SCTY Acquisition makes no strategic, financial or operational sense!

[ChadFeldheimer]

What is currently preventing Tesla from selling solar solutions? It's not clear to me that there are any significant obstacles to them presenting an integrated solution to consumers by partnering (or more specifically, subcontracting) with one or more solar installation companies.

It's not clear that SolarCity is (or will be) the best solution for every consumer's situation.

 

[TheTalkingMule]

SolarCity is not built to be primarily a solar installation company. I would read back through the thread a bit and check out a few press releases around:

Utility and Grid Services

Backup Supply

etc...

 

[Drivin]

What is currently preventing Tesla from selling solar solutions? It's not clear to me that there are any significant obstacles to them presenting an integrated solution to consumers by partnering (or more specifically, subcontracting) with one or more solar installation companies.

It's not clear that SolarCity is (or will be) the best solution for every consumer's situation.

Nothing is preventing them. What you are suggesting is what companies do. All. The. Time.

They partnered with Panasonic to include a battery with the car, and probably many other manufacturers for other components, and provided an integrated offering of a car.

They didn't need to buy Panasonic or Mercedes or other people who supplied components for their integrated solution of a car.

 

[ChadFeldheimer]

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.

Solar is definitely competing "in the desert". There is no regulation to prohibit PV or battery installations. Each consumer is free to consume as much electricity as they want from the grid, or generate, store and consume as much electricity as they want via PV (or wind, or diesel generator, or...).

NV Energy is simply preparing for the inevitable future of the grid: one that incorporates renewables and renewable storage. The prior model is clearly unsustainable. I think Nevada did the right thing by laying out a sustainable and predictable path for the future - eliminating much uncertainty for consumers and businesses alike. Granting consumers the right to sell electricity into the grid for $0.03/kwh at any time and in any amount seems pretty fair to me - if you'd rather store it yourself, go for it (hint: at current powerwall prices, it's cheaper to sell into the grid - and a lot easier!).

Other net-metering states will eventually follow suit. They may or may not serve their constituents as well as Nevada has - in terms of a long phase in period.

My background: I have homes in California and Nevada. I have rooftop PV in California. I sell into the grid at ~$0.30/kwh. It's highway robbery, and it will not last long. Fortunately, my payback period on the install is in a short ~2 years!

 

[ChadFeldheimer]

SolarCity is not built to be primarily a solar installation company. I would read back through the thread a bit and check out a few press releases around:

Utility and Grid Services

Backup Supply

etc...

Why didn't you say this in the first place, instead of first arguing the merits of selling (sorry, presenting information in a non-confrontational environment) an integrated solar solution in Tesla's retail stores. It's almost as if you pivoted to this only after realizing Tesla does not need to buy SolarCity to sell an integrated solution.

For the record, Tesla's own listed benefits to the acquisition focus on benefits to car and home owners. Not to utility and grid services (for which I postulate that an integrated energy solution is much less important) or to backup supply (which we've already established can be done without an acquisition).

Tesla Makes Offer to Acquire SolarCity

 

[TheTalkingMule]

Why didn't you say this in the first place, instead of first arguing the merits of selling (sorry, presenting information in a non-confrontational environment) an integrated solar solution in Tesla's retail stores. It's almost as if you pivoted to this only after realizing Tesla does not need to buy SolarCity to sell an integrated solution.

For the record, Tesla's own listed benefits to the acquisition focus on benefits to car and home owners. Not to utility and grid services (for which I postulate that an integrated energy solution is much less important) or to backup supply (which we've already established can be done without an acquisition).

Tesla Makes Offer to Acquire SolarCity

My comment speaks to the potential size of "non-solar" SCTY operations, not their potential share of the solar installation market moving forward. I believe they will stay at the top of the solar installation ladder, but that's not going to be their primary focus when everything is up to scale. Anyone can put solar panels on a roof. Total energy management and storage will be the sweet spot and SCTY is clearly at the forefront of that as well.

Providing services that no one else can provide is the key. As of now their solar PPA product provides something no one else can provide outside of CA, that doesn't necessarily need to be true in 5 years. There's a lot more to "going solar" than putting panels on the roof and ancillary needs will only accelerate after we get past 1% of supply nationwide. We're decentralizing the entire energy production and consumption model of the country, that takes services decision that will now originate in the home.

 

[neroden]

Solar is definitely competing "in the desert". There is no regulation to prohibit PV or battery installations. Each consumer is free to consume as much electricity as they want from the grid, or generate, store and consume as much electricity as they want via PV (or wind, or diesel generator, or...).

NV Energy is simply preparing for the inevitable future of the grid: one that incorporates renewables and renewable storage. The prior model is clearly unsustainable. I think Nevada did the right thing by laying out a sustainable and predictable path for the future - eliminating much uncertainty for consumers and businesses alike. Granting consumers the right to sell electricity into the grid for $0.03/kwh at any time and in any amount seems pretty fair to me - if you'd rather store it yourself, go for it (hint: at current powerwall prices, it's cheaper to sell into the grid - and a lot easier!).

