SCTY Acquisition makes no strategic, financial or operational sense!

[Perfectlogic]

If it's 5pm and that solar customer decides to cut off the grid, what will take the place of that supply?

Well they could choose to get it from a large scale project at less than 4c/kwh
NV Energy buys utility-scale solar at record low price under 4 cents/kWh
3.87 cents/kwh in 2015 down from 4.6 cents/kwh in 2014. I wonder what the price would be today, perhaps around the 3 cents/kwh they proposed paying for excess rooftop solar? Lol.

 

[ChadFeldheimer]

In their proposed(and now passed?) rate schedule NV Energy is going to pay a solar customer 3 cents for their excess power and the solar customer then gets to pay $500/yr for the privilege. If it's 5pm and that solar customer decides to cut off the grid, what will take the place of that supply? An NV Energy peaker plant that is compensated at anywhere from 8-14 cents(or 5-8 cents if you want to believe that fabrication).

Either way, considering the monopoly nature of the relationship, how is that not theft?

Seems like NVEnergy can control the output of the peaker plant. On the other hand, NV Energy must purchase any PV electricity fed back into the grid.

How much is this difference worth? The right to sell electricity back into the grid at any time and in any amount must be worth something.

 

[Drivin]

Well they could choose to get it from a large scale project at less than 4c/kwh
NV Energy buys utility-scale solar at record low price under 4 cents/kWh
3.87 cents/kwh in 2015 down from 4.6 cents/kwh in 2014. I wonder what the price would be today, perhaps around the 3 cents/kwh they proposed paying for excess rooftop solar? Lol.

Thanks for that post

@TheTalkingMule this is how it is not theft. Besides didn't someone here say their mandate is to secure electricity at the lowest cost? That is exactly what they are doing and those costs seem to be inline with other large scale purchases

 

[TheTalkingMule]

Seems like NVEnergy can control the output of the peaker plant. On the other hand, NV Energy must purchase any PV electricity fed back into the grid.

How much is this difference worth? The right to sell electricity back into the grid at any time and in any amount must be worth something.

Certainly an understandable concern that we should tackle when solar hits 50% of supply at peak. The concerns of the utility are not mine unless there's an increased in cost or reliability. If not, then by mandate they must adapt.

Nevada is a perfect example of the entire state government corrupted to the point were it exists primarily to protect the profits of it's largest utility. The profit needs of monopoly utilities were never intended to dictate policy. Sounds silly to say, but we seem to have forgotten that.

 

[TheTalkingMule]

Thanks for that post

@TheTalkingMule this is how it is not theft. Besides didn't someone here say their mandate is to secure electricity at the lowest cost? That is exactly what they are doing and those costs seem to be inline with other large scale purchases

I don't know a simpler way to explain it other than that they're paying themselves for something that they could easily and sustainably procure for less from their customers. Seems like straightforward theft to me, or at least a close relation.

 

[ChadFeldheimer]

Certainly an understandable concern that we should tackle when solar hits 50% of supply at peak.

How long might that take? My understanding is that the 3 cent buyback won't be in effect for another 12 years. That is, 2028. Until then, there will be a gradual phase in.

 

[TheTalkingMule]

How long might that take? My understanding is that the 3 cent buyback won't be in effect for another 12 years. That is, 2028. Until then, there will be a gradual phase in.

I stopped following Nevada when Arizona become more interesting, so I'm not sure. But even under the current net metering it's likely neutral since solar customers are already forced to pay a flat fee specific to them. Getting compensated at an equivalent of 11.86 cents(retail) is about on par with what NV Energy would otherwise have to pay out for wholesale at peak to a natural gas plant(that they might even own). Granted that's likely not a realistic scenario when you average out all the hours solar is producing, but I don't think the wholesale transparency exists for us to answer the question definitively. It's likely about 8 cents most of the time up to 14 cents at extreme peak.

Warren Buffett will simply say he'd prefer to supply his own solar at 4 cents, but that's not his decision to make. The regulatory body is supposed to make that call in the interest of the ratepayers of Nevada, but those regulators are owned by NV Energy so here we are.

It's clear that every effort undertaken by NV Energy is designed to leverage their position as the monopoly purchaser of power to keep the far cheaper solar out of the market. If solar is allowed to compete in the dessert it eats NV Energy's lunch for sure and profit drops from $750M to $0.

