SolarCity (SCTY)

[futureproof]

Net Energy Metering: Update on Key Distributed Generation Policy
solarcity is hosting a webinar on May 20th about all things net metering... Should be helpful to all for understanding a very important topic to the future of DG...

 

[TheBanker]

Does anyone have any idea how much SCTY would have to charge lease customers up front to become profitable in the first 12 months of the lease?

I think it would be great if SCTY had an option where the client could pay the install/design fee and then get a reduced lease rate. It gives the client a little skin in the game in return for a lower cost of power over 20 years. I wonder how many people would choose that option.

 

[futureproof]

Chandler adding more solar projects - Chandler - EVTNow
"As with previous solar projects, Chandler will not owe more money if the panels produce more power than the contract guarantees. But SolarCity will reimburse the city if the panels under-perform, Norris said."

South Central Connecticut Regional Water Authority SolarCity Commemorate Major Solar Installation
“This solar photovoltaic system, one of the largest of its kind in Connecticut, will allow the Authority to be more efficient and lower our energy costs. These savings are passed on to our customers in the form of reduced rate increases,” said Larry L. Bingaman, the Regional Water Authority’s President and CEO."

- - - Updated - - -

Does anyone have any idea how much SCTY would have to charge lease customers up front to become profitable in the first 12 months of the lease?

I think it would be great if SCTY had an option where the client could pay the install/design fee and then get a reduced lease rate. It gives the client a little skin in the game in return for a lower cost of power over 20 years. I wonder how many people would choose that option.

I personally haven't heard any kind of package deal like this, but if there is a market for it, I'm sure Solarcity would do it. Only thing is the upfront cost that consumer would have to pay... Some people are all or nothing if they have the funds to buy, they buy... However, if it ultimately is cheaper and less risky to do it the way you described, then should be a market for it for sure...

 

[TheBanker]

My thoughts on the hybrid pricing model based on the feedback I've seen on this thread is that some people want to take 100% of the risk (purchase panels/paying installer/future maintenance) vs. those who don't want any risk at all.

I bet there are plenty of people in the middle who are willing to pay for the design and labor for the actual install but do not want to take on risk if the panels/inverter breaks 10 years from now.

I personally would never pre-pay the lease to get a better rate but I'd prefer to pay for someone to install the panels and then lease the electricity off the panels. If the panels fail, I pay nothing and SCTY would need to replace/repair them.

I think it would help the company also be more profitable, faster. SCTY takes on all the risk day 1 of the lease and operates at a loss for what seems a long time. They have to charge a premium KwH rate for that risk.

 

[futureproof]

Thebanker, they are operating at a loss only because they are scaling. Scaling takes a lot of capital as you know. Scaling will ultimately make the design/install cheaper. If the design,labor, etc, costs come down, Solarcity can keep creating competitive products. This is an industry that varies really on each contract, each company competes for every customer individually. Different utility and government incentives, etc.. So, really have to see the competition on a per contract basis. I'm sure, if you wanted/could, you would get a quote from a few different solar companies to determine what best works for you. And that is the key to Solarcity's success. I feel cliche, but P.F. Drucker was right, the sole purpose of a business is to create a customer. I feel Solarcity does that in any product, lease or buy, they put out there. In the words of Elon, just let them compete for your business and see what happens.

 

[HenryF]

First of all, SCTY will not be able to issue ABS easily, if at all, in a recession and a bear market.

This depends on the level of maturity of the ABS market at the time of recession. If ABS market evolves enough, there will always be a market. The rates may go higher but that's about it. In a normal recession Markets don't completely seize the way you are imagining. 2008 was an anomaly. Even in the "great recession" of 2008 not all markets seized up.

States (not named California who put in net metering rules for 20 years) begin to struggle financially even more than before, so they take away net metering rules (this can happen in a bull market and is happening in some states like Colorado or Arizona).

Something is a miss here. How does helping utilities retain their revenues help the State? Are you saying states "own" utilities?

