With SolarCity IPO, Elon Musk May Get Clean Tech Right

[Grenville]

Eric,

 

You might find this interesting:

http://www.theatlantic.com/technology/archive/2013/11/the-100-000-battery-that-could-help-hotels-save-bundles-of-money/281194/

 

Battery storage to deal with utility price increases. It is more commercial.

[fareastwarriors]

http://www.nytimes.com/2013/11/15/business/energy-environment/bonds-backed-by-solar-power-payments-get-nod.html?ref=business

 

Bonds Backed by Solar Power Payments Get Nod

[jeffmori7]

BMW and Solar City have partnered for the new i3:

 

http://www.solarcity.com/bmw/

[fareastwarriors]

http://www.marketwatch.com/story/solarcity-introduces-energy-storage-for-businesses-2013-12-05?reflink=MW_news_stmp

 

SolarCity Introduces Energy Storage for Businesses

[fareastwarriors]

http://www.bloomberg.com/news/2013-12-26/utilities-feeling-rooftop-solar-heat-start-fighting-back.html

 

Utilities Feeling Rooftop Solar Heat Start Fighting Back

[rayfinkle]

The quote I got today from solar city was 14k(pre federal tax credit and the state credit has been exhausted at SDGE) for 2.93 KW DC system. 8 year payback is slightly better than my expectations and I came across much more warm to the idea though I will sit it out until the payback period narrows with the falling price of installation

 

 

I reason that they install your 2.93 KW system at a profit for $14,000.  Thus, the additional cost of a larger system should merely be additional parts plus per-module-installation-labor.  There are roughly 12 solar modules in your system.

 

Based on the below computations, it looks like the hardware for your 3 KW system is about $4,650 total cost for a "do-it-yourself" project.  Therefore the "soft costs" on your project are at least $9,500 -- or about $800 per module for installation.

 

So here is how I arrive at that:

 

1)  Solar City quoted me $50,000 for a 10 KW system.

 

2)  The solar modules for a 10KW system cost $7,448 (using Canadian Solar 245W panels -- priced by www.renvu.com)

Inverters would cost another $4,200.

 

3)  So you are looking at $11,648 dollars for the panels and the inverters.  Then add lets say $3,500 for racking hardware.  Total cost is about $15,000 for all the hardware to install a 10,000 watt system.  Add $500 for freight delivery to the site.

 

So there are $34,500 of "soft costs" in the 10 KW system.  Divide that by the number of modules (40) and you get roughly $800 per panel.

 

So think about that.  $800 per panel for installation!  And they just multiply that number by the number of panels you want installed.  No cost efficiency flow to the customer.

 

I can go into more detail, but basically SCTY does not want to sell systems outright. So if I'm understanding this conversation correctly, folks are questioning why the total quoted (cash) cost is so high relative to creating a system yourself. If you run the DCF on the PPA offering vs. cash for the same system, the PPA is better. The reason for this is embedded in their business model. SCTY finances system through non-recourse subsidiaries that raise tax equity / project debt from investors (different than their securitization facility / corporate equity investors). These funds are generally structured such that investors can claim tax benefits (accelerated depreciation + ITC + local incentives--if any) thus transferring system tax benefits to the balance sheet of a big tax payer. In exchange SCTY can finance systems cheaply with non-recourse debt. This funding dynamic does not work in the same way with prepaid/cash systems. So they are happy to take margin up front, but incentives are to fill the funds with profitable PPA business.

 

On a separate note, I think the stock is way rich right now. Doesn't mean it won't go up, but vs. their "retained value" calc...a potentially overstated proxy for NPV of future system cash flows to SCTY, the stock is pricing in a ton of growth. They'll probably do it, but there's a lot of risk in the market cap. should any number of things cause a hiccup in the machine.

 

Having said all this, Musk is a champ and I love this company and Tesla as a consumer...just not an investor at these prices.

[fareastwarriors]

http://www.nytimes.com/2014/01/04/business/energy-environment/solar-power-craze-on-wall-st-propels-start-up.html?ref=business

 

 

Solar Power Craze on Wall St. Propels Start-Up