SolarCity (SCTY)

[Foghat]

Once you get a sense of where this energy transition is headed, the next question is which companies are best positioned to lean into that transition. For my money, Tesla and SolarCity really stand out both for how they are currently positioned and for how nimble they are. Batteries and peak shaving will be the next big thing. Demand charges are common in commercial and industrial rate plans, and in places they are huge, $20/kW/month. This becomes easy picking for batteries and other demand charge defeating technologies. Utilities are pushing this out to residential ratepayers as well, but what they don't seem to get is the demand defeat technology will eat up arbitrage opportunities these plans create. That's just one example of how incumbent energy companies are miscalibrating, while Tesla and SolarCity launch into these opportunities. Can you make a permanent business model out of demand defeat technplogy? No, eventually utilities will lose too much money on demand charges and pull back on them. That is, if everyone did peak shaving, it would undermine the profitability of the utilities. They would be forced into generating too much power when it is expensive and too little power when it is cheap. So this is not the end of the energy transition. It's just a lucrative byway for Tesla and SolarCity to exploit, just like NEM was lucrative for SolarCity to exploit. By no means is NEM the end of the energy transition. So you don't make a permanent business model around it. You just exploit it while it is available. Suppose utilities where allowed to set whatever FiT they want, which has happened in Australia already. At first, the utilities will be tempted to set really low FiTs. The consequence of that is that solar owners find it economical just to add more batteries. In the process the utility loses value even fast. It misses the opportunity to buy low, minimize transmission costs and sell high. In the process, they lose market share at a faster clip while loading up their cost structure. So while the utilities miscalibrate FiTs, SolarCity will steal profitable market share. We will see that soon in Hawaii. How long will that miscalibration last? I don't know, but the longer it takes, the more share SolarCity will take. The end game is that utilities will learn to optimize the value of DERs through real time trading or something quite close to that. As long as utilities resist trading with solar and battery owners, we know that SolarCity and Tesla will have an edge. They will be exploiting each miscalibration. This is why we should not get upset when utilities or other incumbents do stupid stuff to try to fight SolarCity. It's the miscalibrations that deliver more market share to disrupters over the long run. So get a view of where this energy transition is headed. The ones pushing to get there first will win.

Agreed. It's why I've taken an accumulation strategy.

Climate Change: New York vs. Exxon and the Coming Earthquake in the Financial MarketAssaad W Razzouk

the financial impact of fossil fuel divestment (and carbon pricing)...

Climate change and shareholder disclosure: More investigations on the horizon? | Dentons - JDSupra

 

[jhm]

Agreed. It's why I've taken an accumulation strategy.

Climate Change: New York vs. Exxon and the Coming Earthquake in the Financial MarketAssaad W Razzouk

the financial impact of fossil fuel divestment (and carbon pricing)...

Climate change and shareholder disclosure: More investigations on the horizon? | Dentons - JDSupra

So if these actions succeed to dislodge pension funds and the like from fossil fuel related investment, there will be a need to find other investments, particularly those with stable income.

It think it could be helpful for SolarCity to create suitable income producing securities. The first of course are ABS offerings. These are really beneficial to SolarCity because they generate $1.27/W in capital for a cost of $0.57 of retained value. Shareholders net $0.70/W in retained value from these deals. Tax equity investors are taking a disproportionately large cut of retained value. I believe there is an opportunity to lock in another equity tranche that would be more financially efficient.

Specifically, SolarCity could issue prefer stock that pays a dividend based on the PowerCo Available Cash per cumulative installed MW. Note PAC was $112M on cumulative 1674 MW installed. Thus, a dividend could be based on $0.0669/W. For example, a preferred share based on 100W would have a $6.69 annual dividend this year. Additional prefered shares could be issued each quarter as more MW accumulate. These shares would trade in the open market to get the best yeild. If the market prices them at a 6% yield then they are worth 100W of NRV. However, because they are prefered and get dividends before common shares do, they should fetch a yeild lower than 6% in the maket, and doing so means they generate more capital that retained value claimed. The difference is value that accrues to common shareholders. Additionally, this market yeild send a positive signal to bondholders and common shareholders as to the value of NRV. I would also point out that the value of renewal terms transferred to preferred shareholders. So the market price of preferred shares would indicate a market value for renewal terms. The upshot of this sort of investment is that one gets an equity position in the PowerCo with very little exposure to DevCo, manufacturing, or general overhead. You get a liquid investment in the value of 100 W of installed solar systems. I suspect this equity would come cheaper than tax equity, and would help fill the need for a constant flow of new project based equity.

