a solar system is by far the best way to go for the vast majority of people. Heck, even a solar inspector chimed in on the other page agreeing that buying is the way to go if you are willing to put in some legwork: a few hours of legwork to save thousands or tens of thousands of dollars.
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  • 1/1/2015
    guest
    If that is all that you are "seeing" then you have been fooled by Lyndon Rive as well. These guys are purposely misleading shareholders and I may have to write an article about it. I don't have time right now to respond to your post, but I have done the research and they are obviously screwing around here; probably hoping that nobody will notice how they tried to "trick" the shareholders into believing that Lyndon Rive is buying more shares in the company as a "vote of confidence."

    Thanks for your post, this story is getting better every minute for me. On second thought I have to do a little more research on this subject, because there is still a couple things that I need to check that might make the story even better.

    Stay tuned...

    Edit: changed Give to Rive. Thanks autocorrect :rolleyes:
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  • 1/1/2015
    guest
    I agree with all the solar analysis. I own my system and would absolutely recommend ownership to anyone looking to go solar.

    However the note about GTAT interested me. Mind expanding on it in the "Other Investments" thread?
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  • 1/1/2015
    guest
    I had a chance to go back and read your other post again. It appears that your claiming that Lyndon Rive was insincere(?) in his purchase of 100k shares in last October's secondary offering and you go on to say that he's "purposely misleading shareholders". I'm assuming you're claiming that he's trying to boost stock price for the secondary by purchasing 100k shares while knowing that he'll be dumping 400k shares in 6-8 months (with the 10b5-1 already filed in August 2013).

    It seems like you're reading into it a lot. Lyndon Rive is free to buy shares and to sell shares as he wants, as long as he follows SEC regulations which he did. You might have interpreted his October secondary purchase of 100k shares as a big "vote of confidence" that wasn't sincere because he knew he was going to sell 400k shares the following year. But it could also be that he instituted his 10b5-1 plan with the idea of divesting 10-15% or so of his holdings in 2014. But when the secondary offering came along, he thought it was a good deal to buy some more shares. This is totally legal and understandable. Could have there been other motives as well, like showing support for the company and helping the secondary? Sure. But I don't think it's stock price manipulation or deceiving shareholders, since his later selling of stock (ie., this year) is done publicly. And if he thought him buying 100k shares was going to boost the stock price, then surely he would think that selling 400k shares later would tank the stock price (which would not be good since they might need to raise more money). The reality is he's probably not thinking on those lines. A few hundreds thousand shares here or there isn't a significant number compared to his total holdings.

    On another note, I've seen Elon Musk if he thinks the stock price is low (ie., the company is undervalued) he will go in and buy more shares at the secondary. Elon Musk doesn't actually have the money, as practically all his money is vested in TSLA, SCTY and SpaceX. But he's using a line of credit from Goldman Sachs to make purchases like for his house and other things. And he uses that line of credit (kind of like margin) to buy more shares of TSLA (ie., at $92/share in May 2013), and at SCTY's IPO and at SCTY's Oct 2013 secondary offering. Elon thinks the stock is cheap and he buys more stock, even on margin. Now Elon is unique in that he's okay with holding hundreds of millions of dollars on margin, but most people are not like that. So, in the case of Lyndon Rive, he's more of a normal human being (compared to Elon Musk) and he's going to buy and sell stock and that's fine. As long as he follows SEC guidelines, I'm fine.
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  • 1/1/2015
    guest
    I can see the points from both sides of the argument and the questions sleepy raises could have very simple answers; as an ex-CEO I know how difficult it is to juggle personal financial planning with laws and regulations. (FTR: I'm not in SCTY right now just because I'm uncomfortable with nailing down what the true potential really is, and I'm personally not a fan of their leasing model).

    On a slightly different note, SCTY missed an opportunity here:

    PrairieGoldCar.jpg

    With Leilani's connections to Tesla and her driving a Model S etc...
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  • 1/1/2015
    guest
    I get what you are saying, short-term work for long-term gain. But someone like me doesn't have an extra $434 a month until 3 and 4 kick in. I guess we would have to save that much money first and then do it this way, because the only debt my wife and I have is the house. We do the Dave Ramsey thing and try to not use debt as a way to have things in our lives. Houses and cars are the only thing loans are used for, but maybe solar panels will have to be an add on to the list.

    Part of getting panels is to save money, but it's also to get onto sustainable energy. So if others out there can use a company like Solarcity to automatically get it with a lower price on their electricity bills, then that's great to me. I thought there was talk that Solarcity could eventually one day become like a utility company, where they are supplying the equipment, and you pay for the energy, so owning doesn't really matter. It's more about getting people to switch. I don't know....I see it both ways...
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  • 1/1/2015
    guest
    here is some bad news for my man sleepyhead.

    "The world trading body ruled that the U.S. improperly imposed duties on Chinese steel and solar products. "

    http://news.investors.com/business/071414-708616-us-steel-and-solar-firms-impacted-by-elimination-of-tariff-on-chinese-products.htm
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  • 1/1/2015
    guest
    What's with the personal attacks again?

    And you couldn't be more wrong. This is really good news for me, so I have no idea what you are talking about.

    Go look at the charts: as soon as the news came out JASO went vertical and so did my smaller positions in JKS, SOL, and TSL. My only other solar positions in CSIQ and SPWR finished in the green as well. As I wrote over the weekend, I sold off my SCTY deep ITM bull call spreads for 92% of max payout and I now have no SCTY positions at all.

    Now can we stop with the personal attacks! Please?
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  • 1/1/2015
    guest
    Everyone play nice please or we'll go back to zero tolerance. Thanks.
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  • 1/1/2015
    guest
    I've seen this mentioned before...and often wondered: with his salary very low, and claiming he won't sell TSLA shares, and cannot sell SpaceX shares, does that mean the only "income" Elon gets is from selling SCTY shares? He has to pay back this line of credit somehow.
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  • 1/1/2015
    guest
    My previous post on this topic was incomplete and there is more to this story, but I just don't have time to spare to research this.

    That said, your response is very reasonable if you assume that the part I bolded is correct. But it isn't correct...

    Here is the timeline of events:

    June 18, 2013: SCTY announces secondary offering. In order to prevent the stock from tanking, as a vote of confidence Elon Musk and Lyndon Rive announce they will purchase up to 560,000 shares.

    http://www.streetinsider.com/Corporate+News/SolarCity+(SCTY)+Files+2.8M+Common+Secondary%3B+Elon+Musk+Plans+Purchase/8425605.html

    Stock tanks anyway over the next few months...

    Aug 30, 2013: Lyndon Rive submits 10b5-1 plan (that "no one" reads) to sell 400,000 shares over then next 6-8 months (possibly a lot more shares than 400,000, I really don't know if there will be more sales based on that filing; just going off of what DaveT posted, and I know I can trust his research).

    Oct 16, 2013: SCTY stock is still weak so they announce 2015 guidance outside of normal announcement time to jack up the price of the stock, so they can issue shares 5 days later.

    Oct 21, 2013: SCTY raises capital and Lyndon and Elon purchase 400,000 shares, of which Lyndon buys 107,434 shares.

    Over the next half year, Lyndon Rive unloads 400,000 shares...


    I hope that with additional detail you now see that Lyndon Rive, CEO of SolarCity, is purposely misleading shareholders that he is buying shares as a vote of confidence, when in fact he was planning on dumping 4x the amount of shares that he actually purchased.

    I see this as extremely unethical and they are screwing around with shareholders. All you guys who own SCTY, should be asking them a lot more questions...

    Even though I have no skin in this game, this whole situation still bothers me immensely. How can you trust a CEO when he makes a mockery out of shareholders like this?
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  • 1/1/2015
    guest
    So you're telling me Elon and his cousin are the best con artists we've ever seen? Slap me silly. Pull out your TSLA shares too then....come on man. If this ever was true and brought to attention, this would sink TSLA and the Tesla name. You think Elon needs and wants that attention?
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  • 1/1/2015
    guest
    Thanks for explaining the timeline more. Now that you mention it, I do recall that it did take quite a while between when they announced the secondary (June 2013) and when it closed (Oct 2013). And so Lyndon Rive first decides to buy 100k or so shares in the SCTY offering (June 2013), then files his 10b5-1 plan in August to sell 400k (at least) shares 8-10 month later, and then closes his 100k purchase in the secondary in October.

    While it does seem a bit strange, I'm hesitant to jump to conclusions because we don't know the whole story. And there could be some financial planner helping Lyndon with his personal/family finances. Maybe the financial planner was pushing Lyndon for the longest time (i.e., since IPO) to divest some of his SCTY shares (ie., 10-15%) and Lyndon finally agreed to it (maybe in Spring 2013 but he filed the 10b5-1 later). And maybe he wanted to buy 100k more shares to support the company's secondary, but also because there's some kind of reason that we're not aware of. Or it could have been he decided to buy 100k shares in June, then his financial planner went bezerk on him and told him he was crazy and that he needs to be divesting, and then Lyndon Rive's wife also disagreed with the 100k purchase and wanted to divest to buy a house, etc, etc, etc. So, it's too late for him to go back and cancel his 100k share purchase in the secondary, so he decides to sell 400k shares by filing his 10b5-1 plan to sell in April-June 2014.

    Is it strange? Yes, somewhat. Is it clearly a misleading of shareholders? I don't think it's that clear. It somewhat of a grey area because we don't have the full story. And he didn't break any SEC rules.

    Also, in the bigger picture Elon's purchase is much bigger than Lyndon's. And Elon is the company's largest shareholder as well. And to my knowledge, he hasn't sold any shares yet. If anything, Lyndon Rive's confusing purchase/selling of SCTY shares is dwarfed by Elon's monster stock position in SCTY and him borrowing money to buy even more shares.

    - - - Updated - - -

    Yes, somehow Elon will need to pay back his line of credit with Goldman (and maybe others). He could either sell shares of SCTY, or SpaceX, or TSLA (which he said he'd be the last one out). Or perhaps he has some other investments that strike it big (I know he's made several investments in some startups but probably not very large investments, so this probably won't be enough to pay off his debt). Or he could wait until his companies start issuing dividends (ie., 10-15 years later) and use those dividends to pay down and eventually pay off his debt.

    Elon's situation is quite fascinating to me. It's really interesting that he's chosen to use a line of credit to not only fund his lifestyle (ie., buy house, etc) but also to buy more stock in his companies. He's really gone all-in, and then some. Most people in his position would be divesting and diversifying, but he's putting more in.

    I personally lean on the following scenario... Elon is thinking of keeping his TSLA, SpaceX and SCTY shares "forever" (at least until he dies and passes them on) and doesn't want to sell a single share. He's content with a large line of credit in the hundreds of millions of dollars range to fund his lifestyle and even investing more in his companies. He figures that all his companies will eventually pay handsome dividends and he'll use those to pay off his debt. He doesn't care much, if at all, about divesting or diversification into other assets. He'd be happy of all the assets he ever had were shares of TSLA, SpaceX, and SCTY. He did buy a house though but it wasn't necessarily because he really wanted to buy a house but he wanted to remodel and such and couldn't do that as a renter. He did buy the house across the street from his house but that was more for security purposes. So, he'll buy stuff but his real/true assets/investments are TSLA, SpaceX, and SCTY. And he doesn't intend on selling ever.

    Now, this "scenario" might not be true. We do know that his intention with TSLA is to be the "last one out" (meaning never sell his shares unless the company is sold). We don't know what his intentions are for SpaceX or SCTY shares. But it's an interesting thing to ponder.

    And the day if/when he starts to sell SCTY shares, my theory will be destroyed. :)
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  • 1/1/2015
    guest
    Dave spacex is not a listed company. We do not know his salary from that venture. Another potential source of income. I have known people who inherited their wealth and are scared of it going away. They have no confidence in their ability to replace it. He has had 5 ventures all paying off well. I doubt he has any fear of losing it, he knows he can make it again
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  • 1/1/2015
    guest
    Yes true that he could be getting a salary from SpaceX, but I doubt it's much since they run SpaceX as a fairly tight ship regarding expenses. Also, a few hundred thousand a year from a salary is not going to put a dent in Elon's total debt, nor is it going to fund his lifestyle either (ie., private jet, ex-wife/child support, etc).

    I agree Elon's not afraid of losing it all, since he knows how to create value. I just find it interesting that he'd go into debt to buy more shares of his companies. It strikes me as fairly uncommon.
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  • 1/1/2015
    guest
    Just FYI, as of Feb 2014 (according to Tesla's annual report) Elon has a $275 million line of credit from Goldman Sachs (a large portion used to buy TSLA and SCTY stock during secondary offerings) and a $25 million loan from Morgan Stanley.
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  • 1/1/2015
    guest
    Based on my own situation, which is...well, not quite the size of Mr Musk's!.....a $275mm line of credit at Goldman is going to run him LIBOR + ABOUT 100bps, or 1.2%, more or less. So as long as we're conjecturing, let's conjecture what gross salary he would need to service, say, $200mm of that: about $2.4mm. Less of a salary - at that borrowing level - and he's falling a bit behind all the time.

    Now, I really think that neither he, Goldman, MStanley nor we should worry much over this situation. On the other hand, someone I've known since we were lads put his full faith and credit behind loans to one of his companies, securing it with $1bn of his own fortune. However, when things turned nasty, and the stock price plummeted, his own $30bn turned to ashes, he couldn't make good on his promise, creditors seized what was left...and Eike Batista became known as losing the largest amount of money a single person has incurred in history.
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  • 1/1/2015
    guest
    Are you getting a line of credit for 1.2%? If so, that's amazing. I didn't know that was possible.

    That's one amazing story. I had to look up his wiki page to read more about it, Eike Batista - Wikipedia, the free encyclopedia .
    �
  • 1/1/2015
    guest
    Yes it's possible. :)
    �
  • 1/1/2015
    guest
    Can someone share more info on this? PM me please if needed.
    �
  • 1/1/2015
    guest
    E-mailed you privately.
    �
  • 1/1/2015
    guest
    It seems like Elon's creditors have good reason to give him such a favorable credit line. They and their friends (investors, advised customers) own shares in his companies. If Elon has to sell shares to pay down some of his debt it could very well reduce the value of the stock they own. It's a catch22 that Elon has cleverly negotiated.
    �
  • 1/1/2015
    guest
    Check your PMs, Dave.
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  • 1/1/2015
    guest
    Another article came out today questioning the leasing model. Someone sold their house with a solar lease, then the buyer came back to renegotiate the deal, since he wasn't aware that solar lease would last another 15-16 years. The seller had to give him $10,000 because of the solar lease agreement. Just another data point to add what I have been saying this whole time; buying a solar system is an asset, while entering into a solar lease is a liability - difference between the two is measured in tens of thousands of dollars:

    http://www.npr.org/2014/07/15/330769382/leased-solar-panels-can-cast-a-shadow-over-a-homes-value
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  • 1/1/2015
    guest
    Whenever I come to this thread to learn about SCTY, I find you criticizing the lease model, or something else, like you are on a crusade. I'm starting to feel that it kills any other conversation that may take place.

    (Maybe a thread specifically for discussing the lease model?)
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  • 1/1/2015
    guest

    The argument could be made that this is a Tesla forum and other companies should not have a designated thread at all. But since this is the investor section, and SolarCity is being discussed by investors, it seems only reasonable to point out the concerns about the risks of the company for investors. Leasing is a primary component in the SolarCity model so its discussion is more than warranted - it is vital.

    Sleepyhead has engaged in this debate when others were promoting the benefits of leasing and denying or ignoring the faults. I have no holding in SCTY and never have, but I do read the thread. I don't see why the promotion of SCTY as an investment should be permitted on this forum and no challenge allowed to the thesis. Usually sleepy's posts have come in response to other statements, but when they seem isolated, it's only because he came across more support for his argument or was presenting something he failed to include earlier. Those comments are sort of "wit of the staircase" to which most of us succumb.
    �
  • 1/1/2015
    guest
    Is your point that there shouldn't be too many threads?
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  • 1/1/2015
    guest
    My point was that sleepyhead has every right, and arguably a responsibility, to point out the flaws in the SCTY model as far as investors might be concerned.

    You seemed to want a separate thread for an aspect of SCTY. This is something to which I totally disagree. Since this is the investor section and SCTY has a thread, all discussions related to SCTY should remain here, especially when it concerns valuation and risk. The leasing model carries a lot of risk should potential customers become better informed about the ways in which they could afford to buy a system as well as the risk to lowering the value of their property if they think they might be selling within ten years or so of starting a lease.
    �
  • 1/1/2015
    guest
    Yes, I don't want a single topic to dominate the thread. To me it is just one of many questions to discuss as long as the installed systems actually convert solar to electricity.
    �
  • 1/1/2015
    guest
    Again, I refer to the fact that this is the investor section. Converting solar to electricity is what SolarCity customers seek, but at prices they can afford. Leasing is something that should concern SCTY investors and sleepyhead may argue that it is the central concern against the current valuation. But I think sleepyhead can defend himself and offer his own reasons for providing data related concerns for SCTY in the investor section of a thread dedicated to SCTY.
    �
  • 1/1/2015
    guest
    Well, I'm hereby disclosing that I own some SCTY. There you go. As far as I'm concerned, SCTY can lease and/or sell in whichever way they please.
    �
  • 1/1/2015
    guest
    I guess all threads relating to Model S accidents, power train and other issues should be moved to the investor thread. TSLA investors need to be concerned of those, too.
    �
  • 1/1/2015
    guest

    That's fine. I'm sure every investor in SCTY hopes the company is successful, and if leasing is a path to that success, good for them. Any company that contributes to the global solar array is doing something positive for the environment.

    I own a large amount of TSLA and I hope for success with that company. I don't disclose any fault I find with the company or product because I am not looking to encourage those who want to see the company fail. However, I do want to know about those concerns so that I can make an informed decision about risks vs reward. If I were considering SCTY as an investment, and in the past I have, I would want to know about the drawbacks of the lease program as it could affect the stock price.

    We all hope our investments are successful. Sometimes we make errors in judgment, sometimes we miss the obvious. When the error is an oversight, that's too bad. When the error is because we bury our head and hide from what is obvious, that is gambling that others also won't see the obvious and we become big losers of our own making. On the other hand, sometimes what seems obvious is not actually so clear. The naysayers who oppose TSLA for any number of reasons are the ones I believe who are blind or gambling that enough of the investing world will miss what we see as clear. So by the same token, SCTY investors may be the ones who see the bigger picture that others can't. Only time will reveal the entirety of the pictures.

    - - - Updated - - -

    Yes, that would suit me fine. I don't read the threads in the other sections so I am not as well informed on every aspect of TSLA as perhaps is possible from reading the full forum. I guess it is up to the mods to decide what thread is relevant to each section. And then, they have to decide what subject in each thread should be moved to some other thread or tossed out entirely.
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  • 1/1/2015
    guest
    Mod Note: We tolerate Solar City discussion because of the obvious link(s) to Tesla. I can see the point about wanting space for a wider discussion but at the same time we need to consider how messy that will make the Investor Section where primary discussion revolves around TSLA. No promises that we'll change anything but I'll put it to the other moderators and admins for consideration; in return please give us until a week after TMC Connect (workloads for many folk are high right now).
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  • 1/1/2015
    guest
    I agree with this 100%. Sleepy's post have been extremely valuable to myself (who has some skin in the game) in understanding what could be the major hamartia in solarcity's business model.
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  • 1/1/2015
    guest
    There are few important questions:

    1) What is the SCTY price per watt installed? If it is smaller than what could do small installers - SCTY is doing good. Because on the long run SCTY(and other big players) will squeeze those small players out of the market.
    2) What is SolarCity's expenses per customer acquired(per watt ordered)?

    Answer to the first question - most likely yes, economy of scale for panel/inverters purchase, specialized teams of inspectors/system designers(paperwork)/installers could be used way more efficiently if company have sizable amount of orders.
    I'm not sure how effective SCTY customer acquisition efforts are. But reading Yelp/solar forums it looks like SCTY do use aggressive tactics. Which is rather good.

    And efforts seems to pay out: US-PV-Installer-Market-GTM.png

    Market share of top US installers are growing fast, and SCTY is doing even better.

    As for what is better - lease or purchase, it is quite an idiocy to generalize for 100% of the market. Both have advantages and disadvantages. Doesn't matter if we are talking about solar lease or purchase, car lease or purchase, or factory/industrial space or office space lease or purchase. Each case is different and depends on what offers are available on the market.

    Talking specifically about residential solar prepaid lease vs outright purchase the first one should be much cheaper. Not only that, but in case of purchase customer had to purchase insurance, and pay retail insurance rates against things like hail, vandalism, etc for his solar system. Add inverter replacement costs(paying retail price for inverter, paying certified electrician for one time job) in 10-12 years. Even more important - one should add maintenance expenses, if panel gone bad, it is customer problem to remove it, send it to manufacturer, get replacement and pay for installing it in case of purchase. And if the lease was chosen, it is installer problem.

    Overall one is not better than other, it is all depends. But pointing potential problem with lease while keeping quite about what purchase really mean in terms of hidden expenses down the road is plain wrong.

    Anyhow I think pressing lease model is a right move for SCTY right now. As long as SCTY is able to install, maintain solar systems cheaper than competitors SCTY is in the great position. If sales instead of leasing would become more profitable SolarCity would be able to switch easily.
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  • 1/1/2015
    guest
    Many things I wanted to respond to in this thread and will try to do so over the next few days, as long as this thread doesn't grow out of control that I can't keep up.

    Definitely buying a system is the way to go. I will admit that a lease can make sense for certain situations, but I would imagine that buying is the way to go for over 90% of home owners, possibly a lot more than 90%. E.g. I bought my system and it will save me over $100 a month for the next 25+ years (probably 40 years) after factoring in costs of the system and 0% increase in utility rates (highly conservative estimate). A lease might save me $30 a month, so the leasing company gets 90% of the benefit, while the consumer gets 30% (I know it adds up to 110%, because leasing creates an additional benefit of MACRS). I will expand on this topic a lot more later when I have more time.

    As far as GTAT (sorry for going off topic for a second here), I will try to write something up in the "other investments" thread, but there is so much to write about. In the mean time, I recommend reading some of Matt Margolis articles on seeking alpha or his website, such as this article he posted today:

    GTATs Hyperion Technology is Laser Focused on Cancer

    He is just a regular dude that posted on yahoo message board, where he learned a lot, did a ton of legwork, and ran with it. He now tries to sell a research product for about $100/month at PTT research. I would never recommend paying for that unless you have hundreds of thousands of dollars in GTAT or MU (only 2 stocks he writes about now). He posts most of his stuff to the public about a week after releasing it to paid subscribers anyway, so no reason to pay because his info is not really market moving that you need it now.

    Word of caution on Matt, is that he extrapolates everything into best possible case and subtracts ~20% to be "conservative" and comes up with a PT of $87.50 by next June (GTAT is at $15 right now). He is a little exuberant, so be careful. But his research is really good.



    GTAT just had a 30% decline last week due to some analysts manipulating the stock, since it started running away from them and on 4th of July weekend a sapphire 4.7" iphone screen was leaked out and GTAT was poised for take-off. It appears that some research analysts colluded to "downgrade" to hold while keeping PT's steady for some extremely bogus reasons; not unlike GS downgrade of TSLA. A bunch of shorts had to close their positions and UBS had some autocallable securities due last week that lost them more money the higher GTAT went.

    What I am trying to say is due your research quickly on this stock, because it may turn out that this is a great buying opportunity on this pullback. Apple should unveil iphone6 in just 2 months, so a huge catalyst could be on the way. Their will be many leaks and other possible catalysts at any time.

    In the mean time, GTAT is a momo stock like TSLA and it can pull back hard during a market correction like other momo stocks.

    (Shameless plug) We have a very good discussion of GTAT on our TCI website and the GTAT thread has picked up a lot of steam and useful information of the past month. rsk has some extremely useful input on this topic. I recommend reading over the thread if you are seriously interested in investing in GTAT. Note: there are huge risks investing in GTAT, but I have more than half my money in that stock (sorry JASO, still love you but you are now second):

    GT Advanced Technologies Inc. (GTAT) | The Contrarian Investor Discussion Board

    And to go back on topic GTAT was originally a solar equipment provider, but has since diversified into sapphire (huge potential after signing huge deal with Apple, who invested $578m in GTAT to build out sapphire capacity), Hyperion (this could be a major game changer in slicing stuff really thin; oh, and BTW it can also cure cancer - no joke, read the article posted above), LED, power electronics, other stuff.]

    GTAT has this really cool Merlin technology that will allow you to make solar cells that are 0.7% more efficient, use 80% less silver, save money on paste, and allow you to make 50% lighter modules that will be more flexible and have better longevity; it also uses cheaper copper instead of silver.

    Sorry for going off-topic - if you guys have any GTAT questions, please ask them in the "other investments" thread and I will try to respond. It is a high risk/ extremely high reward stock.

    Now back on topic and I will be talking SCTY now.

    GTAT also supplies solar equipment and it is possible that SCTY will be buying some equipment from them to build out Silevo.

    - - - Updated - - -

    It is actually only ~$300 more per month, since you are saving about $130/month due to solar generation. And I mentioned in my post that I got "no.3" rebate check by the time my second payment was due. So at worst, you might have to do about $300x2, i.e. you need an extra $600 before 3 and 4 kick in. If you can't afford $600, then you should probably rethink the Dave Ramsey thing :smile:

    Also, I am recommending a 5-year loan that essentially costs you very little per month ~$60, but then you can enjoy free electricity after year 5 for 20-30 years, with only minimal maintenance costs due to long warranties.

