SolarCity Analysts Day_2015

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Transcript of SolarCity Analysts Day_2015

  • 2 0 1 5 A N A L Y S T D A Y Delivering Better Energy

  • This presentation contains forward-looking statements that involve risks and uncertainties, including statements regarding SolarCitys business strategies; our operational growth and expansion opportunities; our international expansion plans, including our expectations as to lower global module pricing and labor costs outside the United States; the deployment and installation of megawatts, including estimated Q4 2015 and 2016 megawatt installations; future bookings; financial strategies for cash generation and increasing shareholder value; forecasted cash flows from existing Energy Contracts, including related assumptions as to energy production future operations and maintenance expenses, cancellation rates, renewal rates, default rates, amounts of performance based incentives and other identified assumptions; our projections related to decreases in cost per Watt, including our plans to decrease our sales cost per Watt by eliminating higher cost channels, utilizing more efficient channels, and other initiatives, the impact of proprietary technology in decreasing our installation costs, our expectations regarding future hardware pricing, our expectations regarding the maturing efficiency of our operations centers, and our plans to vertically integrate our commercial product offerings along with related projections regarding installation efficiencies and cost savings; our plans to achieve manufacturing economies of scale and associated manufacturing cost reductions; our expectations regarding the Riverbend agreement and the development and construction of the Riverbend facility, including our projection that the facility will be completed and ready to commence operations by Q2 2016, our expectations regarding capital and operating expenses and the performance of our manufacturing operations; our expectations as to future regulatory and policy outcomes affecting our industry, including our belief as to the likelihood of an extension of the Federal Investment Tax Credit and the continued adoption and extension of net-energy metering programs; our projections regarding hypothetical cash flows and tax equity transactions following the schedule step-down in the Federal Investment Tax Credit; our projections regarding the future pricing of utility-generated electricity and customer savings; our liquidity and forecasted access to capital, including assumptions related to the terms of future financing (including risk premiums and interest rates), the sufficiency of committed available financing, the terms and frequency of future securities offerings (including securitization offerings and our expectation that the risk premium of future securitized offerings will decrease consistent with that of mortgages) and our expectations regarding the refinancing of existing debt obligations, including our short-term Solar Bonds; the amount of megawatts that can be installed and deployed based on committed available financing; the success of our product development efforts and customer preferences, including the potential and performance of residential and commercial energy storage products and other new product offerings; and assumptions relating to the foregoing.Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. In order to meet our projections, we will need to expand our workforce and increase the efficiency of our sales and installation operations relative to what we have achieved to date. Additional key risks and uncertainties include the effect of electric utility industry regulations, net metering and related policies; the availability and amount of rebates, tax credits and other financial incentives; the level of demand for our solar energy systems; the availability of a sufficient, timely, and cost-effective supply of solar panels and balance of system components in each of our geographies; our ability to successfully integrate acquired businesses, operations and personnel; our ability to achieve manufacturing economies of scale and associated cost reductions, our expectations regarding the Riverbend agreement and the development and construction of the Riverbend facility, including expected capital and operating expenses and the performance of our manufacturing operations; the effects of existing and future tariffs and other trade barriers; changes in federal tax treatment; the availability and amount of financing from fund investors; the retail price of utility-generated electricity or the availability of alternative energy sources; risks associated with SolarCitys rapid growth; risks associated with international expansion; the success of our product development efforts and customer preferences; risks that consumers who have executed energy contracts may seek to cancel those contracts; assumptions as to the value under energy contracts and contract renewal rates and terms, including applicable net present values, performance-based incentives, and other rebates, credits and expenses; SolarCitys limited operating history, particularly as a new public company; changes in strategic planning decisions by management or reallocation of internal resources; and general market, political, economic and business conditions. You should read the section entitled Risk Factors in our most recent Quarterly Report on Form 10-Q and subsequent Current Reports on Form 8-K, which have been filed with the Securities and Exchange Commission, which identify certain of these and additional risks and uncertainties. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as otherwise required by law.