 

[Foghat]

So if these actions succeed to dislodge pension funds and the like from fossil fuel related investment, there will be a need to find other investments, particularly those with stable income.

It think it could be helpful for SolarCity to create suitable income producing securities. The first of course are ABS offerings. These are really beneficial to SolarCity because they generate $1.27/W in capital for a cost of $0.57 of retained value. Shareholders net $0.70/W in retained value from these deals. Tax equity investors are taking a disproportionately large cut of retained value. I believe there is an opportunity to lock in another equity tranche that would be more financially efficient.

Specifically, SolarCity could issue prefer stock that pays a dividend based on the PowerCo Available Cash per cumulative installed MW. Note PAC was $112M on cumulative 1674 MW installed. Thus, a dividend could be based on $0.0669/W. For example, a preferred share based on 100W would have a $6.69 annual dividend this year. Additional prefered shares could be issued each quarter as more MW accumulate. These shares would trade in the open market to get the best yeild. If the market prices them at a 6% yield then they are worth 100W of NRV. However, because they are prefered and get dividends before common shares do, they should fetch a yeild lower than 6% in the maket, and doing so means they generate more capital that retained value claimed. The difference is value that accrues to common shareholders. Additionally, this market yeild send a positive signal to bondholders and common shareholders as to the value of NRV. I would also point out that the value of renewal terms transferred to preferred shareholders. So the market price of preferred shares would indicate a market value for renewal terms. The upshot of this sort of investment is that one gets an equity position in the PowerCo with very little exposure to DevCo, manufacturing, or general overhead. You get a liquid investment in the value of 100 W of installed solar systems. I suspect this equity would come cheaper than tax equity, and would help fill the need for a constant flow of new project based equity.

http://www.forbes.com/sites/william...rned-by-the-sun-why-investors-fled-sunedison/


This is article exactly explains how entrenched monopoly utility corruption is. Ratepayers are scared of increases they can't do anything about. Hedge funds like the government protection of corrupt commissions protecting utiltiies from market forces. A sure thing. A fixed game.

solarcity is antithetical to this highly subsidied, bailed out, and most of all anti-market business model. The implosion is all but programmed in. President Roosevelt said in his in inaugural speech once that we must have a second bill of rights. One of the rights being freedom from monopolies. No less true of a statement today.

ENERGY: Germany enters brave new world of decentralized power -- Friday, November 20, 2015 -- www.eenews.net

germany moving toward decentralized grid... Article sites Solarcity as business model.

 

[jhm]

SolarCity uses two forms of outside financing in value cration: tax equity investments and non-recourse debt.

The gap between gross retained value, $1.78/W, and net retained value (per ECV analysis), $1.21/W is due to non-recourse debt. In the most recent quarter, this provided $251M in capital for ECV, or $1.27/W. The present value of the cost of that leverage is just $0.57/W, the gap between gross and net RV. So in sum, SolarCity gets $1.27/W in project funding at a cost off $0.57/W in retained value. This seems like a fair trade.

How about tax equity financing. This provided $307M in project capital, or $1.55/W. These investors get to reap the 30% ITC tax benefit, about $1.39/W, plus 30% to 40% of lease/PPA revenue in the first 6.7 years and 7% there after. So combining ITC plus distributions from leases is a pretty rich cash stream. How much retained value does it draw? So far my best estimate is to compare the gross retained value of MyPower loans to leases. Essentially the cost to the customer net of ITC and small SREC is the same. But with leases, tax equity partners are providing ITC financing, while MyPower customers are providing this service directly. That is, they make a large payment in the second year when their tax return comes back. So MyPower has $3.66/W in GRV, while residential leases yields $1.89/W. I suspect that most of the $1.77/W is due to tax equity financing. In sum, tax equity financing provides $1.55/W at a cost of up to $1.77/W to retained value.

