You are on page 1of 22

Delivering Better Energy

Investor Presentation

Forward-Looking Statements
This presentation contains forward-looking statements that involve risks and uncertainties, including statements regarding SolarCity’s customer and market growth opportunities, financial strategies for cash generation and increasing shareholder value, the deployment of megawatts currently included in backlog, the retained value under energy contracts and of contract renewals, the amount of megawatts that can be deployed based on committed available financing and executed term sheets, 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, including the effect of electric utility industry regulations, net metering and related policies, the availability and amount of rebates, tax credits and other financial incentives, the availability and amount of financing from fund investors, the retail price of utility-generated electricity or the availability of alternative energy sources, risks associated with SolarCity’s rapid growth, risks that consumers who have executed energy contracts included in reported nominal contracted payments remaining and backlog may seek to cancel those contracts, assumptions as to retained value under energy contracts and contract renewal rates and terms, including applicable net present values, performance-based incentives, and other rebates, credits and expenses, SolarCity’s limited operating history, particularly as a new public company, changes in strategic planning decisions by management or reallocation of internal resources, and general market, political, economic and business conditions. You should read the section entitled “Risk Factors” in our Quarterly Report on Form 10-Q, which has been filed with the Securities and Exchange Commission and identifies certain of these and additional risks and uncertainties. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
Slide 2

cheaper power through distributed generation .Our Vision Create the most compelling energy company of the 21st century by delivering cleaner.

Only Lower:    No Upfront Cost Of Installation A Simple Switch to Solar Easily Transferrable upon Moving    Consistent.Value Proposition Yields Value Creation for Shareholders Solar Paid for by the Month like a Utility Bill. Predictable 20-Year Cash Flows Economics Improve from Lower Cost of Capital and System-Installed Cost/Watt Opportunity for Upselling to Other Energy Services Slide 4 .

2013: 195 MW Slide 5 .2b at Q1 2013 Nominal Contracted Payments Outstanding Grew 117% Compounded Annually 2009 to 2012 1400 Estimated Nominal Contracted Payments Remaining ($ in million) 1.Aggregate Cash Flows Under Contract >$1.222 1200 1000 800 600 400 273 200 0 209 2010 2011 2012 1Q13 106 1.109 486 Backlog at May 8.

2013 Customers Cumulative Customers (in thousands) Slide 6 .333 MW Deployed and >57k Customers through Q1 2013 300 50 250 MWs Deployed in Period 40 200 30 150 250 100 157 50 72 31 0 2010 2011 2012 2013E* 0 10 20 MW Deployed * 2013E Represents Guidance the Company as of May 13.

7 GWh Achieved in April:    GWh Production (Weekly) Distributed on Rooftops on Same Site as It Is Consumed Requiring No Transmission and Distribution Minimal Maintenance and No Feedstock Costs Solar production and therefore operating lease revenue is seasonal Q2-Q3: Highest Periods of Production Q4-Q1: Lowest Periods of Production D-08 M-09 J-09 S-09 D-09 M-10 J-10 S-10 D-10 M-11 J-11 S-11 D-11 M-12 J-12 S-12 D-12 M-13 * Roughly 45% of Installed Base of Operating Lease Contracts Are PPAs that Are Variable Based on Production. While Around 55% Are Leases Based on Fixed Monthly Payments Slide 7 .Energy Production Up 132% Y/Y in Q1 2013 Daily Record Generation of 1.

0% 41.400 1. Residential Homes defined as “Housing Units. the implied revenue opportunity at a PPA rate of $0.5% 41. Commercial buildings—Energy Information Administration’s 2003 Commercial Buildings Energy Consumption Survey.15/kWh is roughly $58 billion Note: US Buildings Count.400 9.Enormous Addressable Market Has Barely Been Penetrated Solar Power’s Addressable Market Expands as Retail Electricity Costs Rise and Installation Costs Fall Range of Potential Market Penetration x Total Number of Buildings in SCTY’s 14 Markets (in 000s) = Implied Number of Customers (in 000s) 0.0064 6. See slides 21 and 22 for relevant definitions Slide 8 .855 419 2.000 buildings added per year to arrive at 2011 estimated buildings.400 3.000 GWh (according to 2010 EIA data).855 42 0. Population Estimates Program.0064 2.0064 1.7 .15/kWh in SCTY’s 14 Markets at around 340.3 .7 x Annual Hours of Sun Typical in SCTY Markets (kWh/kW) = Implied Annual Energy Generation (GWh) 1.375 With total electricity consumption above $0.3 .855 209 1. assumes 110. Bureau of the Census.4 kW Residential System Size (in MWs) = Implied GW Deployed of Solar Power .0064 0.1% 41.400 375 1.S.875 1.855 1.5% 41.046 x Average 6.” U.750 1.

