Alternative Energy Investor Discussions

[sleepyhead]

The whole talk about how SunPower cells are 21% efficient while rest of crowd is just 15%... It is very misleading and not close to reality.

SunPowers cells should be compared to monocrystalline solar panels, and they generally got 17%-19% efficient cells. With many actually exceeding 19% efficiency. Like cells from AOU, Sanyo, Jiawei...

And if you compare 21% to multiple cells on a market that are "only" 19% efficient, the difference is not that striking, as in the case if you would be comparing them to 15%. And yes, there are lots of offerings of monocristaline cells from China. But last time I have heard, most of SunPower cells were not produced in Western World too. Their biggest plant located in Indonesia or Philippines - somewhere there.

And such choice, basically sunpower lying outright, by choosing not the panels they actually compete against on the market, but lower end of polycrystalline solar panels, place a shadow on that whole crappy presentation SunPower pulled out...

The reason Sunpower is comparing its panels to "commodity" panels that are 15% efficient is because people don't understand why they should pay $1 for a Sunpower panel when they can get a "commodity" chinese panel for $0.60 (like the ones solarcity uses). Investors don't understand this either, and Sunpower held an analyst day to try to convince analysts/investors that they are going to succeed.

There are other manufacturers that make almost as efficient panels as Sunpower, but their costs are a lot higher than "commodity" panels (just like Sunpower's) and will not take away business from Sunpower in the US. Whereas the cheap Chinese commodity panels are taking away business from Sunpower in US, and that is why they compare their panels to commodity panels in their presentation.

Tesla is guilty of worse things in their presentations: such as using 300 mile range on Model S and comparing it to Nissan Leaf's EPA estimated of 73 miles. They should have used their own EPA estimated range of 265 miles instead.

 

[DaveT]

Does Sunpower get any ongoing revenue from the solar power plants they build? Or is it just a one-time revenue item (ie., like a construction company would bill)?

 

[sleepyhead]

Does Sunpower get any ongoing revenue from the solar power plants they build? Or is it just a one-time revenue item (ie., like a construction company would bill)?

With power plants you have to follow Revenue Recognition principles. GAAP and IFRS principles differ, so Sunpower is not profitable on a GAAP basis. But they are profitable on an adjusted basis, which they use IFRS as a basis and then take out one-time items such as restructuring, and take out employee stock compensation (I disagree with taking this out since it as an actual cost to shareholders, but many companies do this).

To answer your question you get to recognize revenues as certain milestones are achieved. So if they sold the $2.5 bn Antelope Valley Project to Buffet's Mid-American Renewable energy, they won't recognize the entire revenue until the project is completed in like 2 or 3 years or so. They started construction on it this year, so they will be recognizing revenue as they build the project over the next 3 years. Maybe they use percentage of completion, maybe something similar. But it is still better for P&L than a 20 year residential lease.

Important to note that Sunpower expects to be profitable on a GAAP basis sometime in the next 1-3 quarters and this should give the stock a good boost.

 

[Citizen-T]

With power plants you have to follow Revenue Recognition principles. GAAP and IFRS principles differ, so Sunpower is not profitable on a GAAP basis. But they are profitable on an adjusted basis, which they use IFRS as a basis and then take out one-time items such as restructuring, and take out employee stock compensation (I disagree with taking this out since it as an actual cost to shareholders, but many companies do this).

To answer your question you get to recognize revenues as certain milestones are achieved. So if they sold the $2.5 bn Antelope Valley Project to Buffet's Mid-American Renewable energy, they won't recognize the entire revenue until the project is completed in like 2 or 3 years or so. They started construction on it this year, so they will be recognizing revenue as they build the project over the next 3 years. Maybe they use percentage of completion, maybe something similar. But it is still better for P&L than a 20 year residential lease.

Important to note that Sunpower expects to be profitable on a GAAP basis sometime in the next 1-3 quarters and this should give the stock a good boost.

The analyst presentation linked above explains this really well around 1:45:00 in.

 

[sleepyhead]

Here is a good Bloomberg article that just came out on Solarcity. It talks about the risks associated to Net Metering and how Solarcity plans to implement battery storage to combat those risks in the future:

http://www.bloomberg.com/news/2013-...duce-risk-of-utility-backlash.html?cmpid=yhoo

 

[ggies07]

nm.

 

[Curt Renz]

Here’s a letter I received today from Jan Schakowsky who represents my suburban Chicago district in Congress. It’s not a form letter. It’s in response to my notification to her of SolarCity’s initiative in Nevada and my suggestion that Illinois should seek similar involvement. SolarCity currently does not service Illinois despite Chicagoland being a huge market.
_________________________________________

Dear Mr. Renz:

Thank you for writing to express your support for solar power and incentives to speed its implementation in Illinois and across the country. I appreciate hearing from you, and I agree with you.

I agree that Illinois can be a leader in solar energy development. Illinois has some of the best research universities, entrepreneurs, and workers in the world, and our state should leverage those advantages to attract the green energy jobs of the future. I have spoken with state and local elected officials about this, and I will certainly ask them to investigate the Nevada initiative and see whether it can be replicated in Illinois.

