Author Topic: Solar  (Read 6399 times)

JayGatsby

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Re: Solar
« Reply #10 on: August 02, 2017, 09:26:34 AM »
Peter Thiel's book has a good discussion on this if you haven't read it: https://smile.amazon.com/gp/product/B00J6YBOFQ/

He's really skeptical of "the market is huge/growing and we just need to be a part of it" theses. Typically these result in crowded markets and many losers. This same statement re solar was made in the mid 2000s with a lot of venture capital money raised around it (remember Al Gore at Kleiner Perkins) with mediocre (negative?) results.


Uccmal

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Re: Solar
« Reply #11 on: August 02, 2017, 09:47:52 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.

I agree with LC.  Utlities, and /or large established energy companies with deep pockets are the way to go with this. 

My analagy for what might happen:  In the early to mid nineties there were thousands, if not hundreds of thousands of internet providers.  I used a local one and had to painfully dial up from my computers modem to get my online porno (ok that was gratuitous :-) ).   Within a few short years the incumbent "pipe" providers had completely wiped 99% of them out.  Bell Canada is the largest internet provider, followed by Rogers, and a few other local monopolies. 

I see existing utility companies such as the BAM group, Enbridge, Algonquin Energy, Mid-American, and so forth coming out the winners.  They already own the expertise, have the connections, and cash availability to completey control solar and wind.  BEP (BAM sub) already owns and developes alt. energy facilities, as does Enbridge, Emera, BH Energy, and Algonquin.  My list is biased to Cdn. companies but they all have lots of international assets and expertise.  There are likely many other international players in this space as well. 

The second group I see taking a piece of the pie are the oil majors.  Exxon, Shell, Chevron for example.  They can buy the facilities and expertise. 

FWIW I think Tesla and its ilk probably participate in parts of the equation, perhaps storage (which seems to be a big focus of Musks), and industrial scale rooftop.  With the weather we have had in the East this year solar, no utility access seems a bit of a reach for me.  We would be using a whole lot of diesel in our backups. 
« Last Edit: August 02, 2017, 09:50:13 AM by Uccmal »
GARP tending toward value

investmd

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Re: Solar
« Reply #12 on: August 02, 2017, 05:04:41 PM »

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

If 5-10 years to tipping point, from an investment point of view, is now the time to get in? Take a broad perspective (i.e. ETF) whilst still on the ground floor? In 5-10 years, the industry will be much more mature. There will be good companies in the space - i.e.: the Apples of today - but valuations much steeper.

oddballstocks

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Re: Solar
« Reply #13 on: August 03, 2017, 03:47:07 AM »

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

If 5-10 years to tipping point, from an investment point of view, is now the time to get in? Take a broad perspective (i.e. ETF) whilst still on the ground floor? In 5-10 years, the industry will be much more mature. There will be good companies in the space - i.e.: the Apples of today - but valuations much steeper.

I was looking at putting it on my house, not investing in it in the market.
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Voodooking

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Re: Solar
« Reply #14 on: August 10, 2017, 03:56:14 AM »
One thing I always try to remember when I get excited about a new market / product etc. is what Warren Buffett said about airlines and auto companies in the beginning...

In the early days of automobiles and airlines, this was new technology which was obviously going to change the developed world and the lives of almost everybody in it. It would make some people very rich. The problem is, out of the hundreds or thousands of companies at the beginning, how do you know which ones are going to survive, and which ones are going to be profitable?

If you'd invested in every commercial airline at the beginning of aviation, you'd have lost almost all your money. If you'd picked a number of auto companies from the hundreds of American auto companies, you'd have lost money if you didn't pick one of the 'Big 3' that survived.

This instilled the importance of Value Investing to me, and the fact that the only way to make money consistently over time (unless you can predict the future) is value investing. Unfortunately value investing doesn't work with speculative growth investments, no matter how well we would like them to turn out...

With all that said, I have a 5% position in Tesla, and I personally believe they have the potential to be at least a 10x and maybe even bigger than Apple. I think Elon Musk is one of the incredible individuals of our generation, similar to Steve Jobs, Bill Gates, Warren Buffett, Jeff Bezos etc. and I think his products and business plan (INCLUDING SOLAR ROOFS AND STORAGE) are incredibly good. I may be wrong about this, but I don't want to not invest and miss out.

Cardboard

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Re: Solar
« Reply #15 on: August 11, 2017, 01:40:54 PM »
"I may be wrong about this, but I don't want to not invest and miss out."

Being afraid to miss out is symptomatic of greed. Does not sound like value investing at all and certainly does not match the first part of your post which was bang on.

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Liberty

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Re: Solar
« Reply #16 on: October 15, 2017, 09:58:18 AM »
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investmd

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Re: Solar
« Reply #17 on: October 15, 2017, 05:15:09 PM »


Solar net additions these past few years.

https://www.wsj.com/articles/your-next-home-could-run-on-batteries-1508065205

This chart along with "tipping point" suggests to me that it is a decent time to place a v. small %  of portfolio on solar ETF.
I agree with Voodooking that betting on an industry is NOT "value investing". However, putting a very small % into a growth strategy seems reasonable.

Liberty

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Re: Solar
« Reply #18 on: October 19, 2017, 12:40:13 PM »
https://electrek.co/2017/10/19/china-breaking-all-solar-power-records-aiming-for-50gw-in-2017/

Quote
China is leading the world in solar power installations by a long run. ASECEA is predicting that 50GW of solar power is well within reach of being installed this year. In June and July of 2017, China installed 25GW of solar power – and they’ll push the globe past 100GW total for the year.
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Cigarbutt

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Re: Solar
« Reply #19 on: October 19, 2017, 01:42:52 PM »
Why this post?
-working on a thesis and eventual contribution to an active thread about a stock discussed on this Board where what happens in China matters.
-I want to learn.

It is expected that China will be the workhorse here in renewable energy.
https://www.theclimategroup.org/sites/default/files/archive/files/RE100-China-analysis.pdf
Many now assume that coal demand in China will plateau for the next 20 years.
Isn't that an unusually large assumption?
Even looking back only 3 to 5 years ago, it was felt that coal demand would continue to increase in China?
We are talking about extremely large numbers. A small difference can make a large difference.
Aren't we not calling the paradigm shift a bit early especially if we base our projections on the institutional framework in China?


And if the assumptions hold, isn't this a massively bullish signal for commodities in general?

If energy demand and electricity consumption in China follow the proposed graphs going forward, isn't it reasonable that they will also require "dirty" iron ore also?

Change is inevitable but difficult to predict. No?
I always say to myself  (+/- from Yogi Berra) that I've got to be very careful if I don’t know where I am going, because I might not get there.