 

[Gerardf]

I don't hold neither TSLA or SCTY shares. I don't think Tesla should acquire SCTY, way too much risk compared to reward potential. I was once a TSLA investor and have been reading the forum on and off since then.

Hmm, looking at your posts I am still not fully convinced you have no financial stake in TSLA and / or SCTY.

You wrote you used to hold TSLA shares. Can you confirm you also do no hold any options ?
Or that you do not profit in any other way from a lower shareprice of TSLA and / or SCTY ?

From my side : Next to my shares, no options. Nothing else (just the car).

 

[Perfectlogic]

Hmm, looking at your posts I am still not fully convinced you have no financial stake in TSLA and / or SCTY.

You wrote you used to hold TSLA shares. Can you confirm you also do no hold any options ?
Or that you do not profit in any other way from a lower shareprice of TSLA and / or SCTY ?

From my side : Next to my shares, no options. Nothing else (just the car).

I don't hold any options in neither TSLA or SCTY and I do not profit in any way from a lower SP of either. Why are you so convinced I'm invested? I'm bearish on many companies I'm not invested in. Are you invested in every single company you have an opinion on?

 

[Drax7]

It crossed my mind, that if Solarcity is so great, then sunpower and firstsolar are even better companies.

Tesla should consider them to provide the lovely cross selling synergies they envision.

Unless the esthetics of solarcity panels increases the value of the property by more
Than the cost of the system ( This is too funny) , Then solarcity is superior.

Any views on that.

 

[TheTalkingMule]

It has nothing to do with the panels, it's the service that has value. Anyone can put panels up on your roof, SCTY can do it with nothing but a signature and create certainty by just charging for the kWh that are produced. Under the TSLA umbrella they will get more aggressive in difficult markets with battery storage solutions that put all the pressure back on the utilities.

It seems as simple as putting panels on a roof, but t's a very complex equation that will only get more complex a few years from now.

 

[Drax7]

Naaaaah

 

[Vitold]

It crossed my mind, that if Solarcity is so great, then sunpower and firstsolar are even better companies.

Tesla should consider them to provide the lovely cross selling synergies they envision.

Unless the esthetics of solarcity panels increases the value of the property by more
Than the cost of the system ( This is too funny) , Then solarcity is superior.

Any views on that.

It's the same reason why EM is not using dealers - he sees value in engaging with customers directly and cutting out the middleman. It helps that Tesla stores and future Tesla Solar stores can cross sell Tesla products thus lowering customer acquisition costs.

 

[TheTalkingMule]

Exactly. Imagine how furious it makes Elon to see each install "require" $6k of sales effort. That's halfway to the total retail price of an install in Germany and just pure waste in his eyes. That should be $2.5k by now and Elon can probably make that happen under the TSLA umbrella. That alone solves all problems. Not an easy task, but certainly doable.

 

[electracity]

It's the same reason why EM is not using dealers - he sees value in engaging with customers directly and cutting out the middleman. It helps that Tesla stores and future Tesla Solar stores can cross sell Tesla products thus lowering customer acquisition costs.

IIRC he has not ruled out dealers. But dealers do now seem less likely with putting solar in the stores.

 

[Drivin]

It helps that Tesla stores and future Tesla Solar stores can cross sell Tesla products thus lowering customer acquisition costs.

I thought that people go into Tesla stores to "buy", not to be "sold" by your traditional car sales person type.

Do people believe that the "salespeople" in the Tesla stores are the right types to "sell" solar? "Hey, now that you have picked out the options, let me tell you about a great deal we are having on solar for the home. Oh wait, you are thinking of not getting the Ludicrous upgrade so you can get solar power for your home...wait a minute...let's just wrap up this high margin option purchase and talk about solar some other time."

Or are they going to staff actual sales people who understand how to "sell" solar and are compensated as sales people vs. compensated as order facilitators.

Exactly. Imagine how furious it makes Elon to see each install "require" $6k of sales effort. That's halfway to the total retail price of an install in Germany and just pure waste in his eyes.

Being under the Tesla umbrella does not solve the underlying issue - it takes $6k worth of effort to "sell" solar - it will still require a "sales" effort. Let's face it, solar isn't an unknown concept - it is just all the details of the numbers that require effort and waking through the installation process, etc. etc.

Tesla doesn't market and their stores don't have people who "sell" - they know the features and have the car sell itself. Selling solar will require more marketing and a very different store experience.

It would be interesting to know how many S and X owners have solar power and when did they get it? E.g. once they got enamored with the S and realized Musk also has a solar company, did they call SolarCity to start the process? Or did they just happen to be early adopters (or adapters) and have had solar for 15+ years anyway.

