SolarCity (SCTY)

[sleepyhead]

IMO, this is the risk issue for SCTY. The system I recently installed with a local company here in SWFL cost me $2.72/watt all inclusive. Now admittedly I didn't have any option to lease but with the federal tax credit and the local rebate my system will have paid back in exactly 2 years. I installed Axitec panels and SMA inverters, so good quality stuff.

Brand, and leasing options, can take SCTY a long way but they have to be able to compete a little better than $4/watt if that's where they are right now.

View attachment 47257

Beautiful looking system there, and 2 year payback period is just WOW!

I know that a reputable TMC member got a quote from SCTY that was above $22k (can't remember how much exactly) for a 5kW system. I have read articles that the average price for a residential system installed in the US in 2013 was around $4.40 per watt which was a ~20% decline from 2012 when it was above $5. I think that there is no reason that the average is so high when you got your system for $2.72/W and Theshadows once posted a similar $2.70/W quote here on TMC. I got my system for $2.50/W installed and a ~5 year payback period.

I think that the only reason why these systems are still averaging $4.40/W is because of the uneducated consumer. Like I said, when SCTY comes knocking on your door and offers electricity at $0.08/kWh, it sounds like a great deal when you are paying $0.12/kWh or more from your local utility. So people sign up and SCTY's "system cost" ends up being above $4/W, which allows them to maximize tax credits too. If the customer knew that he could get that same system for $2.70/W and get a 5 or 7 year loan from a local credit union at 4%-6% and pay ~$0.03/kWh for solar generated electricity rather than $0.08 offered via a lease contract, then that person would most likely at least reconsider signing that lease.

There is no reason why the national average is above $4/W when you can get these systems installed for under $3/W by local installers. Econ 101 says that these costs will converge and we will see avg. residential system costs below $3/W fairly soon. In that same article Germany is already down to $2.21/W for residential systems.

Here is an article about Germany $2.21 vs. US $4.93:

http://cleantechnica.com/2013/12/06...st-differences-make-solar-cheaper-us-germany/

$2.16 cents of those costs are financing costs, which lines up the pockets of SCTY and Goldman Sachs, while the actual customer loses the vast majority of the economic benefit of having solar on their roofs.

Customers will get more educated on solar, I have no doubt in my mind. They will demand better pricing as competition heats up.

 

[NigelM]

Beautiful looking system there, and 2 year payback period is just WOW!

I know that a reputable TMC member got a quote from SCTY that was above $22k (can't remember how much exactly) for a 5kW system. I have read articles that the average price for a residential system installed in the US in 2013 was around $4.40 per watt which was a ~20% decline from 2012 when it was above $5. I think that there is no reason that the average is so high when you got your system for $2.72/W and Theshadows once posted a similar $2.70/W quote here on TMC. I got my system for $2.50/W installed and a ~5 year payback period.

My payback was positively impacted by a winning a 60% rebate in the lottery with our utility provider. That said, the local installers around here all let you sign an installation contract with a rebate clause (i.e. no rebate, customer has a no-fee cancellation right).

On that pic you can't see all of my system, there's more on the opposite side of the barn on the right, but system size is 29.0kW (116 panels and 4 inverters) with a complete installed price was $79k.

 

[tslas]

Beautiful looking system there, and 2 year payback period is just WOW!


I think that the only reason why these systems are still averaging $4.40/W is because of the uneducated consumer. Like I said, when SCTY comes knocking on your door and offers electricity at $0.08/kWh, it sounds like a great deal when you are paying $0.12/kWh or more from your local utility. So people sign up and SCTY's "system cost" ends up being above $4/W, which allows them to maximize tax credits too. If the customer knew that he could get that same system for $2.70/W and get a 5 or 7 year loan from a local credit union at 4%-6% and pay ~$0.03/kWh for solar generated electricity rather than $0.08 offered via a lease contract, then that person would most likely at least reconsider signing that lease.

And I think, only reason people buy out right is because they can't do simple math.
See we both can play the same game..
like I and some one other in TX said in previous posts, We are getting $0.03/KWH not $0.08/KWH from Solarcity.
but Seriously, 2 yrs pay back period, I will also buy.
5 yrs is pushing it, as I am not sure, I will be in my house that long.

 

[TheBanker]

Sleepyhead,
I see you are from TX. Have you ever heard an oilman say that TX oil should be sold for 10-20% above the cost of getting it out of the ground or is it safe to assume they are selling it at the current market (demand) price?

The truth is, SCTY has a 90-120 waiting list to get the solar system installed and 60%+ is leased. You're trying to tell everyone you are right and they are wrong. You are also comparing apples to oranges because all these low-cost scenarios you keep on about are for purchasing panels from the right source and exactly the right time and put in place by the installer they have no knowledge of. You're assuming all your knowledge of solar is readily available to the public. Most people don't want to deal with the hassle of sourcing panels, researching installers, getting the loan and then finally having the system repaired when it's broken down the road.