So it appears that tax equity financing is substantially less efficient than debt financing. SolarCity may do well to minimize tax equity financing. Moreover, ITC could reduce this inefficient financing by two-thirds. While it is not a plus to lose ITC, there are better ways to finance. Giving the customer to opportunity to retain ITC is a more efficient way to harvest the tax credit.

I did not get any reaction to this post, but I have gone back and reworked the tax equity estimates. What I find and now believe is that Tax Equity Partners are providing 6% financing, plus absorbing some risk around renewal terms. So this is a fair deal.

Suppose that out of 198 MW deployed 85% or 168.3 MW are lease/PPA contracts. TEP is providing then $1.82/W in capital for leased MW. I figure that for tax purposes, these systems are valued at $4.62/W, which accords with the direct purchase price. So the 30% ITC is worth $1.39/W. (Note that if SolarCity were to offer systems at a lower price for direct purchase, it could run into ITS problems justifying this ITC value. So blame high purchase prices on the IRS.) Next, I used the ECV table to calculate the present value of distributions to TEP. This works out to $0.44/W. So combining ITC and distributions under 6% discount, the value to TEP is $1.82/W. So TEP is providing $1.82/W in capital and receiving the same with 6% yeild.

Applying the same sort of direct calculation from the EVC table to Non-Recourse Debt, I get $1.27/W in capital for payments worth $1.06/W discounted at 6%. Thus, 4.5% financing allows shareholders to gain $0.21/W in NRV.

In sum, I am comfortable with costs of financing. TEP is at 6% and NRDebt is at 4.5%. With TEP there is no net loss to shareholders and 7% of renewal risk is absorbed, and with NRD their is a gain of about $0.21/W. So I believe shareholders come out ahead on both sources of project capital. Even so, shareholders would come out ahead if the uptake of MyPower and direct sales were higher. It may be smart for SolarCity to offer points on MyPower loans so that customers can opt into lower interest rates while generating more cash upfront. This could encourage greater uptake and better cash flow, both of which would improve the ability of the company to grow on a cash positive basis.

 

[Foghat]

I did not get any reaction to this post, but I have gone back and reworked the tax equity estimates. What I find and now believe is that Tax Equity Partners are providing 6% financing, plus absorbing some risk around renewal terms. So this is a fair deal.

Suppose that out of 198 MW deployed 85% or 168.3 MW are lease/PPA contracts. TEP is providing then $1.82/W in capital for leased MW. I figure that for tax purposes, these systems are valued at $4.62/W, which accords with the direct purchase price. So the 30% ITC is worth $1.39/W. (Note that if SolarCity were to offer systems at a lower price for direct purchase, it could run into ITS problems justifying this ITC value. So blame high purchase prices on the IRS.) Next, I used the ECV table to calculate the present value of distributions to TEP. This works out to $0.44/W. So combining ITC and distributions under 6% discount, the value to TEP is $1.82/W. So TEP is providing $1.82/W in capital and receiving the same with 6% yeild.

Applying the same sort of direct calculation from the EVC table to Non-Recourse Debt, I get $1.27/W in capital for payments worth $1.06/W discounted at 6%. Thus, 4.5% financing allows shareholders to gain $0.21/W in NRV.

In sum, I am comfortable with costs of financing. TEP is at 6% and NRDebt is at 4.5%. With TEP there is no net loss to shareholders and 7% of renewal risk is absorbed, and with NRD their is a gain of about $0.21/W. So I believe shareholders come out ahead on both sources of project capital. Even so, shareholders would come out ahead if the uptake of MyPower and direct sales were higher. It may be smart for SolarCity to offer points on MyPower loans so that customers can opt into lower interest rates while generating more cash upfront. This could encourage greater uptake and better cash flow, both of which would improve the ability of the company to grow on a cash positive basis.

