Q Operating Metrics Conference Call February 24, Clean, more affordable energy

Transcription

1 Q Operating Metrics Conference Call February 24, 2014 Clean, more affordable energy

2 Forward-Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties, including statements regarding SolarCity s customer and market growth opportunities; the deployment of megawatts including estimated Q1 and full-year 2014 megawatt deployment; estimated nominal contracted payments remaining; forecasted retained value per watt under energy contracts; the amount of megawatts that can be deployed based on committed available financing; forecasted cash flow in 2014; the timing of the release of Q4 and full year 2013 GAAP results; and assumptions relating to the foregoing. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. As of the date hereof, we have bookings and financing for only a small percentage of the orders needed to achieve our 2014 megawatt projections and therefore expect the megawatts deployed in 2014 to be sourced almost exclusively from new deployments of solar systems not currently under contract. In order to meet our projections, we will need to substantially expand our workforce, increase our installation efficiency and exceed our existing bookings rate relative to what we have achieved to date. Additional key risks and uncertainties include the level of demand for our solar energy systems, the availability of a sufficient, timely, and cost-effective supply of solar panels and balance of system components, the effects of future tariffs and other trade barriers, changes in federal tax treatment, the effect of electric utility industry regulations, net metering and related policies, the availability and amount of rebates, tax credits and other financial incentives, the availability and amount of financing from fund investors, the retail price of utility-generated electricity or the availability of alternative energy sources, risks associated with SolarCity s rapid growth, risks that consumers who have executed energy contracts included in reported nominal contracted payments remaining and backlog may seek to cancel those contracts, assumptions as to retained value under energy contracts and contract renewal rates and terms, including applicable net present values, performance-based incentives, and other rebates, credits and expenses, SolarCity s limited operating history, particularly as a new public company, changes in strategic planning decisions by management or reallocation of internal resources, completion of preparation of financial statements and general market, political, economic and business conditions. You should read the section entitled Risk Factors in our most recent Quarterly Report on Form 10-Q, which has been filed with the Securities and Exchange Commission, which identifies certain of these and additional risks and uncertainties. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as otherwise required by law. SolarCity Corporation page 2

3 SolarCity Corporation page 3 Q Review

4 Exiting 2013 on a Solid Platform for Continued Growth Achieved all the major goals of 2013 established at the outset of the year MW Deployed of 280 MW (+78% Y/Y) exceeded initial guidance for 250 MW Total cost per watt reduction of ~(30%) in 2013 outpaced roadmap targets Launch of first securitization of distributed solar assets Positive Cash Flow in 4Q13 Leveraged M&A to further lower costs and cost of capital Financial strategy continues to broaden access to lower-cost capital Introduction of $360m in Aggregation Facilities and first sample of securitization Common Assets to expand capital access to individuals / institutions of all sizes Removed operational bottlenecks constraining installations through 2013 Established the core building blocks to drive sales, scale operations, and raise capital to achieve our goals for MW growth in SolarCity Corporation page 4 See slides 17 and 18 for relevant definitions

5 Cumulative MW Deployed Reached 567 MW at 2013 YE MW Deployed of 280 MW in 2013 Exceeded Initial Guidance of 250 MW at the Start of the Year , MWs Deployed in Period , Cumulative MW Deployed MWs Deployed in Period Total MW Deployed: Up 116% Y/Y Residential: Up 130% Y/Y E* 4Q12 4Q13 Annual Cumulative Residential Commercial * Represents the Company s Estimates SolarCity Corporation page 5 See slides 17 and 18 for relevant definitions

6 Total Cash Payments Under Contract at $2.0b at 2013 YE MW Booked of 101 MW in 4Q13 Drove Estimated Nominal Contracted Payments Remaining Up to $2.0b as Cumulative Energy Contracts rose to 83,265 at the End of 2013 $2.0 90k Est. Nominal Contracted Payments Remaining $1.5 $1.0 $0.5 $0.5 $1.1 $2.0 75k 60k 45k 30k 15k Cumulative Energy Contracts $ YTD 0k Est. Nominal contracted Payments Remaining Cumulative Energy Contracts SolarCity Corporation page 6 See slides 17 and 18 for relevant definitions