CA. Toll Brothers is located in 20 states including AZ. Shea Homes is located in 8 states including AZ. CA. CO.Beyond Direct Sales Are Our Expanding Channel Partners Established Channel Partners SolarCity available at Home Depot in over 450 stores One of the oldest and largest private homebuilders in the nation includes SolarCity systems in their SheaXero communities. and NJ Toll Brothers America’s Luxury Home Builder now deploying SolarCity ready homes. CO. CO. and WA New Channel Partners SolarCity systems are installed by the largest North American privately-owned homebuilder based in the United States. CO and NJ Preferred partner for installing EV chargers. including AZ. Taylor Morrison is located in AZ. FL and TX The nation’s largest home builder and only multi-branded home builder located in over 60 markets and 30 states. CA. CA. creating an opportunity to discuss the advantages of cleaner cheaper energy for thousands of Model S owners in 2013 Partnership with leading automaker to co-market and finance solar projects for Honda and Acura customers and dealerships across SolarCity’s service territory Source: Builder Magazine Slide 9 .

Foothill Ranch.S.0 Billion potential contract value Up to 300MW 5 Year Deployment  Over 160 stores completed or under construction  Provide up to 30 percent of each facility’s total electric needs  Announced 12 new projects in Ohio earlier this month Davis Monthan Air Force Base The largest solar-powered community in the continental U.000 Home Potential >$1. California Walmart is partnering with SolarCity as part of it’s goal of being supplied by 100 percent renewable energy Slide 10 .Massive Opportunity with Large Communities and Retailers     120.

000 employees including hundreds of trained sales consultants. project management. billing. and engineers Solar system design. supply chain. installers. permitting. performance monitoring Replicable and documented processes based on lean manufacturing techniques Infrastructure People Technology Process Slide 11 .Economies of Scale Create a Barrier to Entry 29 operations centers servicing 14 states Close to 3.

no clear ownership System owner and installer have different incentives High costs without economies of scale plus installer margins Value leakage SolarCity Single company resulting in a better experience and future upsells High engineering standards as we install and own the systems Low costs and retains the developer and installer margins Value generation Slide 12 .Vertical Integration Improves Customer Experience and Value Solar Developer Network Customers Engineering standards Costs Arms length.

Advanced Software Technology Lowers Costs SOLARBID TM Lowers customer acquisition costs Energy analysis and proposal generation  Solar production model  Utility rate database  Accurately predicts savings SOLARWORKS TM Enables massive throughput and lowers overhead expenses Massively scalable project management  Project Management  Permitting  Engineering  Supply Chain  Quality Assurance POWERGUIDE TM Ensures system production and continued customer engagement Continual customer conversation  Customer portal shows real-time production and integrates with social media platforms  Platform to upsell additional services  Monitors energy usage and solar production in real time  Integrated with field service and billing Slide 13 .

20 $0.00 $0.74 $1.60 $0.40 $1.20 $1.76 $0.45 Operating Expenses / MW Deployed ($/W) $1.40 $0.02 $1.60 $1.80 $0.00 2009 2010 2011 2012 1Q13 $0.34 Operating Expenses Are Composed of Both Sales & Marketing and General & Administrative Costs Incurred Largely for Investment in the Development of New Solar Energy Systems Slide 14 .Operating Leverage Continues to Drive Down Opex/W $1.

high efficiency furnaces. insulation.    Level 2 fast chargers for residential customers provide a great opportunity to upsell solar Level 3 fast charge stations engineered and constructed by SolarCity provide Tesla owners with unparalleled charge times powered by the sun Over 750 charging locations sold    Proprietary battery control systems integrate solar.000 energy efficiency audits sold. water heating. duct sealing and replacement Over 15. storage and building demand Wall mountable with enough energy to power an energy efficient home Provides backup power during utility outages Slide 15 .Many Upsell Opportunities Over Long Customer Relationship Energy Efficiency Energy Vehicle Charging Battery Storage    Proprietary software performs a whole house simulation using a 3D model of each building to diagnose all areas of energy use and waste Recommendations include air sealing.

046 $128.718 $41.415 $13. installation.406 $59.664 $73.145 $36.136 $12.392 $50.429 $77.418 $47.668 ($61.860) 2011 $23.551 2012 $47.616 $81.747 ($68.662 Recurring customer payments recognized over life of contract.004 $31.775 $50.Condensed Income Statement of Operations Revenue: Operating leases Solar energy system sales Total revenues Cost of revenue: Operating leases Solar energy system sales Total cost of revenues Gross profit (loss) Operating Expenses: Sales and Marketing General and Administrative Total Operating Expenses Income (loss) from operations $42.253) $69.346 $64. typically 20 years $5.355 $119.887 Leased solar systems’ hardware. and direct sales costs amortized over 30 years Primarily customer acquisition and other development costs Investment in growth and development constrain GAAP profitability Slide 16 .

