I'm currently working on a book about the entrepreneur Elon Musk (you can follow the progress here: @elonmuskbook). Elon Musk is famous for founding or co-founding the companies PayPal, Tesla Motors, and SpaceX. One often forgotten company in his empire is SolarCity ($SCTY) where Elon Musk is a chairman, and his cousins Lyndon Rive and Peter Rive are running the company.
They got the idea behind the company while the three of them were traveling towards the Burning Man festival. Elon Musk had earlier co-founded Tesla Motors that are building electric vehicles, and now he needed clean power for his vehicles.
Most companies in the solar industry were focusing on the wrong area: the manufacturing of the solar panel. Making a standardized solar panel is like making a drywall, it's a problem, but not the problem. The large problem is how to convince the society to get solar on the top of tens of thousands of rooftops.
They came to the conclusion that they would provide solar panels for residential buildings in a similar way as Dell is selling computers. No manufacturing would be needed, since they thought that the manufacturing business was too competitive. They would just purchase the parts needed, install the solar panels, and provide the infrastructure around them, and thus SolarCity was founded in 2006.
The vision of SolarCity is to "Create the most compelling energy company of the 21st century by delivering cleaner, cheaper power through distributed generation"
SolarCity provides the sales, financing, engineering, installation, monitoring, and financing of solar panels.
The installation of the solar panels is free
Customers pay a monthly fee ($0.15/kWh) which is hopefully lower than their utility bill ($0.18/kWh)
Easily transferable if the customers move
Most customers agree to a 20-year contract term while the solar energy systems have an estimated life of 30 years
The customer will still be connected to the utility grid. The excess electricity produced by the solar panels are fed into the grid. The meter will then spin backward, accumulating credits with the utility company that will offset the customer on the next bill
The system has no moving parts. Only cleaning and inspection are needed by the customer, such as no growing trees should shade the system. The SolarCity service team proactively monitors the system to ensure that the system is performing as it should
The customers can be divided into three groups:
Walmart. 160 stores where 30 percent of each facility's total electric needs is supplied by the solar panels
Tesla Motors. 750 SuperCharger stations (like gas stations but electricity) where Tesla owners can re-charge their electric vehicles for free. When you buy a Tesla car, you also asked if you want to lease solar panels from SolarCity
SolarStrong. 120,000 military housing units
The customer can choose one of two payment options:
SolarLease. The customer pay a fixed monthly fee with an electricity production guarantee
Power Purchase Agreement. The customer pay a rate based on the amount of electricity the solar energy system actually produces
What happens when SolarCity gets a new customer?
Home Energy Evaluation. At each new building, SolarCity perform an energy efficiency evaluation. During the evaluation, a software enables them to capture, catalog, and analyze all of the energy loads in a home to identify the most valuable and actionable solutions to lower the energy costs.
Energy Efficiency Upgrades. They then offer to perform these upgrades identified during the Home Energy Evaluation.
They also offer energy-related products such as electric vehicle charging stations and monitoring software.
In 2012, 48 percent of the new customers also purchased additional energy products or services.
