$90 Million In SolarCity Bonds Purchased By Elon Musk’s SpaceX
Elon Musk’s SpaceX has just invested in Elon Musk’s SolarCity’s solar bonds to the tune of $90 million dollars, according to reports out this week. SolarCity launched its solar bonds program in 2014. They allow members of the public to invest in SolarCity without buying stock. SolarCity recently took their bonds to a new level by partnering with an investment company to make them available for retirement investing.
Writing on the SolarCity blog, Tim Newell explained:
We are excited to announce that SpaceX has invested $90 million in solar bonds. Solar bonds are issued – and backed – by SolarCity and powered by monthly solar payments from thousands of solar customers across the country. SpaceX is effectively getting paid by the sun.
SpaceX CFO Bret Johnsen bought the bonds online, directly from SolarCity. After reviewing the investment materials, it took less than 10 minutes to set up an account and order the bonds.
Newell is VP of Financial Products at SolarCity.
It’s a little mind boggling that $90 million was invested online in less than ten minutes.
One thing that ties SolarCity with SpaceX, as noted at the top, is Elon Musk. Musk founded the space exploration company in 2002 and is its CEO and Chief Designer. He is a cousin of SolarCity’s co-founder and CEO Lyndon Rive, and is also one of the largest SolarCity investors and its Chairman. SpaceX became a large SolarCity investor too, and very rapidly. Of course, Musk is also the CEO of Tesla, and Tesla apparently will get deeper into the energy storage business by making its own home batteries, which it’s presumed will be used by SolarCity, perhaps as part of its new microgrid service.
SpaceX invested in the solar bonds to get a good return and SolarCity receives more capital to use for expansion as a result. The solar power company has about 9,500 employees now, and hired 4,000 new ones last year.
SpaceX is profitable, so it might be able to continue to invest in SolarCity. It is at least conceivable that the interest SpaceX makes on the solar bonds could be reinvested in more of them.
Image Credit: SolarCity
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Kinda self-dealing but a safe place to stash some money.
Mebbes those divesting themselves of FF stock might think its a safe bet;)
I would hate to think my pension fund still has money invested in coal & oil!
Solar City has still one of the most expensive leasing, PPA or purchase price out there. Their salespeople are very aggressive, however. At the rate of solar PV prices and installation going down, many leaseholders would soon find that they are paying a premium over the newer deals, and may regret their contract the rest of its term. When that happens, sabotage is bound to happen from unhappy customers.
Like any investment… there will be buyer’s remorse if the price continues along the trend.
I do not have sympathy for anyone who has that regret. They should buy when they need the system… and not have sour grapes when neighbors buy for cheaper a year or so later.
*comment influenced by the Tesla owners who have remorse after finding out that they purchased before the Autopilot sensors came out.*
This is the standard thing about being an early adopter. If we all sit around and don’t buy anything until prices stop dropping and technology stops improving then we wouldn’t buy anything.
Even more, not buying results in opportunity costs. You can wait a year to buy cheaper, but than means you have lost the opportunity to make a return on investment this year.
Since solar prices are not dropping as fast as they used to the opportunity cost is higher than the price reduction nowadays.
Exactly.
Opportunity cost.
If prices keep dropping, there are some who will argue that the best time to invest is “Never”, because it would always make sense to wait another year to get something cheaper.
But that means you need to live without that something for an entire year.
Hey look, it is Debbie downer again. I say install yourself. It is not that hard for a competent DIYer.. Or take out a loan and pay the lowest bidder. And even SolarCity offers loans now, they realize the lease thing is dying.
Stow the name-calling, matey.
…with a fitting picture for this comment today 🙂
Yeah, but I’ve already tired of that icon. Some of the ones I use in the future may make your comment look very strange. ;o)
It is hard to say, while yes prices come down, at same time, subsidies will shrink as well. So the overall difference might not be that much.(other than buying is anyways cheaper than leasing)
What will be the future of hydrocarbons and what happens when sources deplete? How many years will this take?
Hydrocarbon sources are not likely to deplete.
At some point we will quit using them. Whether that’s before we make climate change only somewhat worse or extremely worse is the remaining question.
If we’re smart we’ll be down to about 20% to 40% fossil fuels by 2030 and to roughly 0% by 2050.
You have said that you have talked with Solar City, so surely you understand that what is happening with their lease option is that you are purchasing the power produced from them at a lower rate than what the utilities charge.
As such they are under the regulation of the public utility commissions. I doubt that the commission would let the utility rates get much under what Solar City charges without having something to say about theirs also. If that should happen within the times of leases, the utility rates might go down somewhat once there is a large enough amount of power coming from renewable sources but that is still quite a ways off. Also with the large amount of renewables our grids are going to need massive improvements and changes, which is going to cost money which will end up coming from rate payers. Along with a big switch to renewables there will be the stranded assets of fossil fuel generation that will still need to be paid off. So it really seems doubtful that utility rates will go below Solar City rates within the time period of the current twenty year or so leases, so no buyers remorse or defection.
No matter how much you dislike Solar City due to their association with Musk their business plan seems sound for quite some time to come as they are having no problem getting investments from the people with the big money. If they were going to fail within the foreseeable future their stock price wouldn’t be doing so well. So sorry but this customer defection idea is just another one of the fantasies made up by your imagination.
Under the lease agreements you are buying the energy from an independent provider (Solar City). Their rates are not controlled by the PUC.
No the rates are not set by the PUC’s, but because Solar City sells electricity they are under the supervision of the PUC’s. This is why they can expand in some states and not in others,according to local regulations.
In Marion’s fantasy that utility electricity becomes so inexpensive that people void there Solar City contract it seems likely that the PUC would do something about preventing this, such as having something to say about those rates. It is all just a dream anyways due to her animosity towards Musk, utility rates are not going to drop that much in the next twenty years, if they don’t end up increasing to some extent to support the switch to renewables and the necessary grid improvements. Solar City is preparing for this anyways as they are already moving towards more financed purchases of their systems and away from the straight lease model.
We get that you like A.Volta over N.Tesla.. *rolls-eyes*
Oil, the black stuff we pump out of the ground, is not your friend. The carbon released when it is burned is the greatest danger facing humans today. Humans and other animals and plants.
There isn’t a single substitute for oil. We need multiple solutions.
We can move most personal transportation to electricity with EVs. Same with rail and large trucks, electrify them. Move a lot of air travel to high speed rail.
What we can’t reasonably electrify we can run with biofuels and synthetic fuels. Still hydrocarbons, but fuels that use the carbon already in the above ground carbon cycle.
Best to ignore running out of oil. Concentrate on not needing any more.
I am great fan of PV – but OMG they are UGLY! Why can’t SC supply a panel which integrates into the roof and acts as the weather layer (instead of tiles/shingles etc)? Then new-builds, which could be spec’ed with an entire roof plane in PV, as well as retrofit systems would be much more pleasing to the eye.