Solar power is a paradox. It is the world’s fastest-growing energy source, but it has been anything but a one-way ticket for investors. Tesla’s proposed takeover of SolarCity, the largest residential solar company in the US, is the latest warning that bright prospects for the industry will not necessarily be reflected in shareholder returns. The policy framework supporting solar power in the US has “never been better”, in the words of Thomas Werner, chief executive of SunPower, one of the largest American solar companies. The economics of solar power in the US are still heavily dependent on government support, including a federal tax credit and many state incentives. The tax credit had been scheduled to expire at the end of this year, but a budget deal agreed by Congress last December gave it a five-year extension, with a gradual phase-out lasting until 2021. California, the largest solar market in the US and one of the largest in the world, in January agreed favourable new rules for “net metering” – the billing framework for electric utility customers who generate their own power.
FT 22nd June 2016 read more »
Elon Musk has taken a step towards rolling up his different corporate interests, using the high-flying stock of electric car company Tesla Motors to make an all-stock offer worth nearly $3bn for solar power company SolarCity. The prospect of Tesla paying a substantial premium for a company in which Mr Musk is already the chairman and the largest shareholder unnerved Wall Street and knocked nearly 13 per cent from Tesla shares in after-market trading. The $4.1bn that was wiped from Tesla’s stock market value overshadowed a $500m jump in SolarCity’s share price on the news. Mr Musk said that shareholders in both companies would vote on the deal, and that he would abstain from voting both his 21 per cent stake in Tesla and his 22 per cent SolarCity interest. “This would only move forward if there is a majority vote of the non-me shareholders in both companies,” he said.
FT 22nd June 2016 read more »