That seems to be the investment thesis here - that there will be a lot of cross selling. That would be great data for Tesla to reveal - of our customers, X% went with solar within a year or two of getting their Tesla car.

Then of course the follow up is for those that haven't gone solar, if the panels were really pretty, would that get them to go solar?

 

[palmer_md]

I thought that people go into Tesla stores to "buy", not to be "sold" by your traditional car sales person type.

Do people believe that the "salespeople" in the Tesla stores are the right types to "sell" solar? "Hey, now that you have picked out the options, let me tell you about a great deal we are having on solar for the home. Oh wait, you are thinking of not getting the Ludicrous upgrade so you can get solar power for your home...wait a minute...let's just wrap up this high margin option purchase and talk about solar some other time."

Or are they going to staff actual sales people who understand how to "sell" solar and are compensated as sales people vs. compensated as order facilitators.



Being under the Tesla umbrella does not solve the underlying issue - it takes $6k worth of effort to "sell" solar - it will still require a "sales" effort. Let's face it, solar isn't an unknown concept - it is just all the details of the numbers that require effort and waking through the installation process, etc. etc.

Tesla doesn't market and their stores don't have people who "sell" - they know the features and have the car sell itself. Selling solar will require more marketing and a very different store experience.

It would be interesting to know how many S and X owners have solar power and when did they get it? E.g. once they got enamored with the S and realized Musk also has a solar company, did they call SolarCity to start the process? Or did they just happen to be early adopters (or adapters) and have had solar for 15+ years anyway.

That seems to be the investment thesis here - that there will be a lot of cross selling. That would be great data for Tesla to reveal - of our customers, X% went with solar within a year or two of getting their Tesla car.

Then of course the follow up is for those that haven't gone solar, if the panels were really pretty, would that get them to go solar?

It seems as if you've not ever visited a Tesla store. They do not sell as you describe. They are more of educators about the cars and technology in general as well as the Tesla product line specifically.

They could do the same for solar technology in general and the Tesla solar panels and power packs specifically.

They don't sell you anything. If you decide to purchase that's great. If not at least you are more informed about the product and the technology in general.

 

[Drivin]

It seems as if you've not ever visited a Tesla store. They do not sell as you describe. They are more of educators about the cars and technology in general as well as the Tesla product line specifically.
.

I have been to 4, thanks. That is exactly my point.

They don't "sell" - people go there because they are interested in buying, they don't expect to be "sold" as they would if they went to a low end car dealer. They are enthusiastic about the product, the environment, and know the features well.

They could do the same for solar technology in general and the Tesla solar panels and power packs specifically.

I disagree. That low key "sale approach" won't work for solar. If SCTY takes $6k per sale (someone else's number), it is because they DO need to sell, to convince, etc. They are selling. Have you been to a Home Depot where they have the people there for solar? Nice stand, pretty charts, catchy slogans, attractive, personable people - rarely seen anyone spending time there because of that low-key approach.

If people would buy solar based on the low-key "sales" and no-marketing approach of Tesla, then it should have a 40% market penetration (since it has a much lower price point of a Tesla, has a financial benefit, lots of rebates and saves the polar bears). Solar is heavily marketed now - and it takes a lot to sell it. That just ain't the same as the Tesla model.

Those are two entirely different model for who talks to the customer coming into the store. The Tesla store staff are not going to be the right profile for someone who needs to "sell" solar. That "sales" person whose job is to convince on solar, is the person who is not going to want to lose a Ludicrous upgrade or something else they "sold".

The either have to have 2 different types of people in the store, or you sell the two products in the same way. Having one person try to sell two different products in two different ways is a recipe for failure.

 

[palmer_md]

Thanks for the clarification. I guess I misunderstood your original post. But now that you clarified, I'm going to have to disagree with it. I do think that solar can sell quite well with just the information presented without the high pressure sales.

I refuse to talk to the Solar City guys at home depot precisely because of the sales pressure, but if Tesla were offering zero pressure conversation about a solar offering I'd love to have a discussion with them. (not that I need solar because I already have it, but if I did not...).

 

[TheTalkingMule]

You don't want to "sell products" you want to sell solutions. Changes in technology should mean the consumer turns to their long established energy partner SCTY(TSLA) to integrate solutions.

Standing directly adjacent to the customer will now be the best route to high profitability.