SolarCity (SCTY)

[renim]

SolarCity Selects Battery System for Kauaʻi Co-op Solar Storage Project -- LHU'E, KAUA'I, Hawaii, Feb. 16, 2016 /PRNewswire/ --

Industries are disrupted when their business models are disrupted. Solar+Storage+Demand Management will disrupt the electric utility industry.

SolarCity+Tesla+SolarEdge=Disruption

Tesla and SolarEdge are good to go, but SolarCity is going to get disrupted by TOU and the duck curve.

just what happens to midday TOU after 2 more years of 40% growth of solar in SCTY's largest customer state?
http://www.caiso.com/Documents/Briefing_DuckCurve_CurrentSystemConditions-ISOPresentation-July2015.pdf

Nevada is small fries, moving Californian SCTY customers to TOU is going to be great for Tesla, but will gut SCTY like a fish, my prediction is that SCTY shareholders are going to be crying (diluted) big time, but the SCTY bondholders will be laughing

 

[30seconds]

It's real simple: customers have to make their monthly payments to solatcity in order for Solarcity to get financing. Period. It's thst straightforward.

So, let's review... Do Solarcity customers make their payments? 99% out of over 300k lease/ppa customers have made their payments on time since the company was founded 2006. 99%. It's in the investor letter so I advise people read it before they come on here with bold claims of bankruptcy.

Name me me a company with 300k customers that make their monthly payments 99% on time (and soon they will have some thst have done so for a decade on time every time). Now tell me if they great access to capital or not. I'll be waiting.

Bottomline, solarciry conracted payments are an extremely attractive vehicle at all levels of the capital markets. All you got tondo is compare and it's no question, Solarcity will have extensive access to the capital markets for a long time. Hard facts matter.

Who takes on the customer default risk? SolarCity or the ABS holders? If the ABS then SolarCity is basically selling the install to the ABS holder through the payback period, but keeping the debt servicing revenue and any overage with regards to life beyond the payback. If SolarCity (through convertible mechanism) then the SolarCity equity holders are taking on the risk. This could have led to lower financing rates to be passed to the customers.

As far as I can tell, continued debt expansion is only need to expand the installs, it isn't used to service the existing debt/ installs. This is a very different model from other growth companies as SolarCity could basically stop new sales but continue to service the existing debt by the existing install base.

 

[jhm]

jhm, Working Capital and Net Cash Flow are not really my concerns.

My core issue is with the need to borrow recourse debt every quarter, no matter what the growth rate is. Some folks here (blake) suggest that such borrowing is to support the future. But you can easily see R&D and Capex and net them out. The problem still remains. SolarCity needs about $200mln of recourse borrowing per quarter to 'run the shop'. This is very unsustainable.

Here is all the data:

	Period		2014 Q1	2014 Q2	2014 Q3	2014 Q4	2015 Q1	2015 Q2	2015 Q3	2015 Q4
Line 1	MW Installed	MW	82	107	137	177	153	189	256	272
Line 2	R&D Expenses	$M	($1.90)	($3.00)	($4.20)	($10.00)	($12.10)	($12.40)	($17.70)	($22.80)
Line 3	Capital Expenditures	$M	($4.70)	($2.90)	($5.80)	($9.50)	($30.50)	($71.60)	($45.70)	($28.80)
	Debt and Cash:
Line 4	Debt – Recourse	$M	($153.40)	($204.70)	($154.00)	($143.70)	($284.20)	($425.00)	($522.00)	($602.50)
Line 5	Debt – Convertible	$M	($230.00)	($230.00)	($730.00)	($796.00)	($796.00)	($796.00)	($796.00)	($909.00)
Line 6	Cash & Short-Term Investments	$M	$519.60	$405.30	$733.50	$642.70	$575.80	$489.10	$418.40	$393.90
Line 7	Cumilative Debt, net cash (not including non-recourse)		$136.20	($29.40)	($150.50)	($297.00)	($504.40)	($731.90)	($899.60)	($1,117.60)
Line 8	Change QoQ - Recourse borrowing done in the period			($165.60)	($121.10)	($146.50)	($207.40)	($227.50)	($167.70)	($218.00)
Line 9	Net out R&D and CapEx			($159.70)	($111.10)	($127.00)	($164.80)	($143.50)	($104.30)	($166.40)
	Current Portfolio Value
Line 10	Cumulative MW Deployed under Energy Contracts – EoP	GW	0.6	0.7	0.8	1	1.1	1.3	1.5	1.7
Line 11	PowerCo Portfolio’s Pre-Tax Unlevered NPV remaining	$M	$1,030	$1,212	$1,445	$1,735	$2,032	$2,391	$2,790	$3,235
Line 12	Debt – Non-Recourse	$M	($206)	($324)	($448)	($485)	($617)	($731)	($1,013)	($1,242)
Line 13	Change QoQ - Borrowing done in the period			($118)	($124)	($37)	($132)	($114)	($282)	($229)
Line 14	PowerCo portfolio Pre-Tax Unlevered NPV Less Debt	$M	$824	$888	$997	$1,250	$1,415	$1,660	$1,777	$1,993

.
Scroll to the right side if you don't see the full table up to 2015 Q4.

Line 7, 8, 9 and 13 are my calculations. Hope the labels are self explanatory.

Lines 8 and 9 drive home the point.

Of course this is dependent on what happens on line 13. If increased non-recourse borrowing happens, then there will be a lesser need to borrow through recourse debt and vice versa. But my sense is that they are maxing out the potential debt in non-recourse land. So I don't see a rescue unless they change the business model, like keep selling the contracts to 3rd party investors or do more outright cash installs etc. Whatever it is, they not only will have to do it once but repeat each and every quarter. Essential being long now is keeping faith in unknown potential future business model. That is really a leap of faith!

About that MyPower ABS deal, in my view that is not to be counted as a reliable source of debt. We all know MyPower loans are a small fraction of SolarCity's installs. For a deal of that size to happen again, it may take more than an year. I am much more interested in the stream of PPA/lease deals. They are supposed to get bigger and more frequent. Neither of which is happening. In any case, ABS deals and non-recourse debt is not the primary issue here. The need to borrow through recourse debt systematically every single quarter is the big problem.

Benson, I think we may be on nearly the same page. Just to recap the four markers I laid out for those who may not have caught them:

1 Net Cash Flow
2 Change in Working Capital
3 DevCo Cash Flow = NCF + Change in Recourse Debt
4 Free Cash Flow

So turning positive on 1 and 2 is very important so that SolarCity can stay in business as going concern. As I pointed out the fifth ABS was just a month late to turn NCF and ChgWC positive for 2015. So I think we are in agreement that this is pretty much in hand. I do think progress progress here will help the stock. It will allay certain fears. But more importantly it will show progress in the right direct. Specifically DevCo Cash Flow will improve.

So we also agree that SolarCity needs to become DevCo CF positive. Cutting cost per Watt, and especially the sales cost will help, but not go far enough. I do agree that the volume of MyPower loans is low so it probably makes sense to roll this into an ABS just once a year. So while these MP loans accumulate, SolarCity needs Solar Bonds to carry the loans before they are securitized. So Q/Q, recourse debt for this purpose may need to accumulate, but Y/Y this should net out when the MP ABS is issued. Now if PPA and leases are securitized on a quarterly basis, then that should minimize exposure to this form of carry. Commercial projects have a much longer development cycles, so that will tend to call for more recourse debt. There are general sorts of timing issues that are intensified by the growth rate. For example, if you double the sales force in a year, you have to hire, pay and train them months before they are fully upto speed. So as the company grows at a high rate it needs lots of working capital to ramp up, and this grows with the scale of the company. However, slowing growth from 80%+ to 40% should relieve some of this presure. Zero grow would achieve a steady state that only needs Solar Bonds for project carry. So I think the combination of cutting cost per Watt while slowing growth will help DevCo CF come in line.

