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2 0 1 5 A N A L Y S T D A Y Delivering Better Energy
This presentation contains forward-looking statements that involve risks and uncertainties, including statements regarding SolarCity’s business strategies; our operational growth and expansion opportunities; our international expansion plans, including our expectations as to lower global module pricing and labor costs outside the United States; the deployment and installation of megawatts, including estimated Q4 2015 and 2016 megawatt installations; future bookings; financial strategies for cash generation and increasing shareholder value; forecasted cash flows from existing Energy Contracts, including related assumptions as to energy production future operations and maintenance expenses, cancellation rates, renewal rates, default rates, amounts of performance based incentives and other identified assumptions; our projections related to decreases in cost per Watt, including our plans to decrease our sales cost per Watt by eliminating higher cost channels, utilizing more efficient channels, and other initiatives, the impact of proprietary technology in decreasing our installation costs, our expectations regarding future hardware pricing, our expectations regarding the maturing efficiency of our operations centers, and our plans to vertically integrate our commercial product offerings along with related projections regarding installation efficiencies and cost savings; our plans to achieve manufacturing economies of scale and associated manufacturing cost reductions; our expectations regarding the Riverbend agreement and the development and construction of the Riverbend facility, including our projection that the facility will be completed and ready to commence operations by Q2 2016, our expectations regarding capital and operating expenses and the performance of our manufacturing operations; our expectations as to future regulatory and policy outcomes affecting our industry, including our belief as to the likelihood of an extension of the Federal Investment Tax Credit and the continued adoption and extension of net-energy metering programs; our projections regarding hypothetical cash flows and tax equity transactions following the schedule step-down in the Federal Investment Tax Credit; our projections regarding the future pricing of utility-generated electricity and customer savings; our liquidity and forecasted access to capital, including assumptions related to the terms of future financing (including risk premiums and interest rates), the sufficiency of committed available financing, the terms and frequency of future securities offerings (including securitization offerings and our expectation that the risk premium of future securitized offerings will decrease consistent with that of mortgages) and our expectations regarding the refinancing of existing debt obligations, including our short-term Solar Bonds; the amount of megawatts that can be installed and deployed based on committed available financing; the success of our product development efforts and customer preferences, including the potential and performance of residential and commercial energy storage products and other new product offerings; 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. In order to meet our projections, we will need to expand our workforce and increase the efficiency of our sales and installation operations relative to what we have achieved to date. Additional key risks and uncertainties include 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 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 in each of our geographies; our ability to successfully integrate acquired businesses, operations and personnel; our ability to achieve manufacturing economies of scale and associated cost reductions, our expectations regarding the Riverbend agreement and the development and construction of the Riverbend facility, including expected capital and operating expenses and the performance of our manufacturing operations; the effects of existing and future tariffs and other trade barriers; changes in federal tax treatment; 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 associated with international expansion; the success of our product development efforts and customer preferences; risks that consumers who have executed energy contracts may seek to cancel those contracts; assumptions as to the 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; 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 and subsequent Current Reports on Form 8-K, which have been filed with the Securities and Exchange Commission, which identify 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.
Forward-Looking Statements
2
B U S I N E S S D R I V E R S & M E T R I C S
L E A D E R S H I P O F A G R O W I N G O P P O R T U N I T Y
V A L U E O F A S S E T S
M O N E T I Z A T I O N O F E N E R G Y C O N T R A C T S
V E L O C I T Y A N D C O N S I S T E N C Y O F D E P L O Y M E N T S
P R O P R I E T A R Y O R I G I N A T I O N A T L O W E R A C Q U I S I T I O N C O S T S
O P E R A T I N G C O S T E X C E L L E N C E
I N V E S T M E N T I N B E S T - I N - C L A S S T E C H N O L O G Y
G U I D A N C E A N D C O N C L U S I O N
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Strategy Update
Organic origination of long-term Energy Contracts at lower acquisition costs
Best-in-class installation costs through proprietary technology
Monetization of a higher portion of the value of our Energy Contracts through low-cost, long duration financing
Exploring monetization of the full value of some Energy Contracts
Be a catalyst in de-carbonizing the energy infrastructure
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Introduction: Business Drivers and Metrics
Leadership of a Growing Opportunity
Monetization of Energy Contracts and Creation of Asset Value
Investment in Best-in Class Technology
Metric Unit 2014 2015Q1 Q2 Q3 Q4 Q1 Q2 Q3
U.S. Power Capacity:U.S. Installed Generating Capacity GW-AC 1,161 1,169 1,172 1,177 1,182 1,171 1,176 Distributed Solar as % of U.S. Generating Capacity % 0.6% 0.6% 0.7% 0.7% 0.8% 0.9% 0.9%U.S. Installed Distributed Solar Capacity GW-DC 6.7 7.3 7.9 8.6 9.2 10.0 10.8 New U.S. Installed Distributed Solar Capacity MW-DC 483 564 559 719 682 697 796
SCTY Units:SCTY % of New U.S. Distributed Solar Capacity % 17% 19% 25% 25% 22% 27% 32%MW Installed MW 82 107 138 177 153 189 256 MW Deployed MW 82 107 137 176 143 177 205 MW PTO'd MW 83 79 113 138 160 156 203
Energy Contract Pricing of New Deployments (Yr. 1) $/kWh $0.12 $0.12 $0.12 $0.12 $0.13 $0.13 $0.13
Annual Escalator % 1.7% 1.9% 1.9% 1.9% 2.1% 2.1% 2.2%SREC (5-Yr. Portfolio Average) $/kWh $0.01 $0.01 $0.02 $0.02 $0.02 $0.02 $0.02 Energy Harvest (Yr. 1) kWh/kW 1,425 1,416 1,406 1,402 1,404 1,379 1,352
Value Generation and Monetization:Asset Financing in Period (including rebates)* $/W $2.69 $2.04 $2.62 $2.28 $2.35 $2.33 $3.20
Contracted Value of MW Deployed in Period † $/W $3.68 $3.55 $3.37 $3.24 $3.44 $3.49 $3.50Renewal Value of MW Deployed in Period † $/W $0.38 $0.40 $0.38 $0.34 $0.33 $0.34 $0.36
Total Value of MW Deployed in Period $/W $4.06 $3.95 $3.74 $3.58 $3.77 $3.83 $3.86
Cost per Watt**:Sales $/W $0.51 $0.47 $0.49 $0.57 $0.59 $0.53 $0.64 Installation $/W $2.44 $2.28 $2.19 $2.09 $2.09 $2.13 $1.92 G&A $/W $0.30 $0.26 $0.21 $0.20 $0.27 $0.24 $0.27 Total Cost per Watt $/W $3.25 $3.01 $2.89 $2.86 $2.95 $2.91 $2.84
R&D Expenses $M ($1.9) ($3.0) ($4.2) ($10.0) ($12.1) ($12.4) ($17.7)Capital Expenditures $M ($4.7) ($2.9) ($5.8) ($9.5) ($30.5) ($71.6) ($45.7)Change in Working Capital Q/Q $M $28.3 $22.7 $37.0 ($38.1) ($72.3) ($31.7) ($41.7)
Debt and Cash:Debt - Recourse $M ($176.6) ($349.8) ($165.2) ($149.7) ($290.6) ($419.2) ($518.2)Debt - Convertible $M ($230.0) ($230.0) ($730.0) ($796.0) ($796.0) ($796.0) ($796.0)Cash & Short-Term Investments $M $526.2 $429.6 $756.8 $663.6 $586.2 $497.6 $438.7
Current Portfolio ValueUnlevered Pre-Tax NPV Remaining of Cumulative MW Deployed (1.5 GW) $M $2,708Debt – Non-Recourse $M ($995)Net NPV of Cumulative MW Deployed $M $1,713
Proprietary Origination at Lower CostOperating Cost Excellence
5
* Weighted average of Q1-Q3 2015 Asset Financing is $2.68** Cost per Watt is based on our quarterly cost calculation methodology we detail on our website
† Updated since original report
B U S I N E S S D R I V E R S & M E T R I C S
L E A D E R S H I P O F A G R O W I N G O P P O R T U N I T Y
V A L U E O F A S S E T S
M O N E T I Z A T I O N O F E N E R G Y C O N T R A C T S
V E L O C I T Y A N D C O N S I S T E N C Y O F D E P L O Y M E N T S
P R O P R I E T A R Y O R I G I N A T I O N A T L O W E R A C Q U I S I T I O N C O S T S
O P E R A T I N G C O S T E X C E L L E N C E
I N V E S T M E N T I N B E S T - I N - C L A S S T E C H N O L O G Y
G U I D A N C E A N D C O N C L U S I O N
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Solar Represents a Plurality of New U.S. Power CapacityTotal U.S. Installed Generating Capacity is ~1,170 GW with 15-20 GW/Yr. of New Gross Capacity since 2010Distributed Solar Accounted for 22% of New-Build U.S. Generating Capacity in 1H15 with Utility-Scale at 23%
1,110
1,120
1,130
1,140
1,150
1,160
1,170
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2010 2011 2012 2013 2014
Tota
l Ins
talle
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apac
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W)
New
-Bui
ld C
apac
ity (G
W)
New Build U.S. Generating CapacityU.S. Total Installed Capacity
3% 5% 5%11% 12%
22%
1%3% 6%
17%21%
23%
0%
10%
20%
30%
40%
50%
2010 2011 2012 2013 2014 1H15
% o
f New
-Bui
ld U
.S. G
ener
atin
g C
apac
ity
Utility-Scale Solar
0.6
1.11.6
1.92.3
1.4
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1.0
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2.0
2.5
2010 2011 2012 2013 2014 1H15
GW
Inst
alle
d
>20% of New U.S. Capacity was Distributed Solar in 1H152
U.S. Distributed Solar Grew at a 40% CAGR2010 to 20143
15-20 GW of New U.S. Generating Capacity per Year1
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Distributed
Solar is Competitive in a Significant Portion of the U.S.Avg. U.S. Retail Electricity Price Is ~$0.13/kWh with 583 TWh Consumed at that Price or Higher4
Total U.S. Residential and Commercial Electricity Sales ≥$0.13/kWh Exceeded $90 Billion in 2014
0
100
200
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400
500
< $0.08 < $0.09 < $0.10 < $0.11 < $0.12 < $0.13 < $0.14 < $0.16 < $0.18 < $0.20 > $0.20
U.S
. Res
iden
tial a
nd C
omm
erci
al
Ele
ctric
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onsu
mpt
ion
(TW
h)
Average Retail Utility Price ($/kWh)
NY
MA
NC
CT
AZGA CA
MDTX
FL PA HISolarCity Service States
Non-SolarCity Service States
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Retail Utility Rates Are Rising on Infrastructure SpendingRetail Utility Rates Have Increased despite Lower Energy Prices Due to Infrastructure Capex
CA Rate Reform is Increasing Investor-Owned Utilities’ Baseline Tier 1 Residential Rates Initially to >$0.17/kWh in 2017
$0.06
$0.08
$0.10
$0.12
$0.14
$0.16
$0.18
2004 2009 2014
Avg.
