More on Solarcity valuation:
GTM Research: Distributed Energy Resources Will Soon Receive Locational Valuation | Greentech Media
GTM Research: Distributed Energy Resources Will Soon Receive Locational Valuation | Greentech Media
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anticitizen13.7
Not posting at TMC after 9/17/2018
I looked at SCTY and peer companies like SPWR. I liked SCTY's focus on rooftop deployment and power purchase agreements, because I believe that distributed generation and a more decentralized grid is the way the electricity industry is going. SPWR and others still have a lot of resources devoted to utility-scale solar farms. Finally, SolarCity has a good relationship with Tesla (for obvious reasons -- Elon is the chairman of SolarCity's board), and I'm guessing that this will give SolarCity an advantage with integrating storage solutions like PowerPack and PowerWall.
The one thing that gives me pause about SCTY is the financial side of it. I spent a lot of time trying to understand the different and sometimes convoluted ways that SolarCity formed tax partnerships with financial institutions. This was much more complicated than understanding Tesla or most any other company I've looked at.
In the end, it's a leap of faith. I started investing in TSLA before the first Model S rolled off the production line, and the outlook was so uncertain that the company could have cratered at any time before May of 2013 (1st quarterly profit announced). I had no idea if Tesla would make it. SolarCity seems to be past the "survival" phase, but I'm thinking it may be 5-10 years before we see how well its unorthodox business model shakes out.
jhm
Well-Known Member
US Supreme Court Rules in Favor of Demand Response | Greentech Media
This is also good info. Note that things like the virtual power plant using Powerpacks in hotels was possible in SoCal was possible because California has it's own non-interstate ISO. Now FERC Order 745 opens this sort of thing up nationally.
This change really is a big deal. The Electrical Power Supply Association fought Order 745 because they knew it would open up a level of competion that would eat into their profits. I have long maintained that power generation is an industry headed for a glut of capacity in which no one makes enough money to survive. Blocking Order 745 was key to protecting this industry.
So what happens as generation becomes an unprofitable business to be in? Well utilities need to get out of power generation or suffer capital destruction. Utilities need to move toward an network and service model. The better job they can do of helping prosumers trade surplus power, capacity, storage, etc. to one another the more valuable the network becomes to participants.
It's going to take some of these yokels longer to figure this out. For example, NV Energy's plan to build a $900M gas peaker is monumentally dumb in light of the recent SCOTUS ruling. For example, DR programs in other neighboring states can start to undermine the value of a peaker in Nevada. This is an interstate issue, not a Nevada issue. So the Nevada PUC cannot protect them from out of state competition.
Try to grasp what this means. Suppose the wholesale price spikes up to $6/kWh in a multistage market. Utilities in one state may have set up really effective aggregation programs with their customers and as an aggregator they are entitled to some portion of the proceed. So thsee pro-DER utilities call up power from their customers that then sells this into all the surrounding states. So these utilities get to share $6/kWh mostly exporting into the other states. Meanwhile all the other utilities are paying through the nose for power at $6/kWh selling it to their ratepayers for $0.15/kWh. And guess what a state like Nevada has folks with solar and batteries that are not interconnected. So these folk are just charging their own batteries while NV Energy is losing almost $6 on every kWh they sell. These kinds of events happen a couple of times per year.
The implication here is that utilities that do a good job of cultivating and aggregating DERs among their own customers have resources that they can export into interstate wholesale power markets. The utilities that figure this out first will have an edge over the rest.
This is also good info. Note that things like the virtual power plant using Powerpacks in hotels was possible in SoCal was possible because California has it's own non-interstate ISO. Now FERC Order 745 opens this sort of thing up nationally.
This change really is a big deal. The Electrical Power Supply Association fought Order 745 because they knew it would open up a level of competion that would eat into their profits. I have long maintained that power generation is an industry headed for a glut of capacity in which no one makes enough money to survive. Blocking Order 745 was key to protecting this industry.
So what happens as generation becomes an unprofitable business to be in? Well utilities need to get out of power generation or suffer capital destruction. Utilities need to move toward an network and service model. The better job they can do of helping prosumers trade surplus power, capacity, storage, etc. to one another the more valuable the network becomes to participants.
