Author Topic: Solar  (Read 7973 times)

investmd

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Solar
« on: August 01, 2017, 09:53:40 PM »
With recent news from Volvo (all cars to be electrified by 2019) & Tesla (Model 3 delivery) combined with govts of France, UK, & India all declaring no sales of combustion engine vehicles by 2030-2040, the horse appears to be out of the barn for electric cars.

If so, how will the current worldwide electrical grid supply the energy for these cars. Given a new supply source of energy is needed, and that solar is "clean" and the cost of solar has decreased tremendously, is now the time to invest in Solar?? Realize this is a top down macro bet that would generally be frowned upon by bottom up deep value investors.

TAN and KWT seem to be 2 major solar ETFs - both down some 90% since their highs in 2008. Both paying a dividend of approx 3.5%. TAN has 10x of assets under management vs. KWT. Both have a high MER for an ETF (0.71% vs. 0.65%).

Am keen to hear thoughts from the Board. Is this the time to dip into solar?


LC

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Re: Solar
« Reply #1 on: August 01, 2017, 10:05:46 PM »
I think the real winners will be the utility companies that can build economically-feasible solar plants. I don't think any of the hardware sellers will do particularly well. The other parties I think may do well are the contractors building/servicing these sites, and perhaps residential solar financing groups (I don't think residential solar is all that smart, but people still do it and usually get financing).
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Paarslaars

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Re: Solar
« Reply #2 on: August 01, 2017, 11:21:46 PM »
The question is, what are solar ETF's investing in?
Companies that will use solar cells or those that make them?

Currently solar is dirt cheap because of the Chinese that have a huge stock of PV's they are dumping well below cost price.
I believe the current production cost is 0.40-0.45$/W while the Chinese are dumping at 0.20-0.22$/W.
This is already putting some competitors out of business (like SolarWorks).

awindenberger

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Re: Solar
« Reply #3 on: August 02, 2017, 05:05:44 AM »
The question is, what are solar ETF's investing in?
Companies that will use solar cells or those that make them?

Currently solar is dirt cheap because of the Chinese that have a huge stock of PV's they are dumping well below cost price.
I believe the current production cost is 0.40-0.45$/W while the Chinese are dumping at 0.20-0.22$/W.
This is already putting some competitors out of business (like SolarWorks).

Chinese company's are already producing panels at close to $.30/W (including D&A). Take a look at Jinko Solar's Q1 2017 slides:
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NjczMTQ1fENoaWxkSUQ9MzgxNzQyfFR5cGU9MQ==&t=1

Note that even with the significant oversupply during the winter, they were able to eek out a small profit in Q1.

Chinese companies are driving the cost of production down tremendously, and putting US companies like Solarworld out of business. If we were smart, we would remove the current tariffs on solar and buy as many of these panels as possible.

Three months ago many parts of the solar complex were very cheap. RUN and particularly VSLR were trading under book, with no value given to future growth, FSLR was trading at half of book. I was smart enough to buy some VSLR (only small position), but didn't pull the trigger on FSLR.


SmallCap

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Re: Solar
« Reply #4 on: August 02, 2017, 06:04:17 AM »
I think the real winners will be the utility companies that can build economically-feasible solar plants. I don't think any of the hardware sellers will do particularly well. The other parties I think may do well are the contractors building/servicing these sites, and perhaps residential solar financing groups (I don't think residential solar is all that smart, but people still do it and usually get financing).

why don't you think that residential solar is all that smart? is it a price point thing or a economies of scale thing or something else?
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oddballstocks

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Re: Solar
« Reply #5 on: August 02, 2017, 07:21:36 AM »
I had someone come and pitch me on residential solar.  It's a really tough sell.

You buy this expensive system upfront with a loan.  You pay down the loan for 10 years.  In year 10 you finally reap the benefit of your system as it makes your electric bill 'free'.  You have 20 years of free electric with the system.

The problem for me was that I am investing in an asset with a terminal value of zero.  Given the prices they quoted if I put the exact same amount of money into a corporate bond fund the yield would pay my electric bill today, and I'd have my original principle back in 30 years.

The other problem is I have to commit to a costly purchase with no benefit for a decade.  How do I know I'll be here then?  I hope I am, but who knows.  How do I know rates, or what the future will hold?  You pay a lot upfront for something that you don't get to use in 10 years.

