SolarCity (SCTY)

[Cosmacelf]

Thats important but its not the elephant in the room.

what is the value of the systems on peoples roofs?

If it is less than the outstanding debt, then it is subprime.
If it very much less than the outstanding debt, then....
SCTY was, is , and still is a bet against solar PV energy achieving cost reductions.
If you do not consider SCTY as a bet against solar renewable energy achieving cost reductions, then there is no point to my input here.

As 30seconds pointed out, it isn't that simple. You have to factor in cost of replacement. New systems will be cheaper but they won't be as cheap as maintaining the old system, at least for a while.

Also, since these are PPAs, you are really competing against grid electrical prices. Those are simply not going down. They only go in one direction. Up.

 

[TheTalkingMule]

The chances of those consumers buying into a SolarCity PPA today riding it all the way out to 20 years is nearly zero. It should be thought of more as a minimum service guarantee.

Within 4-8 years solar will be so cheap that storage and supply/demand management will be "the product". Today it's solar as a service, but it will very rapidly become much more complicated(in the US anyway). SolarCity(Tesla) can take you all the way through this progression seamlessly and for less than what you pay now for electricity.

With any luck, people buying into PPAs now will be on some kind of micro grid within 20 years.

 

[TheTalkingMule]

I bought SCTY 2019 calls today, with price+premium equal to buying Tesla at about 223. As a frame of reference, you can't buy TSLA 2019 leaps yet, but to buy the 2018 $220 calls the asking price is $26. So you can basically buy 2019 TSLA with the SCTY proxy for 223, or the 2018 TSLA calls for $246. I can't believe the spread is this big either, $23 bucks cheaper and you get an extra year, going to be interesting to see what the TSLA 2019 LEAPS trade for when they come out.

I'm going to head in this direction, you have any deeper thoughts or strike price preferences? Half of my TSLA/SCTY investments went into SCTY LEAPS trying for the grand slam with just moderate risk and that obviously has not worked out.

Looking at the math here and today's prices, buying $35 SCTY 2019 calls would equate to a TSLA strike of $318.15, correct? The price variance is something like $1.20 for SCTY 2019's versus $5.60 for TSLA 2018's.

 

[tander]

I'm going to head in this direction, you have any deeper thoughts or strike price preferences? Half of my TSLA/SCTY investments went into SCTY LEAPS trying for the grand slam with just moderate risk and that obviously has not worked out.

Looking at the math here and today's prices, buying $35 SCTY 2019 calls would equate to a TSLA strike of $318.15, correct? The price variance is something like $1.20 for SCTY 2019's versus $5.60 for TSLA 2018's.

Well I'm not an investment advisor or CFA, but I went for the SCTY $20 2019 just because I figured that it gives me a larger gain if Tesla stock does what I expect it to do (I mean buying Tesla at 223 in two years seems like quite a deal to me, a lot can happen in 2 years for Tesla), and it gives me a larger margin of error if I'm wrong, since I think there is a decent chance of SCTY being above 25 (20+5ish premium) in two years even if the merger somehow didn't go through. But the drawback is they were like $500 per call, so if you go with higher strikes you could buy more of them. I think I was thinking that I'll buy the LEAPS that are fairly close to being IMO and get on base which I consider fairly safe, and then maybe I'll do some shorter term ones for possible grand slams. Still think it's crazy how big the diff between the SCTY v TSLA calls, really surprised there is so much FUD about the merger, but that's just my opinion I guess.

 

[doggusfluffy]

Wal-Mart Leads the Nation in Corporate Solar Deployments. What Will It Do With Storage?

If that happens, Wal-Mart could single-handedly break open the U.S. commercial and industrial storage sector, which has deployed 50.7 megawatts since 2013, according to GTM Research.

Wal-Mart has more than 5,000 stores in the U.S. If only 250 of them deployed the 200-kilowatt batteries that some locations have already installed, that would equal today's cumulative total C&I storage deployments.