It's going to take some of these yokels longer to figure this out. For example, NV Energy's plan to build a $900M gas peaker is monumentally dumb in light of the recent SCOTUS ruling. For example, DR programs in other neighboring states can start to undermine the value of a peaker in Nevada. This is an interstate issue, not a Nevada issue. So the Nevada PUC cannot protect them from out of state competition.
Try to grasp what this means. Suppose the wholesale price spikes up to $6/kWh in a multistage market. Utilities in one state may have set up really effective aggregation programs with their customers and as an aggregator they are entitled to some portion of the proceed. So thsee pro-DER utilities call up power from their customers that then sells this into all the surrounding states. So these utilities get to share $6/kWh mostly exporting into the other states. Meanwhile all the other utilities are paying through the nose for power at $6/kWh selling it to their ratepayers for $0.15/kWh. And guess what a state like Nevada has folks with solar and batteries that are not interconnected. So these folk are just charging their own batteries while NV Energy is losing almost $6 on every kWh they sell. These kinds of events happen a couple of times per year.
The implication here is that utilities that do a good job of cultivating and aggregating DERs among their own customers have resources that they can export into interstate wholesale power markets. The utilities that figure this out first will have an edge over the rest.
Got to just mention Solarcity has seemed to have raised $450mln in past month or so to little or no fanfare by the market.
Also, now the casinos are starting to sue the Nevada PUC because of mystifying reason for exorbitant exit fees. If the casinos are against you in Nevada, PUC/NV Energy are looking to good with the people of Nevada. Bet that solar referendum hits 55k in the next 1-2months now.
Also, now the casinos are starting to sue the Nevada PUC because of mystifying reason for exorbitant exit fees. If the casinos are against you in Nevada, PUC/NV Energy are looking to good with the people of Nevada. Bet that solar referendum hits 55k in the next 1-2months now.
doggusfluffy
Closed
TheTalkingMule
Distributed Energy Enthusiast
1.2-million sq. ft. solar panel 'Gigafactory' in Buffalo almost ready
Had not realized the buffalo plant could be bumped to 5GW. Sick.
Had not realized the buffalo plant could be bumped to 5GW. Sick.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
German energy minister states (basically): "Game over - wind and solar wins":
Germany says solar and wind have won technology race : Renew Economy
Germany says solar and wind have won technology race : Renew Economy
jhm
Well-Known Member
Solar and Wind Could Be the Dominant Source of Power in the US by 2030
Here is an interesting study that shows how extreme use of HVDC power lines could integrate 78% wind and solar into the US power grid by 2030 without use of batteries. It's an interesting technical scenario, but it seems to take for granted the cost of so much transmission. We see Europe moving in this sort of direction where heavy use of long distance power lines balances out the grid so that high levels of renewables can be integrated without much use of batteries. But there is a fundamental problem here. The cost of transmission lines is not likely to decline that much over time, while batteries are declining some 7% over time. So if you work out a levelized cost of transmission for say a 1000 km line and compare that to the levelize cost of storage to obviate bidirectional transmission eventually batteries are cheaper than trading power regional. So by the time this proposed scenario could be built out it could already be economically obsolete.
Does anyone have estimates on the cost of HVDC power lines, maintenance, and energy losses. I'd like to do a little modeling.
Here is an interesting study that shows how extreme use of HVDC power lines could integrate 78% wind and solar into the US power grid by 2030 without use of batteries. It's an interesting technical scenario, but it seems to take for granted the cost of so much transmission. We see Europe moving in this sort of direction where heavy use of long distance power lines balances out the grid so that high levels of renewables can be integrated without much use of batteries. But there is a fundamental problem here. The cost of transmission lines is not likely to decline that much over time, while batteries are declining some 7% over time. So if you work out a levelized cost of transmission for say a 1000 km line and compare that to the levelize cost of storage to obviate bidirectional transmission eventually batteries are cheaper than trading power regional. So by the time this proposed scenario could be built out it could already be economically obsolete.
Does anyone have estimates on the cost of HVDC power lines, maintenance, and energy losses. I'd like to do a little modeling.
TheTalkingMule
Distributed Energy Enthusiast
Of course the Germans aren't interested in caps at peak, they're going to be 200% solar at peak before you know it. All those deals they pushed through to link the European grids are going to pay huge dividends when German utilities are selling their neighbors all their peak supply at a huge premium with no fuel cost!
