SolarCity (SCTY)

[Perfectlogic]

It is a falacy to compare the cost of utility solar to residential rates. In the US residential rates are about 80% higher than industrial rates. Roughly the industrial sector pays about 7c/kWh while the residential sector pays about 12.5c/kWh. The point here is that wholesale prices are the same regardless of sector. So even the average wholesale price goes from 6 to 4 c/kWh because of cheap wind and utility solar, this will mean very little rate relief for residential ratepayers. The spread from industrial to residential has little to do with the cost of generating power. So the spread will remain. In fact the spread has been widening in both absolute and relative terms over the past 10 years. Residential rates have gone up 3.2% annually for the last 9 years, while industrial has only gone up 2.4% in the same time. It is not the cost of wholesale electicity that is driving this widening gap. I suspect the different owes to greater demand elasticity among industrial ratepayers than residential. So increasingly the residential sector is bearing more than its share of the cost of the grid. So utility solar can go to zero, but the residential sector is still stuck with the bill for the grid.

So the primary issue with distributed solar is whether residential ratepayer are willing to pay for the grid. The attack against distributed solar was that these residents were not paying as much for the grid, as if residents have a moral obligation to subsidize the grid for industrial ratepayers. But what rooftop solar owners are doing is expressing demand elasticity. They are simply not willing to pay higher rates and will modify their homes and finance their own energy investments to do so. It is the unwillingness of marginal residential ratepayers to accept high prices that puts economic pressure on utilities to lower their rates. The regulatory framework cannot do this. Only consumers willing to defect can force utilities to lower their rates. But the defection has to be massive. Electricity consumption has actually been in decline for a while, while revenue rises. So a modest decline cannot motivate a utility to compete. But if the threat of defection is high enough to impact solvency, they will have to change strategy.

Why do you not want residential solar owners to pay for the grid when in fact they are still using it? You want net metering but you don't wan't to pay for it. You can't just go to Wal Mart and expect them to buy groceries for the same price they are selling them for. When distribution has a price there will be a difference between wholesale and retail it's that simple. You might very well be underestimating grid cost, from the income statements I have seen (admittedly only a few) the profit margin has been around 10% for utilities. And the thing is that we still need the grid, without it residential solar owners would have to pay for a battery much larger than they use 90% of the time due to the fluctuations of their energy use which would drive their average cost way higher than utility rates everywhere (except maybe Hawaii) and ofcourse if the solar array is too large compared to electricity usage all excess will go to waste, this whole scenario is very inefficient at this time, we need the grid and everyone who uses it should pay for it.

 

[jhm]

Why do you not want residential solar owners to pay for the grid when in fact they are still using it? You want net metering but you don't wan't to pay for it. You can't just go to Wal Mart and expect them to buy groceries for the same price they are selling them for. When distribution has a price there will be a difference between wholesale and retail it's that simple. You might very well be underestimating grid cost, from the income statements I have seen (admittedly only a few) the profit margin has been around 10% for utilities. And the thing is that we still need the grid, without it residential solar owners would have to pay for a battery much larger than they use 90% of the time due to the fluctuations of their energy use which would drive their average cost way higher than utility rates everywhere (except maybe Hawaii) and ofcourse if the solar array is too large compared to electricity usage all excess will go to waste, this whole scenario is very inefficient at this time, we need the grid and everyone who uses it should pay for it.

What you are missing here is that utilities have a perverse incentive to "invest" in more assets so they can justify rates. They are legally limited to a 10% return on investments. So if the market is willing to bear a certain price, they need only increase investments to meet that price. This seem really has very little market discipline about it. So we need to step away from the mindset that ratepayers are obligated to pay for anything. Consumers should rather chose whatever is the cheapest and best value for them among competing electricity prividers.