In the longrun, the PowerCo book generates a stronger cash flow as slide 10 shows. This helps move toward free cah flow, but that could be more than ten years out. So this is the downside of the current business model. It will take years to get to DevCo CF positive and many more years to get to FCF. The rate of growth does not really speed this up. In fact, it may well slow it down. So what is missing with this analysis are opportunities to create additional revenue streams. This is where the stock gets much more speculative. Opportunities like microgrid services and aggregated services could build on the existing business model and even customer base to generate much more value per customer. It is nearly impossible to value the opportunities at this point in time. It is a bit like Tesla's move into stationary storage. In spite of progress, we still have no financials on Tesla Energy. So it's value is purely speculative. So with SolarCity aggregated grid services could be huge, but it's purely speculative at this point. A little less speculative is the opportunity for SolarCity to sell Powerwalls. At $4000 a pop, some fraction of new customers will opt for it, and so will some other fraction of existing customers. So at least we can parameterize this and guess at what the uptake might be. Even so, no reported results. However, these things play out, the basic opportunity is to make more revenue per customer. The current business model will take along time to achieve FCF, but an expanded business model may get there a little quicker. Either way a good deal of patience is required of shareholder.

 

[TheTalkingMule]

Tesla and SolarEdge are good to go, but SolarCity is going to get disrupted by TOU and the duck curve.

That would all be a concern if the people served the grid instead of the other way around. You know what that looks like? A storage revolution.

SCTY making TONS MORE money while saving all ratepayers even more money. This new dynamic is inherently better and cheaper, there's no changing that regardless of what any chart says. Adapt!

 

[renim]

That would all be a concern if the people served the grid instead of the other way around. You know what that looks like? A storage revolution.

SCTY making TONS MORE money while saving all ratepayers even more money. This new dynamic is inherently better and cheaper, there's no changing that regardless of what any chart says. Adapt!

what is so difficult to understand? every Solarcity customer in Califorina who does not have a battery is a future liability to Solarcity when they get pushed to TOU rates.

most Solarcity customer in Califorina who does not have a battery is a potential future customer for Tesla (or others) batteries when when they get pushed to TOU rates.

Cetris paribus, it really is zero sum, Tsla benefits at Scty expense.

Every Californian SCTY customer added this year without a battery is a future liability to SCTY.

how is this not obvious? California's duck curve is upto 2 years ahead of original prediction for springtime. look at slide 2 of the previous link and have a cup of tea while considering it.

 

[jhm]

SolarCity Selects Battery System for Kauaʻi Co-op Solar Storage Project -- LHU'E, KAUA'I, Hawaii, Feb. 16, 2016 /PRNewswire/ --

Industries are disrupted when their business models are disrupted. Solar+Storage+Demand Management will disrupt the electric utility industry.

SolarCity+Tesla+SolarEdge=Disruption

So they went with Tesla Energy. Man, I did not see that coming.

 

[Foghat]

Benson, I think we may be on nearly the same page. Just to recap the four markers I laid out for those who may not have caught them:

1 Net Cash Flow
2 Change in Working Capital
3 DevCo Cash Flow = NCF + Change in Recourse Debt
4 Free Cash Flow

So turning positive on 1 and 2 is very important so that SolarCity can stay in business as going concern. As I pointed out the fifth ABS was just a month late to turn NCF and ChgWC positive for 2015. So I think we are in agreement that this is pretty much in hand. I do think progress progress here will help the stock. It will allay certain fears. But more importantly it will show progress in the right direct. Specifically DevCo Cash Flow will improve.

