Discussion about investing in Solar City

Chris and I had this conversation about investing in Solar City that we wanted to share with you. Please join in!

Saul, I decided to get back into SCTY. I now have a 2.9% position. I believe that solar in the US will continue to expand rapidly, and I think that SCTY will be a big beneficiary. They need to be valued on their net retained value, which is growing every quarter. They have 40% market share. They are vertically integrating to reduce costs: others won’t be able to match their costs due to SCTY’s vertical integration and their scale. They have developed finance innovations with the world’s leading banks to finance the upfront capital costs without issuing new shares. They are securitizing their rooftop systems to access a large part of their future stream of cashflows quickly. This cash flow can be used to install more rooftop systems. In the future (2 years, maybe), I believe batteries will play a role in fueling even more demand for solar. I know you have your doubts and are not invested….(but) I just wanted to share my thoughts with you.

I responded Hi Chris, I really like SCTY, I like what they are trying to do, but I don’t UNDERSTAND their business model, and all the assumptions that go into this retained earnings thing, and how they can say such and such a percent of people will renew for another 10 years after the first 20. That really seems like an enormous stretch to me. How outdated will the panels be after 20 years? How cheap will new ones be? I also see the utilities making their life difficult, and the utilities give lots of money to state legislators.

With regards to TSLA, it seems more like a crusade than a business. I love, LOVE, Musk, but I think he’s trying to make electric cars mainstream, not trying to make money with his company. Huge, huge capital outlays, running at a loss, and selling at $245. Wow. Just sayin…

Chris responded: Hi Saul…I agree with you on TLSA. I’ve never owned it and probably never will.

I agree with you on Musk. He’s one of the most amazing people in the history of humanity. He will probably affect more positive change in the world than any other single living person.

Regarding SCTY, I have a different view.

1) I think that your point about renewals after 20 years is moot. The first contracts won’t be up until around 2030!!! So we won’t get any data until then. What matters is that when they securitize the contracts and when they get investor financing from banks and companies like Google, they are able to extract cash TODAY from their stream of future cash flows including contributions of cashflows from presumed 10 year contract renewals. What’s really important today is that the investors are believing that there will be renewals which allows SCTY to sell the future cashflows for more.

2) Solar technology will get better and cheaper. But I think that one of the main beneficiaries of this will be SCTY because the cost of solar system installations is a main driver to both their profitability and to solar adoption. It doesn’t matter if panels will cost 50% less or are 80% more efficient than today. This will only accelerate solar adoption rate and accelerate SCTY ramp in profits.

3) Utilities will have to adapt or die. Some, like PG&E in California, are adapting while others in Hawaii and Arizona are fighting. I think those who fight are fighting a losing battle. We will see. SCTY is rapidly become a better utility than the industry incumbents. SCTY will continue to remove the various barriers to adoption.

4) SCTY’s installations are already profitable on a marginal basis. Otherwise, they would not be able to profitably securitize the contracts.

5) Regarding the retained value calculations, SCTY is transparent about how they do the calculations. You just need to read it in the letter to shareholders that they release with each earnings release.

And I resonded: Thanks Chris… I’ll probably dip a toe in. Thanks for motivating me.


Saul and Chris,

Some months ago, on one of the TMF free boards, The Grand Adventure Board, AdamGalas said about SCTY something very sensible, that I asked him to re-post here, and he said he would, but never did. I hope he doesn’t mind I repost it now:

<<SolarCity? Well I’ve done a ton of research into them (used to write about them before the fall of yahoo) and I can tell you that they will not likely make investors rich in the long-term.

Their most recent earnings showed them missing installation guidance for the 2nd consecutive quarter (for a hyper growth stock this is important) and their expenses are soaring faster than sales.

In addition their gross margins on systems sold (vs leased) which is becoming a larger part of their business (and will continue to do so as solar tech gets cheaper because it makes better economic sense to buy vs lease) was -17%.

Competition is heating up from other companies like SunPower, which is profitable, builds its own panels and sells 70% of its systems.

Thus SunPower (my favorite solar stock) is able to make a profit while becoming dominant in the business model of the future of solar (sales vs leases) while SCTY isn’t.

Throw in the solar factory that they are building, and the massive growth they are trying to do and they will require billions in new funding, which will mean insane amounts of shareholder dilution.

Meanwhile their “retained value” valuation model is completely flawed.

They make most of that retained value on the assumed extension of the lease after 20 years.

Solar tech will advance so much in that time, and the price increases backed into their PPA lease agreements will make the power they are selling to customers more expensive than that of a new purchased solar system.

Thus when the lease is up you have a choice.

A. Sign up at a cost higher than you can get by installing a newer, better, cheaper system from a competitor.

B. Say “no” and force SCTY to remove their panels (at their expense) from your roof.

Option B is far more likely and gives customers leverage against the company to renegotiate a steep discount on electricity prices charged if they do choose to extend the lease.

Since Solar City would have to pay to remove the panels, they’ll have to accept whatever the customer wants.

That’s likely to be the cost of solar power in 20 years, since anything over that the customer benefits by going with a competitor.

The cost of solar power in 20 years will be much, MUCH cheaper than what Solar City is charging customers today.

In fact the PPA agreements that SCTY is signing with customers isn’t even the margin cost of solar power. It’s based on the rate in a customer’s local area, via the electric utility.

Most of their business is in California, where regulations have made electricity sky high.

For example if it costs $.2/KwHr for electricity from your utility, Solar City will offer to install (free of charge) solar panels on your roof in exchange for a 20 year lease that charges $.16/KwHr + 2.3% per year increase.

They’ll point to stats saying that local electricity rates have been increasing by 3-4% per year and thus you’re benefiting by getting a 20% cheaper rate now, plus 25%-50% slower increases in the future.