There was also some gotcha they tried to explain with selling power back.  I would be selling it back, but the power company only credits on a per year basis.  So I'd have to have the system running for 1-2 years before they'd credit the electric I'd send.  So that first year or two I'd have power bills that were double the usual amount.

And lastly one thing I thought would be cool is to have backup if power went off.  He said the only way to get that is to buy a separate $7k battery pack.  His recommendation was to not waste my time and buy a generator instead.

I agree with LC, the ultimate beneficiary of this arrangement is the utility.  They are getting customers to finance power generation infrastructure needs.  The utility gets the power and pays a wholesale rate for something they didn't have to build.

I've looked at this on and off over the last 15 years.  The good news is things are going in the right direction.  Fifteen years ago it was going to take me 30+ years before I had a payoff.  Now it's down to 10 years.  In another five years or so the panel cost might finally be low enough where I can get a return in 2-3 years.  For me that's the tipping point, I'd jump then.
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LC

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Re: Solar
« Reply #6 on: August 02, 2017, 07:24:49 AM »
I think the real winners will be the utility companies that can build economically-feasible solar plants. I don't think any of the hardware sellers will do particularly well. The other parties I think may do well are the contractors building/servicing these sites, and perhaps residential solar financing groups (I don't think residential solar is all that smart, but people still do it and usually get financing).

why don't you think that residential solar is all that smart? is it a price point thing or a economies of scale thing or something else?

I had a discussion with another user about it over on this thread:
http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/america-1st/msg302262/#msg302262

Essentially it comes down to this:

The large gap in per-MWh costs between utility- and residential-scale systems results principally
from: (a) lower total plant costs per installed kilowatt for larger facilities; and (b) greater solar
electric output from the same PV capacity (300 MW-DC) due to optimized panel placement,
tracking and other economies of scale and efficiencies associated with utility-scale installations.
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Jurgis

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Re: Solar
« Reply #7 on: August 02, 2017, 07:41:44 AM »
I had someone come and pitch me on residential solar.  It's a really tough sell.

Oddball, do you guys have SolarCity or some other "install their panels for cheaper electricity but don't pay upfront" option in your area? Would that work for you?

I haven't looked at residential solar much, since I don't like panels on the roof. I think Tesla tiles on the roof are gonna be gamechanger if/when I get to roof replacement. Unfortunately, I changed the roof about 9 years ago, so it's gonna be long time.
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oddballstocks

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Re: Solar
« Reply #8 on: August 02, 2017, 07:56:36 AM »
I had someone come and pitch me on residential solar.  It's a really tough sell.

Oddball, do you guys have SolarCity or some other "install their panels for cheaper electricity but don't pay upfront" option in your area? Would that work for you?

I haven't looked at residential solar much, since I don't like panels on the roof. I think Tesla tiles on the roof are gonna be gamechanger if/when I get to roof replacement. Unfortunately, I changed the roof about 9 years ago, so it's gonna be long time.

I've had both SolarCity and Vivint Solar pitch me.  Both have the $0 upfront, but it's really a loan.

SolarCity you never own anything, you just pay a little bit less.  The value for SolarCity isn't there.  You have panels placed on your roof and they say you'll pay a few cents less per kwH forever.  The problem is you still pay distribution and other electric charges, so you save a little, not much. 

The Vivint Solar guys are selling the system, it's a no upfront payment thing.  You just get a loan for the amount and the loan payment is roughly your electric bill payment for ~10 years.

I'm all about solar.  I love the idea of it.  The cost just needs to drop.

Where it's getting cost effective is for a small space.  I've looked at solar for our RV in the past.  That's a interesting idea.  There are less demands on the system and the batteries needed aren't terrible.  You can be 100% self sufficient with solar on an RV.  Plus you can move the trailer to where the sun is best to get the highest efficiency.

I think within 5-10 years we're going to hit the tipping point on solar where the ROI finally makes sense.
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Jurgis

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Re: Solar
« Reply #9 on: August 02, 2017, 08:03:08 AM »
SolarCity you never own anything, you just pay a little bit less.  The value for SolarCity isn't there.  You have panels placed on your roof and they say you'll pay a few cents less per kwH forever.  The problem is you still pay distribution and other electric charges, so you save a little, not much.

Yeah, that's the picture I got too.

Quote
The Vivint Solar guys are selling the system, it's a no upfront payment thing.  You just get a loan for the amount and the loan payment is roughly your electric bill payment for ~10 years.

Understood.
I think these make most sense if you can sell back to grid at markup, which is only available in some states (and probably not for long).
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