The next phase of solar in Germany will almost be more interesting than the initial rooftop rollout. How does their open electricity marketplace end up functioning? How much economic advantage does Germany reap by being first to market with massive excess wholesale solar at peak?
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
jhm and others here eloquently laid out the case for the impeding generation glut and how NG (and other) peaker plants will soon be stranded assets. Well guess what, the Germans did these calculations years ago and acted accordingly politically and policy wise. This even as they are not and optimal country for solar (too far north, too much clouds). 5-10 years ago all other countries in Europe were laughing at Germany's "ridiculously expensive" investments in solar and wind. We'll see who gets the last laugh...
jhm
Well-Known Member
Agreed, and this is very much like my point about pro-DER utilities in a FERC Order 745 market. Proactive utilities have an opportunity to build up distributed solar on a low capital basis and export it to the wholesale market capturing value well beyond their service area.
So Germany is already doing this. Last year they had EUR 2 B net export of electricity to the rest of Europe. Critics have tried to dismiss this energy trade saying that Germany is effectively using the rest of Europe to balance their grid. This is the claim that you need alot of fossil generation capacity to balance intermittent renewables. But this is ridiculous from the economic view point. German is exporting higher value power than it is importing. The next export in euros proves that they are actually doing more to relieve their neighbors of the cost of balancing their grids than the other way around.
Thinking more about Order 745, I think this dies have implications for NEM. Consider that a utility wants to argue that solar feed-in rates should only be compensated at wholesale prices and moves to dismantle NEM in their state. Very well, they are opening the door to FERC regulation of the inter-state wholesale market. Could one argue that all solar power that solar customers generate, not just the surplus exported to the grid, is in fact demand response, and under Order 745 must be compensated at the real time wholesale price? So at anytime the solar customer is generating solar power or discharging stored energy for self-consumption while wholesale prices, the customer is entitled to the excess of wholesale to retail, and when exporting surplus is entitled to the wholesale price. I think such an arrangement could create pretty substantial value for customers with solar and batteries, perhaps higher compensation than under NEM. FERC has set a basic standard to assure that DR is not undercompensated below the wholesale price. So it is incumbent on utilities to demonstrate that they are cheating their customers who participate in DR. NEM probably avoids this scrutiny because it is a transaction of local energy that does not impact wholesale prices. But once the utility tries to offer something else that is supposedly based on wholesale prices, it seems they have just opened the door to FERC oversight.
TheTalkingMule
Distributed Energy Enthusiast
Is there absolutely no way for the DoE to weigh in on FiT's and net metering? Can they force the hand of state regulators by setting some kind of variable minimum of net metering as a percentage of some other price/cost?
Whats Coming Net Metering 2.0 Decision | Greentech Media
California timeline for Solarcity mass market solar+storage is now becoming more apparent.
retail net metering will be retained through 2019. At the same time, Over the same 3 year period California will establish distributed resources(solar+storage,etc) first priority on any grid infrastructure investments given equal or more benefit with fossil fuels. They will also establish the value of distributed resources(solar+storage) to the grid.
by 2020, this new system will be codified and Solarcity will operate within the interoperability standards across the industry mandated by California utility commission. The same interopersbility standards of which Solarcity itself is establishing right now in 2016. Having 1/3 of entire distributed solar market has it distinct advantages in proliferating this standard across a wide array of assets in an effiecent timeframe.
so, as such, I expect the stock to jump Each time more pricing of services becomes available. Then we investors and interested investors can apply these revenue streams across the gigawatts of installed capacity and determine a somewhat clearer outlook post 2020.
As I've stated before, I expect it to demonstrate solarcity's significantly undervalued stock price. However by the time this becomes this clearly obvious, the stock price will not be where it is today.
California timeline for Solarcity mass market solar+storage is now becoming more apparent.
retail net metering will be retained through 2019. At the same time, Over the same 3 year period California will establish distributed resources(solar+storage,etc) first priority on any grid infrastructure investments given equal or more benefit with fossil fuels. They will also establish the value of distributed resources(solar+storage) to the grid.
by 2020, this new system will be codified and Solarcity will operate within the interoperability standards across the industry mandated by California utility commission. The same interopersbility standards of which Solarcity itself is establishing right now in 2016. Having 1/3 of entire distributed solar market has it distinct advantages in proliferating this standard across a wide array of assets in an effiecent timeframe.
so, as such, I expect the stock to jump Each time more pricing of services becomes available. Then we investors and interested investors can apply these revenue streams across the gigawatts of installed capacity and determine a somewhat clearer outlook post 2020.