I'll tell you what's *specifically* abusive about the Nevada metering rules. They are raising the connection charge for customers with solar panels, but *not* for customers without solar panels.

"The first change is gradually to increase the monthly service charge for customers who participate in net metering from $12.75 to $38.51. This is a charge for being connected into the grid and will not change regardless of energy use. The PUC did not similarly increase service charges for customers that do not use net metering."

Nevada Rate Change Signals the Start of Larger Utilities Battle | RegBlog
By "partcicipate in net metering", the PUC actually means "offer excess power to the grid" -- it doesn't require that the customer actually receive a single penny from net metering.

This is not reasonable and not fair. The connection charge should be the same for everyone. Now, after the change, solar panel households provide a large subsidy to non-solar-panel households. There is no reason for solar panel households to subsidize non-solar-panel households, and this sets up a subsidy.

The grid should want people with solar panels to offer excess power to the grid. But in response to the terrible Nevada rate schedule, the appropriate reaction of anyone installing solar should be to set up a one-way system where solar power is purely used for load reduction, and excess solar power is wasted, so that they can continue paying the normal connection charge rather than the "punish solar panels" charge. (I believe this is called a "grid-assist" system.) The grid should not want this.

I'm not sure whether Nevada even allows this -- being a bunch of scummy jackasses, NV Power might have tried to prohibit connection of solar panels in this way, and I haven't checked. (Not that they could actually stop a full behind-the-meter setup with no power fed back.) Anyway I'm now trying to figure out whether these are legal in Nevada


If Nevada had had the honesty to raise connection charges for everyone, I'd be fine with that.

 

[TheTalkingMule]

NV Energy made $750M last year and could very easily make nothing as soon as 2017 if solar is allowed to compete, aggregate and sell at wholesale. Hard to be them for doing anything to survive, the blame lies with the voters as usual. A decent governor can stop all this nonsense with ease.

 

[Perfectlogic]

Now, after the change, solar panel households provide a large subsidy to non-solar-panel households.

Don't be ridiculous. How would it make any difference if this connection charge was made for people without solar too? All that would happen would be for the rate to go down and people would end up paying the same, the utility's profit margin is fixed remember?

The houses without solar pays for the grid infrastructure as part of the electricity rate, the guys with solar pays little to nothing at all so getting a seperate bill for being connected to the grid is the only way they pay their share. If you could prove that the $38 is more than their share of infrastructure expenses then you would have a point, but the number doesn't seem that high at all.

 

[electracity]

I'll tell you what's *specifically* abusive about the Nevada metering rules. They are raising the connection charge for customers with solar panels, but *not* for customers without solar panels.

Exactly right. The future is electricity priced at momentary cost plus a grid connection fee for everyone. With carbon and other current externalities priced into power.

Any financial benefit received by solar owners today should be viewed as a temporary substitute for lack of carbon pricing. Just about everyone gets this, except a few such as NV Energy.

 

[Perfectlogic]

Any financial benefit received by solar owners today should be viewed as a temporary substitute for lack of carbon pricing. Just about everyone gets this, except a few such as NV Energy.

Except residential solar already recieves the 30% ITC subsidy, just like larger scale projects. Why should solar panels on your roof get a much larger subsidy than solar panels on a field? Companies behind solar panels on a field don't get to sell power to the utilities at the retail rates of 15c/kwh or whatever they may be, they compete in the market like they should.

 

[TheTalkingMule]

Hasn't every legit cost/benefit analysis to date indicated that pure net metering is at worst neutral for all parties? The cost savings from not having to build out new capacity is wildly under-reported.

The current narrative just has us believing net metering is a "subsidy". It's compensation for new capacity at peak which always has the highest premium.

 

[Perfectlogic]

Hasn't every legit cost/benefit analysis to date indicated that pure net metering is at worst neutral for all parties? The cost savings from not having to build out new capacity is wildly under-reported.

The current narrative just has us believing net metering is a "subsidy". It's compensation for new capacity at peak which always has the highest premium.

That's funny. I mean you are joking right? Just in case you weren't; the utilties don't save anything by outsourcing their 4c/kwh electricity production to SCTY for 16c/kwh. And neither do the consumers, they are the ones paying in the end.

 

[Ulmo]

I have a new gut reaction. I was listening to the unbelievably bad daily news of the world that the daily morning talk show talks about on the radio including some truly awful things our own government has done to us that I was in total disbelief and despondence about, when I shut it off and came inside to do some work. I was closing up some windows on my computer, and saw people discussing the SCTY purchase, and my gut visceral unconscious reaction was that that was crazier than the unbelievably bad news. Why is my unconscious so anti-SCTY merging with Tesla? I'm pretty sure it's the same reasons my conscious thinks: it's not a good idea! SCTY is a separate company precisely because it could so easily fail and it shouldn't bring anything else down with it.

 

[Ulmo]

What is currently preventing Tesla from selling solar solutions? It's not clear to me that there are any significant obstacles to them presenting an integrated solution to consumers by partnering (or more specifically, subcontracting) with one or more solar installation companies.

