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Solar City: Perfect opportunity or Elon's first failure?

Solar City: Perfect opportunity or Elon's first failure?

With the stock value of Solar City approaching IPO, is it a perfect time to invest in a company that will inevitably succeed? The Model 3 demand means that Tesla's power packs are going to be delayed "probably" because of the car's obvious priority for Musk. However, is this the kind of stock that will start rising after a few years and maybe hit a 100 in 5 years or so? Or is the company about to go bankrupt?

3 scenarios:

1. Solar City goes down, Tesla and SpaceX take a hit.
2. Elon knows how critical to his other companies "specially Tesla" that Solar City keeps going and finds a way to keep the company going but it keeps losing.
3. Solar City gets back up because of its great potential.

Do you think I should invest now in Solar City? Do you think the price is about to recover a bit in the few days/weeks or will it go any lower?

How bad does a Solar City bankruptcy affect Tesla?

adoh2010 | 12 mai 2016

And in case you're wondering what batteries have to do with solar? They go together like bread and butter specially now that energy companies are tired of buying excess energy during off peak hours when they already have an excess.

Rocky_H | 12 mai 2016

@adoh2010, I think you have some misconception about Elon Musk's role relating to Solar City, and its relation to Tesla and SpaceX as well. Musk is not involved in the operations of Solar City and is not an employee or executive of Solar City. He is on their board and has some stock holdings in them. Musk is the CEO of SpaceX and Tesla and very closely runs those two companies, but it's not that closely related to Solar City.

stevenmaifert | 12 mai 2016

Solar City's problems, if you can call them that, stem from a lot more competition in the marketplace now than when they first started, and expiration/reductions in the generous government tax credits and rebates for solar that they were getting for their early leased systems. Anti-solar state government shenanigans like what we saw happen in Nevada don't help either, but that affects the whole industry, not just Solar City.

rlwrw | 12 mai 2016

Home owner OWNED solar systems will be ok.
LEASED solar systems, such as Solar City, are taking the financial hit. They rely on a margin that is vanishing.
The utility will buy solar power at wholesale rates, and sell back at retail rates. That's just business.
What is price gouging is that the utilities want to buy the power at 25%, and sell back at 100%.
WHOA!
Put a boatload of panels on the roof for generation, and be stingy on the use.
One might be able to charge an EV within that range.

Mike83 | 12 mai 2016

Never take investment advice from a blog.

Ross1 | 12 mai 2016

Actually, he is Chairman of the board of Solar City

Rocky_H | 13 mai 2016

@Ross, Ah, I didn't actually know he was chairman of the board. I do see that is correct.

warren_tran | 13 mai 2016

SolarCity is not a good investment regardless how you look at it. Do some research and see how Sun power or First Solar is a better investment if you intended to invest on Solar sector.

Look at cash flow, debt to equity, P/E ratio, Earning yield....

You can take investment advice from a forum..just not on a car forum.

vp09 | 13 mai 2016

Great comments! I just wish I had bought my share of Solar City a few days ago, instead of 2 weeks ago. :-(

rlwrw | 14 mai 2016

Solar City does more than just leases. They manufacture their own solar panels, and currently boast of having the most efficient panels at 16%, and the highest output per square foot.
Even if the leasing fizzles out, they can just shift their focus, and continue on.

Al1 | 14 mai 2016

I would argue Solar City is well positioned for long term success. And they are already shifting focus to utilities.

warren_tran | 14 mai 2016

@rlwrw
Unfortunately, sun power has the leading solar efficient since 2014 for residential or commercial application at 22%

http://cleantechnica.com/2014/02/02/which-solar-panels-most-efficient/

SCCRENDO | 14 mai 2016

Had solar city in for a quote. They were so hard sell on the lease even though I kept telling them I wanted to purchase. In fact most would suggest don't lease.

rlwrw | 15 mai 2016

Correction: Article from last October has Solar City panels "in excess of 22%."
http://www.solarcity.com/newsroom/press/solarcity-unveils-world’s-most-efficient-rooftop-solar-panel-be-made-america

rlwrw | 15 mai 2016

Link is wanky. Need to paste it back together at the apostrophe in "world's."

warren_tran | 15 mai 2016

So it is (solar panel 22%) in pilot phase? While sun power actually delivered and in production.

http://www.greentechmedia.com/articles/read/Worlds-Most-Efficient-Roofto...

