SolarCity (SCTY)

[jhm]

Introducing SolarCity, a Powerhouse in Solar Technology - Market Realist

Market Realist has done an overview of SolarCity, not bad as a primer. Article neglects retained value and available cash, two key metrics that helps an investor understand the business model and strategy. Even so, there is a lot of good, basic information in there.

 

[winfield100]

If people want rooftop solar or batteries as insurance against outtages, or for whatever other reason then thats their choice. As long as they pay their fair share of grid infrastructure (unless they want to go completely off grid) and they get paid a fair amount for power sold back to the utility which is around wholesale.

@PerfectLogic. You miss or ignore my point. The centralized grid model has a lot of instability, resulting in outages. A decentralized grid consisting of distributed generation with multiple gigawatt hours of storage would be much more stable. Utility scale solar continues Utility scale centralized generation.
Your thesis seems 100% Utility Solar, residential a non-starter except for outliers.
I point out multiple times Utility Solar/Electricity/gas/coal generation massively fails, for anywhere from hours to weeks on multiple occasions. BTW, I pay Pepco every month for various charges, grid, transmission, distribution. I have never been recompensed for the 12,000+ kWh I have generated, nor do I expect to be. You seem to ignore the robustness of distributed generation vs centralized. Will you comment on whether 15 gigawatts of batteries, distributed in an average of 750,000 residences and businesses as 20kW of batteries, aggregated into a 15gw VPP (virtual power plant) would be more robust than a single 15Gw plant? This would mitigate to reduce the Transmission and distribution losses (+6%)(EIA), 100’s of miles versus a hundred feet or less, enable frequency regulation, etc. I should point out the gigafactory is scheduled to use 30% of its 50Gwh of batteries per year as stationary storage, so eventually every year it will churn out 15Gw of batteries for stationary storage.
I would also point you to Dr Richard Perez page on solar energy, http://asrc.albany.edu/people/faculty/perez/
"you want coal, we own the mines, you want oil and gas, we own the wells, you want nuclear energy, we own the uranium, you want solar power, we own the ahhh, decentralized solar power isnt feasible, only centralized"
BTW, If I had a 10kW array and a 20-30kWh battery pack, I could power my whole house and my electric car

 

[Perfectlogic]

@PerfectLogic. You miss or ignore my point. The centralized grid model has a lot of instability, resulting in outages. A decentralized grid consisting of distributed generation with multiple gigawatt hours of storage would be much more stable. Utility scale solar continues Utility scale centralized generation.
Your thesis seems 100% Utility Solar, residential a non-starter except for outliers.
I point out multiple times Utility Solar/Electricity/gas/coal generation massively fails, for anywhere from hours to weeks on multiple occasions. BTW, I pay Pepco every month for various charges, grid, transmission, distribution. I have never been recompensed for the 12,000+ kWh I have generated, nor do I expect to be. You seem to ignore the robustness of distributed generation vs centralized. Will you comment on whether 15 gigawatts of batteries, distributed in an average of 750,000 residences and businesses as 20kW of batteries, aggregated into a 15gw VPP (virtual power plant) would be more robust than a single 15Gw plant? This would mitigate to reduce the Transmission and distribution losses (+6%)(EIA), 100’s of miles versus a hundred feet or less, enable frequency regulation, etc. I should point out the gigafactory is scheduled to use 30% of its 50Gwh of batteries per year as stationary storage, so eventually every year it will churn out 15Gw of batteries for stationary storage.
I would also point you to Dr Richard Perez page on solar energy, http://asrc.albany.edu/people/faculty/perez/
"you want coal, we own the mines, you want oil and gas, we own the wells, you want nuclear energy, we own the uranium, you want solar power, we own the ahhh, decentralized solar power isnt feasible, only centralized"
BTW, If I had a 10kW array and a 20-30kWh battery pack, I could power my whole house and my electric car

There is no 15GW utility scale solar plant. Even on the utility scale they still get power from hundreds of sources. I'm pretty sure that outtages almost always happen not because of generation problems, but distribution problems. If some wants to pay for a battery as insurance against outtages then go ahead, but they shouldn't let everyone else pay for it.