Florida Is About to Vote On Who Controls Its Solar Power

Pro-amendment groups in Florida argue the change would guarantee consumers’ right to own solar panels—though it’s already protected via state statute—by putting it into the state constitution. It’s worth noting that the pro-amendment group, Consumers for Smart Solar, is largely funded by utility companies with major consumer bases in Florida, such as Duke Energy, Florida Power & Light Company and others, the Energy and Policy Institute revealed last fall. Their campaign, “Yes on 1 For the Sun,” is also backed by groups with financial interests in the power sector, such as Gulf Power, ExxonMobile and the Koch brothers.

 

[gigglehertz]

Reading through the proxy material now, and the background of the merger has some surprises. On page 58:

"On June 2, 2016, representatives of Party A, a potential strategic counterparty for a business combination transaction with SolarCity, met with SolarCity management for an introductory meeting when a Party A management delegation was visiting the Silicon Valley area on other business. No specific transaction or proposal was discussed at this meeting and no proposal was made for a business combination transaction "

So there was at least one nibble during the go-shop period.

Edit: Apparently there was a Party B also that kicked the tires.

Edit: ...and a Party C interested in an acquisition or equity investment. Very interested to find out who but probably never will

 

[kenliles]

Florida Is About to Vote On Who Controls Its Solar Power

I'm currently FL registered voting.
Already voted NO on 1 -
If any FL Solar supporters confused by this Utility head fake -
please check pro solar sites for review-
and vote NO on Amend 1
Home - Floridians for Solar Choice

 

[schonelucht]

First plan on the agenda after the merger : to dump SolarCity tech and replace it by Panasonic. Panels must not have been that competitive then. Yet another part of SCTY that turned out to be useless. Remind me again how the company would've survived stand alone?

 

[TMSE]

First plan on the agenda after the merger : to dump SolarCity tech and replace it by Panasonic. Panels must not have been that competitive then. Yet another part of SCTY that turned out to be useless. Remind me again how the company would've survived stand alone?

You are twisting the facts. Nowhere it is mentioned that SolarCity tech is dumped. One can very well argue that Panasonic will make Silevo tech based PV. My guess is as good as yours. Wait till earnings call or further details revealed in the next few days.

 

[tander]

You are twisting the facts. Nowhere it is mentioned that SolarCity tech is dumped. One can very well argue that Panasonic will make Silevo tech based PV. My guess is as good as yours. Wait till earnings call or further details revealed in the next few days.

Yup, didn't SCTY receive a bunch of patents recently. Besides, it's not like it's their plan to make the most efficient panels ever, it's their plan to make the cheapest panels ever that are still good and practical, and pairable with batteries.

 

[Matias]

" “Panasonic PV cells and modules boast industry-leading power generation performance, and achieve high quality and reliability. We expect that the collaboration talks will lead to growth of the Tesla and Panasonic relationship.”

Does sound like Panasonic tech.

 

[schonelucht]

You are twisting the facts. Nowhere it is mentioned that SolarCity tech is dumped. One can very well argue that Panasonic will make Silevo tech based PV. My guess is as good as yours. Wait till earnings call or further details revealed in the next few days.

You are reading a Tesla press release about Panasonic taking up future Tesla PV manufacturing and SolarCity's supposedly superior technology isn't mentioned at all, yet its pretty awful sales capacity is (which everyone here can't wait to ditch in favor of Tesla retail) Writing 's maybe not in the press release but it's on the wall.

 

[jimmyjohn]

Does any party (TSLA or otherwise) receive LIVE (or DAILY) current proxy vote stats leading up to the final vote day, OR, are the final votes tabulated and an UP/ DOWN on the two questions provided after the deadline?

I'm curious because Fidelity sent me the proxy vote link (Friday, I think) and I voted - electronically - at that time.

I'm sorry if this question is already asked-and-answered.

 

[TheTalkingMule]

People are so concerned about SCTY sales cost? SCTY can be profitable in 5 minutes(net of gigafactory costs) if they so desired.

 

[electracity]

Panasonic makes premium high efficiency panels. I wonder what this announcement means in regard to Silevo IP.

It is probably good for Tesla if Musk doesn't intend to manage the Buffalo factory.