How can you lose?

Well the increase in electricity rates has fallen sharply recently and is no longer increasing at those rates.

In addition solar tech is advancing rapidly, with costs falling off a cliff and battery tech advancing fast.

Tesla is launching a home battery system in the next 6 months that could be a breakthrough.

Imagine buying a solar system and storing up power collected during the day to use at night?

With a big enough battery and solar system (that’s efficient enough) you could be 100% independent of the grid.

20 years from now, let’s say that a solar system +battery costs $.1/KWhr .

The deal you signed with Solar City has you paying $.25/KWhr for power and when your lease is up they ask you to sign on for another 5 years, at the same rate and terms?

You’re not an idiot. SunPower can sell you a much more advanced system, with good financing terms that will let you get power at half the cost Solar City is asking.

So you go to Solar City and say “I tell you what, since I have you by the balls here, and with a word can force you to remove your panels at your own expense, I’ll give you $.09/KWhr and you’ll thank me for my generosity.”

They’ll indeed be forced to take it because they only lose by having to remove the panels if you don’t extend your lease.

What about the value of selling those 20 year old panels? You mean the weathered and worn, and degraded obsolete tech that not even Africans want to buy for scrap prices?

In my opinion investors would do well to avoid Solar City, I just don’t see how their business model works in the long-term.>>

Hope that helps!


SCTY seems like one of these companies that might go on to do really well, but that I’m fine with passing on.

Looking ahead, I see two major battles looming for SCTY: first, the utilities will revolt. Our local utility already has, and has made solar completely unviable economically: not only will they not allow net metering (they won’t buy your solar electricity from you), but they also instituted a huge fixed “infrastructure” fee on everyone’s bill to make sure the monthly bills are significant even if you’re using almost no electricity (and if you disconnect your electricity and reconnect within 12 months, they back-bill you the full amount in order to keep people from temporarily going off-grid when it’s seasonally easiest).

On the other hand, solar is a commodity that is constantly improving and getting cheaper. So at some point, it’ll make more sense to just buy it on your own and reap a lot more of the financial benefits – and as more people adopt it, utilities are more likely to put up a lot more of a fuss.

So to me, this looks like a company that is working in a niche where solar is priced just right (cheap enough for SCTY, too expensive for average folks) and utilities are very accommodating. It’s not clear to me how long that goldilocks scenario will remain.

Anyway, I hope things work out – I’d love to have solar! And I hope the stock does well for everyone. But I don’t think it’s for me.



I’m reposting this great post from huddaman (with his permission) as a counter view to the negative view in the previous post. I’m not sure which is right, whites why I’m only sticking in my toe. Let me preface this by saying that huddaman is usually a VERY cautious guy, always finding the flaws in stocks, so I do take it quite seriously when he makes such a positive post.


SCTY is probably the ultimate growth stock. (That I currently know of)

Before I explain my bullish outlook, I want to put forth important caveats. Thesis only stands as long as management is not full of it. SODA stream was a stock I owned. They peaked their revenue in 2013 at approx 550MM. Management said repeatedly during investor presentations that they expect to cross 1 billion revenue mark by 2016. They are far from it. They are down below 500MM. They either intentionally or unintentionally misled us. Lesson : Credible sounding managements can also make foolish projections. Same goes for Banks that back them. Goldman Sachs in this case.

Back to SolarCity (most of the data/fact/opinion stated should be double checked by you before you act on it. It is just my opinion)

It’s an easy to understand business. They install solar panels on your roof, mostly for free, and then collect the government subsidies, as well as sign you into a long contract to sell you electricity that was generated from their solar plant (up top of your roof). They have introduced myPower and batteries lately, but let’s not get too technical.

Complicated accounting makes the stock less desirable but doesn’t necessarily mean the business is less desirable
If SCTY was a home builder selling homes say at 300K each that cost them 200K to build, but instead of selling the home for 300K, they leased the home to you for 30 years and agreed to receive 300K present value equivalent over 30 years, wouldn’t they book 100K profit per house sold? Surely, if they did that, they would have a GAAP profit. But SCTY doesn’t book any GAAP profits. They don’t get too. Why? I don’t know. GAAP accounting rules were not developed for such a business model. Perhaps I should look into why not? GAAP rules are meant to standardize the way businesses reports so they can be compared and analyzed. Also, I would think they have a goal of enabling the business to present their true financial picture. I believe SCTY management feels GAAP does not do justice in achieving this goal, hence they have invented a completely new system.

They said they are going to get more transparent soon. Perhaps they want their stock price to go up so they can raise more capital to grow their business? They need a lot of capital. Probably around 12B worth in the next 3 years alone. (15K per installation times 800K new customers)

SCTY essentially does what that hypothetical homebulder did in my example of building new homes, but instead of selling, they lease them to potential homeowners for 20 years.

Where/when is the revenue coming from?
SCTY installs solar systems up top your roof, and then re-sells the electricity to you at approx. 13c per KwH. (This represents a few cents of savings per kWH that can translate into savings of a few hundred dollars a year. ) They claim that they are doing so profitably, and report a metric called Retained Value. This RV grows with each profitable installation. And they believe their installations are highly profitable. They expect to receive this over a period of 20 years, after which they expect most customers to renew their contract for another 10 years.

What is this nonstandard retained value they report? It is according to them something equivalent to present value of all future cash flows they expect from installed solar systems.