    A lease on the other hand is like taking out a loan for 20-years for something that you don't even own. You will continue making payments for 20 years. It is really not much different than taking out a loan to buy a system. I am offering a tiny bit of short-term pain for 5 years and then 20 years of freedom, while a lease is just 20 years of less than normal pain, but still pain.

    I laid out the math in one of my previous posts and showed how you personally can save as much as $20,000 over then next 20 years when buying a system compared to leasing.

    I have more to say about the leasing model and why I am not a fan of it. The biggest reason I am not a fan is that the leasing companies are pocketing the majority of the benefit of you going solar, while the customer gets screwed and only gets ~30% (depending on your lease offer, and what generous rebates and incentives are offered in your city/state) of the benefit he could get if he bought a system instead.
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    "Other investments" thread sounds good to me.
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    1) I find sleepyhead's numbers for outright purchases to be very optimistic. He is very savvy with this stuff, so he can find best possible deal(s) out there. But an average person may not come anywhere close to sleepy's numbers.

    2) (no offense but) except for a few solar geeks, nobody knows what $/W means. Let alone comparing different quotes based on this.

    An average consumer at best, if at all, knows Cents/kWh.

    SolarCity competes with utilities on that metric. When SolarCity goes out and says: "lets pull up your electricity bill, this is the rate you are paying, we can reduce this by x%. meanwhile you will be reducing pollution and contributing to the planets well being." its very appealing to most people.

    As much as people here would like, the comparison of $/W is highly irrelavent, which no body really knows or understands.

    3) Lets says sleepyhead turns out right and the lease model entirely dies away, that doesn't in any way mean death to SolarCity. They started out by selling systems outright and by many accounts they still do.

    Musk said they will produce and install in the order of "tens of gigawatts per year". At that scale, starting from now, the potential growth is so much, the exact mechanics of the sales: lease vs cash-sales vs financed-sales is largely irrelevant.

    It so happens that leasing produces the best longterm shareholder value AND currently, consumers are appreciating this model. Thus, it makes complete sense for solarcity to focus on this model. If it doesn't work over time, they can very easily adapt to a different model.

    4) Solarcity has become the most vertically integrated player out there and becoming more so every passing quarter. The economies of scale + execution efficiency will, in time, make this company very valuable. I have no doubts about that.

    In closing I want to say this:
    I have been reading this thread for a long time. No one, I mean absolutely no one, predicted that solarcity will get into panel manufacturing. But solarcity did it and very clearly explained why they are doing it. The management sees far ahead of anyone here and they are ever focussed on growing the company at a phenomenal rate for decades to come. They see obstacles, they will come up with ever more profitable solutions. I trust Musk's vision and Rive brothers' execution.

    I have a large position in solar city (together with Tesla). None of the bear arguments here have swayed me a single bit.. (they did make me research and think a lot though).

    - - - Updated - - -

    Finally, the thing about leasing companies eating away tax benefits meant for the end consumer. Well, we can argue the same about rental homes, can't we? Homeowners get to take mortgage interest tax deduction, which the end consumer would have enjoyed if they bought a home instead of renting one.

    Is renting out homes un-ethical?
    �
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    Mod Note: some posts got quarantined in snippiness.
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    seems to me that the liability issue could be solved with an option to buy-out the solar install on some sort of pro-rated basis over time. Sure it still wouldn't be as good of a deal as an initial purchase but it could be wrapped up in the selling price of the house. It does transfer some risk to the original owner, but taking out a loan (assuming you could get one) to install a system also entails risk - in fact the same risk as the original owner needs to recoup his install costs (be it cash or loan) when selling the house.

    I think this would not cause an issue to the securitization model as it would be similar to a mortgage pre-pay. I seriously doubt that the current SCTY bonds are valued much on cash flows past twenty or thirty years anyways.
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    Talk on the street is scty coming out with a 200mln abs this/next week.

    - - - Updated - - -

    The first one came out Nov 13, 13 for 54.5mln
    The second one on Apr 2, 14 for 70mln
    The latest is for 200mln.

    I believe there was some prior management guidance on this. So not sure if this will be market moving.

    To get a feel for why this is important for scty, you might want to read this old article:

    SolarCity Corp (SCTY) Could Issue Larger Asset-Backed Securities in 2014
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    spot on

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    As per Raymond James Energy Daily Update newsletter SCTY's cost of capital through tax equity funds is in the range of 8% to 11%, which I believe is currently the main source of financing the projects.

    These ABS sales significantly lower the cost of capital and thus improve retained value.

    A few bears speculated that the tax credit expiry in 2017 is a death blow to scty. It turns out, solarcity is looking far ahead and effectively turning "problems" into "opportunities".

    They are not only solving the potential issue of lack of funding but are actually lowering the cost of funding!

    Similar thing happened with panels. By getting into manufacturing through silevo, they are not only solving the potential issue of lack of enough panels, but they are using the opportunity to further lower the total cost of installations (not just panels).

    A number of "risks" pointed by bears are technically risks. But the bears are significantly underestimating the management's ability to address these and go much beyond.
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    According to reports from GTM research, third party ownership accounts for 2/3 of all residential solar installations in year 2013. The ratio stays the same in 2014 so far.
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    I have to agree with David. There's just so much things that cheap electricity can do so demand won't be an issue. For example, there're many places in the world that have severe water problem. With cheap electricity, we can simply produce fresh water from sea.
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    Or, for example with cheap electricity it would be possible to produce gasoline out of air and water gigi.gif Using more than century old F-T process that was and is used on industrial scale since world war 2.
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    cool! Similarly, chemical engineers should be able to find a way to produce jet fuel etc economically and more environmental- friendly...
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    More significant insider selling going on with SCTY. Peter Rive sold 135,000 shares of the stock on July 30th at $74.00, for a total value of $9,990,000.
    I said it before, I'm saying it again, this really doesn't sit right with me. They are making so much money selling their shares. Presumably significant dilution is coming to fund their solar panel factory. If it were not Elon being Chairman and JB being a Board Member I think this stock would be valued at a fraction of what it is today.
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    Debunking the FUD around SCTY's insider sales

    I really wish people would do more research before making claims such as this.

    Alright, let�s review Peter Rive�s holdings and selling.

    1. 12/12/12 filing, SolarCity - Initial Statement of Beneficial Ownership
    Peter Rive has 2,952,378 common shares.
    option to purchase 1,000,000 shares (2009-2019 incentive plan)
    option to purchase 1,000,000 shares (2011-2021 incentive plan)

    2. 6/11/13 filing, SolarCity - Statement of Changes of Beneficial Ownership
    Peter Rive sold 220,743 shares at $14 (137 Ventures exercised option to buy shares from previous 12/30/11 agreement). Amount: $3.09 million.
    Total shares held: 2,731,635 plus option to buy 2,000,000 shares (incentive plans through 2021)

    3. 12/19/13 filing, SolarCity - Statement of Changes of Beneficial Ownership
    Peter Rive sold 40,000 shares (from 8/29/13 Rule 10b5-1 plan) for $56/share, total amount $2.24 million.
    Total shares held: 2,691,625 shares plus option to buy 2,000,000 shares (incentive plans through 2021)

    4. 7/31/14 filing, SolarCity - Statement of Changes of Beneficial Ownership
    Peter Rive exercised option to buy 30,200 shares at $1.62/share and then sold 135,000 shares at $74/share (from 3/24/14 Rule 10b5-1 plan), total amount sold: $9.99 million
    Total shares held: 2,586,835 shares plus option to buy 1,969,200 shares (incentive plans through 2021)

    5. Regarding his option to buy more shares (from incentive plans), 1.65 million out of the roughly 2 million shares are exercisable currently. Meaning, the requirements have been met and he can exercise those shares whenever he chooses. (More info on # shares and option held: SolarCity - Definitive Proxy Statement)

    Ok, so let�s now look at what this means.

    1. SolarCity was founded in 2006. That�s 8 years ago, and founders have every right to raise some cash especially after their company has gone public.

    2. Since going SCTY went IPO, Peter Rive has sold voluntarily only 175,000 shares (40k shares on 12/19/13 and 135k shares on 7/31/14, he sold 220k shares but it was an agreement from 2011 with 137 Ventures).

    3. Let�s put this into perspective, after 7-8 years since the company was founded Peter Rive sells 175,000 shares but still has over 4.5 million shares. That�s like 3.7% of his holdings. Not much at all.

    4. His recent sale is from a 3/24/14 10b5-1 plan and I would actually expect some more sales from this. I think it�s totally normal and acceptable for Peter Rive to sell 5-10% of his holdings, or even up to 15%. That�s fine and causes no concern for me.

    5. Let�s look at this from another perspective. Let�s say your Peter Rive with an annual salary of $275,000 and no other bonuses. $275,000 is not much for the Bay Area, especially after taxes. So most of your compensation is in the form of stock - some from being a founder and some from incentive plans. Now you�ve worked on the company for 8 years and haven�t made much money in terms of salary over those years. Almost all your gains are stock gains. So, when are you going to sell a bit of your stock to take that money and do other things with (ie., build a custom house, buy a private jet, go places, do things, etc)? Sure you could wait another 5-10 years, but that�s not typical. It�s totally reasonable for you to want to sell 5% of your stock holdings to raise some cash so you can use that money for various things. It�s a lifestyle upgrade that�s been put on hold for many years, and now after 8 years the company is doing well and you feel it�s time to take the 5% off the table so you can have tangible benefits in your lifestyle. Totally makes sense.

    It�s quite confusing to me that people would be shocked that a founder liquidates less than 5% of his shares after 8 years of working on the company. Guys, this is how it works. Founders liquidate shares over time. It�s a reality. Now, Elon is quite an anomaly and I don�t think it�s fair to expect other CEOs or founders to never share their shares and to take up line of credits to buy more.

    If anything SolarCity has one of the largest and strongest insider holdings of any company out there. A whopping 70% (!!!) of the common shares are held by the Directors, Executives, and entities affiliated with the Directors.

    Elon has roughly 23% ownership in the company, but there are other groups with large holdings that have been very committed to SolarCity from the early years and have held on to the vast majority of their position until now. This shows amazing commitment.

    Now, it�s only natural that these entities will liquidates their holdings slowly over time. It�s just reality as some of these entities are venture capital firms that need to return capital to their investors as well. So don�t be surprised that over time that these insider entities share more and more shares over time. It�s just not realistic for insider holdings to remain at 70% over the long-term. Over the next few to several years it�s only logical and practical for insider holdings to drop to under 50% and eventually end up at around 30% or so, IMO.

    However, for insider holdings to be at an incredible 70% currently is testament to how strongly the insiders believe in the growth and future of the company.

    If anything, if you look at the insider activity the most glaring fact is not that some insiders sell some shares occasionally to raise cash, but rather that insiders are religiously keeping that vast majority of their holdings in SCTY and insider holdings remain at a incredible 70%.

    Think about that again. Insiders hold 70% of the common shares of SCTY. How is that not incredibly bullish. Even if it was 40-50% it still would be super bullish.
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    Brendon Merkley's been on board since last autumn. He SHOULD own some shares outright! That's not right.
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    SolarCity - Statement of Changes of Beneficial Ownership

    Looks like Brendon Merkley (EVP, Process Engineering) has an option to purchase 150,000 shares at $52.79 (date exercisable 12/2/14, date expiration 12/15/23).
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    Yes, that appears to be correct, Dave. I reiterate, though: he should own some outright. I have no truck with senior management or board members of any company that fail to show that simple show of support for and courtesy to the shareholding public. When such a person is hired and he is granted in-the-money options, as is the case here, it is even more distasteful to me. Long-term readers of my posts do know I am the cranky old-timer here, with old-time beliefs....
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    Hmmm, I'm not sure if I'm getting exactly what you're saying.

    Brendon Merkley is not on the board of directors, but rather is a newly hired EVP of Process Engineering. If he was a board member, then yes I would agree that he ought to buy shares to show his support. But as a hired executive, I don't get the mandate for him to use his personal money to buy shares of the company. SolarCity granted him at-the-money options when he was hired back in Dec 2013. So that's part of his compensation and incentive package, and gives him a vested stake in the company and its future.

    Overall, I like the board and the executive team to have a decent stake/ownership in the company since it aligns their interests with shareholders and allows them to have a longer-term view. However, in Brendon Merkley's case, we don't know his personal finances and I'd much rather have him join the executive team with at-the-money options as part of his incentive/compensation package (ie., 150k shares in this case), rather than him buying a few thousand shares when he was hired from his personal money because it'll look good to shareholders. In my view, him holding options that were at-the-money when issued (issued Dec 2103 but exercisable starting Dec 2014) is pretty much the same as him holding stock outright.

    Maybe I'm missing your point, but I'm not seeing the mandate for a newly hired executive to own shares outright from the outset. Would love to hear more of your thoughts though.
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    Have any of you heard of quality of service issues with SolarCity?
    Looking them up on Yelp - SolarCity - San Mateo, CA | Yelp
    There are many negative reviews, and I did come across a critique of SolarCity in this regard, but couldn't find it now.
    I'd admit that for this reason I'm somewhat skeptical of SolarCity, plus the fact that the cost of entry is very low for new companies doing the same. i.e NRG is now competing with them directly.
    This is the exact opposite of my impression of Tesla which I invested in, where the costumer satisfaction is considered astounding, and the barrier to entry even for established car companies into the EV market in a meaningful way is high. The leaf cost Nissan some imaginary figure of around 6 billion $ to bring to production.

    If you got the same impression, wouldn't it be better for them to outsource the servicing? They seem to have enough on their plate and I'm not sure why it makes sense to be so vertically integrated in the home solar business to begin with.

    I'd like to hear also if you think I got this wrong. Its a first impression and not based on substantial research.

    Thanks,
    Daniel
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    First, Dave, I am aware that the world - and most fundamentally, the US corporate world of 2014 - mostly thinks quite differently from me. With that, MY perspective is:

    * that a senior executive brought in last fall is no longer "newly hired" (H*ll, that makes him an old-timer by today's corporate standards of race-around).

    * that all senior executives of a publicly held company - and board members too, of course - have a moral and even a fiduciary responsibility to the shareholding public of owning shares outright.

    * that compensation packages these days are so bloated that no such person has the ability to claim personal finances as a reason for not fulfilling this duty.

    * that a compensation package that included those 150k share option is that much more reason that he should cowboy up and purchase real shares. NOTHING an executive can do is more demonstrative that he has faith in the organization that he works for than this action.

    Those are my reasons. They also should give you good insight as to why I have spent the past two decades ensconcing, entrenching, embedding myself in a remote part of this remote state. O tempora! O mores!
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    Thanks for the explanation. So, is there a minimum number of shares you want executives to own outright from the outset? For example, if Brendon Merkley purchased 1,000 shares would that be satisfactory? Just curious, since rather than him purchasing a trivial amount of shares outright from the outset I'd rather have him take a comparatively lower salary than the industry and take on a significant stock incentive plan that will align his interests with the long-term future of the company (which SolarCity did by giving him ATM options when they brought him on).
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    Large scale.
    Soft costs are primary cost driver.
    Subsidies will be cut significantly.
    Cheap backup on the horizon.

    Vertical integration provides the opportunity to gain competitive advantage in an increasingly tough, but rapidly growing market. There are potentially huge amounts of money to be made. Imagine panels+battery in every building.
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    As usual, people with negative experiences are very much more vocal. I had Solar City install a system on my house. The process went very well and I haven't required any service as solar systems pretty much never need service. I am satisfied.

    Another point, after the installation, the city inspector who does only solar systems as they are coming online so rapidly, told me "Solar City always does the installation to code just the way we like it, I never have to call them back out to fix anything. Other guys have to come back sometimes several times." I did not ask him who the "other guys" are.
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    Yelp review issue came up many times before on this thread. Several commentators, with first hand experience, said Yelp skews ratings based on if businesses pay Yelp or not. I actually started investing in SCTY after hearing/reading a number of *very* positive reviews. I believed, and still believe, customer satisfaction is their biggest strength.

    'Low barriers to entry' topic comes up here a lot. Let me give a good answer on this one:

    1] Even a high school grad can create a website with a shopping cart. So how come Amazon grew to be so big?

    How hard is it to sell random stuff in a box store? Then how come Walmart became so big?

    How hard is it to make and sell hamburgers? Well, how did McDonald's become so big?

    What about coffee? Any idiot can make coffee and sell it. What made Starbucks so big?

    The answer to all these questions is
    a) Being at the forefront of an emerging trend -and/or-
    b) Business acumen + execution efficiency, typically translating into economies of scale

    2] It's not that easy for someone, even with a lot of capital, to sort of become as big as SolarCity in one shot. It takes time to create a network/hierarchy of competent people, (software) systems, business processes etc. Just because NRG can or will dump a bunch of capital, doesn't mean they will automatically race ahead of solar city.

    3] The size of the market is HUMONGOUS. Will write a detailed post, with data, in a followup. There is enough for everyone who wants to succeed.

    4] GE is a 250+ Billion dollar company. It makes more money in Energy industry, one way or another, than in any other industry. The head guy has this to say about SolarCity:

    At the World Energy Innovation Forum at the Tesla factory in Fremont, Calif. this week, the CEO of GE, Jeff Immelt, said during an onstage interview that GE had focused so intently on how bad the solar panel business was that they �missed SolarCity.� �My God I wish I had thought of that,� said Immelt.

    Reference: Immelt: I Wish I Had Thought Of SolarCity - Business Insider

    - - - Updated - - -

    Care to show your valuation model?
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    Dave -
    Certainly buying 1,000 shares is infinitely superior to owning none. 2,000 shares would be twice as good as 1K...and so on. But as to answering the important question of what is the appropriate amount, I confess I do not know. Now, this gentleman came to Solar City with a bit of baggage....and a "poaching" lawsuit. That has brought upon a countersuit, so, in this one case, we might surmise a bye is in order until the jumping-ship mess is resolved.
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    I think what I'm getting at is that Brendon Merkley effectively owns shares outright via his ATM option signing bonus. Let me explain a bit further.

    When he signed on with SolarCity, as compensation they could have given him a high salary, cash signing bonus, a stock/option plan, etc. In Brendon's case, he and SolarCity opted for the option/stock package as part of (or all of) the signing bonus, which implies to me that they probably didn't give him a large cash signing bonus and his salary probably isn't exorbitant either. So, in this case Brendon is choosing to opt for equity in SCTY as a large part (or all) of his signing compensation package.

    His option/stock package was given to him in Dec 2013 when he joined SCTY and gives him the option to purchase 150k shares at $52.xx anytime between Dec 2014 and Dec 2023. So, in effect SolarCity gave (and Brendon choose to receive) $52 strike Dec 2023 LEAPS. Market value for these options back when he joined SCTY would be at least $25 (probably more since they expire in 2023. I for one would love to buy $52 strike SCTY LEAPS that expire in 2023 for $25.). So, at $25 market value the option to buy 150k shares is worth approximately $3.75 million. Note from what I can tell this isn't an incentive plan with milestones but it like a signing bonus where he's able to exercise the options starting Dec 2014.

    I think my point is Brendon Merkley decided to choose equity in SCTY for his signing bonus, and that equity (basically $52 strike 2023 LEAPs) is in all practically the same as holding 150,000 SCTY shares. While he could have taken a large cash signing bonus, he probably didn't and by taking the equity grant he choose to become a vested stakeholder in SCTY's future.

    I, for one, who much prefer him taking the 150k option grant than him purchasing 10k shares on his own when he was hired. The 150k option grant gives him a much bigger stake in the future of SCTY (practically the same as him holding 150k shares) and aligns his interest much more with the long-term future of company.
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    These are some data points that highlight the growth potential for SCTY:

    ****

    Snippets from Bloomberg New Energy Finance (BNEF)'s 2030 Market Outlook report

    By 2030, the world�s power mix will have transformed: from today�s system with two-thirds fossil fuels to one with over half from zero-emission energy sources. Renewables will command over 60% of the 5,579GW of new capacity and 65% of the $7.7 trillion of power investment.

    Rooftop solar PV will dominate, taking up a fifth of the capacity additions and investment to 2020.

    A small-scale (meaning, rooftop) solar revolution will take place over the next 16 years thanks to increasingly attractive economics in both developed and developing countries, attracting the largest single share of cumulative investment over 2013-26.

    The Americas region will invest $1.3 trillion in 557GW of new power generating capacity through 2026. Renewable energy technologies will account for two-thirds of the new capacity over that period.

    Small-scale solar will be the most important form of renewable energy, accounting for 18% ($231bn) of all investment in power-generating capacity in the region over 2013-26. In the US alone, a 27-fold growth of rooftop PV installations will give it a 10% share of the US capacity mix.

    About the report:
    Published annually, the analysis pulls together the expertise of over 65 technology and country-level experts from 11 Bloomberg New Energy Finance offices worldwide, taking nine months to complete.

    About Bloomberg New Energy Finance:
    With unrivalled depth and breadth, we help clients stay on top of developments across the energy spectrum from our comprehensive web-based platform. BNEF has 200 staff based in London, New York, Beijing, Cape Town, Hong Kong, Munich, New Delhi, San Francisco, S�o Paulo, Singapore, Sydney, Tokyo, Washington D.C., and Zurich.

    Reference:
    http://bnef.folioshack.com/document/v71ve0nkrs8e0

    ***

    From Green Tech Media (GTM) research report: U.S. Residential Solar Financing, 2014-2018

    The share of third-party ownership (TPO) of residential solar, which has grown from 42 percent of the market in 2011 to 66 percent in 2013, will peak in 2014 at 68 percent. Beginning in 2015, the expansion of residential solar loan programs and alternate financing mechanisms such as property-assessed clean energy programs will drive the trend line back toward direct ownership, while the share of TPO will fall to 63 percent by 2018.

    (63% market share for third party ownership is still a LOT by the way)

    All portions of the residential market will experience rapid overall growth.

    About the report:
    The report provides a comprehensive update on the vendor landscape as well as innovation in both both consumer finance and project finance. In addition, the report provides an outlook on the total addressable U.S. residential market, the share of third-party ownership versus direct ownership, and the market size by ownership type with forecasts to 2018.

    About GTM:
    GTM Research, a division of Greentech Media, provides critical and timely market analysis in the form of research reports, data services, advisory services and strategic consulting. GTM Research�s analysis also underpins Greentech Media�s webinars and live events. Our coverage spans the clean energy industry including the solar power, smart grid, energy storage, energy efficiency and wind power sectors. Our analyst team combines diverse backgrounds in investment banking, engineering, information technology, strategic consulting and regulatory sectors. Our analysts are widely known across the industry and speak regularly at industry events all over the world. GTM Research is based in Boston with offices in New York and San Francisco.

    Reference:
    Market Share for Leasing Residential Solar to Peak in 2014 : Greentech Media

    ****

    What about SolarCity's Market Share?

    "Our U.S. Residential Solar Market Share Was the Equivalent of the Next 14 Competitors Combined in the Most Recent Data Available for Q3 2013"

    Data from GTM Research - U.S PV Leaderboard.

    Reference: SolarCity - Events Presentations -> 26th Annual ROTH Conference Presentation -> Page 8

    ****

    So putting it all together:
    Globally renewable sources will continue to grow phenomenally. In US, rooftop solar will dominate the growth. Within, the rooftop solar business, third party ownership will continue to dominate. Within this space SolarCity happens to be the biggest player by far.

    As you can see this data is from two leading authorities in market research in this space.

    ****

    Now lets see some management guidance into the long term:

    "Even if the solar industry were only to generate 40 percent of the world�s electricity with photovoltaics by 2040, that would mean installing more than 400 GW of solar capacity per year for the next 25 years. We absolutely believe that solar power can and will become the world�s predominant source of energy within our lifetimes"

    > Written by Elon Musk, Peter Rive and Lyndon Rive

    Reference: Solar at Scale

    **

    "we expect in the future to build solar panel plants that are an order of magnitude bigger than any plants that exist in the world today to assure we're taking maximum advantage of scale, and then we intend to put a lot of effort into R&D on the panel side as well as into the mounting hardware, which we already own and into inverter technology in partnership with Tesla, as well as battery pack technology to provide an overall solution that gives someone electric power at a price that is less than if they were drawing it from fossil fuels burned over the grid; that's really the key threshold. And obviously the demand grows exponentially as the price drops and you can imagine that it really grows at an enormous pace if we're able to compete with grid-powered electricity with no government incentives and that's really the goal, and that has to be the goal in order for the world to have sustainable energy future."

    > Musk's introductory remarks in the Silevo conference call.

    Reference: SolarCity - Events Presentations -> Silevo conference call webcast

    **

    "Yeah, so absolutely one day we want to go international. But just in the markets that we service today, it�s about half the U.S. population. If you look at the adoption that we�ve had, we have 45,000 customers. 45,000 customers, you can see just with your eye. So we could expand almost infinitely for the next 10 years just in the market that we are in without having saturation. So we�re absolutely interested in international expansion, but the markets that we�re in, it�s a massive market to expand in."

    > Lyndon Rive, Mar 2013

    Reference: SolarCity CEO talks the future of solar power - Fortune

    This whole interview is very insightful by the way. A must read for SolarCity investors.

    **

    "The market is insanely huge and sometimes the biggest challenge is to remain focused on what we are doing here because it is exciting to move into new markets. However, I have to finish this job before I can do that job. The market expansion is essentially going to be infinite in our lifetimes with distributed solar. Countries are starting to realize the benefit of this. For now, we are focused solely on the US."

    > Lyndon Rive, Sep 2012

    Reference: Distributed Solar: Unalloyed Growth Story? Discussion on the rooftop solar market at the Chadbourne global energy and finance conference in June - Chadbourne & Parke LLP - Publications

    - - - Updated - - -

    I'll post some comprehensive stuff on two other widely discussed/confused topics in subsequent weeks.

