jhm
Well-Known Member
Ha. I'm listen to Pet Shop Boys right now. Feels good.
Dancing aside, I think the Saudis see this coming. They need to unload Aramco on the stock market to make their exit. The industry as a whole needs a plan to wind down. If producers keep over investing, they will chase a glut all the way into oblivion. So I think industry leaders know this, but they are not ready to go public and watch market caps tumble. So you won't hear this in the financial press either. I wish I knew when the market will figure this. You can't install 122 GW of renewables without it offsetting some amount of fuels. So it's curious that no one is doing the math. So suppose renewables grow by another 30% in 2016 and the fossil glut only worsens. Will investors get it then? Right now, the industry is scapegoating China for declining demand, which raises the spectre of some sort of global recession. But China is the biggest installer of solar and a big producer of electric vehicles, meanwhile it is dialing back its coal industry and coal imports. China is beginning its energy transformation, and they will be harnessing their manufacturing prowess to pull it off. Making these investments today will pay off dividends for decades. Perhaps this does not drive its economy the way heavy exporting does, but it will kick in and sharply reduce energy imports. So is soft demand for energy in China really the state of its general economy or is it that China has set out to manufacture it's own renewable energy supply chain? So weak demand in Asia is just the cover story to avoid recognizing the impact of of renewable energy.
This is critical for solar investors to understand. The fossil industry has all sorts of denial mechanisms to systematically underestimate solar energy. Solar Stocks will be subject to all sorts of negative sentiment and rabid shorting. Not also that withing the renewables sector, distributed solar is the fastest growing component. Distributed solar has the ability to grow like bunny rabbits across the Outback. This disrupts the utilities which are very much part of the fossil fuel industry. So all this is especially worrisome to the fossil elites. They can't control distributed solar as they can utility solar or wind. So as an investor I simply take heart in this larger perspective. So long as solar and batteries keep getting cheaper, renewable energy is inevitable. We just wring our hands about the timing. It's important for SolarCity to have a diversity of markets that it grows. Any one of them, like Nevada, can get derailed, but there is opportunity to grow in many other places. So just do it. Right now I see commercial solar as SolarCity's biggest growth opportunity. To wit, SolarCity is going to do the world's largest solar roof in Nevada. But in many other places, SolarCity is getting major contracts and has the efficient installing practice and demand charge defeating Powerpacks to do it right. Utilities are going to get their demand charges served to them. When SolarCity gets enough penetration into the commercial segment, the utilities are going to have to rewrite their commercial rate plans. It's going to be much harder for utilities to push around commercial ratepayers the way they do with residential. Industrial ratepayers are even harder to push around, which is the average rate for industrial is like 6 c/kWh, but 11 and 13 c/kWh for commercial and residential. Industrial ratepayers get power a quite close to wholesale prices because industrial business have a lot of options and can build out their own power system if they're not getting a favorable deal from the utility. So solar plus Powerpacks is putting comparable tools in the hands of commercial ratepayers. They will be able to play the same sort of options as industrial companies and so will command lower rates. This is also true of residential ratepayers armed with solar and Powerwalls. But still scale advantages go to commercial over residential. So in the broader strategy, SolarCity can press harder with commercial and soften up the utilities. Thinks like aggregated batteries may well fly in commercial space before utilities are ready to venture it in residential. I believe the technology will scale, but getting through policy barriers may prove more direct with commercial.
I digress, but my point is that renewables will find a way. Technology will keep knocking down barriers and prices will keep coming down. So I'm not going to worry about the obstructionists. They are simply getting further behind with every delay they ompose. Rather I want to keep my focus on where growth can happen right now and keep pushing to grow renewables faster than 30%. Five more years of just doing that, and the edifices of the fossil industries start coming down.