Let me give you an example. Each month I pay Georgia Power about $20 dollar for a nuclear power plant that may be built at sometime in the future. The plant does not exist today and certainly does not power my home. Nevertheless I am obligated to pay the grid for this investment. Now suppose I went to Walmart and at the end of my checkout receipt they added a $20 cost capture fee for a store they would be opening in my neighborhood in maybe 4 or 5 years. Suppose I complain about the charge saying that I should not to pay for this item. But the worker tells me that customers must pay for Walmart's distribution system, and that Walmart has a very thin operating margin anyway. So this cost capture fee is just my fair share of the cost of bringing low, low prices to my community. So what do you think shoppers would do about bearing this distribution expense for Walmart? It actually has nothing to do with what is fair. Customers would simply stop shopping at this Walmart and go to other stores where the total bill is not bloated with arbitrary distribution costs. So Walmart may well have certain distribution investments that they need to make, but they exist in a competitive marketplace. They cannot not arbitrarily pass this on to shoppers. It is the investors who must bear the cost of distribution. Consumers only pay for the items they want and can shop multiple stores for those items.

So if Georgia Power made the nuclear power plant fee an option, nobody would pay for it. If I had my choice of electricity prividers, I could switch to a provider that did not bloat my power bill. But alas Georgia Power has a legal monopoly on electricity in my neighborhood. I really do not have any consumer choice in the matter. What we have is a politically constructed rate scheme. So the nuclear power plant fee for a plant that does not exist is little more than a tax imposed on me and all my neighbors.

Competing companies should be allowed to set up alternative powerlines within the same neighborhood just as they are multiple telecommunications lines reaching homes. When this sort of competion is legally allowed you will find that there are much cheaper ways to distribute electricity to residents. SolarCity, for example, could set up microgrids within neighborhoods (parallel to what the utility has in place) and drive down the cost of distribution. So it's not about forcing residential ratepayers to pay for the grid. It's about allowing consumers to choose the most competitive solutions.

The spread between industrial and residential rate payers is relevant because in principle a microgrid operator could buy electricity as an industrial ratepayer and distribute this power plus any locally generated power to residents in the microgrid. So where the spread is great there is a fair opportunity for a microgrid to make a profit while bringing lower prices and better service to residents. I actually think SolarCity could pull this off.

 

[Perfectlogic]

What you are missing here is that utilities have a perverse incentive to "invest" in more assets so they can justify rates. They are legally limited to a 10% return on investments. So if the market is willing to bear a certain price, they need only increase investments to meet that price. This seem really has very little market discipline about it. So we need to step away from the mindset that ratepayers are obligated to pay for anything. Consumers should rather chose whatever is the cheapest and best value for them among competing electricity prividers.

Let me give you an example. Each month I pay Georgia Power about $20 dollar for a nuclear power plant that may be built at sometime in the future. The plant does not exist today and certainly does not power my home. Nevertheless I am obligated to pay the grid for this investment. Now suppose I went to Walmart and at the end of my checkout receipt they added a $20 cost capture fee for a store they would be opening in my neighborhood in maybe 4 or 5 years. Suppose I complain about the charge saying that I should not to pay for this item. But the worker tells me that customers must pay for Walmart's distribution system, and that Walmart has a very thin operating margin anyway. So this cost capture fee is just my fair share of the cost of bringing low, low prices to my community. So what do you think shoppers would do about bearing this distribution expense for Walmart? It actually has nothing to do with what is fair. Customers would simply stop shopping at this Walmart and go to other stores where the total bill is not bloated with arbitrary distribution costs. So Walmart may well have certain distribution investments that they need to make, but they exist in a competitive marketplace. They cannot not arbitrarily pass this on to shoppers. It is the investors who must bear the cost of distribution. Consumers only pay for the items they want and can shop multiple stores for those items.

So if Georgia Power made the nuclear power plant fee an option, nobody would pay for it. If I had my choice of electricity prividers, I could switch to a provider that did not bloat my power bill. But alas Georgia Power has a legal monopoly on electricity in my neighborhood. I really do not have any consumer choice in the matter. What we have is a politically constructed rate scheme. So the nuclear power plant fee for a plant that does not exist is little more than a tax imposed on me and all my neighbors.

Competing companies should be allowed to set up alternative powerlines within the same neighborhood just as they are multiple telecommunications lines reaching homes. When this sort of competion is legally allowed you will find that there are much cheaper ways to distribute electricity to residents. SolarCity, for example, could set up microgrids within neighborhoods (parallel to what the utility has in place) and drive down the cost of distribution. So it's not about forcing residential ratepayers to pay for the grid. It's about allowing consumers to choose the most competitive solutions.