It safe to assume when SCTY catches up on its' backlog it can do 2 things: Increase marketing to get more clients or lower pricing. Both will work to obtain more business. That's how it works in the banking field I'm in. When it's taking 60 days for us to close on a mortgage we do not cut our margins. When we are slow and closing loans in 15 days, we lower our margins. SCTY will do the same thing.

You could never convince most women to buy panels for their homes. If there is a woman reading this, please speak up and give us your opinion. Women are not huge risk takers and buying panels is a risk for those who have no interest in research solar.

SCTY is a SERVICER as well as a RETAILER. The premium placed on their panels is directly proportionate to the service value the client places on that lease. They see a 10-20% discount on energy and a servicer who eliminates the risk. It's a no-brainer for 60% of the public.

Try to put yourself in a very uneducated buyer's mind who doesn't like risk for a minute and it may change your tone against SCTY's model.

 

[futureproof]

Just by reading the solar summit tweets, I can see inverter maintenance might be an issue in the future... I wonder if multiple maintenance calls will be an issue for owners. I know that labor costs of those warranty calls are not included, so this might an issue that could materialize in the next few years. If owners start to complain about this, will solarcity's model of lease /ppa be further validated? Secondly, lease/ppa was most voted by 400 pros at the summit to be most preferred financing method by consumers thru 2020...

To add, I wouldn't be surprised if tesla gets involved with Solarcity on inverter tech... Tesla CTO JB Straubel on two separate talks specifically outlined the importance of efficiencies of power electronics, specifically the inverter. I might be reading too much into this, but could be something to watch for on the horizon as well...

one more thing... I've read a few article comments and multiple tweets where ppa customers do not pay for any overproduction, and some of them have reported significant overproduction so I wonder if this word of mouth promotion will reflect in a growing preference for ppa in the future.... Now that I think of it, Lyndon said lease and ppa even out by the end of the year and this makes sense since I'm also reading comments from lease customers saying they are saving higher % on their utility bill then stated on the contract, so, this might just be a Solarcity lease/ppa wide thing. I guess we'll just have to wait and see what the q1 numbers and guidance show in terms of sales vs lease/ppa growth to really know if this is the trend.

 

[FluxCap]

You could never convince most women to buy panels for their homes. If there is a woman reading this, please speak up and give us your opinion. Women are not huge risk takers and buying panels is a risk for those who have no interest in research solar

/facepalm

 

[sleepyhead]

And I think, only reason people buy out right is because they can't do simple math.
See we both can play the same game..
like I and some one other in TX said in previous posts, We are getting $0.03/KWH not $0.08/KWH from Solarcity.
but Seriously, 2 yrs pay back period, I will also buy.
5 yrs is pushing it, as I am not sure, I will be in my house that long.

I am not playing any games, but using real numbers. You failed to qualify that the $0.03/kWh number is a quote that you claim to have received for a prepaid lease while the $0.08 is the number you gave for a normal lease. So, in fact the $0.08 number I was using came from your quote. And I don't believe your numbers anyway, because they are not representative of quotes that people are actually getting. I am not calling you a liar, but saying that even if you really did get such a quote, it is not representative of what others are getting in the same area; you might have received some special deal or something. Here is an example of a quote someone got from SCTY from Lewisville, TX which happens to be in the exact same Oncor delivery area that you live in (quote is 1-year old):

SolarLease quotes. Please advise.

This is for a 6.13kW system that will generate 155,290kWh over the 20 year period for a prepaid lease amount of $15,170 or $0.097/kWh, which is a far cry from your $0.03/kWh quote for the exact same Oncor delivery service area in Texas.

Apples to apples comparison: you say $0.03 while the other person got $0.097

Something doesn't add up.

BTW, in order for that person to get his 6.13kW system for $0.03/kWh it would cost them $4,658!!!

If SCTY charged people $4,658 for a 6.13kW system it would go bankrupt by the end of the year. That is $0.76/W installed. SCTY pays about that much for solar panels alone.

None of your numbers hold any water. I am glad that you were able to get such as great deal on your system, but you are making a huge mistake if you believe that others are getting similar deals.

Sorry I had to use math to burst your bubble. SCTY is not going to sell electricity for $0.03 anywhere for an extended period of time.

 

[TheBanker]

What did SCTY's COO have to say today? Yahoo news isn't picking anything up on his speech.

 

[NigelM]

You're trying to tell everyone you are right and they are wrong.

Pot, kettle, black.

You are also comparing apples to oranges because all these low-cost scenarios you keep on about are for purchasing panels from the right source and exactly the right time and put in place by the installer they have no knowledge of. You're assuming all your knowledge of solar is readily available to the public. Most people don't want to deal with the hassle of sourcing panels, researching installers, getting the loan and then finally having the system repaired when it's broken down the road.

