Tag Archives: scty

SolarCity Risk Called ‘Elevated’ After Dumping MyPower Loan

No. 1 residential installer SolarCity ( SCTY ) abandoned its MyPower loan program after overestimating the number of customers qualified for the Investment Tax Credit on solar, JPMorgan Chase analyst Paul Coster wrote Tuesday. Coster downgraded SolarCity stock to neutral from an overweight rating and slashed his price target to 29 from 44, reflecting the firm’s “elevated” risk in 2016. Intraday on the stock market today , SolarCity stock toppled 5.2%. “We still believe the stock is undervalued,” Coster wrote in a research report. “However, risk is currently elevated, and business model uncertainty will weigh on the stock in 2016.” SolarCity is toeing the line between development company and power company. The tricky combination has played out in “poorly expressed GAAP numbers,” Coster wrote. He ticked off SolarCity’s transgressions. Over the last year, SolarCity launched and then withdrew its MyPower loan program, introduced and then de-emphasized a cash available for distribution (CAFD)-like metric, and amended its methodology for examining megawatts installed vs. deployed. “Mostly, these changes made sense to us, but the complexity and flux make it difficult to bring new money investors into this stock,” he wrote. SolarCity Worse Off Than Peers To that point, SolarCity is already driving off current investors. Since Dec. 17 — the day before Congress extended the ITC — SolarCity stock has fallen 68%, while IBD’s 23-company Energy-Solar industry group has dropped 32% over the same period of time. Ongoing net-metering headlines have only fueled the incineration, Coster wrote. Days after Congress extended the ITC by five years, Nevada regulators cut payments to solar customers for excess energy fed back into the grid. Earlier this month, the Nevada Public Utilities Commission voted against grandfathering existing solar customers under the previous rate scheme. “Encouragingly, California’s PUC has already approved a favorable plan for the solar industry, extended into 2019,” he wrote. But whether that will be enough to mitigate the “headline risk” remains to be seen. And SolarCity’s discontinued MyPower plan prompts further customer base questions, Coster wrote. CEO Lyndon Rive told GreenTechMedia.com on Monday that many customers couldn’t qualify for the ITC. “In hindsight, I definitely underestimated that,” he said. “I underestimated the success we’ve seen, which is fantastic.” Growth Hits Stalling Point SolarCity’s customer base isn’t solely wealthy households typically associated with solar panel investments, Coster wrote. And that could be a problem. “We believe new customers (with) apparently good credit (scores) at the lower end of the income spectrum may be at some risk for slow-pay or default in the event of an economic downturn,” he wrote. Meanwhile, SolarCity’s growth is slowing. During Q4, SolarCity installed 272 MW , which was up 54% vs. the year-earlier quarter but missed earlier guidance for 280 MW to 300 MW. SolarCity blamed its exit from Nevada for the miss. Fellow residential installer Sunrun ( RUN ), too, left Nevada upon the PUC vote in December. Although SolarCity reiterated 2016 guidance for 1.25 gigawatts in installations, up 44% year over year, that implies “re-acceleration and a back-end-loaded year — a risk,” Coster wrote. First Solar ( FSLR ), the largest stock by market cap in IBD’s Energy-Solar industry group, was down 4.5% to near 61 in afternoon trading, ahead of its after-the-close earnings report.

