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SolarCity (SCTY)

Discussion in 'TSLA Investor Discussions' started by Curt Renz, Mar 24, 2014.

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  1. TheTalkingMule

    TheTalkingMule Distributed Energy Enthusiast

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    How much would it cost Elon Musk to personally gift a PowerWall to every residential solar customer of SolarCity in Nevada? Couldn't be that much and it would be hilarious.

    These kinds of decisions don't both me for three reasons. One, it's temporary. The voting populace of Nevada won't take this kind of nonsense. Two, it'll get overturned in the courts. Three, it affects the solar industry nearly uniformly. Who cares is demand backs up in Nevada even for an entire year or more? The future is coming, it's inevitable.
     
  2. doggusfluffy

    doggusfluffy Closed

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    Agreed. Double irony if the offer was to pick up your Powerwall at the Gigafactory in person. The more publicity this gets the better informed the voters will become.

    Dire warnings issued for rooftop-solar industry after new rates OK'd | Las Vegas Review-Journal

     
  3. Foghat

    Foghat Active Member

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    the funny thing is well probably see the growth that will happen in Hawaii well exceed (2x-3x) any delay in Nevada installs. Matter of fact growth has been flat for years in Hawaii, now the growth is anticipated to be exponential with solar+powerwall installs.

    its just the crazy way state by state centralized monopoly utility structure pans out. You think it is extremely odd that nevada's own 2014 independently commission net metering report concluded net metering is a benefit to all rate payers at retail rates. But yet its commission ignored it and reduced to whole sale rates. Something really stinks in Denmark here...
     
  4. drinkerofkoolaid

    drinkerofkoolaid Active Member

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    #4024 drinkerofkoolaid, Dec 22, 2015
    Last edited: Dec 22, 2015

    In other words, Sandoval declined to intervene at this stage. This doesn't mean he won't provide his thoughts should any party he agrees with call for judicial review.


    As he points out, ANY PARTY not satisfied with the decision or that feels the decision does not ""provide for energy rate stability and balance the interests of ratepayers with business interests" is able to call for for judicial review. Every person in Nevada with Solar Panels, along with every business involved in installing solar panels will call for judicial review. The new rule clearly doesn't balance the public interests with private interests. Also, how is it legal for them to introduce a retroactive monthly fee for everyone who has solar panels?

    Dire warnings issued for rooftop-solar industry after new rates OK'd | Las Vegas Review-Journal

    In my opinion, this law will be overturned after the lawsuits start flooding in. Numerous states, such as California have already determined that such fees are not legal.

    New California Law Cuts Solar-Permitting Red Tape | Greentech Media

    Here is what the utilities in California said. Ultimately the utilities lost the fight. States are incentivizing people to use solar because it's in the publics interest that more people use solar. Therefore, it should be irrelevant if those who don't use solar have to pay a bit more than those who have solar panels (even if there is any truth to the claim that an increase in solar forces utilities to charge customers who don't have solar panels more).
    In key solar decision, California rejects utility plans

     
  5. doggusfluffy

    doggusfluffy Closed

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    So it's looking like we'll hit 6m over 5m avg. today. Any ideas if the shorts are unloading or loading up even harder? Tesla is flat volumes again.
     
  6. Foghat

    Foghat Active Member

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    rooftop solar already sued Wisconsin under similar circumstances in Nevada and won. Solarcity and others are much more experienced in this type of lawsuit. Again, don't under estimate the legal power of Solarcity and others.

    The bottom line is Buffet just wants to slow down the growth of rooftop. I don't think the really think this new rate will stand in court, but it's still in court. The buffet goal is to draw out the process, contract the industry momentum. He knows that the Nevada PUC(buffet proxy) can't be held liable for any damages, so if he can make this get pushed to the courts, then so be it. It's a win.

    secondly, governor Sandoval is in bed with nv energy. His staff is populated with nv energy employees. Let's not fool ourselves to think he's not looking out for them. A spades a spade. The governor appoints the commission. He can absolutely intervene on any and all decisions. He also can literally put anyone pro nv energy on the commission. This has to be tried by an outside independent entity and most likely that's state/federal court.
     
