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SolarCity (SCTY)

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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...

Right. NEM is safe for the utility that wants to avoid FERC scrutiny on feed-in tariff, but when they step out of that safe place, watch out. Solar and battery owners can take their case to FERC if they believe their utility not giving them full wholesale compensation.

Additionally, when SolarCity is selling grid services in the wholesale market, it becomes a power producers among the rest. Other IPPs operate solar and storage assets, so I see no room for distinction. The distinction between centralized and distributed energy assets would seem immaterial. It's the ability to put MWs of power into the grid at will that matters. I am speaking at a practical and market impact level. The legal distinctions will be thoroughly challenged. But from a practical viewpoint, if you've got your hand on the lever for charging or discharging 100 MW of batteries, you can seriously impact wholesale markets. It matters not how spread out your fleet is.
 
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.

The single biggest concern with Solarcity is regulatory risk. That's it. The fundamental premise of solar and energy storage developing into a superior technology to fossil fuel is undeniable. In a market with 1% penetration, Solarcity is explicitly in a position to grow significantly over many years to come. The only thing that is slowing this process unnaturally is regulatory risk. Eliminate much of the reflgulatory risk and the stock goes bat****.

What Solarcity is doing right now in California, Hawaii, and New York is specifically aimed at reducing that risk associated with NEM and much of the traditional state energy politics. Like orange is the new black, wholesale is the new net metering business model.

Also aquisitiion costs dramatically drop with less regulatory risk. Less risk leads to greater capital investment. Capital investment leads to greater scale. Scale leads to more referrals, etc.. Also, changing the permitting and inspection process also is a massive boon for referrals. Solarcity said if the permitting/inspection process was streamlined (like Germany),they could meet a customer, design the system, install the system, and have it turned on within a day. Imagine what would things would like when this is the case? California is already moving in that direction with regard to permitting...
 
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)

So if NV Energy pays you 3c/kWh while it sells power into the wholesale market at 9c/kWh, they are effectively selling your energy in the wholesale market but are not providing fair compensation. This is not fair to you, and it is not fair to all other power producers who are being undercut in the wholesale market. Clearly, FERC needs to safeguard against such exploitation. This may go beyond the details of Order 745, but it is in keeping with the Court's view of FERC's authority to regulate the wholesale market. When utilities exploit retail customers to undercut the wholesale market, this is a problem.
 
Also aquisitiion costs dramatically drop with less regulatory risk. Less risk leads to greater capital investment. Capital investment leads to greater scale. Scale leads to more referrals, etc.. Also, changing the permitting and inspection process also is a massive boon for referrals. Solarcity said if the permitting/inspection process was streamlined (like Germany),they could meet a customer, design the system, install the system, and have it turned on within a day. Imagine what would things would like when this is the case? California is already moving in that direction with regard to permitting...

I'm in touch with my excellent local installer on a weekly basis just shooting the **** and they consider SCTY the enemy. The potential benefit solar has for nonsolar utility customers and the benefit SCTY's efforts will have for local installer nationwide needs to be articulated better. We're all on the same team here and there's enough marketshare for to last everyone for decades before we move on to storage or the next thing. What we need to do is get out message straight.

I'm really excited to see how Pennsylvania can drift down the path that NY has taken now that we have such an amazing governor. Out state legislature is a hot mess, but there's plenty of things he can do to tip the scales. It will only take a handful of larger states setting up a decent regulatory climate for SCTY to take off and solar momentum to reach unstoppable. So hard to tell when that will be.

NY, CA, PA, MA, OR, WA, TX, NC, NJ, MD, Florida(?), VA(?) Once there's stability in a handful of those states it's game over. Now that TSLA and SCTY have had this experience in Nevada, they're more prepared with a list of legislative "must haves" when picking sites for the next gigafactories.
 
I'm in touch with my excellent local installer on a weekly basis just shooting the **** and they consider SCTY the enemy. The potential benefit solar has for nonsolar utility customers and the benefit SCTY's efforts will have for local installer nationwide needs to be articulated better. We're all on the same team here and there's enough marketshare for to last everyone for decades before we move on to storage or the next thing. What we need to do is get out message straight.

I'm really excited to see how Pennsylvania can drift down the path that NY has taken now that we have such an amazing governor. Out state legislature is a hot mess, but there's plenty of things he can do to tip the scales. It will only take a handful of larger states setting up a decent regulatory climate for SCTY to take off and solar momentum to reach unstoppable. So hard to tell when that will be.

