SolarCity (SCTY)

[Jerpo]

It's too bad people don't share useful information on here anymore... but I will give it a try.

Solarcity reported earnings this afternoon and they were great.

I am particularly excited about

1) official 2015 guidance of between 900 MW - 1 GW, that is a great number- in fact, it will continue for the 5th year, their annual growth rate of ~100%. Bravo.

2) Talked about the trade dispute, and their ability to source "Chinese and non Chinese" panels for low $0.7's with relative ease. That should alleviate some of the concerns about that

3) Next round of securitization (which I think is 60+ days away or they couldn't discuss it now), will be between $100-200m and should have a lower effective rate.

Lyndon sounded great, the future is extremely bullish and as the business grows they should become more profitable. I was lucky enough to buy some shares at $46 today, but I also happily bought some last week at $52.

 

[TheBanker]

I wish I was available for the conf call today. Don't forget they raised guidance for the rest of the year as well so no signs of slowing down anytime soon. If anyone could tell from the report what % of revenue came from sales vs. lease that would be great. It looked like 66% roughly was lease but I might be off a bit. I was in a hurry while reading the release.

Did Lyndon happen to comment on his recent sale of 160k shares?

If the next securitization is 60+ days away how do they know the effective rate they will get?

Today's volume was pretty high. Hopefully this is a washout bottom. I was very nervous all day how the stock was down big on no news. I can see how others got washed out. It was a nerve wracking day to say the least.

 

[Jerpo]

they didn't comment specifically on the rate, but implied/ I expect.

They didn't explicity say anything about the timing of the next securitization, but IIRC there is a rule about discussing it publicly for a period before and after (I could be wrong).

SCTY is one of the most volatile stocks in the game, and if you are the type of person to sell on a 12% down day with no news, you should not own this stock (I felt nervous as well, as I was executing my purchases)

 

[TheBanker]

I posted earlier and still agree with my assumption that today was all about short sellers ganging up on the stock during the day while the longs sat back patiently waiting for earnings to hit. Some daredevils bought today and did well. It's going to be interesting to see what type of short covering rally we get over the next week. It would be nice if SCTY rolled out more news over the next few days to fan the fire and get back in the press with good news for a change. The past couple months has been negative mo-mo BS plus the lawsuit news almost daily. A new piece every few days would be a welcomed surprise for the next few weeks.

The shorts are very quiet today vs. most days.

 

[Jerpo]

Rive and Musk typically like to fan the fire

Last time they announced year ahead guidance was the 475-525 MWs for 2014. I believe the previous day they had announced a deal with Direct Energy for a really nice 1-2 punch.

That being said it doesn't seem like that Direct Energy deal has worked out very well at all, they only installed 1MW of commercial in the Q.

 

[Subhuman]

The huge jump today from SCTY helps take some of the sting out of the BS earnings sell off for TSLA. At least I have one bright spot in my portfolio today.

 

[TheBanker]

TSLA hit $180 and bounced higher fast. A lot of people were looking for it to hit $180. I hope they all had their limit orders in place to catch it! Now they will expect $170. I see $200 before $170.

 

[TheBanker]

Cramer is starting to flip flop on his momentum stock recommendations. Now he's calling FSLR a "Deep Value Play". Earlier today he recommended SCTY as a buy.

What is a momentum stock? Can a stock that has fallen 45% in 2 months still be considered a momentum stock that everyone is afraid of?

Ummmm, probably not....

 

[Jerpo]

I thought it was funny when the analyst asked why they chose to go into Nevada because it was a small market, and Rive flatly said that there is more potential business for SCTY in Nevada than they have booked in the entirety of the company. It is just another talking point to the size of the Total Addressable Market for SCTY. There are over 1m households in Nevada. They have 100k installed residences. This 100% growth, although will not continue forever, should stay at an extremely impressive rate.

The 'momentum stocks' are beat up, and it is certainly a tough time for the stocks I focus on in the market, but good news like this will always stop a landslide like we have seen. I called bottom a few times incorrectly a few weeks ago in the mid-low 50's (as I was buying) and I think it is hopefully safe to say the bottom is now in at $46.

 

[sleepyhead]

Here is an article that pretty much covers everything that I have been saying: that solar leasing is a rip-off to the taxpayer and to the lessee. They even name SolarCity in the article:
http://cleantechnica.com/2014/05/12/high-cost-solar-middleman/

 

[DaveH]

Consumers willing to spend more for convenience.