Sure they could, but they haven't, and if they did the price of power SCTY offers would go up, because a grid has a price. Fact of the matter is that the grid has a price, whether the optimal grid structure is more distributed than it is today is up for discussion, I don't think there is much to save here if any (there is a reason for grids actually growing larger with sale of power between countries), and that everyone who uses that grid should pay their share.

How are they charging you $20 for construction of that nuclear power plant?

"The spread between industrial and residential rate payers is relevant because in principle a microgrid operator could buy electricity as an industrial ratepayer and distribute this power plus any locally generated power to residents in the microgrid. So where the spread is great there is a fair opportunity for a microgrid to make a profit while bringing lower prices and better service to residents. I actually think SolarCity could pull this off."

Not sure I understand you correctly, are you saying that a microgrid operator should be able to buy wholesale electricity without paying for the distributing network that delivers that power to them?

 

[RyanT]

Looks like I should of held onto my scty shares for a little longer.

 

[TheTalkingMule]

Looks like I should of held onto my scty shares for a little longer.

I'm hoping there's a selloff at $50 and I can get in.

 

[Lessmog]

I'm hoping there's a selloff at $50 and I can get in.

Would $49 do it for you? Or, as of now, 48.95?

 

[gigglehertz]

because a grid has a price.

I think the only fair way to go is to split out the so-called cost of the grid as a separate line item for ALL rate payers to pay equally. Then the cost of energy will be more transparent. Customers can judge for themselves if they want to compete with other producers. Then someone can set up the "virtual grid" that I believe JHM talks about, buying and selling energy with the grid operator acting as a sort of PayPal of electricity rather than forcing the grid operator to buy it directly at a fixed price. Sorry if this has already been brought up, too lazy to read 213 pages of info.

 

[Lessmog]

"PayPal of electricity"
Wonderful! Brief, accurate, to the point.

 

[Perfectlogic]

because a grid has a price.

I think the only fair way to go is to split out the so-called cost of the grid as a separate line item for ALL rate payers to pay equally. Then the cost of energy will be more transparent. Customers can judge for themselves if they want to compete with other producers. Then someone can set up the "virtual grid" that I believe JHM talks about, buying and selling energy with the grid operator acting as a sort of PayPal of electricity rather than forcing the grid operator to buy it directly at a fixed price. Sorry if this has already been brought up, too lazy to read 213 pages of info.

I agree this is fair and ideal as it adds transparency as you say. I would still argue that under this system residents shouldn't have the right to sell power back at retail price, but at wholesale instead. The utility still has the job of managing the load which means either the use of peaker plants or as we are heading towards batteries, either way though it has a cost, on top of transmission losses, so retail and wholesale can't be the same. Utilities should obviously be forced by the state to use the cheapest load balancing tools.

 

[jhm]

Sure they could, but they haven't, and if they did the price of power SCTY offers would go up, because a grid has a price. Fact of the matter is that the grid has a price, whether the optimal grid structure is more distributed than it is today is up for discussion, I don't think there is much to save here if any (there is a reason for grids actually growing larger with sale of power between countries), and that everyone who uses that grid should pay their share.

How are they charging you $20 for construction of that nuclear power plant?

"The spread between industrial and residential rate payers is relevant because in principle a microgrid operator could buy electricity as an industrial ratepayer and distribute this power plus any locally generated power to residents in the microgrid. So where the spread is great there is a fair opportunity for a microgrid to make a profit while bringing lower prices and better service to residents. I actually think SolarCity could pull this off."

Not sure I understand you correctly, are you saying that a microgrid operator should be able to buy wholesale electricity without paying for the distributing network that delivers that power to them?

I don't think you grasp that my utility, Georgia Power, is a regulated monopoly. I can only buy and sell power to this monopoly on their terms. If I had surplus rooftop power, it would be illegal for me to run a power line to my adjacent neighbors and sell them that power. Net metering is an issue wherever solar owners are barred from selling power to anyone but the utility.