Thanks for the work, jhm. I'd be interested to hear Brad go through this on analyst day. I'm sure one of those guys will be bringing financing up with all the media/hedge fund manager spin out here right now.

New York is transforming its energy systems. Meet the in charge. - Vox

Also, this is a fantastic interview with the energy czar of New York. Key points: New York set up for DER because of hurricane sandy experience, utiltiies don't own generation capacity, and no oil and gas business' in the state(no contstituites to worry about). This is a formula for the advancement of distributed grid in New York right now.

btw, Solarcity has a substantial aggregated solar+storage project in progress there as well.

Add:
I just listened to the conference call again. I think a communication issue was a result of market reaction to the conference call. The message should have been: we are now transitioning into next phase of growth structure post ITC. We are now very happy where we're at in being able to continue to compound growth in 2017 compared to all other competitors in our sector at that time.

The rest revolves around this. The one analyst talking about the million customer goal got at response that sounded like they are abandoning it. However, they are not making it a priority to the growth strategy of reducing costs and rebalancing compounding growth to get there effectively. The million customer goal is still there, but will be a result of new growth phase not as reason for it.

Also, commercial installs are massive right now. They are guiding for 70-90Mws. That is a national record. I did a little more in-depth research on commercial/govt/education solar providers and solarcity is really separating themselves. I personally called all top companies and firmly judge that solarcity is at the top by a good margin as far as customer response as well as suite of options provided. It amazed me how many companies provide no, or very few options compared to solarcity. Im predicting solarcity will really break away on market share in commercial in 2016.

 

[jhm]

I did not get any reaction to this post, but I have gone back and reworked the tax equity estimates. What I find and now believe is that Tax Equity Partners are providing 6% financing, plus absorbing some risk around renewal terms. So this is a fair deal.

Suppose that out of 198 MW deployed 85% or 168.3 MW are lease/PPA contracts. TEP is providing then $1.82/W in capital for leased MW. I figure that for tax purposes, these systems are valued at $4.62/W, which accords with the direct purchase price. So the 30% ITC is worth $1.39/W. (Note that if SolarCity were to offer systems at a lower price for direct purchase, it could run into ITS problems justifying this ITC value. So blame high purchase prices on the IRS.) Next, I used the ECV table to calculate the present value of distributions to TEP. This works out to $0.44/W. So combining ITC and distributions under 6% discount, the value to TEP is $1.82/W. So TEP is providing $1.82/W in capital and receiving the same with 6% yeild.

Applying the same sort of direct calculation from the EVC table to Non-Recourse Debt, I get $1.27/W in capital for payments worth $1.06/W discounted at 6%. Thus, 4.5% financing allows shareholders to gain $0.21/W in NRV.

In sum, I am comfortable with costs of financing. TEP is at 6% and NRDebt is at 4.5%. With TEP there is no net loss to shareholders and 7% of renewal risk is absorbed, and with NRD their is a gain of about $0.21/W. So I believe shareholders come out ahead on both sources of project capital. Even so, shareholders would come out ahead if the uptake of MyPower and direct sales were higher. It may be smart for SolarCity to offer points on MyPower loans so that customers can opt into lower interest rates while generating more cash upfront. This could encourage greater uptake and better cash flow, both of which would improve the ability of the company to grow on a cash positive basis.

Argh, I think I made a mistake above. I assumed that the value of the system for tax purposes was $4.62/W. I was adding the cost 2.84 plus gross retained value 1.78, but this largely excludes the ITC credit. Grossing up by 30% gets to $6.60/W, whence the ITC is worth $1.98/W, not 1.39 as I presumed above. If this is correct, then TEP pockets an extra $0.59/W. Thus they provide $1.82 in capital and walk away with about $2.41/W in value most of which is reaped in the next tax return. So this about a 32% ROI.

So all this uncertainty revolves around the tax value of the solar system. If anyone can get a better estimate of this, I'd greatly appreciate it.