7 Market Share in U.S. Residential Solar D.G. Hit New Highs Our U.S. Residential Solar Market Share Was the Equivalent of the Next 14 Competitors Combined in the Most Recent Data Available for Q % 32% 30% 26% U.S. Residential Solar Market Share 1 25% 20% 15% 10% 5% 12% 16% 19% 20% 20% 0% Q Q Q Q Q Q Q GTM Research - U.S. PV Leaderboard SolarCity Corporation page 7

8 Cost Reductions Outpaced Roadmap Targets in 2013 Economies of scale drove steep cost per watt reductions as volumes stepped up in 2H13 100% Cost Reduction Indexed from Q % 80% 70% 60% 50% 40% 30% Q Q Q Q Q Q Q Cost Roadmap from 2012 Actual Cost Reduction Reduction in Project Cycle Time Lowers Costs and Improves Customer Satisfaction: SolarCity Corporation page 8 10 new operations centers in CA doubles presence in state to within 30 miles of >90% of the population With additional openings in Blackwood, NJ and Seaford, DE, total operations centers up ~50% in 2013 to 46 Las Vegas facility centralizes account management and provides superior customer experience Tanguy Serra promoted from EVP of Operations to COO as co-founder Peter Rive focuses exclusively on CTO role

9 Advancement in Solar & Storage Integration Continues Storage and Power Management Technologies Continue to Advance Towards Our Goal of Providing Firm Generation Available at Night Residential Storage Pilot program expanded at the end of last year as California deployments continue Provides back-up power in case of a grid outage Commercial Storage DemandLogic TM service launched in Q Enables load shifting to allow customers to counter utility demand charges SolarCity Corporation page 9

10 Breadth of Financing Sources Lowers the Cost of Capital With each new customer we create a recurring predictable cash flow stream. Our financial strategy is to maximize retained value for shareholders by covering (1) Investing activities with cash generated from (2) Operating and (3) Financing activities Revolver Capacity Increased to $200 Million Serves as construction loan in advance of deployment and tranching of tax equity Undeployed Tax Equity Financing Capacity of 171 MW (as of Feb. 21) Four new or upsized funds in total Signed new Fortune 100 technology company investor New Aggregation Facility of $250 Million Provides Bridge to Securitization Securitization Offers Long-Term, Low-Cost Capital First distributed solar securitization assigned BBB+ rating from S&P and a 4.8% coupon Targeting additional securitizations of as much as $200 million in 1H 2014 SolarCity Corporation page 10 See slides 17 and 18 for relevant definitions

11 Retained Value Forecast Rose to $1,051 Million NPV of our forecast for net cash to SCTY remaining from systems under Energy Contracts Cumulative Retained Value: Forecast at December 31, 2013 Retained Value based on discounted forecast of remaining net cash to SCTY ($m) * $1,051 Retained Value under Energy Contract ($m) * $660 Retained Value Renewal ($m) * $391 Retained Value $/watt 1 $1.51/watt *NPV at 6% Impact of Securitization in 4Q13 Contributed $55-$60 million in incremental Retained Value 2 Retained value per watt is computed by dividing cumulative retained value as of such date by a sum of (a) total MWs deployed under Energy Contracts as of such date plus (b) MWs booked under Energy Contracts as of such date but not yet deployed SolarCity Corporation page 11 See slides 17 and 18 for relevant definitions

12 Quarterly MW Breakdown Reflects Growth through the Year Pace of Growth and Timing of Investment Has Historically Translated into Q1 Contributing On Average 16% of Annual MW Deployed, while Q3 and Q4 Have Accounted for Almost Two-thirds 50% 40% 40% Quarter as % of Annual MW Deployed 30% 20% 10% 16% 20% 24% 0% Historical Average Q1 Q2 Q3 Q4 SolarCity Corporation page 12 See slides 17 and 18 for relevant definitions

