SolarCity (SCTY)

[jhm]

Johan, thanks for getting us to look at the specs more closely.

I think storage comes down to 5 7kWh Powerwalls. So that gives a max storage of 35kWh. But in ordinary circumstances you'd want to keep the state of charge between 20% and 90% (just like your Model S). So this ordinary usage is 70% of max, 25kWh per day.

What puzzles me is why they have two sizes. If you simply string together twould 30kW units you get all the capacity electrical and physical of one 60kW unit plus and extra 33 kWh/day of solar energy production. Note that the shipping container for one has 20 feet length and the other 40 feet of length. The extra 33 kWh/day of solar panels is really not that expensive. I figure it is about 4.2kW of modules, and at even at $0.75/W, that's an incremental coat of $3150. Given that each Powerwall will have a cost of $3000, skimping on $3150 in panels does not make sense to me. Also it seems the logistics of smaller units may be easier to handle than bigger ones. So I don't understand why someone would prefer buying one larger unit to two smaller units.

 

[jhm]

Obama evokes Tesla, Nest, and solar roofs to praise energy revolution - Fortune

Wow, Obama slams the energy incumbent for standing in the way. He compares this energy transformation to the transition from telegraphs to smart phones in one decade. That is harsh, I love it.

 

[replicant]

Obama evokes Tesla, Nest, and solar roofs to praise energy revolution - Fortune

Wow, Obama slams the energy incumbent for standing in the way. He compares this energy transformation to the transition from telegraphs to smart phones in one decade. That is harsh, I love it.

Here's an excerpts of Obama's speech. He's reading the teleprompter the whole time except for 25 seconds at 5:40 when he goes off-script to denounce the fossil fuel industry that uses regulation to fight renewable energy.

 

[atang]

Too many nuggets in this video of the President praising solar power installs, battery storage, electric cars, basically everything Elon Musk has done in this country, He just didn't name him. He does call out the people that are fighting the new energy revolution. Worth watching.

https://www.youtube.com/watch?v=3kagnRMXtLg

 

[Johan]

I guess a 60 unit will use a bit less materials in total, fewer plugs, fewer alternators/inverters (however beefier) than 2x30 units. But the savings would be minimal compared to the advantage. If you really need the peak kW output of the 60 unit though it might not be easy to just hook up 2x30 units and achieve the same output. (kind if like how you can't just plug in to 2x120V outlets and charge twice as fast. Most stuff ran off these will likely be AC, at least until dedicated devices accepting DC input become more common.)

 

[replicant]

Citigroup published their Energy Darwinism II report, in preparation for the COP21 meeting in December.

The chapter "Implications" on p. 82 talks about stranded assets.

We estimate that the value of unburnable reserves couldamount to over $100 trillion out to 2050. The biggest loser stands to be the coalindustry, where we estimate cumulative spend under our Action scenario couldbe $11.6 trillion less than in our Inaction scenario over the next quarter century,with renewables, wind and nuclear (as well as energy efficiency) the mainbeneficiaries. While gas suffers a smaller reduction it is still potentially impacted.

In this chapter we examine the effect on the oil, gas and coal industries, and inparticular which assets (typically those at the upper end of the cost curves) whichare most at risk of not being developed/used.

They talk a lot about storage as the "one potential game changer for the industry". Alas the wrong kind of storage: carbon capture and storage.

The one potential game changer for the coal industry comes in the form of Carbon Capture and Storage (CCS); while expensive now, if this can be made economically viable, it could carbon-enable huge potential resources. However, the industry is, in our opinion, in a something of an existential race to develop CCS within its survivability timeframe.

There's only a brief mention of energy storage (page 68).

IMO, jhm made a much better analysis of the (negative) impact of storage on the fossil fuel industry (coal, oil and gas) and their soon-to-be stranded assets.

