That was good to hear, thanks for sharing the link! So when will SolarCity start using these new panels? Not until they build the plant in NY or will they go ahead and use what's available already from Silevo? I've had a SolarCity quote and est. but haven't jumped on solar for the house yet. Would love to get these new ones from them.
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That was good to hear, thanks for sharing the link! So when will SolarCity start using these new panels? Not until they build the plant in NY or will they go ahead and use what's available already from Silevo? I've had a SolarCity quote and est. but haven't jumped on solar for the house yet. Would love to get these new ones from them.
My guess is that it will take a while before SolarCity is able to use Silevo's panels. It appears that Silevo has a small plant in China that does 32 MW, but they've been planning a much bigger plant in the Buffalo NY area which SolarCity will be spearheading now. They seem to be targeting it to be completed in 2 years.
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Thanks for your thoughts. Going out 20+ years I figure there's a lot of room for error. Electricity cost IMO will be more than $0.05/kWh since SolarCity would be competing with the grid/utilities and I don't there's there's any realistic way where utilities will be able to charge $0.05/kWh.
But I think it's fine to have different numbers. My point being is that if SolarCity installs "tens of GWs a year" then it will be worth a lot more than it is now. I like a company that has a huge vision and a huge addressable market - and SCTY fits this.
Recent thoughts on Solar PPA/lease vs Purchase
I've thought about this a lot. I personally don't think the leasing model will be dead in 5-10 years. I there's there's a strong likelihood that it will remain indefinitely. I liken it to a subscription model where people are paying for a service. But let me qualify this some.
I understand the appeal to outright purchase a solar system. I've looked into both leasing/ppa and purchasing, and if one has cash to spend the purchasing works out to be the better deal. The thing is the market is so big and while many people will purchase, I think the PPA model might address a larger market than purchasing (as it is currently doing so). But I think the PPA model needs to grow and adapt in order to do so. Perhaps Solarcity's bigger competition might be some companies that offer affordable financing to purchase and are as relentless as SolarCity to drive down the costs of solar. But SolarCity will have plenty of time to adapt and make their PPA program much better than it is now.
I actually had a great idea (at least in my opinion) yesterday when I was talking a walk. I was thinking how can SolarCity scale their PPA model and compete effectively if/when solar becomes much more affordable to outright purchase and there are compelling financing vehicles available to do so. Here were my ideas:
1. SolarCity should adapt their model to allow the customer to scale up or down their system when they want.
The idea is similar to Amazon Web Services (AWS) which allows developers to scale up or down computing power whenever they want. In SolarCity's case, if they can allow a customer to start using their service by installing a very small system (ie., 2kW solar system) just so that the customer can avoid the high tiers their paying (ie., I'm paying $0.33 for tier 3 energy). And then SolarCity could allow the customer to "scale up" the system whenever they want. In other words, if the customer wants to add solar power, SolarCity would come by and install more panels (of course this could be complicated with mounting, permits, install... but this is the magic that SCTY will have to create and solve). So, if I wanted to scale up my 2kW system to 5kW, SCTY would be able to do so seamlessly (they would just come by within a month or so and do it in a few hours). Now, this is going to take some major innovation from SolarCity to be able to do this type of "scaling" or "adding" to an existing solar system in a cost-efficient manner. Perhaps they can make their mounting system more modular (if it isn't already enough so) and they can streamline the permit processes even more.
2. SolarCity should offer customers to remove the solar system at any time at no cost.
So, if I wanted to remove my solar system, I should be able to request that from SolarCity and they do it (ie., within a month) and at no cost. Sure, it will cost SCTY to do so (man-hours, etc) but they could recycle the panels, inverter, mounts, etc.
The reason why I think SolarCity needs to offer this is because there are situations where a customer might want that kind of flexibility to remove the system. One example is I might want to rent out my house but I don't think the tenant will appreciate/use solar (who knows who's out there). Another example, if if I'm selling my house and the next owner doesn't have good credit so it might be difficult to transfer the currently structured PPA over to the new owner. In this case, I could just request SolarCity to remove the system at no cost to me.