    1) Profitability (or lack there of)

    2) When there is Tesla, why invest in SolarCity
    �
  • 1/1/2015
    guest
    I remember a CEO once quoting a study that indicated on average a happy customer will tell 3 people their positive experience with a company but an unhappy one will tell 14 others their negative experience
    �
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    guest
    Not sure of the content of all of the previous 81 pages, but the economics of our SolarCity PV system were a complete no-brainer.

    Early in 2013 we leased a 7.5 kW system for 20-years with one, repeat: ONE, up-front payment of $8k. Even with our 85-kWh Model S charging every night, and some pretty absurd net-metering here in Texas (Green Mountain Energy's plan: the first 500 kWh is paid back at 100%; all power pushed back onto the grid after that 500 kWh is paid back to us at 50%, YES 50%. I WANT A RESIDENTIAL TESLA BATTERY YESTERDAY!), we end up with a credit bill or a small token payment (i.e. less than $20) every month, for a 3,500 square foot house with 4 bedrooms and 3 bathrooms.

    So let's see:

    1. No more gasoline $ given to those that want us dead; our Tesla is mostly powered by the sun.

    2. No more electric bills, for the most part.

    3. Massive reductions in our GHG emissions.

    4. And a future Tesla residential battery (NOW PLEASE!) so that we'll eventually push #2 to a full credit every month.

    all for ONE payment of $8k in 2013.

    And we'll enjoy full warranty coverage, and monitoring of performance, from SCTY for the next 20 years.

    I pitch the SolarCity/Tesla to anyone who has a cm of common sense and gives a damn about leaving the planet just a little bit better than how we entered it.

    And this is far more painless than dealing with a local "Ma and Pa" Solar Company where they work out of a pickup truck and may, or may not, show up for repairs and will never monitor a single kWh of output...which makes SolarCity a very, very compelling company and an investment as well.

    Hence, our lease of a SolarCity PV system, and purchase of SCTY stock at about the same time, BECAUSE IT WAS A NO-BRAINER.

    As the ad copy said about 40 years ago, "Ask the man who owns [leases] one."
    �
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    guest
    Just read on Raymond James Energy Daily update that per GTM Research:

    In residential sector, for 1Q14

    - SolarCity is leading with 29% market share.

    - Followed by Vivint at 2nd place with 9% share.

    - Sunrun/REC solar combination may be close to the second position.

    In terms of market share data coming from SCTY management, we only saw it upto 3Q13. So this is a good data point as in it's the latest we can get.

    Btw, SCTY market share was
    32% in 3Q13
    26% in 2Q13
    20% in 1Q13
    20% in 4Q12
    19% in 3Q12
    16% in 2Q12
    12% in 1Q12

    So it seems to have stabilised at around 30% for now.
    �
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    thanks for the info.. what happens if you move within 20 years? thanks
    �
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    I had a Solar City lease and ended up moving within the first year. :(
    They have a very smooth process for a lease transfer to the new home buyer. It was pretty simple for all parties. Of course, it does require educating the new buyer on the system benefits, lease obligation, and they have to qualify. But if they are paying cash for the home or getting a mortgage, they can most likely qualify for the lease.
    �
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    "218 MW Booked", when is the last time scty release their backlog?
    �
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    Up 2.50 in after-hours. Clearly the market's happy with the report.
    �
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    where is sleepyhead and his mom and pop shops will destroy Solarcity theory?
    �
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    I remember that the booking was 130+MW last quarter
    �
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    yep, "MW Booked of 136 MW for an annualized run rate of 544 MW Over 80% residential", demand is shooting through the roof, literally.
    �
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    Interesting tidbit from today's earnings conference call:

    Analyst: We�re starting to hear more about solar loan products. What�s your view on solar loans? How might they impact the economics of your business if you were to add them to your product offering?

    Lyndon Rive: I think solar loans have a lot of potential. We are testing different products on the solar loan side. We�ve always been a financial leader in this space. Once we have come up with the absolute best product out there we�ll make a big announcement of what it will look like.
    �
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    guest
    If you accept SolarCity's retained value calculation (which covers NPV over a 30 year cash flow period), they get $1.72 per watt. They booked 218 MW in the quarter. This means they added $375 million in the quarter, or if we annualize this, $1.5 billion.

    The market cap of the company is $6.8 billion.

    I realize there are risks, i.e. competition and a declining government subsity (from 30% down to 10%?), but given the focus they have on owning the supply chain (similar to Tesla), does this valuation not grab you all as incredibly low?

    I'm early on in my research, but I liked what I saw enough to invest following the Silevo acquisition. It seems to me this is a potential multi-bagger. DaveT, I liked your piece on how to get outsized returns. As a former sell side analyst I can assure you that what Dave wrote is exactly true. The Street focuses very short term, and I feel the short term nature of the market is exactly why we're able to sit back, take a long term focus, and earn better returns on growth companies.
    �
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    When they say "booked 218 MW" does that mean that they intend to build that in the future, or they did indeed build 218 mw this past quarter?
    �
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    booked means backlog.
    �
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    I don't see why this is such a great achievement- it means tons of demand but does that mean that they will be able to install all 218 MW? I'll have to go read their conference call but I don't get why you are so excited, FrozenCanuck.
    �
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    That's not quite correct:

    Previous backlog + orders booked - deployments = new backlog.
    �
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    This might sound harsh, but where I come from thick skin is required for investing. Instead of jumping to conclusions and interpreting what I wrote as being "excited" (emotions are not useful when investing), just actually go read the conf call transcrpit or listen to the replay and then come back. Booked = signed contracts. It's an indicator of near-term future installations.

    Back to the topic ...
    �
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    guest

    You are right. this "booked" number explains the retained value leap this quarter, since backlog is included in the retained value calculation.
    �
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    Hello FrozenCanuck, A fellow SolarCity enthusiast here. I appreciate your sentiment. SCTY actually reported $1,291mln Retained Value for previous quarter and $1,804mln for the latest. Thus they added $513mln in the quarter, bringing the annualized number to $2Bln change.

    I am not sure if Retained Value can be interpreted as deferred-earnings though. I am not sure if that is what you are alluding to. Given your background, what's the best way you see this metric can be interpreted as?
    �
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    The one thing I truly appreciate in this quarter's presentation is how they broke down their cost structure and gave full detail. Page 8 of the deck. Or the supplemental document for full detail.

    Looking at some comments on this thread one would think SCTY's operating expenses are so high, given their "bloated corporate structure", that their bankruptcy is imminent. These seemingly deliberate vengeful remarks are truly appalling!

    Thank goodness, they explained it out and tied it all back to the real financial reports.

    Turns out,

    Installation Costs are $2.29/W
    Sales Costs are $0.48/W
    G&A Costs are $0.26/W
    --------------------------
    Total Costs are $3.03/W

    While they accumulated $2.32/W of retained Value for Shareholders.

    This is an incredible business that abundantly pays off in the long run.

    Note: There are many idiotic articles on Seeking Alpha talking about reported EPS and such. They don't understand the basics of this business. The entire operating expenses (Sales + GA) are recorded in one shot, while Revenues are recorded over 120 quarters!! Of course the EPS will be negative. It doesn't matter!
    �
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    Let's just leave out the deliberately provocative statements.
    �
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    With hypergrowth companies, I often find that the more simple the analysis, the easier it is to analyze a stock's potential. So I'd rather have a simple, easy to understand (and track) model versus highly complex forecasts and variables. I can be off by a wide margin on actual outcome, but if the upside potential is enormous that's OK.

    So in keeping with that logic, here's ONE way of looking at SolarCity.

    They want to have 1 million customers by 2018. They've said this several times, and they most recently said they're on track to achieve it after adding 30,000 new customers to the backlog last quarter. They are going to need to ramp that 30k per quarter massively to hit the goal, but let's assume they do.

    Each customer has an average retained value of $14k.

    So if they get to 1 million customers they'll achieve retained value of $14 billion.
    They'll still be growing at that point (very low market penetration), so it stands to reason we might still put something like a 2-3 multiple on this number, giving you a potential market cap of $28-42 billion.

    Keep in mind I'm throwing out an uber-simple model for now. This model suggests that, within 4 years, we could be looking at something in the vicinity of a 5-bagger.

    Thinking way longer term, what's to stop SolarCity from having an installed base of 5 million or even 10 million customers? The economics will obviosly change, so the retained value probably wouldn't be as high anymore (per customer), but why can't this happen?

    This is why I'm so interested in the idea of owning as much of the supply chain as possible. I think it's critical to their leadership in the industry.
    �
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    @FrozenCanuck, Appreciate your comments. I actually believe they will hit the 1mln mark by mid-2017 itself. They have consistently grown around 100% rate for many years and there are no signs of slowing down. At that pace mid-2017 is doable. Of course there are risks to it, primarily if their financing avenues don't scale at the same pace. But looking at the trend, it seems achievable.

    Relating to your long term view, Lyndon Rive said multiple times that they will expand into other countries either this year or next. So that should make the 5mln or 10mln customer marks that much more achievable. He is also on record saying that he wants to grow SolarCity to become the largest energy company in the world (it's on youtube somewhere). In my view they are clearly setting up the company in a way to achieve ambitious goals like that.

    After all, in Musk's big vision, Tesla addresses consumption side of the energy equation, while SolarCity addresses the production side. There is nothing to indicate SolarCity's long term goals would be small.

    On the flip side though, I have some trouble equating Retained Value directly to Market Cap. Ideally growth in Retained Value should directly correspond to growth in Book Value (Shareholder Equity) as SolarCity puts all the contracts on the Assets side of the Balance Sheet. But that doesn't seem to be happening. I am not sure why. Do you have any insights into this?
    �
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    Ok - the retained value on contracts is not the same as retained earnings. The value should flow into earnings over a long time, at which point it lands on the balance sheet and you'll see it as asset / equity.

    It seems reasonable to me to look at market cap as a direct function of retained value, provided you believe the value is real. The contracts that create this retained value should translate into actual earnings, right? And since they are already present value calculations, it's a simple way to look at discounted cash flow of current contracts.

    Then investors will have to adjust for future growth, risks of the company making poor investments, etc.

    It's an unusual one for me. I'm used to looking at companies that don't have 20 year contracts on cash flow, but are more like Tesla or Apple, and just sell products in-quarter and generate earnings. I'm probably in very good company here, so let's figure this out together.
    �
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    My understanding of retained value is that it goes beyond the contracts that have been signed with the current customers (of 20 years) and assumes that 90% of those customers will remain in the lease terms for another 10 years, which can add 29% or so over the value of the contracts signed. I would have preferred that the company calculated retained value as the value that they have actually signed people up for (20 years) and not included a speculative portion- that way there would be unexpected pleasant upside in 20 years. When I think of their retained value, i drop it by a third for the above reason.

    Since demand doesn't seem to be a problem now, it seems that money to pay for installations or the number of crews installing each day are the limiting factors. To me, the fact that the quarter will be cash flow negative isn't a problem unless it prevents them from installing booked systems because there isn't enough money.
    �
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    Adding customers to the backlog isn't necessarily a healthy indicator. In a rapid growth environment it needs to be considered together with the average time metric between booking and deployment.
    �
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    I reached out to Investor Relations at one point and I got an answer very much in-line with what you are saying. But here is my beef with this: looking at the latest 10Q document, Balance Sheet on page 3, they already have a line item saying "Solar energy systems, leased and to be leased � net" with $2Bln as asset. So it makes me think that the future revenue is already recorded as asset. So I am missing the connection when you/investor-relations says that value will flow into earnings over time and then land's into assets. To me it feels like its already in assets.

    I understand retained value intuitively. I am just unable to put it together with any of the financial statements.

    I have access to two research reports. Both of them strongly support valuation through retained value.

    1) JP Morgan - direct quote from latest report - "We believe retained value is the most appropriate way to value this stock since it provides a present value of future cash flows on a net basis."

    2) Raymond James -direct quote from latest report - The #1 question we�ve heard from investors as part of our coverage of SolarCity over the past year and a half surrounds the �right� valuation method and how to think about the many variables. To state the obvious, SolarCity will not have positive earnings, or even EBITDA, anytime soon. A revenue multiple is theoretically viable, but we agree with management that a discounted cash flow (DCF) approach is the most relevant one. The starting point for DCF is the metric entitled �retained value based on discounted forecast of net cash to SolarCity�: $1.80 billion as of 2Q14.

    So everything points to saying that Retained Value is the best way to look at this company. I only wish I can better understand it's connection to 'shareholder equity' as they both seem to imply the same concept.
    �
  • 1/1/2015
    guest
    I completely agree that retained value is the best way to look at this company, but how this translates into stock price is the big question. It is possible for this metric to be the best way to value the company, and simultaneously be overvaluing the retained value.

    What if the value of the solar energy systems, leased and to be leased, is the cost of building the system, and different from the retained value: the retained value would be the money that then comes in from the system?
    �
  • 1/1/2015
    guest
    SolarCity reports both numbers actually. A pure contract value and the one with speculated future renewal.

    For the previous quarter - see deck, page 10
    Retained Value under Energy Contract - $840 mln
    Total Retained Value (with renewal) - $1,291 mln

    For the latest quarter - see deck, page 11
    Retained Value under Energy Contract - $1,245 mln
    Total Retained Value (with renewal) - $1,804 mln

    So just with a mere quarter lag the pure retained value grew to be as much as the total retained value. I can afford to stay 3months longer in the stock for the desired Retained Value :)
    �
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    Morgan Stanley initiated SolarCity (SCTY) coverage with Equal-Weight and target $92
    �
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    First, thanks for the quotes from the two reports. I'd love to read them if you can send them to me, dropbox them, whatever.

    Second - and I have not fully explored this yet, but I think the assets you are seeing are the result of SolarCity actually owning the equipment they've installed on people's roofs. This asset has a value, and there is something on the liability/equity side of the balance sheet to offset this because they had to raise the cash to build these systems somehow, which is an ongoing issue.

    Imagine you and I started a business putting vending machines in stores. We have to buy the machines, and we own them. They sit as an asset on our balance sheet. Say the stores have 20 year contracts with us so we know the $5k machine is going to return $20k over its life. We generate the money up over that period of time, but the asset sits on our balance sheet (and is depreciated) right from the start.

    Make more sense? I hope that's an adequate explanation.

    - - - Updated - - -

    Does anyone actually have full PDFs of analyst coverage reports? I used to have easy access to these when I was a sell side analyst but I exited the biz a few years ago. I'd love to read some of the reports. Usually they focus on the short term, but the initiation pieces are often full of useful info.
    �
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    guest
    That makes complete sense. Thanks for explaining this out. I have been looking for this answer since a while. Really appreciate it.

    After looking at this enough, I see that Retained Value is really the only real way to value this company. It totally explains why management chose to highlight this metric in quarterly presentations.

    Unfortunately the source that I read those two reports from has become completely uptight about redistribution. But I have some good news which I just remembered.

    Deutsche Bank released a very elaborate initiation report in Jan. It's 63 pages long and is quite comprehensive. You can get a copy of it by going to dbresearch.com -> Contact link at the top -> fill out the form. They usually respond back in a few days. The title of the report is "Still Early Innings of Distributed Generation Era; Initiating with a BUY" written by Vishal Shah published 15 January 2014.

    If you want faster response, drop me your email id in a private message.

    They have somewhat of an elaborate model for valuation but at the bottom of it, it still is based on Retained Value.

    - - - Updated - - -

    There are quite a number of skeptics who question the 6% usage for the NPV calc of Retained Value. Here is an interesting tidbit from the Deutsche Bank report:

    �
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    I expect cost of the systems to go up over time (if not stay steady). It's very unlikely they will go further down over the course of years. My reasons are
    1) More EV driving will mean greater electricity needs. My very rough guess is that an EV doubles the system size for an average user.
    2) As net-metering gets pared down, or alternative means of charging solar users for grid usage gains traction, batteries will become an inevitable solution. So adding in the cost of batteries will increase the overall system cost.

    As long as SolarCity is able to lower electricity prices (including everything: panels, batteries, grid connection fees etc), they will be able to continue to grow at a very rapid pace. That's what Musk says too.

    One can argue that if consumer lending of solar systems grows rapidly then more people might be interested in financing. But I'd contend, given SolarCity's scale, their financing costs would be lower than that of consumers. Same holds with respect to everything else: cost of panels, labor costs, pretty much everything else. Scale should enable them to be the lowest cost provider and still be reasonably profitable. Sort of like becoming the WalMart of Solar.. Ofcourse, SolarCity is not there yet. But the objective is to get there. Meanwhile keep picking the low hanging fruit and continue to expand scale (sort of same exact thing Tesla is doing).
    �
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    guest
    Interesting that this rating isn't shown on BBG.
    just had a look at <ANR>. The ratings/PTs are in descending order.

    Roth Capital - buy - $98
    Credit Suisse - outperform - $97
    GS - buy/attractive - $96
    Cannacord - buy - $95
    Deutsche Bank - buy - $90
    Baird - neutral - $83
    JPM - overweight - $83
    Raymond James - outperform - $80

    all PTs published between 08/08 and 08/21 !
    �
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    Mosaic now doing direct lending for home solar installations. Targeting "solar leasing companies", whomever they might be :wink:

    Mosaic Lending.jpg
    �
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    Not an ad, I should have provided more info. I received this in an e-mail yesterday. Thought that I would post it here to let everyone know that Mosaic is making this push. I have invested in the solar crowd funding model that Mosaic uses for maybe a bit over a year. Currently a small amount in three different properties. Not being able to put up solar panels myself, I wanted to be able to help make it happen in any case, and the return is about 4.5% on the funds invested. I believe that their lending to homeowners directly is a new activity for them. Preciously, they pooled investors money to put in solar installations in various facilities.

    RT
    �
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    Interesting that for such a volatile stock, SCTY has traded essentially flat around $70 for 2.5 months. Anyone who follows it closely care to comment on this current stability?
    �
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    guest
    a lot of scty solar panels on the roof


    gigafactory_aerial.jpg
    �
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    guest
    why is there wind energy on the hill? Who even supplies wind energy that tesla would tap into? If they have that many solar panels, why go for a wind farm?
    �
  • 1/1/2015
    guest
    Simplistic answer, wind still works after sunset.

    We can debate the cost/benefit, but one fact remains, wind is 24x7 to some , ehem, degree. (no pun intended.)
    �
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    guest
    STCY two new PTs

    here we go.
    �
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    SCTY is up over 5% during mid-session today, despite the overall market being down. Any ideas why?
    �
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    My guess is GF bill passage in Nevada.
    �
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    They'll use solar, wind and geothermal. I'm sure that the rooftop won't supply them with enough energy.
    �
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    Especially at night.
    �
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    Well, I figured they might be able to rig up some battery storage to help with that. It's the total power generation from the rooftop solar that's the big problem.

    - - - Updated - - -

    Probably, but not necessarily. This will be a large industrial installation for a power-hungry facility in the middle of a very sunny desert, so they could consider favoring more expensive high efficiency panels over cheaper SCTY ones.
    �
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    Might best hold off on such conjecture until we learn the specs. of the panels their new acquisition, Silevo, put forth.
    �
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    What's to prevent SolarCity from obtaining or producing top quality solar panels for the huge industrial project of a related company?
    �
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    I think it's the fact that trina solar said that they have overwhelming demand and can't meet it. All solars liked that.
    �
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    guest
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    Any idea why SCTY is tracking down with TSLA this morning?
    �
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    The market.
    �
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    guest
    Link to this morning's article on SolarCity website: New SolarCity Product Makes it Possible for Businesses to Significantl

    New SolarCity Product Makes it Possible for Businesses to Significantly Increase Solar Output From Each Rooftop

    8:00a ET September 16, 2014 (GlobeNewswire)

    SolarCity (Nasdaq:SCTY) unveiled a new product in its Zep Solar line of solar products today--a flat roof solar mounting solution that is twice as fast to install and can generate significantly more solar electricity from each rooftop than alternatives for the commercial market. ZS Peak makes it possible for far more businesses, schools and other organizations to install solar power on their buildings and immediately pay less for solar electricity than they pay for utility power, and will significantly expand the addressable market for commercial solar.

    Like the revolutionary Zep residential solar systems, ZS Peak provides an innovative snap-together system to simplify and accelerate installation. SolarCity estimates that ZS Peak can increase generation capacity on flat roof buildings by 20-50 percent per building and do so without requiring any penetrations. The system's dense, east-west layout structure will allow SolarCity to fit up to 20 percent more solar panels on standard roofs and up to 50 percent more panels on lightweight roofs, such as those commonly found on warehouses. The increase in panels per roof is particularly valuable in the commercial market, as conventional flat-roof solar systems typically power less than half of a commercial building's load.

    ZS Peak's east-west orientation not only allows installers to fit more solar panels on each roof than standard south-facing systems, it also captures peak power production throughout a longer period of the day. By lengthening power production time and eliminating the typical mid-day spike of standard solar systems, SolarCity can also make more efficient use of solar inverters to further reduce costs for customers. ZS Peak has so significantly improved on the aerodynamics of conventional systems that it can be installed as a lightweight, non-penetrating system on many roofs that would otherwise require the solar panels to be bolted down.

    SolarCity is currently installing its first project with ZS Peak and expects to begin installing the product in volume in January. Businesses and other organizations interested in SolarCity's services can contact the company directly at 1-888-SOL-CITY (1-888-765-2489) for a free, no-obligation solar consultation or visit SolarCity online.
    �
  • 1/1/2015
    guest
    Thanks for posting that SC press release. I would love that system on my house roof. It would be perfect because it is non-penetrating and lightweight. SC won't install on my roof because it has a 1.5" hard polyurethane foam layer with an elastomeric top coat, supported by 2x4" tongue-in-groove and 4x10" beams on a 6' spacing. SC says they don't want to deal with foam roofs because they might leak even though I've offered to sign a liability release. They also said (this was just last month) that their mounting system was not compatible with my roof structure, even though earlier this year they had installed a PV system on a neighbors roof that is the same structural type as mine (but not the same top surface).
    �
  • 1/1/2015
    guest
    You're welcome. Oh my, and you live in the same town as SolarCity. I got the impression that this new system is only for business customers. Perhaps if you keep knocking on their door, they will relent and accept you as a customer.

    Meanwhile, it appears that the system is what could win the bidding to install solar panels on Tesla Motors' huge battery factory being built in Nevada. Of course the fact that the two companies share the same board chairman is helpful.


    gigafactory_aerial.jpg
    �
  • 1/1/2015
    guest
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    guest
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    guest
    SCTY price action makes no sense to me, it went down with tsla yesterday, today stays down even tsla jumped.
    �
  • 1/1/2015
    guest
    MarketWatch Bulletin

    NASA awards $6.8 bln contract to Boeing, SpaceX to send astronauts into space
    09/16/2014 04:14:29 PM
    _____________________________

    I realize it is not a direct SolarCity story, but any positives for a Musk related enterprise can be helpful.

    - - - Updated - - -

    Since yesterday�s market close, Tesla benefitted from bullish commentary by analysts at two firms. Very late in yesterday�s trading the news began circulating of Massachusetts allowing Tesla�s direct sales method. The benefits from the news today of SolarCity�s improved system for business customers may not yet have sunk in with investors. The latest Tesla news may have inhibited institutions from selling any more TSLA shares to raise cash for the Alibaba IPO, at least not since late morning. SolarCity may have been seen today as still ripe for milking ahead of that IPO.
    �
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    yes .. TSLA is much sexier than SCTY ..




    �
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    Awesome. Thanks for letting us know!

    Edit: Well, I thought there would be a streaming of the Keynote, but it looks like there is none....so hopefully we get some info after the event.
    �
  • 1/1/2015
    guest
    You're welcome. Here's an article about today�s SolarCity �Inside Energy� summit in New York which featured Elon Musk as keynote speaker.
    ____________________________________________

    http://www.marketwatch.com/story/elon-musk-a-thermostat-sized-box-may-one-day-power-your-house-2014-09-17

    �
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    Solar City is being added to the NASDAQ Q-50 on Monday. Remember how Solar City acted prior to being added to the Russell 2000. There was a brief pause and decline the week before the event, followed by the stock rallying over 100 percent in the weeks that followed. Do funds that track an index and funds that own a stock that is about to be added to be added to an index usually pause the week before the event occurs?

    Update : Why wasn't Solar City added in March? According to the first link, Solar City was supposed to be added in March.

    Quarterly Changes to the NASDAQ Q-50 Index (NASDAQ:NDAQ)

    Quarterly Changes to the NASDAQ Q-50 Index - NASDAQ.com

    Could this explain why the stock fell after reaching $80? At an $8 Billion market cap, Solar City was among the largest market cap holding for many of the larger indexes that own it.

    Holdings | SolarCity Corporation (SCTY) | ETF Analysis and Performance
    �
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    Nice. Much appreciated. :) I seriously can't wait to see what's these two companies do in the next ten years.
    �
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    I don't understand the thermostat sized comment...an object that small will not have adequate energy storage potential. It would even need to surpass the energy density of gasoline to have any measurable amount of energy storage on a home consumption scale.
    �
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    Inside those "thermostat boxes" would have be some whallopy-gallopy capacitors, indeedy!
    �
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    Has there been any time frame given on when they will build this panel manufacturing plant an order of magnitude larger than the current plants? I really need to get back into SCTY before that happens. I liked to see the recent press release about the commercial mounting hardware. I love to see the R&D ramp up in SCTY.
    �
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    No. They need the grid. They also believe electricity consumption will increase so utilities will still sell a lot of energy.
    �
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    Admin note: As a reminder, please respect copyrights and don't copy and paste entire articles. Link to the original article and perhaps just quote the intro or whatever relevant part. Some posts above were edited accordingly.