 

[trils0n]

Really impressed that the President outlined an energy future vision that was basically DG Solar, Wind + Batteries. Utilities trying to stop renewables / DG through legislation were described as "rent seeking". Pretty strong words. Especially as considering what the Nevada (host of the conference) utility is doing. Seemed like a warning.

 

[Foghat]

Susan from Advanced Micro Grid at the clean energy summit yesterday (scrub to 1:32:40 of "session two" video):

10MW of firm disbatchable electricity from energy storage in a group 26 of hybrid electric buildings in south Orange County where the grid is vulnerable. Serves the function of a utility peaker plant. This is where it gets really really interesting. PJM spent $2bln on a peaker plant that has been used 13 times since 2009, which averages out to $25,000 per Mwh for demand response product. SCE spent $200mln in 2013, at $18,000 per Mwh for demand response.

What is the cost for $10/kW month for aggregated distributed Solarcity solar+ Powerwall storage compared to the PJM plant and SCE plant demand response?

There is no way on this earth distributed solar+storage in aggregation for demand response can be denied at these cost savings. This is going to be massive starting in 2016.

 

[jhm]

Just a thought on Musk buying shares yesterday. He started buying shares at $34.85. At that price the market cap is $3.4B. As of last quarter, net retained value was at just under $3.1B. I would expect the NRV was over $3.5B as of yesterday. Is it possible that Musk connects these two things? Could he have a plan to buy shares whenever the market cap falls below NRV?

It seems plausible to me that Musk would want to defend the share price from a hostile takeover. NRV becomes a critical threshold because a predatory investor could dismantle the business and sell off the book of business to a yieldco for something in the neighborhood of the NRV. I don't think we're anywhere near that sort of risk, but Musk may be motivated to preempt any such risk by defending the share price when the market cap gets too close to NRV.

It's a theory. Any suggestions?

 

[blakegallagher]

Just a thought on Musk buying shares yesterday. He started buying shares at $34.85. At that price the market cap is $3.4B. As of last quarter, net retained value was at just under $3.1B. I would expect the NRV was over $3.5B as of yesterday. Is it possible that Musk connects these two things? Could he have a plan to buy shares whenever the market cap falls below NRV?

It seems plausible to me that Musk would want to defend the share price from a hostile takeover. NRV becomes a critical threshold because a predatory investor could dismantle the business and sell off the book of business to a yieldco for something in the neighborhood of the NRV. I don't think we're anywhere near that sort of risk, but Musk may be motivated to preempt any such risk by defending the share price when the market cap gets too close to NRV.

It's a theory. Any suggestions?

I think that risk is somewhat reduced with Musk holding about 25 percent of the company and another 25 percent + of the shares sold short. If someone began to aquire shares with the intent of a hostile takeover it would cause shares to go sky high.

That being said I could see him adding shares any time its below the NRV because it's such a good deal at those prices.

 

[gene]

Too many nuggets in this video of the President praising solar power installs, battery storage, electric cars, basically everything Elon Musk has done in this country, He just didn't name him. He does call out the people that are fighting the new energy revolution. Worth watching.

https://www.youtube.com/watch?v=3kagnRMXtLg

More than worth watching, it's wonderful!

 

[jhm]

Susan from Advanced Micro Grid at the clean energy summit yesterday (scrub to 1:32:40 of "session two" video):

10MW of firm disbatchable electricity from energy storage in a group 26 of hybrid electric buildings in south Orange County where the grid is vulnerable. Serves the function of a utility peaker plant. This is where it gets really really interesting. PJM spent $2bln on a peaker plant that has been used 13 times since 2009, which averages out to $25,000 per Mwh for demand response product. SCE spent $200mln in 2013, at $18,000 per Mwh for demand response.

What is the cost for $10/kW month for aggregated distributed Solarcity solar+ Powerwall storage compared to the PJM plant and SCE plant demand response?

There is no way on this earth distributed solar+storage in aggregation for demand response can be denied at these cost savings. This is going to be massive starting in 2016.