If we believe it is so, then the 2.7B reported should be the bare minimum marketcap this stock should command as that can be the amount returned back to shareholders. That would be roughly 46% of the stock price or $27 per share. But since this is a going concern, and they are growing the so called retained value at a breakneck pace, there must be worth more than $27. They reported 217K customers have been serviced so far. They expect to service 1MM customers by the end of 2018 (don’t forget SODA’s claims). If they get to service 1MM or 5X the customers today by 2018, and they believe they can get there, then the retained value could reach 5X or 13.5B by 2018 (by my estimate). And they are not going stop adding solar systems to customers once they reach the 1MM customer mark. At that time, they would be worth atleast 13.5B plus the value of the potential increase in retained value over the life of the business. The stock currently trades for only 5.9B. (We should really look at the Enterprise value which is close to 8B)

Currently, there is extreme growth potential ahead, hence the market awards a marketcap of 5.8B (or 3B over the 2.7B retained value). It is possible that the growth opportunity is reduced by end of 2018, and the market awards them only 1B over my projected retained value of 13.5B. So the market cap could reach 14.5b in 2018 or roughly 2.5 times today’s value giving us a stock price of roughly $150 by Dec-2018. (I am pretty sure they will have to pay the debt which is not accounted in the RV, atleast not as per JPMorgan analysts. So you should account for that possiblility and adjust your stock price target by 2018 accordingly)

I am sure there are many risk factors that can prevent them from going there. They claimed to have grown customer base by 98% in recent past, but require to grow only at 61% from now to end of 2018 to reach the 1MM customer mark. In my view, 61% growth is not easy to come by, and just because they managed 98% in the past does not mean 61% is in the bag.

They could materially slow down the growth once they hit a wall. SodaSteram crossed the 1% US household penetration mark and then hit a wall and actually took a u-turn.

Also they could have incorrectly calculated the retained value. It could be unintentionally misleading.

It is possible that cheaper sources of power prop up over time, and customers ditch their solar systems (inspite of the contracts, just like customers ditched their mortgage payments and got mortgage adjustment, etc). Although customers with high credit scores are unlikely to risk their credit for something that is not worth much more than a used car.

Lawmakers will side with customers if for example a new source of electric power emerged 10 years from now that costs say 3c per kwH as opposed to 15-17c that SCTY power might cost after inflation adjustment in 10 years. What if they underestimated the maintenance costs for the solar panels? What if one their major markets suffered huge losses in their panels due to some act of God like hurricane, earthquake, tornado, Tsunami, etc? The risk factors can go on and on. It would depend on your creativity. I do not wish to know them all. Otherwise I will sell the stock. There is too much potential here to think about the negatives.

So don’t bet the farm, but hopefully invest a little at least. I have approx 1.5% of my portfolio in this stock. Maybe 0.15% might be the right amount for somebody else with a different risk tolerance, goals, etc. Day to day performance of this stock is not important for me. I just want to be able to hold it for a long time and let the position grow. If the management promise is true, I think it would be difficult to find another stock that can beat this one over the next 3-5 years.


Thanks Neil, A very thoughtful and useful post.

Another thing that people be aware of is about the tax credits for installing solar. They are currently 30% of the solar installation. At the end of 2017 this is set to drop to 10%. This credit is a very important reason why SCTY is able to get access to so much non-dilutive financing to install so many solar systems. SCTY is able to pass on this tax credit to investors like Google and Goldman Sachs. Company like Google was swimming in cash and are highly profitable. It is prudent for them to invest some of their cash hoard so they can earn a return. Many companies prefer to invest in safe investments like US Treasuries. SCTY offers an alternative that pays a higher interest rate than Treasuries, is almost as safe (who isn’t going to pay their electricity bill), and provides a tax credit that helps to offset some of those huge profits. When the tax credit drops to 10% in 2017, this will have some impact. If the 30% tax credit is renewed, this would be a huge benefit to SCTY. I’m not sure what the likelihood of renewal is but we must consider that 2016 is an election year which might make renewal less likely.


After thinking about it, which I have done for a couple of years now, I just can’t convince myself to buy it. I’ll go along with what Neil wrote:

Anyway, I hope things work out – I’d love to have solar! And I hope the stock does well for everyone. But I don’t think it’s for me.



Hi Everyone, I also am very skeptical of my understanding of the business model. I completely agree with the earlier post about the Utilities fighting things. Having working in a manufacturing industry that used tremendous amounts of power, I also worked with Georgia Power, Southern Company, and the TVA. It is amazing the power they have in influencing the Public Service Commissions that make the rules. I would not bet on a small outfit like SCTY beating them on the lobbying front.

I believe that once these guys decide that SCTY is hurting them, they will drop the hammer. Most homes will need to remain connected to the grid and they will pay for the access.

Last comment, I’m really not sold on Solar as the answer to our energy problems. Has anyone read about the Thorium Liquid Fuel Reactor? This was developed in the 50’s and 60’s by Oak Ridge National Laboratory. It was them promptly put on the shelf by the Nuclear Regulatory Commission in favor of the present nuclear power generators.

Interestingly, thorium is much more common than uranium, uses a low pressure liquid fuel reactor, and the waste is minimal. It basically solves all the problems that we worry about with present nuclear power.

Our government is still doing nothing, but interestingly the Chinese have jumped on the technology and committed to build a reactor.

Just some thoughts. I do wish everyone that owns SCTY all the best, I’m just not in. Brian


This is one of my pet subjects. I’ve really made an effort to understand the electricity business. It’s complex and loaded to the gills with misinformation. That being said, I’m still learning new stuff and do not consider myself an “expert”. I’m just somewhat better informed than the average investor.

I previously wrote a long post which touched on a few aspects of this business. If interested go read post #6495 (also a SCTY reply).

I had a small position in SCTY which I recently sold at a very modest profit in order to buy SKX. A decision which so far has proven to be the right thing to do. I guarantee, I would not have bought SKX were it not for this board.

