SolarCity (SCTY)

[jhm]

Hey, foghat, I just want to say thanks for keeping use posted on the regulatory matters. I still think the longterm, free market solution is virtual net metering. When neighbors can sell surplus power to one another that will crack open a much larger market than solar is currently confined to even if their were no limits to net metering. Virtual net metering allows people who do not have roofs for solar, such as renters and highrise dwellers, to become customers of distributed solar. Community solar can happen even without ground mounted solar gardens. Virtual net metering allows a free market to price distributed solar. We don't need PUCs and politicians to set prices for anything.

 

[blakegallagher]

Foghat, Everything you have written is very informational. I agree with your sentiment. But in reality SCTY looks to be in big trouble at least in AZ and NV and will be in trouble in more states.

Look at this way - EVERYBODY knows prohibiting manufacturers from directly selling cars to consumers is just not fair or right. But these laws protecting the dealers still exist. If anything they were strengthened as Tesla became popular. We cannot take any victory for guarantee based on "rightness". To make matters worse SolarCity just doesn't have the mass appeal that Tesla has, to encourage people to fight on their behalf. We are ultimately at the mercy of the regulators/commissioners, legislature and the governors.

My big hope is that Management will find ways around this one way or the other or look for opportunities elsewhere. At this point investment in SCTY is really just a vote of confidence in management (not necessarily tied to a specific business model).

As you can tell, I am pretty down on SCTY right now. But I'm going to just sit in for a few years and re-assess.

That's what I did with JASO. Everybody here knew since two years ago that it is very much undervalued. But unfortunately it stayed undervalued all along and is undervalued even now. After a point I had to give up and get out... I have two more years for SCTY. End of 2017 is make or break.

One thing that SolarCity has that a lot of people underestimate is a very large workforce and they are a huge job creator in a lot of communities.

In the case of Nevada if this law passes there will be 6000 people that will lose jobs and be on unemployment in the state. That is equivalent to the entire job growth they experienced in 2014 At some point this has to play in decisions on the political level.

Who knows how this will end up who knows how to swallow and up but I think by 2017 you will be very happy with your Solar City stock!

I agree that nothing is a given though and I'm a little bit worried to see the California utilities proposing to end net metering since it is such a large market for them it would be catastrophic in a way we have not seen.

Sorry about your JASO holdings.

 

[jhm]

One thing that SolarCity has that a lot of people underestimate is a very large workforce and they are a huge job creator in a lot of communities.

In the case of Nevada if this law passes there will be 6000 people that will lose jobs and be on unemployment in the state. At some point this has to play in decisions on the political level.

Who knows how this will end up who knows how to swallow and up but I think by 2017 you will be very happy with your Solar City stock!

Sorry about your JASO holdings.

Hmm, 6000 jobs. Isn't that close to the number of jobs the Gigafactory will bring to Nevada?

 

[TheTalkingMule]

Trying to figure out how options work to see how they can be integrated into my SCTY purchase on this dip. Waaaaaaaaaay too much info to absorb for me to be even remotely proficient relative to the field.

I don't know how you folks deal with these ups and downs every day. Thinking I'll just buy as much stock as is remotely rational and sit on it forever.

 

[Foghat]

SB374 Net Metering Cap

well, the NV Energy cap is now hit as of 8pm this evening. All sales of any rooftop solar are now halted in the state of Nevada.

Commission has a massive decision tomorrow and has to do it expeditiously as potential lay offs/transfer announcements could start happening within next 24 hours. Solarcity employs 1400 people in Nevada.

 

[dakh]

Trying to figure out how options work to see how they can be integrated into my SCTY purchase on this dip. Waaaaaaaaaay too much info to absorb for me to be even remotely proficient relative to the field.

I don't know how you folks deal with these ups and downs every day. Thinking I'll just buy as much stock as is remotely rational and sit on it forever.

Next best thing you can do if you want more leverage is to get some LEAP calls. Just need to figure out what strike price suits you best.

 

[blakegallagher]

Trying to figure out how options work to see how they can be integrated into my SCTY purchase on this dip. Waaaaaaaaaay too much info to absorb for me to be even remotely proficient relative to the field.