Foghat, I think you are touching on the nerve spot for the whole utility scheme. Remember the whole 10% guaranteed return on investment. The whole point of spending $2B on a peak plant that gets used twice a year is to allow the utility raise rates. That $2B "investment" lifted the utility profit cap $200M per year. So the problem with aggregated storage is that it blows the whistle on this whole scam. Of course, $10/kW per month to behind-the-meter battery owners would save ratepayers tons of money. That's exactly the problem with it for the utilities. This would put an end to the utility scam and financially destroy players sitting on bogus investments like that.

I think the POTUS did send a warning to the rent seekers. Utilities will need to show how their investments actually reduce rates for ratepayer in a day went so many new schemes could reduce rates much further.

 

[Foghat]

SolarCity Corp (SCTY) Stock: Why Baird Sees 60% Upside

solarcity must have had an analyst meeting. Two key bits:

***The recent ABS was oversubscribed and had no pricing pressure. SUNE had all kinds of lack of demand issues for its yeildco spin off recently causing to lower ipo price. Not even close to the success of what Solarcity is doing with ABS, and these facts prove it. Solarcity is expected to continue with ABS very soon and often, so bodes well for continued low cost capital to keep up with current compounding growth.

***the 100MW silevo pilot plant in fremont will be operational by end of this year, which will begin output at 3X more then silevo's current Chinese pv plant. This is a welcome surprise since it will increase product while serving as a warm up to what is required to getting the buffalo factory up and running full 1GW capacity by start of 2017. Very encouraged by this news as it demonstrates how Solarcity will efficiently scale to meet its goals on time. I also see this as a potential boost in cost savings if that 100MW of product is reached within the 2016 timeframe. I wonder if this additional product is calculated into the $2.50/watt all in cost figure by 2017 ITC expiration?

 

[TheTalkingMule]

Can someone tell me why long call options for 2017 would be priced higher now than at this time last week? $70 calls for Jan'17 look to be $.60 more expensive now. I know I'm a beginner, but what gives?

All I feel qualified and comfortable doing as of now is buying shares, which is fine, but I'm looking for a good way to aggressively bet SCTY if I think they'll be at $150+ by then.

 

[jhm]

I think that risk is somewhat reduced with Musk holding about 25 percent of the company and another 25 percent + of the shares sold short. If someone began to aquire shares with the intent of a hostile takeover it would cause shares to go sky high.

That being said I could see him adding shares any time its below the NRV because it's such a good deal at those prices.

I was thinking that, as a prelude, the takeover investor would first short the stock down to a miserable price, drive out any hope that shareholders may have of seeing a recovery, wait for the other shorts to walk away, and then put up the buyout offer. So defending the stock against Icahn when he's shorting it avoids Musk having to take a much larger stake to defend the company later. So this is just an ounce of prevention.

OTOH, this could simply be the price at which Musk would love to acquire shares. Elsewhere I have dubbed the Musk Rate of Return as the return Musk must expect before investing his own money. I believe the MRR is 50%, his favorite growth rate. So I can imaging Musk doing a little mental math with his broker like this: NRV is $3.1B. It should grow are 50% per year for the next 10 years. So that puts SolarCity worth at least $180 MC or $1800/share in 2025. Yeah, sure, so if you see the MC drop below NRV, pick up an extra $5M for me.

- - - Updated - - -

Can someone tell me why long call options for 2017 would be priced higher now than at this time last week? $70 calls for Jan'17 look to be $.60 more expensive now. I know I'm a beginner, but what gives?

All I feel qualified and comfortable doing as of now is buying shares, which is fine, but I'm looking for a good way to aggressively bet SCTY if I think they'll be at $150+ by then.

It could be that you're not the only one thinking the stock will move up soon. Or it could just be an increase in implied volatility regardless of direction.

If Musk really has set a floor say at $35/share relative to NRV, then in 5 quarters this is about $72/share.