3. IMO the ability to scale up/down a solar system and the ability to remove it at no cost would allow expand SolarCity's addressable market.
One example, is I would immediately get started with SolarCity and have them install a 2kW system at my house and get out of any Tier 2/3 usage, so my electricity bill will drop substantially. I'm thinking of perhaps moving in the next year or so, so that's why I wouldn't want to buy/purchase a system outright. And if SolarCity could offer this on-demand scaling service where I could scale up or down my system size at anytime (and remove it at no cost), then I probably would be tempted to forgo purchasing a system completely and just use SolarCity. Sure there will always be people who will outright purchase their system, but if SolarCity's PPA program offered this scalable optionality (with no-cost removal) then it would make it much more appealing to even more people.
Imagine if SolarCity offered this scaling up/down feature, no-cost removal and no-commitment approach. SolarCity could get people started with a small 2kW system to get people off high utility tier usage. And if it was no-commitment (no-cost removal) and free scaling up/down, I would imagine a flood of people (1m+ this year alone) would take SolarCity up on this offer.
Now some people might say that what I'm proposing is impractical or impossible. But as SolarCity scales, their cost improves and their able to improve their product services. What I'm proposing might not happen overnight but it might be where SolarCity is headed. Especially so, since Elon Musk is SolarCity's chairman and he likes to view things with First Principle. And what I'm proposing is what I think solar ought to be:
- no commitment, no initial cost
- can start off with a small 2kW system (or even smaller) to get off high utility tiers
- can scale up my system at anytime for no cost
- can scale down my system at anytime for no cost
- can have my system removed at any time for no cost
Compare this to outright purchasing/financing a solar system. Outright purchasing/financing a solar system might be the better option for those who are confident they're going to be staying in their current house for the next 10 years. But for those who think they could move in 2-5 years, they might want more flexibility and convenience. Also, purchasing/financing could require additional complexity (longer applications, credit checks, etc).
Right now, SolarCity probably doesn't need to focus on offering what I'm proposing since their currently addressable market is so huge that they just need to provide energy for less than what the utility offers it for. As long as they do that they can probably continue to grow rapidly for the next several years. But at some point as solar costs come down, SolarCity will need to make their product/service more compelling (more convenient, more flexible, etc) than what will be offered for those who outright purchase/finance their systems from other companies. I'm fairly confident that SolarCity will be able to do this... especially with Elon as Chairman and SolarCity following the Musk Ethos of relentlessly cutting costs and improving their product/service.
I've thought about this a lot. I personally don't think the leasing model will be dead in 5-10 years. I there's there's a strong likelihood that it will remain indefinitely. I liken it to a subscription model where people are paying for a service. But let me qualify this some.
I understand the appeal to outright purchase a solar system. I've looked into both leasing/ppa and purchasing, and if one has cash to spend the purchasing works out to be the better deal. The thing is the market is so big and while many people will purchase, I think the PPA model might address a larger market than purchasing (as it is currently doing so). But I think the PPA model needs to grow and adapt in order to do so. Perhaps Solarcity's bigger competition might be some companies that offer affordable financing to purchase and are as relentless as SolarCity to drive down the costs of solar. But SolarCity will have plenty of time to adapt and make their PPA program much better than it is now.
I actually had a great idea (at least in my opinion) yesterday when I was talking a walk. I was thinking how can SolarCity scale their PPA model and compete effectively if/when solar becomes much more affordable to outright purchase and there are compelling financing vehicles available to do so. Here were my ideas:
1. SolarCity should adapt their model to allow the customer to scale up or down their system when they want.
The idea is similar to Amazon Web Services (AWS) which allows developers to scale up or down computing power whenever they want. In SolarCity's case, if they can allow a customer to start using their service by installing a very small system (ie., 2kW solar system) just so that the customer can avoid the high tiers their paying (ie., I'm paying $0.33 for tier 3 energy). And then SolarCity could allow the customer to "scale up" the system whenever they want. In other words, if the customer wants to add solar power, SolarCity would come by and install more panels (of course this could be complicated with mounting, permits, install... but this is the magic that SCTY will have to create and solve). So, if I wanted to scale up my 2kW system to 5kW, SCTY would be able to do so seamlessly (they would just come by within a month or so and do it in a few hours). Now, this is going to take some major innovation from SolarCity to be able to do this type of "scaling" or "adding" to an existing solar system in a cost-efficient manner. Perhaps they can make their mounting system more modular (if it isn't already enough so) and they can streamline the permit processes even more.