I don't know how you folks deal with these ups and downs every day. Thinking I'll just buy as much stock as is remotely rational and sit on it forever.

Your move is the much safer bet! The longer you go the safer the bet should be. I think the 2017 options with a strike price of 80 or under are very safe but I am a big SCTY bull. The options are more volatile but we are at the bottom of a channel that has held for 2 years as Solar City continues to build value.

 

[replicant]

I'm curious to know if the Beyond Coal campaign will continue beyond coal.

If it does, when will it change its focus, and for what: pro-renewable, pro-distributed, anti-centralized, anti-oil, anti-natgas...?

Edit: @admins, feel free to move this post to the Alt Energy thread. It's a reply to the latest net metering comments in this convo, though.

 

[jhm]

I'm curious to know if the Beyond Coal campaign will continue beyond coal.

If it does, when will it change its focus, and for what: pro-renewable, pro-distributed, anti-centralized, anti-oil, anti-natgas...?

Edit: @admins, feel free to move this post to the Alt Energy thread. It's a reply to the latest net metering comments in this convo, though.

I would love to see Beyond Coal take up grid neutrality / virtual net metering / distributed energy. The basic opportunity is to free up the market economics fkr distributed solar and batteries to drive fossil generation out of business. Beyond Coal has been successful in closing down coal plants largely because the economic case for coal has become so miserable. This has led to a lot of substitution of natural gas for coal. This is at best a halfway solution. They need to work on undermining the economics of natural gas. In the long run this will happen as batteries and solar continue to come down in price. So the question for advocacy groups is to understand all the points of resistance that slow down this transition and work to eliminate those points of resisance.

So right now net metering caps are emerging as a point of resistance. Gas peaker plants could be pushed to virtual closure with more distributed solar and batteries. I would argue however that net metering as it stands is too confining for rooftop solar. It limits rooftop solar only to onsite self-consumption for those homes and businesses that can physically install solar. This is way too confining. This is why we need to shift focus to virtual net metering so that roofs that have capacity for more than just self-consumption can be utilized for community solar. Moreover community solar subscribers could also be points of distributed batteries. They buy surplus solar power from neighbors and provide storage services that the whole solar community values. With virtual net metering so many of the aggregated grid services SolarCity would like utilities to pay them for becomes services that solar community subscribers are quite willing to lay for. So virtual net metering would be the most comprehensive regulatory opening I can think of. Net metering, in my opinion, is not worth fighting for, unless it opens the door to virtual net metering as a concession.

 

[winfield100]

@JHM

......virtual net metering so many of the aggregated grid services SolarCity ....

a clarification. is virtual net metering the same or similar to Virtual power plants (VPP) where groups of local batteries are aggregatee into small to large power plants, avoiding some of the T&D (transmissions and Distribution) costs and losses

 

[blakegallagher]

Yuck SCTY below 45, this is ugly. Lets hope Nevada does not shut down solar while we are already at these bottom of the barrel prices.

 

[TheTalkingMule]

Next best thing you can do if you want more leverage is to get some LEAP calls. Just need to figure out what strike price suits you best.

From my limited self-education that seemed like the best plan as well. Buy whatever amount of stock I can reasonably afford then dump some extra into Jan17 calls at an aggressive strike price around $100. I don't wanna get too fancy and make typical mistakes, but I don't want to miss an obvious standard strategy that people learn in week two of options trading.

Thanks for the input folks! [fingers crossed]

 

[gene]

From this article: NV Energy: Rooftop solar cap will be hit Saturday - Las Vegas Sun News

