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SolarCity/Silevo to build 1GW+ plant; shares +7.4%

  • No one ever accused Elon Musk's companies of thinking small: In a blog post discussing SolarCity's (SCTY) acquisition of module developer Silevo, the company states it's in talks with the state of NY to build an initial module plant with "a targeted capacity of greater than 1GW."
  • Moreover, the company will later build "one or more significantly larger plants at an order of magnitude greater annual production capacity."
  • SolarCity, in remarks that bring to mind Tesla's Gigafactory plans: "Our intent is to combine what we believe is fundamentally the best photovoltaic technology with massive economies of scale to achieve a breakthrough in the cost of solar power."
  • In spite of today's module capacity glut, SolarCity asserts shortages are only a matter of time as solar demand grows, in the absence of huge investments. SolarCity has thus far relied on 3rd-party module suppliers for its installations.
  • Silevo claims its Triex technology enables solar cells with 22%+ efficiency and 5%-12% greater energy harvest in arid climates, while remaining cost-competitive with low-cost silicon cell producers. The company has been eying both residential/commercial and utility-scale projects.
Comments (33)
  • sunwindgeo
    , contributor
    Comments (329) | Send Message
     
    Giga factory? Why all this hoopla terminology?
    Just compete with Sunpower. But probably can't. They're just getting started with tech improvements that Sunpower made years ago.

     

    Stick with SPWR as it rises, deservedly.
    17 Jun, 10:31 AM Reply Like
  • Raster
    , contributor
    Comments (575) | Send Message
     
    Not hoopla in this case. Giga is the approved metric term for 10 to the 9th power. A billion. It's about the size of an average nuclear reactor, or a bit under the required energy to send a delorean to a different point in the time.

     

    That's pretty cool though. Solar City will be able to deploy the equivalent of a nuclear plant's worth of power per year.

     

    Fission is overrated. Fusion is much better... : )
    17 Jun, 03:51 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (5031) | Send Message
     
    Many Chinese and Japanese manufacturers do multi GW output per-year already:

     

    " The Top 10 supplied over 18GW of PV modules in 2013, representing a 40% increase compared to 2012. With global PV demand in 2013 only growing by 20%, it is clear that the industry’s leading players expanded market shares considerably in 2013."

     

    http://bit.ly/1jwbcf9

     

    Customers often demand cheaper panels. It remains to be seen how much these SCTY cells/modules will cost when the NY plant is ready and if they are really cost-competitive, margins are razor-thin in solar.

     

    I also doubt the glut will go away quickly, the big Chinese players keep expanding.
    17 Jun, 10:33 AM Reply Like
  • distributed fan
    , contributor
    Comments (10) | Send Message
     
    The glut is Chinese, Chinese domestic demand is surging, the glut will evaporate to the surprise of all the glut peddlers on here. This is great news for SolarCity and another smart move by Elon and the crew. Well done.
    17 Jun, 10:43 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (5031) | Send Message
     
    Do you think the Chinese manufacturers will stand still? They already decimated their European competitors wth razor-thin margins and overtook Germany (and before that to a large exten Japan).

     

    China has the ecomomies of scale today while SCTY is _talking_ about building a giant plant (reminds me of TSLA with their "gigafactory" talk).

     

    SCTY makes some grandiose statements in that blog while all it does is (finally) replicate the SPWR business model.

     

    Until today, SCTY was just a solar bank/leasing company with an installation/service arm.

     

    SPWR for sure deserves its current market cap valuation more than SCTY - both SPWR and FSLR* are making money and trade at sane P/E ratios, SCTY is all about future revenue and difficult leasing/energy price models.

     

    SCTY seems to be another company trading on a "believe in Elon Musk" hype premium.

     

    _____
    * to just use two US competitors as peer comparison and not foreign ones based in Asia.
    17 Jun, 10:51 AM Reply Like
  • TheBanker
    , contributor
    Comments (1343) | Send Message
     
    They can now profit from the sale of the panels. If the leasing model doesn't keep expanding then at least they can earn profits from both producing and installing the panels. This was a smart move and I called it over a month ago. They also need to get into $0 down financing options so they can earn money on the financing of the panels.
    17 Jun, 11:56 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (5031) | Send Message
     
    "They can now profit from the sale of the panels."

     

    The gross margins among all big solar players are very low - and the sector is highly competitive. Margins are close to zero.