The main product is the Solar Energy System:
Solar panels that convert sunlight into electrical current
Inverters that convert the electrical output from the panels to a usable current compatible with the electric grid
Racking that attaches the solar panels to the roof or ground
Electrical hardware that connects the system to the electric grid
The headquarter is in San Mateo, California
Purchases major components from multiple manufacturers. Most solar panels are purchased from manufacturers in China
6 centralized storage and distribution facilities
Distribute inventory to local warehouses weekly
700 trucks and other vehicles
Strong growth. A new customer every five minute of the working day. Number of MW measures how many solar panels have been installed: 58 MW in 2010, 129 in 2011, 287 in 2012 – or 122 percent per year
Sells energy to the customers at prices below utility rate so the customer will save money
Easy to switch to SolarCity since they provides the chain: sales, financing, engineering, installation, monitoring, and financing
Long-term customer relationships for at least 20 years. The installed system will last for 30 years
Large customers. Potential customers trust a company with well recognized customers such as Walmart and the US government
No manufacturing of solar panels - this area is too competitive
Management with track record. The chairman Elon Musk has founded PayPal, Tesla Motors, and SpaceX. Lyndon and Peter Rive have also founded companies, such as Everdream
A customer referral program to find new customers. SolarCity offers cash awards to customers who convinces their friends, family, and colleagues to become new customers
Purchases major components from multiple manufacturers. At least four companies provides the solar panels
Some argue that solar panels are ugly on the rooftops, but not as ugly as wind power
Not yet profitable, need to achieve economies of scale
Peak Oil will force customers to purchase electric vehicles, the demand for electricity will increase with the result that prices of traditional electricity from the grid will increase, and thus make solar panels more competitive
International expansion where distributed solar energy generation is a viable economic alternative to traditional electricity from the grid
People are concerned about the environment, including nuclear and coal power plants
No competition from low-cost countries
The primary competitors are the traditional utilities that supply energy to potential customers
A reduction in utility electricity prices will make it unprofitable to install solar panels
Rising interest rates would increase the cost of capital
Discovery of a better alternative to solar panels
Have customers in 14 US states. But many houses are in California – an earthquake-zone. How will the solar panels survive a hurricane or a tornado, also common in the US?
Found an interesting documentary on scammers. From the description: "Fraudsters in West Africa show us how they use internet scams to steal thousands of dollars from unsuspecting victims all over the globe."
I'm currently working on a more detailed Infographic on the behaviors of the stock market index Dow Jones Industrial Average (DJIA) during World War 2. It seems like Yahoo finance has removed the option to download the data from their website, I've googled the answer and found a strange answer to why they removed it, but that answer is not important here. So, to find the data, I went here: Fred Economic Data, and downloaded it, and you can find yearly closes from the middle of 1896 until today. I haven't seen old data on that index before, so here comes some basic calculations (I've excluded 1896 and 2013 from the data):
Figure 1. Dow Jones Industrial Average 1897-2012 with a logarithmic scale
Figure 2. Dow Jones Industrial Average 1897-2012 - yearly changes
On average, the daily gain during this period was 0.0265 percent, which means that the stock market always moves up a little bit long-term.
The 10 best days were (the format is year-month-day):
1987-10-21: 10.14 - 2 days after the Black Monday
1939-09-05: 9.52 Germany invaded Poland September 1, and on September 5, US announced it's neutrality in the European conflict
The 10 worst days were:
1987-10-19: -22.61% - the Black Monday
1914-12-14: -20.53 - This was not a true daily drop since Dow Jones closed in July because of World War 1 and remained closed until December. Since World War 1, the exchange has remained open through wars, natural disasters, and economic crises.
This is an Infographic covering the Swedish retail-chain H&M ($HM). An Infographic could pretty much be explained as the art of explaining something difficult in a larger picture. This something difficult could be a lot of numbers, or an event such as the sinking of the Titanic. The goal of the Infographic is that someone without any knowledge within the subject the picture is explaining, immediately should get what the picture is about. You can read more about it here: An introduction to data visualization.
I believe that the last part of the Infographic was the most interesting one, you can clearly see that the both competitors GAP and Inditex have more stores, but their profit is still smaller or similar compared with H&M's profit. The map is also interesting, you can clearly see that H&M can expand with more stores, and will expand in 2013 with stores in South America, probably in Peru and Brazil.
I've finished another minimal movie poster with a Peter Lynch theme. This time it's "Don't bottom fish". You can notice in the poster the two stocks Enron and Polaroid, two examples of stocks where investors lost all of their investments if they bought the stocks on the way down. The reef in the poster is actually the price of the Enron stock, from high to zero. You can also notice a tulip at the bottom, and that tulip is a reference to the 17th century Tulip mania, where investors bought tulips like crazy before the price of tulips crashed.