    Thanks! :)
    �
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    Vivint Solar IPO




    Vivint Solar expected its IPO to be priced between $16 and $18 per share, valuing it at about $1.9b billion at the top end of the price range.


    		Market CapMarket ShareRetained VauleRetained Vaule per wattInstallation Cost
    Vivint Solar$1.9B 9%$309.9M$2.39didn't say, seems lower
    SolarCity$6.06B 30%$1800M$1.72$2.29/watt
    �
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    What's the rub on this company. I know they are #2 on installs right behind SolarCity. Is it worth getting into? I got into SC at $10 right on the IPO, wondering if this company is a solid player in the industry....
    �
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    I repeat the final paragraph of the post in which I initiated this thread:

    "Eventually that thread was hijacked for the discussion of other solar companies and alternative energy in general. SolarCity got lost in the noise. Now that SCTY has fallen 30% this month, I'm resurrecting a purely SCTY thread. Other alternative energy companies should only be mentioned in the context of how they might affect SolarCity. Current or potential SCTY shareholders are invited to participate."

    There is another thread in this forum for more general discussion of Solar and other alternative energy companies. It was originally a SolarCity thread but got hijacked and was renamed: Alternative Energy Investor Discussions
    �
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    well... can we at least allow SCTY's direct competitor to be discussed here?


    �
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    As long as that pertains to how it will affect SolarCity and its shareholders. Otherwise, this thread is doomed to be hijacked in the manner of the first SolarCity thread whose title had to be changed to "Alternative Energy Investor Discussions". It would be appreciated if discussions solely about Vivint Solar be posted in that other thread. Otherwise we'll again have to go through the process of starting up a new solely SolarCity thread for SolarCity shareholders and prospective investors. Thank you in advance for understanding and cooperating.
    �
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    I am curious, respect curt but wonder why he gets to choose what is discussed? Originator of thread does not control content.
    �
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    I understand. However, I hope that others understand the intent of this thread and why it was created to replace a previous SolarCity thread that had been hijacked. Otherwise, chaos reigns. As I did this spring regarding other attempts to hijack this newer thread, I have again asked a moderator to intervene. It was the moderator who then moved non-SolarCity posts to the older thread which he had renamed. That other thread still exists for the discussion of other solar companies.
    �
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    I understand and get it. I was just really wanting someone who had read about them to give a crash course in basically one post of whether or not to invest in them.....I've seen the name for along time, but never studied them. Would be nice to spread the eggs in the basket.....but I agree, I want this thread to be focused on SC as well because I have a lot of money tied to it.
    �
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    That's understandable; you're not the one who started posting about Vivant Solar and were simply responding. However, I suspect you may get a good answer to your question, if posted in the other much more heavily frequented thread: Alternative Energy Investor Discussions
    �
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    because he is willing to put in the extra time needed to be a moderator. I thank them for what is normally a thankless job.
    �
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    I have been out of SCTY for awhile but now seems like a great time to get back in. I am going to be looking at some LEAPS tomorrow.


    Key Strengths that have brought me back to SCTY (I have always believed in them but at some point on a huge pullback from TSLA I dumped all other securities into TSLA.

    -The rate at which they are adding retained value

    -The financing company they bought that included the creator of Prosper coming to work for SCTY.

    -Their plans to build a Giga Factory for High Efficiency panels.

    -I believe the money they are pouring into R&D will continue to separate them from the pack.

    -The rate at which they are adding retained value !
    �
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    Falling below previous support... could this be the start of a correction coming?

    I have been waiting for a reentry since I sold a few months ago.
    �
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    I bought a few SCTY calls and leaps today. Seemed like a good time to get back in with everyone distracted with BABA. Hoping for a good week for SCTY next week!
    �
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    Money being withdrawn from momentum stocks to buy the BABA IPO may have pressured SCTY this week. An upcoming IPO from another solar company might also affect SCTY. I'm waiting for that to pass before considering reentry into SCTY.
    �
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    Thanks for the heads up on the solar IPO Curt. I take it your referring to Vivint Solar Inc.? Is it possible that Vivint Solar could boost SCTY by bringing attention to the solar stocks? I don't see people selling SCTY to buy this new solar stock.
    �
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    You're welcome, Chris. Yes, that's the IPO to which I was referring. You may be right about attention being helpful. However, I remain cautious due to the possibility that some people may want to diversify their solar holdings by selling some SCTY to buy the IPO. Then again, they may not. I don't believe a firm date has been set for the IPO, but it should be soon. We'll learn how investors react before long.
    �
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    Curt, I found this article that talks a little about Vivint Solar and Solar City. I posted the link just because it talks about how Solar City has a 30% market share and Vivint Solar only has about 9%. Vivint Solar will be valued around 2 billion where Solar City is valued around 6 billion. So to me it seems Solar City is still a better buy at a 6 billion Valuation. The Blackstone Group - Vivint Solar IPO: A Potential Green Triple-Play? | Benzinga.
    �
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    I think SCTY should Buy or merge with VSLR.
    �
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    SCTY Jan2017 LEAPS are available now - not sure when they started but figured I would pass it along.
    �
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    Man does SCTY look tempting at these prices...I'm thinking about it.
    �
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    I recently went long on some Jan 2017 140's and added some Jan 2017 120's today. I was excited to see SCTY more or less hold the line at the 200 day. With SCTY adding 500million in retained value per quarter (and increasing quickly) I think it is a very attractive proposition at these levels. As a TSLA permabull I am even considering transferring some of my TSLA calls over to SCTY.

    - - - Updated - - -

    Why do you feel this way? I am not sure what that would bring to the table for SCTY? not the mounting hardware :)
    �
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    I think SCTY would benefit due to:
    1. Knocking out #2 in market share, (9% + SCTY 30%=39). More exponential growth for SCTY.
    2. Decent Retained Value $309.9M.
    3. More reasons to serve customer Alarm, Smart Home, etc. SCTY does Home Energy Audits.
    4. 850,000 Customers they have only penetrated 2.5% of that amount with 21,921 customers w/#3 above. Here is a good article:
    All The Numbers Of The Vivint IPO You Need To Know | SolarWakeup.com

    I could be wrong as I'm not a businessman.

    BTW Thanks for answering my first post here ever! And I would like to thank all of you for posting here and teaching me so much! Much respect to you all! I got into SCTY and TSLA with my retirement IRA because of positive comments from Sal D., breaking through the Massive amount FUD on Seeking Alpha. I can't believe it's even legal to operate that sight!
    �
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    the latest upgrade w/ a PT $95 from Canaccord.
    �
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    Well, Flux - neither any press release or blog from Solar City, as of this afternoon, nor ANY reference in that article other than the first paragraph, makes use of the giga-word. I looked it up just to make sure that it was indeed either ann over-enthusiastic reporter and/or headline writer who snagged that soon-to-be-waaaaay-overused term:mad:

    But, as far as the development of a Very Large factory for Silevo/Solar City in the Buffalo area, yes, that has been discussed over the past several months.
    �
  • 1/1/2015
    guest
    Indeed, the story is three months old, but the New York governor put out a press release today and apparently thought the term Gigafactory is cool and applicable. Here's a story from June: SolarCity to build factory in New York - Jun. 17, 2014

    Of more immediate concern, this notice of a half billion dollar convertible note offering came out after the market close and may have caused some jitters in the after hours:
    SolarCity Launches $500 Million Convertible Senior Notes Offering (NASDAQ:SCTY)
    �
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    I would love to know what the expected output is? Elon had mentioned 1GW in the Silevo call, but I did not see that mentioned in any of the articles today about it? Anyone know anything on this?
    �
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    Huh. 5 billion dollar plant. Funny same figure as tesla giga factory. Are these realtime estimates or pulled from the air. I find it hard to think each one would have the same estimate. Remarkable coincidence
    �
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    The real figure is 750 million. The 5 billion includes all payroll and other things over the next 10 years.

    Edit: seem to be conflicting news reports and now I can not find that article I had read. I sure wish I could get a video of this event.
    �
  • 1/1/2015
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    Indeed - it will be interesting to see how the market responds to this convertible note offering. It's not dilution so that is good.

    What are the risks associated with this convertible note? Are they on the hook to meet certain benchmarks by 2019? Some of the legal-speak in their announcement was a bit over my head and I didn't see specific note pricing.
    �
  • 1/1/2015
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    new upgrades from Roth and Deutsche

    Roth Capital Partners PT $98, Deutsche Bank PT $90
    ...and Credit Suisse (no PT !!, "restricted"!)
    �
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    I should have bought at $60.
    �
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    Stock or Options? Why is $3 a game changer for you? Just curious...
    �
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    guest
    Oh I was referring to the fact that I posted on the day of the dip to $60 that this was down below what I thought was fair value given the news of the day, and was going to buy short term calls, but I didn't. That's all.
    �
  • 1/1/2015
    guest

    SolarCity breaks ground on huge solar factory in New York, strikes deal with state


    SolarCity broke ground on its massive solar panel manufacturing facility in Buffalo, New York on Tuesday, according to a release from New York Governor Andrew Cuomo. The facility, when, and if, fully completed in early 2016 is supposed to make a gigawatt worth of solar panels a year, in the one million square foot facility on 88 acres of land in the development park called RiverBend in South Buffalo.


    SolarCity � led by Chairman Elon Musk and his cousins CEO Lyndon Rive and CTO Peter Rive � is following a similar strategy to the one that Musk is using for his electric car company Tesla, with Tesla�s plans to build a massive battery factory outside of Reno, Nevada. The similar strategies are causing some to refer to the new SolarCity factory as Elon Musk�s other �Gigafactory.�

    SolarCity breaks ground on huge solar factory in New York, strikes deal with state Tech News and Analysis

    The above was posted 2 hrs ago.
    �
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    My leaps I bought at 60 are still underwater due to the hugespread on the bid and ask price but come 2017 they are going to look sweet
    �
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    Solar City was already way undervalued before this deal. If the details of this article are correct then the implications are staggering. This article had the best paragraph I have found so far on this deal.

    "SolarCity expects to spend US$150m initially to fund construction of the facility, with the state kicking in an additional US$750m. The company will lease the facility for a 10-year period at a rate of US$1 per year, but must provide 1,450 manufacturing jobs and employ 2,000 downstream jobs in sales and installations, as well as help create 1,400 more jobs to support contractor and suppliers."

    http://www.ifrasia.com/solarcity-funds-gigafactory-with-us$500m-cb/21165975.article

    To only spend 150 million to build out this huge factory is so amazing !

    edit: SolarCity - Current Report

    very nice ... 150m confirmed as the price they expect to get factory operational.
    �
  • 1/1/2015
    guest
    Guys, checkout SolarCity twitter feed at SolarCity (@solarcity) | Twitter

    There are a ton of tidbits. Here is a good one:

    "W 700+ crowd @NYGovCuomo announces deal to create largest solar power manufacturing plant in W Hemisphere to Buffalo"
    �
  • 1/1/2015
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    500mil convertible is priced. Details are here:

    SolarCity Corporation Announces Pricing of $500 Million Convertible Senior Notes Offering (NASDAQ:SCTY)

    - - - Updated - - -

    A few key points.

    - The notes will bear interest at a rate of 1.625% per year.

    - The initial conversion rate for the notes is 11.9720 shares of common stock per $1,000 principal amount of notes (which is equivalent to an initial conversion price of approximately $83.53 per share).

    I am not an expert in convertible pricing. But this looks like a very good deal for the purchasers of the notes. SCTY already reached $83.53+ early this year.

    - The Company expects to use approximately $57.6 million of the net proceeds of the offering of the notes to pay the cost of the capped call transactions described below and to use the remaining proceeds of the offering for general corporate purposes, including working capital, capital expenditures and potential acquisitions.

    Not clear until what price there will be dilution protection. Nevertheless this is a positive.
    �
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    OK, I'm in at these prices. Go SCTY!
    �
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    This is a really good deal for scty. The 8K has some juicy details. This is probably the best part:

    �
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    more info of the purchasers

    [TR="bgcolor: #cceeff"] [/TR][TR="bgcolor: #cceeff"] [/TR][TR="bgcolor: #cceeff"] [/TR]
    Purchaser Aggregate Principal
    Amount of
    Securities to be
    Purchased    		 Aggregate Principal
    Amount of Optional
    Securities to be
    Purchased if Maximum
    Option Exercised
    Goldman, Sachs & Co.
    		 $166,666,000 $25,000,000
    Credit Suisse Securities (USA) LLC
    		 $141,667,000 $21,250,000
    Merrill Lynch, Pierce, Fenner & Smith
    Incorporated
    		 $141,667,000 $21,250,000
    Deutsche Bank Securities Inc.
    		 $25,000,000 $3,750,000
    Barclays Capital Inc.
    		 $25,000,000 $3,750,000
    Total
    		 $500,000,000 $75,000,000






    �
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    guest
    new upgrades from Credit Suisse and Raymond James

    seems that Patrick Jobin is realizing the potential of SCTY.
    "outperform", PT $97. Raymond James, "outperform", PT $80.
    �
  • 1/1/2015
    guest
    Looks like we got dilution protection up to $126.

    See the latest 8K filed on 25th.

    "The Capped Calls have initial strike prices of $83.5282 per share and initial cap prices of $126.0800 per share, subject to certain adjustments."
    �
  • 1/1/2015
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    Just bought a bunch more SCTY stock!
    �
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    good timing, I think VSLR IPO tomorrow should pumps scty up, unless the oil price keeps crashing ..
    �
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    At these prices, it's a bloody clearance. Just went all in with the IRA
    �
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    I grabbed a handful of Jan '17 $60 calls at these prices. Maybe will buy more if we keep going down.
    �
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    I know this is the SCTY thread, but the VSLR price is pretty low right now. Would I be betting against myself to buy (using new cash) some of it since it's direct competition is SCTY or does the whole "spreading your eggs around" and the fact that there is enough room for solar installations to go around make it ok?
    �
  • 1/1/2015
    guest
    As stated in my post that initiated this thread, discussion of other solar companies should only be made in reference to how they might affect SolarCity and its shares. Otherwise there is a thread in this forum titled "Alternative Energy Investor Discussions". It was originally a SCTY thread but got hijacked by discussion of other solar companies and SCTY got drowned in the noise, so its title was changed. That's the reason I initiated this new SCTY thread last March.

    As I expressed in post's #903 & #905, I was holding off on reentering SCTY due to the possibility that some investors wanting to buy VSLR would sell some of their SCTY shares and depress SCTY's price. Apparently you would use new cash to buy VSLR. I can't quarrel with diversification, but keep in mind that yours is money that would not be used to support the SCTY price.
    �
  • 1/1/2015
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    Well, I'm really wondering where I would make the most money. SCTY or SCTY + VSLR. If Vivint starts to move on Solarcity's turf, then that could affect SCTY pricing......so to me they are linked in discussion.
    �
  • 1/1/2015
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    You called it Curt. I started buying too early and my SCTY leaps are pretty deep in the red. I did save some cash just in case it went south so I bought some more SCTY leaps today. Hope SCTY can recover a little tomorrow.
    �
  • 1/1/2015
    guest
    Since its founding in 2011, Vivint Solar has been in competition with SolarCity as a solar panel installer. Vivint Solar was a subsidiary of Vivint and later the Blackstone Group. Today Vivint Solar became a publicly owned company whose VSLR shares compete in the stock market with SCTY.
    �
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    Curt- I'm curious if your buying SCTY now that the price has come down quite a bit? I know you were holding off for a pull back, is this it or do you see it dropping more?
    �
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    I would be a bigger buyer today but I'm worried about a margin call. I wish someone would ask Elon what he thinks about solar cities price
    �
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    Mr Musk bought scty secondary offers at $46 .. so I assume at least $46 is a fair price for him.

    �
  • 1/1/2015
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    Yeah im in the same boat. I wanted to buy some more today on a 6% drop but didn't want to over do in case it fell even farther tomorrow. I am happy to see SCTY up a little in the after hours even though I know that means nothing.
    �
  • 1/1/2015
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    I'm not currently in SCTY, but it remains under consideration.
    �
  • 1/1/2015
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    SCTY finally sees a little green. Maybe because TSLA is having a good day it is following suit or maybe because the market is up I don't know. But I'll take it!
    �
  • 1/1/2015
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    Where has all the chatter gone? Big news this AM with the SCTY Leases... anyone?

    Is there another forum I don't know about :p ?
    �
  • 1/1/2015
    guest
    Yep, pretty big deal.

    Solar Installation at no Additional Cost and Immediate Utility Savings Just Like a Standard Power Purchase Agreement, But Now You Own it

    �
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    Posted on G+:
    Well, this is quite an obvious outcome, SolarCity is the #1 installer in US, and economy of scale is kicking in big time. I bet new SC product got as good if not better margins than PPA offers from SC, while allow more fair direct comparisons with offers from small scale installers who could not realistically compete on price. And on the long run this will ensure even bigger and faster market penetration for cost effective solar.
    US-PV-Installer-Market-GTM.png
    �
  • 1/1/2015
    guest
    Definitely an interesting loan product by SolarCity. It appears to be a 30-year loan. This is something I haven't heard of existing in the solar industry for residential customers prior to this. SolarCity will definitely charge a premium in terms of total purchase price, but since it'll be amortized over 30 years the monthly payments will be quite low. I'm curious to learn more of the details.
    �
  • 1/1/2015
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    I am very surprised to see this from Honda as they seem to be lagging in electric vehicles the one type of car that could benefit from solar.
    �
  • 1/1/2015
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    Low payment BUT increased total interest over the life of the loan. Why wouldn't one just refinance mortgage and get lower interest rate and interest tax deduction? Seems like a product to prey on the lower financial class
    �
  • 1/1/2015
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    Disagree. this will be much simpler than refinancing your house. You can also pay it off at any time without penalty. It sounds like an exciting new loan package that will give people a huge benefit over a lease. There is also no lien on your mortgage with this.
    �
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    Never heard of a lien on your mortgage before but home equity line would also do better and can be paid off earlier. Not sure about Texas but Virginia there is no penalty for paying off mortgage faster. I am curious, is there a lien placed on the home for the loan? If not what is the collateral? Home could be sold without settlement agent or buyer aware of loan that would need to be paid off for the solar system. For that matter what does solar city do to secure their interest in the solar system on a lease? Do they rely on the sellers good will?
    �
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    Thanks for letting us now. I really like this part:

    Now, it's only been a few years, and I'll be interested in seeing what it's like 15 years from now, but as an investor and potential buyer this is great to see.
    �
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    It's quite possible they're getting a lien or 2nd mortgage on the house including the solar system. That often qualifies it for home mortgage, not home equity because it is used to buy or build your home. I don't know what they're doing. Don't worry about the owner selling the house without paying it off. The note will be recorded with city/county records and can't be overlooked when the property is sold.
    �
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    How could it be paid off faster, I thought you could pay off the Mypower loan whenever you want. Keep in mind all other loan options are still open to homeowners. For people who just purchased their home or are underwater in their mortgage this loan would make a lot of sense.
    �
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    Then it is lein against home
    �
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    One thing to keep in mind is that this program also includes all repairs and maintenances to guarantee a certain output from the system throughout the life of the loan which creates an inherent value added. You could classify it as a Rent-to-own scheme but at the end of the day it opens up solar to a much larger market.
    �
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    That's a very informative podcast. Thank you!

    - - - Updated - - -

    One thing that struck me in the podcast: Rive says the Retained Value is net of tax equity guys but it is NOT net of debt. He said that debt is on the Balance Sheet that we can see so that's not netted out as part of Retained Value.

    Does anyone know how to reconcile the Balance Sheet with the Retained Value?

    The real answer that I am after is:
    - What is the true 20-year retained value after "everything"
    - How is it evolving on a quarterly basis
    - How is it evolving on a quarterly basis "per share" (to account for equity dilution)
    �
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    wow, current install cost of less than $2.50/W. Wish I could get that directly.
    �
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    That is what I got directly just by shopping around and maybe you can too, especially in CA where you have a lot of choice.
    �
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    If I am reading the info right.

    I compared from the end of year report last year to the numbers as of Jun 30th because that is what was used in the 10-Q which is where I am getting my "all in number" for debt and accounting for stock dilution (I think but I would love to have someone double check this)

    The retained value after 20 years considering a 0 percent renewal rate is 1.245 billion as of Jun 30th. In December it was 660 million so it has almost doubled in 6 months. [Increase of 585 million ]

    The retained value after 20 years considering a 90 percent renewal rate (which is what SCTY uses in their model) is 1.8 billion as of Jun 30th and it was 1.05 billion on Dec 31. [Increase of ~750 million]

    The total liabilities and equity has increased by 333 million during this same time period. If you only look at liabilites it has increased 165 million in this period.

    Its late and I need to do more research on the subject, But I would love anyone else to correct this data or expand on it.

    - - - Updated - - -


    And yes +1 Sbenson that post was awesome Thank You
    �
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    I think there a lot of benefits to offering these bonds to individual investors that have been overlooked thus far. the biggest one is that it lets SolarCity know where to expand next they will now have a map of everyone in the country who was willing to spend at least a thousand bucks in support of solar. This will give them a tremendous advantage compared to their competitors.

    for instance if they had 300 people from Kansas City that had invested in these bonds and they were considering expanding into that areathey would know that there was potential demand from at least those 300 people. I don't think that it was a coincidence that the my power loan and these individual investor Bonds were rolled out at the same time.
    �
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    Those look like pretty good rates...
    �
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    Bummer. For those of us in the "sunshine state" if florida we cannot buy directly. Only through a broker. Pretty crazy to be the only state in the country demanding we also pay a middleman fee. Time to write our represntatives!
    �
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    Were you interested in purchasing some? I am very curious how many people are buying these and their reasons for doing so.
    �
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    Yes.
    �
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    Wondering if anyone has info on bond ratings for these?

    Soon as I get this info, gonna go to my local FL car dealer .... oh I mean broker (you know for consumer protection:confused:) I think it will be a good way to diversify.
    �
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    These bonds are unrated, junior to existing debt, in the event of default, something like 25% of investors must band together to push for a claim...
    �
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    Just be aware that the article is talking about grid parity of retail electric prices versus retail solar installations (while the picture in the article shows a utility scale solar plant). That's still great news, but don't expect utilities to dump their nat gas power plants in favor of solar anytime soon (unless forced to by mandates) since solar is still 4x the price of nat gas at the utility level.
    �
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    Baird & Co's Ben Kallo reaffirms his "neutral" recommendation with $83 PT.
    �
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    how is 65% upside neutral?
    �
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    very simple. He had also a few "outperform" ratings in the past. However, one should understand some analysts' opinions?
    �
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    Anyone setting up a play on SCTY earnings? Historically they have been a disappointment and we have had a nice recovery from $45. Time to buy some puts?
    �
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    Well those puts from yesterday seemed to be a good call... I'm wondering whether to let them ride, or close them out. Any thoughts in the closing minutes?
    �
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    Weird but why does scty report same day as tesla? Many investors have both and chairman of both in common
    �
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    Because maybe there will be some big "partnership" type of news?
    �
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    I remember that speculation the last time they did that same day and time report but there was no partnership announced then
    �
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    Yep , Same thing has been said before. Although there is news that came out recently that next year Tesla will offer battery storage at competitive pricing. It has also been stated that in 2018 (or was it 2017) battery backup will be offered with every SCTY install. I think they could offer some news on more battery storage that is coming next year but I would not count on it in this earnings call.

    I would not rule out a SCTY/TSLA announcement but I would not bet on it (this quarter)

    I think SCTY will follow the market tomorrow and move up after earnings report.
    �
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    Someone recently shopped SolarCity for a 10 kWh pack from Tesla. The quoted price forna 10 year lease was $1500 down plus $15/month. Discounting at 9%, this has a present value of $2684. If an average of 7.5 kWh is discharged each day, this works out to a levelized cost of about $0.10 per kWh. This strikes me as a pretty reasonable price. The value of having backup when the grid is down may prove to be the tipping point for many.
    �
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    Well those puts I bought were for protection from a bad ER, but it seems like I'll be closing them early, which is good b/c I don't have to loose IV premium.
    �
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    Wow, what a brutal morning. Does someone know something I don't? What's going on?
    �
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    Clearly selling those puts was a bad idea. sold for $5.6, they were $7 last I checked.
    �
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    I've been staying away from scty for a while. I think that we're taking a beating from the oil issues, and scty tends to drop on earnings (mostly because it runs up prior to earnings). Looks good for tomorrow.
    �
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    I'd simply look at it as 73.5c/day. What return can you get on it? Maybe more if you live somewhere with poor solar feed-in returns or if you have real-time pricing and can arbitrage the differentials. But over its life maybe only 6.25kWh usable average, so given charging/discharging losses it might be tough to do anything more than stick it to the man.

    What I think is _really_ good about it, is that static storage is a no-lose proposition for Tesla:
    - If current electricity pricing continues, with per-kWh pricing of infrastructural costs, static storage economics are good.
    - If static storage and solar PV forced pricing to adjust to separate fixed infrastructural costs by Amperage or fixed fee, and only fuel costs by kWh then it will make electric cars cheaper to own.
    �
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    To me it looks like Republicans taking up Senate is a perceived negative for SCTY (and VSLR). The fear is that tax credits will not be extended.
    �
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    I would say, all done SolarCity !

