SolarCity (SCTY)

[AudubonB]

...look what is happening to Arizona commissions right now and you'll see the path of Nevada is not going to end well for that PUC/governor/nv energy. Tell me why all of the sudden two Arizona commissioners are personally flying to Solarcity headquarters to meet with Lyndon Rive personally to "turn the page" "start anew" and "compromise"? Why such a dramatic action? What caused such a u-turn in their sentiment???

That is extremely interesting. Can you please provide a link to confirm it?

 

[Foghat]

That is extremely interesting. Can you please provide a link to confirm it?

Here's an article:
Arizona regulators seek solar net-metering compromise

All stemming from the smoking gun of commissioner stump's text-gate:

Roberts: Reason No. 847 for why Bob Stump's texts must stay on the QT

Nevada PUC/governor/nv energy text-gate to follow?

also, let's not kid ourselves... Warren buffet is not innocent here. His nv energy is apart of ALEC. So are the Koch Bros companies. ALEC is heavily, heavily involved in anti-solar campaigns nationwide, that includes Nevada and Arizona. Again, let's not kid ourselves into thinking good ol warren and the Kochs dont pay attention to what their companies do or has any say in how they act. And for some to say warren is democrat politically, ask him what he would think of a Bernie Sanders win...

here is an article on ALEC:
ALEC calls for penalties on 'freerider' homeowners in assault on clean energy | US news | The Guardian

Ted Cruz was a featured speaker at ALEC event mentioned in this article. Funny, Nevada governor Sandavol is rumored to be considered a leading Vice presidential candidate should Cruz win the republican nomination. Hmmmm...

 

[drinkerofkoolaid]

Lyndon needs to do a better job answering questions when being interviewed.

His points should be something like this.

1) Incentives for Solar are in place for a reason.
2) Solar is good for people who buy Solar Panels, Nevada tax payers, and Nevada.
3) The cost to utilities, for every additional person with Solar panels is negligible. Any independent study suggest there is no added cost to the utility, when you look at the big picture.
4) Maybe those who don't use Solar should pay a bit more than those who have Solar? There are many reasons the state and Federal government is encouraging (INCENTIVIZING) people to buy Solar Panels.
5) It is immoral, unethical, and possibly illegal for the utility to introduce fees that make it impossible for Solar to make sense.
6) It is most likely illegal for the utility to IMPOSE fees on customers who thought they were being REWARDED for doing a GOOD THING by installing solar panels, only to find out they would be arbitrarily PUNISHED by the utilities?

The Good news is Bernie and Hillary, the only SANE candidates, have very clearly stated they believe what Nevada has done is unethical, probably illegal, and unquestionably unreasonable.

1) It is almost unquestionably illegal for the new fees to be imposed on existing customers.
2) SolarCity, and all customers in Nevada will likely sue, and based on what has happened in other states, will likely win. RELEASE THE HULK!

 

[jhm]

The possibility of a 7.5% discount rate was merely speculation about SolarCity selling equity positions in PPA and leases to insurance companies and other financial out fits. It really is a nice idea for SolarCity to tap into insurance companies because they need to invest reserves in pretty stable bond-like assets. The thought of having an insurance company cash upfront for the whole asset is worth taking a 14% haircut on the NRV. This avoids having to raise capital from both debt and equity. Shareholders are much better off taking the haircut to get immediate revenue and profit than straining shareholder value having this sit on the books for 30 years.

Think of it this way. Some installers like SunEdison have a yieldco just so they can liquidate a longterm asset. This cleans up their balance sheet and they get to post immediate earning when they sell the assets to the yieldco. So what if a couple of insurance companies were willing to function as your yeildco? You sell the asset and get the cash. But here you don't even need to bother with spinning off a yieldco. Other financially stable firms can provide all the advantages of a yeildco with less risk to the the parent company. That is, financial turmoil with SunEdison's yieldcos actually contributes to risk for SunEdison as a parent conpany. If the yieldco loses value the parent company which owns most of it loses that value plus it throws into question how the parent would continue to get funding if the yieldco were unable to deliver. That is why yieldcos are not really a stable structure for an installer. What you need are financially stable and truly independent clients that what to buy your assets. If this is what SolarCity is working out, then hats off to them.

Just ask yourself, would the market rather see NRV accumulate on the books or quarterly earnings?

