SolarCity (SCTY)

[TheTalkingMule]

People lose their shirts by falling for crap when they don't look carefully. I get called out as FUD even when I am presenting basic facts with figures and numbers. The unwarranted hype and hopium is dangerous and needs to be called out, just as unwarranted fud needs to be called out. Didn't you and I lose enough money because of this already?

Most folks here haven't lost a dime, we are just waiting patiently for our investment to pay off.

I think the personal attacks comment was referring to your snarky Foghat comment above. While they're no big deal in my eyes, I do think you'd be better off in both your analysis and posting it you took a less emotional path.

Again, it's pretty clear that the trolling in this thread has taken the overall tone of discussion to a bad place. Definitely NOT referring to any of your posting as trolling, other folks.

 

[Yonki]

FYI/FWIW, Here's what Fidelity's been paying me to loan out my shares (for nefarious shorting purposes I'm sure):

TSLA
01/21/16 2.00%
01/22/16 2.50%
02/01/16 2.00%
02/17/16 2.50%

SCTY
01/25/16 4.00%
01/28/16 5.00%
02/09/16 6.00%
02/16/16 10.00%

SCTY's up to 19% now. TSLA still at 2.5%.

 

[jhm]

Jhm, Thanks for the excellent detailed response on TOU rates.

I am not big on demand response actually. If my dryer ever decides to not run immediately when I press the button, I will throw it out of the window and hope that some GTM folks or RMI folks are walking by at that time. A dryer with it's own mind is too smart for itself. More importantly, who will go out and buy a brand new dryer for the sake of saving a few pennies for each load. Nobody. Dryers last like what 20 years. And even the folks who are in the market for a dryer, many of them will be put off by the price premiums the manufacturers charge for making them "smart". These types of analayis make sense in the abstract worlds of RMI and GTM. The last thing a typical American comfort creature cares about is electricity bills, and much less optimising it through demand response. We are not in some third world, where the stay-at-home mom yells at kids for not switching off the ceiling fan when walking out the room.

On the other hand I think batteries will find immense opportunity in this. Especially the commercial, industrial facilities, will get Musk's big boy PowerPacks to not only reduce demand charges but also take advantage of TOU pricing. As gigafactory ramps up, maybe the CA duck won't look as silly as projected. In any case, I don't see a much of an opportunity for SolarCity in this. This is more of a burden or hurdle that they need to jump over to keep business running.

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Wow foghat the unwavering evangelical enthusiasm is really something. Where do you get that from? Declare a complete victory when SC barely files a lawsuit. Now the talk as though SC officially bought the state of Hawaii in entirety when a press release comes out with no detail. Incredible. Amazing.

Anyone interested in a bit more due diligence, have a few questions with respect to this press release.

Is this meant to be a solution for grid-supply or self-supply option? In the past SC management sounded like they are not interested in grid-supply option but they are working on self-supply option. But the issue with self-supply option is you can't really tap the grid at all. So you need a backup generator as part of the package, which SC announcement didn't have. So it's not clear what they are doing.

Any thoughts?

Hey maybe a smart dyer does not fit your lifestyle. How about a hot water heater or refrigerator that goes through a daily defrost cycle. The cycling of these appliances should have no discernable lifestyle cost. Moreover the cost of adding a controller that connects with Nest or whatever is trivial. So the next time you have to replace such an appliance, it may just be standard. EV charging is a big deal. 40 miles per day needs 10 to 15 kWh. Plug in when you get home, and you don't care when exactly it charges so long as you so long as you have enough range for the next day. So if smart charging saves you 5c/kWh that's $15 to $22 per month. So these may all be little things, but they add up. The key to smart technology is to make the operational aspect of demand response pretty transparent to the user and minimize any sort of lifestyle cost.

Regarding HECO's self-supply option, this does allow the solar owner to feed in surplus power for zero compensation. The customer does remain fully connected and can buy or give away power at anytime. Essentially, HECO is offering a backup power service to solar customers. Whether this service is competitive to having one's own backup generator remains to be seen.

So SolarCity is setting up a package that leaves open the possibility of selling grid services to HECO. Will they bite? With the combination of dispatchable supply and load, SolarCity could definitely help HECO balance its grid. So for HECO to refuse to play leaves money on the table. Moreover, it leaves SolarCity’s customers little incentive to use HECO's backup service. HECO could well face outright grid defection.