Res
iden
tial U
tility
Rat
e ($
/kW
h)
$0.15 $0.16 $0.17$0.17$0.20
$0.23$0.20 $0.21
$0.25
$0
$0
$0
$0
$0
$0
SCE PG&E SDG&E
Res
iden
tial U
tility
Rat
es ($
/kW
h)
Old Tier One (1H15) Tier One (2017)* Tier One (2019)*U.S. Avg.Avg. in Our 19 States
New CA Rate Reform Increasing Tier One Rates6Utility Rates in SolarCity Geographies Are Up 49% since 20045
* Assumes 3% Additional Annual Rate Inflation
3.4% CAGR
4.1% CAGR
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Cleaner, Lower Cost EnergySolar PPAs, Leases, and Loans Lower Customers’ Energy Bills for No Initial Investment
No upfront cost for installation required
Solar energy paid for monthly at a lower $/kWh price than charged by the local utility
Our solar contracts typically generate 50-90% of a customer’s annual electricity needs
Customers able to generate savings of up to 20% from Day One
Avg. Annual Year-1 Savings Of > $400 in
California
SOLARCITY EXAMPLE OF A CALIFORNIA PPA WITH NO DOWN PAYMENT
SolarCity Bill
New Utility Bill
New Avg. Bill~$1,848 /Yr.
Old Avg. Bill~$2,256 /Yr.
$0.15/kWh
$0.15-0.19/kWh*$0.19/kWh
* Because of tiered pricing based on usage in California, the output from solar energy systems also lowers the rate charged by the utility
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SolarCityU.S. Service Territories
Total U.S.
Total U.S. Residential Solar Installations at the End of Q2 2015 7 0.68M 0.73M
/ Total U.S. Single Family Housing Units 8 41.3M 92.2M
= Distributed Solar Penetration of U.S. Single-Family Homes 1.7% 0.8%
Despite Continued Growth, Solar Penetration Remains LowU.S. Solar Penetration of Both Residential and Commercial Buildings Is Below 1%
Residential Solar Is Installed on Only 1.7% of Single Family Homes in SolarCity’s U.S. Service Territories
Over 733k residential solar homes in the United States as of the end of Q2 2015 with ~190k new residential installations in 2014.7
635k new single-family home permits across the Country in 2014, expanding the opportunity.9
Less than 1% solar penetration of the 5.6M commercial buildings in the U.S.10
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The Clear Leader in U.S. Distributed Solar InstallationsSolarCity is the Largest U.S. Residential and Commercial Solar Installer
Installed 28% of Distributed Solar, 15% of Total Solar, and 7% of New Gross Power Capacity in the U.S. 1Q-3Q15
3%6% 6% 5%
7% 7%
22%
7% 8%
11%
17%
25%
33%37%
11% 10%
2009 2010 2011 2012 2013 2014 3Q15 SCTY 3Q15 ResiInstaller No. 2
3Q15 ResiInstaller No. 3
% o
f U.S
. Dis
tribu
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Sol
ar In
stal
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Commercial Residential
SolarCity accounted for more than 1% of all solar installed globally this year
22%
32%
Blended
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Potential to Expand SolarCity’s Core Expertise Globally
Acquired ILIOSS for $10M in Aug. 2015
Strong track record with major Mexican corporations
SOLARCITY IS NOW A LEADING C&I INSTALLER IN MEXICO
International opportunities expected to benefit from lower global module pricing and lower labor costs outside the United States
Exploring partnerships with potential long-term asset owners
Example Countries Australia Chile Italy Kenya
Residential Utility Rates ($/kWh) $0.23 $0.15 $0.26 $0.24
Commercial Utility Rates ($/kWh) $0.16 $0.09 $0.19 $0.10
Solar Insolation (kWh/kW) ~1,500 ~1,800 ~1,200 ~1,400
EXPLORING MORE FOREIGN OPPORTUNITIES12
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Regulatory Update
The California Public Utilities Commission’s forthcoming decision on NEM 2.0 is expected to not significantly affect economics for new customers, as state law requires that the new tariff ensure that customer-sited DG “continues to grow sustainably”
New York removed its NEM cap through 12/31/16 while a comprehensive docket called Reforming the Energy Vision (REV) seeks to appropriately value distributed solar/clean energy
Though Hawaii’s public utilities commission capped the state’s NEM program at existing levels, Hawaii is a unique state that (a) already has double-digit rooftop solar penetration and (b) has a very high cost of energy with wholesale rates above the cost of distributed solar
In Arizona, utility SRP’s implementation of anti-solar rate design changes for new installations is being challenged in Arizona federal court
Extension growing increasingly likely as we approach the step-down in the ITC from 30% to 10% on 1/1/17
Nevertheless, we are approaching our business assuming no extension
STATE NET ENERGY METERING (NEM) POLICIES FEDERAL INVESTMENT TAX CREDIT (ITC)
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Regulators Are Continuing Net Energy MeteringRegulators Tend to View Distributed Solar Positively Because Its Benefits Outweigh Its Costs
State-developed mandatoryrules for certain utilitiesNo uniform or statewide mandatoryrules but some utilities allow
No net energy metering
State-developed net energy metering rules ended for new customers
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B U S I N E S S D R I V E R S & M E T R I C S
L E A D E R S H I P O F A G R O W I N G O P P O R T U N I T Y
V A L U E O F A S S E T S
M O N E T I Z A T I O N O F E N E R G Y C O N T R A C T S
V E L O C I T Y A N D C O N S I S T E N C Y O F D E P L O Y M E N T S
P R O P R I E T A R Y O R I G I N A T I O N A T L O W E R A C Q U I S I T I O N C O S T S
O P E R A T I N G C O S T E X C E L L E N C E
I N V E S T M E N T I N B E S T - I N - C L A S S T E C H N O L O G Y
G U I D A N C E A N D C O N C L U S I O N
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Project Cash Flow Driven by Units, Production, and Pricing
Solar Insolation Annual hours of sunshine on the panels adjusted for tilt and azimuth
XSystem Size Capacity (kW or MW)
=Annual Energy Production Estimated kilowatt-hours (kWh) of solar energy
produced in year one
X
$0.13/kWh ( Energy Contract PriceAll the energy produced by the solar system is sold to the customer at an established $/kWh price with an annual escalator (includesperformance-based incentives)
+ +
$0.035/kWhSREC Price )
Portfolio average, e.g., $0 in California
Certain states require non-renewable energy generators to purchase Solar Renewable Energy Certificates to meet state renewable energy portfolio standards
= =
$1,486(or $0.22/W)
Energy ContractRevenue
Annual revenue is the customer bill plus payments for SRECs. Customers contract for 20 years and we expect to provide energy to the home for at least 30 years
1,332 Hours
260W x 26 Panels = 6.8kW
9,004 kWh
751 Avg. FICOInvestment-grade off-taker
BILLSREC
*
*Average of 3Q15 Lease/PPA Deployed; Q315 average including MyPower is 1,352 hours
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Year 0 1 2 3 4 5 6 7 8 9 10 11* 12 13 14 15 16 17 18 19 20Energy Production kWh/kW 1,332 1,325 1,319 1,312 1,306 1,299 1,293 1,286 1,280 1,273 1,267 1,261 1,254 1,248 1,242 1,236 1,229 1,223 1,217 1,211
Annual Degradation (0.5%)Contract (+PBI) Price $/kWh $0.13 $0.13 $0.13 $0.14 $0.14 $0.14 $0.14 $0.15 $0.15 $0.15 $0.16 $0.16 $0.17 $0.17 $0.18 $0.18 $0.18 $0.19 $0.19 $0.20
Annual Escalator 2.2%SREC $/kWh $0.04 $0.03 $0.03 $0.02 $0.01
