Toast -- Interesting point you make about the warehouse facility help with capital raises. You are right about the use of the warehouse to time drop downs. I heard management mentioning the facility allowed price maximization, but I was not thinking at all about the potential TERP equity raise benefits. I've heard Sunpower executives state that the pricing for an in place and operational project is better than the pricing for a to be built project. I suspect having actual project performance numbers to point to helps allay perceived risk Thus, the warehouse would enable better spread capture on sales, but presumably, as you point out, also offer greater predictability to the institutional investors that hold TERP for the dividend cash flow.
CEO has done a wonderful job, but I just don't like CEO's pumping their stock. Not saying he isn't probably correct...
Wantstoretire - I suffered the sting of GTAT too. Did not see that coming. Nothing is ever certain and there are no sure things.
They have industry leading cost structure, which they are driving lower and lower. They innovate on process, financing and installation process and purchase that which they need to facilitate that. See Silevo and Zep. Think a solar version of Dell for residential solar and I suspect soon to be smaller commercial distributed generation. This is high risk and high potential reward, so only venture here with eyes open.
Hello Wantstoretireearly -- I have considered but not invested in TERP. I believe SUNE will has greater upside but perhaps more downside. I would only hold TERP in a tax deferred account, if I do go there. I don't disagree with any of Toast's assertions about the seeming likelihood that TERP dividends will grow faster than they publicly state. But I also believe that the market is not understanding the value creation going on in SUNE, though I'm sensing more are starting to see it.
I've been wrong before though, so please do your own due diligence and at least read everything in last year on investor website and earnings call transcripts. Both SUNE and TERP are complex stories. Remember Enron:)
Toast - Sorry I didn't see that. It sounds farfetched that 2.6GW would be casually claimed to be completed in 2015. I probably ought to listen to the call. Maybe Carlos spilled the beans, or maybe not.
Add MGM too -- But indeed Toast seems all over this.
Toast -- SUNE needs to show that the poly business can be profitable. I have no reason to doubt management but the street presumably is not yet sold.
You are right about the operating cost per watt dropping down, but I think they laid that out in lots of details in the analyst day last year. I doubt you can access it now, but well worth the listen if so. The op cost are getting spread over the quickly growing volume.
I will be delighted if SUNE only hits this years targets, but I suspect more upside to be announced on analyst day. Take a look at the TERP call where they said 80% of the 3.3GW backlog will be done this year. I don't know if that is a typo in the transcript, but that is about 2.6GW -- well in excess of the 2.1 to 2.3 guidance. I'm assuming typo, but I would not be surprised that First Wind backlog and pipeline will get installed more quickly under SUNE given its capital advantages and the warehousing facility being set up just for them. I suspect FW sold because it was financially constrained, and SUNE helps open the tap wider.
Anyway, the only disappointments for me was the poly discussion (which they say they will overcome) and the evasive response to the 40cent/400 watt question.
All in all, I still believe SUNE is the best play on renwable energy and it is showing that its tech agnostic/capital light model is capable of scale.
Hope my blabber is not too far off the mark.
Normally talkative management team was quite tight-lipped, clearly waiting to spell out more details at analyst day next week. In brief, from my vantage point, the top nuggets from two calls.
1. The booking rate is smoking. More promising, the last two quarters, SUNE's additive future business conversion amount is running at roughly 1.5GW each quarter. Looking out, that implies a potential 6GW year take ONLY ON SUNE BUSINESS, not inclusive of additive First Wind business. (I recall a couple years ago dismissing as crazy the idea that SUNE could ever be even coming remotely close to the 10 GW amounts that CEO had mentioned back then; that might not prove so absurd in a few years time or more.)
2. SUNE and TERP will be bring forward more financing method to lower cost of capital. Securitization vehicle is quite likely or some variation thereof.
3. SUNE is going international with First Wind and can't wait to tell us more.
4. Wind is a much better complement to solar than perhaps many had appreciated.
5. Lots of double talk on the 40 cent per watt module plan. Don't count on it, though official statement is that "on track."
6. Forgone margin from retained business claimed to be $480M. That is roughly $1.75 per share pre-tax earnings not being reported if had been selling projects. The take is higher when retained.
7. TERP dividends do not include any third party acquisitions, and management is virtually assuring that those will happen again in 2015. Lots of significant accretive opportunities.
8. Go back and read item #1. That is the key here. Item #2 will be what enables SUNE and other large players to grow much faster than industry.