So I think that SolarCity is loading up customers with dispatchable technology to increase the value of those customers to HECO. This puts SolarCity in a much stronger bargaining position, and it may only need to be strong enough to influence the PUC. I believe ratepayers have an interest in accessing the benefits of these DERs and extending high enough compensation to induce them to remain connected. So after the break down in net metering, I see a bargaining phase beginning. Solar owners and installers need all the chips they can bring to the table.

 

[gigglehertz]

People lose their shirts by falling for crap when they don't look carefully. I get called out as FUD even when I am presenting basic facts with figures and numbers. The unwarranted hype and hopium is dangerous and needs to be called out, just as unwarranted fud needs to be called out. Didn't you and I lose enough money because of this already?

If you're convinced that SolarCity is a scam, and the Rive brothers are lying on their CC's, then why are you here? To help us see the light and sell for a massive short term loss? Out of the goodness of your heart? If you are so down on the company and the stock, then maybe you should just walk away and find another forum.

 

[TheTalkingMule]

SCTY's up to 19% now. TSLA still at 2.5%.

Awesome news, thanks for keeping us in the loop on this! So if they're giving you this, the cost to borrow shares must be absolutely through the roof.

Wish I could loan out my shares

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If you're convinced that SolarCity is a scam, and the Rive brothers are lying on their CC's, then why are you here? To help us see the light and sell for a massive short term loss? Out of the goodness of your heart? If you are so down on the company and the stock, then maybe you should just walk away and find another forum.

That's what I can't figure out. The amount of time spent posting and level of analysis fits into no rational category of investor that I can think of other than someone shorting and not too concerned about an accurate portrayal of fundamentals and outlook. Either way, I'm infinitely grateful for the analytics because he's clearly painting a picture very close to how a typical algorithm currently sees the stock. Just before 3Q earnings he warned that panel makers would do well and SCTY might tank because algorithms will not like the model and all the unrecognized future revenue. It's by looking from the SBenson perspective that I've become comfortable with the Street's view of the stocks value and I can more closely guess when it will pop like mad.

I'm a poker player, whoever has all the money is currently considered "right". When you're right a few times in a row, I don't care much about why you're right, there is something of value in your thought process.

That being said, I think my unanswered question from a few pages back is a valid one.

If you don't think PPA will be a success in the medium term, then why are you even on here? If you think it will, then SCTY clearly will hold or increase their lead as solar gets to scale and soft costs melt to nothing. You seem to be hovering in neutral ground where PPA never quite wins and never quite loses. How is that possible if there's only one major player?

 

[Yonki]

Awesome news, thanks for keeping us in the loop on this! So if they're giving you this, the cost to borrow shares must be absolutely through the roof.

Wish I could loan out my shares

Move over to Fidelity! These shares are in my Fidelity IRA. These interest rates are so good I'm looking at moving my non-retirement securities over to Fidelity as well.

 

[TheTalkingMule]

Move over to Fidelity! These shares are in my Fidelity IRA. These interest rates are so good I'm looking at moving my non-retirement securities over to Fidelity as well.

Maybe I will actually. My solar wagering funds are in a Wells Fargo IRA and the options fees seem high to me. Thanks again for the info.

 

[electracity]

If you're convinced that SolarCity is a scam, and the Rive brothers are lying on their CC's, then why are you here? To help us see the light and sell for a massive short term loss? Out of the goodness of your heart? If you are so down on the company and the stock, then maybe you should just walk away and find another forum.

You need to learn more about trading equities.

 

[SBenson]

For the longest times I wondered why Elon Musk didn't get personally involved in NV fight. In hindsight that looks like a very wise move.

"The White House is said to be considering Gov. Brian Sandoval (R-Nev.) as a nominee to replace Justice Antonin Scalia on the Supreme Court."

Republican governor of Nevada Brian Sandoval being considered for Supreme Court - The Washington Post

and here is a followup

http://news3lv.com/news/local/sandoval-says-he-does-not-want-to-be-considered-for-supreme-court

oh, good lord.

 

[TheTalkingMule]

Can we talk about flexibility?