As for renewals of SCTY contracts in 20 years, of course SCTY will have high renewals, I’d venture close to 100%. Probably the only folks who don’t renew are the ones who buy their systems outright. Why am I so confident of this? Newer, cheaper future technology is irrelevant. First, solar panels have no moving parts and degradation over time has been shown by experiment and experience to be very small.

At the same time everything from light bulbs to refrigerators are becoming more energy efficient, even with more electrical devices, overall household demand for electrical energy is more likely to decrease than increase over the same time frame. Virtually no one will be motivated to replace panels that are meeting their needs just because the new technology is better. Adequacy is what is required and it will be provided for the overwhelming majority of existing installations.

And I also agree with most of Chris’s points. The utilities that are fighting solar will lose the fight. Arizona’s SRP serving greater Phoenix has made the ludicrous claim that infrastructure maintenance is $50/month for solar customers. I think SCTY’s legal challenge has a good chance of winning (on appeal), but then it’s Arizona so anything could happen. Even if SCTY loses, it may only serve to drive people to battery and micro-grid solutions sooner than they might have otherwise so that they can disconnect from the grid completely. It’s hard to see what SRP’s case might stand on while other utilities (e.g., PSE, Puget Sound Energy) is encouraging customers to use local solar and wind systems because it can push out their CAPEX a few years. SRP is operated as a non-profit so they don’t report executive salaries. I think the real motivation behind the lawsuit is a bunch of old, white men are worried about losing their very lucrative salaries for doing virtually no work (note, I too am an old, white male).

Chris also mentioned that SCTY is the gorilla. Due to their dominance and integration most competitors will fall by the wayside. I fully agree. Just like any new industry, it attracts a lot of start-ups, but in time only a few will remain. It happened with autos. It happened with aircraft builders. It happened with air carriers. Etc., etc., etc. it will happen with solar installers.

Like Saul, I have trouble with SCTY’s accounting practices. I’ve often mentioned that financial analysis is not one of my strengths, and SCTY does not make it any easier. I think a lot of people are skeptical about SCTY’s financial claims. But Chris did a pretty good job of explaining why that should not be considered an obstacle.

So given all that, why’d I sell my position. Simple, I ran out of patience. Chris isn’t there to explain why the financial issues are non-issues to the rest of the investors. And there’s still a lot of people who are opposed to solar for nonsensical political reasons. And I’m not sure why, but there’s just not a broad acceptance among consumers and investors. So I thought to myself how long am I willing to sit on an idle investment waiting for the world to catch on while my money could actually be productive elsewhere. I’d waited long enough. And if SCTY finally gets the recognition they deserve, it won’t happen in a heartbeat. There will be time to get on board the train.


Hello Saul,

I am with you on this. I try hard to stay from investment in any enterprise that relies on a government subsidy. Many years ago, I invested in low income housing to take advantage of tax breaks and help bring this needed housing to our community. A few years later, Congress took away the tax breaks and left us with a losing investment.

Best regards,


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I believe that once these guys decide that SCTY is hurting them, they will drop the hammer. Most homes will need to remain connected to the grid and they will pay for the access.

As it should be. If you use the grid - either drawing from it or feeding it, you should pay for it. Solar will just help the disaggregation of actual costs become more transparent. To this point there has been no reason to separate the two and now there is (or will be, at least.) Yes, utilities will still have the lobbying muscle, but AT&T crumbled, cable is crumbling, and I expect power utilities will too, eventually. By ‘crumbling’ I mean, of course, they will still be around, just that the business will change.

If the SCTY model requires that consumers (or the company) never pay a grid fee (with a consequent decrease in ‘production’ fee) then it is flawed. I don’t know one way or the other, I have not researched it a whit.

Last comment, I’m really not sold on Solar as the answer to our energy problems. Has anyone read about the Thorium Liquid Fuel Reactor? This was developed in the 50’s and 60’s by Oak Ridge National Laboratory.

Oak Ridge (about 10 miles from my home. They have a great “Secret City Festival” every summer with tours, seminars, etc.) actually produced a TLFR in the 60’s, but scaling it up to commercial size produced significant engineering problems. Yes, the Chinese have now decided to take that on (with Oak Ridge’s help!) but they still don’t expect to have a commercial application for 20 years. It may be great, but in 20 years solar will be great, too.

Our government is still doing nothing

Funding for Oak Ridge, like all basic research, and the NSF is slipping. I read it about it frequently in our local paper because it looms so large here. But hey, tax cuts!


I’ve been waiting for this board to get around to looking at SolarCity. There has been a lot written about this on Fool.com and especially on Seeking Alpha. It is probably the most inconclusive stock analysis I can remember with strong polarized view points.

Personally - I saw great potential when it was back at $30 when I bought in. I actually sold about 1/3rd of my stake a year or so back when it hit $75. Given the debate over RV it is probably priced for perfection. If it hits its numbers it will probably double. If/when utilities enforce connection fees and tax breaks end then it could probably halve.

I agree I think Musk is a visionary, however many of his business have fairly tricky predications involving not just big bets but lots of public subsidies along the way. Smart yes but not necessarily sustainable. Having said that - no one is as impressive as Musk at redefining business models. If SolarCity runs into trouble, he is probably the one guy who could re-invent the business model all over.

One potential way out of this valuation stalemate is its solar panel purchase and scale up. If it can grow the panel manufacturing business off the back of the rooftop leasing business it might just end up with a viable business model that the street can understand and dwarf the original leasing business.


Saul, Neil, and all the others passing on SCTY,

Passing is never a bad decision. This is especially true when something important about the business is not that well understood.