Without net metering customers are losing money big time on SCTY leases, so they stop paying their bills. SCTY issued ABS's begin to implode and so does the company's stock.

SolarCity will be best prepared of all solar companies to deal with any paring of net metering. If you want to play solar there is no better choice in this perspective.

Another more simple example is that people lose jobs and stop paying for the solar lease, because they don't believe that SCTY will cut them off. Or they can simply play the "wellfare" card to get free/subsidized electricity from the utility instead having to pay SCTY.

Please speak numbers. This statement sounds something like 60% of population will become jobless in a recession.

Unemployment will go up by utmost 5 to 6 points in a recession. Add to that, recessions hit lower income groups harder than higher income groups. Lower income groups have lower home ownership. Put it all together, it would be significantly less than 5% of homeowner population which will have job losses. Now if you properly account for dual-income households, the percentage of families that own homes that can't afford electricity will be minuscule.

Take a look at any of the utilities revenues through past recessions. Duke's revenues were flat even in a catastrophic recession of 2008.

You guys are going out of your ways to spin a huge negative into a positive/neutral in regards to SCTY.

Quite the opposite actually. Many of your negative posts on SolarCity have an alarmist tone and are not grounded in logic or backed up with data. It's a shame that an expert investor/trader like you somehow deliberately tries not to see the positive aspects.

- - - Updated - - -

Ultimately, the stock could fall in a recession but that would be based on sentiment than loss of revenues. Similar to how Apple’s stock fell in 2008 even though its revenues and profits were going up every single quarter throughout the recession. I guess we could argue that growth slowed (than expected) which caused the drop. Even Duke fell during both tech crash and in housing burst. So the stock could fall and it very well might, but that would NOT be due to loss of revenues or profits.


A better way to think about it is, a recession would be a great buying opportunity if you were to have spare cash at that time. Because once it’s over the stock will fly back into it’s proper valuation (and we know the recession won’t have a material impact on the business).

 

[sleepyhead]

You guys are consistently ignoring all risks and brushing them aside like they are immaterial, non-existent or require a black swan event and/or great depression in order to materialize. Good luck in your investments, but you guys are making a big mistake by not acknowledging anything that I say.

Maybe you will listen to S&P Credit Rating Agency instead:

SCTY got BBB+ rating and that barely qualifies for investment grade on their scale (BBB- is considered lowest investment grade). Here is their definition of BBB:

‘BBB’—Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.

It doesn't take a genius to figure out that a recession could impact these ABS quite possibly in a significant way (I posted all this stuff before knowing what the credit rating was). But it does take an ignorant person to think that a recession will not have any impact on the ABS issued by SCTY.

 

[HenryF]

Are you talking about the same agency which rated sub-prime mortgages as AAA? To top it off they lowered US rating from AAA only to see Treasuries take off.

Data is firmly on my side of the argument. Default rates on solar leases are lower than on prime-mortgages. Take a look at:
SolarCity - Events Presentations -> Featured Event -> Page 15.

If a recession were to happen right today, ABS market may not evolve as quickly as hoped. But that's different from a recession happening next year or later. By that time the ABS market would have evolved quite nicely and a recession will have very little impact if any.

 

[futureproof]

Standard Poors Thinks SolarCity is Investment Worthy, Should You?

"SolarCity (NASDAQ: SCTY ) got the blessing of Standard & Poor's this week. The ratings agency said that SolarCity's recent bonds are reated at a BBB+, an investment grade rating. This should actually come as a surprise for some investors because it got that rating despite not having a long credit history and it got a better rating than some of the other utility giants such as Duke Energy (NYSE: DUK ) and Exelon (NYSE: EXC ) ."

https://www.greentechmedia.com/articles/read/SolarCitys-New-70M-Securitized-Rooftop-Solar-Portfolio

• S&P assumes a solar module degradation rate of approximately 1.3 percent per year
• Residential customers need a FICO of 680+ with no bankruptcy in the last five years in order to qualify for a lease or PPA.
• Weighted average PPA price is $0.15 per kilowatt-hour with a 2.07 percent escalator.
• California, Arizona, and Colorado (the top solar states) accounted for approximately 90 percent of SolarCity's total portfolio.