U.S. Crushes Solar Installation Record In ‘Monumental’ 2015

U.S. solar installations boomed in 2015 to a record-stomping 7.3 gigawatts as legislators bandied about the fate of the Investment Tax Credit on solar, the Solar Energy Industries Association said Monday. For the first time ever, solar energy beat out natural gas capacity additions. Solar energy generated 29.5% of all new electric-generating capacity in the U.S. California, North Carolina and Nevada led the charge, and the three states now top 25 GW in cumulative installations. There’s still plenty of headroom for growth, said Shayle Kann, Greentech Media Research senior vice president. The top 10 states account for 87% of installed capacity, but 24 of 35 states Greentech tracks saw market growth in 2015, he said in a statement. SEIA CEO Rhone Resch, in the association’s press release, called 2015 “a monumental year for the U.S. solar industry.” The year was also marked by Obama’s Clean Power Plan, a pledge to cut carbon emissions by power plants, and a 196-country agreement to cut carbon emissions during the COP21 (Conference of Parties) climate change summit in Paris. “Over the next few years, we’re going to see solar continue to reach unprecedented heights as our nation makes a shift toward a carbon-free source of energy that also serves as an economic and job-creating engine,” Resch said in the release. In 2015, residential installations jumped 66%, outgrowing the commercial and utility markets, which were flat and up 6%, respectively. Still, utility installations — First Solar ( FSLR ) and SunPower ‘s ( SPWR ) wheelhouse — continued to account for more than half of all installed capacity. Overall, installed capacity has grown 1,150% since 2010, when U.S. solar capacity touched just 2 GW. Last year, the residential segment alone eclipsed 2 GW in installations — a first. Residential installations now comprise 29% of the entire U.S. solar market, its largest share since 2009, the SEIA said. Commercial installations trailed but managed to break 1 GW for the fourth year running. Solar Stocks Got Late-2015 Boost From Congress The results shine light on the recently shadowed industry. IBD’s 23-company Energy-Solar industry group is down 31% for the year after sharply rising at the end of 2015 on Congress’ decision to extend the Investment Tax Credit (ITC) on solar for five years. The ITC has been slated to expire Dec. 31, 2016, and Wall Street expected solar demand to hit a floor in 2017. Shares of installers First Solar, SunPower, SolarCity ( SCTY ) and Sunrun ( RUN ) lit up on the extension. Tesla ( TSLA ) CEO Elon Musk chairs SolarCity. But the rally was short-lived. Less than two weeks later, stocks plunged after Nevada regulators opted to cut net-metering payments to solar customers, or what utilities pay solar customers for excess energy fed back into the grid. Warren Buffett’s Berkshire Hathaway ( BRKA )-owned utility NV Energy pushed for the cut, which will take place in five steps over 12 years. Utilities dislike net-metering mandates, which forces them to buy energy at a high cost. This month, Nevada regulators voted against grandfathering in existing solar customers under the old rate scheme. Sunrun executives have said they will sue. In 2015, California regulators went in the opposite direction. The California Public Utilities Commission voted to retain net metering but add interconnection costs, new minimum bill requirements and time-of-use rates, according to Greentech. Other states are likely to take up the issue. Net metering is mandated in 44 states. Last year, 13 states each added at least 100 megawatts in installations, helping lead to 17% growth in the U.S. solar market. Utah jumped from No. 23 state in solar to No. 7, and Georgia moved from 16th to eighth place. Nevada was No. 3 on the installer list for the second year running. In 2013, Nevada was No. 12. California and North Carolina have led in recent years. But analysts say Nevada solar demand is likely to hit a floor in 2016 on the new net-metering rate scheme. SolarCity and Sunrun exited their Nevada operations in December because of that then-pending move. Vivint Solar ( VSLR ), soon to be acquired by SunEdison ( SUNE ), made a similar threat at the time.

Nevada PUC Refuses Solar Grandfathering Bid; Sunrun Plans To Sue

Nevada regulators voted unanimously late Friday to slash net-metering payments without grandfathering existing solar-energy customers, despite opposition from 55,000 Bring Back Solar Alliance supporters. Within an hour of the 3-0 vote by the Nevada Public Utility Commission, Sunrun ( RUN ) executives were already planning to file suit, Lauren Randall, the company’s public policy manager, told IBD. “Even NV Energy recommended grandfathering current solar customers for a period of 20 years, but once again, Governor (Brian) Sandoval’s commission gave the monopoly utility more than it asked for,” she wrote in an email. “This decision is clearly unjust and unacceptable for Nevadans. “We will sue to overturn the anti-solar rules, and we will win.” The decision follows a week of testimony, including commentary from Tesla Motors ( TSLA ) CEO Elon Musk, chairman of No. 1 solar installer SolarCity ( SCTY ). Both Sunrun and SolarCity criticized the net-metering cut — payments that solar customers get for selling excess energy to utilities — and exited Nevada in December when the PUC first approved the new rates. Solar advocates’ hope momentarily gleamed last month when Warren Buffett’s Berkshire Hathaway ( BRKA )-owned utility, NV Energy, proposed a 20-year grandfathering caveat to the new solar rules. But Friday’s vote puts the final nail in Nevada’s solar coffin , according to Bryan Miller, Sunrun vice president of public policy and power markets. He’s also president of the Alliance for Solar Choice president. “(PUC Commissioner) Dave Noble was wrong when he predicted his initial order would not kill the industry,” Miller said in an email Thursday. “He has now flip-flopped and argues that the commission can legally kill the industry.” Nevada incentivized more than 17,000 residents to install solar, BBSA spokesman Bob Greenlee said in a statement Thursday. Since 1997, net-metering policies have required utilities to purchase excess power fed into the grid from solar customers at a retail rate. Under the new rules, the reimbursement rate will step down five times over 12 years to reach what the Nevada PUC calls a “cost-based structure.” Although TASC estimates that solar customers will still save about a third on their electric bills, the rate shift doesn’t allow them to recoup the costs of their systems, Greenlee said. Early Friday, he said the BBSA planned to cart “six wheelbarrows full” of signed commitment cards from supporters. “Fully 89% of Nevadans believe that the Public Utilities Commission made the wrong decision when it ended net-metering, refused to grandfather existing solar customers at their current rates and destroyed one of the fastest-growing solar sectors in the country,” Greenlee told IBD via email following the vote. Greenlee tallied 55,000 commitment cards — the same number of petition signatures needed to put the matter on a referendum ballot in November. The PUC, however, argued within its draft order Wednesday that grandfathering existing customers under the old rates would perpetuate the $16 million that utility customers now pay annually to subsidize solar customers. Proposals to delay the necessary correction in rates to a cost-based structure only serve to kick “the can down the road,” the PUC said. Over 40 years, the subsidy borne by non-solar customers would grow to $640 million. “These proposals do nothing to address the problem of antiquated rates that were instituted nearly 20 years ago to jump-start an industry,” the commission wrote. “The old net-metering rates are not reflective of accurate price signals or actual costs to serve.”