    �
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    Analyst Recommendations Today

    11/06
    Deutsche Bank : reiterates "buy" w/ PT $90
    Roth Capital: reiterates "buy" w/ PT $98
    JP Morgan: reiterates "overweight" but changes PT from $74 to $72
    Baird & Co: reiterates "neutral" w/ PT $83
    Raymond : reiterates "outperform" but changes PT from $80 to $75
    11/05
    Canaccord: reiterates "buy" but changes PT from $95 to $87
    �
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    Seems like a very good bet. With climate-change-denier Sen. Inhofe taking over as chair of the Committee on Environment and Public Works, and with Sen. Murkowski of Alaska at the helm of the Energy and Natural Resources Committee, it looks like "drill, baby, drill" is going to be the Congressional direction. A WSJ good article on this yesterday.
    �
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    QUOTE: "After representing 36% of total U.S. residential solar installations in Q2 2014�more than the next 50 installers combined�we expect the 33% sequential growth in our residential deployments to lead to an even higher percentage in Q3 2014."

    And market share really matters. As long as solar market continue to consolidate, with smaller players becoming uncompetitive due to economy of scale there is a tremendous value in being market leader. And there would be a market for residential solar in US, doesn't matter who won election, democrats or republicans.
    �
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    Maybe, but I would worry a lot, were I an investor in SCTY or any solar stocks, that a change in a retail rate regulation or removal of federal and/or state subsidies could cripple the business. I admit, though, that the solar industry has gotten so big and employs so many people that such changes are increasingly unlikely.
    �
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    Merrill Lynch confirms PT$95 and "buy" rating. Here's why.

    �
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    thinking about to sell some shares in SCTY. not because of the silly stock move, but I need some liquidity. Just don't know what to think about the markets right now. It's kind of playing Texas Hold'em and you're not allowed to see the 5th card on the table.
    �
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    Tell the Walton Family: Stop your hypocritical undercover campaign to destroy rooftop solar. | CREDO Action

    Tell the Walton Family: Stop your campaign to make it harder for Americans to go solar. Click here to sign the petition.
    The Waltons own a majority stake in First Solar, a Malaysia-based corporation that manufactures large-scale commercial solar arrays that utilities may buy and add to their energy mix to meet state clean energy standards. First Solar is putting a bet on utility-scale solar, which wants to rig the playing field by suppressing residential solar installations. In a nakedly self-serving move, First Solar is working to impose fees on residential households with rooftop solar.[SUP]2[/SUP]
    First Solar sees rooftop solar as a competitive threat, and is heavily involved in cutthroat campaigns nationwide to destroy the residential rooftop solar industry and make it harder for Americans to go solar.
    Their strategy is already working in Arizona, where residential solar installations dropped 40% after Walton family-supported fees were introduced, leading to unprecedented job losses in Arizona�s solar industry.
    Not satisfied with a single state, the Waltons have also given millions to pro-fossil fuel groups like the American Legislative Exchange Council (ALEC) and the Koch brothers front group, Americans for Prosperity, to fund similar anti-clean energy policies across the country.
    �
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    Nice. Thanks for the article! I loved seeing this affirmation. A couple of people two years ago thought they would turn into this.

    �
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    I've been away from this thread for too long, finally catching up! SBenson, I am 99.9% sure that what Rive said/meant is that retained value does not factor in debt service costs. The debt (principal) is accounted for because the cost of the system is accounted for in the RV calculation. The fact that they finance the cost of the systems they build is separate.

    Does that make more sense?
    �
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    Roth Capital Partners reaffirms its "buy" recommendation and PT of $98.
    �
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    Technically the stock looks like a good buy right now bouncing off that hard support at $50 for the 10th time, really doesn't want to go below that number it seems. The financials are a bit confusing to me though, looking at the data from google finance which shows a large minority interest, 50% higher than their revenue, is this from their leasing contracts or? I would like to hear peoples case for owning the stock, what is the revenue per customer, what kind of profit margin can be expected in the future, are they cheaper than competitors?
    �
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    Could SolarCity install one solar system on the roof of a shopping mall and sell power to each tenant? If so, they could include storage in the package as well. This could lead to really efficient use of system assets.
    �
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    Thanks for the post FrozenCanuck� Although not 100% convinced, I think you might be right. The Retained Value definition from the slideshow in footnotes says that it is net of bunch of things including depreciation. So it seems the cost of the asset is effectively taken out of the retained value. Do you have any other references that indicate that the cost of the system is already accounted for in the RV calculation?
    �
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    51 days to break 80.... I can dig it :)
    �
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    Canaccord anD Raymond James reiterated their recommendations and price targets.
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    Interesting research paper, but the novel concept in the paper is that any blu-ray disk gives you an easy to use template for photon capture. I believe the photon capture effect was already well known. Whether it is applicable to high efficiency solar panels, well, neither the article or underlying paper addresses that.
    �
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    If I read it correctly, they already have the contract, they just don't quite know where it's going to be built. They just closed on a $400M financing deal with BofA, though, so this particular contract is only 1.5% of that deal, and even less if you consider the total their total power purchase agreement style of installation. So I don't think it is all that big a deal for them. Walmart is much bigger.
    �
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    Happy New Year to you all,

    any thoughts on current directions of SCTY? I'm not quite sure what to think of the insider sellings - diversification of investment? And just a wild idea from a dream last night: What if Google acquired SolarCity?
    �
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    Insider selling is typically pre defined timelines. It's not voluntary action.
    �
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    NO idea about the insider selling, but what seems clear is that the bullish triangle pattern seen by Recognia never happened. They probably thought end of November was going to be a positive breakout but that was clearly untrue. Now the stock has hit the same peak twice while the lows in between have been getting lower. All at low volume.

    Looks like investor uncertainty which won't be helped by the CEO selling all his shares.

    I don't follow SCTY closely and am not an investor but as far as I can tell there doesn't seem to be any weakness in the fundamentals. The market seems uncertain about how SCTY will fare with these super-low fossil fuel prices. SCTY doesn't have the same 'still-equally-attractive-even-with-free-oil' quality that TSLA does, so I think the uncertainty here is more justified than at TSLA.

    If you guys know SCTY a lot better than me you might be sure that the low oil won't hurt SCTY in the long run and might be confident that the company can keep getting big contracts. If that is the case this looks like a prime buying opportunity. As Buffet said 'Be fearful when others are greedy and greedy when others are fearful'. Well, others look pretty fearful at the moment if you ask me.
    �
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    That article inaccurately states that Solar City is "mostly" owned by Elon. He has about 21.5% of the stock and no executive role. I don't see why this issue should stick yo him.
    �
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    From a commenter on the article, here are the congress members going after solar:

    Last election, Paul A. Gosar received $11,000 from oil and gas as well as $28,000 from electric utilities.
    Last election, Matt Salmon received $30,000 from electric utilities.
    Last election, Lamar Smith received $93,000 from oil and gas.
    Last election, Ted Poe received $79,000 from oil and gas.
    Last election, Jeff Miller received $30,000 from electric utilities.
    Last election, Cynthia Lummis received $91,000 from oil and gas as well as $13,000 from electric utilities.
    Last election, David McKinley received $77,000 from oil and gas as well as $72,000 from electric utilities.
    Last election, Andy Harris received $40,000 from oil and gas.
    Last election, Mo Brooks received $18,000 from electric utilities.
    Last election, Morgan Griffith received $56,000 from oil and gas as well as $61,000 from electric utilities.
    �
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    Solar Jobs Report Shows Huge Growth

    WASHINGTON -� The solar industry reports job growth 20 times higher than the rest of the U.S. economy, according to a new analysis.
    As of 2014, there were nearly 174,000 jobs in the solar industry, according to the report from the nonprofit Solar Foundation. That represents 86 percent employment growth since the organization began tracking job figures in 2010. By the end of 2015, companies said they expect to hire an additional 36,000 new solar workers.
    �
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    Yeah right, we should believe Koch Brother's funded organization writing against CleanTech.

    Here is the full official response:
    Monopoly Money
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    Congrats SCTY longs today. Anyone still here?
    �
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    Yep. And now I'm trying to figure out what caused that bump up.
    �
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    Oil, I'm virtually certain.
    �
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    I'm not so sure, SCTY peaked a little after 11 Eastern when oil was still near the low of the day. They did announce the ER date today - TSLA got a similar bump last week after announcing.
    �
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    Could be, but oil futures trade around the clock, and they were up significantly from Friday's price at open. It's often less just about the spot price than the trend investors see as well, and if they think the trend has turned, they will bid up oil futures and (though I don't necessarily agree with reason for correlation), so-called "alternative" energy stocks.
    �
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    I own 7 solar stocks and SCTY is one of them. They all did very well today although SCTY did lead the pack. My US solars were just behind SCTY with 6-7% gains.
    �
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    pretty sure it had to do with Obama's proposal/ suggestion to extend the ITC and nothing to do with oil ;)
    �
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    SCTY earnings is this Wednesday. Anyone have any thoughts on it? They had a good run up the last couple weeks but I think they could report ok and the momentum could keep going. I'm not sure what the short interest is now but at one point about a month ago I beleive it was at 40%.
    �
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    I am very excited about this earnings call. I am crossing my fingers for an update to the 1 million customer goal by mid year 2018.

    I believe as of Jan. 15 the short interest was 34.8 percent. Short Interest in SolarCity Corp Drops By 4.1% (SCTY) - The Legacy
    It has come down but it is still heavily shorted. On Interactive Brokers most shorted by sector they have come down from second (behind transocean) most shorted to fifth.

    As far as pure dollars invested it would seem that these people are more excited about the earnigns call than me. A hedge fund aquired 5.4 percent stake in SCTY :)

    http://www.streetinsider.com/13Gs/JANA+Partners+Shows+New+5.4%25+Stake+in+SOLARCITY+%28SCTY%29/10277181.html


    I own a bunch of underwater options that hopefully will be made right with this earnings report but we shall see.

    I am also interested to hear me about the old Solyndra facility that they leased. In the Silevo conference call they talked about really ramping up R&D and it is exciting to see this part of the business ramping up.

    In 5 years when SCTY is the top panel producer everyone will say it was always really apparent they would be the top producer :)
    �
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    4Q results available at: SolarCity - Investor Relations (under Events & Presentations heading). I'm still reading, so no commentary, though certain headlines I saw suggest SCTY is down 5% or so after hours.
    �
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    Bummer for SCTY:(. I was hoping for a short squeeze after earnings.
    �
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    The earnings report looked good to me. A continuation of growth and growing prospects. The stock had taken a rise a couple of weeks going into earnings; we've lost about half that rise since. Sun Edison's results, with a similar story, caused SUNE to go up. Short term noise.
    �
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    Yeah, I was pleased with the report too. Just another year doubling the business.

    I thought shorts were simply attacking the price to nullify the news. I put a limit order in at $52.50, thinking shorts would drive the price down again, but I was wrong. So maybe we'll see the price recover soon.
    �
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    My thinking too. I setup a limit order at 52.01 but I guess I was too low, too late.
    �
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    Well maybe enough of us had the same idea that the shorts knew it would be costly. They are able to see the order book and guage demand. So for me it's good if the order goes through and good if the price is defended. I've got enough shares already that I'm not worried about missing out.
    �
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    I thought the quarter went really well too. I am really excited about the commercial jobs gaining momentum because of the new mounting hardware. A 2-3 week installation only takes 2 - 3 days.

    I was hoping they would guide for 2016 but it would make more sense for them to do that next earnings call anyway
    �
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    guest
    I was under impression that SunPower was competing with SolarCity on residential solar market in US. Today was an earning report from SPWR. So it was a good timing to take a look and do some research and here is the numbers I digged out:

    iWqlZpL.jpg

    So essentially SunPower is becoming irrelevant on US residential solar market. In Q2''13 they installed ~2.4 times less MW then SCTY, now they do less than a one tenth. And a year ago SPWR guided for 320 to 350 MW recognised total worldwide in Q1�14, now they are guiding for 240 to 270 MW recognised in Q1�15. Solar market is growing while SunPower installing less MW. And SunPower revenue gone from 758,192 in Q4'13 to 609,661 in Q4'14. Writing is on the wall.

    SolarCity had 39% of residential market share in Q3'14. In Q4'14 SCTY installed 24.5% more MW than in Q3. So most probably SCTY increased it marketshare again. Waiting for Vivint Solar report on March 4.

    US-PV-Installer-Market-GTM.png
    �
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    Google invests $300 million into Solar City and no-one comments on this forum? Interesting observation about what companies investors are not currently paying much attention to.
    �
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    I agree, with drinker. I expected to hear comments on this forum about the 750 million fund and Google's 300 million addition to it. I don't understand what is in it for Google. As a SCTY holder, I like it though.
    �
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    Hi all,

    I am trying to wrap my head around what the value is of solarcity as a company.

    Could someone please explain to me what the difference is between
    1) the contracted customer payments, which stands at US$5B (from the Q4 result presentation)
    2) the retained value forecast of US$2.423B (from the Q4 result presentation)
    3) the leased and to-be leased solar power agreements of US$2.796B (from the cost methodology)
    �
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    And an extra question:
    Does the tax incentive of 30% hold up until 2017 or throughout 2017?
    �
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    Just bought an initial position at $50.50. Has gotten hammered since the last ER. Long haul should be just fine.
    �
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    FWIW I think the last results were very bad compared with previous quarters.
    Mw booked dropped! to 206. While MW deployed went to 176 meaning the backlog barely rose.
    If they cant pull up there sales soon, they will have to stop the acceleration of production.
    The 920-1000 MW for 2015 doesnt look like a near certainty from where I'm sitting.

    Whats worse is that even when they booked less than in quarter 2 (218 MW) and 3 (230MW) the sales cost kept increasing to more than 75 million now.

    At the same time, the increase in retained value is also going down.
    In the 2nd quarter this was half a billion! Now its just half that.

    I wont comment on what my perceived value is of the stock but since the market didnt like the result of the second quarter, they should hate the last quarter.

    If it falls through 47 we could see low thirties fairly fast.
    �
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    What's not to like? Gross profit is up 100% from prior year, and GM is 31%, up from 24% prior year. Net loss to shareholders is about the same as last year. So this is truly spectacular growth with solid cost control.

    Apparently the sun does not shine as much in Q4 as in Q3. So be very careful about comparing different quarters of the year. All forms of construction and energy are seasonal. Summer is the big money quarter for SolarCity.
    �
  • 1/1/2015
    guest
    SolarCity is not happy about this:

    SolarCity Files Lawsuit Against Salt River Project for Antitrust Violations : Greentech Media

    �
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    Not sure they have a leg to stand on. $50 a month isn't punitive. Perhaps, though, SRP should have had a tiered rate depending on system size.
    �
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    SolarCity is wasting its money if it thinks this lawsuit will succeed. The idea of using antitrust statutes is clever, but it can only succeed if SolarCity can demonstrate that the rate structure is not supported by costs. Speaking as someone who has testified about rate design at my state commissions, SRP will have no trouble at all defending this rate design as cost-based.

    What SolarCity might achieve with this lawsuit is sending a message to other ?utilities that they will get into a nasty legal battle if they follow SRP's route.
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    Is it possible to have a solar + storage system that is off grid in addition to a grid connection? Use your solar + storage whenever possible and use the grid when you run out. In that way the utility doesn't need to know that you have solar, you don't pump anything back to the grid. Excess power is sometimes wasted and you need a large battery. But 50$/month is completely unreasonable. How much power can an average residential solar system produce? 100$/month worth?

    If the utility charges 50$/month to connect that to the grid, it is punitive compared to the 100$ worth of power produced. I can understand the utility paying you a lower rate for your power than they charge to supply you with their power but a flat fee makes no sense. It would make more sense to have the kind of system I described above for the extra 50$/month than paying the utility. Longer term utilities are shooting themselves in the foot if they think they can get away with this.
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    I don't know about the technicalities, but it rate payers with solar get pissed off enough with the utilities, Tesla and SolarCity will have little difficulty selling home grid storage systems to red blooded Americans. Controversy and showing how punitive the utilities are is really good PR. Think of how much free publicity auto dealers have given Tesla by trying to block their stores. Now we've got a utility in AZ that wants to the rump for solar+storage.

    Any chance this was timed for the unveiling of Tesla's next product?
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    What about the fact that they are not charging all customers the same rate? Aren't they discriminating against customers with solar because they're not charging the same fee to other residential customers?
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    I'd have to read the actual tariff filing, but they've probably got that covered. Utilities have long had a "standby usage" tariff for customers who met part or all of their load with on-site generation (e.g. factories that had cogen electric and process steam) but wanted to assure they had power even if their on-site generation failed.
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    Here is what folks at Bloomberg think:
    **
    SolarCity Powers Up Antitrust Lawsuit Against Salt River Project


    A March 2 SolarCity antitrust lawsuit accusing the Salt River Project electric utility of trying to monopolize the retail provision of electric power may have staying power. At issue is a new Salt River pricing plan that allegedly imposes higher rates on customers who choose to use home solar panels for some power generation. Asserted facts in SolarCity's complaint, which claims that the price changes were intended only to exclude solar competitors, appear sufficient to meet the bar for pleading an antitrust case.

    **
    Salt River Project Unlikely to Short-Circuit SolarCity's Lawsuit


    Salt River Project is unlikely to be immune from SolarCity's March 2 antitrust lawsuit against the electric utility. Regulated utilities, even if they're lawful monopolies, don't have blanket immunity from antitrust laws. While application of antitrust laws to these entities may be limited in some respects, in this case, where the utility is allegedly using its market power in one market (grid access) to monopolize a second market (retail provision of electric power), antitrust liability may apply.
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    Technologically, I think we are past the point where granting monopoly status to utilies serves a public good. I am able to get phone service from my choice of providers, natural gas, and satellite or cable television. But in the state of Georgia I have no choice of electric utility and companies like SolarCity are legally barred from leasing power generation equipment or writing PPAs, because only utilies are granted that privilige. So as bad as it may sound in Arizon, it's even worse in Georgia.

    If SRP ratepayers had a choice in power providers, this sort of rate plan would not stand.

    I'm tired of utilities arguing that it's not fair to have to provide back up capacity to solar residents who don't need much volume, or to have to pay feed in tariffs. They should give up their monopolies and let some other provider cover the capacity requirements or pay feed in tariffs.
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    Bloomberg hasn't spent 25 years working in utility regulatory law. I have. I haven't carefully read the complaint, however, so Solar City's lawyer may have come up with a clever angle I haven't considered, but I doubt it.
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    Standby usage tariffs are common for commercial customers, but for residential they are usually very small or nonexistent. Perhaps you can explain how the utility can get away with a rate structure where one customer without solar doesn't have to pay the tariff while another customer with solar has to pay it, even if they both consume the same amount of electricity each month. There are other reasons why a customer might not use much power in a month, not just solar. I don't think Tesla is complaining about this and is taking an antitrust angle instead.
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    I am completely unable to value it.

    I can't explain it all. But I *can* tell you that SolarCity is engaged in securitization. So: they lease a solar panel to a customer. But then they turn around and put the solar panel into a trust, which collects the lease payments. Then the trust issues stock or bonds, and these are sold off to banks and investors for upfront money. (The bondholders pay Solar City a lump sum, and in return get the lease payments in the future.) Solar City only collects a small management fee in the future; they no longer "retain" the value of the lease.

    I have no idea how this is structured for a PPA, but I'm sure there's something similar. There are also quite likely to be a lot of variations in the exact structure.

    But the basic idea is this: Solar City fronts its own money to buy the panels and put them up, but SolarCity immediately turns around and resells the panels (and the income stream from the PPA or lease) to investors, recovering the upfront money immediately (hopefully with a profit).

    So that's why retained value can go down even with contracted customers going up. It indicates increased securitization.

    This sort of securitization is a form of off-balance-sheet accounting. As such it completely conceals the true economic state of the business; the state of the business cannot be determined from its earnings or balance sheet. This is why I cannot evaluate Solar City; it requires a lot of very in-depth research to figure out exactly what's going on with the securitizations, and how much risk is retained by Solar City.

    I want to be clear: I'm not saying that the situation is bad. I'm saying that it is *hard to evaluate* because of the complex financial structure. If you can evaluate it, more power to you (and I'd love to read your analysis).
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    Might be significant that Solar City is scheduled to speak today at 12:30 at the ROTH investor conference. I'm posting this in both the Tesla and Solar City section since it might be relevant to both.
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    GridLogic

    SolarCity Launches GridLogic, A Global Microgrid Service
    We need to discuss the implications of SolarCity and Tesla getting into the microgrid industry. This could take SolarCity deeply global. This also could set infrastructure in place for selling EVs in places where utility grids are substandard or nonexistant. This could be huge.
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    I got an email from my neighbor who is a Georgia state representative. She cosponsored bipartisan bill to allow solar installers to offer leases and PPA based financing in the state. The bill passed the House with no opposition.

    If this become law, and I expect it will, then SolarCity and competitors will finally be able to bring their business model and financing to Georgia. I believe Georgia will quickly become an excellent market for rooftop solar.

    Yay, Georgia!
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    Indeed!
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    @jhm Do you have a link to the bill or more information? When does it go into effect if passed? I wonder if SCTY will open house in Georgia right away since it's outside of their two current operating zones.
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    Interesting thought. I think the solar-battery microgrid business would be a viable solution for many towns and villages in Sub-Saharan Africa. There's a lot of countries with disastrous grid and power plant infrastructure.

    Do you have information that SolarCity is willing to go global?
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    HB 57 2015-2016 Regular Session
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    No word yet. They do have an NPO that is bringing power to communities in underdeveloped countries. While many of this location may not have the economics to pay for such a system, it is an excellent test bed for this technology. So we definitely know that SolarCity is contemplating the potential to leapfrog power grids. It remains to be seen where exactly the best commercial opportunities will emerge. The global market for this is vast. India has the highest growth rate for power consumption and MENA follows close behind India.

    Another thing to consider is that SolarCity has been doubling it's business annually for a while just operating in a few states. To maintain that pace of growth, they will need to expand their footprint. Georgia should open up soon, but over the next 5 years they really do need to go international. GridLogic could take them virtually anywhere.

    Let's keep our ears open for announcements.
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    Anyone want to speculate about why no one is discussing the developments at Solar City? The flat activity in this thread is representative of the movement in the stock :confused:
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    I don't know. I think GridLogic is a really big deal for both SolarCity and Tesla, but few seem even remotely curious.

    How about this? U.S. Energy Storage Market Could Triple This Year - NASDAQ.com

    This group anticipates stationary growing 67% in MW per year over the next 5 years. This only factors in a $/W reduction of only 9% with just 800 MW @ $1.875/W in 2019. So this view seems ignore the contribution of the Gigafactory which could be as much as 15,000 MWh or 7500 MW power @ $0.50/W or $250/kWh, excluding installation and siting, which could be borne by ratepayers installing behind-the-meter. This puts Tesla storage potentially cheaper than a new NG plant at $0.90 to $1.80 per W. Thus, Tesla could be a really cost competitive source of peak capacity. So by 2019 Tesla could totally rock this market.

    But nobody's really interested in that.
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    I remember this thread and the 'Alternative Energy' thread being hot in 2013/beginning of 2014, but I think a lot of people moved over to this site:

    The Contrarian Investor

    Which is unfortunate, because I liked the chatter here. Just another place I have to go now.
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    That site seems inactive. Last post I found on the main page was dated Jan 5, 2015.
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    jhm, I am very interested in your calculations and insightful future projections. Thank you for posting.

    Perhaps this post could get more attention if it were placed in gigafactory thread or perhaps a new thread on energy storage potential. That would be great.

    Most people here are Tesla investors, and only some have an interest in Solar City.

    I had an investment in SCTY in the initial stages and got out of it after few months, after doubling my investment. I got out because I thought that SCTY operates in very crowded space, plenty of competition, without clear competitive advantage. The only differentiation that SCTY has is its business model that involves financing, which I like, but that may not be enough to separate it from the pack. I will be happy to be corrected.

    Back to your great post on energy storage potential, I think that if the value is unlocked as you project, TSLA shareholders are likely to be the main beneficiaries as TSLA controls energy storage, not SCTY. Hence, your post did not get its deserved attention in this thread.
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    It's a bit unclear where a discussion of GridLogic should belong. It is a new microgrid as a service from SolarCity, but at heart the energy storage and management devices are from Tesla. So any Tesla investor interested in the stationary storage market needs to pay attention to both SolarCity and GridLogic.

    What sets SolarCity apart is their market dominance strategy. They are by far the largest solar installer in the US. They have put a lot of resources into minimizing the total cost of installation, and if I recall correctly they've driven the down to $2.86/Wp, with installation accounting for $2.09, making rooftop installations nearly competive with utility scale installations about $2/Wp.

    Now here's what I find so interesting about GridLogic. They are developing a nearly plug and play, intelligent network approach to rolling out interconnectable microgrids AT A COST COMPETITIVE WITH UTILITY SCALE GRIDS. So these microgrids can be rapidly deployed at below utility cost and scaled up and interconnected as needed. Central to these GridLogic nodes are the intelligent storage devices that not only store energy but perform intelligent power management. I figure Tesla can sell this as low as $0.50/W and still make a 30% gross margin. But even at $1/W for storage and load management this is competitive with gas/coal/oil generators in the $1.8/W range and $0.9/W for combined cycle natural gas. Here we are only looking at the cost of capacity, not the cost of energy/fuel. As a source of both capacity requiring not fuel, solar comes in at $1.9/W and wind at $1.5/W. So GridLogic can integrate cheap renewable energy with fossil fuel generators for backup minimizing both the capacity of back up deneration needed and the amount of fuel used. Since this is a microgrid, large transmission lines are not required, but may be integrated if available. Users within the microgrid can each have meters and gateways to measure the amount of energy consumed and generated. GridLogic suppoers billing and reporting functions. Individual users may connect whatever energy storage and generation assets they may possess. So Teslas Home Grid Storage device will be plug-and-play within GridLogic. With such a device the end user can support power needs in excess of the capacity of powerlines connecting the end user to the microgrid. That is, the Home Grid device can charge at a daily average rate, say 3kW, but discharge when needed at much higher rate for peak demand, say 10kW to rapidly charge an EV. Reliability is also enhanced as storage is distributed across the microgrid. So the infrastructure needed to distribute power can be kept to minimum, it is scaled to daily energy transmission needs and not instantaneous peak power demand needs. So if the cost of generation is competive with utilities, the cost of storage and load management is lower than utilities, and the cost of distibution capacity is smaller than utilities, then the whole system (capacity, energy and reliability) is cheaper than a utility.

