Foghat, you seem to have the right idea as to why SCTY has been suppressed for this long. It has puzzled me quite a bit. The regulatory uncertainty is a sure risk, especially net-metering battles. You are very right that we are looking at the addressable market the wrong way. The addressable market is capped out at where net-metering caps are. Behind the meter generation+storage is really long ways away from being economically compelling for vast majority of the market. Solar aggregation is really a slow process in my view as that involves utilities. I hope to see some positive news from Arizona but market seems to be seeing the opposite.
Worst case scenario, what's the end game here? SCTY gets locked out gradually as net-metering caps are met in various states. Maybe SCTY can keep going to more states and more countries. Or maybe SCTY can get into utility solar projects. What about commercial/industrial applications. Is net-metering that crucial there? In other words, is there sizeable addressable market behind-the-meter there?
Sure in 2030 (or whatever year) net-metering won't matter. Panels + Batteries will be so efficient and so cheap that utilities will no longer be needed for a sizable addressable market. But until then what's the game?
What's each of your worst case scenarios? Would love to hear your opinions.
Well, the key with net metering debate is a value of solar study by an independent organization. It is clear utilties are not liking this idea because the 8 independent commissioned studies out there now show the benefits outweigh the costs to all rate payers on the grid. In light of this independent evidence, utilties can not claim solar users shift costs onto non solar customers.
right now, many utilties are saying there is a cost shift without any sort of objective study on the value of solar. It's like they are saying that it is a cost, so everyone has to believe it as fact. So, inherently, utilties are starting from a weak position. it is a matter of getting more support for DG benefits from more and more studies to use as a baseline to judge what "cost shifts" are happening. Again, the entire foundation of utitlies arguement is around net metering cost shifting to non solar. If that turns out to be not the case, then utitlies will lose their entire ability to arbitrarily raise new charges, or reduce net metering rates.
Arizona APS, as far as I know, is NOT a capped net metering program, so Solarcity could turn as many rooftops solar as physically possible between now and the end of the hearing process, which last into 2016. Then, after the net metering benefits study concludes net benefits, we could see another boom to finish out the ITC into 2017. Let's not forget, the ITC could be extended again or end up being greater then 10% so that would be a massive boon. 2016 is going to be a wild year, my opinion is it will end up very positive for Solarcity.
I think aggregation is going to be a reality sooner then you might think. It clearly is dependent on tesla energy production ramp. If tesla can pump out a lot of batteries next year, and Elon has already indicated they potentially are looking at $500mln in 2016 sales, then Solarcity will easily install well over 10k solar+storage systems. In california right now they are discussing how to integrate these assets into the grid, ref: Solarcity white paper on their gridx website. From that white paper, Solarcity has already gamed all the questions utitlities will raise about costs. Solarcity has also outlined all the mitigations to those costs. also, they will be working under PURPA, not net metering with solar + storage so they bypass the net metering issues.
My feeling is that Solarcity is well ahead of the game here and will implement solar+storage next year in large numbers, which will override many of the net metering/cap delays utilties want to make happen. Specifically in California they are already working to implement this new DG program and its my belief california will go the DG priority order idea route. Along with New York, and possibly Hawaii, there will be overwhelming evidence for this new energy structure for the rest of the country to follow.
the Massachusetts cap is being doubled, the New Jersey cap is also being raised, and New York is sure to follow since they are already booked to hit the cap in many utiltiy territories already. So, the cap issue seems to be being address by various states already.
I feel the rest of this year will be volatile and 2016 will be no different, but as the evidence rolls in on the value of solar as well as Solarcity's plan being worked on in.california a good year and half ahead of the california cap being hit, we might really see a strong response on the market.
For me, I continue to accumulate shares at these prices as much as possible. Believe me, I've had opportunities to put my money elsewhere and make more over the last year or so, but I'm making the bet this works out over the next 2 years in a really big way... And continue for literally decades to come. I'm obviously in the long game here.