For the vast majority of PV systems folks are looking at a 5-figure purchase. I think that almost all are going to do some sort of research, get quotes (note: multiple), check references etc. Also, the history of PV systems has shown them to be pretty darn reliable, they're solid-state after all with no moving parts.

It safe to assume when SCTY catches up on its' backlog it can do 2 things: Increase marketing to get more clients or lower pricing. Both will work to obtain more business. That's how it works in the banking field I'm in. When it's taking 60 days for us to close on a mortgage we do not cut our margins. When we are slow and closing loans in 15 days, we lower our margins. SCTY will do the same thing.

That's the point some other folks were making; just that SCTY may well be forced to become ever more price competitive.

You could never convince most women to buy panels for their homes. If there is a woman reading this, please speak up and give us your opinion. Women are not huge risk takers and buying panels is a risk for those who have no interest in research solar.

Odd, we seem to have gone through a timewarp and found ourselves back in 1950. Really, there's plenty of female members on TMC and more than a few with PV systems.

SCTY is a SERVICER as well as a RETAILER. The premium placed on their panels is directly proportionate to the service value the client places on that lease. They see a 10-20% discount on energy and a servicer who eliminates the risk. It's a no-brainer for 60% of the public.

Someone explain to me please what actually needs servicing on a residential solar PV system.

Try to put yourself in a very uneducated buyer's mind who doesn't like risk for a minute and it may change your tone against SCTY's model.

An oxymoronic argument IMO. An educated buyer who doesn't like risk is probably never going to even consider a solar PV system.

 

[TheBanker]

Ask 10 random women if they would buy or lease a solar panel system. Most would lease and most would say yes to leasing vs. staying with utility company.

I'm sure over the course of 20 years there will be issues with all solar systems. A squirrel chews on a wire, an inverter fails, something leaks water, etc, etc.

I have 2 static hard drives for my computer and 1 failed within 60 days of buying it. Just cause it has no moving parts doesn't mean it won't break. These things are made in china and SCTY uses panels which are not necessarily top quality. Of course something is bound to break.

Quicken Loans is by far the biggest online lender in the country and their margins are bigger than most. Competition doesn't squeeze them out as badly as you think just cause there are 1000s of other mortgage companies. They have the best name, great service, average pricing and they have a reputation most cannot argue with. SCTY will be the biggest and best in the residential market cause they are starting off on the right foot. So far it doesn't appear they have made too many mistakes. They do not need to lower their margins just cause a few companies are doing it slightly cheaper. Those companies may not have the expertise or reputation to steal business from SCTY in an outright war for the client's business. I think you are focused too much on just pricing and not enough on the total package of what SCTY has to offer a client. Being the biggest company on the block with a 10yr reputation goes a long ways. You deserve bigger margins when you're the best.

 

[NigelM]

Ask 10 random women if they would buy or lease a solar panel system. Most would lease and most would say yes to leasing vs. staying with utility company.

I don't understand your point. You think you would get different answers if you asked 10 men??

These things are made in china and SCTY uses panels which are not necessarily top quality. Of course something is bound to break.

Sheesh....haven't heard anyone say that before.

Those companies may not have the expertise or reputation to steal business from SCTY in an outright war for the client's business. I think you are focused too much on just pricing and not enough on the total package of what SCTY has to offer a client. Being the biggest company on the block with a 10yr reputation goes a long ways. You deserve bigger margins when you're the best.

Firstly, SCTY isn't even in many states; it's not that anyone needs to steal business from SCTY, it's that SCTY comes in as an unknown against established local companies. They better have a substantial point of difference and not come in with poor quality product (your suggestion, not mine) trying to ride on reputation established elsewhere. FWIW, I don't think any company "deserves" bigger margins; they either earn it or they don't.

 

[dsm363]

Ask 10 random women if they would buy or lease a solar panel system. Most would lease and most would say yes to leasing vs. staying with utility company.

I'm sure over the course of 20 years there will be issues with all solar systems. A squirrel chews on a wire, an inverter fails, something leaks water, etc, etc.

I have 2 static hard drives for my computer and 1 failed within 60 days of buying it. Just cause it has no moving parts doesn't mean it won't break. These things are made in china and SCTY uses panels which are not necessarily top quality. Of course something is bound to break.

As to your understanding of who makes purchasing decisions for things like solar panels I'm not sure if you have that totally correct.

What are static hard drives?

 

[TheBanker]

China rarely produces the highest quality product in the categories, especially electronics. SCTY can get away with using an average quality panel if they are also servicing it. I never referred to their panels as even remotely poor quality.

Of course you are going to get different opinions from men and women when it comes to buying just about anything. Men think "How hard can it be to fix a solar panel? and women are thinking, "Heck no, I'm not getting up on the roof when it breaks". Women are more likely to lease cars than men as well.