 

[dalalsid]

@dalalsid

You are repeating yourself, I have already explaned why you are wrong 10 times.

Perfectlogic, You are repeating yourself, I have already explaned why you are wrong 10 times. Here is a copy paste:

"There will come a time when DG is cheaper than transmission alone even at a small scale."
"How many years before solar + batteries goes under 10c/kWh?? 5 years? 10 years? 15 years?"

Here is a link to a calculation for current Solar + battery price - http://seekingalpha.com/article/3147876-the-unstoppable-force-of-solarcity-simplified - 20c/kWh. Here is a neat chart extrapolating avg. utility power pricing vs drop in solar + storage PPA pricing from that article (note: that was written by me):

 

[Perfectlogic]

Perfectlogic, You are repeating yourself, I have already explaned why you are wrong 10 times. Here is a copy paste:

"There will come a time when DG is cheaper than transmission alone even at a small scale."
"How many years before solar + batteries goes under 10c/kWh?? 5 years? 10 years? 15 years?"

Here is a link to a calculation for current Solar + battery price - http://seekingalpha.com/article/3147876-the-unstoppable-force-of-solarcity-simplified - 20c/kWh. Here is a neat chart extrapolating avg. utility power pricing vs drop in solar + storage PPA pricing from that article (note: that was written by me):

So on your off grid calculations you assume the residents take advantage of new technology, and on the utility calculation you assume they ignore any new technology which I'm pretty sure is against the law. Nice assumptions.

 

[dalalsid]

So on your off grid calculations you assume the residents take advantage of new technology, and on the utility calculation you assume they ignore any new technology which I'm pretty sure is against the law. Nice assumptions.

I assume SolarCity PPA pricing improvements for new customers based on new tech unless you are claiming that SCTY/TSLA will not offer new tech (in which case I can safely ignore anything you say). I also assume utility price rising at the same rate as they have for the last decade. I see no reason for that to change. As you yourself has stated several times, they have sunk costs of infrastructure which will not go away soon and switching from nat gas to solar is only going to save the utility 2c (also according to you). And you are yet to provide even a single example of new technology reducing end customer pricing on the utility side. Also I'm assuming SolarCity PPA pricing which is inherently more expensive than buying a system too. So no assumption there is unreasonable. If you want to argue that the utility will drop pricing, you need to show either
a. average price increase slowing down (not yet happened inspite of cheaper nat. gas, wind and solar)
b. regional price dropping where more renewables are being deployed.

P.S. As usual you are ignoring my main point:
"There will come a time when DG is cheaper than transmission alone even at a small scale."

 

[Perfectlogic]

I assume SolarCity PPA pricing improvements for new customers based on new tech unless you are claiming that SCTY/TSLA will not offer new tech (in which case I can safely ignore anything you say). I also assume utility price rising at the same rate as they have for the last decade. I see no reason for that to change. As you yourself has stated several times, they have sunk costs of infrastructure which will not go away soon and switching from nat gas to solar is only going to save the utility 2c (also according to you). And you are yet to provide even a single example of new technology reducing end customer pricing on the utility side. Also I'm assuming SolarCity PPA pricing which is inherently more expensive than buying a system too. So no assumption there is unreasonable. If you want to argue that the utility will drop pricing, you need to show either
a. average price increase slowing down (not yet happened inspite of cheaper nat. gas, wind and solar)
b. regional price dropping where more renewables are being deployed.

P.S. As usual you are ignoring my main point:
"There will come a time when DG is cheaper than transmission alone even at a small scale."

Like I have said several times before, utilities haven't had the chance of lowering rates until now, the new technology have hit cost parity NOW and moving foward cost reductions will happen. It's so simple, come on now. You are comparing future technology on the residential off grid side with current technology on the utility side...

