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  • SolarCity Is Ramping Up Its Expansion [View article]
    The discount rate is SolarCity's cost of capital, which is actually lower than 6% for these assets they're creating. I'm tired of people getting this wrong.

    SolarCity is estimating retained value CONSERVATIVELY.
    Mar 14, 2015. 01:13 PM | 4 Likes Like |Link to Comment
  • The Widening Gap Between SolarCity And Its Competitors [View article]
    You need help:
    http://bit.ly/1E5kGfK
    Feb 28, 2015. 03:17 PM | 4 Likes Like |Link to Comment
  • The Widening Gap Between SolarCity And Its Competitors [View article]
    From SolarCity's most recent shareholder letter:

    "According to GTM Research data, we accounted for 39% of total U.S. residential solar installations—more than the
    next 70 installers combined—in the most recent data available for Q3 2014."

    http://bit.ly/1AT0N7Y

    Looks like 4th quarter is not available yet.
    Feb 27, 2015. 09:42 PM | 4 Likes Like |Link to Comment
  • The Widening Gap Between SolarCity And Its Competitors [View article]
    The $2.8 billion worth of solar systems on their balance sheet is the market value of the systems themselves on the roofs of their customers. What is not on the balance sheet is the Estimated Nominal Contracted Payments Remaining of $4,951 million. I think you know this or you should based on our last discussion. I must say, you're a man on a mission! As you indicated before on another thread, the NPV of these payments is less, of course, and is indicated in management's retained value forecast. Since you are confused about GAAP accounting, you should look up ASC 840-20 Operating Leases.

    "“Retained Value” forecast represents the sum of both “Retained Value under Energy Contract” and “Retained Value
    Renewal.” Retained Value under Energy Contract represents our estimate of the forecasted net present value at a
    discount rate of 6% of Nominal Contracted Payments Remaining for all lease and PPA Energy Contracts (excluding
    consumer loan energy contracts) and estimated performance-based incentives and contracted solar renewable energy
    certificates allocated to us, net of amounts we are obligated to distribute to our fund investors, upfront rebates,
    depreciation, renewable energy certificates, solar renewable energy certificates and estimated operations and
    maintenance, insurance, administrative and inverter replacement costs, based on contractually agreed amounts as well
    as historic expenses. This metric includes all lease and PPA Energy Contracts for solar energy systems deployed and in Backlog. Retained Value Renewal represents our estimate of the forecasted net present value at a discount rate of 6% of
    the payments we would receive upon renewal of all lease and PPA Energy Contracts (excluding consumer loan
    agreements) through a total term of 30 years at a rate equal to 90% of the contractual rate in effect at expiration of the
    initial term, net of estimated operations and maintenance, insurance, administrative and inverter replacement costs, based
    on contractually agreed amounts as well as historic expenses. This metric includes all lease and PPA Energy Contracts
    for solar energy systems deployed and in Backlog. We assume renewal due to both (1) a higher life expectancy of the
    equipment used in our solar energy systems (typically 30 years or more) vs. a contract term (typically 20 years) and (2)
    our assumption utility retail rates continue to increase at their historic pace and our expectation that the price of our
    energy contracts will continue to represent an economic incentive for our customers to renew their contracts."
    Feb 27, 2015. 09:17 PM | 4 Likes Like |Link to Comment
  • SolarCity: An Estimation Of Intrinsic Value Through Effective Earnings [View article]
    Bill Cunningham, from the recent shareholder letter '“Retained Value” forecast represents the sum of both “Retained Value under Energy Contract” and “Retained Value Renewal.” Retained Value
    under Energy Contract represents our estimate of the forecasted net present value at a discount rate of 6% of Nominal Contracted Payments
    Remaining and estimated performance-based incentives allocated to us, net of amounts we are obligated to distribute to our fund investors,
    upfront rebates, depreciation, renewable energy certificates, solar renewable energy certificates and estimated operations and maintenance,
    insurance, administrative and inverter replacement costs, based on contractually agreed amounts as well as historic expenses.'
    Nov 20, 2014. 11:10 AM | 4 Likes Like |Link to Comment
  • The Widening Gap Between SolarCity And Its Competitors [View article]
    You're going to have to try harder.
    http://bit.ly/1C9FBxM
    Feb 28, 2015. 02:22 PM | 3 Likes Like |Link to Comment
  • The Widening Gap Between SolarCity And Its Competitors [View article]
    You also need to brush up on your understanding of contracts apparently.
    Feb 27, 2015. 09:19 PM | 3 Likes Like |Link to Comment
  • SolarCity: Another Disappointing Quarter [View article]
    To EnergyProfitProphet:

    I suspect that your mistaken analysis of the value of the company stems from the fact that you're completely ignoring Estimated Nominal Contracted Payments Remaining of $4,951 million, which is used to produce the retained value figure, of course. It's understandable since GAAP rules don't allow for revenue recognition until the service is actually delivered. This is why the shareholders' equity is lower than you'd like to see, I think.
    Feb 26, 2015. 03:43 PM | 3 Likes Like |Link to Comment
  • The Widening Gap Between SolarCity And Its Competitors [View article]
    You have clearly mastered the finer points of trolling. I'm not sure my arguments matter much here anyway, so have fun. People misguidedly influenced by you deserve to lose money anyway.
    Mar 2, 2015. 10:14 AM | 2 Likes Like |Link to Comment
  • SolarCity: Another Disappointing Quarter [View article]
    This article is ridiculous. SolarCity accounts for the bulk of its business in accordance with ASC 840 Leases as stated in its recent 10-K. They are considered operating leases because they meet certain requirements under that rule. Therefore, they pay the entire cost of the solar equipment up front, and then recognize lease revenue yearly as the rule requires. There are tax advantages for classifying these as operating leases, which is why the company only leases for 20 years when the useful life is considered to be 30 years, for example. The company goes out of its way to explain this to people in their shareholder letter.

    " We view the increase in Estimated Nominal Contracted Payments Remaining as a better measure of our new
    sales activity than reported revenue, which is recognized as customer payments are received over the 20-30 year lives of
    our lease, PPA, and loan contracts." That increase is $837 million, again, from the shareholder letter.

    This was not another disappointing quarter. It was another fantastic quarter and the author's analysis needs to be redacted because of the obvious misunderstanding of operating lease accounting.
    Mar 1, 2015. 01:52 PM | 2 Likes Like |Link to Comment
  • The Widening Gap Between SolarCity And Its Competitors [View article]
    Likewise for you and accounting, I guess.
    Feb 28, 2015. 07:20 PM | 2 Likes Like |Link to Comment
  • The Widening Gap Between SolarCity And Its Competitors [View article]
    That author miscalculated. Read the article and then read this (again) and tell me what he screwed up:

    "“Retained Value” forecast represents the sum of both “Retained Value under Energy Contract” and “Retained Value
    Renewal.” Retained Value under Energy Contract represents our estimate of the forecasted net present value at a
    discount rate of 6% of Nominal Contracted Payments Remaining for all lease and PPA Energy Contracts (excluding
    consumer loan energy contracts) and estimated performance-based incentives and contracted solar renewable energy
    certificates allocated to us, net of amounts we are obligated to distribute to our fund investors, upfront rebates,
    depreciation, renewable energy certificates, solar renewable energy certificates and estimated operations and
    maintenance, insurance, administrative and inverter replacement costs, based on contractually agreed amounts as well
    as historic expenses. This metric includes all lease and PPA Energy Contracts for solar energy systems deployed and in Backlog. Retained Value Renewal represents our estimate of the forecasted net present value at a discount rate of 6% of
    the payments we would receive upon renewal of all lease and PPA Energy Contracts (excluding consumer loan
    agreements) through a total term of 30 years at a rate equal to 90% of the contractual rate in effect at expiration of the
    initial term, net of estimated operations and maintenance, insurance, administrative and inverter replacement costs, based
    on contractually agreed amounts as well as historic expenses. This metric includes all lease and PPA Energy Contracts
    for solar energy systems deployed and in Backlog. We assume renewal due to both (1) a higher life expectancy of the
    equipment used in our solar energy systems (typically 30 years or more) vs. a contract term (typically 20 years) and (2)
    our assumption utility retail rates continue to increase at their historic pace and our expectation that the price of our
    energy contracts will continue to represent an economic incentive for our customers to renew their contracts. "

