SolarCity (SCTY)

[Perfectlogic]

This is the SolarCity thread, no one is "paying" anything for rooftop solar here. Every SCTY PPA market is priced 10-15% below local grid prices. What's the problem?

Clearly the best solution it to move hassle-free production as close to consumption as possible so long as it lowers cost, is what the consumer wants and retains flexibility for whatever setup the future may hold.

If you told suburban Philadelphia people 5 years ago that they'd be able to sign a contract and have panels on their roof at negative cost with no maintenance they'd say you're nuts. Yet here we are.

Slightly below current utility price but with an escalator so on average over the contract more expensive than current utility rates.

Yes, as long as it lowers the cost, but it doesn't, residential solar is much more expensive.

I think this is a good time for me to take a break from the thread again before I start insulting peoples intelligence. I have a feeling I will be back at some point.

 

[Skotty]

One of the issues with buying renewable energy credits under the idea that it doesn't matter where the renewable energy is generated is this: besides the fact that it's just a lazy way to achieve the overall bare minimum, folks on both sides of the environmental argument regularly divide up all the areas of the country by their generating mix, and use that in their arguments. How often does someone chime in to counter those arguments because of the sale of renewable energy credits? Never. So apparently it matters, whether it should or not.

 

[doggusfluffy]

@giggle
I'm pretty sure Buffet also owns a large stake in one of the largest utility scale solar plants in the US too, he owns a lot of things.

Actually, the fight is over keeping the monopoly intact for NV Energy and nothing to do with solar technology as the casinos would rather install their own and keep the savings for themselves. Future problem for all "legacy" utilities in full view... I believe.

Las Vegas casinos seek to power their bright lights with renewable energy

Together, the casinos’ 15 properties account for 7% of NV Energy’s electricity sales, and if that income were lost, the utility says, its remaining customers would have to endure significant rate hikes. As a result, the public utility commission (PUC) of Nevada is demanding resorts pay tens of millions of dollars to leave NV Energy’s services, a December 2015 decision which one casino has appealed.

 

[TheTalkingMule]

This is why a 2% escalator will never(in the short term) be an issue. On the first ~10 years of a 20 year contract signed today with SCTY in southeastern PA, you will NEVER see grid prices go down. As the customer(revenue) base is eroded by solar, the fossil/nuclear utility will need to raise rates in order to cover the static overall cost. This is precisely what happened in Germany and will happen in any location where the energy market is regulated in a remotely free and fair manner.

NV Energy will make another $750M in profit this year because solar has been effectively shut out of the market by corrupt regulators. However if solar, or any form of production, were allowed to compete on a level playing field they would make nothing. Their revenue at current rates would be nowhere near enough to cover their costs.

Clearly the US(or at least Nevada) handles this situation very differently that Germany. In Germany the utility can say this sudden loss of revenue is unfair, but the answer from regulators is "tough beans". We needed X amount of production yesterday and today we need Y which is far less than X. The luxurious benefit of being a regulated monopoly is inversely proportional to the horrendous downside of technological advancement.

If we were capable of acting like adults in this country we could sit down and pencil out a fair plan in weeks, but that's how Germans operate not us.

 

[jhm]

http://seekingalpha.com/article/3973101-sunpower-growing-dominance-distributed-generation

The author argues that SunPower could rise to challenge SolarCity in the residential solar segment. They are guiding 350 to 450 MW in US residential for 2016. Good to watch.

 

[SBenson]

Chanos is speaking today at SALT conference. I fully expect him to bash SCTY as usual.

Agenda

Will be interesting to see what he has to say after Q1 ER.

About SALT conference

 

[SBenson]

He is been busy bashing Cheniere for last 10mins non stop. About its debt, how the LNG spot market is bad etc. etc.

So we know he has nothing to do with clean energy, fossil fuels and such religious debates. He is simply a financial guy. Where he sees mispricing, he goes short and tells the world.