Georgia Power is able to bill me for an unbuilt nuclear power plant because the state PUC approved it, and as long as Georgia Power has legal monopoly status, I have no legal alternative.

My point about the spread between residential and industrial rates is that a microgrid operator could in theory become a industrial ratepayer, which is buying retail from the utility, not wholesale. Thus, the microgrid is buying power at retail rates with the cost of distribution built into the rate structure. But this industrial power is about 6 c/kWh cheaper than residential rates. So the microgrid buys at say 7 c/kWh and distributes this power among microgrid participants at say 10 c/kWh. So yes the microgrid is bearing the cost of distribution not only on this 3c/kWh spread, but also on any local solar, storage and other services it may provide to participants. For participants they avoid having any direct relationship with the utility paying say 13 c/kWh plus any other fees the utility puts on residential ratepayers. So while this is economically and technically possible, it is not legal in this state. This legal framework explicitly protects the monopoly from this sort of competion.

Now if the a utility really had the most optimal cost structure for distribution, it really would have nothing to fear from microgrid attempting to arb the residential / industrial spread. No competitor would be able to make a profit doing so. They also would not be threatened by distributed solar or batteries. So the fact that utilities are working so hard to keep rooftop solar away from their franchises is indicative that they are not sitting on a competitive cost structure, and would suffer under competition.

Note that utility profit is generally limited to a 10% rate of return. If competition forced utitlies to lower rates 10% or more, adjusting for the cost of fuel, they would be unprofitable. This is why SolarCity can offer rates just 3 c/kWh below residential and face practically no risk of price competition for the utility. A utility charging 16c/kWh is unprofitable below 14.5c/kWh. To get out of this predicament the utility would need to do some very serious cost cutting in their distribution network, but this would also cut their rates and reduce their net income. Utilities are not inclined to kill earnings just to become competitive with rooftop solar. So they are stuck in a position of watching their business model get disrupted. The best they can do for short term quarterly performance is fight regulatory battles to obstruct competition. This, however, is a strategy that puts them at existential risk longterm. Eventually, distributed solar and batteries will be so cheap, that residential ratepayers will find it cheaper to go completely off grid. This will leave massive investments in grid assets stranded. If these really are the investments that lead to the lowest cost residential power, then they have nothing to fear. But if they have been making poor investment choices, then there will be a massive asset bubble in the utilities. Utilities will default on debt and go bankrupt. At this point, useful bits of the grid will be purchased for pennies on the dollar. Utilities may have opportunities to avoid this scenario, but they need to move quickly to strike a new deal with new entrants such as SolarCity.

So the way I like to look at SolarCity's retained value is that it is a hedge on the continuation of the regulatory status quo. If this status quo is breached, then much more opportunity opens up for SolarCity. So either SolarCity is worth it's NRV under the status quo, or it is worth much more in a more deregulated residential power market. It is ironic that shorts want to poke holes in the value of leases and loans with out recognizing that, under those same scenarios, utilities are under much greater distress and SolarCity is much freer to seize the market. If one really does believe that utilities will substantially lower their residential rates, then one really ought to short the utilities, not SolarCity. It is an illogical thesis.

 

[Foghat]

SolarCity - Current Report

surprised no one took notice that Solarcity board expects to be at $400/share and a $40bln market cap within 10 years... However, 7 out of 10 of the operational goals to that $40bln will be hit within the next 3 years, possibly earlier. Very interesting how that is...

Of note, one of the ten goals is 3 million customers... So very rough estimate of $90bln in contracts, $40bln in net retained value. So, given the fact that they will expect to continue growing after 10 year mark, this looks to be the board is operating from a conservative estimation or rather "realistically achievable" given current growth projections.

 

[jhm]

because a grid has a price.

I agree this is fair and ideal as it adds transparency as you say. I would still argue that under this system residents shouldn't have the right to sell power back at retail price, but at wholesale instead. The utility still has the job of managing the load which means either the use of peaker plants or as we are heading towards batteries, either way though it has a cost, on top of transmission losses, so retail and wholesale can't be the same. Utilities should obviously be forced by the state to use the cheapest load balancing tools.