Leased and to Be Leased $1.1b at Q1 2013 Represents SolarCity’s Total Investment in Solar Energy Systems.140 $1.200 Solar Energy Systems Investment ($m) $1.002 $400 $293 $269 $200 $561 $269 $112 $62 $50 2008 $50 2009 $157 $112 2010 $0 2011 2012 1Q13 See slides 21 and 22 for relevant definitions Slide 17 .002 $138 $1.000 $800 $441 $600 $562 $1.Cumulative Solar Systems Investments >$1.

082 ($304.129 ($65.206 $109.255 $40.252) $256.786) Net cash provided by (used in): Operating activities Investing activities Financing activities Net cash provided (used) before equity issuance Net cash provided by equity issuance Net increase (decrease) in cash and cash equivalents See slides 21 and 22 for relevant definitions Slide 18 .333 ($449.300) $514 ($32.059) $323.885) ($86.799) 2012 $60.576) $98.886) $22.658 ($41.378 ($33.058) $81.609 Three Months ended March 31 2012 ($76.Condensed GAAP Statements of Cash Flows $ in thousands Year ended December 31 2011 $18.831) $122.087 ($7.284 ($29.898 ($140.597) $175.197 2013 $8.

2013 $ in millions (except per watt) Total Retained Value* Retained Value Under Energy Contract* Retained Value Renewal* Total Retained Value $/watt* $569 $305 $264 $1.25/watt *NPV at 6% See slides 21 and 22 for relevant definitions Slide 19 .Retained Value of $569 Million as of Q1 2013 Measurement of the NPV of Our Forecast for Net Cash to SolarCity Cumulative Net Retained Value as of March 31.

Questions and Answers .

we include each residence as an individual contract. purchase of property and equipment and acquisition of business net of cash required. For commercial customers with multiple locations. commercial and government leases and power purchase agreements pursuant to which consumers use or will use energy generated by a solar energy system that we have installed or contracted to install. each location is deemed a contract if we maintain a separate contract for that location.Appendix – Definitions “Backlog” represents the aggregate megawatt capacity of solar energy systems not yet deployed as of the date specified pursuant to Energy Contracts and contracts for solar energy system direct sales executed as of such date. This metric includes solar energy systems deployed under Energy Contracts as well as solar energy system direct sales. For landlord-tenant structures in which we contract with the landlord or development company. Note that we have previously referred to the foregoing as “Customers” and have chosen to redefine as we believe “energy contracts” is a more appropriate descriptor. “MW” or “megawatts” represents the DC nameplate megawatt production capacity. Slide 21 . commercial and government buildings where we have installed or contracted to install a solar energy system. “Energy Contracts” includes all residential. Note that we have previously referred to the foregoing as “Buildings” and have chosen to redefine as we believe “customers” is a more appropriate descriptor. Investments in Solar Energy Systems does not include solar energy system direct sales or solar energy systems sold via sale-leaseback structures. “Customers” includes all residential. or performed or contracted to perform an energy efficiency evaluation or other energy efficiency services. “Investments in Solar Energy Systems” represents the sum of payments for the cost of solar energy systems leased and to be leased. “MW Deployed” represents the megawatt production capacity of solar energy systems that have had all required building department inspections completed during the applicable period.

Payments for direct sales are not included. renewable energy certificates. As an additional example. if a customer is 2 years into her 20 year contract. This metric is net of estimated operations and maintenance. administrative and inverter replacement costs. assuming all Energy Contracts are renewed at a rate equal to 90% of the contractual rate in effect at expiration of the initial term. Slide 22 . . As an example. “Retained Value under Energy Contract” represents the forecasted net present value of Nominal Contracted Payments Remaining and estimated performance-based incentives allocated to us. This metric includes Energy Contracts for solar energy systems already deployed and in Backlog. insurance.Appendix – Definitions “Nominal Contracted Payments Remaining” equals the estimated sum of cash payments obligated to be paid to us under our Energy Contracts over the remaining term of such contracts. if a customer chose to pre-pay her Energy Contract. then it is included in estimated Nominal Contracted Payments Remaining only while it is in Backlog as the pre-payment has not been received. insurance. administrative and inverter replacement costs. This metric includes Energy Contracts for solar energy systems deployed and in Backlog. solar renewable energy certificates and estimated operations and maintenance. net of amounts we are obligated to distribute to our fund investors. depreciation. then 18 years of contract payments remain. upfront rebates. This metric includes Energy Contracts for solar energy systems deployed and in Backlog. “Retained Value Renewal” represents the forecasted net present value of the payments SolarCity would receive upon Energy Contract renewal through a total term of 30 years.