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SolarCity: Starting Its Own Grid Infrastructure


RV_

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Wow!

I knew that Battery tech would not be cost effective for residential and small biz solar installs for 5-10 years, Despite current installations and improvements on hybrid battery and super capacitor installs happening now in Europe, due to their embrace of sustainable renewable energy tech. They will be not too long after a Gigafactory opens its doors and begins production of new tech LiIon battery packs for EVs, Solar, Wind, and other intermittent Energy sources to better provide power.

 

The idea of micro grids may be a flop due to some innate risks. But the article outlines all of the negative and positives involved as they move forward on build out of micro grids and they get into the grid themselves. I honestly can't say, with all the push back going on from the power companies, whether they can pull this off or not. For investors this will be a project to watch as future copycat and counter ventures by established grid participants could take this idea and run with it. But if they all do, it would bode well for investors to have an inkling of what is being proposed and being done today, to make profits tomorrow.

 

Excerpt:

 

"Summary

•SolarCity's nearly complete reliance on the utilities' grids will become increasingly troublesome for the company, making its microgrid initiative (GridLogic) a smart move.

•While SolarCity's microgrids would have many immediate benefits for customers, the true promise of these microgrids lie in their ability to provide a platform for more extensive grid build outs.

•SolarCity has been constantly raising the barriers of entry for the rooftop solar industry, giving itself a much better market positioning moving forward.

 

A reliance on utility grids has always been a problem for SolarCity (NASDAQ:SCTY), as the company is essentially at the mercy of utilities or regulatory bodies. Due to the absence of cost-effective battery storage technology, SolarCity has no choice but to rely on the utility grids in order to fully function, which is terrible for SolarCity given its natural conflicts of interests with the utilities. Because of this problematic dependence upon the utilities among many other things, SolarCity is starting a microgrid initiative called GridLogic. As per SolarCity,

 

“GridLogic, a microgrid service that combines distributed energy resources - solar, batteries and controllable load - to enable a cleaner, more resilient and more affordable way of providing power. SolarCity's microgrid service ensures that any community anywhere in the world vulnerable to power outages and high energy costs - including remote or island communities, hospitals and military bases - can have dependable, clean power when the grid is down. GridLogic can operate either in conjunction with or independently of the utility grid."

 

GridLogic is a great starting base for a potentially more extensive grid infrastructure down the road. With the inevitable utility push back against distributed solar, SolarCity is incredibly smart to enter into the grid business themselves, rather than being wholly dependent upon utility grids. While truly cost-effective residential electricity storage systems would be a panacea for SolarCity's grid-dependence issues, it will take years of innovation for such storage systems to become a reality. In the meantime, building its own grid system should be a huge boon for SolarCity in terms of its lowering grid dependence, and adding energy stability for its customers.

 

Here is an illustration of how SolarCity's GridLogic microgrids would function.

 

(RV interjection: You'll have to go to the link to see the diagrams and the whole article)

 

In addition to the obvious benefits of maintaining a grid infrastructure, a distributed grid (which is the type of grid that SolarCity intends to build) has one big advantage over traditional centralized grids. This advantage would be a greater resilience to disruptive events, i.e., extreme weather, grid attacks, etc. This greater resilience is only natural given a distributed grid's countless points of electricity generation, versus a centralized grid's few points of electricity generation (think giant power plants). While it is relatively easy to cut off the few points of electricity generation for centralized grids, it would be nearly impossible to cut off the numerous points of electricity generation in a distributed grid.

 

Of course, SolarCity would not need to build out a grid that covers all of its customers, as battery technology would make this unnecessary. In the meantime, SolarCity would definitely stand to benefit from a distributed grid infrastructure. Given the massive benefits of doing so, SolarCity's GridLogic program should add to SolarCity's value proposition.

 

A common criticism against large residential solar companies has been the seeming lack of competitive barriers. In this regard, SolarCity has been doing a great job of constantly putting up more barriers of entry in the residential solar industry. For instance, SolarCity has been the first to vertically integrate rooftop solar across the value chain, move upstream into manufacturing, significantly widening financing options (i.e. solar bonds), and is now planning to integrate a grid infrastructure into its business. Clearly, SolarCity has been able to effective raise the barriers of entry in this industry, despite the seeming simplicity of residential solar.

 

SolarCity's manufacturing project represents the company's largest bet to date, and could be a deciding factor for the company's long-term prosperity. If this bet turns out to be successful, any company that truly wants to compete in the residential solar industry would essentially have to integrate panel manufacturing, which would almost certainly put an end to the low barriers of entry criticism. An extensive grid infrastructure would only raise the barriers of entry for rooftop solar even further. With a retained value of $2.589B, which is rapidly catching up to the company's valuation of $4.8B, SolarCity currently represents an extremely attractive investment opportunity."

 

For the rest of the article, much more info, and the illustrations of the micro grid concept go to the full article here: http://seekingalpha.com/article/3017346-solarcity-starting-its-own-grid-infrastructure?auth_param=ee6s6:1agonjj:94cb2a27ebae412b0ace20ba67de5508&uprof=46

 

I am not an investor anymore with Solar City but still follow them. I sold my few shares and bought Tesla with it when they dropped to a good buy price last year of $125. So I have no dog in the success or failure but this article sure got my attention. It should be big.

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