 

[Foghat]

Argh, I think I made a mistake above. I assumed that the value of the system for tax purposes was $4.62/W. I was adding the cost 2.84 plus gross retained value 1.78, but this largely excludes the ITC credit. Grossing up by 30% gets to $6.60/W, whence the ITC is worth $1.98/W, not 1.39 as I presumed above. If this is correct, then TEP pockets an extra $0.59/W. Thus they provide $1.82 in capital and walk away with about $2.41/W in value most of which is reaped in the next tax return. So this about a 32% ROI.

So all this uncertainty revolves around the tax value of the solar system. If anyone can get a better estimate of this, I'd greatly appreciate it. I am growing concerned that TEP investors may be taking advantage of shareholders.

What are your thoughts on the effect of mix on your numbers right now? Commercial is a little different then residential in this respect. They are ramping commercial up significantly at the same purposefully tapering residential around 210mws/quarter. Remember, they are building commercial/residential crews on projected MWs installed for the quarter, so this is a deliberate rebalancing of the mix, especially after they've activated the $1billion commercial install fund this year. What is the impact of this new mix that could give more context to the numbers?

 

[SBenson]

So all this uncertainty revolves around the tax value of the solar system. If anyone can get a better estimate of this, I'd greatly appreciate it. I am growing concerned that TEP investors may be taking advantage of shareholders.

jhm, I didn't get a chance to sit down for tax equity valuation. But I think your suspicion that they are reaping a lot is correct.

This cameup in Q2 call at the 1:00:00 mark as they were discussing the ITC preparedness: Lyndon Rive: "It's a combination of cost reduction and less cash going to the tax equity investors. That gets us to the $0.60 a watt."

And in Q3 CC at 56:50 mark Brad Buss says "remember that it starts with that tax equity fund, right, that's the root of all evil because that deals with all the way through to the ABS."
His characterization of Tax Equity somehow stuck with me. Not sure if that was just a passing innocent slip of tongue or if he really meant some thing.

It's a shame that the management doesn't talk about returns of Tax Equity folks. But I do think this is somewhat of a hidden trick that will play out in helping them get through ITC. In a way the lowering of ITC might turn out to be positive in disguise as it forces them to get out of the tax-equity payouts.

 

[jhm]

jhm, I didn't get a chance to sit down for tax equity valuation. But I think your suspicion that they are reaping a lot is correct.

This cameup in Q2 call at the 1:00:00 mark as they were discussing the ITC preparedness: Lyndon Rive: "It's a combination of cost reduction and less cash going to the tax equity investors. That gets us to the $0.60 a watt."

And in Q3 CC at 56:50 mark Brad Buss says "remember that it starts with that tax equity fund, right, that's the root of all evil because that deals with all the way through to the ABS."
His characterization of Tax Equity somehow stuck with me. Not sure if that was just a passing innocent slip of tongue or if he really meant some thing.

It's a shame that the management doesn't talk about returns of Tax Equity folks. But I do think this is somewhat of a hidden trick that will play out in helping them get through ITC. In a way the lowering of ITC might turn out to be positive in disguise as it forces them to get out of the tax-equity payouts.

Thanks for the context, quotes. It's actually encouraging to me to hear Buss speak this way about TEP. It suggests to me that there is some tension there. If the TEP are reaping too high a return, then management should be working on ways to get around it. There ought to be cheaper ways to get equity like preferred stock and cheaper ways to cash on ITC credits, like MyPower loans where the customer retains it. But it sounds like management is struggling to break free. So I guess the one silverlining to ITC stepdown would be cutting TEP by 2/3.

- - - Updated - - -

What are your thoughts on the effect of mix on your numbers right now? Commercial is a little different then residential in this respect. They are ramping commercial up significantly at the same purposefully tapering residential around 210mws/quarter. Remember, they are building commercial/residential crews on projected MWs installed for the quarter, so this is a deliberate rebalancing of the mix, especially after they've activated the $1billion commercial install fund this year. What is the impact of this new mix that could give more context to the numbers?