Toast and MGM -- Won't have time till later today or weekend to closely look over. TERP had said last quarter that they generally don't update guidance to reflect SUNE pipeline/backlog changes. I will likely post more this weekend, but to me the key in what limited I've looked at is that even without FW being in the 4Q numbers, the effective realizable bookings is exploding upward. If repeatable (which I think it is), it suggests perhaps that the 2.1GW number for 2015 could be upped. Also, I think they are saving lots for next week's analyst day, which I'm much more interested in.
Would be nice to know more about this exposure. I was told by someone in my family who is a retired electricity to stay away from UCs as explosive. I don't know if that is true. In doing a deep deep dive, I've only seen one other scientific article where the danger was mentioned, but it was said to be more problematic that Li battery concerns. The post below is now the third time I've seen this concern mentioned. Would think if it were so problematic that I would have seen more in literature.
mrboo -- Your post pretty much nails it on the head. Seems like potential, but that has been the status for some time, and very difficult to forecast with any degree of certainty the potential range of revenues in the next couple years. I have good reason to believe that even the truck start module market will be a slow ramp. However, it is the one piece I feel confident will ultimately generate meaningful revenue. Because I have limited capital that is deployed in another sector and I expect that sector to continue to outperform, I can afford to see if the price on this drops to a point where it becomes a relatively low risk bet with a better risk to reward profile. Might not happen, but I'm only out the time of monitoring at this point.
Tells you all you need to know...added 3.7M shares on 21M shares held already...
add further that retained and yieldco come in over time (15 to 20 years) so not really in bottom line TODAY. It is a future annuity which, under GAAP, is not counted in earnings. Hope this helps.
It is complicated by the question of whether retained on own balance sheet, dropped into yieldco or sold (small percentage). I tend to look at it as being not less that 50cents per watt but as high as $1.25, with more for yieldco and retained. Over time, I suspect these margins will narrow, but I think the larger players like SUNE will grow 2X or more the market rate.
I'm sorry, my answer is horribly incomplete. A GW is 1000 MW. I believe a GW is 1 billion watts, so I believe that 1GW can cost about $2B to $3B in US and less in lower wage places like India.
Typically in US about $3 historically, but much lower in India. My guess is that below $2, but SUNE has said the margins will be same. The key to understand is that you can probably count on no less than 50 cents per watt of gross margin, and as much as a $1 or more on "retained value" basis. Less if sold. They will likely lay out more details in capital markets day.
Don't forget that India is not exactly the model of political stability and leadership change can easily derail all of this. Nevertheless, agree that 1/2 projected would in and of itself be quite a feat given that not long ago a total yearly development of 1GW by SUNE would have been a major achievement.
Oh...now I see...I think yahoo deletes anything with a link. In future you should just state how to find, not provide a link.
Anyone know why the above referenced post was deleted?
Regardless, the next couple weeks should prove interesting and SUNE might hopefully shed more light on their EPS potential and on their global expansion efforts. I suspect lots on wind. SUNE really is executing quite well and has some competitive advantages that were highlighted in a deleted posts. I'm hoping SUNE eventually (in next year or two) makes its model and effect of the newly added pipeline on future EPS easier to understand so that more than just hedge funds appreciate what is going on.
I value SUNE on an conservative "effective earnings" basis. While I think (or maybe hope) that is a correct way to look at SUNE (versus sum of parts), it might in SUNE's interest to spell that out more clearly for shareholders so that the next capital raise is at say $30 per share, rather than at $20. SCTY goes a bit further in connecting the dots, but even they stop short of drawing a complete picture. For what it is worth, I tend to view "residual value" as only potential upside and not really anything that should be valued. If solar prices continue to drop at current rates, renewals will most likely be at the future 15 or 20 year market price of solar. Thus, valuing solar at escalator prices seems like nonsense to me. But, in truth, if pricing drops to the 4 to 7 cent KwH price range, no one will be worrying about escalators as there will have already been an explosion of growth only limited by grid capacity. At such prices, the "tens of GW" could indeed be developed.
Without blabbering on again, I think SUNE's asset light and partnership model (see PermaCity deal) uniquely positions SUNE for potentially robust growth.
Disclosure: I didn't see GTAT imploding, so my views are inherently suspect and potentially severely flawed. Do your own due diligence. I obviously have material blind spots, so there could be risks (e.g., interest rates) that I'm not sufficiently taking into account.
Check out the news of SUNE stating that it will develop 15 GW of solar and wind in India by 2022. That is nearly 2GW per year. Plus, SUNE taking FW international. Even if 1GW per year were to be built, the potential is quite amazing.