    Just as SolarCity has worked to squeeze out and finance the total cost of rooftop installation, it can squeeze out and finance the cost of expanding power grids with intelligent and efficient microgrids. In places like India and MENA, GridLogic could expand at much faster and cheaper rates than traditional utilities. Think of this like how cell phone networks have leapfrogged past traditional landline telephone companies in remote and underdeveloped regions. Microgrids can thrive where for over a hundred years centralized utilities have found it uneconomical to provide even basic service. The growth of demand for power is highest in India and the Middle East is second highest. SolarCity has the opportunity to deploy new utility access faster and cheaper than any player expanding the grid.
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    Sounds great. Anywhere there's not already existing power infrastructure can simply skip installing power lines from the main grid and go with this micro grid, which is cheaper anyway and cleaner. Distributed generation.

    And in places where power lines already exist we are seeing friction (Arizona most recently) where the incumbent doesn't like distributed generation happening on roofs.

    Years ago people would go solar because green even given the high cost. Now the cost is cheaper than fossil fuels, and it's still green, with really no downsides (aesthetics?) especially with storage mixed in, have we reached the tipping point? SCTY thinks so, hence their own gigafactory being built in Buffalo for panel production.
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    The GridLogic vision (or, more generally, micro-grids built on solar) would be great for new housing subdivisions in AZ and SoCal. Require that each new house have at least x kW of panels, and design the homes to incorporate those gracefully and in a variety of orientations to extend the solar generation as long as possible. Don't even bother interconnecting to the electric utility, so they have no control over anything. Install a shared storage & backup generators (high-efficiency NG fuel cells or Sterling engines), and you're done.

    This is easier to do on new construction, so you don't have to negotiate with the utility about ownership of the lines between the houses.
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    Maintenance of these micro grid power lines and backup generators would be a great biz for the incumbents to pivot into...
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    The solar forum on the Contrarian Investor is very active every day: Solar | The Contrarian Investor Discussion Board
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    They don't update the front page very often, but the forums are buzzing with info.
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    Here's the beauty of SolarCity's business model. They are pursuing microgrid-as-a-service. They design, install, finance and maintain the system. This is just the logical extention of their solar financing model. Potentially all components of the microgrid could be leased from SolarCity, but any owned components could also integrate into the microgrid. So it gives the end users the ultimate flexibility to arrange financing and ownership to meet their needs.

    If you look at the report from the National Bank of Abu Dhabi, you'll see that much of the challenge in meeting their region's growing power gap comes down to financing. And as a bank, NBAD sees this need clearly and wants to cultivate the financial markets to support this endeavour. I happen to view SolarCity primarily as a finance company. This is their genius. For a long time, centralized utilities have enjoyed financing advantages over smaller more decentralized players. So the big enabler for distributed power generation and sharing is leveling the financial playing field. Meanwhile there is a fossil fuel asset bubble looming, as utility investors start to wake up to the reality that many of their energy assets are overvalued due to obsolescence in the face of solar, wind and battery technologies, it will become increasingly difficult for utilities to get the kind of financing they are accustomed to. It is becoming increasingly difficult to finance a new coal plant today, for example, because high integration of renewables put utilization assumptions into serious doubt. That is, banks and the financial market just can't be sure a new coal plant will be able to compete and pay for itself over the next 40 years. So traditional utilities will be met with increasing skepticism from the financial market, while players like SolarCity will find it easier to bundle distributed energy assets and PPAs into asset backed securities and sell them on the bond markets. So the financial playing field is becoming level and may even tilt in favor of distributed power. Definitely SolarCity knows how to play this game.
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    That's a very common misconception, popularized by a few strong willed folk, who don't write much here anymore. These folks have been saying that since the beginning (or since the IPO).

    SCTY market share increased from 6% in 2009 to 17% in 2012(IPO time) to 39% in 3Q14.

    This is "market share" growth.

    Per latest available data, their residential installations exceeded the next 70 competitors� combined!

    See the latest presentation at SolarCity - Events Presentations

    If solarcity didn't have a competitive advantage why is it's market share growing??

    It's very simple, their economies of scale is helping them out at every level from financing to operations.

    This will continue to play in their favor for a long time into the future.
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    I'm hoping that GridLogic / SolarCity have hired some very good regulatory lawyers. There are aspects of this business plan that look strikingly similar to an electric distribution company (e.g. Southern California Edison)--they own and maintain a power grid for use by the customers, over which they sell power. It's going to be a state-by-state question about how far GridLogic can go without (a) violating the exclusive franchise of the incumbents and/or (b) becoming a rate-regulated utility. This could shape up to be a battle like that Uber is facing. Utilities are much better lawyered-up than the taxi cab companies, though.
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    Interesting indeed. From a bigger perspective it's always interesting to see how disruptive new businesses always seem to touch on and get in trouble with established business model who very often have the benefit of different forms of legal protection. Points in case:
    Uber vs. Taxi companies
    Solar City vs. Utilities
    Tesla vs. Dealers

    I guess identifying these kinds of conflicts early could be a good indicator of where to invest if you're looking for disruptive ideas?
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    I have not followed SCTY for more than a year so I can easily be wrong.

    My guess is that their market share growth is due to their ability to eliminate capital investment hurdle for their customers. That is very attractive proposition for many people. When a potential customer weighs their current utility service vs Solar City utility service, the benefits of going green and paying less are on the one side and there is no clear downside in that equation.

    Some people prefer to own everything including their solar panels and they are unlikely to become Solar City customers. As panels are becoming cheaper, capital investment hurdle becomes lower and thus Solar City might be loosing this advantage over other solar providers.

    The strength of Solar City is in their footprint. They are building a distributed grid network that they own and lease and the size of that network grows with each customer, thus adding incremental value to Solar City business. That business will be enormously reinforced with GridLogic value proposition.
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    Currently, they can offer power at $0.13/kWh in markets where the utility rates are in excess of $0.16. This is an addressable market of $60B. Their cost of installation is $2.09/W. If they can drive this down to $1.90/W in 2017, then they should be able to offer power at $0.118/kWh. This would have the impact of expanding their addressable market 20% to $72B.

    The implication of the declining cost of solar is that they can offer new systems at lower rates and address a larger market. So I'm not particularly worried that solar will become cheap and undercut their business model. Just the opposite, as solar becomes cheaper SolarCity will undercut the utilities and gain market share.

    You make a good point about a distributed grid growing in value with each incremental customer. To Robert's point, they'll want to be very careful with crossing legal lines that limit their business model. My view is that GridLogic will make the most sense in regions that are underserved by utilities. That's why I am enthusiastic about India and the Middle East where growth in demand for power is highest in the world. GridLogic will be offered worldwide. It would be a real kick to see it get started in a place like India and just start doubling every 9 months. Then we'd see both SCTY and TSLA take off.

    - - - Updated - - -

    I wonder if the Gigafactory itself may serve as a test case for GridLogic. They will be integrating PV, wind, geothermal, grid power and batteries. It could be a compelling demonstration site.
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    I am sceptical about business expansions to low maturity markets, like India and the Middle East. That is an option, but usually quite difficult and may require long time to be successful.

    The hurdles to overcome are different remote language and culture, often disagreeable local and wider politics, undeveloped financial markets. These are not empty words, these are real obstacles for business expansion, as business must overcome local nepotism, corruption and other similar phenomena that appear during the developing stages of society.
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    You might consider India's ambition to install 100GW of solar by 2022. Rooftop PV and microgrids have a role to play. Already rooftop installations are providing power at 8 Rupees or $0.13 per kWh.
    India's Solar Ambitions Face Challenges | MIT Technology Review
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    I do not doubt India's ambition to install large solar capacities.

    I doubt young business willingness and capability to bridge a huge maturity gap in establishing themselves in a culturally remote societies. The rules of the game are different in these societies. Foreign business must play by both the local rules and by their corporate rules. These rules might be conflicting or difficult to align. That is costly.

    Obviously these hurdles can be overcome. Mature businesses with a lot of cash on their balance sheet have much better odds than young developing businesses.
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    I feel lots of negativity coming from you man, you need to feel the flow:

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    ggies, I appreciate your creative expression of your personal sentiment, but I fail to grasp your arguments in this discussion.:smile:
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    I have worked and been friends with many people from India. I have no doubt that SolarCity would be able to staff their operations in India with very capable, intelligent, well educated and hardworking persons who understand their cultures, languages and politics quite well in addition to all the technical knowledge and skills. Indians themselves will be able to electrify their country, and companies like SolarCity can briing an effective business model, product innovation and financing capability to facilitate this transition.

    The hang ups that India has had around expanding their grid is that it has been a highly centralized and burueacratic endeavor that depends very heavily on government intervention. This government centric approach has left over 20% of India without any power and with grids that are very unreliable otherwise. The beauty of GridLogic is that it builds efficient and reliable microgrids from the highly local out to fully interconnected. This is a bottom up approach in contrast to the top down approach that as yet to succeed in India. What you will see are little islands of inexpnsive and reliable power string up a few businesses here and a few homes there. On the success of a nearby microgrid others will want to join in and still others will want to start their own microgrid. So these little islands will pop up and grow, and in time they will become quite interconnected. I think that GridLogic has the potential grow much faster than any state run grid or large utility. There is a reason why SolarCity is the fastest growing electricity provider in the US where the utilities are quite good and quite well connected politically with legal monopolies to protect them from competition. It happens one customer at a time, one rooftop at a time.
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    India has another problem with solar: dust. A good friend of mine who is both Indian and a chemical engineer has a lot of experience with solar panels in India. The airborne grit is much finer in the Dehli area than in the U.S., and if it's not removed from the panels on a regular (daily, or daily+) basis, the particles begin to weld onto the glass surface. There will need to be advances in the panel surfaces and/or automated cleaning technology, he reports, in order to avoid rapid degradation of panels.
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    A few days ago I saw a picture of people cleaning panels in India and they were surprisingly dirty! So after reading your comment, I googled it and here is what I found:
    india solar panels cleaning - Google Search
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    The main risk that I see in Solar City spreading to India is the incompatibility of leasing business model with the economic and financial environment.

    LeaseIndia.PNG Leasing.PNG

    What happens in a scenario: people sign up for panels with Solar City, as there is no downside for them in doing so, and then along the line stop paying as they can not afford it? That is one of the risks that is likely to be higher in less financially and economically developed markets.
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    An advantage of India though is that the current government is very supportive of infrastructure development, particularly power and particularly in remote communities.
    It is common for (local and regional) government to provide substantial capital to businesses that are interested in implementing projects that will help development efforts.
    I believe Modi is very serious about turning India into a modern economy and so we may see the regulatory and business environment improve in India, which along with serious willingness to drive sustainability and development and a highly tech-savvy people/economy at least gives hope that India could be a fantastic market for SolarCity.

    I actually have an unrelated involvement/interest in off-grid electricity provision in India and can say that the Indians are very well acquainted with the concept and most have very favourable views of generating electricity locally and independently from the national grid.

    I'm not saying that India won't be a very tough market to penetrate or denying the difficulties of language/cultural barriers and the incompatibility of SC's business model with the Indian norm, but in terms of the product itself, I think India is a fantastic fit and could be a HUGELY lucrative market if the barriers above are overcome.
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    Leasing is just one form of financing SolarCity provides. They mostly offer power purchase aggreements (PPA) wherein the customer pays per kWh used. In the US, the delinquency rate that SolarCity experiences is substantially lower than for mortgages, which have the lowest rates among consumer debt. Customers poy their PPA bill to SolarCity because they want to continue using power and utility rates are higher. So while there may be temptation to skip a car payment or even a mortgage payment, the power bill is one of the very last a person might skip. There is a certain amount of credit risk with any service contract. The state grid offering lower to an customer has just as much credit risk as SolarCity. Naturally, SolarCity would want to pull credit scores on any customer, whether in the US or India and screen out poor credit risks. SolarCity city has also develop an innovative new solar loan which as I recall ties interest payments to the consumption of energy, which protects the customer from the risk of underperformance of the system. In return for abslrbing this risk, SolarCity realizes higher retained value per watt on this product. The key point here is that SolarCity is very creative about developing its financial products. They offer outright sales, solar loans, monthly leases, PPAs, and on the deposit side they have solar bonds which pay better than CD rates to retail investors. Which products are most suitable in India remains to be seen, even so each product would have to be constructed to work within India's legal, tax and regulatory framework. This is a given. There may even be subtle issues that motivate innovation of a totally new financial product. Off the top of my head, there may be contexts where prepaid plans make sense. For example, a prepaid phone plan could have an embedded prepaid charging plan. Here SolarCity could contract with the company selling the prepaid phone credits to pag them so that the phone user may charge at SolarCity charging stations. This may seem pretty far fetched in places like the US or Australia, but in super remote and grid isolated places in India there may be lots of cell phones and other portable electic devices, but no place nearby to charge them. I'm not saying this is a plum market, but there may a context for it. Any in case, SolarCity is very innovative financially, so I am confident they can figure out what will work best in any particular context. In the view of Robert Shiller, all finance is technology. So it comes down to figuring out how to make it work.
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    jhm, I agree that every problem has a solution, often quite creative one. Developing markets present a great expansion potential for many businesses and many businesses do expand very successfully.

    The timing of such expansion is relevant. Solving all the unusual problems in foreign markets costs a lot of money, takes a lot of time and occupies a lot of business resources. For these reasons, such expansion is well suited to mature cashed up businesses that have resolved most of their domestic issues. Jumping to a foreign different market may seem premature if a business is still establishing itself in a more secure and familiar domestic market.

    Perhaps Solar City is ready for foreign challenges and I wish them all the best as only good can come out from what they do, in whichever market they take their business.
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    SolarCity has locked up 43% marketshare in US rooftop solar. They double their deployed MW every year, 1GW reached last year. They are truly at the top of their game within their familiar domestic market. However, within the next several years, they seriously need to address new markets if they are to continue their present rate of growth. Certainly they can move into a few more states and sell more storage with each installation, but this is pretty much BAU for them. They've got a nkce 1 mlion customer goal for mid-2018. This takes them to 6 GW deployed and will probably multiply their retained value 6 times as well. This could take thier stock to $250 to $300 in 2018.

    This would all be fantastic, but where do they go after 2018? This is why I am so keen on them developing GridLogic and taking it worldwide. It represents an evolutionary step forward from mere rooftop solar, and it addresses an incredibly large market. In the next two years, I'd like to see SolarCity build some really good demonstrations for GridLogic with a binder full of case studies. This is developmental work. Once the Gigafactory can produce stationary storage at scale, SolarCity should be in a good position to move aggressively with GridLogic. They can't really get ahead of the Gigafactory, even if they wanted to. But this gives them a few years to develop and refine their microgrid-as-a-service model.


    Tesla investors should also recognize that they have a lot at stake in whether SolarCity can pull this off. If they succeed, then Tesla should move quite dynamically in the stationary storage market. Either utilities will pay top dollar for storage, or a much more nimble SolarCity will usher in disruption. OTOH, if SolarCity does not succeed, then utilities will largely only buy what storage is required of them. Storage has the potential to send much of the fossil fleet to early retirement if the disruption is deep. India is one of the very last countries to be installing new coal plants. China is choking on too many coal plants thrown up in its haste to become an economic superpower. Should we wait for the rest of the developing world to take the same path? The best chance Tesla has is to disrupt with impunity.

    - - - Updated - - -

    How much of that is pollution?
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    As applied to India, this is a real howler. Pay for electricity? in India? There's a reason that the electricity infrastructure is in disarray: power plant operators don't get paid because distribution companies don't collect. Heck, a lot of the power isn't even metered. We call the gap "non-technical losses".

    This isn't to say that there aren't models that could work, but they'll have to pay up front for the gear. For example, treat the solar panels and micro-grid the same way you would treat the communal water-well, as a government cost, paid by taxes.
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    Any coincidence that Elon Musk and Bill Gates will talk together at this years BOAO Forum for 2015 Asia (Sunday, 2015-03-29)?
    Some kind of partnership here in the future?
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    Slandering solar is not about protecting taxpayers, but utilitys monopoly status | TheHill

    It may time to attack political support for power monopolies.

    Utilities have long complained about having to pay feed in tariffs for excess solar power, but give me the right to sell my surplus power to my neighbor and the utilities can offer whatever they like. If I offer power just slightly below what my neighbor is paying the utility, then my neighbor will gladly buy from me.

    This is the basic test of a free market: can I sell my surplus to my neighbor? If I can, then networking solar panels and other microgrid resources becomes a powerful economic force.
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    Question; since the utility installed and maintains the power lines you would need to use to power your neighbor, what cut should the utility get?

    I pay $7.21 as a connection fee. My guess is the costs to maintain the transmission grid are likely higher.
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    They can charge whatever they want so long as my neighbor and I have the right to establish our own power line on our own property. Yes, I am assuming that the properties are adjacent or connected by common area such as HOA owned property.
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    In most jurisdictions, you do not have that right. A utility has been given the distribution franchise, and stringing up a competing network crossing property lines is illegal in the jurisdictions I'm familiar with. Georgia may be different, but I don't think so.
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    That is exactly the privilege that must be challenged. It is clearly anticompetive and contrary to a free market, though it has been enshrined in law for generations. The laws should be changed.

    Until monopoly privilige is surrendered, I think the utilities have no moral grounds to complain about having to accomodate solar power. On a daily basis, solar power is politically attacked as being contrary to free market principles, and yet there can be no free market when persons cannot legally sell surplus power to the highest bidder. Barry Goldwater, Jr., is right to point out just how incredibly hypocritical that is.

    - - - Updated - - -

    Samsung, Tesla, Solar Firms Pursue Battery Microgrids TSLA SCTY ABB - Investors.com

    Other companies are teaming up to go into the microgrid business. SunEdison is specifically looking to enter India.
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    That privilege was acquired and paid for by utilities. Part of utilities' business value is based on the franchise rights, which belong to them. It is difficult to retroactively take away these rights as that would be akin to taking away and socialising private property. Not many people would approve such principles. Such actions, if carried out, destabilize economic environment as businesses then operate in an uncertain environment with the possibility of being de floored at any time by different rules. Established businesses, like utilities and dealers, require some time to readjust to different rules. Eventually they will lose out to newcomers and new rules, but granting them some grace period for readjustment may work better in the long run.

    Going forward, things can and will be different. Solar producers can either build their own grid or contribute for the upkeep of the existing grid if they wish to derive benefits from that grid.

    What is stopping neighbors from building the connections themselves? Perhaps they do not wish to pay the price of building mini-grid. If 2 neighbours decide to build their own network, it then belongs to them and it would be wrong for the third neighbour to come along and claim free connection rights. It is a simplistic representation but may fit here.

    Regarding paying for electricity, there is an interesting movie, "The Light Thief", about Afghanistan village and how villagers creatively steal power. The respected village electrician, 'light thief', gets called if someone is disconnected due to not paying and he illegally hooks them back up to power poles and tampers with their meter. That is a crime but is not considered a crime by villagers, it is a way of life. This is extremely difficult to police and enforce if the enforcer is from the same village. People in such environment develop different values, it seems cruel and unjust to them that they are denied access to power just because they can not afford it.

    If any business like Solar City dares to venture into markets like that, it has to be prepared to make choices which could easily be labelled heartless and cruel.

    Paying up front for the gear is a huge hurdle to overcome in any society.
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    Actually, in such a context, I think microgrids are advantageous. It is one thing to steal power from a big business or government at some distance from the community. But with a microgrid, one is simply stealing from ones immediate neighbors. If neighbors want to share power when one neighbor falls on hard times, they are perfectly free to do so, and that is what neighbors do. With large utilities, this sort of neighborliness is not possible.

    Regarding SolarCity, I would encourage people to take a look at their non-for-profit outreach GivePower Foundation. The video is quite moving. Solar Power Projects - Solar Energy for Schools without Electricity
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    This is actually a great point. The poorest Indians are not the ones who are likely to be micro-grid clients. Businesses and middle class who want a stable electricity source are. The stealing of electricity makes the case for solar stronger, since it weakens the grid.
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    Slave owners felt they had a legal right to compensation for loss of property when slaves have been emancipated. In some countries, governments actually provided such compensation.

    What is stopping neighbors with adjacent properties from installing their own private connection is apparently the laws which gave this exclusive to local monopolies. This is exactly what I am arguing with. My neighbor and I have lost a really basic property right long before either of us were born.

    In Georgia, this exclusive right to power distribution was so strong that a company like SolarCity could not enter in to a PPA with me wherein they would install a solar power system on my property and I would pay per kWh used. This is how strong the utility laws are.

    However, the Georgia House of Representatives has recently voted on a bill called the Solar Power Free-Market Financing Act. It passed with no opposition. The Senate must also pass this legislation before it can be signed into law by our governor. I hope it does pass. Yes, it will erode the privilege that the utilities alegedly paid for some time ago.

    These are laws, not inalienable rights. Legal monopolies only exist for the greater good of society. Once a democracy deems these franchise laws have outlived their usefulness, they can be changed.

    The fact that companies like SolarCity can offer power at a discount to the utilities demonstrates that the utility monopolies have outlived their usefulness to society. Rate payers can actually lower rates when companies are allowed to compete for the ratepayer's business.

    Every month I must pay Georgia Power about $7 as a cost recovery fee for a nuclear power plant they have not yet built. It will still be several years before this plant will start producing power. Many of us don't even want an new nuclear plant in our state, but we are all forced to pay for it whether it gets built or not. If Georgia Power had to compete for my business, that is if I had any choice, they would not get away with forcing my neighbors and me to prepay for a nuclear power plant we don't want. Upto this point, they have prevented solar installers from providing financing which has largely kept rooftop solar out of the state. Yet the utilities will tell you that solar cannot compete in a free market, which in a way is true because no free market exists so long as monopolies are protected by force of law.
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    In my opinion, Solar City will offer battery storage for free, to Solar City customers with a PPA, but will charge those who choose to buy panels from Solar City, a fee of some sort, that perhaps includes some sort of discount to what Solar City will charge other companies or those who choose to only buy the battery storage systems.

    My guess is Tesla will make its batteries available to all Solar Panel producers and installers, however Solar City will charge these companies a bit more. This will act as free advertising for Tesla, since the battery storage units will have Tesla's logo on them. This will be very beneficial for Tesla's brand awareness and sales.

    This would guarantee that Tesla's Gigafactory is at capacity by 2020, at which point, a second and perhaps third Gigafactory will be nearing completion. Batteries are very heavy and therefore cost a lot to ship. When Tesla says it plans to begin producing in China, I suspect Elon meant Tesla will be producing batteries for China, in China, to significantly reduce the cost of producing the final product, and to partner with Chinese companies, and the Chinese Grid. These partnerships will benefit China, Tesla, and Chinese consumers. By establishing strong partnerships in China, Tesla is very likely to get added to the list of companies and vehicles eligible for subsidies in China.

    Anyone see a problem with this logic?
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    I am not advocating for keeping the existing order, but for the grace period to give people time to adjust to changes. That grace period is given by a cumbersome electoral and legal system which move at slow speeds. Faster and more effective electoral and legal system is likely to provide faster changes in social and business landscape.

    It is inherent in monopolies to not give their power away, why would they. The onus is on the new entrants and voters to act to enforce the change, monopolies are behaving as expected. That is how it is in the democratic society that people collectively built, there is no one to blame for the outcome if everyone plays by the rules, as monopolies seem to be.

    I find it surprising though that neighbors are not allowed to lay an underground dc cable on their properties that connects their batteries if they are both off the grid.
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    Just had my Solar City PPA system installed today (2.6kw) Cannot wait to turn it on! Sold my scty stock to pile it into Tesla several months ago. Team leader said battery packs for all Scty systems are "on the way". I feel that in my investment time frame that my Tesla stock will do better than Scty but I wanted to "support" Solar City!
    :biggrin:
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    TMC members in another thread are noting the pop upward for the TSLA share price based on Elon's tweet teasing a new product line not involving a car, but SCTY is reacting similarly: Elon Musk on Twitter:
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    Musk's SpaceX Agrees to Buy $90 Million in SolarCity Solar Bonds - Bloomberg Business

    (Bloomberg) -- Elon Musk�s Space Exploration Technology Corp. agreed to buy $90 million in SolarCity Corp. bonds tied to payments from rooftop solar power systems.
    That�s almost all of the $93 million in one-year bonds that SolarCity is offering at a 2 percent interest rate, the San Mateo, California-based solar developer said today in a regulatory filing. Musk is co-founder and chief executive officer of Hawthorne, California-based SpaceX, as well as chairman and largest shareholder of SolarCity.
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    Wow, I did not see that coming. I wonder what the motivation is. Is SpaceX just needing to sit on cash for a little while? Makes me wonder if SpaceX might also be in the market for some new Tesla bonds.
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    but that just means that nobody is really buying those bonds... right?
    but also sounds like a warren buffet move... its nice to have money to play with like that.
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    my mistake. I forget that spacex needs solar panels and batteries for their internet satellite mission. brilliant,
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    This has all prompted my shift in stock strategy the last couple weeks. I recently did some homework on Elon and his ventures, and sold 75% of my stake in other solar companies. I invested it all in SolarCity and Tesla Motors, I think Tesla is a good buy now with the stock dip these past few months, along with the X and 3 on the horizon.
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    I still don't see why it makes sense for SpaceX to buy those bonds. Obviously there's something I'm missing.
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    SpaceX are very profitable and has always been. It makes sense to help the "elon empire" grow since solarcity, tesla and SpaceX share many of the same investors.
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    +1 I purchased SCTY at $18.50 and sold at $74 to buy more TSLA. Took a hit with the pull back, but will be buying SCTY bonds soon. Will need a higher return on some "cash" than my credit union. Been a Tesla long since $32. (Was doing the buy\sell from $28, but did not have the "time" to work and trade successfully."
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    Thanks for this analysis. How do you know that SpaceX has always been very profitable? It's privately owned. Isn't SpaceX growing at a good pace and therefore probably in need of cash itself? I thought about the fact that all three companies share the same investors but concluded that was not a good reason for SpaceX to buy the bonds. Yes it helps the empire to support each other but doesn't that also concentrate risk? Or not because they are very different companies?
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    My impression is that the CFO just needed to park some cash and these bonds happen to offer a competitive yield with low risk. The motive need not be any deeper than that.