So we also agree that SolarCity needs to become DevCo CF positive. Cutting cost per Watt, and especially the sales cost will help, but not go far enough. I do agree that the volume of MyPower loans is low so it probably makes sense to roll this into an ABS just once a year. So while these MP loans accumulate, SolarCity needs Solar Bonds to carry the loans before they are securitized. So Q/Q, recourse debt for this purpose may need to accumulate, but Y/Y this should net out when the MP ABS is issued. Now if PPA and leases are securitized on a quarterly basis, then that should minimize exposure to this form of carry. Commercial projects have a much longer development cycles, so that will tend to call for more recourse debt. There are general sorts of timing issues that are intensified by the growth rate. For example, if you double the sales force in a year, you have to hire, pay and train them months before they are fully upto speed. So as the company grows at a high rate it needs lots of working capital to ramp up, and this grows with the scale of the company. However, slowing growth from 80%+ to 40% should relieve some of this presure. Zero grow would achieve a steady state that only needs Solar Bonds for project carry. So I think the combination of cutting cost per Watt while slowing growth will help DevCo CF come in line.

In the longrun, the PowerCo book generates a stronger cash flow as slide 10 shows. This helps move toward free cah flow, but that could be more than ten years out. So this is the downside of the current business model. It will take years to get to DevCo CF positive and many more years to get to FCF. The rate of growth does not really speed this up. In fact, it may well slow it down. So what is missing with this analysis are opportunities to create additional revenue streams. This is where the stock gets much more speculative. Opportunities like microgrid services and aggregated services could build on the existing business model and even customer base to generate much more value per customer. It is nearly impossible to value the opportunities at this point in time. It is a bit like Tesla's move into stationary storage. In spite of progress, we still have no financials on Tesla Energy. So it's value is purely speculative. So with SolarCity aggregated grid services could be huge, but it's purely speculative at this point. A little less speculative is the opportunity for SolarCity to sell Powerwalls. At $4000 a pop, some fraction of new customers will opt for it, and so will some other fraction of existing customers. So at least we can parameterize this and guess at what the uptake might be. Even so, no reported results. However, these things play out, the basic opportunity is to make more revenue per customer. The current business model will take along time to achieve FCF, but an expanded business model may get there a little quicker. Either way a good deal of patience is required of shareholder.

Have you looked at what 2.25/watt of total all in cost will look like at current 3.63/watt npv? Current numbers are based of 2.71/watt costs, but what does 2.25/watt look like?

also, they didn't include the net booked portion of contracts which has been trending at well over $1bln. So, if they are projecting to be well over $4bln npv in current contracted business, how does that affect non recourse debt ratio comparison?

my point is I think we have look at the full picture here. I know they are trying to work out the presentation/expectations/investor value for their briefs and quarterly briefs, but the reality still remains they are continuously creating big value for investors through and through in he real world right now. And we haven't even gotten to exploiting the full value of their business yet. It's like we are only looking at the tip of iceberg above water and thinking that's the endgame. We're not even close to monetizing the full value of what Solarcity is doing or where they are going.

also, look at what the misses are on these quarterlies and it's been really all about their efforts to expand commercial instslls which have more variable lead times do to government inspections and other non controllable government processes. Has nothing what so ever to do with demand, so it is very important to note this when evaluating quarterly numbers/guidance misses. Every single one of solarcity's ABS have been oversubscribed so clearly finance has more to do with timing then problems getting it. All I point out is we have to look at the context to know the reality as it relates to company health moving forward. Solarcity is very healthy in reality.

my assessment is solarcity's issues stem strictly from a investor relations problem as to opposed to business problem. They need to invest in better communications on the investor relations front. Someone needs to sit down and flesh out a clear way to communicate value and progress toward avhieving thst value, especially in our current bi-polar market world. They need to peak shave the market mood swings with a great hand holding message/process. To me, this messaging is the job of investor relations. Rive needs to take a look at how he can improve media/investor messaging and I feel well have less boo birds dominating the conversation in media/internet moving forward.