 

[drinkerofkoolaid]

The possibility of a 7.5% discount rate was merely speculation about SolarCity selling equity positions in PPA and leases to insurance companies and other financial out fits. It really is a nice idea for SolarCity to tap into insurance companies because they need to invest reserves in pretty stable bond-like assets. The thought of having an insurance company cash upfront for the whole asset is worth taking a 14% haircut on the NRV. This avoids having to raise capital from both debt and equity. Shareholders are much better off taking the haircut to get immediate revenue and profit than straining shareholder value having this sit on the books for 30 years.

Think of it this way. Some installers like SunEdison have a yieldco just so they can liquidate a longterm asset. This cleans up their balance sheet and they get to post immediate earning when they sell the assets to the yieldco. So what if a couple of insurance companies were willing to function as your yeildco? You sell the asset and get the cash. But here you don't even need to bother with spinning off a yieldco. Other financially stable firms can provide all the advantages of a yeildco with less risk to the the parent company. That is, financial turmoil with SunEdison's yieldcos actually contributes to risk for SunEdison as a parent conpany. If the yieldco loses value the parent company which owns most of it loses that value plus it throws into question how the parent would continue to get funding if the yieldco were unable to deliver. That is why yieldcos are not really a stable structure for an installer. What you need are financially stable and truly independent clients that what to buy your assets. If this is what SolarCity is working out, then hats off to them.

Just ask yourself, would the market rather see NRV accumulate on the books or quarterly earnings?

Well written!

 

[jhm]

Well written!

BTW I used to work in insurance. It is a strange sort of business. You take in premiums, invest them conservatively, and pay off claims as they come in. You never know exactly how much you will have to pay out in claims, you just reserve for them. That's what the actuaries are for. So it is a strange business where cash comes in first with a very slow outflow of cash for years even decades to follow. So this nicely complements what a solar installer is faced with. The solar installer has a big outflow of cash up front with a slow trickle of inflow for decades to follow. Insurance companies will also have some tolerance for a variable cashflow such as from PPAs. Certainly actuaries have the analytic tools to deal with this. Cooler than that, some insurers have risk that is linked to weather and may be able to hedge meteorological risk with solar PPAs. For example, if you insure against fires, a particularly sunny and dry year raises risk across your portfolio. But such a year would also produce an abundance of solar power. So the increased cash flow from your solar PPAs would help offset your fire losses.

 

[Jackl1956]

In this Presidential Election Year, solar power net metering will become a political football. Nevada will most certainly be contrasted with California. Jerry Brown took an enormous Republican deficit and turned it into a budget surplus. This was done while driving California's renewable portfolio standard toward 33% via AB32(California's global warming initiative). In addition, the state has incentivized grid storage. California is the new distributed generation paradigm.

The CPUC will vote on Net Metering in the next couple weeks. The Democratic presidential candidates will beat Sandoval silly with facts. This is a historic political blunder.

 

[AudubonB]

Moderator Note:

I am acutely aware how difficult it is to keep this Investor discussion sanitized from any Political discussion, but I also know you folks can meet that challenge.

That is all. Carry on.

Carefully.

 

[drinkerofkoolaid]

In this Presidential Election Year, solar power net metering will become a political football. Nevada will most certainly be contrasted with California. Jerry Brown took an enormous Republican deficit and turned it into a budget surplus. This was done while driving California's renewable portfolio standard toward 33% via AB32(California's global warming initiative). In addition, the state has incentivized grid storage. California is the new distributed generation paradigm.

The CPUC will vote on Net Metering in the next couple weeks. The Democratic presidential candidates will beat Sandoval silly with facts. This is a historic political blunder.

Very true. The main cause of the recent volatility is the incident in Nevada.

The next president will unquestionably make the environment, Solar Power, and Climate Change key points during their time in office. The president has a number of tools at his disposal, to address matters similar to what happened in Nevada.

Any opposition to addressing climate change should be treated as a threat to our national security, and to the world.

This is very relevant to recent events, and will be more relevant in the next few years. It is critical for anyone investing in SolarCity, since efforts that hurt solar assets in states will affect SolarCity.

 

[Foghat]

The possibility of a 7.5% discount rate was merely speculation about SolarCity selling equity positions in PPA and leases to insurance companies and other financial out fits. It really is a nice idea for SolarCity to tap into insurance companies because they need to invest reserves in pretty stable bond-like assets. The thought of having an insurance company cash upfront for the whole asset is worth taking a 14% haircut on the NRV. This avoids having to raise capital from both debt and equity. Shareholders are much better off taking the haircut to get immediate revenue and profit than straining shareholder value having this sit on the books for 30 years.