Renewal Value

Are we nearing a point where SCTY can safely say they'll give you the panels after 25 years? Why not have that as the standard part of the contract? I can't imagine it would be logical to keep the panels up in year 26 under a PPA, and any decent company wouldn't have the solution be to discard them when they're still 80% effective. Why not entice people with the concept of ownership at the end of a 5 year renewal?

As I've said a bunch of times, the value in these PPA contracts is the relationship building. If they execute properly, SCTY will have a "total energy solutions" customer for life. Why worry about a few panels with minimal residual value? I don't see a scenario where that seriously undermines the future business model(replacement revenue, etc.)

Sales Cost
So here we are at the tipping point. Total hardware costs have nearly bottomed out relative to the decline curve of the last three decades, but soft cost are now the big glaring issue. Customer acquisition, sales, marketing is like $.60/W+ for SCTY(more or less for local installers) and MUST be trimmed substantially by end of 2017 to remain competitive with local installers who will soon be able to charge $2.00-$2.50/W for quality products profitably at scale.

SCTY talks about this and seems to have a plan, but at what point am I going to be able to simply sign up for SolarCity PPA online and get a rate that reflects that $.60/W savings? I've sent a few emails/facebook messages to SCTY and have gotten no response. Obviously there are concerns about undermining the business model by offering lower online pricing, but there must be a nuanced solution here.

 

[renim]

All these extreme TOU scenarios and excessive fee scenarios are basically the same as saying "you can stop solar"......

no it means the opposite, TOU midday rates come from solar, utility solar is at 4 cents / kwh in the states neighbouring California, it will get to 3 cents per kWh in about 2 years. Yes NIMBYs can stop utility solar near them, but they can't stop it over the border.

TOU in California appears to be heading towards being the trailing 12 month average of last years price, so it should be 'gentle'. but it still heading towards midday TOU being the same same rate as middnight TOU. By 2020 midday TOU will be less than midnight TOU.

great for TSLA, lousy for SCTY

 

[Foghat]

Grid Resiliency – Distributed Energy Resources| SolarCity

yes yes and yes... This video is exactly the message by which Solarcity needs to market Solarcity products. Regulators can get it, and regular people can get it. Visually demonstrate the benefits and go viral with it continuously on the net.

The message is "everything is just better" with home solar grid.

its time for Solarcity to get this vision out there for everyone to get familiar with. As we seen, it is a media war over the future of energy with incumbents. Have to win the game on messaging and this can do it. The better this gets, the sooner we can fully transition the grid and all energy production and consumption.

 

[TheTalkingMule]

no it means the opposite, TOU midday rates come from solar, utility solar is at 4 cents / kwh in the states neighbouring California, it will get to 3 cents per kWh in about 2 years. Yes NIMBYs can stop utility solar near them, but they can't stop it over the border.

TOU in California appears to be heading towards being the trailing 12 month average of last years price, so it should be 'gentle'. but it still heading towards midday TOU being the same same rate as middnight TOU. By 2020 midday TOU will be less than midnight TOU.

great for TSLA, lousy for SCTY

Linear thinking. You can't beat solar by manipulating the TOU to extremes, it simply won't work. It'll be too easy for people to adjust. They can do it today semi-economically, how do you think the landscape will look in 2 years when Gigafactory 1 is open and other(even cheaper) home battery companies are online? There's no way for traditional utility production to wiggle out of this new dynamic.

 

[electracity]

no it means the opposite, TOU midday rates come from solar, utility solar is at 4 cents / kwh in the states neighbouring California, it will get to 3 cents per kWh in about 2 years. Yes NIMBYs can stop utility solar near them, but they can't stop it over the border.

TOU in California appears to be heading towards being the trailing 12 month average of last years price, so it should be 'gentle'. but it still heading towards midday TOU being the same same rate as middnight TOU. By 2020 midday TOU will be less than midnight TOU.

great for TSLA, lousy for SCTY

Have you calculated solar added year by year to reach this conclusion? Sunny day electricity obviously becomes low cost, but I would be surprised if the drop is that quickly. This price drop will have some interesting opportunities for industry.

 

[TheTalkingMule]

Not sure if it was discussed, but a judge seems to have cleared the way fro SUNE to finally buy Vivint for $1.9B That's been held up for a while now, right? Isn't Vivint just a bunch of sales guys? Don't you want to be trimming sales at this stage?