The financial performance and valuation with SCTY is tricky. Regarding the retained value, I think SCTY is using a 6% discount rate and they are making an assumption about the renewal rate 20 years from now. When discounting of future cashflows is done the farther out the payment, the less it contributes to the net present value (assuming a positive discount rate). So if you want to knock off some value for the renewal…what might that be? $700M out of $2.7B might be a very generous amount to knock off. So let’s do that and then we get a retained value of $2B. The market cap of SCTY is currently $6B so 3x this revised retained value. They have about 200k customers now. Their goal is to have 1 million customers by 2018. Let’s say they miss their goal and only get another 400k customers. Then the RV (the lower one that I used to ballpark estimate if they don’t renew any customers in 20 years) should be about equal to the current value of the entire business value today. But they will still be running the business, adding new customers, creating more value. So the way, I look at it, I think the absolute worst case is that the stock would have a retained value (book value) equal to today’s price with the benefit of still being a growing business. But you need to consider that we won’t know the renewal rate for another 20 years (I’m sure I’ll have sold my shares by then) so most people will assume that there is at least some value to renewals. Ok, the worst case scenario is probably a massive volcanic eruption or a nuclear war that darkens the skies for a decade thereby cutting off much of their power generation revenue stream.

Now when I compare the minimum value (my opinion) of $60 and compare that with the multitude of scenarios which could provide unforeseen upside, then I consider this a bet that I want to make with 3% of my portfolio. BTW, 3% is a small position for me. So what are some of the things that could go in favor of SCTY:

  1. renewal of the 30% tax credit beyond the end of 2016.

  2. an acceleration in the adoption of solar

  3. a partnership with Telsa on batteries that favors SCTY versus other solar companies

  4. internation expansion

  5. more evidence of global warming and a more intense concerted global effort to limit greenhouse gases

  6. other revenue unforeseen revenue streams for SCTY (lots of innovation is possible)

With all this (and I would think most of them have at least a 50/50 chance), I view SCTY as a call option with lots of upside and limited downside. I suppose the biggest downside is the opportunity cost of using this 3% of my portfolio for companies that will grow faster. Anyway, that’s how I look at this company.



One possible flaw in that anti solar city argument is that the main installed cost of solar panels isn’t the panels themselves. It is installation costs,(presumably mostly labor) and permitting. Unless you see a very different future world than I do, the cost of these will likely go up a lot in 20 years. More than compensating for more efficient panels which will mean somewhat fewer panels are needed.

A solar cell installation on your house will cost a lot more 20 years from now. . Barring some fundamental break through not presently evident, solar panels have a very finite efficiency limit since they capture only very limited wave lengths. . As an example the heat you feel from the noon sun is infrared . Not captured by narrow wavelength solar panels. IOW they will not keep improving to infinity, there are limits. And those limits are not that far off because conversion of energy is never 100% efficient. Usually it is not even close.

There is no factual evidence of what Solar City renewal rates will be because none have come up for renewal. So it’s all guess work for both of us. In any case I don’t own SCTY for the 20 year span. It may be gone by then but so will I.

I am waiting for the advance of combining solar and roofing so that they can be done st the same time using inexpensive labor, once every 20 or 30 years.

Another thing re comments about Tesla. I wonder if any of the anti Tesla posters have actually driven one? I am reminded about Henry Ford who said that if he had asked potential future customers what they wanted in transportation they would have said" A faster horse". The present Teslas are a very different and superior driving experience and the cars keep improving at a very rapid rate. Like most Tesla owners i will probably never go back to gas cars.
The Tesla is simply the best car in the world (Consumer Reports agrees) and I expect that when the Gen 3 arrives in 2 or 3 years it will be similarly superior to “$35,000” ICE cars. BTW the average price of a new car sold in the US is now close to $35,000. .

If Tesla can get battery costs down they may be making more money selling batteries than cars. I have heard that the potential grid market alone is $60 billion, not counting individuals.

Of course TSLA the stock is not the same as Tesla the car maker or Tesla the battery maker. It’s not cheap. And it’s not low risk.


1) renewal of the 30% tax credit beyond the end of 2016.

This one’s getting trickier and trickier. The recently floated Camp tax reform proposal kept only the low-income housing tax credit while eliminating solar, New Markets, and Historic tax credits. At least that’s my recollection; it’s been a while since I reviewed it. The LIHTC is really the only one of those credits that has broad, bipartisan support at this time.


Another thing re comments about Tesla. I wonder if any of the anti Tesla posters have actually driven one? I am reminded about Henry Ford who said that if he had asked potential future customers what they wanted in transportation they would have said" A faster horse". The present Teslas are a very different and superior driving experience and the cars keep improving at a very rapid rate. Like most Tesla owners i will probably never go back to gas cars.

Hi Mauser, I love Tesla the car and I love Tesla the company, and I think Musk is a genius, and I wish them all well — but that’s different than investing in Tesla the stock if I don’t think it’s a good investment (because of huge capex expenses required, wildly overpriced stock, losing money, etc).



Saul I made that point myself about TSLA the stock at the end of my post. It’s not for the faint of heart. And I certainly wouldn’t recommend it at today’s price.

My shares were bought at much lower prices. But not in the really early stages because I thought the chance of starting a successful new car company were close to zero. Nobody else had been able to do it since Chrysler in the 19320’s. Lots tried , lots failed. The difference may be that Tesla got in at a very propitious time, when other car companies and suppliers were willing to sell assets dirt cheap because they needed the cash. And of course that Tesla isn’t offering a minor variation on the same theme, but something truly revolutionary, even if not as big a jump as from the horse to the model T.