NY, CA, PA, MA, OR, WA, TX, NC, NJ, MD, Florida(?), VA(?) Once there's stability in a handful of those states it's game over. Now that TSLA and SCTY have had this experience in Nevada, they're more prepared with a list of legislative "must haves" when picking sites for the next gigafactories.

The thing is with Solarcity leading taking on all these battles, the local installer also wins. A rising tide lifts all ships. Ask a competitor to Tiger woods(in his prime) if they liked competing against him they would say no. But they would say they love him under their breath because that second place paycheck was massive, and thst in addition to the benefits from 20 million people that saw him win second place. Before tiger woods, golfing as a profession made a fraction of what it does after. This is no different here.

So, installers competing with Solarcity may not enjoy losing to Solarcity in marketshare, but never, ever have they had so much business because of them at the same time. The industry before Solarcity was but a fraction of what is today and what will be every day after.
 
Love Radford Small being in charge of financing. He needs to be the investor relations face of the company too, but that's a separate complaint.....

California utilities seem pissed, that is a good sign.

California solar advocacy group says "This proposed decision rejects utilities' bad math on solar and stands with consumers.". That may very well be true, but does not highlight the benefits of solar to nonsolar rate payers. That continues to be a big hindrance to wider acceptance of reality. Get off the back foot and express solar's true value to everyone. Not doing so reinforces the "solar vs nonsolar" resentment that the utils are trying to cultivate.

Good day.

- - - Updated - - -

Have not read yet, but wanted to post that Bloomberg is starting to dig deeper. I mean....they spent the time and effort to make this nice gif, that's a good sign.

Who Owns the Sun?

buffett_vs_musk.gif


Warren Buffett controls Nevada’s legacy utility. Elon Musk is behind the solar company that’s upending the market. Let the fun begin.
 
Summary of California's decision by Vote Solar:

Today saw a major victory for solar choice in San Francisco. After many months of deliberation, the California Public Utilities Commission (CPUC) voted to adopt new rules that uphold net metering for future solar customers of the state’s large investor-owned utilities (IOUs). The decision, put forward by CPUC President Michael Picker and approved by the Commission in a 3-2 vote, represents a balanced path forward that will support consumer savings, local jobs, healthier communities and climate progress.
As any of you regular Vote Solar blog readers will know by now, understanding how solar’s benefits and costs fit into our changing electricity system is complex and groundbreaking stuff. Today’s decision was the result of a thorough Commission-led stakeholder process from the state that knows solar best, our nation’s largest rooftop solar market by a long shot, and we hope other states will take note.
Here are some key elements of the decision:

  • Rejects demand charges, fixed charges and standby charges proposed by the utilities and the Office of Ratepayer Advocates that would apply only to solar customers, and finds that none are reasonable or cost-justified.
  • Upholds net metering for customers who go solar in 2016 and beyond. That means future solar customers who send excess clean energy back to the grid to be sold to their neighbors will continue to receive a kWh-for-kWh credit for that energy (though they will also pay some new charges on those exports too– see below for info on new non-bypassable charges).
  • Ensures that customers who go solar under the new net metering tariff can stay on that tariff for 20 years from the date their solar array is interconnected – which is key for reducing customer uncertainty around future policy changes. The Commission will review the net metering rules again in 2019, but any changes would not apply to customers who have already gone solar before that date.
  • For the first time, extends eligibility for the new net metering tariff to customer-sited facilities larger than one megawatt in size, so long as the customer pays all interconnection and distribution system upgrade fees.
  • Removes a utility-imposed roadblock to virtual net metering in multi-tenant buildings, requiring that the utilities’ virtual net metering tariffs must allow one solar array to serve multiple service delivery points in multi-tenant buildings.
  • Establishes a Phase 2 of the proceeding to develop new policies to expand solar access for residential customers in disadvantaged communities.
The decision doesn’t keep everything as it was under California’s current net metering program. Instead, it makes a few compromise changes that will apply to customers under the new IOU net metering program:

  • Requires solar customers to pay non-bypassable charges on all the energy they consume from the grid, regardless of how much clean energy they export back to the grid. We consider it reasonable that solar customers contribute in this way to public purpose programs, like energy efficiency rebates and rate subsidies for low-income residential customers. These new charges are expected to add approximately 2-3 cents per kilowatt hour for energy exported back to the grid, equivalent to about $6-8/month for an average residential solar customer. (The Commission removed two categories of charges from the list included in the December proposed decision, following clean energy advocates’ argument that rooftop solar reduces the need for new transmission and new large-scale power plants.)
  • Puts a small interconnection fee in place to ensure that customers cover the costs to the utility of plugging into the grid, another reasonable compromise. The amount of the fee may only include the following Commission-approved utility costs: Net Metering Processing and Administrative Costs, Distribution Engineering Costs, and Metering Installation/Inspection and Commissioning Costs.
  • Requires all residential customers who go solar under the new net metering tariff to take service on a time-of-use (TOU) rate schedule, meaning rooftop solar generation will be credited more during times of peak electricity system need. (Note: current NEM customers will be able to stay on their rate design plans) We commend the Commission for moving towards TOU rates, which if properly designed empower customers to respond to price signals, and which demand charges or other fixed charges largely fail to do. Vote Solar will work with the Commission to help shape future TOU rates that are fair for solar customers, and we will strongly advocate for programs that begin to shift load, with the help of demand response, storage and other innovations, to the hours when solar produces most energy.
There are ways we think this decision could have been even stronger, but all in all the CPUC has provided a solid foundation for keeping rooftop solar growing in California. In doing so, the CPUC has stood strong against intense pressure from the state’s three powerful utilities — PG&E, SCE and SDG&E — which have attacked net metering for years and in the last few weeks even mounted a last-ditch, inside-outside campaign to weaken the Commission’s strong proposed decision. The CPUC also chose a markedly different path from Nevada’s Public Utilities Commission, whose recent decision to weaken Nevada’s net metering program has resulted in the loss of hundreds of local jobs and significant new costs for residents and small businesses that go solar.
Instead, the Commission stood with hundreds of social justice, faith, environmental, business, labor and health groups, schools and local elected leaders, as well as with California ratepayers from all across the state, who late last year delivered more than 150,000 petitions in favor of protecting net metering and expanding solar access — by far the most public input the CPUC has ever received on any issue. In recent months, major newspapers including the LA Times, San Francisco Chronicle and the San Jose Mercury News have all editorialized in favor of upholding net metering and continuing the state’s push on solar progress. Last weekend, rock legends Bob Weir, Sammy Hagar and Michael Franti joined the campaign, hosting a pop-up performance celebrating California sunshine that ended with a march to the CPUC steps in support of net metering.

So the list of those to thank for today’s historic solar victory is inspiringly long. It starts with forward-thinking Commissioners and staff at the CPUC as well as Governor Brown, whose vision of leading the world in clean energy and climate progress this decision helps achieve. It includes all the clean energy and public interest advocates who worked tirelessly in the Commission proceeding to build the case for keeping rooftop solar affordable and expanding access to more Californians, and the many more community leaders for whom this was the first time they’d participated in a CPUC proceeding. But we couldn’t have achieved this victory without the hundreds of thousands of ordinary Californians that heard what was happening and spoke up for solar. Today’s vote really was a win for all of us – our communities, our state and our planet. Thank you!

Comment by me, Gene: California would have been a better environment than Nevada for Tesla's Gigafactory :(
 
Can someone suggest good, broad solar ETFs?
I have absolutely no doubt whatsoever in my mind that solar will come to dominate world energy and do so more quickly than many people expect. However, I don't know exactly how the solar landscape will look in 15 or 20 years and would like to rely on my understanding of the physics and engineering advantage of solar in general rather than my limited understanding of the business advantages of individual solar companies over each other.
 
Can someone suggest good, broad solar ETFs?
I have absolutely no doubt whatsoever in my mind that solar will come to dominate world energy and do so more quickly than many people expect. However, I don't know exactly how the solar landscape will look in 15 or 20 years and would like to rely on my understanding of the physics and engineering advantage of solar in general rather than my limited understanding of the business advantages of individual solar companies over each other.

I don't know exactly how ETFs are managed and manipulated day to day, but it's hard to simply bet on an industry since many individual players will go busto even as a handful of others go on to rule the world. Think of picking out Chevrolet from the thousands of US car companies at the turn of the century, not an easy task.

I have heard that SCTY has a major position in most solar ETFs. I think the biggest one has SCTY at 5-10% or something like that.
 
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