- - - Updated - - -

Renim, what are those tou rates that will come in NEM 2.0? Please enlighten us, since you have an inside scoop on those not yet announced numbers. Also, any changes only happen after utilties hit there NEM 1.0 cap... Again, do you have some scoop on when those caps will be hit because no one else knows.

 

[electracity]

what is so difficult to understand? every Solarcity customer in Califorina who does not have a battery is a future liability to Solarcity when they get pushed to TOU rates.

most Solarcity customer in Califorina who does not have a battery is a potential future customer for Tesla (or others) batteries when when they get pushed to TOU rates.

Cetris paribus, it really is zero sum, Tsla benefits at Scty expense.

Every Californian SCTY customer added this year without a battery is a future liability to SCTY.

how is this not obvious? California's duck curve is upto 2 years ahead of original prediction for springtime. look at slide 2 of the previous link and have a cup of tea while considering it.

Yeah, SCTY appear headed into an shitstorm in California. It looks to me like pg&E is requiring new solar customers to use TOU E6 after march 1st. Why this change isn't more understood is a mystery.

 

[Jack6591]

Tesla and SolarEdge are good to go, but SolarCity is going to get disrupted by TOU and the duck curve.
View attachment 111530

just what happens to midday TOU after 2 more years of 40% growth of solar in SCTY's largest customer state?
http://www.caiso.com/Documents/Brie...SystemConditions-ISOPresentation-July2015.pdf

Nevada is small fries, moving Californian SCTY customers to TOU is going to be great for Tesla, but will gut SCTY like a fish, my prediction is that SCTY shareholders are going to be crying (diluted) big time, but the SCTY bondholders will be laughing

If I generate power with solar (SolarCity), then store it to batteries (Tesla), power flows can then be controlled by intelligent controllers (SolarEdge). This is why the utilities are complaining about Tesla "gaming" the system. A strategic alliance between these 3 companies will disrupt the utility industry business model. Power can utilized at the optimum time to take advantage of time-of-use rates and to mitigate demand charges.

 

[Foghat]

If I generate power with solar (SolarCity), then store it to batteries (Tesla), power flows can then be controlled by intelligent controllers (SolarEdge). This is why the utilities are complaining about Tesla "gaming" the system. A strategic alliance between these 3 companies will disrupt the utility industry business model. Power can utilized at the optimum time to take advantage of time-of-use rates and to mitigate demand charges.

Again, Solarcity is currently 1/3 of all rooftop solar installs in the untied states. Many of these installs are clustered within specific utiltiy territories. Along with tesla powerwalls, smart inverters by solaredge(and others), Solarcity will have the distinct advantage of being able to aggregate all this energy production(with its proprietary aggregating software platform) in a dispatchable way to the grid when needed by the grid. If Solarcity can aggregate clusters of its 1.7GWs of capacity under current long term contracts, they have a massive value stack that far out values any powerwall sale or solaredge sale in isolation.

Bottomline, Solarcity is the center piece of unlocking a significant value not available otherwise.

 

[electracity]

Without batteries there is no aggregation. With TOU and batteries, the electricity is used in the solar customer's home to offset the high rate at the duck's head.

 

[Foghat]

Under aggregation agreement, Solarcity shares revenue 50/50 with its customer which reduces net cost/kWh for the customer. So consumers save more money being a Solarcity customer under its aggregation agreement then without.

so faced with adding energy storage and a smart inverter without Solarcity aggregation contract savings, or going with Solarcity and achieving higher savings, what would a majority of consumers do?

the answer is clear who holds the keys to the total value proposition(currently at 1/3 the market) in distributed energy resources market. Solarcity. Hard to contort the reality otherwise.

 

[electracity]

The customer is not going to sell from the battery and immediately buy it back. Aggregation works with basic net metering. It doesn't work for solarcity with NEM plus TOU.

