SolarCity (SCTY)

[DaveT]

"At a targeted capacity greater than 1 GW within the next two years, it will be one of the single largest solar panel production plants in the world. This will be followed in subsequent years by one or more significantly larger plants at an order of magnitude greater annual production capacity."

Holy Moly.

1. Solarcity just acquired a solar panel manufacturing company, Silevo.

2. Elon (and the Rive brothers) claim Silevo's tech is unique - high energy output at low cost.

3. They're making a factory with 1 GW output.

4. In a few years they'll be making on it more plants with 10 GW output.

Guys, this is massive and game-changing.

I'll repeat. This is massive and completely game-changing.

 

[sleepyhead]

"At a targeted capacity greater than 1 GW within the next two years, it will be one of the single largest solar panel production plants in the world. This will be followed in subsequent years by one or more significantly larger plants at an order of magnitude greater annual production capacity."

Holy Moly.

1. Solarcity just acquired a solar panel manufacturing company, Silevo.

2. Elon (and the Rive brothers) claim Silevo's tech is unique - high energy output at low cost.

3. They're making a factory with 1 GW output.

4. In a few years they'll be making on it more plants with 10 GW output.

Guys, this is massive and game-changing.

I'll repeat. This is massive and completely game-changing.

Wait a minute, where are all those people arguing with me that panel manufacturing is a bad business to be in?

I would also like to point out that when FSLR acquired TetraSun last year, they were making similar claims and nothing has come to fruition yet.

This Silevo sounds like a startup company in the same mold as TetraSun. I am sure that Elon and company will make it work, but lets not get too excited until we see some actual numbers.

The good news is that whatever cost they are able to achieve, it is most certainly going to be a lot lower cost than what they pay to buy panels elsewhere. This is a big deal for SCTY, and one that I was advocating for almost a year. The downside is that they will have to raise more capital to build out manufacturing and a lot more dilution will be in the works over the next few years...

 

[Student_Forever]

To be honest, I am floored. I have attended a shareholder meeting but there were indications of this sort of thing happening. The management was optimistic, as expected, but I must admit this news is beyond my expectations. It's bold and aggressive and I like it, too.

 

[Johan]

Wow.

SPWR produced 1,2 GW in 2013, Suntech around 2 GW, FSLR 1,8 GW. Worldwide total production in 2013 was just under 40 GW.

So just jumping in with 1 GW and soon expanding to 10 is huge.

 

[dalalsid]

Wow.

SPWR produced 1,2 GW in 2013, Suntech around 2 GW, FSLR 1,8 GW. Worldwide total production in 2013 was just under 40 GW.

So just jumping in with 1 GW and soon expanding to 10 is huge.

I reiterate - Solar Gigafactory

 

[DaveT]

.This Silevo sounds like a startup company in the same mold as TetraSun. I am sure that Elon and company will make it work, but lets not get too excited until we see some actual numbers.

The good news is that whatever cost they are able to achieve, it is most certainly going to be a lot lower cost than what they pay to buy panels elsewhere. This is a big deal for SCTY, and one that I was advocating for almost a year. The downside is that they will have to raise more capital to build out manufacturing and a lot more dilution will be in the works over the next few years...

I'm excited because it seems like Elon has been involved in this decision to acquire Silevo and to plan to build the massive plants. The blog post sounds Elon.

Also I think Elon is probably the smartest guy out there to evaluate new tech/companies in light of their tech, business model, and also practicality to scale. It's quite obvious he's evaluated Silevo and it's quite obvious that Elon is very excited.

I'll be looking into Silevo later today.

But initially I'm very excited. There's no other company in the world who's talking about making a 10GW solar plant.

This might open up new sectors for Solarcity if they can significantly lower their panel costs. Imagine if they can get into utility-scale power plants but provide the whole package - panels, install, stationary storage, maintenance. If the panels are as good and cheap as Elon and the Rive brothers say they are, then it's totally possible.

 

[DaveT]

Here's more info on the Silevo acquisition put out by Solarcity:
http://files.shareholder.com/downloads/AMDA-14LQRE/3206410324x0x762403/aa368a6f-c0ba-4164-8068-be869edd4e98/Sunflower%20Investor%20Presentation%20FINAL.pdf

There was apparently a conference call this morning. If anybody has a link to it, please post.

 

[sleepyhead]

I'm excited because it seems like Elon has been involved in this decision to acquire Silevo and to plan to build the massive plants. The blog post sounds Elon.

Also I think Elon is probably the smartest guy out there to evaluate new tech/companies in light of their tech, business model, and also practicality to scale. It's quite obvious he's evaluated Silevo and it's quite obvious that Elon is very excited.

I'll be looking into Silevo later today.

But initially I'm very excited. There's no other company in the world who's talking about making a 10GW solar plant.

This might open up new sectors for Solarcity if they can significantly lower their panel costs. Imagine if they can get into utility-scale power plants but provide the whole package - panels, install, stationary storage, maintenance. If the panels are as good and cheap as Elon and the Rive brothers say they are, then it's totally possible.

I agree with you, but just wanted to point at that it will take a lot longer to build out 1GW of manufacturing capacity than some people might expect. 10GW is a long ways down the road 5+ years or maybe even 10+ years.

Panel manufacturing is still very capital intensive and will require a lot of capital raising that quite frankly SCTY does not have. It will be a very dilutive exercise for SCTY shareholderd.

Ironically, SunPower CEO just said in an interview that 5,10,maybe 15 years from now it might not make sense for them to manufacture panels any longer and could license out their technology and have someone else build panels for them. It is too capital intensive and they would rather use capital to do projects.

In the end though SCTY really needs to make its own panels, so this is a good move for them.