Here is a reference to his Cheniere short from about a week ago:
Chanos Calls Gas Exporter Cheniere `Excessively Expensive Bet'

 

[TheTalkingMule]

I wouldn't expect him to say one word about SCTY, the job is already done for this quarter. He needs the stock price to go back up in order to spread uncertainty next time around.

 

[SBenson]

The panel is done. He didn't say one word about SCTY.

Mule got into his head and came out with the news already.

 

[jhm]

Look, I didn't say that planting all the solar panels in New Mexico is the cheapest way to manage the grid, I used that example to proof a point that from an environmental standpoint it doesn't matter much where the renewable energy is produced.

I'm not ignoring anything, you are ignoring the fact that transmission is still a cost with residential solar as long as you use the grid. Transmission cost doesn't have to be huge with utility scale plants, in most of the US there are decent locations relatively close. That added cost of perhaps 1 or 2 cents at most doesn't even come close to the added cost of 8 cents / kwh for rooftop solar compared to utility scale.

I'm not ignoring anything. The grids of the world have the opportunity to retreat to those high density areas where the grid service is most profitable and spend less money where grid service is marginally unprofitable.

Historically, the legal framework for monopoly utilities was a bargain to assure that service would be extended to areas where it is marginally unprofitable to provide service. The whole idea was to use profitable high density populations to cross-subsidize service to remote populations. This is legal rationale for a monopoly. Without a protected monopoly, natural competition would offer lower rates in high density areas and charge more or neglect low density areas.

This sort of framework very well may have been necessary 100 years ago as governments struggled to assure that whole countries would be electrified. But it is also a framework which has failed to bring electricity even today to about 1.2 billion inhabitants on this planet. Communities that are too poor and too remote have been bypassed by the grids of the world.

But now cost effective distributed energy technologies are opening up new opportunities for the grids and those at the margin. The political bargain that established legal monopolies is no longer needed. Moreover, that legal monopoly status has been perverted to protect the utilities from competition that would allow all participants to enjoy electricity at lower cost. The utilities have been so worried about protecting their revenue stream from competition that they have failed to see many of the opportunities to cut costs using DG technologies. They now have the opportunities to undo the cross-subsidization implied in the monopoly utility model. Remote communities can be better served by microgrids.

Having a microgrid connection is nice for a customer with rooftop solar because they get some back-up service and opportunities to sell surplus power and trade storage capacity. Whether the microgrid is interconnected with a large transmission grid makes little difference and can be determined purely on the economic cost/benefit of building and maintaining that specific interconnection. To say that a rooftop owner must bear the cost of transmission of power to other customers 1000 km away is at best a moral or legal argument for forced cross-subsidization, but it is not an economic one. To be able to trade power with others within 1 km is quite sufficient for the rooftop solar owner to enjoy nearly all the benefits of large grids. Even at the microgrid scale, utility scale solar pricing can be approached. A 1 MW solar system can easily serve a 100 family microgrid without interconnection to a transmission grid. So all these opportunities are becoming available at a local scale. Only urban centers really need centralized, i.e., remote, power generation and transmission, but urban centers have the economic density to make this cost effective.

 

[SBenson]

Chanos now on Bloomberg TV (live). He is asked about SolarCity and he carefully evades the question and switches the topic. Umm.. wonder why

OT: Interestingly, he says he has been short LendingClub and refuses to say if he has covered yet.

 

[doggusfluffy]

Senate passes $37.5B energy and water bill after ending Iran fight

Despite the bill's popular support in the Senate, the White House has threatened to veto it, saying the measure doesn't provide enough research funding for advanced energy projects or renewable energy sources.

"At this funding level, the number of research, development, and demonstration projects supported in cooperation with industry, universities, and the national labs would be reduced, limiting innovation and technological advancement," the White House said in an April statement.

Despite that, members said Thursday they were happy just to begin the appropriations process. Sen. Lamar Alexander (R-Tenn.), the bill's sponsor, noted that the bill was the earliest appropriations measure to pass the Senate in 40 years.

