Green Energy

Yesterday SolarCity released a SEC filing listing the milestones its co-founders need to achieve to vest tranches of shares of their new performance-based compensation plan. The milestones reveal some ambitious goals for the solar installer.

For example, the first milestone is to achieve a cost of production of $0.50/Watt for solar modules with at least 20% efficiency.
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The global stock market had a horrible day. Even Wall Street darlings like Google and Apple saw billions of dollars trimmed off their market capitalizations. A surprising exception, SolarCity, the largest residential solar installer in the US, managed to go against the grain and closed the day with an impressive 7% gain thanks to its Chairman and major shareholder Elon Musk who bought another $5 million worth of shares during the stock’s price fall to add to his holding in the company now worth over $900 million of SolarCity’s total market cap of just over $4 billion.
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SolarCity made its first international move today when it announced the acquisition of ILIOSS, one of the largest commercial and industrial solar developers in Mexico. Until today, SolarCity operated in 17 states in the US and they focused their efforts where electricity rates and government incentives are favorable to solar. Mexicans pay expensive rates for their electricity and they have plenty of sunshine, making Mexico an attractive market for the solar company.
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SolarCity is the largest installer of residential solar so looking at their market performance is a useful indicator for the solar industry as a whole. This week, the company released their financial results for the second quarter of the year (April to June) and they achieved record bookings and installations.

Even though the company missed Wall Street’s expectations, they impressed the industry with 189 MW of solar power installed in just 3 months. I’m not overstating anything when I say this is impressive. For comparison, SolarCity installed more distributed solar power on rooftops than the capacity of a large solar power farm like the Centinela Solar Energy Project in California.
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[youtube=https://www.youtube.com/watch?v=_ZwguLJVxsM]

We’re mostly going to stay away from politics but this ad is very specifically on solar and renewables and it will hopefully kick off a debate on the energy sector that we’ll see in the run up to the 2015 elections.  The 10 year goal of moving US residences to renewables is a worthy 1st step. More from her campaign page

A great ground look at what’s happening in Hawaii, the state where energy costs the most and where there is plenty of solar energy.  Over 12% of Hawaiians have solar power which is 20x the US national average.  If you count all the rooftops on Oahu together, Solar is a 300MW plant that is more than double the size of the next biggest plant on the island.

The problem is: That power plant dies when the sun goes down and the other plants have to crank way back up.
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The Obama administration introduced today a new initiative to make it easier for all Americans, but in particular low- and moderate- income communities, to purchase solar energy and lower their energy bills. The initiative translates into executive actions from the administration and private sector commitments.
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Solar panels on the roof of SpaceX’s headquarters in Hawthorne, CA.

SolarCity revealed in a recent SEC filling that the company expects SpaceX, Elon Musk’s rocket company, to buy $75 million in “SolarBonds”. Earlier this year, SpaceX already purchased $90 million in solar-backed bonds from SolarCity, just 2 months after the aerospace company landed a $1 billion equity deal with Google and Fidelity. If this second purchase goes through, SpaceX will be holding $165 million in SolarCity debt backed by solar assets. 
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Xcel Energy, a major electric utility in Minnesota, proposed a new community solar program to make the renewable energy more accessible to the 600,000 apartment renters in the state. The proposal was approved by utility regulators late last year. Now just a few months after the program officially launched, Xcel reports having received over 700 applications totaling 763 megawatts (MW) of solar power installations. To put these figures into perspective, it would be enough electricity to supply more than 100,000 average households each year.

