SolarCity Continues To Struggle, Reports 40% Drop In Solar Installations In Q1

MAY 4 2017 BY MARK KANE 55

It seems that Tesla acquired SolarCity in the last moments before a storm hit, as the solar industry has become breathless due to dwindled or eliminated subsidies in some states, and in the difficulty in finding new customers.

Tesla Solar Roof

SolarCity ends door-to-door sales this month and has cut its workforce, which sure doesn’t seem to be good environment for merger. Some voices in the industry called the merger transaction a kind of bailout of SolarCity, while reports were boasting high growth rates at the same time.

Latest report indicates a nearly 40% drop of solar installations by SolarCity, down from 245 MW year ago to 150 MW in the first quarter of 2017.

“”The trendsetters are kind of gone,” Tammy Goad, vice president of corporate development for California-based Valley Energy said at a solar industry conference in San Diego on Tuesday.

Stiff competition in the industry has pushed some companies out of the market, or forced them to scale back. One of the nation’s biggest rooftop solar companies, Sungevity, filed for bankruptcy earlier this year.”

“That growth rate slipped to 19 percent last year, and the trend has worsened significantly in 2017. Not only did SolarCity post its worst quarterly solar deployments in nearly two years, residential interconnection requests at California’s three investor-owned utilities were down 35 percent in January and February, according to state data. California makes up about half the residential solar market.”

Hopefully it’s temporary slowdown, and Tesla’s integration of SolarCity’s products into its retail stores will help turn things around, as the offerings will be combined with Tesla’s new Solar Roof tiles and combination with energy storage systems.

source: Reuters

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55 Comments on "SolarCity Continues To Struggle, Reports 40% Drop In Solar Installations In Q1"

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tftf

No way.

This is a great business. That’s why Tesla merged with them. Bailout was a lie by big oil.

Together with Tesla’s car the combined “global green energy powerhouse” will be soon worth 1 trillion $.

Elon said so. He must know. 1 trillion USD.

(If you find sarcasm, you are free to keep it)

ROFLOL

So…how much of that $3.7 billion that was lost on shorting Tesla’s stock this year came out of your pocket?

tftf

Enough to pay for my free ticket to Mars!

Remember: Losses are actually positive, this is Tesla we are talking about. Go Elon!

ROFLOL

The fact that you are trying to affect your financial fate by posting on this blog tells different story. A sad one….

Winners have better things to do with their time.

tftf

Yes, sure. Ron Baron is reading this site and selling his stock today. ROFL.

I’m just trying to open the eyes of a few retail investors.

Mark.ca

You are useless to us….don’t you have some other place to play at?

ROFLOL

Ah, the successful speculator on a mission to save small investors from Elon Musk’s dark schemes…So easy to confuse with a down on his luck troll…

Thanks for clearing that up!

ROFLOL

Pushmi-Pullyu

tftf, every Tesla-hater post you make here just reminds us that you’re a loser whining because you’ve lost so much money in your “short” Tesla stock investment.

Now wade back into the Seeking Alpha cesspool where you live, where your bitter FUD won’t affect the useful discussion here.

You’re about as welcome here as ants at a picnic.

mx

Just keep in mind the physics.
Solar panels keep increasing capacity, now at 22-23%, verses 19% 2 years ago. Prices keep dropping.

Do the math.

George Bower

I think Elon has other ideas for Solar City. He now has his own solar panel manufacturing company called Panasonic….you know the same company that makes batteries at the giga factory.

I see Solar City developing into a more commercial venture putting in huge solar farms backed up by Tesla power packs.ie basically Solar City becomes a utility supplying power.

If Tesla is serious about the Tesla truck…and it looks like they are based on the the article just out on using Model 3 motors in the truck, then Tesla will need lots of solar installations for their all new Semi truck super charger network. With demand charges being so high from the regular utility companies Elon will just make his own electricity.

tftf

“He now has his own solar panel manufacturing company called Panasonic….”

Panasonic (and formerly Sanyo, now merged with P) posted massive losses competing with South Korea and China in the past – in both consumer electronics and solar.

Good luck using Panasonic to somehow get great margins against the same competitors (LG Chem, Samsung, BYD, CATL etc.)

mx

I don’t know, I wouldn’t touch a Chinese panel. They’ve got the worst long term performance.

I’d say China should keep every panel it makes.

¯\_(ツ)_/¯ sven

Tesla should have waited until Solar City went bankrupt to acquire them for a small fraction of the cost they paid. But that would have meant Elon and his cousins losing a boatload of money on their Solar City stocks and bonds. That’s why many were railing at Elon’s conflict of interest when he proposed that Tesla purchase Solar City at top dollar when Solar City’s financial situation and future business outlook were bleak, if not a death spiral swirling down the drain.

