So, tell me again why Nevada taxpayers handed SolarCity $1.2 million to open an office in Las Vegas to compete against existing companies that install rooftop solar panels.
Allysia Finley reports in The Wall Street Journal that SolarCity’s stock price has soared 600 percent since its December IPO, even though it lost $61 million in the first six months of this year. That’s because the company owner is playing with other people’s money — yours.
SolarCity’s latest 10-Q report states: “Initially, we only offered our solar energy systems on an outright purchase basis. In mid-2008, we began offering leases and power purchase agreements. Our ability to offer leases and power purchase agreements depends in part on our ability to finance the installation of the solar energy systems by monetizing the resulting customer receivables and related investment tax credits, accelerated tax depreciation and other incentives. We expect customers to continue to favor leases and power purchase agreements.”
You see, as Finley explains, SolarCity signs agreements with customers agreeing to sell them power at rates lower than the utility company, but the customer cedes ”any and all tax credits, incentives, renewable energy credits, green tags, carbon offset credits, utility rebates or any other non-power attributes of the system” to SolarCity. These include a 30 percent federal tax credit.
Nevada also offers solar panel installers rebates through NV Energy. So far this year rebates have amounted to $2.80 per watt for schools and public buildings and $1.25 per watt for residences and businesses. Those rebates are scheduled to be cut to $1 and 50 cents, respectively, by the end of the year.
The Public Utilities Commission a month ago denied a request by NV Energy to accelerate the cuts in rebates because the company is rapidly depleting available funds.
Assembly Bill 428, passed in the spring, requires NV Energy to create 250 megawatts of distributed solar power between 2010 to 2021, but sets a cap of $255 million on rebates. According to an industry source, NV Energy estimated that all but $47 million of the $255 million has been spent through its Solar Energy Incentive Program.
A year ago in a story in the View section of the Las Vegas Review-Journal, the CEO of Faith Lutheran Junior/Senior High School was quoted as saying about its 1.11 megawatt solar installation, ”It’s a $5.2 million project, and we didn’t pay a dime for it. And we’re saving money every year.”
It was paid for with taxpayer and ratepayer money — NV Energy rebates and the Federal Renewable Energy Investment Tax Credit. The array was installed by Bombard Renewable Energy, a competitor with SolarCity.
As Finley points out, SolarCity and Faith Lutheran also benefit from net metering, in which the utility company pays the retail rate per kWh uploaded to the grid, which happens when the site uses less power than the solar panels are generating. “Retail rates can be two to three times as high as the wholesale price of electricity because transmission and delivery costs, along with taxes and other surcharges that fund state renewable programs, are baked in,” Finley explains. So utilities are paying twice the price for power they can purchase elsewhere at wholesale.
Finley estimated that the head of SolarCity, Elon Musk, who also is the head of the electric car maker Tesla, which also gets government subsidies, has increased his net worth $5 billion in the past year due to the run up in price of the stock he owns in both companies.
You can get rich using other people’s money.