Rebates/Prepayments $/W $0.10Project Revenue $/W $0.22 $0.21 $0.21 $0.20 $0.20 $0.18 $0.19 $0.19 $0.19 $0.20 $0.20 $0.20 $0.21 $0.21 $0.22 $0.22 $0.23 $0.23 $0.24 $0.24O&M Expenses $/W ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.18) ($0.02) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03)Gross Project Cash Flow $/W $0.10 $0.20 $0.19 $0.19 $0.18 $0.17 $0.16 $0.16 $0.17 $0.17 $0.17 $0.02 $0.18 $0.18 $0.19 $0.19 $0.20 $0.20 $0.20 $0.21 $0.21
Year 21* 22 23 24 25 26 27 28 29 30**Energy Production 1,205 1,199 1,193 1,187 1,181 1,175 1,169 1,163 1,158 1,152
Annual DegradationContract (+PBI) Price $0.18 $0.19 $0.19 $0.20 $0.20 $0.21 $0.21 $0.22 $0.23 $0.23
Annual EscalatorSREC
Project Revenue $0.22 $0.22 $0.23 $0.23 $0.24 $0.25 $0.25 $0.26 $0.26 $0.27O&M Expenses ($0.15) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.04) ($0.04) ($0.04)Gross Project Cash Flow $0.07 $0.19 $0.20 $0.20 $0.21 $0.21 $0.22 $0.22 $0.23 $0.23
Gross Project Cash Flows (Pre-ITC) Valued at $2.56/W NPVThe Foundation of Our Value Creation Rests Upon the Cash Flow Stream of the Underlying Assets
Q3 2015 NPV of Lease/PPA Gross Project Cash Flows before the Investment Tax Credit/Depreciation Was $2.56/W at a 6% Discount Rate
$/W UNIT ECONOMICS FOR THE 172 MW OF LEASES/PPAS DEPLOYED IN Q3 2015:
30-Year NPV: $2.56/W Rebates/Prepayments: $0.10/W (upfront) Contracted NPV: $2.02/W (discounted at 6%) Renewal NPV: $0.44/W (discounted at 6%)
* Inverter replacement assumed in Year 11 at a cost of $0.15/W and in Year 21 at a Cost of $0.12/W** Renewal assumes SolarCity continues to provide energy to the home at a 10% discount to the utility price at the time of renewal
Note: Excludes default rates
In aggregate, the lease/PPA MW Deployed in Q3 2015 are expected to generate unlevered Gross Project Cash Flow (pre-tax equity distributions) of ~$34M in Year One (172 MW x $0.20/W)
Excludes MyPower MW Deployed (See Appendix A)
18
Tax Equity Primer
$/W $/W % of Return
Cash Investment in Project ($1.77)
Investment Tax Credit offsetting income tax $1.36 65%
Depreciation offsetting income tax over life of partnership $0.29 14%
Cash Flow from project $0.46 22%
Total Nominal Return $2.11 100%
The Investment Tax Credit (ITC) available under Section 48 of the IRC currently includes a 30% tax credit for solar systems on residential and commercial properties, which is scheduled to be reduced to 10% after December 31, 2016.
While the current ITC focuses primarily on renewable energy property, various iterations of the ITC have existed since 1962, and over its history the ITC has been used by Congress to spur investment in a multitude of industries.
ITC is part of broader General Business Credit under Section 38 that provides tax credits to various asset types, including low income housing, new markets, carbon sequestration, marginal oil wells, and dozens of other industries.
HISTORY ECONOMICS
Pool of sophisticated investors comprised of leading financial institutions and corporates investing for an attractive risk adjusted return
Investor base continues to expand as asset class matures
INVESTOR BASE
SELECT TAX EQUITY INVESTORS
Partnership with SolarCity as 1% Member and Tax Equity as 99% Member
Investment structured with projected “flip” and tenor 6.5 years
Tax Equity partner receives the ITC, accelerated depreciation benefits and a share of cash flow
After Tax Equity partner reaches a target IRR, their partnership interest flips down to 5% and SolarCity can exercise a buyout of the Tax Equity’s interest
PARTNERSHIP STRUCTURE
% Benefit to Tax Equity Partner
Pre-Flip Post-Flip
ITC / Depreciation 99% 0%
Cash Flow 30-40% 5-10%
After-tax IRR 7% to 12%; pre-tax cash IRR 2% to 5%
Tax Equity partner funds $1.75-1.80 / W ($4.55 Fair Market Value * 30% ITC * 1.28 funding multiple)
Return is comprised of 65% ITC, 14% depreciation, 22% cash flow
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Year 0 1 2 3 4 5 6 7 8 9 10 11* 12 13 14 15Gross Project Cash Flow $0.10 $0.20 $0.19 $0.19 $0.18 $0.17 $0.16 $0.16 $0.17 $0.17 $0.17 $0.02 $0.18 $0.18 $0.19 $0.19
Tax Equity Investment $1.77Tax Equity Distributions ($0.07) ($0.07) ($0.07) ($0.06) ($0.06) ($0.06) ($0.05) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01)
Unlevered Project Cash Flow to SCTY $1.87 $0.13 $0.12 $0.12 $0.12 $0.11 $0.10 $0.11 $0.15 $0.16 $0.16 $0.01 $0.17 $0.17 $0.17 $0.18
SCTY Share of Cash Flow 65% 65% 65% 65% 65% 65% 67% 92% 92% 92% 51% 93% 93% 93% 93%Tax Equity Share of Cash Flow 35% 35% 35% 35% 35% 35% 33% 8% 8% 8% 49% 7% 7% 7% 7%
Year 16 17 18 19 20 21* 22 23 24 25 26 27 28 29 30**Gross Project Cash Flow $0.20 $0.20 $0.20 $0.21 $0.21 $0.07 $0.19 $0.20 $0.20 $0.21 $0.21 $0.22 $0.22 $0.23 $0.23
Tax Equity Distributions ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.02) ($0.02) ($0.02) ($0.02)
Unlevered Project Cash Flow to SCTY $0.18 $0.19 $0.19 $0.19 $0.20 $0.06 $0.18 $0.18 $0.19 $0.19 $0.20 $0.20 $0.21 $0.21 $0.22
SCTY Share of Cash Flow 93% 93% 93% 93% 93% 82% 93% 93% 93% 93% 93% 93% 93% 93% 93%Tax Equity Share of Cash Flow 7% 7% 7% 7% 7% 18% 7% 7% 7% 7% 7% 7% 7% 7% 7%
Unlevered Cash Flow After-Tax Equity Valued at $3.87/W***In Addition, Tax Equity Enables the Monetization of the Investment Tax Credit (ITC) in Year One
Tax Equity Invests $1.75-1.80/W in Return for a Portion of Gross Project Cash Flow and Most of the 30% ITC/Depreciation
30-Year Unlevered Pre-Tax NPV: $3.87/W Tax equity investment: $1.77/W (upfront) Rebates/Customer prepayments: $0.10/W (upfront) Contracted Unlevered NPV: $1.59/W (discounted at 6%) Renewal Unlevered NPV: $0.41/W (discounted at 6%)
* Inverter replacement assumed in Year 11 at a cost of $0.15/W and in Year 21 at a Cost of $0.12/W** Renewal assumes SolarCity continues to provide energy to the home at a 10% discount to the price at the time of renewal
*** Unlevered Cash Flow Value of $3.87/W on this slide only includes Leases/PPAs; the $3.86/W reference on Slide 5 is a blend including MyPowerNote: Excludes default rates
UNLEVERED PROJECT CASH FLOW OF LEASES/PPAS WITH A 30% ITC Tax Equity Share of Cash Flows: Pre-Flip: 30-40% Post-Flip: 5-10%
20
Levering Cash Flows Yields $2.76 upfrontNon-Recourse Project Debt Is Used to Help Fund the Upfront Investment and Target Day One Cash
Aggregation Facility Debt Currently Funds $0.80-0.90/W and Is Expected to Be Refinanced with Long-Term ABS Debt
30-Year Pre-Tax NPV: $3.87/W Tax equity investment: $1.77/W (upfront) Rebates/Customer prepayments: $0.10/W (upfront) Debt monetization: $0.89/W (upfront) Contracted Levered NPV: $0.70/W Renewal Levered NPV: $0.41/W
* Inverter replacement assumed in Year 11 at a cost of $0.15/W and in Year 21 at a Cost of $0.12/W** Aggregation Facility debt assumes the terms of current aggregation facilities (2-yr. maturity)
*** Assumes ABS debt is issued to refinance the aggregation facility debt after two years, an 18-year amortization period, and the average interest rate of our first 4 ABS issuances of 4.5% (the most recent LMC-4 issuance was at 4.4% including fees)
Note: Excludes default rates
LEVERED PROJECT CASH FLOW WITH A 30% ITC
$/W 0 1 2 3 4 5 6 7 8 9 10 11* 12 13 14Unlevered Project Cash Flow $1.87 $0.13 $0.12 $0.12 $0.12 $0.11 $0.10 $0.11 $0.15 $0.16 $0.16 $0.01 $0.17 $0.17 $0.17
Aggregation Facility Proceeds/Paydown** $0.89 ($0.05) ($0.84)Aggregation Facility Debt Service** 2.75% ($0.02) ($0.02)