The new offer, 2014-1, comes with a new set of insights into SolarCity's securitization strategy:

• 2013 vs. 2014: The number of PV systems in the pool jumps from 5,033 to 6,596, and the price-per-kilowatt-hour escalator drops a bit. FICO score expectations and assumed solar module degradation rate are essentially unchanged. The 2014 pool leans toward longer customer agreements with a greater focus on residential rooftops, because the money for this type of company is in long residential leases.
• Net energy metering: S&P's take on the regulatory climate for solar expects "some balancing of utilities' and solar developers' needs, including potential transition periods to modified rates for existing solar customers." S&P sees this trend as mitigating the regulatory headwinds.
• Inverter modeling: S&P anticipates inverter replacement ten years after each solar system is put into service. "The transaction has a reserve built up leading up to this expected expense."

 

[futureproof]

Solarcity is developing a $0 PV+storage lease for residential. This is their optimal product. They are already doing it with their commercial demand logic product. Again, it will be important to keep our ears open on results and further developments in the q1 conf call, or q2 conf call. Remember, Elon said in his Amsterdam talk he is looking for late 2014/early 2015 for a ramped up energy storage roll out. Since this CPUC decision came so suddenly, might be earlier... Just going to have to see...

it it is interesting to note that Elon's energy storage ramp objective coincides with the 18650 Panasonic agreement ramp projections for 2014....

Tesla’s Power Play | EnergyBiz
STRAUBEL Stationary and mobile storage have a nice synergy involving economies of scale. The more batteries that are manufactured, the lower the unit cost. We help to drive down the cost of batteries for electric vehicles by making more stationary storage, and vice versa.

 

[CyberDutchie]

Tesla Power Light | EnergyBiz
this is a recent JB interview on Solarcity/tesla energy storage. Although it could be shorter variation on this article from a few weeks ago... Tesla's Power Play | EnergyBiz

JB STRAUBEL: "Our long-term goal is to invent ways to solve storage problems to facilitate a 100 percent renewable grid. That shouldn’t threaten utilities. It's the logical and future evolution of the grid. Utilities have a key part in this. Our role is to invent and improve the products that make a 100 percent renewable grid possible."

All in all, I think we will see more of the tesla/Solarcity energy storage narrative in the coming weeks and throughout the second half of the year...

Wow, this is an awesome interview, thanks for posting the link. Everyone should read this, I got inspired by it to load up more SCTY versus profit taking before the stock price gets too close to my cost $29 basis. Load up on the dips and hold for 5...10...15...20 years if you can afford it. In my opinion, as long as the company survives a major downturn, you will be massively rewarded.

 

[HenryF]

It's a fallacy that solarcity's operations will seize up in a recession due to lack of funds. It's thoroughly rebuked by someone here by directly referring to the official 10K document. Pasting here for convenience.

***

The topic of what will happen to SCTY's financing if there is a recession came up here. So I though this snippet from the 10K document is relevant:

"We finance our operations, including the costs of acquisition and installation of solar energy systems, mainly through a variety offinancing fund arrangements that we have formed with fund investors, credit facilities from banks, preferred stock equity offerings and cash generated from our operations. As described below under—Financing Activities—Financing Fund Commitments, as of December 31, 2013 we had $544.3 million of available commitments from our fund investors, including a $344.0 million financing fund structured as a debt facility, that would be available through our asset monetization strategy.

While we have reported operating losses for the year ended December 31, 2013, we believe that our existing cash and cash equivalents, funds available under a secured credit facility and funds available in our existing financing funds that can be drawn down through our assets monetization strategy will be sufficient to meet our cash requirements for at least the next 12 months."

Another thing to note, Solar City is constantly expanding it's funding choices. The list includes:
- Incoming cash from lease payments
- Tax equity funds
- Syndicate loans (eg: the latest 250Mil financing facility)
- Asset backed securities (example)
- The upcoming crowdsourcing platform

It's worth noting, not all recessions are as bad as 2008/09 recession. Most recessions are moderate lasting about 2 to 3 quarters.