 

[Foghat]

Wow.... Clearly don't understand what aggregation is/does(demand response on the wholesale market).

good to know influence is strong with some members...

again, I have to say messaging would be a significant value add for Lyndon to look into to utterly destroy the uninformed boo birds controlling the message right now in the broader market.

 

[electracity]

I'm not the one who is confused.

 

[Foghat]

I'm not the one who is confused.

Haha... Good comeback... And I mean that in the most sincerely sarcastic way possible.

 

[jhm]

Who takes on the customer default risk? SolarCity or the ABS holders? If the ABS then SolarCity is basically selling the install to the ABS holder through the payback period, but keeping the debt servicing revenue and any overage with regards to life beyond the payback. If SolarCity (through convertible mechanism) then the SolarCity equity holders are taking on the risk. This could have led to lower financing rates to be passed to the customers.

As far as I can tell, continued debt expansion is only need to expand the installs, it isn't used to service the existing debt/ installs. This is a very different model from other growth companies as SolarCity could basically stop new sales but continue to service the existing debt by the existing install base.

In structure finance products like an ABS, it is standard to set up multiple tranches to achieve a higher bond rating for the upper tranches. So default risk is more concentrated in the lower tranches. So the A series get paid first their contracted portion. Second the B series get paid upto their contracted amount. And finally what is left flows to SolarCity as the equity tranche holder. So this is three tranches. Usually structured products will be over capitalized, but with SolarCity holding the equity tranche that really does not matter. So suppose hypothetically you have 100M in scheduled payments with 80 M for tranche A, 15 M for tranche B and 5M for the equity tranche. Let's suppose 1% of payments are delinquent. The A gets 80%, B gets 15% and equity gets 4%. So A and B suffer no loss. Let's suppose the situation deteriorates badly and 7% of payments are delinquent. Then A gets 80%, but B only gets 13% and equity gets 0%. If late payments are received they flow to tranches that have been underpaid in tranche order. This is what makes Series A such a good credit the lower tranches absorb credit risk before it does. So the Equity tranche is most highly exposed to default risk. The equity holder will usually reserve for a certain levels of default risk, say 2%, and adjust reserves as experience accumulates. So it is incumbent on SolarCity to do a good job with maintaining credit standards and to have effective collection processes in place.

So that was a long winded explanation, but I do think it's helpful to get a feel for how these structures work. The secret to the sauce is tranching. And that also explains why top tranches can get much better bond rating that recourse debt on the issuing company. The structure itself makes it so that SolarCity is nearly irrelevant. In the mortgage space, MBSs have pretty much commoditized mortgage credit, which has driven down the cost of mortgages enormously. Even so MBS investors are still exposed to systemic risk as was seen in the 2008 mortgage crisis. This individual credit risks are pretty much washed out by the structure, but when home prices decline across the country with a high fraction of homes with negative equity, then even the top tranches get exposed to macro risk. So ABS investors always do well to consider systematic and macroeconomic risks. Regarding solar ABSs I think the biggest systemic risk is the housing market. Another mortgage crisis would be bad. So long as customers are paying on their mortgages, they will most likely be paying on their solar system too. I do not believe that NEM and other policy changes are a serious risk. If my landline phone company charges me too much, that does not mean I stop paying for my mobile phone. Customers may be disappointed that they are not saving as much money on their utility bill, but that does not put them into financial distress such that they would stop paying on their mortgage or car loan. So there is no cause to miss payments on their solar financing. If anything, a customer with a battery would sooner stop making utility payments than to stop solar and battery payments. That is, some customers may be financially pushed off the grid. Thus, batteries may actually enhance customer credit.