I believe you mentioned that since all systems cost $10k or greater than most people will do the research. I'm betting SCTY can enter it's 15th state and easily beat the local installers. Anyone can google SCTY and see all their reputation and experience in the industry easily. That is going to allow for higher margins, deserved or not. I'm certainly not going to choose the local installer who has been working the area for 3 years when I can choose SCTY's longer track record in multiple states.

As much as I like tinkering with things, I do not see myself buying a SCTY system unless they have a maintenance package to sell me as well. I am not going to call someone local to fix a SCTY system and I don't want to give $10k to a local installer who may not be around 20 years from now. The likelihood of SCTY going out of business in 20 years is very small. A local installer hurts his back on a roof and he's easily out of commission.

- - - Updated - - -

A solid-state hard drive has no moving parts. It's basically flash memory in a very large capacity drive. They do break regardless of how fast and cool they are!

 

[NigelM]

You're assuming all your knowledge of solar is readily available to the public. Most people don't want to deal with the hassle of sourcing panels, researching installers....

Anyone can google SCTY and see all their reputation and experience in the industry easily. That is going to allow for higher margins, deserved or not. I'm certainly not going to choose the local installer who has been working the area for 3 years when I can choose SCTY's longer track record in multiple states.

You lost me now. If I had more time to spend here I'd try to figure out how folks who do no research actually do research.

 

[dsm363]

I would think most people spending $30+k on a system would at least use Google and do basic research.

 

[NigelM]

China rarely produces the highest quality product in the categories, especially electronics. SCTY can get away with using an average quality panel if they are also servicing it. I never referred to their panels as even remotely poor quality.

Here:

These things are made in china and SCTY uses panels which are not necessarily top quality. Of course something is bound to break.

Sorry if I mis-understood but 'made in China', 'not necessarily top quality' and 'bound to break' implied for me that we should steer clear of them. As I said earlier, I've never heard anyone say that about SCTY panels before.

Anyway, I've got some Tesla posts to pursue. Good luck!

 

[bonnie]

Where exactly are you getting your information about women? So cute. So so cute.

You could never convince most women to buy panels for their homes. If there is a woman reading this, please speak up and give us your opinion. Women are not huge risk takers and buying panels is a risk for those who have no interest in research solar.

I'm a woman reading this. I bought panels for my home. A LOT of panels. All by myself! What exactly do you want to know? (btw, my initial opinion is that it is 2014 and not 1950.) I'm probably more of a risk-taker than 90% of the people on this forum. I've owned fast cars a large part of my life, worked as a jump master and was part of setting a few new world skydiving records, have a Roadster (just buying one was a risk ), and I'm sure plenty of other things. I'm talked into most things against my better judgment with the line, 'but it will be fun!'.

Ask 10 random women if they would buy or lease a solar panel system. Most would lease and most would say yes to leasing vs. staying with utility company.

Here's one woman saying she bought her solar panel system. I took one look at the leasing model and said 'no thanks'.

Of course you are going to get different opinions from men and women when it comes to buying just about anything. Men think "How hard can it be to fix a solar panel? and women are thinking, "Heck no, I'm not getting up on the roof when it breaks". Women are more likely to lease cars than men as well.

I've never leased a car in my life. And I own multiple ladders, have a well-stocked tool chest, and also own many pairs of high heels.

Anyone can google SCTY and see all their reputation and experience in the industry easily. That is going to allow for higher margins, deserved or not. I'm certainly not going to choose the local installer who has been working the area for 3 years when I can choose SCTY's longer track record in multiple states.

I went with a local installer. I believe in supporting the local economy. I did pick someone who had been in business for a number of years, who had grown up here and was not likely to move, who had great references, and was price competitive. And I'm glad I did.

 

[dsm363]

Bonnie 2016!

 

[futureproof]

I think the greater argument is buying vs. lease within the context of the bigger mass market... Right now, the mass market, including governments, utilities, residential, etc... are preferring to do lease/ppa. Most in the solar industry see lease/ppa being the majority of consumers thru 2020. Individuals posting here seem to be people that have purchased their systems which is also a good number of consumers out there. However, regardless of educational level, more people are choosing lease right now. We have to look at the numbers if we really want to view Solarcity as a good investment or not. Divorce yourself from your personal choice(either lease or ownership) if you can. This debate just shows how critical examining their q1 numbers (as well as the rest of 2014) will be. If we see more growth in lease/ppa, then Solarcity is doing it right and will continue to dominate market share... If not, then we should see the new leaders emerge very soon.

 

[futureproof]

Public invited to solar array ceremonies May 6 - Queen Anne's County News - myeasternshoremd.com

Approximately 2.3MW Solarcity lease comes on line in Centreville, MD. Ribbon cutting May 6th.