Have you aver driven a Tesla?
Because if somebody hasn’t, they can’t appreciate the difference between a good ICE car and a good electric car. In a very small way it’s like sex- reading about it and experiencing it are two very different things.:slight_smile:

Tesla will either crash and burn ,or join the ranks of successful car companies,I don’t think there is much middle ground. The execution risks are very high.

The trouble with men like Musk and Jobs, driven charismatic leaders who can see further than the rest of us is that sometimes they make mistakes about the vision . And when they do, having gone far out on a limb only dimly visible to most of us, the fall can be catastrophic.


“Interestingly, thorium is much more common than uranium, uses a low pressure liquid fuel reactor, and the waste is minimal. It basically solves all the problems that we worry about with present nuclear power.”

Looks like there are few unsolved problems:

LFTRs are quite unlike today’s operating commercial power reactors. These differences create design difficulties and trade-offs:
Mothballed technology - Only a few MSRs have actually been built. Those experimental reactors were constructed more than 40 years ago. This leads some technologists[who?] to say that it is difficult to critically assess the concept.[citation needed]
Startup fuel - Unlike mined uranium, mined thorium does not have a fissile isotope. Thorium reactors breed fissile uranium-233 from thorium, but require a considerable amount of U-233 for initial start up. There is very little of this material available. This raises the problem of how to start the reactors in a reasonable time frame. One option is to produce U-233 in today’s solid fuelled reactors, then reprocess it out of the solid waste. A LFTR can also be started by other fissile isotopes, enriched uranium or plutonium from reactors or decommissioned bombs. For enriched uranium startup, high enrichment is needed. Decommissioned uranium bombs have enough enrichment, but not enough is available to start many LFTRs. It is difficult to separate plutonium fluoride from lanthanide fission products. One option for a two-fluid reactor is to operate with plutonium or enriched uranium in the fuel salt, breed U-233 in the blanket, and store it instead of returning it to the core. Instead, add plutonium or enriched uranium to continue the chain reaction, similar to today’s solid fuel reactors. When enough U-233 is bred, replace the fuel with new fuel, retaining the U-233 for other startups. A similar option exists for a single-fluid reactor operating as a converter. Such a reactor would not reprocess fuel while operating. Instead the reactor would start on plutonium with thorium as the fertile and add plutonium. The plutonium eventually burns out and U-233 is produced in situ. At the end of the reactor fuel life, the spent fuel salt can be reprocessed to recover the bred U-233 to start up new LFTRs.[citation needed]
Salts freezing - Fluoride salt mixtures have melting points ranging from 300 to over 600 degrees Celsius. The salts, especially those with beryllium fluoride, are very viscous near their freezing point. This requires careful design and freeze protection in the containment and heat exchangers. Freezing must be prevented in normal operation, during transients, and during extended downtime. The primary loop salt contains the decay heat-generating fission products, which help to maintain the required temperature. For the MSBR, ORNL planned on keeping the entire reactor room (the hot cell) at high temperature. This avoided the need for individual electric heater lines on all piping and provided more even heating of the primary loop components.17 One “liquid oven” concept developed for molten salt-cooled, solid-fueled reactors employs a separate buffer salt pool containing the entire primary loop.[79] Because of the high heat capacity and considerable density of the buffer salt, the buffer salt prevents fuel salt freezing and participates in the passive decay heat cooling system, provides radiation shielding and reduces deadweight stresses on primary loop components. This design could also be adopted for LFTRs.[citation needed]
Beryllium toxicity - The proposed salt mixture FLiBe, contains large amounts of beryllium, which is toxic to humans. The salt in the primary cooling loops must be isolated from workers and the environment to prevent beryllium poisoning. This is routinely done in industry.80 Based on this industrial experience, the added cost of beryllium safety is expected to cost only $0.12/MWh.80 After start up, the fission process in the primary fuel salt produces highly radioactive fission products with a high gamma and neutron radiation field. Effective containment is therefore a primary requirement. It is possible to operate instead using lithium fluoride-thorium fluoride eutectic without beryllium, as the French LFTR design, the “TMSR”, has chosen.[81] This comes at the cost of a somewhat higher melting point, but has the additional advantages of simplicity (avoiding BeF
2 in the reprocessing systems), increased solubility for plutonium-trifluoride, reduced tritium production (beryllium produces lithium-6, which in turn produces tritium) and improved heat transfer (BeF
2 increases the viscosity of the salt mixture). Alternative solvents such as the fluorides of sodium, rubidium and zirconium allow lower melting points at a tradeoff in breeding.[2]
Loss of delayed neutrons - In order to be predictably controlled, nuclear reactors rely on delayed neutrons. They require additional slowly-evolving neutrons from fission product decay to continue the chain reaction. Because the delayed neutrons evolve slowly, this makes the reactor very controllable. In a LFTR, the presence of fission products in the heat exchanger and piping means a portion of these delayed neutrons are also lost.[82] They do not participate in the core’s critical chain reaction, which in turn means the reactor behaves less gently during changes of flow, power, etc. Approximately up to half of the delayed neutrons can be lost. In practice, it means that the heat exchanger must be compact so that the volume outside the core is as small as possible. The more compact (higher power density) the core is, the more important this issue becomes. Having more fuel outside the core in the heat exchangers also means more of the expensive fissile fuel is needed to start the reactor. This makes a fairly compact heat exchanger an important design requirement for a LFTR.[citation needed]