I will do whatever I can to help attract solar, wind, and other advanced green energy companies to our state.

Again, thank you for reaching out to me about this important issue. Please let me know if I can be of any further assistance to you in the future.

Sincerely,
Jan Schakowsky
Member of Congress

 

[ShortSlaver]

Congrats to all you SCTY longs on the rebound. It didn't quite get to my buy-in level (close) so I missed the boat on this new bump. MUSK ETF FTW!

 

[AudubonB]

Curt -
I beat you to the punch in re-establishing my SCTY position...by about 48 hours....which means I was sucking wind for that time as it appears you got in quite close to that recent low. Good job - well done!
Now let's hope we can get a bit steadier a gain than was occurring back in May. That was a really frantic period.

All: take a very, very close look at claims that "our product is different", and read peer-reviewed work on PV panel technology and associated efficiencies. Make up your own mind whether or not a marketing claim is something akin to New! Improved! Tide. Now with SuperSuds!!!!

 

[Gtoffo]

Congrats to all you SCTY longs on the rebound. It didn't quite get to my buy-in level (close) so I missed the boat on this new bump. MUSK ETF FTW!

Cheers!

Regarding the SPWR vs. SCTY debate: I've personally only invested in SCTY so far... those are two VERY different companies. SCTY is a bet on solar power IN GENERAL. You don't really care who produces the panels, you only believe in solar as a viable energy source. SCTY will buy from whoever produces the best panels in terms of price/efficiency ratio. It's a "pure" bet on solar as a whole.

SPWR on the other hand is a PRODUCER of solar panels, so you aren't really betting on solar as an energy source in general, but on a specific producer and thus hoping they'll win against the competition of other producers. I don't know if that will be the case.... I would need to see some kind of sustainable and definitive advantage which so far I haven't seen (but I haven't researched the company much).

Maybe we could put together a few names of the best solar panel producers and invest in all of them hoping to hit the majority of the winning ones.... that would reduce the risk of investing in single panel producers.


BONUS question: does anybody have any predictions/good estimates for SCTY's Q2 to point me towards? When should they be released?

 

[ggr]

If you want an analogy, you can compare something like different roof materials. A more durable but more expensive roof material compared to a less durable but a cheaper one. Then it would be interesting to see which roof material is more successful in the market.

I'm afraid I disagree with your analogy. I don't think that SPWR and SCTY are actually comparable, and certainly they aren't in direct competition. SCTY is a company that leases resources (roofs) and invests in equipment (panels) to make money on a consumable (electricity) using an innovative financing model. It's more comparable to leasing farmland, buying tractors and growing stuff on the land, than manufacturing solar panels.

(Oh, BTW, I'm long both, and enjoying it immensely.)

 

[Curt Renz]

Recent SolarCity Press Releases:

June 26 – Lightweight Mounting for Commercial Buildings
http://www.solarcity.com/pressrelea...ces-LightMount™-for-Commercial-Buildings.aspx

June 25 – SolarCity on Walmart Roofs in Maryland
http://www.solarcity.com/pressrelea...ree-for-Every-Residential-Solar-Customer.aspx

June 25 – Software to Monitor Energy Usage
http://www.solarcity.com/pressrelea...ree-for-Every-Residential-Solar-Customer.aspx

 

[Citizen-T]

SPWR doesn't just produce panels. They also sell/lease full solutions (like SCTY). The difference really is that SPWR only sells systems that use their panels. Well, that and that SPWR does power plants.

 

[sleepyhead]

Cheers!

Regarding the SPWR vs. SCTY debate: I've personally only invested in SCTY so far... those are two VERY different companies. SCTY is a bet on solar power IN GENERAL. You don't really care who produces the panels, you only believe in solar as a viable energy source. SCTY will buy from whoever produces the best panels in terms of price/efficiency ratio. It's a "pure" bet on solar as a whole.

SPWR on the other hand is a PRODUCER of solar panels, so you aren't really betting on solar as an energy source in general, but on a specific producer and thus hoping they'll win against the competition of other producers. I don't know if that will be the case.... I would need to see some kind of sustainable and definitive advantage which so far I haven't seen (but I haven't researched the company much).

Maybe we could put together a few names of the best solar panel producers and invest in all of them hoping to hit the majority of the winning ones.... that would reduce the risk of investing in single panel producers.


BONUS question: does anybody have any predictions/good estimates for SCTY's Q2 to point me towards? When should they be released?

I completely agree with this statement. But my line of thinking is that Sunpower is currently undervalued and Solarcity is "overvalued". Solarcity would be the better investment if both companies were fairly valued, but it already has a good chunk of growth baked into its market cap. Sunpower is valued like a mature company (like an Apple or Microsoft) when it is a growth story. That is why I have more money in Sunpower right now. I feel that a 20% increase in revenues could cause a 100% increase in net profit. Sunpower in the short run (next 2 years) looks very appealing to me. Solarcity looks better to me in the long run though 5-10 years.