The mix makes it all the more confusing to try interpret EVC and even cost per Watt. The installed cost per Watt could go down simply by virtue of mixing cheaper commercial installations into the average. The gross retained value is fairly low for commercial, but this might be okay if the cost per Watt is in proportion to that.

So I've asked investor relations if they might provide EVC analyses broken out by segment, PPA/lease, MyPower, and Commercial. I'll be surprised if they actually release that, but they need to know that investors care.

Strategically, I want to see SolarCity move aggressively into Commercial. I think there are huge opportunities to help business defeat demand charges. So batteries, solar and smart demand devices figure into this, and will save businesses big bucks.

But in the meantime, the mix adds confusion.

 

[SBenson]

<<snip>>
I'm cautious as well, but feel that SC is doing the right things to get more market share and higher margins; but maybe those don't always seem to add to shareholder value the straightest of lines.

The biggest problem with SolarCity is really the amount of deception that they lay on naive investors.

Over the course of last 40 to 50 pages, I highlighted many of their deceptive tactics (characterization of situation in Hawaii, and in California, they BS cost metrics that don't account all costs, and their epic EVC metric, etc.).

Of all the deceptions, the very biggest is the Retained Value metric.

For the longest times, SolarCity published only Gross Retained Value and simply called it 'Retained Value' without a qualifier. They tried to spin it as that is the shareholder value that they are creating. All three analyst reports I read (2 from prominent big banks - JPM, DB) all directly used this Retained Value metric and projections of it to come up with stock price targets. Much of the financial media analysts/reports/bloggers all directly used this metric.

To be fair, SolarCity said that this is not net of debt. But consolidating RV with their balance sheet is so damn difficult that no body cared to do it.

I myself struggled with consolidating the Balance Sheet with RV but failed. I asked around but it wasn't of much help. It was too damn difficult. The business model and financials are too damn complex. Moreover, when the growth rates are 100% and RV is keeping pace at the same rate, who cares if there is debt? Even if debt was half of RV, it will be more than covered within a short span of 6-months was the thinking. The growth rate was dizzying. It covered away all flaws.

Only much later, in 2015 Q1 did they really consolidate with the Balance Sheet and publish the truly meaningful Net Retained Value (NRV). So why didn't they do this earlier? Just deceptive game, it is to selectively show data to spin things in the brightest light. Just taking advantage of naive crowds through financial gimmickry. Basically their cost metrics in the slide deck is the same game played all over again, selectively pick the cashflows and hide the true picture.

In 2015 Q2, when results were announced on July 29th, the investor community for the first time had an opportunity to really assess how the shareholder value is increasing. This I believe is the real kicker which set in motion the strong decline of the firm (together with external macro factors) starting in August.

When Q3 came out, the growth rate dropped to 40%. But this also shed additional light into progress of NRV and how it is not adding up with their announced cost-structure. Now you look at NRV, net out the renewal, net out the convertible bonds, and look at a per share basis, it is measly $14/share. And it is growing at an annualized pace of merely 16% or so.

This is a far cry from all the shareholder value, and the growth rate, investors thought they had in investing in SCTY. The stock promptly plummeted inline with new found reality.

This 40% growth rate is very enlightening, as it sheds light on a lot of issues, gimmicks and games that management has been playing. Growth is a very deceptive thing, it hides all flaws.

To repeat a Warren Buffett quote: "Only when the tide goes out do you discover who's been swimming naked."

I really learnt a lot through investing in SolarCity. Investing in growth companies, especially with new age financials and metrics, is a dangerous game. You never know what the real value to the shareholders is. When reality sets in and expectations are reset, there will be massive corrections in stock prices. I guess many people learnt this lesson in the tech bubble. I learnt it through SolarCity.

 

[Rarity]

I've been thinking about that Buffett quote the last few days. SolarCity seems to have a swimsuit on (if only a small bikini).

SunEdison looks like it is going to zero. I don't know if SolarCity can take any advantage of that.