 

[jhm]

He is been busy bashing Cheniere for last 10mins non stop. About its debt, how the LNG spot market is bad etc. etc.

So we know he has nothing to do with clean energy, fossil fuels and such religious debates. He is simply a financial guy. Where he sees mispricing, he goes short and tells the world.

Here is a reference to his Cheniere short from about a week ago:
Chanos Calls Gas Exporter Cheniere `Excessively Expensive Bet'

I've been telling folks that LNG is a bad bet for quite a while. Wind and solar at PPAs around $40/MWh price combined cycle natural gas plants out of the market. With NG at $5/MMBtu, the fuel cost alone is $40/MWh. The cost of liquefying NG in in Texas and shipping to Asia is about $5/MMBtu. So that leaves no room for buying NG in Texas at $2/MMBtu or making a profit on sell in Asia. LNG is only useful as a back-up and peak generation fuel, not for baseload generation.

The first part of this argument also helps explain why almost no new natgas generation capacity is being added in the US this year. According to FERC Energy Infrastructure Update, 16 MW of NG was added this year through March. The balance of 1308 MW of new capacity was all renewable, including 707 MW of wind and 522 MW of utility solar. (Small scale solar is not reported.) Last year at this time 458 MW of gas had been added. So natural gas looks to be falling out of the new capacity market. Natural gas prices really should go back up above $3/MMBtu for gas producers to turn a modest profit. So with wind and solar hammering PPA prices below $40/MWh, there really is no way for new natgas generation to pencil out as baseload in the US. And upcoming batteries kill the economics for gas peakers. So about the only new gas capacity that might make sense is retrofitting an existing coal plant to run on gas instead.

So it actually is quite helpful for shorts to attack LNG. Traditional energy investors are resistant to facing the decline of fossil fuels, and there is huge potential for a lot of capital to get misallocated. This is a key issue for solar and other clean tech stocks. Capital needs to shift from fossils into renewables. This will accelerate renewables.

So I'll keep a watch out for new gas generation capacity. I suspect more gas will be added later in the year, but it will be at a steep decline from last year. In fact, I have the notion that September 2015 will prove to be the peak operating capacity year for gas in the US. Utility solar is supposed to hit something like 12 GW this year, so it will massively blow past wind for a first time. As this comes out it could attract media attention and serve as a catalyst for solar stocks. Wouldn't that be nice for a change?

 

[doggusfluffy]

I've been telling folks that LNG is a bad bet for quite a while. Wind and solar at PPAs around $40/MWh price combined cycle natural gas plants out of the market. With NG at $5/MMBtu, the fuel cost alone is $40/MWh. The cost of liquefying NG in in Texas and shipping to Asia is about $5/MMBtu. So that leaves no room for buying NG in Texas at $2/MMBtu or making a profit on sell in Asia. LNG is only useful as a back-up and peak generation fuel, not for baseload generation.

The first part of this argument also helps explain why almost no new natgas generation capacity is being added in the US this year. According to FERC Energy Infrastructure Update, 16 MW of NG was added this year through March. The balance of 1308 MW of new capacity was all renewable, including 707 MW of wind and 522 MW of utility solar. (Small scale solar is not reported.) Last year at this time 458 MW of gas had been added. So natural gas looks to be falling out of the new capacity market. Natural gas prices really should go back up above $3/MMBtu for gas producers to turn a modest profit. So with wind and solar hammering PPA prices below $40/MWh, there really is no way for new natgas generation to pencil out as baseload in the US. And upcoming batteries kill the economics for gas peakers. So about the only new gas capacity that might make sense is retrofitting an existing coal plant to run on gas instead.

So it actually is quite helpful for shorts to attack LNG. Traditional energy investors are resistant to facing the decline of fossil fuels, and there is huge potential for a lot of capital to get misallocated. This is a key issue for solar and other clean tech stocks. Capital needs to shift from fossils into renewables. This will accelerate renewables.

