SolarCity (SCTY)

[Gerasimental]

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.

Yes, I've just been looking. SCTY is 9% of KWT. I understand your point, but with an ETF you can cope with a few of the companies going to 0 as others will pick up the slack as long as the overall pie keep growing. And as new entrants enter the market the ETF is likely to include them in its portfolio. It saves me having to pay attention to each entrant and make the decision of whether I want to invest or not, I just average out. As long as the pie keeps growing, the ETF should keep growing.
Of course you'll never get the returns that you'd get if you picked out the winner that has a 40% market share 15 years from now, but that's not what I'm after.

 

[TheTalkingMule]

Wouldn't you want to shift to a time-of-use rate platform if you have a decent solar array? You'd be kicking out the most juice at peak hours and would be compensated more, no?

 

[gene]

Wouldn't you want to shift to a time-of-use rate platform if you have a decent solar array? You'd be kicking out the most juice at peak hours and would be compensated more, no?

I have solar and I have TOU. It works for me as I charge my car at night. The only cases I can think of where TOU is a bad choice is where someone needs to run A/C or a pool filter during the daytime.

 

[Foghat]

BREAKING: California regulators preserve retail rate net metering in 3-2 vote | Utility Dive

"The new solar net metering program will begin in 2017, or as soon as net metering caps are reached in each utility service territory."

This is a key point we must all take explicit notice.

caps will be met over the next 2-3 quarters, and probably will accelerate sooner because of the selling point of getting the net metering rates before the switch.

with that being said, expect stronger then already strong demand as a result.

again, I'm not sure if Solarcity will change its 40% compounded growth target, but I'm sure they will increase install projections now over the next few quarters. It's safe to say they will have strong q2/q3 booking/install numbers at least in my opinion.

Overall, I expect strong guidance at the q4 conference call on FEB 8th. It's pretty much a no brainier with this news out of California. There are still GW+ of installs to go under current caps. Lots of room for eager consumers to get in under old NEM for Solarcity.

20 year grandfathering a massive incentive alone.

 

[Foghat]

In related news, I wouldn't be surprised if SEC got wind of insider trading by Jim Chanos on Solarcity. He clearly had prior knowledge in the lead up to the NV PUC decision. His comments on subprime and customers defaulting just 2 months prior(during which the case was in the PUCs hands for decision) would be clear enough start for investigation alone.

He also stated he wished he could short more just before the decision came out as well.

where there is smoke there is fire as they say... It would be very interesting a massive case like that on chanos would do to his hedge fund fortune...

 

[Johan]

In related news, I wouldn't be surprised if SEC got wind of insider trading by Jim Chanos on Solarcity. He clearly had prior knowledge in the lead up to the NV PUC decision. His comments on subprime and customers defaulting just 2 months prior(during which the case was in the PUCs hands for decision) would be clear enough start for investigation alone.

He also stated he wished he could short more just before the decision came out as well.

where there is smoke there is fire as they say... It would be very interesting a massive case like that on chanos would do to his hedge fund fortune...

Why would you say it's clear he had insider knowledge? Is there some specific circumstances, statements or such that suggests that? Couldn't it just be he was betting on the Nevada vote going the other way, based on his knowledge of the politics and people involved?

 

[eye.surgeon]

I have solar and I have TOU. It works for me as I charge my car at night. The only cases I can think of where TOU is a bad choice is where someone needs to run A/C or a pool filter during the daytime.

I have solar, and use PG&E EV time of use plan. It's the best choice even with my pool pump and heavy A/C use (fresno). The only thing I actually schedule around TOU is car charging, which I do overnight.

 

[Foghat]

Why would you say it's clear he had insider knowledge? Is there some specific circumstances, statements or such that suggests that? Couldn't it just be he was betting on the Nevada vote going the other way, based on his knowledge of the politics and people involved?

No, because non-grandfathering was not even a part of the discussion between rooftop and NV Energy. It was purely a PUC decision that came as a big surprise to rooftop solar industry when it was announced on December 22nd.