***

 

[futureproof]

Riverkeeper’s Annual Fishermen’s Ball | Riverkeeper

solarcity will receive the Big Fish Award tonight...

Riverkeeper’s Big Fish Award recognizes individuals and organizations that have had a transformative impact on the movement to protect our natural resources. Their innovative problem-solving, bold leadership and dedication inspire all of us to follow in their footsteps and be better citizens and stewards of the earth.

 

[NigelM]

Mod Note: Enough already with the personal stuff. Yet another post (and that quoting it) got moved to snippiness. This thread is among the worst for having posts moved....I've left warnings before and now have zero tolerance for bad behavior.

 

[TheBanker]

Hopefully he's just buying a house for his mother

Form 4: Update Filing for SolarCity Corp (SCTY)
Apr 30, 2014 (Vickers Stock Research via COMTEX) --
Document Processing Date: April 29, 2014

Stock Name: SolarCity Corp
Stock CUSIP: 83416T100

Filer: RIVE, LYNDON R.
Position: Chief Executive Officer

Stock Symbol: SCTY
Exchange: NASDAQ
Stock Type: COM

Transaction period: April 29, 2014
Trade amount: 160000 shares
Trade type: Automatic Sell
Trade price range: $52.254

Shares still held: 1899812 shares
Own Type: Indirect

 

[futureproof]

Hopefully he's just buying a house for his mother

Form 4: Update Filing for SolarCity Corp (SCTY)
Apr 30, 2014 (Vickers Stock Research via COMTEX) --
Document Processing Date: April 29, 2014

Stock Name: SolarCity Corp
Stock CUSIP: 83416T100

Filer: RIVE, LYNDON R.
Position: Chief Executive Officer

Stock Symbol: SCTY
Exchange: NASDAQ
Stock Type: COM

Transaction period: April 29, 2014
Trade amount: 160000 shares
Trade type: Automatic Sell
Trade price range: $52.254

Shares still held: 1899812 shares
Own Type: Indirect

SolarCity - Statement of Changes of Beneficial Ownership

he actually still holds over 2.6millions shares. Sold roughly 6%. Also sold at pretty much the 200 day area before earnings release... I'm thinking it is for personal reasons unrelated to health of the company.
if he sells another 6% this week or after earnings, then I'd be a little concerned...

 

[TheBanker]

I wonder what the "Automatic Sell" represents. I wonder if this was a planned sale. It would be nice to see more details about these transactions. Luckily Elon isn't selling. I don't care what reason Elon would be selling for. If he sells at this price range I'd really be concerned.

Does anyone know Lyndon's salary? Maybe he also has a low salary like Elon so selling stock is his only way to make large payments in his life.

 

[futureproof]

@thebanker,

SolarCity - Definitive Proxy Statement
He makes 276k.(pg37)

- - - Updated - - -

http://www.innov8energy.com/blog/innov8energy-solarcity-partner-to-provide-solar-energy/

looks like they might be adding more marketing power in the MD/DC area now...

 

[ggr]

I wonder what the "Automatic Sell" represents. I wonder if this was a planned sale. It would be nice to see more details about these transactions. Luckily Elon isn't selling. I don't care what reason Elon would be selling for. If he sells at this price range I'd really be concerned.

Does anyone know Lyndon's salary? Maybe he also has a low salary like Elon so selling stock is his only way to make large payments in his life.

Senior executives at public companies don't get to trade shares in those companies just whenever they want. They have to have a "trading plan" in place, and in a case like this would have to have committed to selling the shares months in advance.

 

[futureproof]

Senior executives at public companies don't get to trade shares in those companies just whenever they want. They have to have a "trading plan" in place, and in a case like this would have to have committed to selling the shares months in advance.

+1
i wonder how far out they set their trading dates? Does anyone know 105b-1 stipulations?