 

[Foghat]

In structure finance products like an ABS, it is standard to set up multiple tranches to achieve a higher bond rating for the upper tranches. So default risk is more concentrated in the lower tranches. So the A series get paid first their contracted portion. Second the B series get paid upto their contracted amount. And finally what is left flows to SolarCity as the equity tranche holder. So this is three tranches. Usually structured products will be over capitalized, but with SolarCity holding the equity tranche that really does not matter. So suppose hypothetically you have 100M in scheduled payments with 80 M for tranche A, 15 M for tranche B and 5M for the equity tranche. Let's suppose 1% of payments are delinquent. The A gets 80%, B gets 15% and equity gets 4%. So A and B suffer no loss. Let's suppose the situation deteriorates badly and 7% of payments are delinquent. Then A gets 80%, but B only gets 13% and equity gets 0%. If late payments are received they flow to tranches that have been underpaid in tranche order. This is what makes Series A such a good credit the lower tranches absorb credit risk before it does. So the Equity tranche is most highly exposed to default risk. The equity holder will usually reserve for a certain levels of default risk, say 2%, and adjust reserves as experience accumulates. So it is incumbent on SolarCity to do a good job with maintaining credit standards and to have effective collection processes in place.

So that was a long winded explanation, but I do think it's helpful to get a feel for how these structures work. The secret to the sauce is tranching. And that also explains why top tranches can get much better bond rating that recourse debt on the issuing company. The structure itself makes it so that SolarCity is nearly irrelevant. In the mortgage space, MBSs have pretty much commoditized mortgage credit, which has driven down the cost of mortgages enormously. Even so MBS investors are still exposed to systemic risk as was seen in the 2008 mortgage crisis. This individual credit risks are pretty much washed out by the structure, but when home prices decline across the country with a high fraction of homes with negative equity, then even the top tranches get exposed to macro risk. So ABS investors always do well to consider systematic and macroeconomic risks. Regarding solar ABSs I think the biggest systemic risk is the housing market. Another mortgage crisis would be bad. So long as customers are paying on their mortgages, they will most likely be paying on their solar system too. I do not believe that NEM and other policy changes are a serious risk. If my landline phone company charges me too much, that does not mean I stop paying for my mobile phone. Customers may be disappointed that they are not saving as much money on their utility bill, but that does not put them into financial distress such that they would stop paying on their mortgage or car loan. So there is no cause to miss payments on their solar financing. If anything, a customer with a battery would sooner stop making utility payments than to stop solar and battery payments. That is, some customers may be financially pushed off the grid. Thus, batteries may actually enhance customer credit.

Just to comment on you r excellent explanation, homeowners pay their electric bill even after they stop paying their mortgage. and if specially a mortgage crash happened in grandfathering states (all except temporarily Nevada right now) then banks would pay the lease/ppa upon taking over the home in order to maintain grandfathering advantages that boost home value on resale. Bottolmline, solar bill is trending out to be of higher quality then a mortgage payment, risk compression is trending better on solar payments then on a mortgage payment. And this is a phenomena that seems to be exclusive to long term ppa/leases, not necessarily ownership (since a new owner does not get grandfathered.)

This is why management has said they see solar eventually matching mortgage rates and potentially going lower in the future.

 

[dakh]

Yeah, SCTY appear headed into an shitstorm in California. It looks to me like pg&E is requiring new solar customers to use TOU E6 after march 1st. Why this change isn't more understood is a mystery.

What is this statement based on? SCTY welcomed the ruling. They would sure have stated if it wouldn't work for them, like they did in Nevada. Oh and it's not PG&E, that's the commission's decision for the state.

 

[electracity]

What is this statement based on? SCTY welcomed the ruling. They would sure have stated if it wouldn't work for them, like they did in Nevada. Oh and it's not PG&E, that's the commission's decision for the state.

But the new regime also imposes an “aggressive” move to time-of-use rates for net-metered customers, Commission President Michael Picker noted. Starting as soon as the successor tariff is implemented, net-metered solar customers will be required to move to TOU rates that charge different prices during different times of the day, to better match real-time costs of generating and transmitting energy across the grid at large.

http://www.greentechmedia.com/articles/read/Californias-Net-Metering-2.0-Decision-Rooftop-Solar-to-Keep-Retail-Payme