    Forward-Looking Statements

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  • B U S I N E S S D R I V E R S & M E T R I C S

    L E A D E R S H I P O F A G R O W I N G O P P O R T U N I T Y

    V A L U E O F A S S E T S

    M O N E T I Z A T I O N O F E N E R G Y C O N T R A C T S

    V E L O C I T Y A N D C O N S I S T E N C Y O F D E P L O Y M E N T S

    P R O P R I E T A R Y O R I G I N A T I O N A T L O W E R A C Q U I S I T I O N C O S T S

    O P E R A T I N G C O S T E X C E L L E N C E

    I N V E S T M E N T I N B E S T - I N - C L A S S T E C H N O L O G Y

    G U I D A N C E A N D C O N C L U S I O N

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  • Strategy Update

    Organic origination of long-term Energy Contracts at lower acquisition costs

    Best-in-class installation costs through proprietary technology

    Monetization of a higher portion of the value of our Energy Contracts through low-cost, long duration financing

    Exploring monetization of the full value of some Energy Contracts

    Be a catalyst in de-carbonizing the energy infrastructure

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  • Introduction: Business Drivers and Metrics

    Leadership of a Growing Opportunity

    Monetization of Energy Contracts and Creation of Asset Value

    Investment in Best-in Class Technology

    Metric Unit 2014 2015Q1 Q2 Q3 Q4 Q1 Q2 Q3

    U.S. Power Capacity:U.S. Installed Generating Capacity GW-AC 1,161 1,169 1,172 1,177 1,182 1,171 1,176 Distributed Solar as % of U.S. Generating Capacity % 0.6% 0.6% 0.7% 0.7% 0.8% 0.9% 0.9%U.S. Installed Distributed Solar Capacity GW-DC 6.7 7.3 7.9 8.6 9.2 10.0 10.8 New U.S. Installed Distributed Solar Capacity MW-DC 483 564 559 719 682 697 796

    SCTY Units:SCTY % of New U.S. Distributed Solar Capacity % 17% 19% 25% 25% 22% 27% 32%MW Installed MW 82 107 138 177 153 189 256 MW Deployed MW 82 107 137 176 143 177 205 MW PTO'd MW 83 79 113 138 160 156 203

    Energy Contract Pricing of New Deployments (Yr. 1) $/kWh $0.12 $0.12 $0.12 $0.12 $0.13 $0.13 $0.13

    Annual Escalator % 1.7% 1.9% 1.9% 1.9% 2.1% 2.1% 2.2%SREC (5-Yr. Portfolio Average) $/kWh $0.01 $0.01 $0.02 $0.02 $0.02 $0.02 $0.02 Energy Harvest (Yr. 1) kWh/kW 1,425 1,416 1,406 1,402 1,404 1,379 1,352

    Value Generation and Monetization:Asset Financing in Period (including rebates)* $/W $2.69 $2.04 $2.62 $2.28 $2.35 $2.33 $3.20

    Contracted Value of MW Deployed in Period $/W $3.68 $3.55 $3.37 $3.24 $3.44 $3.49 $3.50Renewal Value of MW Deployed in Period $/W $0.38 $0.40 $0.38 $0.34 $0.33 $0.34 $0.36

    Total Value of MW Deployed in Period $/W $4.06 $3.95 $3.74 $3.58 $3.77 $3.83 $3.86

    Cost per Watt**:Sales $/W $0.51 $0.47 $0.49 $0.57 $0.59 $0.53 $0.64 Installation $/W $2.44 $2.28 $2.19 $2.09 $2.09 $2.13 $1.92 G&A $/W $0.30 $0.26 $0.21 $0.20 $0.27 $0.24 $0.27 Total Cost per Watt $/W $3.25 $3.01 $2.89 $2.86 $2.95 $2.91 $2.84

    R&D Expenses $M ($1.9) ($3.0) ($4.2) ($10.0) ($12.1) ($12.4) ($17.7)Capital Expenditures $M ($4.7) ($2.9) ($5.8) ($9.5) ($30.5) ($71.6) ($45.7)Change in Working Capital Q/Q $M $28.3 $22.7 $37.0 ($38.1) ($72.3) ($31.7) ($41.7)

    Debt and Cash:Debt - Recourse $M ($176.6) ($349.8) ($165.2) ($149.7) ($290.6) ($419.2) ($518.2)Debt - Convertible $M ($230.0) ($230.0) ($730.0) ($796.0) ($796.0) ($796.0) ($796.0)Cash & Short-Term Investments $M $526.2 $429.6 $756.8 $663.6 $586.2 $497.6 $438.7

    Current Portfolio ValueUnlevered Pre-Tax NPV Remaining of Cumulative MW Deployed (1.5 GW) $M $2,708Debt Non-Recourse $M ($995)Net NPV of Cumulative MW Deployed $M $1,713

    Proprietary Origination at Lower CostOperating Cost Excellence

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    * Weighted average of Q1-Q3 2015 Asset Financing is $2.68** Cost per Watt is based on our qu