- - - Updated - - -

Here's more info on the Silevo acquisition put out by Solarcity:
http://files.shareholder.com/downlo...e98/Sunflower Investor Presentation FINAL.pdf

There was apparently a conference call this morning. If anybody has a link to it, please post.

Thanks for the link.

A lot of fluff and no real (important) information in that presentation (like all other companies always do).

 

[evme]

There is a lot of good reasons for this. The Tesla gigafactory will be powered by solar and wind. That means off the bat, SolarCity has a huge order of solar panels to fulfill. And with solar + battery solarcity will now have a full coverage.

Solar manufacturing is a very competitive market but solar + battery is going to belong to only Tesla and SolarCity.

 

[sleepyhead]

There is a lot of good reasons for this. The Tesla gigafactory will be powered by solar and wind. That means off the bat, SolarCity has a huge order of solar panels to fulfill. And with solar + battery solarcity will now have a full coverage.

Solar manufacturing is a very competitive market but solar + battery is going to belong to only Tesla and SolarCity.

The GF is a very small order of panels...

 

[DaveT]

I agree with you, but just wanted to point at that it will take a lot longer to build out 1GW of manufacturing capacity than some people might expect. 10GW is a long ways down the road 5+ years or maybe even 10+ years.

Panel manufacturing is still very capital intensive and will require a lot of capital raising that quite frankly SCTY does not have. It will be a very dilutive exercise for SCTY shareholderd.

Definitely valid points. SCTY will need a lot of capital to build these plants.

 

[DaveT]

The GF is a very small order of panels...

+1.

 

[bonnie]

Solar City will be so much more than an installer and supplier of solar panels. Guys. Gigafactory. Solar + battery energy storage. I'm working with the Solar City engineering group right now to put a demo storage battery in at my house (hopefully in time for the TMC Connect bbq, but waiting on permits) that could eventually allow me to be off the grid if I desired.

I believe that the gigafactory is still bigger than we can comprehend right now. And I believe that Solar City plays into that vision. Elon does nothing in a silo. Everything is interconnected.

 

[evme]

The GF is a very small order of panels...

Why do you say that? They will probably need at least 50,000 panels if not much more (You have to charge and discharge all those batteries just for testing/QC, so charging 35-50 GWH of batteries multiple times is going to need some power). Plus pretty sure Tesla plans to make multiple gigafactories in the long run.

 

[Student_Forever]

I am running another thought experiment. Two points.

Point I: Confrontation / Legal Risk

I realize that there is a long history between utilities and photovoltaic (PV) producers, since 1960's to be exact. So, is there a risk of utility companies fighting back in the same manner as autodealers did against TSLA? After all, companies are "persons" and as such they have a 'right for life'... News or hints of news for legal battle might end up gyrating the stock price, I think.

Here is a set up that I have:
1) GOOD NEWS: There is public sentiment in favor of renewable energy.
2) GOOD NEWS: Some traction with PV sales & retail customer base.
3) GOOD NEWS: Geopolitics and oil price fluctuations.
4) BAD NEWS: There are entrenched interest groups with deep lobbying pockets.
5) BAD NEWS: Utility companies own the grid.

Possible considerations:
a) Declining cost of PV's,
b) Battery storage.

What am I missing? What factors might tilt the balance of power? And what could be possible dynamics / what-if scenarios?

=====

Point II: Housing Design

PV production by itself does not seem sufficient to me. Incremental improvements in consumption even with factories rolling out solar panels en masse would not slow down the rate of CO2 emission fast enough. In the US, housing is re-built at around 2% annually...

Unless we start building new houses & office buildings with embedded PV's within the construction material, e.g. roofs, walls, and windows, I don't see fundamental changes in user lifestyle. Perhaps the next move for SCTY would be to buy one of construction companies and build houses with an entirely new concept in mind?..

Please feel free to make counter-arguments and critique. I would appreciate that. Thanks!

 

[sleepyhead]

Why do you say that? They will probably need at least 50,000 panels if not much more (You have to charge and discharge all those batteries just for testing/QC, so charging 35-50 GWH of batteries multiple times is going to need some power). Plus pretty sure Tesla plans to make multiple gigafactories in the long run.

That is an extremely small order in the grand scheme of things.

 

[ggr]

I think the good news has triggered a small short squeeze. There's no reason for the price to have kept going up except people who feel forced to buy.

 

[Zzzz...]

Good news. Important points from the presentation:

• Only six core production steps
• Highly automatable
• Off the shelf equipment from the semiconductor and flat panel display industries
• Use of standard n-type wafers
• Lower labor content per module due to higher efficiency and increased automation


Each of top ten solar panel producers already produce more than GW a year. And those top10 do increase market share rapidly at expense of smaller manufacturers. But with SolarCity being one of the biggest solar panel customer around Silevo as part of SolarCity could make into top ten in no time.

 

[Student_Forever]

Responding to:
Short-Term TSLA Price Movements - 2014 - Page 509

Solar City to build 1 or 2 of its own gigafactories. In this case the product is 1 GW of solar panels. I thoroughly expect investment bankers are drawing up a convertible bond issuing.

Convertible bonds issue should dampen implied vol. on the longer dated options (LEAPS), right?

Also, I think SCTY would issue additional equity to satisfy the convertible bond hedge. -- Typically hedge funds short the stock to hedge against the credit risk on the bond. Since the supply of equity is limited (or hard to borrow), sometimes companies issue additional equity, which helps with overall fund raising. TSLA in particular issued more common shares when it was issuing convertible bonds last spring if I remember correctly. Equity dilution was small.

 

[EV2BFREE]

Is anyone expecting a capital raise soon with this surge in share price? If they are expecting to produce 1GW within two years, how much will that cost?