13 Guidance for Q and Full-Year 2014 Q1 2014: MWs Deployed: 78 MW 82 MW GAAP Details: To Be Provided Along with Complete Q financial Results on March 3, : MWs Deployed: 475 MW 525 MW Cash Flow 1 Positive (though quarterly cash flow could vary) 1 Net cash flow is defined as Operating Cash Flows Less Investing Cash Flows Plus Financing Cash Flows (excluding equity issuance) SolarCity Corporation page 13 See slides 17 and 18 for relevant definitions

14 Outlook Underpinned by Key Drivers of DG Value Creation Entering 2014 with All the Pieces in Place for Growth and Value Creation in Distributed Solar Revenue MW deployment capacity scaling Market share at all-time highs Utility rate outlook supports pricing Installation/Development Costs Outpacing cost roadmap Project cycle time compression Zep reduction in labor hours Cost of Capital Supply of capital broadening Securitization validates asset class Risk premium compressing SolarCity Corporation page 14 See slides 17 and 18 for relevant definitions

15 Paving the Path To a Cleaner, Distributed Energy Future SolarCity Corporation page 15

16 Questions & Answers SolarCity Corporation page 16

17 Appendix Definitions Backlog represents the aggregate megawatt capacity of solar energy systems not yet deployed as of the date specified pursuant to Energy Contracts and contracts for solar energy system direct sales executed as of such date. Customers includes all residential, commercial and government buildings where we have installed or contracted to install a solar energy system, or performed or contracted to perform an energy efficiency evaluation or other energy efficiency services. Energy Contracts includes all residential, commercial and government leases and power purchase agreements pursuant to which consumers use or will use energy generated by a solar energy system that we have installed or contracted to install. For landlord-tenant structures in which we contract with the landlord or development company, we include each residence as an individual contract. For commercial customers with multiple locations, each location is deemed a contract if we maintain a separate contract for that location. MW or megawatts represents the DC nameplate megawatt production capacity. MW Booked represents the aggregate megawatt production capacity of solar energy systems pursuant to customer contracts signed (with no contingencies remaining) during the applicable period net of cancellations during the applicable period. This metric includes solar energy systems booked under Energy Contracts as well as for solar energy system direct sales. MW Deployed represents the megawatt production capacity of solar energy systems that have had all required building department inspections completed during the applicable period. This metric includes solar energy systems deployed under Energy Contracts as well as for solar energy system direct sales. SolarCity Corporation page 17

18 Appendix Definitions Nominal Contracted Payments Remaining equals the estimated sum of cash payments obligated to be paid to us under our Energy Contracts over the remaining term of such contracts. This metric includes Energy Contracts for solar energy systems already deployed and in Backlog. As an example, if a customer is 2 years into her 20 year contract, then 18 years of contract payments remain. As an additional example, if a customer chose to pre-pay her Energy Contract, then it is included in estimated Nominal Contracted Payments Remaining only while it is in Backlog as the pre-payment has not been received. Payments for direct sales are not included. Retained Value forecast represents the sum of both Retained Value under Energy Contract and Retained Value Renewal. Retained Value under Energy Contract represents the forecasted net present value of Nominal Contracted Payments Remaining and estimated performance-based incentives allocated to us, net of amounts we are obligated to distribute to our fund investors, upfront rebates, depreciation, renewable energy certificates, solar renewable energy certificates and estimated operations and maintenance, insurance, administrative and inverter replacement costs. This metric includes Energy Contracts for solar energy systems deployed and in Backlog. Retained Value Renewal represents the forecasted net present value of the payments SolarCity would receive upon Energy Contract renewal through a total term of 30 years, assuming all Energy Contracts are renewed at a rate equal to 90% of the contractual rate in effect at expiration of the initial term. This metric is net of estimated operations and maintenance, insurance, administrative and inverter replacement costs. This metric includes Energy Contracts for solar energy systems deployed and in Backlog. Undeployed Tax Equity Financing Capacity represents a forecast of the amount of MW that can be deployed based on committed available tax equity financing for Energy Contracts. SolarCity Corporation page 18

19 Thank You Clean, more affordable energy