Nix

Dumb idea. They would still be wading through bankruptcy proceedings for another year or two, not getting ready to launch Solar Roofs this summer.

(⌐■_■) Trollnonymous

Just use Solar City to prop up covers at all the SC locations in SoCal and other sunny locations.

Also, offer to do the same for Public DCFC locations (for a nominal fee) but put the Tesla name and logo all over the cover……lol

¯\_(ツ)_/¯ sven

Does the lease/contract between Tesla and the property owners allow Tesla to install such structures or does Tesla have to negotiate an update to the lease/contract? If the Superchargers are in a parking lot in front of the business, then the solar roof would block the street view of the business for people driving/passing by. That is not something the business owner would want.

(⌐■_■) Trollnonymous

The SC’s I’ve seen are way off to the side if not away from the business far out in the parking lot corner. Not all but most I have seen are.

Take Folsom SC’s, they are out front street side and behind them are trees blocking the view of the outlet mall……lol

Truckee SC’s, they are covered by shrubs in the back side hidden away.

No reason why they couldn’t negotiate solar covers for the SC’s on the properties. These types of negotiations happen all the time.

¯\_(ツ)_/¯ sven

I agree that most Supercharger are not in front of the host business, but some are like this one:

http://www.greencarreports.com/news/1098831_teslas-contradictory-messages-is-supercharging-unlimited-or-not

Scramjett

I had no idea there were superchargers in Truckee! Which I80 exit are they off of or are they somewhere further from the I80 corridor?

Scramjett

IIRC, that is indeed what Musk said his plan was. He wanted to put up a sort of solar powered carport for the cars to park under and have a large (500 kWh?) battery to store the electricity for when a Tesla plugs in. I thought it a pretty good idea myself, especially along I5 in California where the central valley gets tons of sun.

unlucky

Still not a fan of the bailout Musk forced Tesla shareholders (inc. myself) to give to Solar City.

But looking forward it will be interesting if Tesla can make a better go of what Solar City was trying to do. It’s a tough business and despite mentions above, Solar City really hasn’t been a player in large scale solar, just rooftop really. Perhaps there are better directions and Tesla will direct them there.

Nick

No one is forced to be a TSLA shareholder. If you don’t agree with their decisions or direction, you can simply sell the stock.

unlucky

I did sell my stock.

But that’s beside the point. The excuse “you can sell your stock” doesn’t excuse execs from exercising proper fiduciary duty. For example bailing out your cousins with shareholder money is an easy path to a lawsuit.

Nick

Yep, anyone can sue regardless of merit.

The SEC and FTC greenlit the deal, so it seems they didn’t share your concerns.

I’m glad you sold the stock if you didn’t have faith in the leadership of one of the few companies improving the world instead of just trying to make a buck.

unlucky

I don’t think the SEC has anything to do with such deals. And the FTC is only concerned about unfair trade.

The enforcement for not following fiduciary duty is shareholder lawsuits. And they didn’t evade those. We’ll have to see what the outcome is.

Having a goal in mind doesn’t mean you have to make bad business deals. They don’t have to buy Solar City even if they want to get into solar.

Tom

Almost every time it does but typically those sort of shady deals lead to stocks dropping precipitously. Here, anyone who’d be suing over the merger will have a tough time showing damages since the stock just keeps going up. What’s their claim ‘well it only went up x when we think it should have gone bankrupt and I should have lost everything’. So he’ll get away with a very high stakes gamble that was shady at best. On the plus side, this high valued stock which was once again used to raise case at a ridiculously cheap rate via stock dilution….which also just made the stock go up violating all rules of math…is allowing what’s left of Solar City to revamp its entire business model and ride out a bit of a storm while their competitors go bankrupt. It will likely come out the other side a significantly smaller company whose stores are just the Tesla stores and those stores will sell cars, energy storage, solar panels, and roofing. The end game is likely way more sustainable as a business model than the previous one which was extremely people intensive in its sales model.

Scramjett

I had shares in both companies and I voted in favor of the deal.

Incidentally, Elon did recuse himself of the decision for that reason.

I got the impression, particularly after introducing the powerwall, that getting into Solar was always what Elon had planned for Tesla.

¯\_(ツ)_/¯ sven

Nick, why do you want to stomp out any discussion of Tesla that isn’t glowing praise and adulation of Tesla and Elon? If these uncensored discussions are unbearable, you can always sell your Tesla stock. No one is forced to be a TSLA shareholder. 😉

Get Real

And no one is forcing you to constantly troll all the Tesla threads sven.