Only utilities and independent power producers have the right to sell into the wholesale market. If utilities want to recognize rooftop solar owner or aggregates thereof as IPPs, then it would make sense to set the feed in tariff at wholesale. But what the utilities are trying to do is cut off competition. It has nothing to do with fairness. If aggregated distributed solar had access to the wholesale market and could get credited for transmission and distribution costs avoid, i.e., no shipping cost to neighbors, then SolarCity would be in a much stronger position to gain market share and profit. For example, with this sort of access behind-the-meter storage could be properly compensated for providing peak power and peak load. This would very quickly put gas peaking plants out of business. So the last thing the utilities want is for SolarCity and its customers to be recognized as an IPP. So it is disingenuous for utilities to argue that solar owners should only receive wholesale rates for power sold without allowing wholesale access. Barring market access is the real economic inequity here, so let's not even talk about what feed in tariff is "fair."

Really, I think the utilities should just shut up about net metering. It is really one of the best ways for utilities to preserve their monopoly. It limits the value of home batteries, and once the battery market heats up, it will be lights out for the utilities. At best striking down net metering buys the utilities five years of status quo, then comes mass defection. But net metering can keep solar customers and their neighbors nicely in the grid indefinitely. The utilities can use net metering to keep residential rates low by driving down distribution costs. So the question is whether they want to exploit the distribution benefits offered by distributed solar to enhance the value of their network. That is, they can work with SolarCity to create a mutually beneficial situation, or they can resist these opportunities and collapse under grid defections. They need to cut their deal now as their bargaining power will only diminish with each coming year.

 

[Irishjugg]

SolarCity - Current Report

surprised no one took notice that Solarcity board expects to be at $400/share and a $40bln market cap within 10 years... However, 7 out of 10 of the operational goals to that $40bln will be hit within the next 3 years, possibly earlier. Very interesting how that is...

Of note, one of the ten goals is 3 million customers...

My portfolio is certainly on board with these goals!

Been adding with all my extra cash the last few in the 41-50 range. Missed the 35 because I'm not allowed to trade during working hours

 

[Perfectlogic]

I don't think you grasp that my utility, Georgia Power, is a regulated monopoly. I can only buy and sell power to this monopoly on their terms. If I had surplus rooftop power, it would be illegal for me to run a power line to my adjacent neighbors and sell them that power. Net metering is an issue wherever solar owners are barred from selling power to anyone but the utility.

Georgia Power is able to bill me for an unbuilt nuclear power plant because the state PUC approved it, and as long as Georgia Power has legal monopoly status, I have no legal alternative.

My point about the spread between residential and industrial rates is that a microgrid operator could in theory become a industrial ratepayer, which is buying retail from the utility, not wholesale. Thus, the microgrid is buying power at retail rates with the cost of distribution built into the rate structure. But this industrial power is about 6 c/kWh cheaper than residential rates. So the microgrid buys at say 7 c/kWh and distributes this power among microgrid participants at say 10 c/kWh. So yes the microgrid is bearing the cost of distribution not only on this 3c/kWh spread, but also on any local solar, storage and other services it may provide to participants. For participants they avoid having any direct relationship with the utility paying say 13 c/kWh plus any other fees the utility puts on residential ratepayers. So while this is economically and technically possible, it is not legal in this state. This legal framework explicitly protects the monopoly from this sort of competion.

Now if the a utility really had the most optimal cost structure for distribution, it really would have nothing to fear from microgrid attempting to arb the residential / industrial spread. No competitor would be able to make a profit doing so. They also would not be threatened by distributed solar or batteries. So the fact that utilities are working so hard to keep rooftop solar away from their franchises is indicative that they are not sitting on a competitive cost structure, and would suffer under competition.