2. SolarCity should offer customers to remove the solar system at any time at no cost.
So, if I wanted to remove my solar system, I should be able to request that from SolarCity and they do it (ie., within a month) and at no cost. Sure, it will cost SCTY to do so (man-hours, etc) but they could recycle the panels, inverter, mounts, etc.
The reason why I think SolarCity needs to offer this is because there are situations where a customer might want that kind of flexibility to remove the system. One example is I might want to rent out my house but I don't think the tenant will appreciate/use solar (who knows who's out there). Another example, if if I'm selling my house and the next owner doesn't have good credit so it might be difficult to transfer the currently structured PPA over to the new owner. In this case, I could just request SolarCity to remove the system at no cost to me.
3. IMO the ability to scale up/down a solar system and the ability to remove it at no cost would allow expand SolarCity's addressable market.
One example, is I would immediately get started with SolarCity and have them install a 2kW system at my house and get out of any Tier 2/3 usage, so my electricity bill will drop substantially. I'm thinking of perhaps moving in the next year or so, so that's why I wouldn't want to buy/purchase a system outright. And if SolarCity could offer this on-demand scaling service where I could scale up or down my system size at anytime (and remove it at no cost), then I probably would be tempted to forgo purchasing a system completely and just use SolarCity. Sure there will always be people who will outright purchase their system, but if SolarCity's PPA program offered this scalable optionality (with no-cost removal) then it would make it much more appealing to even more people.
Imagine if SolarCity offered this scaling up/down feature, no-cost removal and no-commitment approach. SolarCity could get people started with a small 2kW system to get people off high utility tier usage. And if it was no-commitment (no-cost removal) and free scaling up/down, I would imagine a flood of people (1m+ this year alone) would take SolarCity up on this offer.
Now some people might say that what I'm proposing is impractical or impossible. But as SolarCity scales, their cost improves and their able to improve their product services. What I'm proposing might not happen overnight but it might be where SolarCity is headed. Especially so, since Elon Musk is SolarCity's chairman and he likes to view things with First Principle. And what I'm proposing is what I think solar ought to be:
- no commitment, no initial cost
- can start off with a small 2kW system (or even smaller) to get off high utility tiers
- can scale up my system at anytime for no cost
- can scale down my system at anytime for no cost
- can have my system removed at any time for no cost
Compare this to outright purchasing/financing a solar system. Outright purchasing/financing a solar system might be the better option for those who are confident they're going to be staying in their current house for the next 10 years. But for those who think they could move in 2-5 years, they might want more flexibility and convenience. Also, purchasing/financing could require additional complexity (longer applications, credit checks, etc).
Right now, SolarCity probably doesn't need to focus on offering what I'm proposing since their currently addressable market is so huge that they just need to provide energy for less than what the utility offers it for. As long as they do that they can probably continue to grow rapidly for the next several years. But at some point as solar costs come down, SolarCity will need to make their product/service more compelling (more convenient, more flexible, etc) than what will be offered for those who outright purchase/finance their systems from other companies. I'm fairly confident that SolarCity will be able to do this... especially with Elon as Chairman and SolarCity following the Musk Ethos of relentlessly cutting costs and improving their product/service.