 

[winfield100]

There is no 15GW utility scale solar plant. Even on the utility scale they still get power from hundreds of sources. I'm pretty sure that outtages almost always happen not because of generation problems, but distribution problems. If some wants to pay for a battery as insurance against outtages then go ahead, but they shouldn't let everyone else pay for it.

again, you miss or ignore my point. 750,000 residences or businesses, with or without PV, but most likely PV and a battery pack averaging 20kWh each, some more, some less, could be aggregasted as a 15Gw VPP. I am well aware this does not presently exist. I continue to point out that distributed vs centralized is more robust when trouble occurs. On the utility scale, you have a lesser number of centralized, point source generating vs distributed.
We shlll probably have to agree to disagree. You go your way with centralized control and multiple massive failures, and I shal go with distributed, where failures will also occur, but to a much lesser degree

 

[dalalsid]

utilities haven't had the chance of lowering rates until now

Hahahaha. That's like saying other car companies haven't had the chance to build long range EVs until now. Or cable providers haven't had the chance to provide affordable broadband until now. Taxi companies haven't had the chance to build an app until now. etc. etc.

Does anybody here have lower electricity bills since 2008 as natural gas prices declined? Haven't had the chance my a$$. Forget about renewables. They had the chance just from natural gas pricing.

Also didn't you just say that some state got 20% of it's power from wind? Wouldn't it be easy for you to show dropping prices in that state?

--Edit--
P.S. Here is how fast the grid is switching to cheaper natural gas from coal:
The American Power Grid And The Economics And Greenness Of Tesla's Luxury Electric Vehicles - Tesla Motors (NASDAQ:TSLA) | Seeking Alpha

Where are my price drops?

 

[Perfectlogic]

Hahahaha. That's like saying other car companies haven't had the chance to build long range EVs until now. Or cable providers haven't had the chance to provide affordable broadband until now. Taxi companies haven't had the chance to build an app until now. etc. etc.

Does anybody here have lower electricity bills since 2008 as natural gas prices declined? Haven't had the chance my a$$. Forget about renewables. They had the chance just from natural gas pricing.

Also didn't you just say that some state got 20% of it's power from wind? Wouldn't it be easy for you to show dropping prices in that state?

I'm not gonna waste my time digging around for numbers trying to prove anything to you, as I have clearly proven my point 10 times already but it falls for deaf ears, you have made your mind up and won't change it for anything, and that is why I'll actually stop responding now, it's a waste of time.

 

[dalalsid]

I have clearly proven my point 10 times already

You have stated your point 10 times. I have proven mine.

 

[Foghat]

Utilities are already choosing DG to reduce costs like never before:

"Rather than build a new substation at a cost of $1 billion, New York City-based utility Con Ed plans to invest5 in demand-side management programs (distributed solar generation) and substation upgrades to reduce its load by 52 megawatts by 2018, at significantly lower cost to ratepayers.Additionally, California’s Distribution Resource Plans and New York’s Reforming the Energy Vision (REV) proceedings are two important regulatory dockets that will continue in 2015. Both acknowledge the utilities’ revenue diminution dilemma and seek to realign incentives to accept and encourage clean distributed generation resources to the benefit of everyone, including utilities, clean energy providers, and consumers."

 

[dalalsid]

Utilities are already choosing DG to reduce costs like never before:

"Rather than build a new substation at a cost of $1 billion, New York City-based utility Con Ed plans to invest5 in demand-side management programs (distributed solar generation) and substation upgrades to reduce its load by 52 megawatts by 2018, at significantly lower cost to ratepayers.Additionally, California’s Distribution Resource Plans and New York’s Reforming the Energy Vision (REV) proceedings are two important regulatory dockets that will continue in 2015. Both acknowledge the utilities’ revenue diminution dilemma and seek to realign incentives to accept and encourage clean distributed generation resources to the benefit of everyone, including utilities, clean energy providers, and consumers."