Think of it this way. Some installers like SunEdison have a yieldco just so they can liquidate a longterm asset. This cleans up their balance sheet and they get to post immediate earning when they sell the assets to the yieldco. So what if a couple of insurance companies were willing to function as your yeildco? You sell the asset and get the cash. But here you don't even need to bother with spinning off a yieldco. Other financially stable firms can provide all the advantages of a yeildco with less risk to the the parent company. That is, financial turmoil with SunEdison's yieldcos actually contributes to risk for SunEdison as a parent conpany. If the yieldco loses value the parent company which owns most of it loses that value plus it throws into question how the parent would continue to get funding if the yieldco were unable to deliver. That is why yieldcos are not really a stable structure for an installer. What you need are financially stable and truly independent clients that what to buy your assets. If this is what SolarCity is working out, then hats off to them.

Just ask yourself, would the market rather see NRV accumulate on the books or quarterly earnings?

well, let's reel it in just a bit here... At the max, Solarcity would do this for only about 12% of the portfolio. This is not the main way of getting capital by any means. So 88% is done the same way they have been doing it. This, in my estimation, is purely supplemental. So even if it is 7.5%, 88% of the rest is sub 5%. Way, way below the net 6% discount rate used in npv calculations.

I say again, there is no change in the overall discount rate of 6%.

i think people need to settle down and realize this. Also, who is Bernstein? I have never heard anyone from Bernstein on any Solarcity quarterly conference call asking questions. How on earth do we believe Solarcity gives them exclusive access to projected numbers? Even if that happened, why would Bernstein release this information the very morning after the negative Nevada PUC decision? All I ask is for all of us to think about his for a second before turning the bipolar switch on...

 

[Foghat]

Amidst all this noise, let us not forget about this little Solarcity project happening right now...

CEC PON 14-303 - SunSpec Alliance -

make no mistake, Solarcity is already in the process of creating/establishing a global standard for distributed resources and the grid for whole sale markets.

Let that sink in for valuation sake.

 

[doggusfluffy]

Controversial solar rate changes will stay in effect - KRXI - Reno NV Top Stories - News, Sports, Weather

After hours of public testimony, PUC Chairman Paul Thomsen said he was offended by witnesses who suggested the panel did not know what it was doing when it adopted the new rate. Thomsen said the new rate is designed to create a path forward for the solar industry while treating all ratepayers fairly.

He said, "The new rate is intended to ensure that the 98 percent of residential utility ratepayers who are nonsolar customers do not subsidize those with solar systems."

Offended? For shame. :wink:

 

[Gerasimental]

The next president will unquestionably make the environment, Solar Power, and Climate Change key points during their time in office. The president has a number of tools at his disposal, to address matters similar to what happened in Nevada.

What makes you say this? I've not been following the primaries race closely for the last month or so, but last time I check all of these things were a complete non-issue on the GOP side. Are you simply assuming to the GOP candidates don't stand a chance? Only glimmer of hope I saw on that side was that after the Paris accord, a majority of republican voters want the US to push ahead with 'green' policies, and would think favourably of a candidate who propose to do this - although I attribute this more to wanting 'America to lead the world' than anything else.

 

[jhm]

well, let's reel it in just a bit here... At the max, Solarcity would do this for only about 12% of the portfolio. This is not the main way of getting capital by any means. So 88% is done the same way they have been doing it. This, in my estimation, is purely supplemental. So even if it is 7.5%, 88% of the rest is sub 5%. Way, way below the net 6% discount rate used in npv calculations.

I say again, there is no change in the overall discount rate of 6%.

i think people need to settle down and realize this. Also, who is Bernstein? I have never heard anyone from Bernstein on any Solarcity quarterly conference call asking questions. How on earth do we believe Solarcity gives them exclusive access to projected numbers? Even if that happened, why would Bernstein release this information the very morning after the negative Nevada PUC decision? All I ask is for all of us to think about his for a second before turning the bipolar switch on...

Sorry, I did not mean to give the impression that this was more than speculative or would somehow overhaul the basic financial model for the company. I recognized with reflection that I had been taken in by bearish spin that somehow SolarCity was changing their discount assumption. I'd be fine with that if it were the case, but all we have here is a little speculation that SolarCity may sell a few assets under deals that have a 7% to 7.5% yield. That does imply a haircut off of valuing those assets under a 6% discounts, but it is actually a damn good deal.

I do rather suspect that these deals may be for larger commercial projects. The recent John's Hopkins project involves a third party that will provide all financing. This is really smart because it allows SolarCity to get paid upfront and plow those earnings back into other projects. Large projects might not fit so neatly into an ABS deal, but may be big enough for other financiers to step in.

