3 ms·

The processes mentioned still sorta basic but I think it's always useful to point out that innovation extends beyond tech. Also, I wonder where any of this (so

by pbreit 11y ago

The processes mentioned still sorta basic but I think it's always useful to point out that innovation extends beyond tech. Also, I wonder where any of this (solar city, spacex and tesla) would be without government help?

dylanjermiah 11y ago
Musk has said Tesla didn't need the government money, it was just used as a cash buffer (which of course was repaid early with interest). As for SpaceX, they've been profitable for 7+ years and NASA is a client so not sure. As for Solar City unsure, but government money doesn't make a business succeed. No matter how much. (Solyndra) c
- sremani 11y ago
  Federal Credits are crucial for SolarCity. Most of the SolarCity customers do not own their Solar plants and SolarCity quotes a "very high" price if any one asks for a SolarPV to own.
  - lotharbot 11y ago
    > "SolarCity quotes a "very high" price if any one asks for a SolarPV to own" My rooftop solar (I believe it'll be ~6kw; installation is soon) is around $20,000 to own outright, which includes 30 years of maintenance, whether or not I pay it off early. Once it's paid, it's mine. That's actually not a "very high" price compared to decades of electricity, particularly not once you include the federal tax credit (30% of the system price). So you're right that the federal tax credit is a big deal, but I wouldn't have described the system as a "very high" price (it's around the same amount as the average "minor" kitchen remodel.) EDIT: the big deal with the federal tax credit is that it can be used as a down payment, which makes the overall system payments begin at a lower price than grid electricity rather than a slightly higher price. This means monetary savings is immediate.
    - sremani 11y ago
      In 2013, for 10.5KW plant I was quoted $40K+ and I ended up with 20 year leasing (paying entire amount upfront) for a notch less than $10K. Even adding all the credits the ownership would have cost me 25K+. That is a huge difference. Of course the numbers vary a bit by state.
      - IkmoIkmo 11y ago
        So California has a capacity factor of about 17.5% as far as I can find, and a residential cost per kwh of 17c roughly. Considering that, a 10.5KW system saves you $2.65k per year, that is if you use that much energy, if not you sell some at a slightly lower feed in tariff than the 17c retail rate. That's pretty sweet. It kind of boggles my mind why this stuff isn't more popular... For example, imagine instead of using the $25k to cover your entire electricity budget (let's assume it's $2.5k a year) for decades to come, you earmarked it to be invested in a different project, with the returns going towards paying the utility bill. Had you invested the same $25k and got a typical long-term average stock return of 7%, you'd net $1.75k every year, assuming your utility bill was say $2500 and it was 100% covered by your $25k, 10.5KW system, you'd be short $750 on the first year compared to having put that money into a solar installation. Which would mean it'd have to be made up, so you reduce the $25k stock investment by $750, added to the $1.75k stock return, to pay for your annual bill, and go into year two. Same story for year two, only now instead of making 7% on $25k, you make it on $24.25k, and so your return drops from $1.75k to $1.7k. As the years go on, your $25k cash becomes smaller and smaller, and by year 17 it has evaporated entirely, and you start the bear the full cost of paying $2.5k a year to your utility, without any equity or investment or $25k cash left. Instead, the solar installation of $25k probably still has $10k of equity locked up in the value of your home, and is still generating about 85-90% of your annual bill two decades in. Not to mention electricity prices have gone up every decade (not necessarily in real terms, but in nominal terms still), meaning your 10 KW system will save more and more in nominal terms, while the $25k investment isn't inflation adjusted. (it it was, the 7% return would probably drop to about 5%, making it even worse off). -- edit: the 7% return is already inflation adjusted actually, sorry. And none of this even mentions the taxes that cut into your stock returns, again making it a worse off venture, while it appears saving money on your utilities with self-production is largely untaxed (?), just