This is significantly more than Xcel planned and now they are petitioning their own program to decelerate its implementation.
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SolarCity, leader in residential solar installations, launched a new website called SolarCityNOW. The website displays realtime information on SolarCity’s energy output and new solar installations. The map illustrates how SolarCity acts like a decentralized electric utility. The company has over 200,000 installations, all connected to the internet in order to monitor the energy output of each system in realtime. 
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SolarEdge, an Israel based inverter manufacturer, released a very interesting video of a 24 hour time-lapse of the energy management system of a house connected to the grid, a solar panels installation and a battery pack. 
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A few months after SolarCity bought the former headquarters of the defunct solar panel manufacturer, Solyndra,  Tesla is now announcing that they signed a lease for the 500,000 square feet plant Solyndra used to operate. The building is located just a few minutes away from Tesla’s Fremont factory.

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If you are to set a goal for the production of renewable energy, why not make it 100% of total production? This is exactly what Hawaii did this week by enacting a law imposing requirements for electric utilities to supply the state with 100% renewable energy by 2045. Hawaii is already a leader in clean energy with 22% of their electricity production coming from wind, solar, geothermal, and other renewable energy resources. The new policy, Act 97, would require electric utility to produce 30% of their energy from renewable sources by the end of the decade and 100% within 30 years.

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The LA Times published an article over the weekend titled “Elon Musk’s growing empire is fueled by government subsidies”. The publication compiled data from government programs and estimated that Tesla Motors, SolarCity and SpaceX, three companies Musk is involved in, have benefited from “$4.9 billion in government support”. Saturday, I wrote an opinion piece about how I thought the article is grossly one-sided. Since then, the LA Times released a breakdown of the $4.9 billion figure.

Here is the complete breakdown with my comments on each government incentive and information that wasn’t included or simply glanced over in the LA Times article:

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The Times published an article over the weekend titled “Elon Musk’s growing empire is fueled by government subsidies”. The article is well-researched and mostly accurate, but it conveys a clear disdain for the fact that Musk’s companies are taking advantage of the government subsidies available to them.

The publication compiled data from government programs and came to the conclusion that Tesla Motors, SolarCity and SpaceX, three companies Musk is involved in, have benefited from an “estimated $4.9 billion in government support”. I will not dispute the actual amount, but I’d like to bring up a few points which weren’t discussed in the article and that are highly relevant to the subject.

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Gaelectric Group CEO, Brendan McGrath and Gaelectric Head of Energy Storage, Keith McGrane at the Tesla Energy event last month

Ireland’s Gaelectric Group entered into an agreement with Tesla Motors to build a 1 MW demonstration utility-scale project. The project is expected to be deployed in 2016. The company is among the firsts to sign a “utility-scale” deal with Tesla. Executives from Gaelectric were among the electric utility industry specialists invited to the event introducing Tesla Energy at Tesla’s design studio in Los Angeles. Here’s Brendan McGrath, Gaelectric Group CEO, on the deal:

We are delighted to be associated with Tesla in introducing its battery systems to Ireland. As a renewable energy group with a pipeline of 500 MW of wind power in Ireland and energy storage projects in Ireland and Europe, Gaelectric has an obvious incentive to drive the adoption of technologies that facilitate the economic dispatch of wind and other renewable sources.

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SolarCity is currently building a solar panel factory in Buffalo. The construction site is not unlike Tesla’s Gigafactory under construction in Nevada. SolarCity’s facility, which could also be dubbed a “Gigafactory” since its planned output is also estimated in gigawatts, has a similar 2-storey steel structure as the one Tesla is building for its battery factory. 

Update: SolarCity and Tesla are not sharing any designs or contractors for their respective factory projects according to Kady Cooper, Director of Communications at SolarCity.

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There has been a lot of uninformed banker-speak in the media about Tesla’s battery including by Bloomberg here. The problem is these folks don’t understand the new market that Tesla is opening up.

But I’m also turning to Bloomberg for the first smart analysis and that’s not surprisingly from Solar City’s Lyndon Rive (who happens to be Elon Musk’s Cousin – perhaps you noticed the accent?).

The complaints have been that the battery wall doesn’t make economic sense – that for the average household to go off the grid with these combined with solar (or wind), it would be incredibly expensive.

That’s correct…
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