This. Any utility that wants to survive needs to get into DG. Utility scale everything is not a solution and not always cheaper.

 

[jhm]

Is variable pricing the way out of Hawaii's solar wars? | Utility Dive

This is a very good article on the importance of getting the economics right. Pricing electricity at marginal cost is consistent with my thinking, though I would go a bit further and allow market to find its price in realtime.

Is the cost of service the missing link?

There is one reason this thinking and every aspect of the debate “falls short” despite the broad agreement on the need for variable pricing, Wallsgrove said.

“We don’t have a cost of service study for Hawaii that tells what the magnitude of that problem is,” he explained. “We need something more definitive on that before we start making policy decisions.”

Such a study of the full array of costs and benefits, Wallsgrove explained, would quantify the ratepayer impacts that arise from expanding distributed generation and distributed energy services. “Where the "cost-shift" rhetoric fails, a cost of service study would get at the heart of the fairness questions.”

Roberts was adamant about what needs to come first. “You need to get the variable pricing correct and then you can deal with distribution issues in other was.”

Advocates, especially utilities and solar companies, fail to think about the system as a whole and don’t understand “basic economics,” he said. “These are really important issues and shouldn’t be turned into a political shouting match.”

With an efficient price system, he added, “all the hand-wringing goes away.”

Solar generation should not be curtailed to keep thermal generation in place but if the grid doesn’t need the solar because it is already running on 100% renewables, “it should be priced accordingly because that is how we will get our next round of innovative solutions,” Wallsgrove said.

The UHERO authors say time varying rates should be based on the marginal cost, which is economic thinking, he added. But rates are more than just a way to generate revenue and recover costs.

“They can shift the system," Roberts said. "Maybe we shouldn’t take the simplistic approach of pricing energy based on marginal cost but instead price it on the kind of system we want to build.”

 

[Foghat]

Jhm,
Did you read about the "flexiwatt" yet?

in a couple years when the gigafactory is churning out 15GWh of storage, what do you think the cost/kWh would be for a energy storage-as-service to homeowners? Meaning I have a pv system at my house and I want 24-7 off grid energy so I buy access to a mobile powerwall/powerpack storage system in order to do that. Could his potentially be cheaper then grid electricity as powerwall prices go down? Solarcity would rail(or hyperloop) charged packs to these mobile units and charge a contracted $/kWh rate for it. They could also do a combo deal and ppa the entire pv system with mobile storage unit.

this mobile storage service could also be useful for micro grids and everything in between. Solarcity could have a a few large solar farms out in the sunniest spots of the country for the sole purpose of charging powerpacks/powerwalls. Then be continuously shipping packs around the country, again over rail or potentially hyperloop down the line.

I think it really boils down to costs coming down for powerwall/powerpack which could really cause a significant transformation rather precipitously. A person only needs to see a net cheaper cost/kWh retail and they will switch off the utility. If not for just expensive consumption periods of the year, like summer. Ppa the mobile storage or a few months of the year to avoid costly utility bills. Maybe set up a net metering idea for the mobile unit while the home is connected. Maybe these credits can be bought and sold to neighbors on a local market. Potentially turn into a solar Bitcoin.

 

[joefee]

"Solar Bitcoin" ....Elon on the front of the coin?

 

[jhm]

Jhm,
Did you read about the "flexiwatt" yet?

in a couple years when the gigafactory is churning out 15GWh of storage, what do you think the cost/kWh would be for a energy storage-as-service to homeowners? Meaning I have a pv system at my house and I want 24-7 off grid energy so I buy access to a mobile powerwall/powerpack storage system in order to do that. Could his potentially be cheaper then grid electricity as powerwall prices go down? Solarcity would rail(or hyperloop) charged packs to these mobile units and charge a contracted $/kWh rate for it. They could also do a combo deal and ppa the entire pv system with mobile storage unit.

this mobile storage service could also be useful for micro grids and everything in between. Solarcity could have a a few large solar farms out in the sunniest spots of the country for the sole purpose of charging powerpacks/powerwalls. Then be continuously shipping packs around the country, again over rail or potentially hyperloop down the line.

