Benson, I rather expect that equity investors, both common and tax partners would have to absorb any customer default losses before passing that on to ABS investors. The assets that back the ABS are both the intended source of cashflow and collateral should SolarCity default. I find it highly unlikely that the NV situation could lead SolarCity to default on their ABS obligations. For one, only a fraction of the initial term cashflow is monetized by the ABS. And for another, defaulting would forfeit any value in the book of renewal terms.
So I am not worried for the sake of ABS investors. Furthermore, the cost of remedying the decline in export revenue is limited to the cost of installing Powerwalls. For example, the change is expected to push over $600 per year of costs back onto solar owners. That may seem like quite alot of incremental cost over several decades, but the total cost is really capped at the cost of storage over those years, maybe around $3000 per household. So the question becomes, who pays for storage? I suspect that SolarCity will work out some reasonable way to split the cost with customers, perhaps installing at cost. Regardless what they bring forward, the total cost of the policy shift is limited and can be mitigated. If SolarCity handles this well, it could actually work to SolarCity’s advantage in bringing reassurance to prospective customers. That is, solar owners who bought their systems from small installers may have been left to fend for themselves in this situation, while SolarCity customers had the benefit of an installer and finance on their side. Think of the way that Tesla works with customers when things don't go well. Musk has a strong business ethic of putting the customer first. I expect no less from SolarCity. Putting the customer first in a situation like this will also protect the ABS investor. In the longrun, this will work out best for the shareholder too.
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Hey, Nevada is a proud state. But, yeah, this is all par for the course. As SolarCity gains market share, utilities everywhere will seek to obstruct in anyway they can. Sadly, about all they can do is play policy games and seek protection from real competition from politicians. That's all they got. It will be a really long time before we see real competition on the basis of lowering prices or improving service.
So let's all enjoy the ride. In the meantime, I'd love to see SolarCity to use Nevada and Hawaii as test beds. They need to figure out the smartest ways to deliver power management technologies including batteries to help customers get the most out of their solar systems. They need to be the very best at defeating demand charges, minimizing solar exports, optimizing time of day pricing. This is the second stage booster for solar to borrow a SpaceX analogy. So I want to see SolarCity bring new competive capabilities to the market.