    They got a 1 year solar bond at 2.0%. Same duration jumbo CDs are under 1.2% and UST is at 0.26%. So if you need to park cash for a year and find the default risk of solar bonds to be quite low, then 2% a damn good rate.
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    That's part of the brilliance... it is so logical.
    It even makes sense even if EM was not at the centre of all of this.
    As SpaceX will need to partner up with solar and battery company to power their internet satellites that they will be launching in the next 15-20 years
    which, having internet in space is part of the masterplan of being multiplanetary...

    I'd like to hear the masterplan behind space x actually...
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    From VentureBeat in 2010: http://venturebeat.com/2010/06/09/spacex-profitable-despite-musk-being-cash-poor-but-is-an-ipo-needed/:
    Also Elon has mentioned that SpaceX is profitable in many interviews over the years. Regarding the money. SpaceX took a $1B investment from Google and Fidelity not long ago. In conjunction with that, Elon announced that SpaceX would build worlds largest communications network of 4000+ satellites. They probably can't deploy that money both intelligently and immediately so parking some of it in bonds for a while probably makes sense. Not long after that the media started writing stories that after the Google/Fidelity investment SpaceX was now profitable, which I suppose is technically correct, they also were profitable before the investment.
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    What's going on with SCTY these days? It is up $9 since March 16th.
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    Yep, nice price movement, surely in part related to the upcoming April 30th announcement, but also due to positive analyst notes reaffirming high price targets in the range of 75-100 USD.

    I'm long SCTY, bought a while ago at around 50 USD.

    OT:
    btw, finally decided on a profile/avatar pic. :smile:
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    I would imagine it will be a proposal of covering the open-air aqueducts with panels to shade the water and decrease evaporation. SolarCity could tout not only the decrease in evaporation but also the decrease in water needed for energy production. If they could make this work there are a lot of cool possibilities and interesting implications...
    1. While SC has done some larger scale work, this could be a much higher level project. If state leaders/ public opinion are favorable to the deal, it could force the utilities to be somewhat friendlier to SC, at least for this project.
    2. Could this be one of the first projects they develop themselves without a customer contracting...they would obviously need to work with water commissions etc, but maybe they own it and offer the shading "philanthropically."
    3. This could be a perfect project to push their solar bonds with. If the Elon hype machine is able to have this blasted over the media like he always is, I'd imagine the public would want to buy in to their common well being. Likely, some of the big name companies would like to as well.

    I put the odds of this happening within 12 months low (less than 20%), but if they can pull it off that would be really cool! Thoughts?

    A 350 MW project in brazil to provide shading for a reservoir - http://www.popsci.com/brazil-building-giant-floating-solar-farm
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    SpaceX has extra cash in the bank. Normally companies invest such money in short term US Treasuries. The SpaceX CFO has determined that the 1 year SolarCity bonds are essentially risk free, and they, of course, pay more than 1 year Treasuries, so he decided to invest.

    Not many CFOs would do this. There is always a risk of a company going under. I am assuming that he assumes that Elon would tell the SpaceX CFO if there was going to be a significant problem with SolarCity since Elon is on the board of both companies.
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    I love the aqueduct solar panel cover concept. It looks like a win for everyone!
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    I was stunned when I first saw the water canals in the American west--they're uncovered and relatively shallow. The evaporation losses must be high. SolarCity installing solar covers for these canals in California could be a win-win: more solar power and less evaporation.
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    I don't think it means much. It is a large investor (probably a fund that has made its money) selling to another large investor (probably another fund) in an arranged cross sale. Both funds might be clients of the same brokerage and they have arranged sales to be done at end of day pricing or some such.
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    It's an interesting question how to tell when the race has been won. This article points to when renewables became a majority of new capacity. But suppose globally capacity is growing at say 4% annually while 2% of existing capacity must be replaced. I am totally making up these stats because I am too lazy to try to look them up, but for the sake of illustration lets go with it. These rates mean that new capacity is 6% of existing base. If 50% of this is still fossil fuels, the 3% minus the 2% replaced means that the fossil fuel fleet is still growing at 1% per year. So the fossil fuel fleet will not peak and begin to decline until renewables comprise 67% of new power, 1 - 2%/6%.
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    It's not capacity that matters, it's capacity x capacity_factor. 1MW solar < 1MW natural gas combined cycle < 1MW coal < 1MW nuclear.
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    That's a fair point. Making matters more complex, adding more intermittent renewable calacrity added to the mix reduces the utilization of fossil fuel. Renewables have no marginal cost, so they can go all the way down to $0/MWh (and below!) on the spot market. NG is more dispatchable than coal. So it is in a better position to tolerate real time competition with wind and solar. The economics of coal are becoming increasingly poor because it is losing so much utilization. At least in the US almost all new capacity is wind, solar and NG.

    Ironically, inclusion of battery storage into the grid will not only help wind and solar, but may also help coal and nuclear. Batteries will smooth out the intermittency of wind and solar, while smoothing out the intermittency of demand making it more conformable to base load generation. Any home with solar that charges the battery during peak sunshine and late at night when grid rates are low is actually helping all both extremes. However, depriving coal and nuclear access to the peak power rates that occur when the sun shines brightest will undermine the profitability of baseload power. So while batteries can help with utilization it will put a cap on peak rates. So either way coal is doomed.

    The virtue of batteries is that they enable the cheapest marginal producers of energy to optimize their utilization. Batteries will squeeze out the peakers. So this will reduce the total capacity grids require. This is potentially more threatening to utilities than wind and solar. Because utilities make money on their total capacity and recapture the investment from ratepayers. So as capacity requirements decrease, both the size of their asset portfolio shrinks and many assets lose value. The utility industry could be headed into a massive asset bubble. Will they be able to pass these capital losses onto ratepayers? Maybe not, if enough ratepayers defect by throwing up rooftop solar and rounding it out with batteries. This is what I find so fascinating about home storage, it will empower consumers with choices that transform them from being mere ratepayers to being customers who must be won over with superior service and prices.
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    Even though it may take some time I think you just answered you previous post on when it was won.
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    Moderator's Note

    We're wandering far from SCTY. This would be an interesting discussion over in the Energy & Environment area; if it keeps up, I'll move it there.
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    In the USA batteries could kill coal, but not necessarily from solar and wind, but because the cheapest capacity right now is Combined Cycle natural gas. Combined Cycle is the Atkinson Cycle of the electricity world. Take away the RPSes, tax credits and other subsidies for renewables and you would end up with an NGCC heavy grid.

    I don't see eliminating peakers as a threat. Robert can correct me, but I believe the peakers are usually old, amortized plants. Many of the load-following plants are newer, but cheaper natural gas. And, in the USA at least, there's a lot of old capacity, and newer capacity tends to be NG and renewables. So, I really don't think it's a problem.

    To me, the big threat to utilities is the support for renewables. Legislatures are supportive, so that's why ALEC and co are trying their best to kill the solar subsidies by lobbying the PUCs to make pricing changes that weaken solar.
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    While many older plants are now, in effect, peakers because they run so infrequently, there are new units being installed as peakers. For example, the proposed repowering of the E.F. Barrett plant on Long Island replaces two ancient steam units and some 1970-vintage combustion turbines and jets with a new 636 MW combined cycle unit and six simple cycle turbines (collectively 260 MW).

    A combined cycle unit is, in effect, one to four simple cycle turbines that feed waste heat into a heat-recovery steam generator (HRSG). The combined unit has higher efficiency than the simple cycle turbines: e.g. the CCGT replacing Barrett will have a 6,758 Btu/kWh while the CTs are at 10,122 Btu/kWh. But the extra complexity also increases the start time (notice and warm-up) and reduces the economic range of flexibility: CCGTs typically operate at no less than 40% loading. For this reason, I see the industry evolving to using more CTs (rather than CCGTs) when installed to support renewables. CCGTs are far better at replacing old baseload plants (coal, oil, or gas).
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    Well, to draw this back to SolarCity, it may helpful to frame the discussion from the view of SolarCity's share of the meter. Rooftop solar produces the most power when the sun is brightest, and this corresponds to the time when AC usage is heaviest and when grid power has historically been priced the highest. So solar cut into the most profitable hours of production. It cuts into the hours that make the capacity of the system profitable. But solar only leaves a huge share of the meter for utilities to satisfy. The next step of adding batteries to solar enables SolarCity to go after an even larger share of the meter. Depending on the type of rate plan, TOU or demand, batteries can take advantage of low TOU rates or shave demand charges. Either way share of meter is gained by SolarCity and the leftover share to utilities is limited to their least profitable hour, the times when surplus capacity and minimal demand drive the spot market prices to levels that are not high enough to pay for the CapEx of new fossil fuel capacity of any sort. So per installation, SolarCity will be able to extract virtually all o d the profit with its share of the meter.

    The next question beyond that is how quickly can add more customers and how deeply can they penetrate the customer base of a utility. Adding storage to their product offering, SolarCity has the potential to sign up even more customers at lower acquisition cost per sale. They can even sign up storage only customers where rooftop solar is not a desirable option. A storage only installation still capture the most profitable share of the meter, leaving the utility with a less profitable share. So I am optimistic that storage will help SolarCity to continue to double its customer base year after year.

    Renewables plus storage has the potential to extract virtually all the profit out of fossil fuel generation.
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    At November 2014's Electricity Natural Gas price of $4.68/(1000ft^3) that's 1.5435c/kWh difference between CCGT and CT.
    If you have a battery that costs $100/kWh, usable for 10 years with 75% average usable capacity, and 90% cycle efficiency, then the cost per cycled kWh per day (ignoring cost of money) is 4.056c/kWh/day. If the battery could be cycled 4 times per day, that'd be 1.014c/kWh. (Over 10 years that would be 14610 cycles) CCGT or CT might depend greatly on where battery prices and durability end up.

    Relevance to SCTY: cheap batteries could be a great way to help renewables, but cheap batteries would also help the economics of fossil generation. Until solar really beats fossil, success depends on government support.
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    That's really beautiful. Having two peaks of load minus wind and solar gives home batteries the potential to cycle twice per day. On the right sort of TOU rate plan, this can improve the economics of batteries. It would be nice to see spot prices along with this.
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    SolarCity's Gigafactory

    Have not heard much about SolarCity's solar panel gigafactory. They broke ground with NY governor and all but not much since. The factory was said to be the Largest Solar Panel manufacture in the western hemisphere and in the world!, (IIRC). That's Pretty Exciting! Other related topics are how Lyndon and Peter are utilizing the absolute rock star team from Silevo, (Dr. Zheng Xu, Dr. Jianming Fu and VP Christopher Beitel).

    Here is a information rich (older) interview with CEO Lyndon Rive. It's laughable how many times Lyndon has to correct reporter.

    http://www.youtube.com/watch?v=g6SzQeeZOPw
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    Nice video. I think the interviewer is like most investors who don't quite get it and are operating on old information. The explanation at the end of crossing one market after another and doing so without subsidy is the key thing to understand. SolarCity has been relentless in cutting the total installed cost. The Giga watt factory is part of this effort. Higher efficiency and local production for the Rast coast reduces total installed cost. I expect the West Coast will still source panels from China, while the NY plant will supply the East Coast.

    You can definitely see Elon's strategic philosophy at work here.
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    Thanks JHM!

    That is what I visualize as well. I foresee SCTY developing into the largest power provider in the country, TSLA the most profitable auto manufacturer/power battery provider. That's why I invested about equal weight TSLA/SCTY, ok a little more TSLA than SCTY. SCTY like TSLA is growing like Elon described in his Khan Academy interview with Sal Khan. Elon said, You want to cause the customer base to grow like bacteria in a Petri Dish. Oh BTW, SpaceX Launch You UP as well! :biggrin:
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    Solar City Q1 IR is on 05/05 after market closes.
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    Yep, I pretty much feel the same way as you except I have my investment slanted much heavier to scty right now. After the 20-?? percentage gain over the next month I am anticipating I may re-balance closer to 50/50 tsla/scty
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    Interesting! I had no idea that was coming. It just might happen. :wink:
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    Why do you think the stock price will go up 20% over the next month? What catalysts do you see? Anything beyond the April 30 announcement?
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    A few events might contribute to a spike over the next month:

    *April 30th announcement and demonstration(as you pointed out). But might here a number for how large the initial home storage roll out might be. Also, Bloomberg just reported large utility energy storage units will be announced as well. Not sure if Solarcity will have anything to do with it, but possible they could.
    *Q1 conference call is on May 5th. Rumor is they booked 18k+ customers in the month of March alone. They booked 21k in all of q4, so potentially as massive booking of 40K+ new customers. In addition they hit at record 5GWh of total deployed production at the end of March, which could indicate they may exceed high end revenue forecasts for Q1. Also, we may hear big guidance news for the rest of the year as well as how home storage will fit in that equation. Greentech Media also reported today Solarcity unlocked $1bln in financing for 300MW of commercial installs. That is a significant number and may reflect in bookings and Q1 installs. Commercial installs have been disappointing in the past few quarters so if they show strength here it might reflect well with the market. It will also be of interest to see how levered retained value looks this quarter since it is a new metric never disclosed before. Q1 report has a lot of momentum building it seems.
    *My Solar loan ABS offering. This is significant because it includes no tax equity. If Solarcity is able to do $100s of millions in my solar loan abs dollars, they could really thrive post ITC 2017. So important to see how this pipeline works out. Thus far, they have raised about $140-150mln in online solar bonds, so it might be a nice surprise if this works out as well. If the finance works out, it could be possible to see continue 98% compounded growth and a 1.8-2GW year for 2018. I think it's a low probability they will give out 2016 guidance, but that doesn't mean it won't happen. 2016 guidance would squeeze the stock in and of itself. It would be a massive catalyst at this moment in the year.

    always a chance of a surprise outside these events, but primarily these outline may push the stock up the mentioned prior 20%+. My only caveat is any sudden rate changes or utility uncertainty news events over the same time period.
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    The biggest catalyst I see is when they announce their install targets for next year. If They predict the 2 Gigs that seem obvious to me that will put them at over 800k customers at the end of next year. They would start 2017 with 800k customers and end it with 1.6 million (If they double production the next two years). Currently analayst are using their target of 1 million customers by the middle of 2018 for their models and It is a much too conservative number.

    The April 30th announcement also has the potential to be huge. I think there is a chance Tesla announces some HUGE sales to Utilities around the country and if they do and they are using Solar City's Demand Logic software it could be a huge boos to scty as well.

    We also know they have had record breaking bookings this quarter and I believe what they have said regarding the commercial install times being a week for all of their competitors and only a couple of days for them. I think we will see some of the momentum on that front.

    Also their retained value per watt on the mypower loan is around twice what it is on the PPA's/Lease's which should be taken very positive.

    I am also hoping to hear more about cell research and factory construction and I believe with each earnings call more and more people will realize the benefit of having the state of New York build one of the largest solar plants in the world producing panels at the lowest cost per watt.

    Edit: There is also the large short interest but I think a decent amount of it has covered recently. Based on the Interactive Brokers Short Interest that is sent out. Scty has been somewhere in the top 5 of the energy sector shorts since I have used them and they were not on the list this time.

    I see a lot of articles about how tough it will be on SCTY to lose the ITC when it will affect the whole industry and SCTY is the only company I know of that should have a brand new 1 Gig plant humming along at full production q1 2017.

    That last point is getting more into my long term thesis... The bottom line is I am expecting a 20 percent move when they announce (officially) a 2 gig target for next year.
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    Thanks, Blake. I share your optimism. I'm particularly interested in the 1 million customer goal, and want to see solid progress towards it. I figure if they hit that goal, retained value should be $14B or maybe more depending on how rich the loan mix is. I think market cap should be around 2 time retained value, $28B. So assuming 5% annual increase in the number of shares (employee incentives mostly) we could see $240/share in 2018. So basically I just want to see them build up the retained value.

    They should come out with a new unlevered retained value which will net out the value going to debt. Currently levered retained value is a kind of enterprise value, but the unleavened will be strictly the value to equity. So it will be very interesting to see how this breaks out.



    Regarding ITC, I think SolarCity is working very hard to cut all costs. So I think they will be in a good place to get through the transition, while less efficient competitors will stumble. So it won't be easy for any, but it is the right challenge to face. I also think it sets them up for more international opportunities. Squeezing every last cent out of intallation costs is the right discipline to have anywhere. They have quietly entered New Zealand this year.

    BTW, I believe that DemandLogic programming was done by Tesla, but I suspect their is a lot of IP sharing going on. Microgrid-as-a-service is a big wildcard for both companies. It could be that New Zealand is a good place to develop some microgrids, a few islands perhaps.

    Viva Cinco de Mayo!
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    Will the trade be to buy stock now and take advantage of the run-up into april 30th? OR will it be to buy after the announcement when the stock takes a dive? Not saying it will 100% dive after the announcement but that seems to be the trend. Usually a quick recovery follows though.
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    In my opinion it would be to buy now and hold on or sell after announcement. In the past few quarters you would of done best buying about a week ago and holding until maybe 2 days before earnings. I am thinking this time will be different but time will tell.
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    Hawaiian Electric Co. can't solve rooftop solar issue alone, SolarCity exec says - Pacific Business News more support for a q1 revenue beat is Hawaii connecting a substantial backlog of over 2500 customers over the fist three months of 2015. Systems were installed so as soon as they were connected, revenue started flowing in to Solarcity. maybe why we also saw Solarcity hit record 4GWh/day and 5GWh/day production within two weeks of each other.
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    I would love to see SCTY close in the green today. On a day when the market has been down all day I would feel better about the lottery tickets I bought :) (may 8ths)
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    First Solar: Likely The Best Bet In The Solar Industry - First Solar, Inc. (NASDAQ:FSLR) | Seeking Alpha

    Interesting article that compares the cost of utility and residental solar about half way down the page, according to the study its $1.88/w and $3.60/w respectively, now the margin addon is significantly higher on the residental side, but even discounting the margin cost is still more than 35% higher for residental. I guess this is why I'm not as excited about residental as others, the growth might have been higher in residental compared to utility but you certainly pay a premium for this growth in the stock, and how sustainable is it when utility is cheaper?
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    SolarCity has an installation cost of $2.09/W. SG&A is another $0.76/W, for a combined $2.86/W. Also note that residential solar need only compete with residential rates, while utility installations must compete with wholesale power rates. The ratepayer is still paying a profit margin to their utility for whatever power they buy. So it is not apples to compare retail and wholesale prices.
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    There is margin both in residental and utility, unless you are producing your own panels and mounting them on your roof. The price of a residental and utility watt is an apples to apples comparison as I see it, unless people are able to disconnect from the grid entirely which would save money on infrastructure, but that wouldn't make much sense as it would take a lot of batteries.
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    SolarCity is able to sell power to their customers a few cents cheaper than utility rates, and that is good enough to make the sale. That is a retail to retail comparison. If SolarCity were to offer the same rates to a utility, they would not buy it. Utilities buy power to resale. They need wholesale rates, not retail rates. The question you should be asking is, if utilities can install solar more cheaply than SolarCity, why don't they offer retail rates lower than SolarCity? If you think that utilities have an absolute cost advantage over rooftop, then why are they losing market share to rooftop installers? I think it has something to do with not wanting to destroy the value on their balance sheets.
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    Those prices don't tell the whole story. Utility is cheaper when you consider cost per watt on a large scale but there are many advantages of rooftop.

    No transmission losses - Land is rarely free and sometimes very expensive for a utility solar farm and sometimes they must be placed pretty far from where the power is used. This requires expensive Transmission lines and losses. So you already lose some of that advantage.

    Strengthens grid- Having distributed solar helps lower peak demand all over, When combined with small batteries it will alter peak demand dramatically as solar reaches higher penetrations.

    Individuals can invest- One thing rarely mentioned is there are a whole lot of homeowners who want solar and they don't have the option of building utility scale solar so they go residential :)

    The main reason I am excited about residential over Utility is it so much easier to execute. Each Utility Project is unique and requires extensive engineering work and paperwork. Their is a high likelihood that there will be delays with utility projects because there are so many actors at play.

    Solar City Management has found a way to double every year and it looks like they will continue to do that which is going to result in some staggering wealth generation

    You also have to consider the ITC step down. It sure looks like the US utility solar market will be hit hard if it drops down to 10 percent for them like scheduled. I guess you could argue this one both ways but I think SCTY and other US rooftop installers will fare better than US utility players.
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    We should probably talk more about ITC step down. I don't have a feel for how it might impact utility or rooftop differently. I suppose for utilities after the step down, it will just be harder to pencil out solar projects relative to other projects a utility might consider. For rooftop customers there are fewer choices: utility or solar with or without batteries.

    Another issue that should be consider explicitly is the problem that utilities have with integrating too much solar into their mix. I alluded to this in my comment about balance sheets, but it does need to be said. As more solar is added, whether utility or rooftop, it decrease midday demand net of solar. Traditionally these are peak hours and most generation assets are most profitable during these peak ours. As the demand net of solar declines, these assets can become unprofitable to operate. So too much solar has the risk of impairing many assets on a utility's balance sheet. The utilization assumptions that justified their investment many years ago just do not hold up. So the utility industry is at risk of a serious asset bubble. Adding yet more utility solar could do more financial harm than good. But it gets worse as even more solar is added. Taken too far an power generation can exceed demand and the spot market puts a negative price on power, that is, wind and solar operators may be paid or forced to curtail production. This is where grid storage and perhaps aggregated customer side storage can be enormously helpful. With sufficient storage capacity the spot price would never go negative. Storage assets would soak up power selling a just a fraction of a penny per kWh. Later when the sun goes down storage assets would then sell the power back. In this way, the energy mix could integrate 100% renewable sources. Additionally, the daily spread from the lowest spot price to highest would be no greater than the levelized cost of storage, maybe 5c/kWh some day. So in the long run as solar goes to 5c/kWh and storage to 5c/kWh, the price of power could be bounded between 0 and 10 cents, and these prices would be obtainable from a utility or on your rooftop. The pace at which we converge to such a state determines whether the utilities can get a full return on their prior investments. So it is basically within the utilities' interest to transition slowly. And this is what give the likes of SolarCity a huge advantage.
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    I must admit I don't know much about this whole thing, but does the utility pay for the infrastructure, or some of it? That would make for an uneven playing field. Every source I have found says utility scale solar is much cheaper than residental.


    "Strengthens grid- Having distributed solar helps lower peak demand all over, When combined with small batteries it will alter peak demand dramatically as solar reaches higher penetrations."

    This peak demand argument works for both resi and utility.

    "No transmission losses - Land is rarely free and sometimes very expensive for a utility solar farm and sometimes they must be placed pretty far from where the power is used. This requires expensive Transmission lines and losses. So you already lose some of that advantage."

    This might be true, but according to the articles I've found utility is still significantly cheaper.

    "The main reason I am excited about residential over Utility is it so much easier to execute. Each Utility Project is unique and requires extensive engineering work and paperwork. Their is a high likelihood that there will be delays with utility projects because there are so many actors at play."

    Utility scale can be huge projects though, last year First Solar built a single project bigger than the whole of SCTYs installations for the year put together.

    "Solar City Management has found a way to double every year and it looks like they will continue to do that which is going to result in some staggering wealth generation"

    Like I pointed out before they are still a relatively small player, growing this fast will soon be a lot harder, if utility scale really is significantly cheaper it could put a stop to the rampant growth.

    I don't see why utility should have a harder time with legislation than residental, I would argue the opposite would seem more likely given who has the money muscle.
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    Ratepayers pay for the infrastructure through the rates they pay. Utilities essentially build out infrastructure and recapture the cost through rates. Generally utilities are monopolies, so there is no such thing as a level playing field when monopoly status is granted by the state. So the question should be whether all this infrastructure is worth the cost. If a utility builds a power station, solar or otherwise, hundreds of miles from where the power is used, then it must have the transmission and distribution infrastructure needed to deliver that power at great distance. So all this infrastructure is part of the real cost of utility solar. Rooftop solar, on the other hand, does not need any transmission and distribution infrasture. An inverter and a few meters of wire is sufficient to deliver this power to the house or business. Now if it were legal to sell your surplus power to your neighbor, you would only need a little cable and your neighbor would be willing to pay you nearly as much as their residential rate charged by the utility. But where utilities are legal monopolies, neighbors are not allowed to share power. But the infrastructure to do so would be quite minimal. The reason why it is equitable to require utilities to pay feed in tariffs for surplus solar power is that their monopoly status prevents the owner of rooftop solar from selling to any other entity. So feed in tariffs are a small accommodation to preserve legal monopoly status. There is absolutely nothing level about this playing field. The utilities have the privilege of putting the cost of their infrastructure on to ratepayers, while rooftop solar demonstrates that not all that infrastructure is actually needed. Utilities for their part are claiming that customers with rooftop solar are not paying "their fair share" of infrastructure costs. This, of course, presumes that ratepayers have a more obligation to pay for infrastructure that enables utilities to generate power at great distance and sell it locally. But this argument falls apart when it becomes clear that power can be made and shared locally. It is like saying that one has to pay the shipping cost of produce from South Africa even if one chooses to buy locally grown produce.