 

[The Blue Owl]

Grid Resiliency – Distributed Energy Resources| SolarCity

yes yes and yes... This video is exactly the message by which Solarcity needs to market Solarcity products. Regulators can get it, and regular people can get it. Visually demonstrate the benefits and go viral with it continuously on the net.

The message is "everything is just better" with home solar grid.

its time for Solarcity to get this vision out there for everyone to get familiar with. As we seen, it is a media war over the future of energy with incumbents. Have to win the game on messaging and this can do it. The better this gets, the sooner we can fully transition the grid and all energy production and consumption.

Yes, this video is a good start. But on that whole page, there is still no mention of increased security (they do mention it in the video). They have white papers and data sheets on other subjects, but not the security aspect.

This type of attack is what I am talking about. SC should really start making noise about this to build support from conservatives. Distributed solar is clean, but so is utility solar. OTOH, only distributed generation is secure.

 

[jhm]

no it means the opposite, TOU midday rates come from solar, utility solar is at 4 cents / kwh in the states neighbouring California, it will get to 3 cents per kWh in about 2 years. Yes NIMBYs can stop utility solar near them, but they can't stop it over the border.

TOU in California appears to be heading towards being the trailing 12 month average of last years price, so it should be 'gentle'. but it still heading towards midday TOU being the same same rate as middnight TOU. By 2020 midday TOU will be less than midnight TOU.

great for TSLA, lousy for SCTY

You need to remember to add about 7 or 8 cents per kWh for transmission and distribution. This will be included in TOU, even if solar takes wholesale prices below $30/MWh. Somebody's got to pay for the grid, right?

 

[TheTalkingMule]

Zero chance of this Nevada model standing up there, let alone speading to legitimate states. 3 cents/kWh when the alternative source would be 12 cents if solar weren't there? Good luck with that.

Don't forget, these companies will be broke very soon, so we won't have to worry about governors being utility puppets.

 

[Foghat]

SolarCity Creates New Fund to Finance $249 Million in Solar Projects -- SAN MATEO, Calif., Feb. 25, 2016 /PRNewswire/ --

Add a $249mln tax equity fund to the capital raise for the quarter.

oh yeah, once done, will add another $249mln after it...

 

[renim]

Have you calculated solar added year by year to reach this conclusion? Sunny day electricity obviously becomes low cost, but I would be surprised if the drop is that quickly. This price drop will have some interesting opportunities for industry.

Nevada solar farm is being added at about 100MW / month, since THAT decision, Nevada solar approvals are trending to 200 MW/month. But as these are farm solar, they tend to single axis tracking and horizontal alignment, so not optimum for panel efficiency, but good for afternoon higher value solar. Current market price for new solar farm in Nevada is 3.87 cents/kWh. Its not that hard to see further engineering 'mounting' improvements shave this figure down to 3 cents/kWh. Further panel improvements should get it below 3 cents/kWh.

The sunbelt states near California have plenty of mines, already serviced with good preexisting electrical infrastructure and land available for 'sun mining' Its dual use.

Hard rock mining tends to have a gold rush mentality. Its not hard to see a couple of dozen of Nevada Copper Forms Strategic Alliance With NV Energy on Solar Development Opportunity | Energy and Mines going ahead in the next 4 years. In each of the sun belt mining states (particularly Arizona, Nevada, Utah, Colorado, New Mexico) kinda similar shale gas boom, but focuses on solar rich, dry air, elevated states.

I don't know if much of that solar production will go west, but it will block California solar production going east (which is the natural flow of solar power). Powerwall/powerpack batteries have a significant price advantage for single large installations, the solar farms should install their powerpacks at a significant discount to what SCTY can install powerwall units at.

Interesting times ahead, SCTY reminds me of BTU, too much debt spent in expensive legacy infrastructure, facing a wall of tsunami of cheap solar coming.

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You need to remember to add about 7 or 8 cents per kWh for transmission and distribution. This will be included in TOU, even if solar takes wholesale prices below $30/MWh. Somebody's got to pay for the grid, right?

the transmission will be included in the TOU, but domestic solar users will still have to pay for distribution. Somebody will pay for the grid.