     

    Many large panel manufacturers are already bankrupt (including former heavy- weghts like Q-Cells, LDK, STP etc.), today's remaining cell and module manufacturers are already very efficient.
    17 Jun, 12:14 PM Reply Like
  • sunwindgeo
    , contributor
    Comments (329) | Send Message
     
    Exactly, and musk is what pushes the stock up. He has a kind of cult of personality in tech world. This is not to say that is is not a brilliant guy but when you are just getting started, grandiosity isn't smart.
    17 Jun, 12:25 PM Reply Like
  • cmnsnse
    , contributor
    Comments (745) | Send Message
     
    Answer this: which company will be able to grow at compounded rates post 30% ITC? Who is preparing for compounded growth post current net metering regimes?

     

    The reason Solarcity is rising to a higher market cap is because they are positioned to grow much faster and gain more business over the next 2-4 years and accelerate even more over the next 10-20 years compared to the competition that currently looks better on the balance sheet.
    18 Jun, 10:47 PM Reply Like
  • jonnybomb
    , contributor
    Comment (1) | Send Message
     
    the chart looks like it could become a strong head and shoulders. Maybe a good idea to short it.
    17 Jun, 11:09 AM Reply Like
  • distributed fan
    , contributor
    Comments (10) | Send Message
     
    The key to understanding the importance of this is deal is an understanding of the cost components and gating items of a residential rooftop installation. For ground mounted solar space is not normally a constraint, inefficient panels do the job fine, for roof installations space is a big limiting factor as are non-panel and non-inverter costs. This acquisition gives SCTY the capability of installing 340W systems on the same roof space as current Chinese 250W panels. This 25% improvement to output combined with the static fixed costs of installation allows SCTY of installing on roofs which previously were uneconomic, or extracting better economics from like for like roofs. The impact of this is considerable, and at a guess is probably as important as a 25% contraction in the spread of their securitization cost of capital over the relevant US Treasury in terms of future retained value.
    17 Jun, 11:10 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (5031) | Send Message
     
    SPWR claims about 21.5% efficiency on their (shipping) US panels today, what's so special about SCTY plans? I don't see it.

     

    Source: http://bit.ly/1pF7S8V
    17 Jun, 11:17 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (5031) | Send Message
     
    And let's not forget FSLR bought TetraSun back in 2013:

     

    "A stealthy Silicon Valley startup called TetraSun, which designs silicon solar cells, has been acquired by solar giant First Solar. It’ll be First Solar’s first commercial foray into highly efficient silicon panels."

     

    http://bit.ly/1pFfaJz

     

    SCTY is just playing "me-too" to SWPR and FSLR imho.
    17 Jun, 11:54 AM Reply Like
  • TheBanker
    , contributor
    Comments (1343) | Send Message
     
    This will allow them to install less panels for the same energy. This will speed up the install times and possibly save money on hardware.

     

    A smaller system looks better too so the referrals from neighbors would also increase.
    17 Jun, 11:59 AM Reply Like
  • TheBanker
    , contributor
    Comments (1343) | Send Message
     
    The will own the producer and profit from it. Why buy from a competitor when you can own your own panel producer? How do you not understand this move?
    17 Jun, 11:59 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (5031) | Send Message
     
    Because it's full of PR talk, including the claim "world's largest" then followed by "advanced" (because otherwise SCTY wouldn't even be in the top 10).

     

    SCTY somehow thinks they are the only ones doing "advanced solar panels".

     

    The top 10 PV manufacturers each did above 1 GW in output in 2013 already.

     

    China / Japan have the economies of scale in cell and module production already (all top 10 manufacturers came from these two countries in 2013, 8 out of the top 10 are from China) as I outlined above.

     

    Margins are close to zero - good luck entering that market with a US manufacturing base and two strong local competitors (FSLR; SPWR).

     

    PS: Isn't it also interesting to note that the purchase price wasn't revealed, at least I read nothing about it.
    17 Jun, 12:49 PM Reply Like
  • TheBanker
    , contributor
    Comments (1343) | Send Message
     
    They will be able to control their destiny more by controlling production. Even a small profit is an extra profit they didn't have but the control factor will be large. They will also have better panels than they are currently using.

     

    I'm sure panel manufacturers spend money on advertising. SCTY doesn't have to spend money advertising the panels since they will be using them all. That helps save money.

     

    I believe $200m was the price being paid.
    17 Jun, 01:38 PM Reply Like
  • 22765361
    , contributor
    Comments (8) | Send Message
     
    Great News Thats The "Way" to Go

     

    One to Follow in California ? Need To !
    17 Jun, 11:15 AM Reply Like
  • Deja Vu
    , contributor
    Comments (1291) | Send Message
     
    The sell worked once so Musk is trying it again. Next he will announce a Giga Factory that will build 1 million rockets a year and allow anyone to travel to space for the cost of a greyhound ticket.