like making a sandwich at home or doing your own laundry isn't taxed. I know you ended up leasing but I don't know the terms of your lease, but simply running some numbers for a buy scenario looks really appealing. Of course it is very contextual. In cities where the kwh rate is just 9c instead of 17c, and where the credits, rebates and tariffs aren't very appealing, and where the capacity factor due to fewer sunshine hours is a third lower (e.g. in the UK it's closer to 10%, as opposed to 17% in places like California or Hawaii), it's a totally, totally different story. But it feels like in California it's a giant no-brainer. I mean I know solar is rapidly growing as an industry but we're also hearing of bankruptcies, of Solar City having lost hundreds of millions this year and last year, of solar still being a moral rather than a financial decision etc. And I can't seem to square it with the numbers I'm seeing which look really appealing. Let me know if you'd like to share some of the terms, numbers, expenses etc for your lease by the way, would be curious to hear some real life cases!
  - rhino369 11y ago
    Not just federal credits but state run "renewable energy" credits (RECs In industry parlance). The biggest subsidy for solar is net metering. Solar is still not really cost effective without massive subsidy. But those subsidies exist for a reason and taking advantage of them is not weakness.
- grogenaut 11y ago
  Didn't they almost go out of business completely due to a cash shortage, I thought the govt loan was instrumental in keeping that from happening. That seems quite different than a "cash buffer".
  - enraged_camel 11y ago
    They probably would not have taken the risks that put them in that situation if they didn't have that buffer. In other words, the buffer allowed them to be less risk-averse, and accelerated their growth.
    - davej 11y ago
      I don't believe this is true, can you provide a source? Tesla was running out of cash at the end of 2008 and private investors saved them. The government loan was in early 2010. I don't believe that there is any evidence that Tesla was running out of cash after the 2008 private investment.
- deleted 11y ago
  [deleted]
prostoalex 11y ago
1) Government help seems to be a factor, but not a guarantee of success. Solyndra, A123 and Fisker Automotive all were recipient of government loans or grants, yet for various reasons are not around today. 2) This comes up in libertarian circles frequently, and is usually meant as deriding comment, but it's important to keep in mind that all energy business has government involvement in some ways. Nuclear and hydro are frequently government-owned, coal was subsidized back in the days when it got its start, there are natural monopolies involved in grid and energy distribution. Solar, however, enables such a great level of autonomy, that it might just be the last sector where government and private interests are intertwined.
michaelchisari 11y ago
Also, I wonder where any of this (solar city, spacex and tesla) would be without government help Has any world-changing industry gotten anywhere without government help?
- twoodfin 11y ago
  Many world-changing industries have not needed $10^8 loans or $5,000 per-unit consumer subsidies to take off. I'm not arguing (here, at least) that those are bad ideas, just that there's a broad spectrum in what constitutes government "help".
  - michaelchisari 11y ago
    I think if you look at anything on the scale of what Musk is doing, then you'd be hard pressed to find many for whom $100,000,000 isn't a drop in the bucket. Aerospace? Energy? Transportation? All of these have had extraordinary subsidies in terms of loans, grants, tax breaks, etc. Did you have something specific in mind?
  - crdoconnor 11y ago
    >Many world-changing industries have not needed $10^8 loans or $5,000 per-unit consumer subsidies to take off. Industries such as what? If you don't throw subsidies at key industries (energy, automotive, aerospace, computers), some other countries will, and those countries will inevitably come to dominate. Most countries that do this might try to hide it, but they still do it.
    - twoodfin 11y ago
      The typical home PC was not bought with a tax credit. If government-directed industrial policy were the deciding factor in a sector's success, we'd all be in awe of the massive, globally dominant Japanese software industry, or the French Minitel business.
      - crdoconnor 11y ago