  7. drinkerofkoolaid

    drinkerofkoolaid Active Member

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    #4027 drinkerofkoolaid, Dec 22, 2015
    Last edited: Dec 22, 2015
    Hoping for an overreaction induced drop tomorrow so I can load up on calls. This inverse volatility is a good things for options, but I wouldn't be surprised if Chanos chimes in with FUD tonight or tomorrow. The noise from today is causing the market to completely overlook the price target upgrades from the past few days. Cup and Handle alert for both Tesla and SolarCity.
     
  8. Foghat

    Foghat Active Member

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    "As big as this one is, my guess is it won’t even supply half of our needs” by 2018, he said.

    well, this looks like to be a statement Solarcity will guide for over 2GWs in 2018.


     
  9. SBenson

    SBenson Active Member

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    Foreword: Keeping the conversation on the subject as opposed to each other’s positions and motivations will be much more productive. No need for provocative statements each time someone posts a cautionary note. That only shows weakness in one's comprehension of the situation. Try to keep emotions in check please, we are here to find information from each other.

    Moving on to the real subject...

    The biggest problem with the Nevada deal is with NOT-grandfathering existing solar customers. So what now?

    Sure we can talk about lawsuits and all that. One simple thing people miss, courts exist to enforce law. Not to decide what is fair. Fairness is supposed to be decided by the law itself which lawmakers make (congressmen and executive department: Mayor/Governor/President etc.) If you are hoping that courts will rule in favor of SolarCity, it needs to be based on some information on existing laws. Just because something is perceived unfair by a set of people, it doesn't automatically become 'illegal'. Also note that we are talking about state laws here. So what is applicable in CA is not directly applicable in NV.

    I myself don't know if laws are in place to call PUC's decision illegal. My suspicion is no such laws exist. If so, PUC wouldn't have taken such a bold step. This is purely my speculation. Again, please come in with proper info if you want to say otherwise or just say that you too are speculating like me and give some reasoning as to why you are speculating that way.

    IF this PUC order stays, then what?

    (Before someone jumps all over this, notice the big, bold IF? We are just doing scenario analysis here. Not trying to say that that is the only possible outcome)

    My best guess is - homeowners are on hook to pay SolarCity anyway. In case of leases the argument is straightforward. In case of PPAs, I believe the charge is based on what the system produces. It is not dependent on how much is consumed on the spot and how much is shipped to grid and what the grid is giving back as credit. So primarily this is a direct hit for homeowners... Keep note, even if the homeowners bought a system outright through local installers, whether they take up some sort of financing or not, the homeowners will be in the same predicament anyway. So SolarCity asking for continued full payment as agreed upon earlier is not unfair. At least in my view.

    Now many homeowners may choose to default on the contract, because for many it may be worth defaulting than paying 2X the electricity bill for next 20 years. Then the pain spreads upwards to asset-backed investors and shareholders. If the numbers look very bad, this may leave a bad taste in the asset backed investors mouths. So either asset-back financing becomes expensive (rates go up) or simply unfeasible. More importantly this sets precedence. That is the bigger issue here than just the mere loss ensured in NV alone. This issue will certainly put asset backed investors on guard. This morning Raymond James released a note saying as much.

    So here we go again, doubting the very foundation of this business model. If anything management wants to do more asset based financing. Not less. In the Analyst Day event they said they are exploring ways to finance away *all* of the 20-year contracted cashflows. So this NV issue strikes right in the heart.

    Maybe this explains why shorts are relentless. I wonder how they know all this beforehand? Spending as much time as I do on SCTY, I had no clue that not grandfathering existing homes is ever a possibility. Maybe my perspective was shaded because that's what Lyndon Rive said multiple times in the past (again a dose of deception here, look up Q1 2015 CC transcript for example). But couple of times random guys popped up in this thread and said exactly this (and we promptly ssshhed them away; we really ought to learn to pay attention to the cautionary comments here in this thread).

    Although this whole thing sounds alarming, on the flip side there is near infinite money in the global financial system (I work in the outer rim of the industry and I get to see some inner-workings sometimes). And with Paris there seems to be particular interest in financing green investments. So I believe/hope that ABS financing rates may go up but won't cease entirely.