Note that utility profit is generally limited to a 10% rate of return. If competition forced utitlies to lower rates 10% or more, adjusting for the cost of fuel, they would be unprofitable. This is why SolarCity can offer rates just 3 c/kWh below residential and face practically no risk of price competition for the utility. A utility charging 16c/kWh is unprofitable below 14.5c/kWh. To get out of this predicament the utility would need to do some very serious cost cutting in their distribution network, but this would also cut their rates and reduce their net income. Utilities are not inclined to kill earnings just to become competitive with rooftop solar. So they are stuck in a position of watching their business model get disrupted. The best they can do for short term quarterly performance is fight regulatory battles to obstruct competition. This, however, is a strategy that puts them at existential risk longterm. Eventually, distributed solar and batteries will be so cheap, that residential ratepayers will find it cheaper to go completely off grid. This will leave massive investments in grid assets stranded. If these really are the investments that lead to the lowest cost residential power, then they have nothing to fear. But if they have been making poor investment choices, then there will be a massive asset bubble in the utilities. Utilities will default on debt and go bankrupt. At this point, useful bits of the grid will be purchased for pennies on the dollar. Utilities may have opportunities to avoid this scenario, but they need to move quickly to strike a new deal with new entrants such as SolarCity.

So the way I like to look at SolarCity's retained value is that it is a hedge on the continuation of the regulatory status quo. If this status quo is breached, then much more opportunity opens up for SolarCity. So either SolarCity is worth it's NRV under the status quo, or it is worth much more in a more deregulated residential power market. It is ironic that shorts want to poke holes in the value of leases and loans with out recognizing that, under those same scenarios, utilities are under much greater distress and SolarCity is much freer to seize the market. If one really does believe that utilities will substantially lower their residential rates, then one really ought to short the utilities, not SolarCity. It is an illogical thesis.

You write very long posts, and you have drawn a lot of conclusions that I don't agree with, but I won't spend my time refuting them all as I'm pretty sure it's impossible to change your mind anyway. I agree that the utilities have a large amount of sunk cost that might have to be written off at some point due to the price of energy about to decline as wind and solar has hit parity and will continue the cost cutting. This doesn't make a SCTY contract today at 16c/kwh any better though as the terms gets better and better for the customer every year. I also don't think that the utility is going away even if some might declare bankruptcy due to asset devaluation, the large grid is still the most efficient today and will be for a while as it allows for the highest utilization rate of capacity.

 

[Foghat]

I think many "haters" don't understand is that Solarcity rooftop solar installation is only the beginning of the relationship between the ppa/leasee/owner and Solarcity. Much like the Tesla Model S, it will upgrade and improve over time of ownership. This has never happened before in the automotive industry and it has never happened before in the utiltiy business. Solarcity will offer energy storage, smart thermostats, smart water heaters, weather sensors, etc... All revolving around a software operating system that connects and communicates between all appliances, devices, and automobiles to maximize energy savings for a consumer.

This by definition of centralized power generation can never be offered by utitlies. Solarcity is positioned for these partnerships and innovations for the foreseeable future and that means potentially decades. The solar system you get from Solarcity is central nervous system, the next few decades will be the buildout of the connective tissue. 20 year customers will be extremely common because of this type of upgradable/add on capability a utiltiy can not offer to individual homeowners. not to mention the massive advantages to firm near instant demand response, accurate/real time energy market pricing, expensive peaker plant avoidance among many many other benefits to a big utitliy in purchasing Solarcity roof top solar services. It is a resounding win win for all involved. can't hate on it forever. We all see the light bulb eventually. Just some will lose a lot of money before they do.

 

[Perfectlogic]

I think many "haters" don't understand is that Solarcity rooftop solar installation is only the beginning of the relationship between the ppa/leasee/owner and Solarcity. Much like the Tesla Model S, it will upgrade and improve over time of ownership. This has never happened before in the automotive industry and it has never happened before in the utiltiy business. Solarcity will offer energy storage, smart thermostats, smart water heaters, weather sensors, etc... All revolving around a software operating system that connects and communicates between all appliances, devices, and automobiles to maximize energy savings for a consumer.

