futureproof
Member
I believe this is where the fundamental disconnect is. SPWR gets wholesale prices for it's electricity. SCTY gets retail prices.
In my own electric bill the difference is a factor of 3X
(supply charges vs delivery charges vs total charges is 1:2:3)
HenryF, I think SPWR is a wisely diversified company, with a specific mix of utility, commercial, and residential that works for them. In the Q4 conference call, they noted that they didn't give residential lease more weight because of the net metering risks and regulatory uncertainty. Cash sales were much safer and rev. rec. more immediate. However, the CEO did note that they will go deeper into residential lease/ppa now. It has become more of a focus and they will adjust their mix appropriately.
To me, I find this telling that they want a piece of what Solarcity is getting. I also see that they are topped out on capacity right now, so they will have to adjust resources from one area in order to compensate. Although their capacity should jump up nicely in 2015, I still feel they are keenly aware of "getting in now" on this market segment. I do say that the KB Home deal they have is big. I've seen a few KB Home communities pop up here in LA in the past few years and have even visited one and talked with a sales rep about the solar system and "Zero House." KB Home sells affordable homes focused on first time home buyers. They generate over a $1bln annual revenue, so no slouch in this market. As far as I know, the SPWR agreement is for cash sales to the KB Homes, then they include the price of the system in the home price.
Solarcity's primary strategy with home builders is to not sell only, but also to have an option to lease/ppa with the new home buyer. So far, as far as Bob Kelly has noted, home buyers like the lease/ppa(saves money) and home buyers are choosing lease/ppa which might be an indication of preference for convenience, immediate savings, or peace of mind.
Overall, I think we should see SWPR get more into the Solarcity "retail" game over the course of the year.(which indicates they Solarcity might be onto to something right here.) Besides, the turnaround on utility projects is long, residential much shorter. Therefore growth can be more immediately experienced with a heavier mix of residential.