¯\_(ツ)_/¯ sven

That’s rich, coming from someone who constantly trolls all the HFCV threads Get Real.

Nick

“discussion”

😀

Someone out there

On the other hand as a stockholder he has a right to influence the direction of the company to a degree proportional to the size of the position.

Pushmi-Pullyu

“Still not a fan of the bailout Musk forced Tesla shareholders (inc. myself) to give to Solar City.

“But looking forward it will be interesting if Tesla can make a better go of what Solar City was trying to do.”

That’s pretty much the way I see it, too. I’m not an investor, but I certainly read plenty of analysis and comments from those who are, the majority of who opposed the buyout.

However, the time to oppose that was before it happened. It’s now a done deal, so there’s no value in further complaints about it. At this point, Tesla fans (and perhaps investors, altho I can’t speak for them) should try to see the glass-half-full side of things, and hope for the best.

Let’s give Tesla a reasonable amount of time to turn this business around before we start throwing mud again.

Mark C

IIRC, the Tesla financial call said the door to door sales for Solar City were discontinued. Their sales are lower, but the percentage of people who buy are significantly higher than before, compared to the percentage who lease. Also mentioned was there would be more people who are knowledgeable in solar on staff in Tesla store locations.

Completely made up customer to Tesla store rep: I’ll take a loaded Model X please. Why yes, I am interested in generating the electricity at home and even having emergency backup power for when the grid fails. So, yes, put solar shingles (or solar modules) on my roof and hang 3 Powerwall 2’s on my garage wall.

Or, if you’re a Tesla shorter kind of person….Tesla is about to go bankrupt so you better sell all your Tesla stock to me really cheap.

Mark.ca

I wanted to give them a try but they were way more expensive than competitors. This is a cut throat market and you have to compete. They need to cut costs and i saw they are trying to do just that now. Maybe the solar roof tiles will give them some life.

David Murray

I just had them come do a consultation a few days ago… haven’t decided if I want to go with them or not. They want to do a 20 year loan at 4.99% interest, which seems a bit high to me (for somebody with as good of credit as I have). While the payment is cheaper than my current electric bill by about $40, I’m not sure if it is worth is considering I may never be able to sell my house.

Someone out there

You should definitely get quotes from some other companies and compare.

Anonymous

Do you know what happens if they go out of business and leave thousands of dollars of capital equipment installed on your roof? Expecting any solar company to stay in business for 20 years is a bit of a stretch these days.

hpver

My only experience with Solar City was when their door to door sales guys were pushing leases on solar, which were terrible for consumers. We found better service and more truthfulness from a well known local company. Still haven’t gone with solar because conservation still pencils out a little better for us, but when we do it won’t be with SC.

James

Musk’s plan for Solar City is essentially changing its entire business model anyway, so short term might be painful, but the solar roof concept, which will no doubt be offered as an option when you buy your car, will be pretty revolutionary. They are becoming a roofing company on top of being a space company, an energy storage company, an energy services provider, a hole boring company, a car company, a data company, robotics company, etc., etc. I’m pretty certain I missed something.

Essentially, Tesla/Musk is becoming a solutions company, and they have a whole lot of tools in their basket.

Get Real

Solar City is dead because it is being transitioned to Tesla Energy with a focus on battery storage systems which Tesla with its growing scale will have the lowest lithium battery costs for.

The other part of the new Tesla Energy division will of course be their new premium Solar Tiles which if they cost as much as a regular roof plus electricity generated will do very well with new construction, re-roofs and probably get lots of high income homeowners to put on.

Nix

Yawn. Tesla solar is actively promoting their buzz-worthy solar roofs and Panasonic low profile panels, so their sales of old obsolete products built by other companies are down.

Who could have seen that coming? Except for everybody?

John

It’s because folks are starting to figure out Solar City isn’t a good deal. Solar City simply becomes a replacement energy company for those who lease a system from them- they lower the customers power bill only about 10-15% and they pocket the tax credits. Not a good deal.

DJ

Meanwhile the unsolicited calls I get about putting solar on my house (mind you I already have solar on the house) have increased by 140%!

Literally just got the 3rd call in a month or so from the same company.If they call again, after me asking them to please stop calling, I’m just gonna have them come out and give me a bid on something I would never ever do. Waste my time, I waste yours 😀

DJ

Meanwhile the unsolicited calls I get about putting solar on my house (mind you I already have solar on the house) have increased by 140%!