Expected ABS Debt Proceeds*** $0.97 ABS Debt Service*** 4.50% ($0.08) ($0.08) ($0.08) ($0.07) ($0.07) ($0.10) ($0.10) ($0.11) ($0.11) ($0.11) ($0.11) ($0.10)
Levered Project Cash Flow $2.76 $0.05 $0.24 $0.04 $0.04 $0.04 $0.03 $0.04 $0.05 $0.05 $0.05 ($0.10) $0.06 $0.06 $0.07
$/W 15 16 17 18 19 20 21* 22 23 24 25 26 27 28 29 30Unlevered Project Cash Flow $0.18 $0.18 $0.19 $0.19 $0.19 $0.20 $0.06 $0.18 $0.18 $0.19 $0.19 $0.20 $0.20 $0.21 $0.21 $0.22
Aggregation Facility Proceeds/Paydown**Aggregation Facility Debt Service**
Expected ABS Debt Proceeds***ABS Debt Service*** ($0.11) ($0.11) ($0.10) ($0.03)
Levered Project Cash Flow $0.07 $0.08 $0.08 $0.16 $0.19 $0.20 $0.06 $0.18 $0.18 $0.19 $0.19 $0.20 $0.20 $0.21 $0.21 $0.22
21
>50% of Value Is Monetized Upfront and the Rest Retained
* Unlevered contracted cash flow net of operations and maintenance expenses and tax equity distributions** Non-recourse aggregation facility debt issuance at a 56% advance rate and a 2.5-3.0% interest rate with the potential to subsequently term out through ABS debt at a 66% advance rate and a 4.5-5.0% interest rate
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
Total Value of MWDeployed
Upfront Cash Remaining Value notMonetized Upfront
$ pe
r Wat
t
Tax EquityInvestment
Plus Rebates/Prepayments:
$1.87/W
Contracted Post-Tax
Equity:$1.59/W* Debt
Monetization:$0.89/W**
Renewal:$0.41/W
Renewal:$0.41/W
$3.87/W
Retention of Contract$0.70/W
Renewal: $0.41/W
Unlevered Sale of Contract $0.55/W
Tax EquityInvestment
Plus Rebates/Prepayments:
$1.87/W
$2.76/W
Retention of approximately1/3 of contract value and 100% of
renewal
>50% of total value and 56% of contracted value monetized
upfront at 2.5-3.0%, and ultimately 66% in securitizations at 4.5-5.0%
6% Discount rate
6% Discount rate
22
Hypothetical Unlevered Cash Flow with a 10% ITC of ~$3.32/WWith a 10% ITC, Tax Equity Investment Could Fall to $0.45-0.50/W and Pre-Flip Distributions to ~10%
Offsetting the Decline in the ITC from 30% to 10%, We Expect Contract Pricing to Be Higher By ~$0.02/kWh by 2017
30-Year Unlevered Pre-Tax NPV: $3.32/W Tax equity investment: $0.48/W (upfront) Rebates/Customer prepayments: $0.10/W (upfront) Contract NPV: $2.23/W (discounted at 6%) Renewal NPV: $0.52/W (discounted at 6%)
* Inverter replacement assumed in Year 11 at a cost of $0.15/W and in Year 21 at a Cost of $0.12/W** Renewal assumes SolarCity continues to provide energy to the home at a 10% discount to the price at the time of renewal
Note: Excludes default rates
HYPOTHETICAL UNLEVERED PROJECT CASH FLOW OF LEASES/PPAS WITH A 10% ITC
23
Year 0 1 2 3 4 5 6 7 8 9 10 11* 12 13 14 15Gross Project Cash Flow $0.22 $0.22 $0.21 $0.21 $0.20 $0.19 $0.19 $0.20 $0.20 $0.20 $0.06 $0.21 $0.22 $0.22 $0.23
Customer Preyaments/State Rebates $0.10Tax Equity Investment $0.48Tax Equity Distributions ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.00) ($0.00) ($0.00) ($0.00) ($0.00) ($0.00) ($0.00) ($0.00)
Unlevered Project Cash Flow $0.58 $0.20 $0.20 $0.19 $0.19 $0.18 $0.17 $0.18 $0.19 $0.20 $0.20 $0.05 $0.21 $0.21 $0.22 $0.22
SCTY Share of Cash Flow 90% 90% 90% 90% 90% 90% 91% 98% 98% 98% 93% 98% 98% 98%Tax Equity Share of Cash Flow 10% 10% 10% 10% 10% 10% 9% 2% 2% 2% 7% 2% 2% 2% 2%
Year 16 17 18 19 20 21* 22 23 24 25 26 27 28 29 30**Gross Project Cash Flow $0.23 $0.24 $0.24 $0.25 $0.25 $0.11 $0.23 $0.23 $0.24 $0.25 $0.25 $0.26 $0.26 $0.27 $0.27
Tax Equity Distributions ($0.00) ($0.00) ($0.00) ($0.00) ($0.01) ($0.00) ($0.00) ($0.00) ($0.00) ($0.00) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01)
Unlevered Project Cash Flow $0.23 $0.23 $0.24 $0.24 $0.25 $0.10 $0.23 $0.23 $0.24 $0.24 $0.25 $0.26 $0.26 $0.26 $0.27
SCTY Share of Cash Flow 98% 98% 98% 98% 98% 96% 98% 98% 98% 98% 98% 98% 98% 98% 98%Tax Equity Share of Cash Flow 2% 2% 2% 2% 2% 4% 2% 2% 2% 2% 2% 2% 2% 2% 2%
Multiple Options to Monetize Unlevered Cash Flows
$/W 30% ITC 10% ITC
Upfront Asset Financing:
Tax Equity Investment $1.77/W $0.48/W
Rebates & Prepayments $0.10/W $0.10/W
Aggregation Facility Debt $0.89/W $1.26/W
Total Upfront Asset Financing $2.76/W $1.84/W
Remaining Value: $1.20/W $1.60/W
Contracted Levered NPV** $0.70/W $0.95/W
Renewal Levered NPV $0.41/W $0.52/W
Value of MW Deployed $3.87/W $3.32/W
CURRENT STRATEGY IS TO MAXIMIZE UPFRONT MONETIZATION EQUITY INVESTMENTS FROM 3RD PARTY FINANCIAL BUYERS ALSO POSSIBLE
$/W 30% ITC 10% ITC
Upfront Asset Financing:
Tax Equity Investment $1.77/W $0.48/W
Rebates & Prepayments $0.10/W $0.10/W
Equity Investment at 7% unlevered IRR* $1.46/W $2.05/W
Total Upfront Asset Financing $3.33/W $2.63/W
Remaining Value:
Renewal Value Yrs. 21-30 $0.41/W $0.52/W
Value of MW Deployed $3.74/W $3.15/W
*Illustrative example; equity investment in contracted cashflows at 8% unlevered IRR would yield $1.34/W and total asset monetization of $3.21** Additional ability to monetize another $0.10 through securitization
5.5% 6.9% 7.4% 7.7% 8.9%
NEP ComparableYieldCo Average
CAFD NYLD Unlevered Year1 Yield of Contracted
Sale at 7% IRR*
Div
iden
d Yi
elds
(201
6 C
onse
nsus
)
COMPARABLE YIELDCOS
24
NPV of Portfolio’s Levered Project Cash Flows of $1.7B*(excluding SRECs)The NPV of Unlevered Project Cash Flows to SolarCity is $2.7 Billion; Project Non-Recourse Debt is $1.0 billion
Power Co Portfolio as of 9/30/15
Cumulative Deployments under an Energy Contract 1.5 GW**
Annual Energy Harvest (2016) 1,400
Average Contract Price (2016) $0.126/kWh
Tax Equity % of net cashflow(2016) 43%
Project Debt ($M) $995
Blended Cost of Debt (%) 4.5%
* Excludes SRECs** Cumulative Deployments under an Energy Contract of 1.5GW excludes 0.1 GW of System Sales 25
-50.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049
O&M Cash to Tax Equity Debt Service Levered Cashflows to SC
Cash flows generated by Energy Contracts
Strong Asset Quality with Predictable PerformanceUnderlying Asset is Contracted Cash Flow that Represents Customers’ Monthly Energy Bills
Low Delinquency Rates and the Predictability of Solar Irradiation Provide High Visibility into Cash Payment Stream
180+ Day Delinquency Rates are Low and Holding Steady kWh Production is Coming in Largely within Forecast
0.6%0.6% 0.6% 0.6%
0.5%0.6%
0.5% 0.5%0.4% 0.4% 0.4%0.4%
0.5%
0.0%
0.2%
0.4%
0.6%
0.8%
Oct14
Nov14
Dec14
Jan15
Feb15
Mar15
Apr15
May15
Jun15
Jul15
Aug15
Sep15
Oct15
Del
inqu
enci
es a
s %
of B
illin
gs
Average FICO score of residential portfolio was >750 as of 9/30/15
Commercial customers largely consist of municipalities and investment grade corporations
0
50,000
100,000
150,000
0%
20%
40%
60%
80%
100%
Sep14
Oct14
Nov14
Dec14
Jan15
Feb15
Mar15
Apr15
May15
Jun15
Jul15
Aug15
Ene
rgy
(MW
h)
Act
ual/U
nder
writ
ten
%
Actual Energy (MWh) Underwritten Estimate (MWh)
Actual/Underwritten %
26
B U S I N E S S K E Y D R I V E R S & M E T R I C S
L E A D E R S H I P O F A G R O W I N G O P P O R T U N I T Y
V A L U E O F A S S E T S
M O N E T I Z A T I O N O F E N E R G Y C O N T R A C T S
V E L O C I T Y A N D C O N S I S T E N C Y O F D E P L O Y M E N T S
P R O P R I E T A R Y O R I G I N A T I O N A T L O W E R A C Q U I S I T I O N C O S T S
O P E R A T I N G C O S T E X C E L L E N C E
I N V E S T M E N T I N B E S T - I N - C L A S S T E C H N O L O G Y
G U I D A N C E A N D C O N C L U S I O N
1
2
3
4
5
6
7
8
9
27
Strategy Targets Lower Cost, Longer Term Financing