 

[Bonken]

Cheers!

Regarding the SPWR vs. SCTY debate: I've personally only invested in SCTY so far... those are two VERY different companies. SCTY is a bet on solar power IN GENERAL. You don't really care who produces the panels, you only believe in solar as a viable energy source. SCTY will buy from whoever produces the best panels in terms of price/efficiency ratio. It's a "pure" bet on solar as a whole.

SPWR on the other hand is a PRODUCER of solar panels, so you aren't really betting on solar as an energy source in general, but on a specific producer and thus hoping they'll win against the competition of other producers. I don't know if that will be the case.... I would need to see some kind of sustainable and definitive advantage which so far I haven't seen (but I haven't researched the company much).

Maybe we could put together a few names of the best solar panel producers and invest in all of them hoping to hit the majority of the winning ones.... that would reduce the risk of investing in single panel producers.


BONUS question: does anybody have any predictions/good estimates for SCTY's Q2 to point me towards? When should they be released?

+1

This is exactly why im long scty, im sure spwr are selling great products but there are so many things that can happen and so many technologies that can change the game. SCTY on the other hand can pick and choose their supplier as much as they want and are not locked in with one technology, which makes it a safer bet on the general solar industry overall. This and the Elon Musk connection which it will benefit substantially from both in its ability to raise capital and also in its ability to generate free PR and penetrate the publics mind so that they will both buy their products and stock.

 

[CyberDutchie]

Maybe we could put together a few names of the best solar panel producers and invest in all of them hoping to hit the majority of the winning ones.... that would reduce the risk of investing in single panel producers.

Great idea! Just two days ago I noticed there was little activity on this thread. Since then we've filled 6 pages of really good discussion. I learned a lot from the SPWR versus SCTY exchanges. A special thanks to sleepyhead for his passionate debate and detailed responses. And for the suggestion to add SPWR to the portfolio, I already made a few bucks after opening my initial position today :smile:.

 

[ggies07]

If I do buy some SPWR shares now at $20, is it worth it? I know it was at $160, but that was awhile ago. I bought my Solarcity shares around $10.

Also, I agree, thanks for the valued debate from sleepyhead.

 

[sleepyhead]

In the long run $20 should be a good price for SPWR. But remember the stock has gone up 6% yesterday and 7% today (add another 3% from Wednesday's bottom). Anything can happen in the next few days. If you don't buy now then wait for a pullback and buy before their Q2 earnings. Company guided for 5c-20c per share, and the analyst consensus is at 10c. Remember these guys are sandbaggers like Elon. I think they might raise guidance for the rest of the year (but this is pure unsubstantiated speculation) on my part.

The correction in the general market may not be over yet. If things get ugly again then Sunpower will probably go down another 10%-20% from here. It is hard to say.

- - - Updated - - -

Here is what will happen to Sunpower tomorrow. It will open and start going up in a straight line pretty quickly to about $20.90 or 3% within the first 3-5 minutes. Then it will go straight down for a few minutes to about 20.40. Then it will go back up to 20.60. If it can retest that 20.90 then it will be another big day of gains. If it only goes to 20.60 and starts coming back down then it will probably be a down or flat day for Sunpower.

This is assuming that we have a flat or positive day in the market. If the market gets scared again due to some minor economic news then Sunpower and other solars will give back a good chunk of gains from the past two days.

 

[Bubba]

SPWR doesn't just produce panels. They also sell/lease full solutions (like SCTY). The difference really is that SPWR only sells systems that use their panels. Well, that and that SPWR does power plants.

And Sunpower is mostly owned by Total (French oil company). They have access to very low cost money. I recall an article that made this point that it provides Sunpower with a financing advantage in the areas where Sunpower competes directly against Solar City.

 

[Norse]

In the long run $20 should be a good price for SPWR. But remember the stock has gone up 6% yesterday and 7% today (add another 3% from Wednesday's bottom). Anything can happen in the next few days. If you don't buy now then wait for a pullback and buy before their Q2 earnings. Company guided for 5c-20c per share, and the analyst consensus is at 10c. Remember these guys are sandbaggers like Elon. I think they might raise guidance for the rest of the year (but this is pure unsubstantiated speculation) on my part.

The correction in the general market may not be over yet. If things get ugly again then Sunpower will probably go down another 10%-20% from here. It is hard to say.

- - - Updated - - -

Here is what will happen to Sunpower tomorrow. It will open and start going up in a straight line pretty quickly to about $20.90 or 3% within the first 3-5 minutes. Then it will go straight down for a few minutes to about 20.40. Then it will go back up to 20.60. If it can retest that 20.90 then it will be another big day of gains. If it only goes to 20.60 and starts coming back down then it will probably be a down or flat day for Sunpower.

This is assuming that we have a flat or positive day in the market. If the market gets scared again due to some minor economic news then Sunpower and other solars will give back a good chunk of gains from the past two days.

Thanks for all the good advices so far, got in on SPWR some days ago because of you.