     

    Everyone should try it. For instance, Gulfstream should announce a Gigafactory for private jets that will make one billion jets a year so that there is a breakthrough on costs so that everyone can have thier own private jet when they turn 16.

     

    Probably stole the idea from the Fed where they have a Gigafactory to print dollar bills and bring down the "cost" hehehheh
    17 Jun, 11:44 AM Reply Like
  • distributed fan
    , contributor
    Comments (10) | Send Message
     
    SPWR is a great company making great products. Buying Sunpower modules wasn't really on the radar for SCTY though. I've no doubt that they looked to improve on the power per roof per dollar ratio offered by REC or Yingli or the other mass market offers and so chose to buy the 340W Silevo.
    17 Jun, 12:00 PM Reply Like
  • rkw29
    , contributor
    Comments (169) | Send Message
     
    So is Silevo profitable?
    17 Jun, 12:15 PM Reply Like
  • Gumby
    , contributor
    Comments (2570) | Send Message
     
    Efficiency is not the only game in town. Peak efficiency can only be achieved as long as the surface of the solar panel is perpenicular toward the sunlight. As the sun sails across the sky, the efficiency is much lower in the morning hours and afternoon hours. You can add axis mounts that track the sun through the day as well as the winter and summer trajectory which will require another axis as well. So I know a tiny solar panel company which has a patent that doesnt require one of the axis as its solar panel has micro grooves that will capture more sunlight during the morning and afternoon hours without any need to use the axis mount. The only axis required, I presume, is tilting the panels slightly to maintain perpendicular toward the seasonal sun trajectory. You know that the winter sun is much lower toward the horizon than the summer sun which is much higher in the sky. This matters a great deal. It is very important to maintain any solar panel perpendicular toward the sun or too much sunlight will reflect the surface and get lost or wasted. Axis mounts is more expensive to use than solar panels that can stay stationary and be able to capture the sun fully over longer periods of the day. The company I mentioned is trading only 7 cents a share today. it can go up manyfold once the company start manufacturing its special solar panels. I dont know the cost of manufacturing but I feel it is still far cheaper than using axis mounts. Time is money! What you may not realize that any 21% efficient solar panels are actually only 4-6% efficient during the morning or afternoon hours. The seven cent a share company can manufacture special solar panels that can start with maybe 12-15% efficiency in the off hours and hit peak efficency of 21% during the high noon hours. Big difference !!
    17 Jun, 12:48 PM Reply Like
  • sunwindgeo
    , contributor
    Comments (329) | Send Message
     
    Solar city isn't profitable, they are five years out from profitability and with set up of new plant (great news for NJ) they could be even farther out from profitability.

     

    While I can support Musk in his efforts to grow green power I can't understand the comparisons (yet) to major solar collector companies that ARE profitable now. Sunpower paid dues over time, grew slowly but grew, the Total buyout sucked, but along came Google AND bank leasing partners. They are profitable, NOW. They have grown to point of liftoff and even the organized short sellers have been stymied.

     

    If you can afford to invest in one co., make it SPWR, otherwise, yeah maybe really long term SCTY, but it seems to me they will drag sector down more than help it for next five to ten. Their rapid share price growth was attributable to a name, Musk, and that buzz is fading.
    18 Jun, 07:56 AM Reply Like
  • TheBanker
    , contributor
    Comments (1343) | Send Message
     
    SCTY is growing fast and it isn't their goal to grow the solar sector. They are stealing market share, now around 32%. Who wants SCTY to grow slowly just to make a profit now? We want them to grow fast so they make huge profits over 20 years. Stop looking at today and think 20 years out for a change.
    18 Jun, 10:41 AM Reply Like
  • distributed fan
    , contributor
    Comments (10) | Send Message
     
    All this talk about the Musk brand value misses the point entirely. Where was the brand value of Elon during the SCTY IPO? Even when the IPO price was savagely cut by the bankers due to the failure of professional money managers to understand his business model, Elon himself had to buy a large percentage of the IPO to get the deal away.
    His so called brand value comes directly, unequivocally and wholly from being right!
    SCTY is doing well because it's a great business
    18 Jun, 10:05 AM Reply Like
  • distributed fan
    , contributor
    Comments (10) | Send Message
     
    All this talk about the Musk brand value misses the point entirely. Where was the brand value of Elon during the SCTY IPO? Even when the IPO price was savagely cut by the bankers due to the failure of professional money managers to understand his business model, Elon himself had to buy a large percentage of the IPO to get the deal away.
    His so called brand value comes directly, unequivocally and wholly from being right!
    SCTY is doing well because it's a great business
    18 Jun, 10:05 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (5031) | Send Message
     
    "SCTY is doing well because it's a great business "

     

    Have a look at their finances again, especially their cash flow.