Non-Recourse Term Financing
Solar Bonds
$334m Facility at 3.25% + LIBOR
Corporate Revolver
Tax Equity
Non-Recourse Aggregation Facilities
$650M Facility at 2.75% + LIBOR
Long-Term Debt Securitizationat 4.3%-4.8% and Rated A and BBB+
0-1 Year 0-5 Year 8-13+ Years
Development and ConstructionFinancing (DevCo)
Asset Ownership (PowerCo)
28
$240M Facility at 3.25% + LIBOR
$0.1 $0.3 $0.4 $0.4$0.8
$1.7
$2.6
2009 2010 2011 2012 2013 2014 2015 1Q-Q3
New
Com
mitt
ed P
roje
ct
Fina
ncin
g ($
B)
Strong Track Record and Visibility into Financing
Issued first asset-backed securitization (ABS) of distributed solar assets in Q4 2013
Four ABS transactions to date raised $450 million in non-recourse debt collateralized by 317 MW of distributed solar
Total Tax Equity Financing Raised: $4.4B
Tax equity capacity: $929M
Aggregation facility capacity: $398M
MyPower conduit capacity: $77M (increased by $40M in Q4 2015)
Revolver capacity: $19M (increased by $65M in Q4 2015)
Cash and short-term investments: $439M
STRONG FINANCING TRACK RECORD $1.4B IN COMMITTED/UNDRAWN FUNDING AS OF 9/30/15
29
Debt Outstanding as of the End of Q3 2015
Terms (Yrs.)
Underlying MW
$M Outstanding at End of 3Q15
Pre-Tax Cost Recourse Payment
Schedule
Investment-Grade ABS Debt 8-13 317 $425M 4-5% Non-Rec. Amortizing
Aggregation/ MyPowerFacilities 2-3 764 $570M 3-4% Non-Rec. Amortizing
Revolver and Other* <1 $308M 3-4% Recourse Term
Solar Bonds 1-15 $211M 1-6% Recourse Term
Convertible Debt 5 $796M 2-3% Recourse Term
MW Inspected - No Back Leverage 188
MW Inspected – Fully monetized 225
PowerCoDebt
DevCoDebt
* Includes revolver debt of $295 and other debt of $13M
$123M LMC4 Issued at
4.4% WACC and Rated A
Weighted-Average 2.2% interest rate and 1.3 Yrs. Remaining
Term
30
Short Term Maturities Extended to 2017Revolving Debt Facility Maturity Extended and Capacity Increased
Revolving Aggregation Facilities Enable the Recycling of Assets and Are Expected to Be Upsized and Renewed
Outstanding(9/30/15) 2016 2017
Revolver $295M Prior Maturity:Dec. 2016
New Maturity:Dec. 2017
Solar Bonds $211M $176M Due: Sept. 2016
Expected to Be Rolled Over
MyPower Facilities $123M Jan. 2017 Strategy to term outin longer duration ABS
Aggregation Facilities $447M Option for one yr. extension on Dec. 2017 maturity
Strategy to term outin longer duration ABS
31
B U S I N E S S K E Y D R I V E R S & M E T R I C S
L E A D E R S H I P O F A G R O W I N G O P P O R T U N I T Y
V A L U E O F A S S E T S
M O N E T I Z A T I O N O F E N E R G Y C O N T R A C T S
V E L O C I T Y A N D C O N S I S T E N C Y O F D E P L O Y M E N T S
P R O P R I E T A R Y O R I G I N A T I O N A T L O W E R A C Q U I S I T I O N C O S T S
O P E R A T I N G C O S T E X C E L L E N C E
I N V E S T M E N T I N B E S T - I N - C L A S S T E C H N O L O G Y
G U I D A N C E A N D C O N C L U S I O N
1
2
3
4
5
6
7
8
9
32
Installation Process for Customers Includes Six Steps
Sale Survey Design Permit Install PTO
Improving Customer Wait Times
34
MEDIAN DAYS FROM BOOKING TO INSTALL HAS FALLEN ~50% SINCE JANUARY 2013
5060708090
100110120130140150
Jan-
13
Apr
-13
Jul-1
3
Oct
-13
Jan-
14
Apr
-14
Jul-1
4
Oct
-14
Jan-
15
Apr
-15
Jul-1
5
Oct
-15
Med
ian
Day
s fr
om B
ooki
ng to
Inst
all
0 50 100 150 200 250 300Q
3 20
15 In
stal
latio
ns
Days from Booking to Install
Our Process Results in High Customer Satisfaction
60%
70%
80%
90%
NPS
Sco
re %
Q1 2015 Q2 2015 Q3 2015
* Net promoter score is based on a scale of 1-10 in which the percentage of 0-6 scores is subtracted from 9-10 scores
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
B U S I N E S S D R I V E R S & M E T R I C S
L E A D E R S H I P O F A G R O W I N G O P P O R T U N I T Y
V A L U E O F A S S E T S
M O N E T I Z A T I O N O F E N E R G Y C O N T R A C T S
V E L O C I T Y A N D C O N S I S T E N C Y O F D E P L O Y M E N T S
P R O P R I E T A R Y O R I G I N A T I O N A T L O W E R A C Q U I S I T I O N C O S T S
O P E R A T I N G C O S T E X C E L L E N C E
I N V E S T M E N T I N B E S T - I N - C L A S S T E C H N O L O G Y
G U I D A N C E A N D C O N C L U S I O N
1
2
3
4
5
6
7
8
9
50
Proprietary Origination at ScaleMW Booked Grew at a Compounded Annual Rate of 95% from Q3 2013 to Q3 2015
As We Continued to Drive Higher Growth, Sales Unit Costs Increased over the Last 2 Years from $0.40/W to $0.64/W
$0.40 $0.43$0.51
$0.47 $0.49$0.57 $0.59
$0.53
$0.64 $0.61 $0.59
3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15SCTY
3Q15Comp A
3Q15Comp B
Sale
s C
ost (
$/W
)
51
91101
136
218230
206
237
395
345
9571
3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15SCTY
3Q15Comp A
3Q15Comp B
MW
Boo
ked
in P
erio
d
Lead generation Close Performance Marketing Retail partners Home Builder partners Malls Events Canvassing Ambassadors Referrals
• In-home consultation• Phone consultation• Online
Mal
l Car
tTh
e H
ome
Dep
otD
igita
l Ad
Diversified residential sales channels
52
Formulaic Growth in Commercial Sales
2013 2014 2015 YTD
Com
mer
cial
MW
Boo
ked
Com
mer
cial
Sal
es R
eps
by C
ateg
ory
Public Sector National Accounts Agriculture/Water
Mexico MW Booked
53
Reallocating Resources to Lower Cost Sales ChannelsSales Costs Vary Significantly by Channel
SolarCity Already has Channels Operating at Goal Cost Structures
Avg. $0.64
MW Installed by Channel
Sale
s C
ost b
y C
hann
el
($/W
)
54
Note: We will not be disclosing this level of granularity on a regular basis
Achieving Our Sales Cost Goal of $0.40/WGoal Is to Reallocate Resources and Drive Productivity to Improve Cost of Acquisition
$0.64
$0.40
$0.14
$0.10
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
Sales Cost 3Q15 Channel Mix Effect Initiatives incl. ProductivityImprovement
Sales Cost Goal
Sal
es C
ost (
$/W
)
55
B U S I N E S S D R I V E R S & M E T R I C S
L E A D E R S H I P O F A G R O W I N G O P P O R T U N I T Y
V A L U E O F A S S E T S
M O N E T I Z A T I O N O F E N E R G Y C O N T R A C T S
V E L O C I T Y A N D C O N S I S T E N C Y O F D E P L O Y M E N T S
P R O P R I E T A R Y O R I G I N A T I O N A T L O W E R A C Q U I S I T I O N C O S T S
O P E R A T I N G C O S T E X C E L L E N C E
I N V E S T M E N T I N B E S T - I N - C L A S S T E C H N O L O G Y
G U I D A N C E A N D C O N C L U S I O N
1
2
3
4
5
6
7
8
9
56
1834
15 17 17 28 14 215362 70 67
90120
148 139168
203
0255075
100125150175200225
3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15
MW
s In
stal
led
in P
erio
d
Commercial Residential
Best-in-Class Operations Lead the Way in Volumes and CostsMW Installed Have Grown 80% per Year since 2013 to Annualized Pace of >1 GW
Installation Cost/Watt of <$2.00/W is the Lowest Among Publicly-Reported Companies
57
* Installation cost is based on MW Deployed and tranched in period, which was a higher mix of lower cost residential installation in Q3 2015
$2.65 $2.49 $2.44 $2.28 $2.19 $2.09 $2.09 $2.13 $1.92$2.27
$2.87
$1.00$1.25$1.50$1.75$2.00$2.25$2.50$2.75
3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15SCTY
3Q15Comp. A
3Q15Comp. B
Inst
alla
tion
Cos
t ($/
W)
*
Safety and Quality Have Improved with Growth
58
TRAINING PROGRAM
4 training academies All installers go through rigorous employment training
before setting foot on a job site Follow up with continued education online and in
person General leadership training at SolarCity headquarters Dedicated training team