for what it's worth- in 20 year time frame, given the current trajectory on both panel/battery; I don't see how the Utility (as currently defined) survives as a producer at any price- they'll be more of a grid operator probably sinking more power than producing; the consumer of power will have it available for nearly free grid or no-grid; As opposed to a communication network, the purpose of the power interconnect disappears when the Sun is the distributor - agree with Sleepy on this one and maybe even a step further. I see in 20-30 years a virtual no cost for electrical power as we know it- that's going to become a major disruptor of it's own as the Solar industry essentially eats itself into the same position PC manufactures have created for themselves- precisely because they achieve the mission- making limitless power available to everybody, everywhere for next to nothing
In a utopian society, energy (and food, eduction, healthcare, housing, etc) is all provided for free-of-charge. But in reality, it's not going to happen. Energy costs money and for the foreseeable future will cost money. There are too many costs associated with harvesting, storing and delivering energy for energy to be free. Somebody has to pay for those costs. Now if you say the government will step in and subsidize energy to make it free, that's a different story (albeit a very, very unlikely one).
pz1975
Active Member
What about using roofing companies to tie in a solar system installation with getting a new roof? The average roof lasts between 20-40 years depending on material. I think a good time for people to consider putting solar on their roof is when they have to get a new roof installed, which if 30 years is the average, means that about 3.3% of 'used' houses will need their roof replaced each year. This is a huge market for potential solar installations and tying in solar installation with the roofing companies somehow (discount if packaged together or something) could be huge. Roof companies could get a 'finder's fee' for every successful referral they make, which would make them motivated to sell the idea of solar to customers. The basic cost savings on electricity could be shown and I am sure lots of people would be willing to chip in more on their roof to get solar installed at the time for huge future cost savings. People would know that the panels won't have to be taken down and replaced (which I am sure has a significant cost to do + potential for damage) with a new roof so they would be more willing to do it. If someone knows their roof will need to be replaced in the next 5 years or so, most would not consider getting solar installed before the change (this is the situation I am in and the reason I thought of this). The goal would be to try to make solar an automatic consideration every time someone needs a new roof. I think now any time a new house is built, solar is at least considered by most builders. If this same consideration could be made every time a new roof is installed, then the demand would be much greater.
not free- virtually free relative to today;
strongly disagree with "Energy costs money and for the foreseeable future will cost money"; In 30 years, it'll cost so little money, you won't think any more about it's cost than you do a cup of coffee (and not Sbux)- standard issue on every home/apt/office building built into the amortized costs of whatever you live and work in. Similar to WiFi today- in 30 years- cost of electrical power will be a non-issue. Not much more than the cost of sunlight is today- just my opinion of course
While there are certainly discerning buyers, the vast majority of solar power purchasers consider their electric bill a "monthly bill". SolarCity's PPAs sell to that mindset. Most residential customers will not "burn the calories" to evaluate the differences between purchasing and leasing.
It boils down to "can you lower my monthly payment?"
It boils down to "can you lower my monthly payment?"
First, I don't think energy and WiFi are good comparisons in terms of cost. But even if you do compare them, people still pay similar prices for the internet connection now compared to 15 years ago. And similar prices for their cell phone plans now compared to 15 years ago (in fact, people probably pay even more monthly now). Cable TV, probably people pay the same or even more today.
WiFi, cable/sat TV, cell phone, etc. all have infrastructure and service costs associated, so even though the bandwidth speeds have increased at an impressive rate the companies providing those services still need revenue to pay for their associated expenses.
With energy, for the foreseeable future (ie., next 30 years) there will be required infrastructure needed to harvest, store and deliver energy and those infrastructure and servicing costs are not trivial.
Also, technologies like bandwidth, cpu speed, etc. benefited from tremendous exponential growth in speed (ie., Moore's Law, Nielsen's Law, etc). But with solar the rate of improvement is not as fast (ie., panels aren't doubling in efficiency every 18 months). Also, solar has a lot of associated fixed costs that are unavoidable like the cost of materials for the panel/module, mounting, inverter, permits, etc.
The point being is that I fully expect energy to not be "virtually free" in 30 years. Rather, we'll probably pay less per kW for it but we'll probably use a lot more of it (ie., average 2 electric cars per household, etc) so the average we spend on electricity in 20 years might actually be similar to what we spend now... maybe a bit less but definitely IMO not virtually free.
mershaw2001
I'm short the short sellers
I just need to vent. I am short SCTY now after this run up and I can't stop second guessing myself, that I am going to be slaughtered tomorrow as it runs another 5 dollars up.