    Let's be concrete. Part of the reason that utility installations are cheaper per watt than roof top is that these locations are sited where land is cheap and there are not competing economic uses for the land. One is able to choose a location that is idea. So this is exploiting cheap real estate, and this most likely means this land is at substantial distance from highly populated areas where the power is most needed. So transmission lines are required to get this power to ratepayers. If you add the cost of these lines to the cost per watt you may well find that there is not much of a difference between utility installations and SolarCity in the fully installed and transmitted cost per watt.
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    Utility is much cheaper. Utility and Distributed are very different models. I think there are additional cost with Utilities that you don't have with residential but even with these Utility Solar should be much cheaper than residential.

    I don't think the argument works both ways on this, because they work in tandem. The utility solar farms will be built and treated as a utility power plant. At the same time customers are installing solar to decrease the amount they consume. I know some people try to frame it as a battle of Utility vs Residential/Commercial but they are really just very different. On a broad scale I think they are both good for each other and all solar is great for air quality.


    I agree with you here completely

    That is true but it was 3 year project. Started in Nov 2011, Finished in Nov 2014. Even if they had completed it in a year I think it misses the point. Solar city installed ~500 MW in 2014 and they will install ~1GW in 2015 and ~2GW in 2016 and ~4GW in 2017. At least that is their plan and the path looks pretty clear to me.

    I don't think they are a small player anymore. If utility solar and residential solar were at odds in the way you think Solar City would not have been able to grow from 31MW in 2010 to 1GW in 2015. That is two of Topaz Solar Farms in one year when it took First Solar 3 Years to build it. That comparison is not fair but I don't think yours was either :)
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    @jhm

    Okay so the playing field is uneven, the utility has to pay for infrastructure while residents with solar on the roof gets that service for free, this isn't exactly fair either tbh, well I guess its fine as a government incentive to get solar rolling but should be fixed at a later time, I don't really like the fact that resi solar is more subsidized than utility solar though. You can't just act like residents with solar doesn't need the grid, with current battery prices that is just unrealistic, it would be much more expensive for the quantity of batteries needed to stay completely off grid (at least if you want to have power on cloudy days) than to just keep it.


    "That is true but it was 3 year project. Started in Nov 2011, Finished in Nov 2014. Even if they had completed it in a year I think it misses the point. Solar city installed ~500 MW in 2014 and they will install ~1GW in 2015 and ~2GW in 2016 and ~4GW in 2017. At least that is their plan and the path looks pretty clear to me."

    I don't think you should be so sure about that continued growth, especially when you agree that utility scale solar is cheaper, because if utility and resi solar then were to compete on an even playing field in the future then utility wins.
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    Residents with solar don't get to use the infrastructure for free. They pay for all of the energy that they use. In some cases they have to pay 50 dollars a month for having the solar.

    "I don't think you should be so sure about that continued growth, especially when you agree that utility scale solar is cheaper, because if utility and resi solar then were to compete on an even playing field in the future then utility wins. "

    If starting tomorrow all utility solar installed in the US would be installed for free I think Solar City would still be successful. Utilities are still going to charge you for your power and they will have a bunch of graphs to show you why they have to charge you what they do. The point is it really does not hurt Solar City at all if Utility Solar does extremely well. In fact I think they will get into the utility solar game once they ramp up their manufacturing.
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    If some of the cost of the infrastructure is incorporated into the rate paid to the utility (which is how I understood jhms post), then the residents using their own solar panels does get at least some of the advantage of being connected to the grid for free (paid for by the majority of people who doesn't own solar panels), which gives residental solar a one might say unfair advantage to utility scale solar at the moment.
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    The size of the net-metering benefit depends on the structure of your rate. Commercial customers' electric costs are mostly fixed charges and demand charges; there is still a need to manage down your peak load, which may or may not match your solar production. Residential customers have a small fixed charge, with most of the cost assigned to a �/kWh charge, but that's changing as utilities wise up to the revenue crunch caused by energy efficiency and behind-the-meter generation.

    The other question is whether the net-metering benefit exceeds the value the distributed generation creates for the grid. A recent study by the Maine Public Utilities Commission shows that distributed solar creates 13.8�/kWh of 25-year levelized savings to the utility through lower energy procurement costs and reduced need for future investment in T&D. (There was another big source of value from reduced air emissions, bringing the total benefit to nearly 30�/kWh.) So I'd argue that paying solar (in Maine) less than 13.85�/kWh is an unfair charge. Net metering here gives a slightly higher "payment" to solar, but not unreasonably so IMO.
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    Net metering might or might not be of benefit to the utility, that is not my point though. My point is that residental solar seems to have an unfair advantage against utility scale solar right now as resi doesn't contribute to grid cost and utility scale does. If this changes residental solar might lose momentum as utility seems to be the cheaper option, that's all I'm saying, I'm a big solar fan and have money invested, just not in SCTY.
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    Thanks for linking the study and quoting the 13.8 C/kWh. I have seen a lot of articles reference the report but not slit specifics and not link the report. As always, much appreciated.
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    > SolarCity currently serves 17 states. [atang]

    And the states must have financial incentive programs or NO SolarCity. SCTY business model is based on low hanging fruit, none of which grows in WY. Here its DIY or forgedaboudit.
    --
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    Currently on CMP: (Delivery) $0.063264 + (Standard Offer Supply) $0.065441 = $0.128705.
    If on CMP A-TOU, with peak usage 7am to 8pm: $0.102708 + $0.065441 = $0.168149
    CMP A-TOU Off-peak, weekends and holidays $0.045318/kWh + $0.065441 = $0.110759

    Not bad. I'll have to read that report.
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    Solar power
    This article lays out the politics behind anti-net-metering tactics. Solar produces less than 1% of the electricity in the US, but apparently that is enough to threaten incumbent industries.
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    Jhm,

    The key is establishing the value of solar to all grid users. Multiple studies have come out showing the benefits outweigh the costs to all grid users. In addition, the same Arizona utilities that have said solar costs non-solar users(thus added fees to solar customers), are now asking the Arizona commission for permission to put solar on homes. Ironic, they say home solar costs non solar customers yet they want to put solar on homes. It is painfully clear some utilities find home solar a threat to revenue, not a burden on the grid. In the end, utilities will either play ball with distributed solar competition now, or painfully lose in court and in the wallet and have to play ball with DG solar later.
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    A new kind of utility: Why SolarCity wants to be 'more than a solar company' | Utility Dive

    If you want to know where SolarCity is going with Tesl, Nest, and utilities, you need to read this. Owning the customer relationship is very smart, aggregating distributed assets to utilities is genius.

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    It is interesting to note that Hanley jumped ship from PG&E(big CA utility) to work for Solarcity on grid integration solutions.

    On a seperate note, just read a Twitter post that Solarcity reps and tesla reps had a team meeting @ Hawthorne design studio today. Can only speculate this has something to do with April 30th unveiling.
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    I agree. The claim that rooftop is "not paying it's fair share" should be held with suspicion. The claim implies that nothing of value is being contributed to the grid, which is simply not true.

    I recently learned that T&D accounts for 42% of the power bill. Broken out that is 31% transmission, 11% distribution, 58% generation. So right off, DG avoids transmission cost, and during peak hours when spot prices are high may even save on generation cost. So at a minimum rooftop solar reduces the transmission load which is a benefit to the grid. Trillions of dollars are needed to be invested in T&D in the coming decades, but distributed solar, batteries, and microgrids can minimize this burden on the system. While not every player in this space will realize the economic benefits of this transition, it will benefit the economy as a whole, and those players who are willing to innovate stand to profit the most.
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    I agree. As DG + storage amasses, less peak generation is required, faster demand response happens as well. With predictive analytics that Nest, home weather sensors, electric car sensors, and wearable devices such as the apple watch and other fitness trackers bring to the table, DG assets can develop the highest accuracy in determing how to deliver energy when and where it's needed with the highest efficiency possible. All this adds up to significant cost savings for every electricity user in the country. Big significant stuff here, in my opinion.
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    Because so much of the T&D network is a sunk cost, not using it doesn't lower its cost. The T&D benefit comes from lowering losses (losses rise with the square of current, so lowering current flow lowers losses) and deferring the need for future investment. The benefit is clearer on the T side; D might need more or less investment, depending on how the flows work out.

    The Maine PUC's Value of Solar study I linked above shows first-year and 25-lifetime savings as follows (for Central Maine Power, the largest Maine utility):

    		First-Year25-Year Levelized
    Avoided Energy Cost$0.061$0.081
    Avoided Gen. Capacity Cost$0.015$0.040
    Avoided Res. Gen. Capacity Cost$0.002$0.005
    Solar Integration Cost($0.002)($0.005)
    Avoided Trans. Capacity Cost$0.014$0.016
    Avoided Dist. Capacity Cost--
    Subtotal: Avoided Market Costs$0.090$0.138
    Net Social Cost of Carbon$0.021$0.021
    Net Social Cost of SO2$0.051$0.062
    Net Social Cost of NOx$0.011$0.013
    Market Price Response$0.009$0.066
    Avoided Fuel Price Uncertainty$0.000$0.037
    Subtotal: Societal Benefits$0.092$0.199
    GRAND TOTAL$0.182$0.337
    The distribution cost/benefit was left open. The report states, "Not included, but left as a future placeholder if the peak distribution loads begin to grow (requiring new capacity)." It also omits voltage regulation cost/benefit, noting it was "Not included, but left as a future placeholder if new interconnection standards come into existence allowing inverters to control voltage and provide voltage ride-through to support the grid."

    I would caution against generalizing from these findings, because the costs and savings are going to vary by state.
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    I see SolarCity has some new Advertisements on there YouTube channel


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    And as a Avid Solar City supporter .... I don't like these at all. I watched the first one and felt the need to mark my disapproval somewhere ....

    I guess people might respond to this. Maybe this is their market research. Educating the public about 0 down solar is their mission ... I don't think this does it.
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    Agree. Seems to cheapen the message, the opportunity, the product, the company. Hope they move off of this rapidly
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    It's a bit like a Saturday Night Live sketch making fun of a commercial.
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    Put the infinite power of the sun to work and saaaave.

    feels like a geico commercial... kinda grows on you.
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    I was reading through them after reading your comment and ran into this gem.

    "
    He doesn't have one. Just another pointless comment. The sheer size of this facility is apparently lost on him. The needs of a facility that produces micron scale parts is probably beyond his comprehension. The obstacles faced in this construction have not been covered well by the News, perhaps not revealed to reporters. Radioactive (trace level) materials were found, and required haz mat procedures. Entire rail cars were found buried. No one wants it known that Republic was given an easy road out, with site remediation improperly done. The state DEC and the EPA caved on this one."

    Pretty interesting if its true.
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    I cannot see how the announcement tonight, cannot mention solar city. I personally feel the stock is going to get a good lift in the next few days, likely in the 5 to 10 per cent range.
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    I agree completely, if SCTY drops tomorrow and I am not overextended on margins I will double down on any weeklies I can pick up for the earnings call ! Excited for the announcement. Its getting pretty close.

    A breakthrough in the affordability of Solar Battery Systems (yea SCTY is involved. I was a little worried by the TSLA press kit)
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    That's good to see; I was stunned that SCTY isn't listed as a partner in the Tesla Energy press kit.
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    Well that's because they have an announcement of their own on their website:

    Off Grid Solar Power Systems – Off Grid Hawaii - SolarCity

    $0 down lease total package solar+storage.... "Hey Hawaii, you want to get off the grid?"

    this info dropped the same time as Tesla Energy...

    i bet the press hits the wire tonight or tomorrow morning...


    Update...
    New blog just posted by Peter rive, Solarcity CTO:
    A breakthrough in the affordability of Solar Battery Systems

    update#2:
    first Solarcity battery+solar installs begin in October...
    SolarCity Introduces Affordable New Energy Storage Services Across the U.S. - Yahoo Finance

    update#3:
    Elon states Solarcity is its lead installation partner in home storage.
    http://af.reuters.com/article/energyOilNews/idAFL1N0XS03L20150501

    updat#4:
    first battery+storage orders will go to new customers (then first come, first serve to existing. Customers)... Might be interesting if the 10k nest thermostat offers in CA coincides with this storage+solar ramp? Presumably, Solarcity will benefit from the SGIP incentives here...
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    SolarCity throwing down the gauntlet to Hawaii in tonight's blog. Utility won't let homeowners connect solar to their grid? Fine, we'll disconnect the grid and install a battery alongside the panels...
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    guest
    Wow, SolarCity is taking a bold stance. SolarCity to utility: you can work with us and benefit from aggregation services or we will enable mass defections.

    Emboldened by batteries, perhaps.
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  • 1/1/2015
    guest
    That's awesome! Hell yeah, good for you solarcity! Can't stop technology progress!
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  • 1/1/2015
    guest
    @jhm. They are emboldened now, yes, but take a few things away and things do change. Fed Tax credits, state battery storage incentives (in some states) and also take away SREC selling and Net-metering programs... I don't know how things change without the incentives, but someone today having Net-Metering and SREC selling programs along with the tax credits does pretty well buying Solar PV. Some of the programs mentioned here are not going to be around forever. Batteries may need to take the place of Net-Metering over time. SREC markets have collapsed hurting many who bought into solar during 2009 and 2010 expecting payback. To me, I look at batteries as a necessary technology that needs to come to fruition as state power commissions are looking at ways to slowly ween solar PV customers off of net-metering since the real demand spike is later in the day and not mid-day when solar is running best. Be careful out there but in some ways, SolarCity is kind of acting like the white truck driver in this video facing off with the power industry: Youtube: CceSRMmhv3w
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  • 1/1/2015
    guest
    They have stated publicly every time until now that they thought disconnecting from the grid would be a terrible idea. They also worked with HECO at the NREL in boulder and proved they could hook up more than double the solar with no problems. After that HECO continued to drag their feet. It seems like they were somewhat forced to be bold here. They were patient for a long time.


    That video is hilarious but a completely unfair characterization ... This one is a lot more accurate representation of the Utility/SCTY battle ...

    PIMP VS KARATE MASTER Knock Out! - YouTube

    The pimp (utilitues) are cleary upset when the Karate Master (SCTY) tells him he will actually benefit from distributed solar.
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  • 1/1/2015
    guest
    There are mixed messages floating around. Some press say "Tesla batteries will take customers off the grid" and Musk says in the presentation that utilities want to buy battery units. The common person gets confused, but the real issue is education of those on the street wondering what is really going on and who benefits. Clearly, peak load has been a grid problem for some time. Peak days in 2007 and also way back during the Enron shenanigans caused California major headaches and occasional voltage drops and brownouts and blackouts. High heat in the west and cold nights in the eastern and northern states can be some trouble. Grid operators pay excess backup generator fees and prices during these hot days and a major concern is how to shut down some coal plants while turning to more irregular power from renewables. Some standby generators only run a few days per year, maybe for a few hours. Baseload coal plants can run 24/7 while renewables have trouble doing that. Do power companies want us to go off grid? I doubt it and I wouldn't go off grid to spite the utilities. I would go off grid if net metering goes away and grid prices rise .10/kWh. But I don't see that coming for 10 years. By then, hybrid systems will be plentiful and relatively cheap. Now, if I lived in CA I might add a load shaving battery but in doing so, I would have my hand out for all the subsidy money available which can make the cost nearly free. I do think it makes more sense to install 100kWh systems for grid stability than dozen or more 7-10 kWh systems. Far better cost of scale deployments. One system in every convenience store and larger box store would easily smooth the grid power if they could be managed smartly through grid operators. Convenience stores run lots of refrigerators, lighting, gas pumps and deli equipment. Perfect deployment location. Running a load shaving 100kWh unit there takes the store nearly off the grid while it is load shaving, most likely at 20KW.
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  • 1/1/2015
    guest
    Seems to be entirely too much focus on comparing Tesla's new offering to traditional grid power generation, transmission and distribution. Don't forget that the costs of electricity production (generation), transmission and distribution are heavily subsidized, wasteful, polluting, massively less efficient, and in many cases - more expensive means of converting energy to electricity than photovoltaics, inverters and lithium ion batteries.

    Bonaire are you short TSLA or SCTY at the moment? Just curious.
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  • 1/1/2015
    guest
    It's like you are implying that utilities can't or doesn't use solar, remember that utility scale solar is much bigger than residental right now. Centralized energy storage solutions also has a utilization percentage advantage compared to batteries in every home, just like it is inefficient for homes to be completely off grid right now as you need to size your battery much larger than what you need on average. Don't hate on the utility scale battery use, it's the lowest hanging fruit.
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  • 1/1/2015
    guest
    I am all for utility scale storage, but transmission and distribution via poles and wires is not ideal long term for a resilient and efficient grid. Just like single points of failure in computer networking are problematic.
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  • 1/1/2015
    guest
    I think one important advantage of distributed solar is being overlooked here: virtual power plant(ing).

    Distributed solar is deployed much faster then centralized solar or fossil fuel power plants. Distributed solar is much closer(on top of in many cases) to location of need. If utilities can use the distributed asset to offset peak loads, then that is worth billions of dollars in developing, deploying, maintaining centralized peakers.

    Obviously, this will start out in "low hanging fruit" utility markets now and expand as DG price points continue to fall thus expanding that install base further.

    Solarcity has has pretty much built out its current 200k+ customer base in neighborhood clusters, or specific utiltity clusters where solar has made most economic sense, which also has had an organically added benefit for aggregating for virtual power plants. So, Solarcity is already "ready" to build this virtual peaker plant in ideal areas where utilities can benefit almost immediately, or as soon as Solarcity installs this initial powerwall production ramp. There is a reason Solarcity is strategically prioritizing selling powerwall to specific customer sets in addition to economics right now...
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  • 1/1/2015
    guest
    As Elon pointed out in the PW/PB presentation, there are 2 billion vehicles in the world, with a replacement cycle around 20 years, which is a 5% re-build rate. If material resources are not a problem, then manufacturing is not a problem, it's just a matter of building manufacturing plants.

    I agree that it would make sense for major solar installers to get into construction: the key thing is that if you're going to have solar, the roof becomes more than just something that keeps water off the house.
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  • 1/1/2015
    guest
    SolarCity sent me an email yesterday thanking me for my interest. But the thing is, I didn't contact SolarCity. I signed up for Tesla Energy. I used a special email address for the Tesla Energy signup, just so I could see how Tesla distributes that email to third parties. Guess what email address SolarCity sent to.

    Not a problem at all, but I do have a small grumble about how SolarCity and Tesla are executing on what is clearly a partnership. When done right, that is, when a customer of Company A signs up for something and grants permission for Company A to send customer info to third party companies working with Company A, and then you get an email from Company B, it says "Thanks for your interest in Company A's product. We're here to help you with Company A's product and our own value add services, etc etc."

    This is where I feel SC and Tesla dropped the ball a tiny bit. Nowhere in SC's email to me does it mention Tesla, Tesla Energy, PowerWall, or anything of the sort. It just says "Thank you for your interest!" Interest in what, though? What if I'd never heard of SolarCity, and I got this email, and I'm like, who are they? It was only after checking the email address it was sent to that I confirmed that Tesla referred me to SC.

    A minor complaint, but a lack of detail that they need to clean up if they want to accelerate crossing the chasm from early adopters to the mainstream market.
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  • 1/1/2015
    guest
    I just went through the teslaenergy.com site. Did you unclick the "interest in solar" box?

    Maybe the other partners aren't ready yet to offer the product like Solarcity is at the moment. It feels like the other companies have a deal to distribute and/or sell powerwall, but won't be selling it any time soon. Nor has Tesla disclosed how many powerwalls they are actually producing this year.

    I see where you coming from. Even if Solarcity is the only one ready to take orders, Tesla ought to provide a disclaimer your personal information will be sent to a third party.
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  • 1/1/2015
    guest
    Foghat, I doubt many powerwalls come out this year. First, the CA SGIP program is waitlisting new projects. Tesla and SolarCity has to deliver dozens if not hundreds of commercial and government larger systems. The projects already are on the reserve list for SGiP money. I think that takes them through the end of 2015 with a good $30-40 million transferred from SolarCity to Tesla for equipment. That is where the money is rather than moving small projects. The powerwall was cute and good for lots of tv and press coverage but it needs some time to ferment. It was stated limited supply this year and full production once the GF is complete. Early announcement done last week possibly to prepare for a small to medium sized financing vehicle soon.
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  • 1/1/2015
    guest
    I guess we'll see how they execute. Solarcity did say they are taking powerwall+pv orders now to start installing in October. That to me means they intend to start installing during the entirety of Q4, which infers home storage+solar will happen this year. Not sure if that means California or one of the other markets Solarcity operates in so SGIP may not be a good indicator of how powerwall+pv will be deployed this year anyway.

    I also think Solarcity and tesla know exactly how many they will sell this year and have already allotted that to home, commercial, and utility installs for 2015. I'm really now just waiting for the big press release or Elon at one his talks announcing powerwall is "sold out" for 2015.

    Also, I'm holding to the virtual power plant concept as being more valuable to Solarcity AND utilities so powerwall may have a little more momentum behind it then you think. Not sure how long it would take to deploy utility level installs, but Elon did say it would take only an hour for powerwall. Speed might trump size in many cases with energy storage.
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  • 1/1/2015
    guest
    The term sold out is simply a marketing term used to describe, well, an inability to deliver something. No company should ever be sold out. Even concerts announced as sold out really are not. Now, they were sold out in terms of projects for commercial storage for 2015 already. The projects lined up on the SGIP have been there for a few years and there are rules that require interconnect 18 months after application or face two, now three, 6-mo extensions. They have the hawthorne project still on the books which they showed at last week's demo and the SGIP shows it is not interconnected. Maybe that is why it showed 0 from the grid (left meter), or the SGIp people didn't update the project yet.

    the powerwall is not compelling to me, as an ev driver and solar pv owner. The reason is the lock in to certain installers and also the lack of one unit power. I want 5KW of continuous power out of an inverter and one single rack of batteries. If I were to install one. It would be 40 kWh and include the ability to island the house. The powerwall is only a small part of a hybrid island-able grid-tied with battery backup system. Yet some people think it will charge off the solar pv if the grid goes down. That is called islanding and there are no islanding specs because you need to send your typical solar inverter a grid signal indicating it is up. Also, you need to dump excess load into something if the batteries are full or the solar pv is outputting more power than the battery charge rate. To me, the powerwall is a verticle box of batteries which is a building block and not a solution. It fits into some people's needs but a hybrid grid tied system that load-shaves is really what people want and they need to get their installer to engineer a full system for them at a much higher price. They have basically made the 18650 cell available, nearly at cost, to the renewables community and load shaving solutions for commercial. Utility is a scaled commercial approach.
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  • 1/1/2015
    guest
    These are important points, @bonaire. Net metering raises substantive question about how the (largely fixed) costs of maintaining the power grid should be allocated; any reasonable answer will raise the fixed portion of customers' bills and lower the per-kWh portion, making net metering a much less attractive prospect for solar. A bill to introduce SRECs here in Maine is floundering because of reasonable questions about why we should be "picking technology winners and losers" instead of just supporting renewable energy generally. I heard no good answers to this at the public hearing. (Maine already has a REC program.)

    The big advantage of an off-grid solution is that the future costs are completely known. Any calculations that depend on the future of utility rates is on shaky ground.
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  • 1/1/2015
    guest
    i guess the net metering question boils down to the value of distributed solar to the grid. If having solar customers connected to the grid provides a benefit at current rates, then net metering is appropriate and necessary. Thus far, there are multiple independent studies that support the notion distributed solar is a benefit to the grid. Most notably, the study from Maine where they assert the value might be near double the current utility retail rate.

    i think we all have to remember utilities operate on a cost plus model in a monopolist market regulated by a governing body or a rate payer elected board. They are set up to add more assets to the ledger. Most profit motives are determined by raising rates not reducing them and they can easily hold customers captive since there is no other place to get electricity in town. These governing bodies are there to look out for the interests of the rate payer. If something benefits the grid, it benefits the rate payer. Thus to impede that from happening through adding fees or cutting net metering is not only counter to the rate payers best interest, it violates a slew of state and federal anti trust laws.

    this is, again, if DG is determined to be a benefit at retail rates which current evidence is leading in that direction. Also, it is fair to mention currently 44 states are implementing net metering and that list has only been additive since it started. The behind the doors conversations by utilities since 2012 has been distributed solar is a threat to revenues, not a cost shift onto non solar customers.
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  • 1/1/2015
    guest
    I dont think you are locked into using any installer. I believe Treehouse is selling it. That is just a home improvement store so I would think you could buy it there and install it yourself if you know what your doing it. It was described as "just works" so I would think install is pretty easy.

    Anyone have the Baird downgrade that was issued this morning? I would any details anyone can provide.
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  • 1/1/2015
    guest
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