Waste management - About 83% of the radioactive waste has a half-life in hours or days, with the remaining 17% requiring 300 year storage in geologically stable confinement to reach background levels.[71] Because some of the fission products, in their fluoride form, are highly water soluble, fluorides are less suited to long term storage. For example, cesium fluoride has a very high solubility in water. For long term storage, conversion to an insoluble form such as a glass, could be desirable.[citation needed]
Uncertain decommissioning costs - Cleanup of the Molten-Salt Reactor Experiment was about $130 million, for a small 8 MW(th) unit. Much of the high cost was caused by the unexpected evolution of fluorine and uranium hexafluoride from cold fuel salt in storage that ORNL did not defuel and store correctly, but this has now been taken into consideration in MSR design.[83] In addition, decommissioning costs don’t scale strongly with plant size based on previous experience,[84] and costs are incurred at the end of plant life, so a small per kilowatthour fee is sufficient. For example, a GWe reactor plant produces over 300 billion kWh of electricity over a 40-year lifetime, so a $0.001/kWh decommissioning fee delivers $300 million plus interest at the end of the plant lifetime.
Noble metal buildup - Some radioactive fission products, such as noble metals, deposit on pipes. Novel equipment, such as nickel-wool sponge cartridges, must be developed to filter and trap the noble metals to prevent build up.
Limited graphite lifetime - Compact designs have a limited lifetime for the graphite moderator and fuel / breeding loop separator. Under the influence of fast neutrons, the graphite first shrinks, then expands indefinitely until it becomes very weak and can crack, creating mechanical problems and causing the graphite to absorb enough fission products to poison the reaction.[85] The 1960 two-fluid design had an estimated graphite replacement period of four years.2 Eliminating graphite from sealed piping was a major incentive to switch to a single-fluid design.17 Replacing this large central part requires remotely operated equipment. MSR designs have to arrange for this replacement. In a molten salt reactor, virtually all of the fuel and fission products can be piped to a holding tank. Only a fraction of one percent of the fission products end up in the graphite, primarily due to fission products slamming into the graphite. This makes the graphite surface radioactive, and without recycling/removal of at least the surface layer, creates a fairly bulky waste stream. Removing the surface layer and recycling the remainder of the graphite would solve this issue.[original research?] Several techniques exist to recycle or dispose of nuclear moderator graphite.[86] Graphite is inert and immobile at low temperatures, so it can be readily stored or buried if required.[86] At least one design used graphite balls (pebbles) floating in salt, which could be removed and inspected continuously without shutting down the reactor.[87] Reducing power density increases graphite lifetime.88 By comparison, solid-fueled reactors typically replace 1/3 of the fuel elements, including all of the highly radioactive fission products therein, every 12 to 24 months. This is routinely done under a protecting and cooling column layer of water.
Graphite-caused positive reactivity feedback - When graphite heats up, it increases U-233 fission, causing an undesirable positive feedback.[44] The LFTR design must avoid certain combinations of graphite and salt and certain core geometries. If this problem is addressed by employing adequate graphite and thus a well-thermalized spectrum, it is difficult to reach break-even breeding.[44] The alternative of using little or no graphite results in a faster neutron spectrum. This requires a large fissile inventory and radiation damage increases.[44]
Limited plutonium solubility - Fluorides of plutonium, americium and curium occur as trifluorides, which means they have three fluorine atoms attached (PuF
3, AmF
3, CmF
3). Such trifluorides have a limited solubility in the FLiBe carrier salt. This complicates startup, especially for a compact design that uses a smaller primary salt inventory. Solubility can be increased by operating with less or no beryllium fluoride (which has no solubility for trifluorides) or by operating at a higher temperature[citation needed](as with most other liquids, solubility rises with temperature). A thermal spectrum, lower power density core does not have issues with plutonium solubility.
Proliferation risk from reprocessing - Effective reprocessing implies a proliferation-risk. LFTRs could be used to handle plutonium from other reactors as well. However, as stated above, plutonium is chemically difficult to separate from thorium and plutonium cannot be used in bombs if diluted in large amounts of thorium. In addition, the plutonium produced by the thorium fuel cycle is mostly Pu-238, which produces high levels of spontaneous neutrons and decay heat that make it impossible to construct a fission bomb with this isotope alone, and extremely difficult to construct one containing even very small percentages of it. The heat production rate of 567 W/kg[89] means that a bomb core of this material would continuously produce several kilowatts of heat. The only cooling route is by conduction through the surrounding high explosive layers, which are poor conductors. This creates unmanageably high temperatures that would destroy the assembly. The spontaneous fission rate of 1204 kBq/g[89] is over twice that of Pu-240. Even very small percentages of this isotope would reduce bomb yield drastically by “predetonation” due to neutrons from spontaneous fission starting the chain reaction causing a “fizzle” rather than an explosion. Reprocessing itself involves automated handling in a fully closed and contained hot cell, which complicates diversion. Compared to today’s extraction methods such as PUREX, the pyroprocesses are inaccessible and produce impure fissile materials, often with large amounts of fission product contamination. While not a problem for an automated system, it poses severe difficulties for would-be proliferators.[citation needed]
Proliferation risk from protactinium separation - Compact designs can breed only using rapid separation of protactinium, a proliferation-risk, since this potentially gives access to high purity 233-U. This is difficult as the 233-U from these reactors will be contaminated with 232-U, a high gamma radiation emitter, requiring a protective hot enrichment facility[71] as a possible path to weapons-grade material. Because of this, commercial power reactors may have to be designed without separation. In practice, this means either not breeding, or operating at a lower power density. A two-fluid design might operate with a bigger blanket and keep the high power density core (which has no thorium and therefore no protactinium).[citation needed]