According to the above link, the difference is minimal and seem like your number 16% is what solar city current product offer at the moment.

rlwrw | 16 mai 2016

Well, that was October of last year. This is now.
It looks like panel mtgs. are starting to get into an efficiency war.
This may be a good thing. Nobody is going to sit on a panel, not introduce improvements, and risk falling behind the competition.

Al1 | 25 mai 2016

Interesting article on Bloomberg on ownership versus leasing.

Looks like leasing is losing its appeal, and companies start to come up with financing options in response to that.
However comes 2023 and investment tax credit will expire which will substantially improve economics for leasing.

bloomberg com news articles 2016-05-24 why-lease-when-you-can-own-the-tough-question-facing-solarcity

sp_tesla | 26 mai 2016

current solar ROI of 10+ years is not very good investment.

Nexxus | 26 mai 2016

@sp_tesla,

We made back our investment in just 5.5 years just with the reduction in power use. Our 20Kw system more than meets our needs for our all electric life style. Our 62Kw battery backup even allows us to be off the grid. We only got off the grid because Va Dominion Power wanted to charge us for the power we weren't using. Now, how stupid is that?

Rocky_H | 26 mai 2016

@sp_tesla Quote: "current solar ROI of 10+ years is not very good investment."

@Go_Peddle_4_me Quote: "We made back our investment in just 5.5 years"

This is SO incredibly dependent on what your rates are and how much your total usage and bill is. I keep pricing it out every few years, and it has just gotten under the 10 year time frame for me recently. It's just tough to make it work out when our rate is 7-8 cents per kwh and our total household electric bill is under $100. The 5 year thing isn't applicable everywhere.

Nexxus | 27 mai 2016

@Rocky,

I know. I was just relating our personal situation.

vp09 | 27 mai 2016

I put PV panels on my roof in 2001. When people asked me "when will they pay for themselves?" I said "when you turn them on." The real estate journals at that time showed that solar panels returned 100% of their cost in increased value of the property. Compare that to adding a room, at 50%, or a swimming pool, at zero percent.

SamO | 27 mai 2016

@GP4Me,

How difficult was it to get off Dominion power?

MountainVoyageur | 10 juin 2016

The real estate journals at that time showed that solar panels returned 100% of their cost in increased value of the property.
Perhaps instantaneously, but doesn't your solar installation depreciate over time? Some reasons to do so are:

the actual capacity of the solar panels degrades over time
Solar technology keeps improving. In the future, when your go to sell the house, the amount of power you have on your roof will not be worth what you paid for it

Brian H | 14 juin 2016

its

Nexxus | 14 juin 2016

@SamO,

Not hard at all. I told them to come out and unplug the meter or I would the following day. Somebody was there before the day was out and I told them to remove it so I could turn my system on. When the system is hooked into an electric grid and senses no utility power, it won't allow the panels to charge the battery portion of the system. Without the power grid everything works fine.

SamO | 14 juin 2016

@GP4Me,

Nice!

vp09 | 14 juin 2016

Mountain, you are right in both your points, but degradation has been decreasing with better panels. I had mine 7 years and I wasn't aware of any degradation, although it always produced more than I used so I probably wouldn't have anyway. I believe that first solar panel ever installed, in 1957, in Georgia, is still in operation. When I installed my panels in 2004, the installer (Real Goods Solar) told me that accelerated wear tests showed a 100-year life.

On your second point, you are certainly right on the first part-- solar technology keeps improving. My panels were 185 watts each, and my neighbor just installed a system with 250 watt panels. Same physical dimensions.

On the second part of your second point, I either disagree, or don't understand what you wrote-- my system was still a 2.2 kW system, when I sold the house after 7 years of free electricity, and the $10,300 I paid out of pocket (for a $23,000 system) was still a good investment, in my opinion, those 7 years later.