It's not clear that SolarCity is (or will be) the best solution for every consumer's situation.

+100,000
unless the quip about legal problems and "arm's length" was not just complete nonsense, for which I'd downgrade it to
+10,000

Here's how much I respect Elon Musk's vision: I see a lot of my own visions in there and how they behave too. Many of my visions are, well, not only visionary, but really helpful to humanity, humankind, and the wonderful world we live on. However, when the numbers are crunched, at any given moment, only a subset of my visions are actually possible at that time, even some of the ones that can be leveraged 4 dimensionally. There are all sorts of costs and dynamics to consider. That's how much I respect EM's visions: I really care about them enough to tell him when he's wrong about something. (Otherwise, I wouldn't even bother.)

 

[Perfectlogic]

That's funny. I mean you are joking right? Just in case you weren't; the utilties don't save anything by outsourcing their 4c/kwh electricity production to SCTY for 16c/kwh. And neither do the consumers, they are the ones paying in the end.

Another point on this that I forgot to mention which completely invalidates that argument. The utilities don't even have to pay the upfront cost of the utility scale project themselves. When we hear a PPA signed for a utility scale solar project it means that someone else (not the utility) has built a solar project and is now selling the power to the utility for the agreed upon amount, which recently has dropped below 4c/kwh.

How people can claim that the utility saves money buying power from rooftop solar for 16c/kwh when they can literally just buy the exact same power for a quarter of the cost also without any investment needed never seizes to amaze me. Absolutely amazing how people will stubbornly cling on to an idea so obviously wrong just because they want it to be true. I feel like the diehard residential solar fans are even worse than christian fundamentalists.

 

[wycolo]

I refuse to talk to the Solar City guys at home depot precisely because of the sales pressure, [palmer_md]

You could go online to HD website and order pre-packaged DIY solar kits which would be delivered to your local HD store for pickup. Just as you can also buy your Tesla online. But it might be worthwhile to pump the SC guys for some perspective on that state's tax rebates and financing scenarios which they know cold.
--

 

[neroden]

Don't be ridiculous.

I'm not being ridiculous. You are being a clueless dumbass, or pretending to be one, I can't tell which.

How would it make any difference if this connection charge was made for people without solar too? All that would happen would be for the rate to go down and people would end up paying the same, the utility's profit margin is fixed remember?

The houses without solar pays for the grid infrastructure as part of the electricity rate,

Nope, not necessarily.

the guys with solar pays little to nothing at all so getting a seperate bill for being connected to the grid is the only way they pay their share. If you could prove that the $38 is more than their share of infrastructure expenses then you would have a point, but the number doesn't seem that high at all.

Everything you said is wrong.

Learn how to do math, then try again.

If you're really that much of a clueless dumbass, here's a hint: a household which installs solar, and *does not feed anything back*, looks exactly the same to the utility as a household which installs a more efficient electric heating system or insulates their house or just uses less hot water. Applying a fixed charge to one and not the other means that the solar household is subsidizing the other household. IF the utiilty is not charging a high enough connection charge to everyone, then efficient households are not paying their share of the grid costs. There is no reason for solar households to be taxed to subsidise them, except for malicious anti-solar hostility.

If you can't get something this simple through your head, you should be banned from this forum. It's bloody obvious.

 

[dakh]

Another point on this that I forgot to mention which completely invalidates that argument. The utilities don't even have to pay the upfront cost of the utility scale project themselves. When we hear a PPA signed for a utility scale solar project it means that someone else (not the utility) has built a solar project and is now selling the power to the utility for the agreed upon amount, which recently has dropped below 4c/kwh.

How people can claim that the utility saves money buying power from rooftop solar for 16c/kwh when they can literally just buy the exact same power for a quarter of the cost also without any investment needed never seizes to amaze me. Absolutely amazing how people will stubbornly cling on to an idea so obviously wrong just because they want it to be true. I feel like the diehard residential solar fans are even worse than christian fundamentalists.

I don't think anyone argues net metering isn't skewing the system. It's by design. Until there's substantial penetration of solar it is simple and works well enough towards getting some solar power into the system. The system is skewed already in all sorts of ways, fair or not. Regulatory changes are coming that are much more sophisticated and will put other checks and balances in place.

I strongly advise to just drop the whole what's fair vendetta. We can try to figure out what would be the outcomes from various policies that get proposed, that'd be useful.

 

[ChadFeldheimer]

I'll tell you what's *specifically* abusive about the Nevada metering rules. They are raising the connection charge for customers with solar panels, but *not* for customers without solar panels.

The net metering rate has a higher connection charge, but lower per kwh rate.

In an ideal world, they would have eliminated the old rate plan. But we live on planet Earth =) For better or worse, the "traditional" rate still works fine for non-net metering customers: the costs of distribution are covered, customers are used to it, etc. The Nevada change was about creating a sustainable net metering rate plan, which is difficult enough without trying to eliminate the old rate plan. But don't worry - as the solar future unfolds, eventually this will come into play.