    If SolarCity comes out with an ABS pricing announcement that will certainly do some good to restore confidence. That MyPower deal being underwritten by Credit Suisse is not priced yet. It is well rated by S&P and Kroll agencies. So I hope that comes out soon.

    Overall I am still optimistic that this too shall pass. Fingers crossed.

    - - - Updated - - -

    FWIW, per IB, the rebate rate went down both yesterday and today. Also shares available for shorting increased quite a bit.

    It certainly looks like short covering is happening in dips.
     
  10. Foghat

    Foghat Active Member

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    Grandfathering has never been denied in the history of of US utilities and was confirmed oddly enough in Arizona PUC proceeding earlier this year.

    It is legally unprecedented. furthermore, Nevada state law prohibits PUC decisions from upending the rooftop solar industry in the state, which clearly this decision has done. there are a plethora of legally questionable things from this decision it's hard to enumerate them.

    There is no question, this is a legal mess for the PUC, but again, that's part of the buffet strategy. They won't pay damages, so why not push this into the courts, slow rooftop momentum right at the same time they Nevada is set to bid and install buffet natural gas generators? Rather coincidentally, buffet is also looking at Arizona for his nat gas products as well...
     
  11. AudubonB

    AudubonB Mild-mannered Moderator Lord Vetinari*

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    Ad Hominem Alert

    To all:

    First and most important. I do not have a dog in this fight; I write this as a heads-up based on my own experience, background and knowledge. Nor am I singling anyone out as being defamatory; the finger-pointing I am going to do is dispassionate; absolutely disinterested.

    I have noticed a common attack in a good number of these posts as well as some that deal with, e.g., the US railroad industry. That is to say, as shown in the immediate prior post
    I know personally this is not and never has been the case at all. My father knew Warren Buffet when Buffet was a fairly young man and a newcomer in the investment world; he saw him as having the potential to become the best of the new crop of investment professionals and made sure I studied him carefully and learned from his methods.

    Unfortunately for me, I once tripped up and ended with egg all over my face, as follows. I was at a dinner at the home of the head of ABC shortly after the time that Berkshire Hathaway established a controlling interest in the parent company. As someone who had grown up with an intense aversion to television, it always had been awkward being with this family (the daughter was my first elementary school crush, and we remained extremely close for many decades after)...I must have had too much wine that particular evening, because I opened up. I said words to the effect of how pleased I was that Buffet had made this investment...."And why is that?"...."Because this will give him the opportunity to effect real change and turn television into the medium of learning and blah blah blah," I responded, digging myself an Omaha-sized hole as I ridiculously placed my own vision in Buffet's shoes. Mr. _X_ looked at me in a "Have I possibly known you for the past twenty-five years, and have you learned nothing from your father?" look and replied "Warren Buffet does NOT act that way. He NEVER gets involved in his investments".

    Well, it's a fine thing I'd dug that hole because I desperately needed to jump into it, fast.

    So go ahead and criticize NVE, Union Pacific and others as much as you wish and welcome to it. But I offer up my mistake to you all that you not repeat it.
     
  12. TheTalkingMule

    TheTalkingMule Distributed Energy Enthusiast

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    And such is the nature of the human investor I guess. We just secured ITC extension beyond our wildest dreams and folks are concerned about a backwoods chunk of desert that isn't even really a state. That demand will be there, it'll just sit until state politics catch up.

    These things will happen monthly for the next 3-10 years, can we maintain a bit of perspective?
     
  13. jhm

    jhm Well-Known Member

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    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.

    - - - Updated - - -

    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.
     
  14. Perfectlogic

    Perfectlogic Member

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    That would be pretty foolish. Remember not to get too caught up in a bullish mind set guys, there are no guarantees and certainly not SCTY. With the ITC extension I too am bullish on SCTY at this price level but there is no doubt that the risk is real. Only skimmed the thread but apparently Nevada is now retroactively establishing a fee for residential solar customers, I don't know if SCTY can just hike the prices for these customers or who will end up paying, but the legislative risk is real nonetheless. Residential solar has a legislative tailwind like I have argued before in this thread and if this were to change their whole business model could quickly turn sour so be careful out there. I hope you don't have 100% of your money in SCTY with 40-50% of them in OOM options, if so I at least hope you are young.
     