 

[Johan]

We can only speculate as to Elon's reasoning behind what triggers his large buys. Anyway you want to spin it he's achieving to things simultaneously as he buys on dips like yesterday: he makes a great investment for himself while at the same time defending the company against attempts by large players to drive it further down thereby setting the stage for attempting a hostile takeover.

We shouldn't get too paranoid but seriously think first of the spot on analysis by jhm and Foghat on how all these huge investments in Nat. Gas. peaker plants are likely to fall apart like a house of cards in just a few years time. Then think of the fact the we know for sure that some players with substantial financial muscle are invested in these schemes and utilities (Buffet for sure, many large funds including Chandos', Icahn?) and there's your plot...

 

[atang]

More than worth watching, it's wonderful!

Can one have a TSLAgasam an a SCTYgasam simultaneously?

 

[ggies07]

We can only speculate as to Elon's reasoning behind what triggers his large buys. Anyway you want to spin it he's achieving to things simultaneously as he buys on dips like yesterday: he makes a great investment for himself while at the same time defending the company against attempts by large players to drive it further down thereby setting the stage for attempting a hostile takeover.

We shouldn't get too paranoid but seriously think first of the spot on analysis by jhm and Foghat on how all these huge investments in Nat. Gas. peaker plants are likely to fall apart like a house of cards in just a few years time. Then think of the fact the we know for sure that some players with substantial financial muscle are invested in these schemes and utilities (Buffet for sure, many large funds including Chandos', Icahn?) and there's your plot...

I'm really sad about Buffet.....I have some Berkshire B stock and I need it to do well for at least a few more years because it will hopefully help with a nice down payment on the Model 3. So it's hard for me to be mad at him, hahaha, although I understand why.....and will be after I take my money out of his company.

 

[jhm]

We can only speculate as to Elon's reasoning behind what triggers his large buys. Anyway you want to spin it he's achieving to things simultaneously as he buys on dips like yesterday: he makes a great investment for himself while at the same time defending the company against attempts by large players to drive it further down thereby setting the stage for attempting a hostile takeover.

We shouldn't get too paranoid but seriously think first of the spot on analysis by jhm and Foghat on how all these huge investments in Nat. Gas. peaker plants are likely to fall apart like a house of cards in just a few years time. Then think of the fact the we know for sure that some players with substantial financial muscle are invested in these schemes and utilities (Buffet for sure, many large funds including Chandos', Icahn?) and there's your plot...

Oops, I was.mixing up Chanos and Icahn, wasn't I. So Chanos shorts, and Icahn potentially steps in as an activist investor. An activist like Icahn could push SolarCity to spin off the PowerCo as a yieldco. This would be well short of a take over, but I don't think Musk would take kindly to such activism.

At any rate, Musk made a smart buy and defended the stock. I'm happy on both counts.

- - - Updated - - -

I'm really sad about Buffet.....I have some Berkshire B stock and I need it to do well for at least a few more years because it will hopefully help with a nice down payment on the Model 3. So it's hard for me to be mad at him, hahaha, although I understand why.....and will be after I take my money out of his company.

This suggests another way to influence Buffet. Perhaps you can send a message to Berkshire investor relations expressing your dissatisfaction with the energy posture. Not sure it would do anything, but they need to know there is serious disapproval among investors.

Buffet is playing a dangerous political game. He is betting against technologies and business models he does not understand, and that alone should worry him. If there is some sort of political move to deregulated the power distribution business, this could end quite badly for Berkshire investors.

All the best with however you play this.

 

[Foghat]

Idaho regulators reduce PURPA contracts from 20 to 2 years | Utility Dive

buffet at it again in Idaho now... He's essentially just cut renewable investment in the state now. He's clearly not happy with renewables that he can't control entering his utitlity's market space. This has been his new trend and he's doing it with a lot of force now. Wasn't like this a couple of years ago. We are witnessing a significant shift in aggressiveness of his posture.

I only expect it to increase from now on. Buffet is making this very clear. I know why he loves regulation... Because he can control and manipulate it to his advantage. Just another example of the downside to legal monopoly utility.