 

[FluxCap]

Here is an article that pretty much covers everything that I have been saying: that solar leasing is a rip-off to the taxpayer and to the lessee. They even name SolarCity in the article:
http://cleantechnica.com/2014/05/12/high-cost-solar-middleman/

So, I have SolarCity coming to my house in DC to do a consultation on Thursday. I want solar on my roof and want to see what they have to offer me. I also want to see first-hand how their consultants handle things to see if SCTY investment makes sense for me.

Sleepy, can you or theshadows recommend a purchased alternative that has any kind of financing? Sunpower panels maybe?

 

[ggies07]

I don't really understand the hate for leasing. You guys would rather less solar out there than more? It's obvious most people still can't afford solar up front, so leasing from a company like SolarCity is the next best step. IT GETS SOLAR DISTRIBUTED. IT GETS PEOPLE USING RENEWABLE ENERGY.

 

[sleepyhead]

I don't really understand the hate for leasing. You guys would rather less solar out there than more? It's obvious most people still can't afford solar up front, so leasing from a company like SolarCity is the next best step. IT GETS SOLAR DISTRIBUTED. IT GETS PEOPLE USING RENEWABLE ENERGY.

Have you read the article?

I don't have a problem with leasing at all. I have a problem with companies abusing my tax dollars, so that the execs end up with huge bonuses.

Why does SCTY "estimate" installation costs to be above $4/W when local installers do the same job for less than $3? They (as well as other solar leasing companies) and Goldman Sachs are ripping off the taxpayers by jacking up the system price and then charge the consumer a lot lower fee than what they "estimated" because they already ripped off the government. This is why SCTY is getting sued.

I recommend reading the article.

 

[ggies07]

Have you read the article?

I don't have a problem with leasing at all. I have a problem with companies abusing my tax dollars, so that the execs end up with huge bonuses.

Why does SCTY "estimate" installation costs to be above $4/W when local installers do the same job for less than $3? They (as well as other solar leasing companies) and Goldman Sachs are ripping off the taxpayers by jacking up the system price and then charge the consumer a lot lower fee than what they "estimated" because they already ripped off the government. This is why SCTY is getting sued.

I recommend reading the article.

I see. I was just giving a generic post from all the leasing negativity. I have not read that specific one yet, but will now.

 

[FluxCap]

So, I have SolarCity coming to my house in DC to do a consultation on Thursday. I want solar on my roof and want to see what they have to offer me. I also want to see first-hand how their consultants handle things to see if SCTY investment makes sense for me.

Sleepy, can you or theshadows recommend a purchased alternative that has any kind of financing? Sunpower panels maybe?

So I'm going to compare the Solar City quote I get on Thursday to some non-leased alternatives because it looks like there are some kick-ass incentives I could take advantage of in my "state" which is DC if I purchase a system. I don't understand them all, but I'm sure Solar City does. I was using a cost calculator on this web site that seemed interesting too.

If anyone has other ideas on getting accurate cost comparisons for purchased solar panels (financed but owned) vs. Solar City, let me know. Looking forward to SCTY's visit. I may choose to invest depending on how it goes, and to become a customer, we will see.

 

[sleepyhead]

I recommend reading this article. I did not write this article, but share the exact same views:

http://seekingalpha.com/article/221...ed-customers-and-investors?source=marketwatch

Regardless of what the customer profile is, we believe that no sane customer is likely to renew the existing PPAs/leases at 90% of the going rate, as SolarCity management claims. The optimistic case for SolarCity management is renewal at a rate that is about 30% initial contract value (i.e. around $0.05 to $0.06 per KWH).Even that may be doubtful. A savvy customer could actually ask SolarCity to pay money to keep the system on the house when the lease expires. It would be cheaper for SolarCity to pay off the customer and leave the system on the roof than incur the expense of removing and transporting what is likely to be a highly inefficient system with very little market value. In other words, the retained value at the end of 20 years could actually turn negative.
Investors who buy a company's story without doing due diligence on the company's retained value shenanigans are in for a rude surprise.
If and when SolarCity makes a more rational set of assumptions in its retained value, the company's financial results will not look pretty, but as a public company, its management needs to make a better set of assumptions for its business plan and share them with the stockholders.

 

[sleepyhead]

So I'm going to compare the Solar City quote I get on Thursday to some non-leased alternatives because it looks like there are some kick-ass incentives I could take advantage of in my "state" which is DC if I purchase a system. I don't understand them all, but I'm sure Solar City does. I was using a cost calculator on this web site that seemed interesting too.