I am going to have to agree with kenliles on this one:
My solar system cost me $1.15/W out of pocket and at that rate it costs 2.5c/kWh to produce electricity assuming that it lasts 30 years (I have a 25 year warranty).
Right now small business installers are installing systems for as little as $2.50-$2.75/W. 5 years from now we will see systems installed at under $1.50/W. 10 years from now at under $1/W.
At $1/W you will be paying about 2c-3c/kWh depending on where you live.
At $1/W the average solar system size (installed by SCTY) of 6kW will cost only $6000. Nobody is going to pay $150/month or $1,800/year or $36,000 over 20 years for a $6,000 system. You can easily finance a $6,000 system over 5 years and pay $100/month (if 0% interest).
The solar industry is really not much different from the semi-conductor/computer industry: it just keeps getting cheaper and cheaper.
20 years from now solar will be a lot cheaper than $1/W. BTW, JKS built its recent power plant at $1.13/W, so we are already there.
I still think that SCTY will grow into a huge company, but that it will require huge dilution (which we have already seen over the past year and will continue). It is also operating in an industry where its revenue per watt will decline by 75% in 5-10 years. Elon Musk IMO does not care about how much money we make on SCTY or TSLA shares. It has become very obvious to me that his only goal is to save humanity and he doesn't care about shareholders at all. The only reason he wants the share price to go up is to be able to raise more capital to grow as fast as possible (for humanity's sake). This strategy will definitely deliver outsized returns for TSLA shareholders going forward. But when it comes to SCTY, there just isn't as much upside as in TSLA. It will probably do better than 10% per year going forward, but I am not sure. I don't think that SCTY will come close to TSLA when it comes to shareholder return from this point in time.
There is a lot of extremely exuberant valuation methodologies applied to SCTY in this thread and I fear that a lot of people are ignoring the economics of the solar industry.
If 10 years from now SCTY is installing 10GW's per year, then that is $10b in revenue. Applying a very generous 10% net profit margin gives them $1b in net income. 15x PE is a $15b market cap. Share count will most likely double, which means that SCTY would still be trading under $100/share 10 years from now, which would be an awful return on investment. I have purposely ignored battery and other potential business opportunities just for illustration purposes to show how much everyone here is overvaluing SCTY's stock price appreciation potential from the solar side of things.
I'm really confused here. Ken, so can you clarify what you mean by energy being "virtually free" in 30 years? Do you mean people will have a $5 monthly electricity bill in 30 years? I'm trying to clarify into numbers here because I'm having a hard time grasping your reasoning and what is "virtually free".
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1. I doubt that in 10 years the average cost to install solar will be $1/W. If you said $1.5/W in 10 years I might say it's possible, but $1/W is really pushing it.
2. Electricity usage will likely go up in 10 years (i.e.., people having electric cars, etc). It might boost the average size of a system to 10kW. So, $15,000 (for a 10kW system at $1.5/W) is still a hefty amount to finance and while there might be compelling financing vehicles for people to purchase, it doesn't mean that SCTY can't compete with extra convenience and flexibility (like the options I've listed prior like free scaling up/down, free takedown, etc).
3. If SolarCity reaches $10b in revenue within 10 years, the market will likely give them a much higher P/E than 15 since the SolarCity model is a subscription-type model with recurring revenue (ie., Netflix) so future revenues are more secure. Also, if they reach $10b in revenue in 10 years, their growth rate will be very high and it'll warrant a higher P/E multiple, maybe 20-30x.
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1. I doubt that in 10 years the average cost to install solar will be $1/W. If you said $1.5/W in 10 years I might say it's possible, but $1/W is really pushing it.
2. Electricity usage will likely go up in 10 years (i.e.., people having electric cars, etc). It might boost the average size of a system to 10kW. So, $15,000 (for a 10kW system at $1.5/W) is still a hefty amount to finance and while there might be compelling financing vehicles for people to purchase, it doesn't mean that SCTY can't compete with extra convenience and flexibility (like the options I've listed prior like free scaling up/down, free takedown, etc).