 

[jhm]

Just a not on determining the average price per W. Ultimately the customer plus ITC plus any other incentives pay the full price for the system. So adding customer revenue, SREC, and other rebates and payments and discounting 6%, I get $3.225/W which only leaves out 30% ITC. So dividing by .7, I get $4.61/W at the pre-ITC price.

This approach is within a penny of adding cost per Watt, $2.84, plus gross retained value of $1.78. GRV nets out ITC, but cost per Watt includes it. So ITC should wash out in the sum, $4.62/W.

So I had gotten concerned that I may have missed something, but I thing both approaches are pretty much correct and yeild similar results. So I think $4.62 is pretty close to the right number, and $1.39/W is the ITC. So with this, I maintain that TEP are providing 6% financing, which is quite fair. So I'm not going to hold TEP or management in undue suspicion. There may well be tensions between management and TEP, but it does not appear to be a situation leading to diadvantage for shareholders. It could just be friction for management to deal with.

Sorry about the back and forth. I'm just trying to check my work and get this right.

 

[TheTalkingMule]

I've been thinking about that Buffett quote the last few days. SolarCity seems to have a swimsuit on (if only a small bikini).

SunEdison looks like it is going to zero. I don't know if SolarCity can take any advantage of that.

From what I gather, SUNE and several others are deriving their growth from yield cos they essentially operate themselves. Masturbatory sales practices aren't real growth. SCTY is doing it the hard(expensive) way by actually building up a "subscriber base". Pretty obvious to me who wins out as we move along the next few years and all these other installers get squeezed just as bad as the SCTY shorts. Sometimes I think I'm being a bit too rosy on the outlook, but really who else has a nationwide full service model that is going to survive this tumult? Nobody that I can see.

Pretty clear that a full ITC stepdown would be good for SolarCity and their marketshare in the long run. Who else can say that?

SCTY is on pace to top their customer count and install cost goals. The details can be spun in any number of way as you can see above.

 

[doggusfluffy]

Elon Musks Connection to SolarEdge Casts Long Shadow on Stock - Bloomberg Business

The Silicon Valley billionaire’s SolarCity Corp. is the biggest buyer of its components for photovoltaic systems. That turned SolarEdge into a darling of investors until its top client announced it would scale back installations of panels. Shares of the Israeli company that had soared as high as $42 are back down at $18, the price of their March trading debut in New York.

 

[blakegallagher]

The biggest problem with SolarCity is really the amount of deception that they lay on naive investors.

Over the course of last 40 to 50 pages, I highlighted many of their deceptive tactics (characterization of situation in Hawaii, and in California, they BS cost metrics that don't account all costs, and their epic EVC metric, etc.).

Of all the deceptions, the very biggest is the Retained Value metric.

For the longest times, SolarCity published only Gross Retained Value and simply called it 'Retained Value' without a qualifier. They tried to spin it as that is the shareholder value that they are creating. All three analyst reports I read (2 from prominent big banks - JPM, DB) all directly used this Retained Value metric and projections of it to come up with stock price targets. Much of the financial media analysts/reports/bloggers all directly used this metric.

To be fair, SolarCity said that this is not net of debt. But consolidating RV with their balance sheet is so damn difficult that no body cared to do it.

I myself struggled with consolidating the Balance Sheet with RV but failed. I asked around but it wasn't of much help. It was too damn difficult. The business model and financials are too damn complex. Moreover, when the growth rates are 100% and RV is keeping pace at the same rate, who cares if there is debt? Even if debt was half of RV, it will be more than covered within a short span of 6-months was the thinking. The growth rate was dizzying. It covered away all flaws.

Only much later, in 2015 Q1 did they really consolidate with the Balance Sheet and publish the truly meaningful Net Retained Value (NRV). So why didn't they do this earlier? Just deceptive game, it is to selectively show data to spin things in the brightest light. Just taking advantage of naive crowds through financial gimmickry. Basically their cost metrics in the slide deck is the same game played all over again, selectively pick the cashflows and hide the true picture.