  15. Foghat

    Foghat Active Member

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    #4035 Foghat, Dec 22, 2015
    Last edited: Dec 22, 2015
    On behalf of myself, thank you for your anecdote. If only this was abc maybe things would be different. However, this is electricity, a much different ball of wax. every action Buffet's taken in nevada has been anti-roof top solar, and blatantly so. If there is one thing that is absolutely true is warren buffet doesn't like to lose money. Roof top eats into revenues. he's heavily invested in centralized utility. He has zero investment in roof top solar.

    In Nevada, you can't disconnect from the grid in you have solar + storage. If you decide to leave the grid, you have to pay an exit fee. If you refuse to pay the exit fee you will be sued.

    secondly, the very Nevada PUC conducted an independent study on net metering in 2014 that concluded net metering benefited all rate payers at retail rates. Today's decision completely ignored its own study. If you can't see the foul play just from that fact, then I guess nothing will. There are many many different facts and examples that demonstrate protectionism of a monopoly position in the face of emerging competition. Remember, net metering was found to benefit ALL rate payers, meaning the grid serves the ratepayer better(and cheaper) then without. This exactly what the commission was designed to ensure would happen in the face of a legal monoplistic utility that would maximize rates despite consumer impact.

    - - - Updated - - -


    solarcity expects to grow rapidly in Hawaii in 2016. Lyndon rives stated at the analyst brief growth has flatlined in Hawaii over the past few years, but not in 2016.
     
  16. doggusfluffy

    doggusfluffy Closed

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    Financial Woes Scorch SunEdison - WSJ

     
  17. Jackl1956

    Jackl1956 Active Member

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    Elon Musk vs Warren Buffet

    I have invested in Tesla Motors and SolarCity because I believe in the corporate mission. I am convinced a solar electric economy is our best solution to the challenge of climate change. Pointedly, so do the employees, management and chief executives of these companies.If you are a value investor, invest with Warren. I happen to believe in what these guys are doing. Should I lose everything, I will have done so doing the right thing.
     
  18. ggr

    ggr Roadster R80 537, SigS P85 29, M3P 80k

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    It sounds like you didn't actually understand Audie's comment. I was thinking of posting something similar, but didn't have any personal experiences to hang it on, just some research and being an investor in B-H. So let me say it again:

    Berkshire Hathaway invests in solid balance sheets and well-run companies, and then doesn't micro-manage them. In fact it pretty much doesn't do any management, micro or otherwise. Berkshire Hathaway isn't only Warren Buffet, Charles Munger also directs investments. Berkshire Hathaway employs only about 30 people (maybe less, I can't remember), so they don't even have staff who meddle in investments. Nevada Energy is a subsidiary of a larger energy company. Warren Buffet is not even on the Board of Nevada Energy.

    So, malign NVEnergy all you want (I agree!), but leave Warren Buffet's name out of it.
     
  19. gene

    gene Supporting Member

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    I'm curious, does anyone know how much that exit fee in Nevada is?
     
  20. jhm

    jhm Well-Known Member

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    It's curious, on a day when solar (TAN) is down over 4.3%, and SUNE is down 23% in particular, that coal (KOL) and Oil & Gas E&P (XOP) would both be up nearly 2%. Are these related? Could it be that post-COP21 investors are starting to see renewables at odds with fossils? Is there any chance that fossil investor take heart in the prospect that a company like SunEdison might become financially weakened? It must be too early to know these things. As a statistical, I know there is not yet enough data to conclude that renewables and fossils are negatively correlated. But it is an intriguing thought, is it not?

    Even so, fossils are in disarray. Coal is so cheap that coal companies are going under. Natural gas is so cheap that gas producers are going under. And oil is so cheap that oil producers are going under. What fleeting schadenfreude there must be to see SunEdison routed by the market. That must feel a whole lot better than the reality on the ground for fossils.

    No one wants to admit it, but renewables are winning.
     
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