SCTY vs. OSHA Incidence Rates13 Recordable Rate Lost Days
SolarCity 1.8 0.3
Construction (All) 3.6 1.3
Specialty Trade 3.8 1.4
FEWER INCIDENTS AND LOST DAYS THAN COMPARABLE INDUSTRIES
2013-12 2014-03 2014-06 2014-09 2014-12 2015-03 2015-06 2015-09
Failu
re R
ate
Cum
ulat
ive
Inst
alla
tions
Month of failure case creation
Jobs in Fleet Inverter Failure Rate Installer Error Rate
QUALITY: FAILURE RATES HOLDING STEADY WITH VOLUMES
For every 100 employees, SolarCity experiences 1.8 recordable injuries/illnesses (incl. non-serious) in a given year (vs. 3.6 for the construction industry).0.3 of these incidents have lead to misseddays (vs. 1.3 for construction).
SolarCity Product Quality
SolarCity partners with select Tier-1 suppliers and requires them to meet our standards for product and manufacturing excellence, with rigorous third party testing on an ongoing basis
China-based SolarCity quality team (8 staff) and third party auditing firms visit supplier factories on regular basis to ensure our products are built to specification
SolarCity believes that the Useful Life of the Solar modules used in our installations exceeds 35 years.
59
Infrastructure in Place to Serve Key U.S. Solar GeographiesWith 81 Operations Centers, We Are within 30 Minutes of 90% of the Population in Our Geographies14
Our Differentiated Logistics Network Enables Low Costs and Faster Customer Response Time
6 614 17
25
0102030405060708090
0
5
10
15
20
25
30
2011 2012 2013 2014 3Q15
Cum
ulat
ive
New
Operations Centers
Opened Cumulative
60
Zep Offers Proprietary Means to Lower Unit Labor CostsZep Has Enabled Installation Crews to Double Productivity
Inst
alla
tion
Hou
rs p
er k
W In
stal
led
Zep Non-Zep*
* Small sample size
Single mounting system offers efficiencies in training, quality, safety, and maintenance
61
Certain Operations Centers and Commercial Projects Already Performing Above Goals
Q3
2015
Inst
alla
tion
Cos
t ($/
W)
New Offices Mature Offices atOperational Excellence
Offices Focused On Being Optimized
Average
Q3
2015
Inst
alla
tion
Cos
t ($/
/W)
Carports Ground-Mount and Rooftop
Average
Q3 2015 Commercial Installations81 Operations Centers
RESIDENTIALCOMMERCIAL
* Some Q3 2015 installation costs will flow through Q4 2015 cost per watt as MW are deployed and tranchedNote: We will not be disclosing this level of granularity on a regular basis
62
Reducing Installation Cost Goal to $1.50/WLower Hardware Prices and Soft Costs Are Each Expected to Drive ~50% of Cost Reductions
$1.02
$1.50
$0.90
$0.22
$0.10$0.10
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
$2.00
Installation Cost 3Q15 Hardware PriceReductions
Normalizing HigherCost Operations
Centers to Avg andLower Mix of Higher
Cost Carports*
Other Initiatives Installation Cost Goal
Aver
age
Tota
l Cos
t per
Wat
t
$1.92
Soft Costs
HardwareCosts
* Current economics in some states support carports but lower revenue numbers will reduce carport projects that generate enough returns
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B U S I N E S S D R I V E R S & M E T R I C S
L E A D E R S H I P O F A G R O W I N G O P P O R T U N I T Y
V A L U E O F A S S E T S
M O N E T I Z A T I O N O F E N E R G Y C O N T R A C T S
V E L O C I T Y A N D C O N S I S T E N C Y O F D E P L O Y M E N T S
P R O P R I E T A R Y O R I G I N A T I O N A T L O W E R A C Q U I S I T I O N C O S T S
O P E R A T I N G C O S T E X C E L L E N C E
I N V E S T M E N T I N B E S T - I N - C L A S S T E C H N O L O G Y
G U I D A N C E A N D C O N C L U S I O N
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9
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Broad Technology Portfolio
SOLAR MODULES Silevo Tunneling Junction High efficiency / low cost World record module efficiency of
>22% certified by Renewable Energy Test Center
System design automation Energy production forecasting Logistics and resource management Utility rate tariff database Energy usage evaluations Customer account management Customer applications
SOFTWARE
Fast installation, lower cycle time Superior aesthetics
MOUNTING HARDWARE &BALANCE OF SYSTEM
Real-time energy monitoring Voltage control Energy storage integration
GRID CONTROL SYSTEMS
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Integrated Module Production Offers New Cost AdvantageVertical Integration into Module Manufacturing to Provide Competitive Edge in Costs and Aesthetics
2017 Goal Is to Produce Modules at a Lower Cost of $0.55/W at a Higher Module Efficiency of 21-22%
Traditional Silicon Modules Silevo ModulePanel Wattage (60-cell) 260 350
Module Efficiency (Cell Efficiency) ~15% (~18%) 21-22% (24%)
Additional Energy Harvest ->5%
Manufacturing cost goal ($/W) ~$0.55/W
Balance of system (BoS) cost reduction - >$0.10/W
Module Efficiency of >22% Certified by Renewable Energy
Test Center
WORLD RECORD MODULE
Silevo’s 350-Watt module is significantly above original 310-W at the time of acquisition due to breakthrough in shingling technology
Silevo cell is bi-facial, which allows for additional energy harvest in commercial and utility-scale installations
66
Higher Efficiency Enables Lower Labor and BoS CostsSilevo’s 350-W Module Utilizes 33% Fewer Panels than Traditional Modules on a Typical House
Silevo installation
16 panels × 350 Watts per panel =
6 kW System Size
Standard installation
24 panels × 260 Watts per panel =
6 kW System Size
Additional mounting planes required
Enables fewer balance of system components and lower labor costs
Increases available energy generation in roof-constrained environments
Higher Efficiency:
67
Largest Solar Panel Factory in the Western Hemisphere Construction at Buffalo is underway with winter weather
incorporated into the schedule Targeting construction completion and initial equipment
installation by Q2 2016 Silevo’s high-volume manufactured product has been
validated by Tier 1 financial solutions; installations underway with manufacturing in China and our Fremont facility
SolarCity will be operating the facility but does not own it, which will be our strategic approach towards manufacturing
68
Zep Enables Better Aesthetics and More Panels on a Roof
Competitor with Traditional Mounting Hardware SolarCity with Zep
69
Note: Competitor image is rendered
Proprietary Residential Mounting Hardware Requires Fewer StepsOur Zep Mounting Hardware Simplifies Installation and Eliminates the Need for Rails and Clips
Zep Enables Lower Installation Costs by Requiring Fewer Components and Less Labor Hours
CORE COMPONENTS
ToolsEnd CapArray SkirtGripDC Wire GripCombiner boxGround ZepInterlockLeveling Foot
70
Continued Investment in Productivity through Simplification
Current Part Count
New Part Count
71
Commercial Mounting Hardware Offers Unique Solution
CORE COMPONENTS
Positive AttachmentBallast Pan Zep Tool
DC Wire ClipSnap BushingPeak Base
Valley Base
Ground Zero
Bridge AssemblyConduit Assembly Tube Connector
ADDITIONAL COMPONENTS
72
Storage Enables Energy Independence
Market Segment Product
Commercial & Industrial DemandLogic reduces peak demand charges
Residential Cleaner, more affordable back-up power
Remote Communities and the Developing World
Microgrids protect against outages and provide more affordable energy
UtilitiesCapacity and power quality services
73