WHAT HAPPENS TODAY

Expert witnesses championing the solar industry and the power company will offer evidence to the PUC.
The solar industry hopes that once the cap is maxed, the industry won’t halt and new customers won’t be charged what it calls exorbitant fees. NV Energy wants to create a new price structure for new customers who want to participate after the cap is hit.
NV Energy proposed a plan that would halve the credit it pays to customers for the rooftop solar energy they provide to the grid. It also proposed a new demand charge and a user fee.
WHAT HITTING THE CAP MEANS FOR CONSUMERS
For the 9,171 net metering customers hooked up to NV Energy, the end of the cap could mean little. But it’s a big deal for customers who want to buy or lease solar panels in the coming days. Once the cap is reached, NV Energy will no longer send its employees to tie rooftop solar installations into the grid. The PUC could also vote to impose the pricing model proposed by NV Energy or it could craft a solution of its own.
WHAT COMES AFTER THE CAP
Whatever the PUC decides on Wednesday is only an interim solution.
NV Energy and the solar industry made a gentlemen’s agreement (and a law) during the session in which they agreed to lift the cap entirely in return for a new price structure. Neither side expected the cap to be hit so soon — prompting the current dilemma.
The PUC is tasked with coming up with a permanent solution by December to end the cap battle.
WHAT THE ATTORNEY GENERAL JUST DID
Late Thursday, the attorney general’s Bureau of Consumer Protection — which represents ratepayers in PUC cases — requested that the commission not agree to NV Energy’s new fees as an interim solution. “Notably, just last year (NV Energy) testified in support … that the current rate design was reasonable,” the bureau wrote in the filing.
NV Energy said on Thursday that rooftop solar customers cost it money, which it is forced to pass on to nonsolar consumers — around $8 to $12 million in expenses for every 3,000 new rooftop solar customers.

 

[Noble Ninja]

SCTY down ~10% today on 10 million share volume (5x average) to a low of $42.18 so far but SCTY is way oversold. New 52-week low and down 30% since August 5th (two weeks ago, the day after TSLA's ER).

Seems like oil and China is to blame again, causing a lot of stop limits triggered around the $48 mark (has been a great support line for the past year).

 

[SBenson]

Itching to buy more. Given that the (bad) news hasn't hit the major news-wires yet, I wonder if the stock will fall even further. Confused between waiting and buying.

- - - Updated - - -

Foghat, any stats as to % of SolarCity business exposed to Neveda (and Arizona)?

IIRC they got into NV installation business recently while many of the risks were known publicly. So one would think SolarCity is well prepared for any circumstances (even if it means swiftly moving people without much costs/losses during the transition).

 

[hershey101]

I give up with SCTY. Pulled the trigger on some calls in the morning (although if I had been around I would probably have moved my buy limits lower)... Already down 15% on them. sigh. Ok I'm selling all of my holdings on the next bounce back to ~$55 and then saying adios to this stock. It might seem like a no brainer in 2020 or 2025, but I don't have the patience to wait that long. I would rather take that money and throw it in TSLA.

 

[Foghat]

Itching to buy more. Given that the (bad) news hasn't hit the major news-wires yet, I wonder if the stock will fall even further. Confused between waiting and buying.- - - Updated - - -Foghat, any stats as to % of SolarCity business exposed to Neveda (and Arizona)? IIRC they got into NV installation business recently while many of the risks were known publicly. So one would think SolarCity is well prepared for any circumstances (even if it means swiftly moving people without much costs/losses during the transition).

The NV cap is 235MWs. To give perspective, California's cap is something above 9,000MWs. Massachusetts is going to be 1,600MWs, so NV is actually a small % of business. Now, what most people don't realize, the Nevada legislature just passed a bill that lifts the net metering cap completely. That means no cap now. If solar wins a continuation of the same net metering rate in the interim today(or very very soon), then all sales teams are a go to sell in unlimited fashion. Then, when the commission agrees on the new rate, Solarcity could expand dramatically in Nevada because the cap is gone and there are a lot bare roofs around the state. I think they will continue the same net metering rate in the interim, which puts all the pressure on the commission to come up with a long term rate between the interim rate decision and December 31st. Actually hitting the cap now, puts tremendous pressure on the commission to continue the same net metering rate since they can't come up with an appropriate judgement right now with so much at stake.Again, we could see a significant expansion during the interim up to the final rate decision NLT December 31st. Since the only reference to the cost/benefit of DG was an independent study conducted by the NV PUC concluded net metering is a net benefit to all rate payers, it will be difficult for the NV commission to judge otherwise against their own independent study... No matter what the utility says about its non independently verified aversions and claims. Therefore, in the absence of a new independent net metering study, I feel we may see a DG friendly rate revision by Dec 31st. By which, a long term net metering rate with go active. This will then really open up the expansion of Solarcity Nevada sales and we then can truly breakdown an addressable market over a magnitude greater then the current 235MW capped market. Potentially a massive reversal to what we are seeing today and thus a tailwind to he stock price momentum higher. I personally have picked up more this morning on my perceived great opportunity that's materialized during this down swing.