 

[schonelucht]

People are so concerned about SCTY sales cost? SCTY can be profitable in 5 minutes(net of gigafactory costs) if they so desired.

How?

 

[TheTalkingMule]

How?

Slower expansion to cut sales costs in half does the trick with one conference call. SCTY's margins are probably quite fat in places like CA and NJ where they operate at full speed. It's wedging your way into the less solar-friendly secondary markets that's expensive. Look at Nevada, risking a deep dive into that market nearly killed the company. If you're looking to safely make money you simply don't go there.

But that's not Elon's vision, the role of SCTY(and TSLA Energy post-merger) is to forcefully inject solar into ALL markets as rapidly as possible. That costs money, but fortunately we're well lover the hump and costs will plummet regardless. Even losing money they've gained a nearly insurmountable marketshare lead in what we know for a fact will be the primary energy source 20 years from now. AND they're cash flow positive net of expansion efforts. What's not to like?

The idea that Elon Musk would fold the nation's leading solar installer into TSLA and not end up making unholy gobs of money is even more absurd than people in 2013 saying EVs will never catch on. It's clear as day that Elon will be king of the world in short order if he's allowed to execute on his vision as he sees fit. We can legally buy shares in that enterprise. What's the problem?

 

[tander]

How?

Pretty much all they have to do is stop growing virally and start to focus on strategic growth. And when they start combining the panels with batteries the formula looks even better and they can probably go back to the viral growth.

 

[SBenson]

People are so concerned about SCTY sales cost? SCTY can be profitable in 5 minutes(net of gigafactory costs) if they so desired.

I lost interest in getting into all the nitty gritty detail and proving things with numbers, facts and references. But I will share the gist of things, take it for what it's worth.

Many people think that SCTY's install costs, especially sales costs are it's problem. That's not entirely true. The other big issue is cost of capital... From what I know SCTY gives away 12% return or thereabouts to tax equity "partners", with guarantees behind it. In other words if the PPA /lease goes into default, SCTY holds the bag entirely. Also in case of the ABS deals, the final maturity of the deal gets extended based on defaults. So the ABS owners have large cushions against losses. That's the reason why ABS timelines don't match with the PPA timelines.

Many people wonder if SCTY is not giving homeowners a good deal, while at the same time it is not making any profits (including all future cashflows), what gives??

The problem is that there are various "leaks" in the business model:
- Substantial cost of capital
To contrast cost of capital is not even considered when making outright purchases, so effectively 0 in people's minds, wether it's true or not in reality
- Default costs
SCTY holds the bag entirely. Again not even considered when making outright purchases.
- O&M costs
SCTY holds the bag on this. SCTY estimated $0.40/W on this. No body thinks of this for outright purchases.
- Renewal
For modeling investors will never take the renewal portion seriously, especially because it is not contracted out. But an outright purchaser might actually consider the purchase as "investment" for longer than 20 years.

In a nut shell, the SCTY PPA/lease are not comparable to outright purchases at all. They are very different animals. But a reasonable rational homeowner is not going to look at all these subtleties. Will compare sticker prices and say SCTY is giving one shitty deal. On the other hand a reasonable rational investor will look at all the cashflows and say SCTY is getting one shitty deal. Neither is a winner, all the money is lost in "ether".

Even entirely erasing the Sales cost down to zero will not make the business model viable. Will prove this one last statement with proper math when I get around to it.

 

[SBenson]

Oh btw, the latest Tesla/Panasonic announcement makes it abundantly clear that Silevo IP is worth 0. After all the hype and everything, oh well.

SCTY has been failing every which way. A bankruptcy is an near certainty if not for a Tesla bailout.

Lyndon Rive has done an exceptionally poor job executing SolarCity. Musk in turn did an exceptionally poor job entirely trusting Rive.

The silver lining here is: As we all know Musk is very averse to trusting anyone with running Tesla. This whole SCTY fiasco might have reinforced his belief very strongly. So how ever hard it might be, he will stay put with Tesla longer than he ever imagined.