Storage Enables Solar Energy at Night
Building Firm, Dispatchable Power
74
Cleaner, More Affordable, More Resilient GridA Network of Distributed Solar and Storage Systems Enables a Lower Cost, More Reliable Grid
Distributed Energy Resource Aggregation Can Provide Low-Cost Grid Services such as Peak Shaving and Voltage Support
75
B U S I N E S S D R I V E R S & M E T R I C S
L E A D E R S H I P O F A G R O W I N G O P P O R T U N I T Y
V A L U E O F A S S E T S
M O N E T I Z A T I O N O F E N E R G Y C O N T R A C T S
V E L O C I T Y A N D C O N S I S T E N C Y O F D E P L O Y M E N T S
P R O P R I E T A R Y O R I G I N A T I O N A T L O W E R A C Q U I S I T I O N C O S T S
O P E R A T I N G C O S T E X C E L L E N C E
I N V E S T M E N T I N B E S T - I N - C L A S S T E C H N O L O G Y
G U I D A N C E A N D C O N C L U S I O N
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Conclusion
Originating new solar installations at an annualized rate of >1 GW
New Energy Contracts generating value of ~$3.86 per Watt today with a 30% ITC (and an estimated $3.32 per Watt with a 10% ITC)
Building solar assets at the best cost of publicly-traded peers of ~$2.84/W with a path to $2.25/W in 2017 and ultimately $2.00/W
Deployed and retained portfolio of 1.5 GW generating $135M in annual unlevered and $55M in annual levered cash flow on average over the next five years and a total 30-Yr. NPV of $1.7 billion (excluding SRECs)
Currently monetizing upfront ~2/3 of the value generated, and exploring options to monetize more of the cash flow in year one
Investing in technology to widen our relative cost advantage and enable greater renewable capacity on existing grid infrastructure
- Goal of not owning manufacturing assets on balance sheet77
83 136
285
503
878-898 1,250
0
250
500
750
1,000
1,250
2011 2012 2013 2014 2015E* 2016E*
MW
s In
stal
led
in P
erio
d
Guidance Implies MW Installed Growth of 43% in 2016 vs. 2015
* Based on Q4 2015 guidance of 280-300 MW Installed
78
Long-Term Guidance
79
Metric Unit 2014 2015 2017 2019Q1 Q2 Q3 Q4 Q1 Q2 Q3
U.S. Power Capacity:U.S. Installed Generating Capacity GW-AC 1,161 1,169 1,172 1,177 1,182 1,171 1,176 Distributed Solar as % of U.S. Generating Capacity % 0.6% 0.6% 0.7% 0.7% 0.8% 0.9% 0.9% Continued increase in U.S. Installed Distributed Solar Capacity GW-DC 6.7 7.3 7.9 8.6 9.2 10.0 10.8 Distributed solar generation penetrationNew U.S. Installed Distributed Solar Capacity MW-DC 483 564 559 719 682 697 796
SCTY Units:SCTY % of New U.S. Distributed Solar Capacity % 17% 19% 25% 25% 22% 27% 32%MW Installed MW 82 107 138 177 153 189 256 One Million Customer GoalMW Deployed MW 82 107 137 176 143 177 205 MW PTO'd MW 83 79 113 138 160 156 203
Energy Contract Pricing of New Deployments (Yr. 1) $/kWh $0.12 $0.12 $0.12 $0.12 $0.13 $0.13 $0.13 Increase in Pricing
Annual Escalator % 1.7% 1.9% 1.9% 1.9% 2.1% 2.1% 2.2%SREC (5-Yr. Portfolio Average) $/kWh $0.01 $0.01 $0.02 $0.02 $0.02 $0.02 $0.02 Energy Harvest (Yr. 1) kWh/kW 1,425 1,416 1,406 1,402 1,404 1,379 1,352
Value Generation and Monetization:Asset Financing in Period (including rebates)* $/W $2.69 $2.04 $2.62 $2.28 $2.35 $2.33 $3.20 Seeking to monetize a higher % of value upfront
Contracted Value of MW Deployed in Period † $/W $3.68 $3.55 $3.37 $3.24 $3.44 $3.49 $3.50 Renewal Value of MW Deployed in Period † $/W $0.38 $0.40 $0.38 $0.34 $0.33 $0.34 $0.36
Total Value of MW Deployed in Period $/W $4.06 $3.95 $3.74 $3.58 $3.77 $3.83 $3.86
Cost per Watt**:Sales $/W $0.51 $0.47 $0.49 $0.57 $0.59 $0.53 $0.64 Installation $/W $2.44 $2.28 $2.19 $2.09 $2.09 $2.13 $1.92 G&A $/W $0.30 $0.26 $0.21 $0.20 $0.27 $0.24 $0.27 Total Cost per Watt $/W $3.25 $3.01 $2.89 $2.86 $2.95 $2.91 $2.84 $2.25 $2.00
R&D Expenses $M ($1.9) ($3.0) ($4.2) ($10.0) ($12.1) ($12.4) ($17.7)Capital Expenditures $M ($4.7) ($2.9) ($5.8) ($9.5) ($30.5) ($71.6) ($45.7)Change in Working Capital Q/Q $M $28.3 $22.7 $37.0 ($38.1) ($72.3) ($31.7) ($41.7)
Debt and Cash:Debt - Recourse $M ($176.6) ($349.8) ($165.2) ($149.7) ($290.6) ($419.2) ($518.2)Debt - Convertible $M ($230.0) ($230.0) ($730.0) ($796.0) ($796.0) ($796.0) ($796.0)Cash & Short-Term Investments $M $526.2 $429.6 $756.8 $663.6 $586.2 $497.6 $438.7
Value creationUnlevered Pre-Tax NPV Remaining of Cumulative MW Deployed (1.5) $M $2,708Debt – Non-Recourse $M ($995)Net NPV of Cumulative MW Deployed $M $1,713
* Weighted average of Q1-Q3 2015 Asset Financing is $2.68** Cost per Watt is based on our quarterly cost calculation methodology we detail on our website
† Updated since original report
Questions & Answers
80
Appendix A: MyPower Gross Project Cash Flows
81
Year 0 1 2 3 4 5 6 7 8 9 10 11* 12 13 14 15 16 17 18 19 20Energy Production kWh/kW 1,488 1,480 1,473 1,466 1,458 1,451 1,444 1,437 1,429 1,422 1,415 1,408 1,401 1,394 1,387 1,380 1,373 1,366 1,359 1,353
Annual Degradation (0.5%)Contract (+PBI) Price $/kWh 0.16 0.17 0.17 0.18 0.18 0.19 0.19 0.20 0.20 0.21 0.21 0.22 0.22 0.23 0.24 0.24 0.25 0.26 0.26 0.27
Annual Escalator 2.6%SREC $/kWh $0.04 $0.03 $0.03 $0.02 $0.01
Rebates/Prepayments $/W $0.04Project Revenue $/W 0.25 0.26 0.26 0.26 0.27 0.27 0.28 0.28 0.29 0.29 0.30 0.31 0.31 0.32 0.33 0.33 0.34 0.35 0.36 0.36O&M Expenses $/W -0.02 -0.02 -0.03 -0.03 -0.03 -0.03 -0.03 -0.03 -0.03 -0.03 -0.18 -0.03 -0.03 -0.03 -0.03 -0.03 -0.03 -0.03 -0.03 -0.03Gross Project Cash Flow $/W 0.04 0.23 0.23 0.24 0.24 0.24 0.24 0.25 0.25 0.26 0.27 0.12 0.28 0.28 0.29 0.30 0.30 0.31 0.32 0.32 0.33
Year 21* 22 23 24 25 26 27 28 29 30Energy Production 1,346 1,339 1,332 1,326 1,319 1,313 1,306 1,299 1,293 1,287
Annual DegradationContract (+PBI) Price 0.27 0.28 0.29 0.30 0.31 0.31 0.32 0.33 0.34 0.35
Annual EscalatorSREC
Project Revenue 0.37 0.38 0.39 0.39 0.40 0.41 0.42 0.43 0.44 0.45O&M Expenses -0.15 -0.04 -0.04 -0.04 -0.04 -0.04 -0.04 -0.04 -0.04 -0.04Gross Project Cash Flow 0.22 0.34 0.35 0.36 0.36 0.37 0.38 0.39 0.40 0.40
$/W UNIT ECONOMICS FOR THE 26 MW OF MYPOWER DEPLOYED IN Q3 2015:
30-Year NPV: $3.77/W Rebates/Prepayments: $0.04/W (upfront) Contracted NPV: $3.73/W (discounted at 6%) Renewal NPV: $0.00/W (discounted at 6%)
• Inverter replacement assumed in Year 11 at a cost of $0.15/W and in Year 21 at a Cost of $0.12/W Note: Excludes default rates
†Updated since original report
1 FERC “Energy Infrastructure Updates” from December 2011 to December 2014 (http://www.ferc.gov/legal/staff-reports.asp)
2 GTM Research/SEIA’s “U.S Solar Market Insight Report Q2 2015” for residential and solar solar capacity and FERC “Energy Infrastructure Updates” ((http://www.ferc.gov/legal/staff-reports.asp) for all other energy capacity
3 GTM Research/SEIA’s “U.S Solar Market Insight Report Q2 2015”
4 EIA’s “2014 Utility Bundled Retail Sales” (https://www.eia.gov/electricity/sales_revenue_price/pdf/table10.pdf)
5 EIA’s “Average Price by State by Provider, 1990-2014” (http://www.eia.gov/electricity/data/state)
6 Based on filings from PG&E (http://www.pge.com/nots/rates/tariffs/tm2/pdf/ELEC_4697-E.pdf), Southern California Edison (https://www.sce.com/NR/sc3/tm2/pdf/3268-E.pdf), and SDG&E (http://regarchive.sdge.com/tm2/pdf/2784-E.pdf)
and assumes an additional 3% annual rate increases per year
7 GTM Research/SEIA’s “U.S Solar Market Insight Report Q2 2015”