by pbreit 11y ago

dylanjermiah 11y ago

Musk has said Tesla didn't need the government money, it was just used as a cash buffer (which of course was repaid early with interest). As for SpaceX, they've been profitable for 7+ years and NASA is a client so not sure. As for Solar City unsure, but government money doesn't make a business succeed. No matter how much. (Solyndra) c

sremani 11y ago
Federal Credits are crucial for SolarCity. Most of the SolarCity customers do not own their Solar plants and SolarCity quotes a "very high" price if any one asks for a SolarPV to own.
- lotharbot 11y ago
  > "SolarCity quotes a "very high" price if any one asks for a SolarPV to own" My rooftop solar (I believe it'll be ~6kw; installation is soon) is around $20,000 to own outright, which includes 30 years of maintenance, whether or not I pay it off early. Once it's paid, it's mine. That's actually not a "very high" price compared to decades of electricity, particularly not once you include the federal tax credit (30% of the system price). So you're right that the federal tax credit is a big deal, but I wouldn't have described the system as a "very high" price (it's around the same amount as the average "minor" kitchen remodel.) EDIT: the big deal with the federal tax credit is that it can be used as a down payment, which makes the overall system payments begin at a lower price than grid electricity rather than a slightly higher price. This means monetary savings is immediate.
  - sremani 11y ago
    In 2013, for 10.5KW plant I was quoted $40K+ and I ended up with 20 year leasing (paying entire amount upfront) for a notch less than $10K. Even adding all the credits the ownership would have cost me 25K+. That is a huge difference. Of course the numbers vary a bit by state.
    - IkmoIkmo 11y ago
      So California has a capacity factor of about 17.5% as far as I can find, and a residential cost per kwh of 17c roughly. Considering that, a 10.5KW system saves you $2.65k per year, that is if you use that much energy, if not you sell some at a slightly lower feed in tariff than the 17c retail rate. That's pretty sweet. It kind of boggles my mind why this stuff isn't more popular... For example, imagine instead of using the $25k to cover your entire electricity budget (let's assume it's $2.5k a year) for decades to come, you earmarked it to be invested in a different project, with the returns going towards paying the utility bill. Had you invested the same $25k and got a typical long-term average stock return of 7%, you'd net $1.75k every year, assuming your utility bill was say $2500 and it was 100% covered by your $25k, 10.5KW system, you'd be short $750 on the first year compared to having put that money into a solar installation. Which would mean it'd have to be made up, so you reduce the $25k stock investment by $750, added to the $1.75k stock return, to pay for your annual bill, and go into year two. Same story for year two, only now instead of making 7% on $25k, you make it on $24.25k, and so your return drops from $1.75k to $1.7k. As the years go on, your $25k cash becomes smaller and smaller, and by year 17 it has evaporated entirely, and you start the bear the full cost of paying $2.5k a year to your utility, without any equity or investment or $25k cash left. Instead, the solar installation of $25k probably still has $10k of equity locked up in the value of your home, and is still generating about 85-90% of your annual bill two decades in. Not to mention electricity prices have gone up every decade (not necessarily in real terms, but in nominal terms still), meaning your 10 KW system will save more and more in nominal terms, while the $25k investment isn't inflation adjusted. (it it was, the 7% return would probably drop to about 5%, making it even worse off). -- edit: the 7% return is already inflation adjusted actually, sorry. And none of this even mentions the taxes that cut into your stock returns, again making it a worse off venture, while it appears saving money on your utilities with self-production is largely untaxed (?), just like making a sandwich at home or doing your own laundry isn't taxed. I know you ended up leasing but I don't know the terms of your lease, but simply running some numbers for a buy scenario looks really appealing. Of course it is very contextual. In cities where the kwh rate is just 9c instead of 17c, and where the credits, rebates and tariffs aren't very appealing, and where the capacity factor due to fewer sunshine hours is a third lower (e.g. in the UK it's closer to 10%, as opposed to 17% in places like California or Hawaii), it's a totally, totally different story. But it feels like in California it's a giant no-brainer. I mean I know solar is rapidly growing as an industry but we're also hearing of bankruptcies, of Solar City having lost hundreds of millions this year and last year, of solar still being a moral rather than a financial decision etc. And I can't seem to square it with the numbers I'm seeing which look really appealing. Let me know if you'd like to share some of the terms, numbers, expenses etc for your lease by the way, would be curious to hear some real life cases!
- rhino369 11y ago
  Not just federal credits but state run "renewable energy" credits (RECs In industry parlance). The biggest subsidy for solar is net metering. Solar is still not really cost effective without massive subsidy. But those subsidies exist for a reason and taking advantage of them is not weakness.
grogenaut 11y ago
Didn't they almost go out of business completely due to a cash shortage, I thought the govt loan was instrumental in keeping that from happening. That seems quite different than a "cash buffer".
- enraged_camel 11y ago
  They probably would not have taken the risks that put them in that situation if they didn't have that buffer. In other words, the buffer allowed them to be less risk-averse, and accelerated their growth.
  - davej 11y ago
    I don't believe this is true, can you provide a source? Tesla was running out of cash at the end of 2008 and private investors saved them. The government loan was in early 2010. I don't believe that there is any evidence that Tesla was running out of cash after the 2008 private investment.
deleted 11y ago
[deleted]

prostoalex 11y ago

1) Government help seems to be a factor, but not a guarantee of success. Solyndra, A123 and Fisker Automotive all were recipient of government loans or grants, yet for various reasons are not around today. 2) This comes up in libertarian circles frequently, and is usually meant as deriding comment, but it's important to keep in mind that all energy business has government involvement in some ways. Nuclear and hydro are frequently government-owned, coal was subsidized back in the days when it got its start, there are natural monopolies involved in grid and energy distribution. Solar, however, enables such a great level of autonomy, that it might just be the last sector where government and private interests are intertwined.

michaelchisari 11y ago

Also, I wonder where any of this (solar city, spacex and tesla) would be without government help Has any world-changing industry gotten anywhere without government help?

twoodfin 11y ago
Many world-changing industries have not needed $10^8 loans or $5,000 per-unit consumer subsidies to take off. I'm not arguing (here, at least) that those are bad ideas, just that there's a broad spectrum in what constitutes government "help".
- michaelchisari 11y ago
  I think if you look at anything on the scale of what Musk is doing, then you'd be hard pressed to find many for whom $100,000,000 isn't a drop in the bucket. Aerospace? Energy? Transportation? All of these have had extraordinary subsidies in terms of loans, grants, tax breaks, etc. Did you have something specific in mind?
- crdoconnor 11y ago
  >Many world-changing industries have not needed $10^8 loans or $5,000 per-unit consumer subsidies to take off. Industries such as what? If you don't throw subsidies at key industries (energy, automotive, aerospace, computers), some other countries will, and those countries will inevitably come to dominate. Most countries that do this might try to hide it, but they still do it.
  - twoodfin 11y ago
    The typical home PC was not bought with a tax credit. If government-directed industrial policy were the deciding factor in a sector's success, we'd all be in awe of the massive, globally dominant Japanese software industry, or the French Minitel business.
    - crdoconnor 11y ago