In 2015 Q2, when results were announced on July 29th, the investor community for the first time had an opportunity to really assess how the shareholder value is increasing. This I believe is the real kicker which set in motion the strong decline of the firm (together with external macro factors) starting in August.

When Q3 came out, the growth rate dropped to 40%. But this also shed additional light into progress of NRV and how it is not adding up with their announced cost-structure. Now you look at NRV, net out the renewal, net out the convertible bonds, and look at a per share basis, it is measly $14/share. And it is growing at an annualized pace of merely 16% or so.

This is a far cry from all the shareholder value, and the growth rate, investors thought they had in investing in SCTY. The stock promptly plummeted inline with new found reality.

This 40% growth rate is very enlightening, as it sheds light on a lot of issues, gimmicks and games that management has been playing. Growth is a very deceptive thing, it hides all flaws.

To repeat a Warren Buffett quote: "Only when the tide goes out do you discover who's been swimming naked."

I really learnt a lot through investing in SolarCity. Investing in growth companies, especially with new age financials and metrics, is a dangerous game. You never know what the real value to the shareholders is. When reality sets in and expectations are reset, there will be massive corrections in stock prices. I guess many people learnt this lesson in the tech bubble. I learnt it through SolarCity.

The biggest problem with solar city is their financials are one of a kind because they invented their business model. They are not deceptive like chanos and his cronies that intentionally misrepresent their business model.

Ever since Brad took over as cfo they have been trying to explain their financials better.

There will be a massive correction with solar city's stock and I fear your gut will truly wrench when it happens. It might take a couple months or a few years. I hope you go long with short term options at the exact right time

I'm selfishly hoping it stays low for a couple/few more months so all this work I am putting in can be magnified through scty leaps. Working to expand my business from one installation crew to two! I am a bit smaller than solar city's 40k+ employees.

 

[doggusfluffy]

Paris 2015: Australia's quiet climate commitment to decarbonise the economy

The Paris agreement "must establish a durable platform for limiting global temperature rise to below 2 degrees, including through a long-term goal, accountability and transparency of contributions, and allowing for strengthening of ambition over time", Mr Turnbull agreed in a statement issued with the President of the European Commission Jean-Claude Juncker and the President of the European Council Donald Tusk on November 15.

The concession by Australia marks a significant advance on the country's position and stands in contrast to comments made just three weeks ago by Foreign Affairs Minister Julie Bishop that Australia wouldn't back wording supporting a long-term goal being added to the Paris accord because the country does not have a domestic target to cut carbon emissions beyond 2030.

 

[electracity]

Elon Musks Connection to SolarEdge Casts Long Shadow on Stock - Bloomberg Business

SEDG is up 20% from the bottom. They should have some good news next year as the primary inverter for the Powerwall.

 

[doggusfluffy]

Harness power of the sun - 48 Hours - Rotorua Daily Post News

Solarcity NZ chief executive Andrew Booth says the Bay of Plenty is one of the top three markets nationally for solar energy use, though just .2 per cent of Kiwi households use solar. A recent Deutsche Bank report mentions New Zealand as one country where solar energy costs the same or less than retail power.

 

[TheTalkingMule]

Now that install costs are down to $1.92, why wouldn't sales cost start their slow drift down to $0? Why would a savvy consumer not seek to purchase this product online with no sales soft cost associated based on the recommendations of loved ones?

Clearly Germany got to this sales-free word of mouth plateau very quickly, hence total retail install prices of <$2/W all-in. At what point will that sales-cost-free option exist from solarcity.com?

 

[doggusfluffy]

Canada's Oil-Rich Province Is Bringing in a Carbon Tax and Justin Trudeau Is Thrilled | VICE News

Her announcement came on the eve of a pivotal climate change meeting on Monday between Prime Minister Justin Trudeau and the Canadian premiers ahead of the Paris climate conference discussions. It's the first such meeting between the prime minister and the leaders of the provinces since 2009, although it's unclear what sort of tangible plan will emerge from it before they head, as a group, to Paris.