3. If SolarCity reaches $10b in revenue within 10 years, the market will likely give them a much higher P/E than 15 since the SolarCity model is a subscription-type model with recurring revenue (ie., Netflix) so future revenues are more secure. Also, if they reach $10b in revenue in 10 years, their growth rate will be very high and it'll warrant a higher P/E multiple, maybe 20-30x.
1. The DOE Sunshot Scenario is looking at $1/W by 2020 for power plants and $1.50/W for residential. The avg. residential installation cost was $2.20 in Germany 1 year ago. I have no doubt in my mind that we can get to $1.50/W by the end of this decade, so $1/W 10 years from now is reasonable although high inflation would put a dent of course.
2. 10kW is not possible IMO since SPWR avg. system size is about 8kW and they said that the limiting factor is constrained roofs. New housing will have to be built with solar friendly designs in mind, i.e. lots of southern facing roof space. At $1/W SolarCity will not be able to afford to scale up/down, free takedown, etc. Way too labor intensive, i.e. expensive.
3. PE ratio's in the solar industry are going to fall below 10x PE, since it is a commodity business with small margins. If SCTY can do $10b 10 years from now, and then $15b in year 11, $20b in year 12, then yes it will deserve a high PE ratio, but it will not be able to grow that fast. Chinese solar companies are growing revenues over 50% YoY and they are getting 6x PE ratios right now.
Anyway, my numbers are just hypothetical and for academic purposes to show that the future earnings potential in the solar industry is not that great. I am not talking about $10b from revenue from customers who make monthly payments. I am assuming $10b in revenue from selling systems, since I don't think that leasing is going to make much sense 10 years from now. If they are leasing 10GW 10 years from now then they will only have $1-2b of revenue at best and not $10b. You are misinterpreting my numbers here: I am using a 100% cash sale, while you are applying my numbers to a lease scenario.
Also, as I posted in the other thread: SCTY's SG&A and interest exp. is over $1/W right now (82MW installed last Q and $88m in SG&A+interest exp), and this is going to be a big problem if they can't get it down to $0.10 - $0.20/W (which seems pretty impossible right now). A mom and pop shop would be less than $0.10/W on these unnecessary costs. So if SCTY can't bring the costs down then it could be a huge problem. If they do install 10GW per year, then they will need to keep corporate expenses at under $2b per year. It could be doable, but they are already at $0.5b/year while doing 20x less than 10GW.
The balance of system costs for residential solar are still very high in the U.S. I've read some case studies on Germany's solar history and it appears they have a much more streamlined permitting process. Also, in Germany after they reached a certain cost per W, the low-hanging fruit to reduce costs was taken so they've been experiencing a much more difficult time to decrease costs. I would imagine a similar thing to happen in the U.S. Once cost per watt falls below $2/W, then it becomes increasingly difficult to reduce costs. Although it will happen, it might not happen as quickly as some people want/expect. Although the drop to $2/W might happen faster than some think. So overall, I think the drop to $2/W is low-hanging fruit but after that it gets tougher. So I definitely wouldn't expect $1/W in 10 years for residential solar in the U.S. Anyway, it's probably semantics we're dealing with in some ways because it's tough to forecast that far out.
In 10 years, it's likely that they can pack more watts in each panel so 10kW might be possible.
If SolarCity offered me an on-demand no-commitment PPA with the ability to scale up/down w/o additional cost and free takedown, then I would definitely pay a premium for that service and probably would choose it over outright purchasing a system (considering I plan to move in the next several years). I'd start with 2kW and scale up from there. And if I ever wanted to move, I would have them take it down for free. The more I think about it, SolarCity will have to more in this direction of offering superior service/flexibility/scaling to customers to make it more attractive than outright purchasing/financing. But for now they have more than enough addressable market competing with utilities.
Thanks for the clarification. I don't think SolarCity will sell many systems in the future. I think they've dropped that business model in favor of a PPA/lease model. In the future I hope they adapt it further into something even more flexible like I've described.