If anyone has other ideas on getting accurate cost comparisons for purchased solar panels (financed but owned) vs. Solar City, let me know. Looking forward to SCTY's visit. I may choose to invest depending on how it goes, and to become a customer, we will see.

Study those incentives closely and make sure to ask a bunch of questions to see how the sales representative responds.

I did a rough calculation yesterday for my SunPower system that I bought two months ago, and I estimated (using a flat $0.16/kWh price for retail electricity over the next 25 years) that I will save over $40,000 because I bought my system. Had I leased from SolarCity, my savings would probably be only 25% of that amount.

Some questions you can ask:

1. What panels are they going to use, and what is the stated watt peak per panel. What type of technology does the panel use (thin film, multi-Si, mono-Si, etc)?
2. What is the maximum system size that will fit on the southern facing portion of the roof?
3. Can you get more efficient mono panels to put in a bigger system and how much more it will cost?
4. What happens when you have to replace your roof 10 years from now?
5. Are the panels certified to be PID resistant?
6. Ask for a bunch of other details such as degradation and guaranteed production rates over 20 years etc.
7. What kind of inverter you will get?

One very important thing in this industry is that all watts are not created equal. All chinese panels have ~3% straight out of the box, while SPWR has 0%. SPWR has 0.13% annual degradation, while Chinese guarantee no more than 0.5%. Some panels work a lot better with low lighting, shading, clouds, etc. Some panels work a lot better in high humidity, temperatures, etc.

I have had my SPWR system for 2 months now and compared it to NREL's great solar calculator on what I should be getting:

http://pvwatts.nrel.gov/pvwatts.php

My panels are actually producing 20% more than what the website says that they should. The reason for this is that Chinese panels simply cannot compete with SPWR panels, which give you a lot more production per Watt peak. I also have 1/3 of my panels facing west (slightly northwest), and I put into the calculator that they all face 100% perfectly south. So if all of my panels did face south then I am sure that I would be getting 25%+ higher production than Chinese panels.

I sent you a PM with a link that will get you a discount on a SunPower solar system. Since you are going to invite a bunch of different companies over for solar quotes, I recommend that you give these guys a try as well. I am curious to hear your feedback.

Cheers and it is great to hear that you are going solar.

 

[Chickenlittle]

I recommend reading this article. I did not write this article, but share the exact same views:

http://seekingalpha.com/article/221...ed-customers-and-investors?source=marketwatch

Regardless of what the customer profile is, we believe that no sane customer is likely to renew the existing PPAs/leases at 90% of the going rate, as SolarCity management claims. The optimistic case for SolarCity management is renewal at a rate that is about 30% initial contract value (i.e. around $0.05 to $0.06 per KWH).Even that may be doubtful. A savvy customer could actually ask SolarCity to pay money to keep the system on the house when the lease expires. It would be cheaper for SolarCity to pay off the customer and leave the system on the roof than incur the expense of removing and transporting what is likely to be a highly inefficient system with very little market value. In other words, the retained value at the end of 20 years could actually turn negative.
Investors who buy a company's story without doing due diligence on the company's retained value shenanigans are in for a rude surprise.
If and when SolarCity makes a more rational set of assumptions in its retained value, the company's financial results will not look pretty, but as a public company, its management needs to make a better set of assumptions for its business plan and share them with the stockholders.

I want to be supportive of solar but the first question that came to my mind is that theses leases will likely outlast the roofs in a significant number of homes. Who is responsible for taking system off and reinstalling the system when roof redone and is there any risk to the home owner claiming roof life decreased by mounting the system? Of course I put it in this link but I also own spwr and wonder at all the lease models. Is anyone here aware of answers. Perhaps someone who has a lease already can answer

i have installed solar but did a ground installation. Not comfortable with rooftop

 

[dalalsid]

"roof life decreased by mounting the system"

- generally the thought seems to be that systems increase roof life. Also I don't understand why SCTY would payoff the customer or bother to remove the panels. They could just offer to continue the lease at a very reduced rate or sell the system to the homeowner for a very low price that newer systems at that time couldn't compete with. They could remove the system if the customer leases/buys a newer better system from them. Unless there are people of the opinion that when the lease ends, energy will cheaper or no more expensive than today and a cheaper lease offering will be something that the homeowner doesn't want.