The only way people would default on their leases is if keeping the solar system would cost them more then if it wasn't on their roof. That is the case in Nevada right now, so it is essentially made Solarcity a sub prime lender.

These are the exact reasons chanos made a big short bet. The only market where this timing was possible was in Nevada. His short was perfectly placed right when the NV PUC was making its decision early September and was then set to give a decision by the end of December, by which they did. That time period where he established his short position.

he was tipped off in my opinion and I also think others(involved in the proceedings)made a lot of money with him(or attempted to make a lot of money).

 

[ohmman]

I have solar, and use PG&E EV time of use plan. It's the best choice even with my pool pump and heavy A/C use (fresno). The only thing I actually schedule around TOU is car charging, which I do overnight.

There's nothing stopping you from running your pool pump overnight, especially in winter. Even in the summertime, when I'm using my pool solar heater, I'll only run 2-3 hours during the day and the rest overnight. Easy to schedule, and it's about 1/4 the cost.. something to think about.

 

[Foghat]

SolarCity Statement on California Net Metering Decision -- SAN MATEO, Calif., Jan. 28, 2016 /PRNewswire/ --

solarcity stating its time to install as fast as they can in this new "paradigm shift."

Does this mean greater then 40% compounded growth is back on?

"Paradigm shift" s definately a statement solar+storage and aggregation is happening in a big way. No looking back.

It is definately going to be an interesting q4 conference call.

 

[eye.surgeon]

There's nothing stopping you from running your pool pump overnight, especially in winter. Even in the summertime, when I'm using my pool solar heater, I'll only run 2-3 hours during the day and the rest overnight. Easy to schedule, and it's about 1/4 the cost.. something to think about.

From a cost perspective that would be smart. If you talk to pool people they will tell you that filtering the water in the dark isn't very productive--biologically there's much more need for filtering during sunlight hours.

 

[Foghat]

The Tesla Powerwall is finally rolling out. First stop: Australia

first powerwall up and running in Australia. Reported as having Massive massive demand for it there as well.

I expect the same is happening here is the US and that signals Solarcity is looking to have incredible demand as well.

The signals are clear in my opinion. Solar+powerwall has commenced ramp up.

This may also indicate we should start getting solar+storage updates from Solarcity. Will be looking for this at q4 conference call. Again, I feel guidance is going to be the star of the call for this and many other reasons.

 

[ohmman]

From a cost perspective that would be smart. If you talk to pool people they will tell you that filtering the water in the dark isn't very productive--biologically there's much more need for filtering during sunlight hours.

That's a good point. I haven't had chlorination issues (even with my salt generator), but I also have my pool covered when not in use. When it's in use, the pump's always on. But if for some reason you don't have a pool cover, you'd at least need to supplement during the day.

Still, in winter there's little excuse for daytime pumps. Depending on where you live, if it ever freezes your freeze guard comes on. That's extra pump time. So if you already run your pump overnight, you're cutting that extra energy usage as well.

Thanks for the clarity either way. I'd forgotten about "naked" pools, and that's an important distinction. Um.. SolarCity. (just trying to stay on topic)

 

[TheTalkingMule]

I have to think Nevada backing off de-grandfathering and headed toward a full voter ballot smackdown plus this California net metering decision would be enough to send this stock to the stratosphere. Is no one doing the math? Is it not clear enough that these grandfathered PPA contracts have inherent value and will have almost no defaults? SCTY needs a net retained value clock somewhere on it's investor relations page.

 

[jhm]

Garnaut – time to write down value of power grids : Renew Economy

Wow, I feel like I stepped into an alternate universe reading this. If utilities don't write down their grid asset, they push the economy into even greater inefficiencies. I love the blunt economic framing here.