So I'll keep a watch out for new gas generation capacity. I suspect more gas will be added later in the year, but it will be at a steep decline from last year. In fact, I have the notion that September 2015 will prove to be the peak operating capacity year for gas in the US. Utility solar is supposed to hit something like 12 GW this year, so it will massively blow past wind for a first time. As this comes out it could attract media attention and serve as a catalyst for solar stocks. Wouldn't that be nice for a change?

Chanos is an infinitely better stock trader than I am to be sure. I need to remember to pay attention the next time he's chiming in on SCTY or even TSLA as he does seem to be correct, regarding the price action at least. I didn't expect this latest dip at all after the ITC extension and Gigafactory producing packs already. I assumed the bright outlook for SolarCity would be quite apparent. I welcome some positive catalyst! I'm also a bit curious to see how popular the end NV Energy monopoly referendum will be.

Things to know on a ballot measure to end NV Energy monopoly

 

[jhm]

Chanos is an infinitely better stock trader than I am to be sure. I need to remember to pay attention the next time he's chiming in on SCTY or even TSLA as he does seem to be correct, regarding the price action at least. I didn't expect this latest dip at all after the ITC extension and Gigafactory producing packs already. I assumed the bright outlook for SolarCity would be quite apparent. I welcome some positive catalyst! I'm also a bit curious to see how popular the end NV Energy monopoly referendum will be.

Things to know on a ballot measure to end NV Energy monopoly

You don't need to be a great trader to do what Chanos does. You just need to know how to work the media. I'm sure Trump could do a much better job doing this than Chanos.

Anyhoo... the ballot measure is quite interesting. It's curious to see NV Energy so low key about it. I get the impression that they know now that they over stepped their political welcome and are at risk of getting evicted by voters. If they try to fight this, they risk generating controversy and igniting passions against them.

 

[gene]

Sunrun is up 14% aftermarket due to ER. Maybe it will bode well for the solar sector tomorrow.

 

[renim]

[QUOTE="doggusfluffy, post: 1531035, member: 25523"... I'm also a bit curious to see how popular the end NV Energy monopoly referendum will be.....[/QUOTE]

Things to know on a ballot measure to end NV Energy monopoly[/QUOTE]

A market where the energy retailers are separated from T&D which is also separated from energy producers (3 separate independent business) accelerates the end of net metering because the energy retailer only saves on costs avoided in buying the energy from the independent energy producer. Ending a vertical electricity monopoly ends the regulatory capture that net metered residential solar customers enjoy.

Its simple to have multiple energy retailers, in my country there is about a 20% annual churn rate on electricity retailers. But the T&D, that is naturally a monopoly, in the early days of electricity multiple power poles owned by multiple companies would service the same area, and other areas were unserviced. Very cost ineffective, very un egalitarian. Areas with a single provider could be charged extremely excessive rates....

Its a similar problem to rail, physically it is a monopoly, because of the level of co-ordination & interaction.

 

[renim]

Chanos is an infinitely better stock trader than I am to be sure...

Bonds Detail
personally these seem like a bargain to me, guaranteed 20%-25% annual return, unless SCTY goes to zero.
But be aware, BTU, Peabody had similar bargain bonds in the not too distant past too.

The core issue is that as costs of solar decline, the value of solar assets decline. Its real simple. The faster the decline of solar costs, the faster the decline of solar asset value. TOU is coming, even to California. Any home owner with their own solar on their roofs knows the replacement are (a, lower cost & b, greater capacity). Perhaps PV leasees may not care, but people looking to purchase the house, and their financiers do.

 

[jhm]

The remarkable reason that solar is going viral in these 10 American cities

This is pretty cool. I like the dynamic graphics.

 

[Jack6591]

Chanos is doing all that he can to destroy Tesla and SolarCity. The goal of these companies is building sustainable energy and transportation to solve the global warming crisis. With malice and forethought he is profiting from the destruction of our children's future.

I hope he rots in hell. Too strong? I think not.