Regarding SolarCity's revenue 10 years out, if they reach 1 million customers in 4 years then it's possible they could reasonably reach 5 million in 10 years. If each customer pays $130/month ($1560/year), then that's $7.8 billion in revenue. I'd give them a 15% operating margin (I know you give them a 10% but I think as a service business they can get fairly high margin of at least 15%). So, $1.17b of profit. Since they'd be growing very fast still and it's a subscription business (future revenue is more or less guaranteed), I'd give them a 30x multiple at that time. $35b market cap (or course there will be some dilution due to secondaries, but still not bad for a market cap 10 years out).
I'm not too worried about SolarCity's expenses. They are growing 100% per year and are bound to have very high expenses. They are scaling out their warehouses, equipment, teams, R&D, etc. However, as they ramp up installations to reach 1 million customers in 4 years, those expenses will drop significantly on a cost per watt basis as they reach greater scale.
Dave, to get this reference (and I fully admit, not an easy picture to draw from our current context for power), it's important to return to first principles. There is no inherent 'cost of energy'- it's everywhere for the taking by anyone. And it's already distributed. You receive it everyday in the form of heat when the sun's photons hit your face and those molecules convert it to heat- how much do you pay for that heat? the cost of being alive whatever that is- it's virtually free.
Let's try to paint a picture for the image I'm describing:
The transition I believe we are making over the next 30 years, is akin to discovering how to use fire (think Castaway here). Long ago that used to cost a lot- it's now free (I call the current cost of manufacturing and distributing matches free- because it's so small the cost is barely more than breathing). When I say virtually free, I mean so small that, for example, the average person will pay for all their energy use for a year with 2 days labor. The cost will be as low as you consider matches today- or pencils- or perhaps a cell phone if we include storage for overnight usage; The point is not whether it takes 2 or 4 days to pay for your yearly energy use- the point is it's so low, it's no longer considered a human want or even concern, it's considered a given (because frankly it is by the Sun fusion reactor). And inevitably(I'm saying 30 years), except for a tiny cost to manufacture a deck of playing cards, there is no inherent cost required.
This comes about because it's already there- the photons that impend on the space you occupy contains more energy than you can ever use, you won't pay more for it than you pay today to breath and be part of society. We have crossed the threshold now technologically to convert a tiny tiny number of the free photons to electrons as a useable form. It's already there, pre-distributed to every sole for free- with the current trajectory of both technology and cost to manufacture the 'convertors' to produce the 'matches' for everyone to purchase for pennies per day.
I'm trying to form an image here of what I believe is inevitable. The flat panels today are sufficient to make this inevitable, but later they will be micro-mirror concentrating(within the panel) and convert many times more photons per square meter than today- exactly like the semiconductor path- The energy captured in a few square meters will OVERpower everything you'll need for a household. The problem will reverse itself and the issue will be how to safely sink that much power- which likely as not will REQUIRE DETACHMENT from the grid rather than attachment- the sun has already resolved both production and distribution for free. The cost of the convertors(photon>electron) will fall to the equivalent of picking up a couple of plywood panels at home depot- so yeah, there's a cost, it's not free, and yes it's virtually free.
You'll pay more for the plywood roof over your head that today shields that head from getting burned by too many photons slamming on it every day, than you'll pay for panel surface area sufficient to convert some of those photons to electrons for you're own use. In fact, it's will be part of the same cost integrated into the material protecting you from the very energy you used to pay for- you'll now pay more to protect yourself from it than to collect it for use in a different (electrical) form. And I'll go a step further, the technology for this is already known, the scaling of manufacturing and distribution channels for those 'matches' is all that remains- only this time it will happen in compressed time- more like the cell phone did- 30 years or less. It's already done and baked in my opinion there's no way to stop it now.
that's what I mean when I say 'for free'
I would say that SCTY is also looking beyond installation of residential solar. From the comments by Elon, JB, the cousins it seems that they are looking at what it will take to move the entire grid to renewables (not just solar). This includes batteries and, very importantly, grid level capabilities to generate and shift power. I think this is what Elon was discussing the other day with his comments about software.
Right now SCTY is focusing on leasing and end to end installations at home and business level because it's the easiest money for them. I'm sure, later, they will be happy to sell you batteries, panels and monthly subscriptions to their management software that probably will buy/ sell power for you automatically.