California and Nevada is the tale of two states. CPUC has chosen a path that will support the entire economy of the state, while NPUC has chosen a path that adds friction to economic advancement. Is it too much to expect that a PUC consider the total impact of policies on the state economy. Industrial firms like Tesla and Switch could flourish in Nevada, especially as they are allowed to make full use of the solar, wind and geothermal resources of the state, but NPUC is willing to compromise that by seeking to protect the profits of utilities in the state. California, on the other hand, is willing to harness the economic potential of renewable energy, which will be a boost to every business that has chosen to operate in the state.

 

[dakh]

I have to think Nevada backing off de-grandfathering and headed toward a full voter ballot smackdown plus this California net metering decision would be enough to send this stock to the stratosphere. Is no one doing the math? Is it not clear enough that these grandfathered PPA contracts have inherent value and will have almost no defaults? SCTY needs a net retained value clock somewhere on it's investor relations page.

At this point I'm thinking $50 was the short squeeze we were expecting (those shorts covered and new ones entered the game). So one way to look at it is the market was valuing SCTY at mid 20's before ITC extension, and mid-30's after. Another way to look at it is market was valuing SCTY at $50 after ITC but China, oil and Nevada knocked it down to 30's. There's also interest rates rise somewhere in there, which seems important. Now we have very favorable California and federal demand response decisions that barely moved the stock. So that would mean market doesn't think the last round of positives is of much value compared to last round of negatives. Eventually SCTY will show the money or at least show the path and force price action, but if we're assuming market got some modicum of rationality in it it's all said and done for now.

 

[blakegallagher]

At this point I'm thinking $50 was the short squeeze we were expecting (those shorts covered and new ones entered the game). So one way to look at it is the market was valuing SCTY at mid 20's before ITC extension, and mid-30's after. Another way to look at it is market was valuing SCTY at $50 after ITC but China, oil and Nevada knocked it down to 30's. There's also interest rates rise somewhere in there, which seems important. Now we have very favorable California and federal demand response decisions that barely moved the stock. So that would mean market doesn't think the last round of positives is of much value compared to last round of negatives. Eventually SCTY will show the money or at least show the path and force price action, but if we're assuming market got some modicum of rationality in it it's all said and done for now.

/disagree, the market has to be spoon feed and solar city has been radio silent on all of this

 

[Foghat]

/disagree, the market has to be spoon feed and solar city has been radio silent on all of this

The market will only trend up on scty. But, I think cautious until solar+storage value is understood. The instant those numbers are understood, investors will flood in.

key points in this valuation:

sunspec aggregation/interoperability pilot preliminary results this year at some point, most likely late 2016.
APS solar+storage pilot preliminary results by the end of 2016
New York value of solar determination late 2016
Kuai utiltiy solar+storage system turned on by approximately q3.
Sales of solar+ storage officially apart of quarterly reports.

 

[TheTalkingMule]

I'm starting to think it's still solar in general that is the problem. Well educated progressive friends of mine still regurgitate the disinformation of "unfair cost shifts" when I mention Nevada. They read one article on the topic and assume the worst. This is why I feel let down my the SCTY PR team.

It'll pass though. By the end of this summer everyone will know. One would think.

 

[ggies07]

Garnaut – time to write down value of power grids : Renew Economy

Great article, thanks!

Question:

So in this article, Garnaut says:

“Higher prices for electricity is an especially inefficient means to this end (recouping sunk investment),” Garnaut said.

“An economically efficient pricing structure would charge mainly for the use of peak capacity used by firms and households, and avoid purely fixed charges for access to the grid.

So is he saying they need to discontinue the rate increases that happen every year due to this technology shift? If so, what happens to the people who have a PPA and in year 12 their rate is higher than the utilities due to the esculator? That wouldn't be good......

I love this:

But Garnaut warned that this would not occur without a change in Australia’s recent political culture.

“Success requires us to stop seeing energy policy and technology choice in partisan political and ideological terms. Success requires thinking on time scales that allow sound policy innovations to remain for long periods.
“Success requires independent citizens to reject government subordination of public to private interests, as powerful players from the old economy seek to block the emergence of the new.”