Proliferation of neptunium-237 - In designs utilizing a fluorinator, Np-237 appears with uranium as gaseous hexafluoride and can be easily separated using solid fluoride pellet absorption beds. No one has produced such a bomb, but Np-237’s considerable fast fission cross section and low critical mass imply the possibility.[90] When the Np-237 is kept in the reactor, it transmutes to Pu-238, a high value fuel for space radioisotope thermal generators.[91] A single gram is worth thousands of dollars. Pu-238 is itself an excellent proliferation deterrent. Because of this, Np-237 could be returned to the reactor and transmuted. Vacuum distillation does not separate neptunium. All reactors produce considerable neptunium, which is always present in high (mono)isotopic quality, and is easily extracted chemically.[90] However, this is a byproduct of traditional uranium fission, along with elements like plutonium, americium, and curium.[63] Np-239 or isotopes thereof are not necessarily produced in a LFTR.[92]
Neutron poisoning and tritium production from lithium-6 - Lithium-6 is a strong neutron poison; using LiF with natural lithium, with its 7.5% lithium-6 content, prevents reactors from starting. The high neutron density in the core rapidly transmutes lithium-6 to tritium, losing neutrons that are required to sustain break-even breeding. Tritium is a radioactive isotope of hydrogen, which is nearly identical, chemically, to ordinary hydrogen.[93] In the MSR the tritium is quite mobile because, in its elemental form, it rapidly diffuses through metals at high temperature. If the lithium is isotopically enriched in lithium-7, and the isotopic separation level is high enough (99.995% lithium-7), the amount of tritium produced is only a few hundred grams per year for a 1 GWe reactor. This much smaller amount of tritium comes mostly from the lithium-7 - tritium reaction and from beryllium, which can produce tritium indirectly by first transmuting to tritium-producing lithium-6. LFTR designs that use a lithium salt, choose the lithium-7 isotope. In the MSRE, lithium-6 was successfully removed from the fuel salt via isotopic enrichment. Since lithium-7 is at least 16% heavier than lithium-6, and is the most common isotope, lithium-6 is comparatively easy and inexpensive to extract. Vacuum distillation of lithium achieves efficiencies of up to 8% per stage and requires only heating in a vacuum chamber.[94] However, about one fission in 90,000 produces helium-6, which quickly decays to lithium-6 and one fission in 12,500 produces an atom of tritium directly (in all reactor types). Practical MSRs operate under a blanket of dry inert gas, usually helium. LFTRs offer a good chance to recover the tritium, since it is not highly diluted in water as in CANDU reactors. Various methods exist to trap tritium, such as hydriding it to titanium,[95] oxidizing it to less mobile (but still volatile) forms such as sodium fluoroborate or molten nitrate salt, or trapping it in the turbine power cycle gas and offgasing it using copper oxide pellets.96 ORNL developed a secondary loop coolant system that would chemically trap residual tritium so that it could be removed from the secondary coolant rather than diffusing into the turbine power cycle. ORNL calculated that this would reduce Tritium emissions to acceptable levels.[93]
Corrosion from tellurium - The reactor makes small amounts of tellurium as a fission product. In the MSRE, this caused small amounts of corrosion at the grain boundaries of the special nickel alloy, Hastelloy-N. Metallurgical studies showed that adding 1 to 2% niobium to the Hastelloy-N alloy improves resistance to corrosion by tellurium.25 Maintaining the ratio of UF
3 to less than 60 reduced corrosion by keeping the fuel salt slightly reducing. The MSRE continually contacted the flowing fuel salt with a beryllium metal rod submerged in a cage inside the pump bowl. This caused a fluorine shortage in the salt, reducing tellurium to a less aggressive (elemental) form. This method is also effective in reducing corrosion in general, because the fission process produces more fluorine atoms that would otherwise attack the structural metals.97
Radiation damage to nickel alloys - The standard Hastelloy N alloy was found to be embrittled by neutron radiation. Neutrons reacted with nickel to form helium. This helium gas concentrated at specific points inside the alloy, where it increased stresses. ORNL addressed this problem by adding 1-2% titanium or niobium to the Hastelloy N. This changed the alloy’s internal structure so that the helium would be finely distributed. This relieved the stress and allowed the alloy to withstand considerable neutron flux. However the maximum temperature is limited to about 650 °C.[98] Other alloys also showed promise.[99] The outer vessel wall that contains the salt can have neutronic shielding, such as boron carbide, to effectively protect it from neutron damage.[100]
Long term fuel salt storage - If the fluoride fuel salts are stored in solid form over many decades, radiation can cause the release of corrosive fluorine gas and uranium hexafluoride.[101] The salts must be defueled and wastes removed before extended shutdowns and stored above 100 degrees Celsius.[83] Fluorides are less suitable for long term storage because some have high water solubility unless vitrified in insoluble borosilicate glass.[102]
Business model - Today’s solid fuelled reactor vendors make long term revenues by fuel fabrication.[dubious – discuss] Without any fuel to fabricate and sell, a LFTR would adopt a different business model.
Development of the power cycle - Developing a large helium or supercritical carbon dioxide turbine is needed for highest efficiency. These gas cycles offer numerous potential advantages for use with molten salt-fueled or molten salt-cooled reactors.[103] These closed gas cycles face design challenges and engineering upscaling work for a commercial turbine-generator set.[104] A standard supercritical steam turbine could be used at a small penalty in efficiency (the net efficiency of the MSBR was designed to be approximately 44%, using an old 1970s steam turbine).[105] A molten salt to steam generator would still have to be developed. Currently, molten nitrate salt steam generators are used in concentrated solar thermal power plants such as Andasol in Spain. Such a generator could be used for an MSR as a third circulating loop, where it would also trap any tritium that diffuses through the primary and secondary heat exchanger.

And the Sierra Club would probably not be a supporter…



If you think Thorium is the way to go then Lightbridge (LTBR) is the pure play in that space building thorium power IP.

And if Lightbridge just picked up another patent in Korea…