8 Single-family housing units based on data from U.S. Census American Community Survey’s “Housing Units by Units in Structure and State” and assumes 1.0% annual growth in the housing stock per year through 2015. Excludes multi-
family, mobile, and other housing units
9 U.S. Census Bureau’s “Building Permits Survey by State – Annual” (http://www.census.gov/construction/bps)
10 Commercial buildings count from EIA’s 2012 Commercial Buildings Energy Consumption and commercial solar installations from GTM Research/SEIA’s “U.S. Solar Market Insight Report”
11 GTM Research – U.S. PV Leaderboard
12 Solar insolation hours based on NREL PV Watts calculator and representative cities in each country. Pricing is derived from a range of sources, including Eurostat, Climatescope, GTM Latin America Playbook, and CFE
13 Bureau of Labor Statistics Incidence rates of nonfatal occupational injuries and illnesses by case type and ownership, selected industries, 2014 (http://www.bls.gov/news.release/archives/osh_10292015.htm)
14 U.S. Census Bureau 2010. Based on the percent of the population, in states where SCTY operates, that reside in zip codes serviceable by SolarCity. Excludes NY, TX, PA and Mexico
Appendix B: Footnotes - (1/1)
82
“Asset Financing in Period” represents the aggregate project financing cash receipts in a period. This includes both tax equity investment as well as non-recourse project debt, such as our aggregation and MyPower facilities and solar asset-backed loans. Asset monetization per watt is a ratio of total Asset Monetization in the Period divided by MW Deployed in the period, and reflects only actual cash received in a period whether or not they are specifically related to the actual MW Deployed in the period.
“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 and consumer loan 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.
“Gross Project Cash Flow” forecast represent our estimate of the sum of total cash inflows we forecast from MW Deployed in the applicable period under Energy Contracts over the 30 year expected life of the system. This includes (a) payments that our customers are obligated to pay us over the remaining term of such contracts, (b) associated performance-based incentive (PBI) payments, (c) associated solar renewable energy credits (SRECs) that we have contracted to sell, typically representing 5 years of a total potential term of 15 years, and are net of (d) estimated operations and maintenance, insurance, administrative and inverter replacement costs, based on contractually agreed amounts as well as historic and forecasted expenses. Operations and maintenance, insurance, and administrative costs reflect our operating expenses in our funds, or are estimated at $0.021 per watt and assumed to grow at a 2.5% inflation rate per year, and inverter replacement unit costs are estimated to decline at a (2.5%) rate per year, implying $0.15 per watt in Year 11 and $0.12 per watt in Year 21. Energy production is estimated to degrade at 0.5% per year. For our MyPower Energy Contracts, we use the expected cash flows over the full term of the 30-year contract, and for lease and PPA Energy Contracts with terms less than 30 years, we assume the contracts are renewed at a contract price equal to 90% of the contractual price in effect at expiration of the initial term through the remainder of the expected 30-year system life.
“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.
Appendix C – Definitions (1/2)
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“MW Installed” represents the megawatt production capacity of solar energy systems, for which (i) all solar panels, inverters, mounting and racking hardware, and system wiring have been installed, (ii) the system inverter is connected and a successful DC string test has been completed confirming the production capacity of the system, and (iii) the system is capable of being grid connected (including pending a utility disconnect procedure), the latest of which is completed during the applicable period. This metric includes solar energy systems deployed under Energy Contracts as well as for solar energy system direct sales. In each case in-period completion of the above criteria may be demonstrated by written verification by each of the Chief Financial Officer and the President (which may include written sub-certifications).
“MW PTO’d” represents the megawatt production capacity of solar energy systems that have had all required building department inspections completed by the authority having jurisdiction and subsequently interconnected to the utility grid.
“Pre-Tax NPV” represents the net present value at a 6% discount rate of the Levered Project Cash forecast. It includes both the debt proceeds and total debt service including full principal repayment for both (a) actual Aggregation Facility debt drawn down (or expected to be drawn down) and (b) our forecast for Solar Asset-Backed Loans for the underlying MW Deployed in the period. This includes both “Contracted Levered NPV,” which represents the net present value of Levered Project Cash Flow under contract as well as “Renewal Levered NPV,” which represents the net present value of Levered Project Cash Flow forecast from renewal.
“Unlevered Project Cash Flow” represents our forecast of Gross Project Cash Flows after both Tax Equity Investment and Tax Equity Lease/PPA Distributions. “Tax equity Investment” represents the total expected investment from our tax equity funds investors in our lease and PPA Energy Contracts. “Tax Equity Lease/PPA Distributions” are based on the terms of the agreements we have in place with our tax equity investment partners for the MW Deployed in the applicable period under lease and PPA Energy Contracts. We do not use tax equity investment for our MyPower product. For tax equity investment in our lease and PPA Energy Contracts, our investment partners share in a portion of the Gross Project Cash Flow forecast received over the term of the agreement. Our estimate is not inclusive of any potential buy-out of our tax equity partners’ interests in the project after Year 20.
“Unlevered Pre-Tax NPV” represents the net present value at a 6% discount rate of the Unlevered Project Cash forecast. It includes (a) the Tax Equity Investment as well as the Gross Project Cash Flows after Tax Equity Lease/PPA Distributions. This includes both “Contracted Unlevered NPV,” which represents the net present value of Unlevered Project Cash Flow under contract as well as “Renewal Unlevered NPV,” which represents the net present value of Unlevered Project Cash Flow forecast from renewal of our lease/PPA contracts.
“Value of MW Deployed” represents the Unlevered Pre-Tax NPV of MW Deployed under an Energy Contract during a specified period.
“Levered Project Cash Flow” represents our forecast of Unlevered Project Cash Flows after non-recourse debt service. Debt service includes both (a) Aggregation Facility debt for the first two years, based on the terms of our current facility, as well as (b) Solar Asset-Backed Loans, which we assume we issue at the end of year two to refinance the Aggregation Facility debt. We base the interest rate on the average of all four of our previous issuances and assume principal repayment over an 18-year term.
Appendix C – Definitions (2/2)
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Thank you