As I've stated before, I expect it to demonstrate solarcity's significantly undervalued stock price. However by the time this becomes this clearly obvious, the stock price will not be where it is today.
I'm not sure. The Supreme Court's dissenting opinion, written by justice Scalia I believe, spelled out the arguments against Federal incursion on the states' abilities to be the arbiters of such regulation. So once you veer away from the effects that clearly are interstate ones, you fairly quickly get back to states' rights issues, and the questions you raise sound to me at first glance too specific to be considered national in nature. Happy to be shown wrong.
On edit: I probably should have written "...not only the dissenters...but the majority opinion as well took into consideration..." etc.
FERC explicitly stated NEM is retail and not under its jurisdiction.
Wholesale markets are explicitly under its jurisdiction and confirmed as such by Supreme Court decision.
States jurisdiction is retail. Feds jurisdiction is wholesale.
How this relates to Solarcity is that they will begin offering wholesale market services from consumer solar which traditionally falls under NEM, retail markets. Solarcity is able to now migrate into the Fed jurisdiction confirmed by Supreme Court, which makes ever more difficult for utilities to block/slowdown Solarcity,etc...
consider the implications of the value of Solarcity grid services now... Solarcity now can potentially march into any wholesale market across the country and there is nothing the utilties can do about it. If Solarcity successfully migrated from state NEM to federal wholesale business model, they have essentially kicked open the entire 50 state Union for business and there is nothing outside overturning a Supreme Court decision anyone can do about it. Talk about mitigating regulatory risk... This obliterates it...
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TheTalkingMule
Distributed Energy Enthusiast
Two questions:
That was my understanding of net metering, defined literally as compensation at the retail level(rate). So how the hell is the NV PUC allowed to create a net metering rate that does not exist on the retail side? Perhaps that's the essence of the legal issue. I always just assumed the new 3 cent rate was simply ridiculous, but still legal.
I made this comment on another board, is it accurate? (LOL.....perhaps I should be checking accuracy before spouting off)
That was my understanding of net metering, defined literally as compensation at the retail level(rate). So how the hell is the NV PUC allowed to create a net metering rate that does not exist on the retail side? Perhaps that's the essence of the legal issue. I always just assumed the new 3 cent rate was simply ridiculous, but still legal.
I made this comment on another board, is it accurate? (LOL.....perhaps I should be checking accuracy before spouting off)
I think since the Nevada PUC decision is still relatively recent, a lot of legal questions are being examined by all parties just as we discuss this ourselves right now. We haven't heard the end of what violations/problems the PUC decision has manifested, so it's just a matter of seeing responses unfold now.
ive said this before, Solarcity is already working on a business model beyond net metering and seems to be setting up and working with a policy framework it has intimate knowledge of. In essence, they are not adjusting to the system, the system is adjusting to them... they are reengineering a new game of which they'll be playing within. To understand this, only further supports the undervalued nature of its stock right now. Again, when this becomes explicitly obvious, you will never see stock prices we're seeing right now again...
ive said this before, Solarcity is already working on a business model beyond net metering and seems to be setting up and working with a policy framework it has intimate knowledge of. In essence, they are not adjusting to the system, the system is adjusting to them... they are reengineering a new game of which they'll be playing within. To understand this, only further supports the undervalued nature of its stock right now. Again, when this becomes explicitly obvious, you will never see stock prices we're seeing right now again...
TheTalkingMule
Distributed Energy Enthusiast
This is why I focus on install cost, particularly customer acquisition cost, and don't get concerned when people point to all that heavy cost out on the edge. They're into some crazy stuff that takes a lot of money to develop, but the payback is simply astronomical if this is executed properly. Another reason I was fine with a post-ITC shakeout and subsequent marketshare lead increase, I think it would have helped SCTY consolidate their frontrunner position in solar.
Finding the point where the wider investing public is convinced of this model is going to be more complex that I thought, but the roadblocks are being removed almost daily. I'll just stick with "soon" as my official time horizon.
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