I also disagree that this will all come at massive dilution. There is plenty of profit available and Elon also realizes that he can't do this by himself. He has to show others how to make reasonable margins in order to get other companies to contribute to scale - similar to Tesla.
Just like all all growth companies returning dividends to shareholders isn't the primary goal. It is to grow value in the overall business including using growing cash flows to finance expansion.
in other words when it comes to Elon - think BIGGER!!
after all he seems to have set himself a goal of saving the earth so he can start colonization of Mars.
Right now SCTY is focusing on leasing and end to end installations at home and business level because it's the easiest money for them. I'm sure, later, they will be happy to sell you batteries, panels and monthly subscriptions to their management software that probably will buy/ sell power for you automatically.
I also disagree that this will all come at massive dilution. There is plenty of profit available and Elon also realizes that he can't do this by himself. He has to show others how to make reasonable margins in order to get other companies to contribute to scale - similar to Tesla.
Just like all all growth companies returning dividends to shareholders isn't the primary goal. It is to grow value in the overall business including using growing cash flows to finance expansion.
in other words when it comes to Elon - think BIGGER!!
after all he seems to have set himself a goal of saving the earth so he can start colonization of Mars.
CapitalistOppressor
Active Member
SolarCity finally did something to make me interested in them, so I'm going to dive right in with my "expert" opinion after having started my Solar research by reading the last two pages of this thread (because reading just one page wouldn't be very thorough). Though, I suppose that technically I just skimmed the last two pages.
Still, given my vast insights on this subject, and the maybe one word in three that I actually read over the last two pages, I would say that the one statement that I know I agree with is the one I highlighted. I would contend that at no time in the next trillion years will Humanity say "oh hey, this is enough energy, lets call it a day".
And the maximum amount of insolation available to any homeowner probably will be insufficient to that homeowner's needs even in the relative near term. To the extent that there are periods where typical homeowners have excess capacity, there will always be a buyer for the energy.
How SolarCity itself fits into all of that is much more problematic, and one reason why I haven't invested before now. But with this vertical integration into panel manufacturing they are well positioned to be able to control their destiny to an extent they were not before. I always hated how they seemed to be mainly a finance company peddling risky securities based on an untested business model.
With the moves they are announcing to massively ramp up production capacity and their commitment to become the IP leader in the industry they are much better positioned to switch up their business strategy if their leasing model goes south on them.
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Yes, what we've seen over the past 6 months is Elon publicly committing to a program to take over the world, where previously we had just speculated that he was planning to take over the world.
Specifically, he is going to leverage the "Musk Mystique ETF" effect to finance an endless number of battery and solar module plants to vertically integrate the competition into flaming dust bunnies.
He already has the dominant IP (which he just semi-open sourced) in the energy storage side of things, and he has just committed to acquire whatever IP he needs to acquire on the solar generation side, while simultaneously installing one of his signature ultra-R&D/engineering teams into SolarCity so that he can replicate his IP success in Tesla and SpaceX.
In fact, this announcement just constitutes Musk deciding to import Musk Industries "Best Practices" of vertical integration and R&D/Engineering into SolarCity. He is fundamentally changing the nature of SolarCity from some hinky finance and installation company into a technology and manufacturing powerhouse.
I was always fuzzy on what the fundamental identity of SolarCity was going to be moving forward. Not any more. It's going to be just like Tesla or SpaceX, only for solar technology.
$1/W is unrealistic unless you assume that the solar components are free and labor costs don't go up. In the $2.50/W that an installer charges, 75c/W for panels, 40c/W for inverter, ?c/W for other components. Can't be much less than <1$/W for labor.
Personally, I highly doubt that the pre-rebate price can go much under $2/W. 1$/W for total system components and 1$/W in labor/permits etc. Also comparing JKS building a utility scale project in China at just over $1/W is not comparable to a retail rooftop installation. For the price to hit that kind of low we need to see something radically different like using panels as the roof material in new construction/roof replacement. I say even if total component cost goes down to 50c/W, labor will rise enough to keep the cost around $2/W.
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