    If you can't figure it out, you deserve to lose money. Shame on you!
    Feb 27, 2015. 10:14 PM | 2 Likes Like |Link to Comment
  • SolarCity: Another Disappointing Quarter [View article]
    You are confused and I don't care what you think anyway.
    Mar 11, 2015. 12:00 PM | 1 Like Like |Link to Comment
  • The Widening Gap Between SolarCity And Its Competitors [View article]
    The one thing I've read very little mention of on SeekingAlpha is the fact that SolarCity accounts for its leases and power purchase agreements as operating leases. If you want to read more about GAAP rules for operating leases, I enourage you to google them.

    "From the lessor’s perspective
    If the lease is classified as an operating lease, the rental payments are record as rental revenue in
    the periods earned and the underlying property is depreciated in the normal manner based on the
    lessor’s accounting policies. The leased property and accumulated depreciation are reported
    separately on the lessor’s balance sheet. "
    http://bit.ly/1zv0VH9

    SolarCity pays for the systems up front, but according to GAAP rules is only able to recognize lease payments as revenue for the current period. Not sure if this a year or what. Maybe someone can help me here. This skews the GAAP income statement and causes confusion, which is why they developed the retained value metric.

    "When a lease is classified as an operating lease, the lease expenses are treated as operating expense and the operating lease does not show up as part of the capital of the firm."
    http://bit.ly/1zv0U62

    Furthermore, SolarCity is being *conservative* with the discount rate they are using for the retained value forecast. Their cost of debt is closer to 4% NOT 6%.

    "As an approximation, using the firm’s current pre-tax cost of debt as the discount rate yields a good estimate of the value of operating leases."
    http://bit.ly/w4jRpw~adamodar/New_Home_Pag...

    I'm not sure I entirely agree with the company's assumed renewal rate of 90%, but even using 70% along with the true cost of debt you can see that the retained value is higher than their estimate.

    There is a lot of understandable confusion regarding this company's financial statements. I may write an article about this to clear up some of the confusion regarding operating leases.
    Mar 1, 2015. 10:28 AM | 1 Like Like |Link to Comment
  • SolarCity: Another Disappointing Quarter [View article]
    In fact, EnergyProfitProphet (misnomer if I've ever seen one), you called yourself out on this one inadvertently, I think. The NPV is probably around $2.423 billion as the company explained.

    "“Retained Value” forecast represents the sum of both “Retained Value under Energy Contract” and “Retained Value
    Renewal.” Retained Value under Energy Contract represents our estimate of the forecasted net present value at a
    discount rate of 6% of Nominal Contracted Payments Remaining for all lease and PPA Energy Contracts (excluding
    consumer loan energy contracts) and estimated performance-based incentives and contracted solar renewable energy
    certificates allocated to us, net of amounts we are obligated to distribute to our fund investors, upfront rebates,
    depreciation, renewable energy certificates, solar renewable energy certificates and estimated operations and
    maintenance, insurance, administrative and inverter replacement costs, based on contractually agreed amounts as well
    as historic expenses. This metric includes all lease and PPA Energy Contracts for solar energy systems deployed and in Backlog. Retained Value Renewal represents our estimate of the forecasted net present value at a discount rate of 6% of
    the payments we would receive upon renewal of all lease and PPA Energy Contracts (excluding consumer loan
    agreements) through a total term of 30 years at a rate equal to 90% of the contractual rate in effect at expiration of the
    initial term, net of estimated operations and maintenance, insurance, administrative and inverter replacement costs, based
    on contractually agreed amounts as well as historic expenses. This metric includes all lease and PPA Energy Contracts
    for solar energy systems deployed and in Backlog. We assume renewal due to both (1) a higher life expectancy of the
    equipment used in our solar energy systems (typically 30 years or more) vs. a contract term (typically 20 years) and (2)
    our assumption utility retail rates continue to increase at their historic pace and our expectation that the price of our
    energy contracts will continue to represent an economic incentive for our customers to renew their contracts."
    http://bit.ly/1C5nYzb

    Thank you. You made my point and I rest my case.
    Feb 27, 2015. 03:03 PM | 1 Like Like |Link to Comment
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