update:

We can't forget the gigafactory will require a lot of solar. I willing to estimate 100MWs+ so nearly 50% of the just hit cap right there... Another reason to understand why there is no new cap potentially. I think this is more evidence Solarcity is going to make a big expansion into Nevada soon, especially if the net metering rates are maintained at near current rates going into 2016. Gigafactory might also take all 2016 silevo ramping production and potentially some of 2017 production and that is in bulk single customer shipment which are a significant cost savings to Solarcity. This also applies to the production on Solarcity's new ZS peak zep products as well. Therefore, Nevada is priming up to really expand Solarcity sales next year and gives weight to a 1.6GWs+ 2016 yearly guidance.

 

[MartinAustin]

Jim Chanos just came onto CNBC and said he is now shorting the stock.

(That caused the drop at 12:25 EST, though it has been recovering nicely from there since...)

It's a bit weird to be shorting it at the $45 level... it would be something else if it was $80 and you said you were shorting it!

 

[gene]

Jim Chanos just came onto CNBC and said he is now shorting the stock.

(That caused the drop at 12:25 EST, though it has been recovering nicely from there since...)

It's a bit weird to be shorting it at the $45 level... it would be something else if it was $80 and you said you were shorting it!

Well, I just now bought more to add to my substantial holding.

 

[SBenson]

The NV cap is 235MWs. To give perspective, California's cap is something above 9,000MWs. Massachusetts is going to be 1,600MWs, so NV is actually a small % of business. Now, what most people don't realize, the Nevada legislature just passed a bill that lifts the net metering cap completely. That means no cap now. If solar wins a continuation of the same net metering rate in the interim today(or very very soon), then all sales teams are a go to sell in unlimited fashion. Then, when the commission agrees on the new rate, Solarcity could expand dramatically in Nevada because the cap is gone and there are a lot bare roofs around the state. I think they will continue the same net metering rate in the interim, which puts all the pressure on the commission to come up with a long term rate between the interim rate decision and December 31st. Actually hitting the cap now, puts tremendous pressure on the commission to continue the same net metering rate since they can't come up with an appropriate judgement right now with so much at stake.Again, we could see a significant expansion during the interim up to the final rate decision NLT December 31st. Since the only reference to the cost/benefit of DG was an independent study conducted by the NV PUC concluded net metering is a net benefit to all rate payers, it will be difficult for the NV commission to judge otherwise against their own independent study... No matter what the utility says about its non independently verified aversions and claims. Therefore, in the absence of a new independent net metering study, I feel we may see a DG friendly rate revision by Dec 31st. By which, a long term net metering rate with go active. This will then really open up the expansion of Solarcity Nevada sales and we then can truly breakdown an addressable market over a magnitude greater then the current 235MW capped market. Potentially a massive reversal to what we are seeing today and thus a tailwind to he stock price momentum higher. I personally have picked up more this morning on my perceived great opportunity that's materialized during this down swing.

update:

We can't forget the gigafactory will require a lot of solar. I willing to estimate 100MWs+ so nearly 50% of the just hit cap right there... Another reason to understand why there is no new cap potentially. I think this is more evidence Solarcity is going to make a big expansion into Nevada soon, especially if the net metering rates are maintained at near current rates going into 2016. Gigafactory might also take all 2016 silevo ramping production and potentially some of 2017 production and that is in bulk single customer shipment which are a significant cost savings to Solarcity. This also applies to the production on Solarcity's new ZS peak zep products as well. Therefore, Nevada is priming up to really expand Solarcity sales next year and gives weight to a 1.6GWs+ 2016 yearly guidance.

Thanks Foghat. I picked up another slice of shares at 41.50.