     

    They burn cash coming from financing activities (stock issuance, more debt...) each and every quarter - and will now likely even spend more to get the factory and production going.

     

    If outside liquidity dried up one day, SCTY would be gone very soon.

     

    Meanwhile competitor SPWR is profitable with a similar business model for all of 2014...

     

    It will take SCTY 2+ years to even catch up to where SPWR and others are today.
    18 Jun, 10:56 AM Reply Like
  • TheBanker
    , contributor
    Comments (1343) | Send Message
     
    They are growing at 100%, currently. You're looking at today's numbers while the long investors should be focused on the income set in place for the next 20 years.

     

    Outside liquidity is not going to dry up for SCTY because their bonds are just as stable as a mortgage bond. The default rate is similar to mortgages.
    18 Jun, 11:55 AM Reply Like
  • sunwindgeo
    , contributor
    Comments (329) | Send Message
     
    JP Morgan downgraded Sunpower this a.m. JP Morgan was also the market maker for SolarCity. Seems very inside to me, also very conflict of interest. We shall see. I've posted it here and there in hopes someone in the know about such matters will give me an answer.

     

    Here are the disclosures: http://bit.ly/1pfUKmU

     

    SolarCity will be a losing business for the next five years at least, and now as it has to set up a production facility, hire people, those losses will increase to more than the $1.00 per share they are at now. That is negative 1.00 a share and twice the losses of six months ago.

     

    Sunpower on the other hand should be rising due to growth, income, and potential for growth this year and years to come. It has a strong income base with strengthening earnings that have been 10 out of 12 of last month highly positive, sometimes income at over 30 cents per share higher than estimates. Sunpower is a no brainer right now for growth and success.

     

    If short sellers, special interests such as JP Morgan, can reduce Sunpower THIS time, and only one day after a Solarcity announcement with THAT BIG of a conflict of interest, there is no hope for investors like me.
    18 Jun, 12:08 PM Reply Like
  • TheBanker
    , contributor
    Comments (1343) | Send Message
     
    There is no hope for you cause your math stinks.

     

    SolarCity is doubling each year for the past 5 years and expecting 70% growth for the next 4 years.

     

    What is SPWR's growth rate currently and expected for next 4 years?

     

    It's takes money to grow a company. SCTY isn't losing money. They have 20yrs of profits locked in with those signed leases.
    18 Jun, 03:40 PM Reply Like
  • distributed fan
    , contributor
    Comments (10) | Send Message
     
    You either get SCTY or you don't. If you shorted yesterday are you doubling down today?
    You can't look to clumsy measures of P&L valuation in an infra/network play or you'll be buried.
    18 Jun, 04:46 PM Reply Like
  • TheBanker
    , contributor
    Comments (1343) | Send Message
     
    Does a train have the right-of-way or should it yield to those standing in the way?

     

    Every short seller should hang that on the wall and look at it before trading the short side of a rising stock.

     

    If you're standing in the way of this stock it will roll right over you. If you want to short SCTY, wait for it to break down on its' own first. The shorts got lucky from March-June because the entire momo crowd got cut. SCTY did nothing to deserve the cut and that's why it's rising now.

     

    Do yourself a favor and cover your shorts or at least set a stop tomorrow morning where you're going to cut your losses. The short losses are infinite on the upside and none of the longs are going to forgive you for not understanding how the SCTY model really works.
    18 Jun, 09:12 PM Reply Like
  • cmnsnse
    , contributor
    Comments (745) | Send Message
     
    Have to remember, Elon, lyndon, et al, know EXACTLY when they will release news and what news they have coming down the pike soon and all I can say there will be a handful of big events leading directly into pre-ER numbers in July-August.

     

    Can't count out regulatory wins and the long anticipated individual level ABS...

     

    I smell a large convertible bond offering coming. Wouldn't count out Elon buying another 500k-1mln shares at the stock offering price just as he did before(did this with Tesla as well)
    18 Jun, 11:08 PM Reply Like
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