It's always good for SolarCity to diversify the way it finances. It's purely bearish spin to suggest that seek such alternatives indicates some sort of disparate problem. Creative financial problem solving is part of what make this company great. They truly are some of the best financiers outside of the financial industries.

 

[Foghat]

Sorry, I did not mean to give the impression that this was more than speculative or would somehow overhaul the basic financial model for the company. I recognized with reflection that I had been taken in by bearish spin that somehow SolarCity was changing their discount assumption. I'd be fine with that if it were the case, but all we have here is a little speculation that SolarCity may sell a few assets under deals that have a 7% to 7.5% yield. That does imply a haircut off of valuing those assets under a 6% discounts, but it is actually a damn good deal.

I do rather suspect that these deals may be for larger commercial projects. The recent John's Hopkins project involves a third party that will provide all financing. This is really smart because it allows SolarCity to get paid upfront and plow those earnings back into other projects. Large projects might not fit so neatly into an ABS deal, but may be big enough for other financiers to step in.

It's always good for SolarCity to diversify the way it finances. It's purely bearish spin to suggest that seek such alternatives indicates some sort of disparate problem. Creative financial problem solving is part of what make this company great. They truly are some of the best financiers outside of the financial industries.

apologize, not really aimed at you, jhm... You're a thoughtful person with genuine intentions on scty discussion. Forgive my broad blast under your comment.

California Launches Its First Real-World Smart Inverter Test | Greentech Media

"It’s the first real-world test of a technology set to be mandated for all new solar and battery projects in California in 2016, a fact that’s drawn some of the world’s biggest inverter makers into the project."

Here is another reminder of what is actually happening with Solarcity, which should refresh the discussion on the actual valuation of a near future Solarcity. It will become painfully clear to all those politicians/PUC and other stakeholders where the grid is going to be very soon. It's not a question of it, it's a question of how soon.

We all need to remember this.

 

[blakegallagher]

What makes you say this? I've not been following the primaries race closely for the last month or so, but last time I check all of these things were a complete non-issue on the GOP side. Are you simply assuming to the GOP candidates don't stand a chance? Only glimmer of hope I saw on that side was that after the Paris accord, a majority of republican voters want the US to push ahead with 'green' policies, and would think favourably of a candidate who propose to do this - although I attribute this more to wanting 'America to lead the world' than anything else.

I Know it's difficult but please refrain from mentioning either parties name when Republican Democrat or GOP is mentioned emotion start flying and the whole thread gets chopped up and moderated laugh out loud

To be clear it is the post directly above this one that is more likely to get us moderated than yours but any political discussion devolves into chaos here

 

[Jackl1956]

Moderator Note:

I am acutely aware how difficult it is to keep this Investor discussion sanitized from any Political discussion, but I also know you folks can meet that challenge.

That is all. Carry on.

Carefully.

I understand your advice and concern. However, the politics of global warming and renewable energy are inextricably linked to investing in SolarCity and Tesla Motors. The corporate mission statements of both firms clearly communicate the goal of advancing solutions for global warming. I am not sure how an honest, comprehensive discussion of these investment matters can take place without delving into politics.

 

[AudubonB]

Jackl1956

I am not sure how an honest, comprehensive discussion of these investment matters can take place without delving into politics.

As I said, I know all of you can meet that challenge. I suppose it's time to have all review TMC's Terms of Service, specifically

You agree to not use the Service to:

a. upload, post, email, transmit or otherwise make available any Content that is unlawful, harmful, threatening, abusive, harassing, tortuous, defamatory, vulgar, obscene, libelous, invasive of another's privacy, hateful, or racially, ethnically or otherwise objectionable. TeslaMotorsClub.com is not the place for debate on religion, sex, politics, or other such controversial posts not directly related to issues having to do with electric cars; and this is not the place to talk about illegal downloads or how to obtain them. There are several forums on the Internet dedicated for discussing this type of material. This is not one of them.

It is inconceivable to me that any of you are so inexperienced as not to realize how divisive to forum comity discussions that veer toward championing one or demonizing another political party are.

You can discuss how the promulgating of EVs or solar electricity present a political challenge. You cannot ​on this forum discuss how this politician or that political party is a moron or a saint.

 

[hockeythug]

Yikes. Never liked the fact that these solar companies were at the mercy of the power companies and the government.

 

[doggusfluffy]

A Look Inside SolarCity, WNYs Largest Construction Project in 20 Years

I'm sure they're all glad to be warm and indoors.