I think it really boils down to costs coming down for powerwall/powerpack which could really cause a significant transformation rather precipitously. A person only needs to see a net cheaper cost/kWh retail and they will switch off the utility.

I have not read this, but I have imagined it. It's a good thought experiment to try to understand the cost of shipping electricity. How much does it cost to send 100 kWh 100 mikes over powerline like versus transporting a battery. First you've got to get a grip on hardware costs. So just 100 mile cable at $10/foot is $5.28M, so you can buy alot of batteries for that kind on money. Then you've got the variable costs. I think the transmission loses are small, just a 1% or so. But what will it cost to move a 880 pound battery 200 miles round trip. It's got to be much more energy cost. I don't have this all worked out, but transmission lines are cost prohibitive for really remote locations, so there may be an opportunity there. But transportation is also expensive. So the more economical use may simply be to produce power locally on remote area, store it in stationary storage, and avoid transport costs all around. So its kind of tricky to find just the right sort of use case. Essentially, batteries have the advantage of being mobile and this is what is to be exploited. Transmission lines are a fixed long-term investment. So mobility has advantages when temporary solutions are needed.

 

[winfield100]

I think the transmission loses are small, just a 1% or so.

EIA says 6% loss.

 

[Foghat]

EIA says 6% loss.

EIA data also shows California lost over 14.2 Terrawatt hours due to t&d loss in 2013. If you look over the past decade, they've lost close to that on average per year. At .20c/kWh for retail, that over $2.85bln per year, $28.5bln over the past decade. Added cost shift onto ratepayers, in my opinion.

Winfield, have you ever researched how much money is spent on oil spills, failed nuclear plant closures, nat gas pipeline explosions, coal ash dumping violations, rail car derailment spills? how much has this has been cost shifted on ratepayers in higher rates? I imagine insurance rates for utitlies also go up or are higher because of such disasters... I wonder how many cents/kWh of cost avoidance DG solar installs create for utilities in this respect?

Also, how much avoided cost DERs have on power outages? Just over the past month, NV Energy has had numerous power outages, that have cost 10's of millions of not more...


if if we all recall the YouTube video of a Solarcity + tesla storage in operation during a power outage in the Bay Area... I wonder that what that stability in mass woul look like on the utitlity of this were to happen in the future again?

 

[dalalsid]

Jhm,
Did you read about the "flexiwatt" yet?

in a couple years when the gigafactory is churning out 15GWh of storage, what do you think the cost/kWh would be for a energy storage-as-service to homeowners? Meaning I have a pv system at my house and I want 24-7 off grid energy so I buy access to a mobile powerwall/powerpack storage system in order to do that. Could his potentially be cheaper then grid electricity as powerwall prices go down? Solarcity would rail(or hyperloop) charged packs to these mobile units and charge a contracted $/kWh rate for it. They could also do a combo deal and ppa the entire pv system with mobile storage unit.

this mobile storage service could also be useful for micro grids and everything in between. Solarcity could have a a few large solar farms out in the sunniest spots of the country for the sole purpose of charging powerpacks/powerwalls. Then be continuously shipping packs around the country, again over rail or potentially hyperloop down the line.

I think it really boils down to costs coming down for powerwall/powerpack which could really cause a significant transformation rather precipitously. A person only needs to see a net cheaper cost/kWh retail and they will switch off the utility. If not for just expensive consumption periods of the year, like summer. Ppa the mobile storage or a few months of the year to avoid costly utility bills. Maybe set up a net metering idea for the mobile unit while the home is connected. Maybe these credits can be bought and sold to neighbors on a local market. Potentially turn into a solar Bitcoin.

It would be easier to install PV in non-optimal locations (partially shaded, other side of roof etc.) than constant battery transport, probably. You have a link to this flexiwatt thing??