This by definition of centralized power generation can never be offered by utitlies. Solarcity is positioned for these partnerships and innovations for the foreseeable future and that means potentially decades. The solar system you get from Solarcity is central nervous system, the next few decades will be the buildout of the connective tissue. 20 year customers will be extremely common because of this type of upgradable/add on capability a utiltiy can not offer to individual homeowners. not to mention the massive advantages to firm near instant demand response, accurate/real time energy market pricing, expensive peaker plant avoidance among many many other benefits to a big utitliy in purchasing Solarcity roof top solar services. It is a resounding win win for all involved. can't hate on it forever. We all see the light bulb eventually. Just some will lose a lot of money before they do.

I assume you are talking to me since I am the only "hater" in this "circlejerk" of a thread. All of this "Solarcity will offer energy storage, smart thermostats, smart water heaters, weather sensors, etc..." is pure speculation, besides the energy storage that is, but like Elon has been saying himself, utility scale storage will be much larger than residential, utility scale is pretty much by definition cheaper than the small scale residential just like it is for solar. Still haven't heard a single explanation for how residential solar will compete against utility scale when utility clearly is much cheaper. But I guess SCTY can always pivot into a weather sensor company.

 

[Foghat]

I assume you are talking to me since I am the only "hater" in this "circlejerk" of a thread. All of this "Solarcity will offer energy storage, smart thermostats, smart water heaters, weather sensors, etc..." is pure speculation, besides the energy storage that is, but like Elon has been saying himself, utility scale storage will be much larger than residential, utility scale is pretty much by definition cheaper than the small scale residential just like it is for solar. Still haven't heard a single explanation for how residential solar will compete against utility scale when utility clearly is much cheaper. But I guess SCTY can always pivot into a weather sensor company.

i was talking about hedge funds positioned short on Solarcity. I didn't think you were a "hater." Is this how you feel about yourself though?

 

[Perfectlogic]

i was talking about hedge funds positioned short on Solarcity. I didn't think you were a "hater." Is this how you feel about yourself though?

My bad then, I don't know if I would call myself a hater, I am merely perplexed by the hype around residential solar when it makes no economic sense. I am neither short or long, I wouldn't mind SP appreciation though so I can get some attractively priced puts as a hedge against my other solar investments.

 

[Foghat]

My bad then, I don't know if I would call myself a hater, I am merely perplexed by the hype around residential solar when it makes no economic sense. I am neither short or long, I wouldn't mind SP appreciation though so I can get some attractively priced puts as a hedge against my other solar investments.

What assumptions do you feel the rooftop solar hype is based around? Do you feel there is no benefit? I noted in an earlier post that in South Orange county, the utitliy is buying access to 10MWs of energy from a group of 26 buildings owned and operated by retail level customers. This is proving to be multiples of magnitude cheaper then $1billion dollar 10MW peaker plant that has only been used 13 times in 6 years.

That is a distributed energy asset. This adds another data point that supports the massive potential of aggregated distributed assets to the grid of which Solarcity is currently building out. There are currently 8 independent studies that conclude rooftop solar is already abenefot beyond the average retail electricity price right now. I have yet to find a public cost breakdown from a big utitlity that provides visibility into cost formulations and raw data of how they operate.

do you have access to utitlity level cost data from top to bottom costs which is critical in determining what costs and benefits DG solar has in relation?

 

[Perfectlogic]

What assumptions do you feel the rooftop solar hype is based around? Do you feel there is no benefit? I noted in an earlier post that in South Orange county, the utitliy is buying access to 10MWs of energy from a group of 26 buildings owned and operated by retail level customers. This is proving to be multiples of magnitude cheaper then $1billion dollar 10MW peaker plant that has only been used 13 times in 6 years.

That is a distributed energy asset. This adds another data point that supports the massive potential of aggregated distributed assets to the grid of which Solarcity is currently building out. There are currently 8 independent studies that conclude rooftop solar is already abenefot beyond the average retail electricity price right now. I have yet to find a public cost breakdown from a big utitlity that provides visibility into cost formulations and raw data of how they operate.

do you have access to utitlity level cost data from top to bottom costs which is critical in determining what costs and benefits DG solar has in relation?

Utility scale solar has a total cost of around $1.3/watt which is half that of SCTY, First Solar has a target of $1/watt in 2017. It's called economy of scale, the soft cost is much lower when you install 100MW compared to 8kW.