Literally just got the 3rd call in a month or so from the same company.If they call again, after me asking them to please stop calling, I’m just gonna have them come out and give me a bid on something I would never ever do. Waste my time, I waste yours 😀

Alan Campbell

I would think anyone who has been following the advancements in solar, would be waiting for the new solar shingles, and no longer settling for the giant black blocks on the roof. Once the solar shingles are available, and offering the solar shingle + Powerwall combo, I expect a big spike in solar city sales. That combo would also be a necessary/no-brainer new construction upgrade.

ModernMarvelFan

“It seems that Tesla acquired SolarCity in the last moments before a storm hit, as the solar industry has become breathless due to dwindled or eliminated subsidies in some states, and in the difficulty in finding new customers.”

Yup. I have said it many times…

It was a simple bailout. Solar City would have easily folded if it wasn’t for the TSLA bailout.

What else did Tesla do? Used the money it raised recently from Model 3 release and paid off Solar City’s Solar Bonds at much higher yield.

It basically bailout out the high interest debts of Solar City with Tesla Cash raised at much lower interest rates. Remember that much of that solar bonds in the last round were bought by Elon and his family.

So, it was a simple “bailout” on financial terms.

SCTY didn’t have much left. TSLA could have snatched it up at much lower price if it was left to go bankrupt. But Elon and his family would have lost far more money in that investment (certainly better for TSLA shareholders overall).

Scott

As someone who has actually dealt with Solar City through the quote stages of our array, I can attest to them being the least viable of the 5 quotes we had on our project. They were incorrect about setback laws, and had a very narrow scope of product to design what we wanted. Their model is fine- if you don’t know any better.

ModernMarvelFan

Actually they are also not price competitive (ever since they went IPO few years ago).

Four Electrics

Why would you buy solar panels for your house when the local electric company can roll out solar cheaper than you can, with no upfront cost to you? That’s what I see happening. In this world, you’d only need solar for peace of mind when a natural disaster cuts off power for longer than you have energy storage. A niche market.

Pushmi-Pullyu

I’m sure those who do install home/commercial solar power systems have their reasons, so your implication that there’s no good reason is just as false as your Tesla-hater FUD, “Four Electrics”.

Some want to be able to reduce their personal carbon footprint.

Some don’t like to be held captive by being the customer of a local monopoly.

Some just want to be able to live without being dependent on anybody — including their local utilities.

And there is the fact that the local utility might be bound up in so many regulations and/or legacy costs that it can’t offer a competitive price, even if it wants to.

Nix

Because your local electric company actually can’t.

You are making the classic mistake of comparing wholesale (before profit) undelivered prices, with delivered prices with no additional profit.

When you hear numbers for utility level solar installs, you aren’t getting all the numbers. You still have to add in delivery to your home through the grid, and utility company profits. That is an additional roughly 40-50% for grid costs in most of the United States, and an additional roughly 5% on top of solar generation + grid costs together. You have to add those back into any numbers you have seen.

You are also comparing untaxed prices on electricity, vs. taxes pre-paid on home solar. When you buy solar generated electricity from a utility, you pay taxes on top. You don’t pay additional taxes per kWh for your own solar, all the sales taxes on your system are already paid.

Doggydogworld

You make the classic mistake of ignoring that homeowners with PV and net metering depend on that expensive grid just as much as homeowners who get electricity from utility-scale solar farms. They just don’t pay their part.

As PV penetration grows beyond trivial levels, this free-riding becomes to obvious to ignore and policies are adjusted. This is why SCTY and similar companies all imploded – their business model required free riding.

Smaller markets still offer free rides, whether to take the offer or not is an individual choice. But it’s bad policy. Net metering doesn’t scale and doesn’t help PV move beyond niche levels of penetration.

Jason

Interesting. In Australia the utility bill is made up of multiple things, one is the static charges for the utility, another is the usage of the utility. The infrastructure is paid by the static charge. Installing solar reduces/removes the usage charges but the static charges are still there. If you get a feed in tariff then the income from that might offset/remove the static charge as well. So whether I put on solar or not, I’m still paying my part for the grid and other infrastructure if I’m connected to the grid.
Surprised if this is not the same model in other parts of the world.

Pushmi-Pullyu

“Hopefully it’s temporary slowdown…”

That appears to be entirely unrealistic. SolarCity’s business model was failing; that’s why it had to have a buyout to avoid bankruptcy.

If Tesla can turn the business around, that’s great. But that turnaround certainly won’t happen overnight. Tesla isn’t even going to start making two of the four types of solar roof tiles it has advertised until next year.

Personally I’m rather skeptical that Tesla can make the former SolarCity into a profitable division of the company, but we certainly should give them a couple of years to see if they can turn things around before we pronounce it a failure.