scty investor presentation - may 2013

7/27/2019 SCTY Investor Presentation - May 2013

1/22

Delivering Better Energy

Investor Presentation


2/22

Slide 2

Forward-Looking Statements

This presentation contains forward-looking statements that involve risks and uncertainties, including statementsregarding SolarCitys customer and market growth opportunities, financial strategies for cash generation andincreasing shareholder value, the deployment of megawatts currently included in backlog, the retained valueunder 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 notnecessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if atall. Forward-looking statements are subject to risks and uncertainties that could cause actual performance orresults to differ materially from those expressed in or suggested by the forward-looking statements, including theeffect 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, theretail price of utility-generated electricity or the availability of alternative energy sources, risks associated withSolarCitys rapid growth, risks that consumers who have executed energy contracts included in reported nominalcontracted payments remaining and backlog may seek to cancel those contracts, assumptions as to retained valueunder energy contracts and contract renewal rates and terms, including applicable net present values,performance-based incentives, and other rebates, credits and expenses, SolarCitys 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 sectionentitled Risk Factors in our Quarterly Report on Form 10-Q, which has been filed with the Securities andExchange Commission and identifies certain of these and additional risks and uncertainties. We do not undertakeany obligation to publicly update or revise any forward-looking statement, whether as a result of new information,future developments or otherwise.


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Our VisionCreate the most compelling energycompany of the 21 st century by

delivering cleaner, cheaper powerthrough distributed generation


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Slide 4

Value Proposition Yields Value Creation for Shareholders

No Upfront Cost Of Installation

A Simple Switch to Solar

Easily Transferrable upon Moving

Solar Paid fo r by the Month l ike a Ut i l i ty B i l l , Only L ow er:

Consistent, Predictable 20-Year Cash Flows

Economics Improve from Lower Cost of Capital and

System-Installed Cost/WattOpportunity for Upselling to Other Energy Services


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Slide 5

Aggregate Cash Flows Under Contract >$1.2b at Q1 2013

Backlog at May 8, 2013: 195 MW

Nominal Contracted Payments Outstanding Grew 117% Compounded Annually 2009 to 2012

106

273

486

1,109

1,222

0

200

400

600

800

1000

1200

1400

209 2010 2011 2012 1Q13

E s t i m a t e d N o m i n a l C o n t r a c t e d P a y m e n t s

R e m a i n i n g ( $ i n m i l l i o n )


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Slide 6

333 MW Deployed and >57k Customers through Q1 2013

* 2013E Represents Gu idance the Co mp any as o f May 13, 2013

31

72

157

250

0

10

20

30

40

50

0

50

100

150

200

250

300

2010 2011 2012 2013E*

C u m u l a t i v e C u s t o m e r s

( i n t h o u s a n d s )

M W

s D e p l o y e d i n P e r i o d

MW Deployed Customers


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Slide 7

* Roughly 45% of Installed Base of Operating Lease Contracts Are PPAs that Are VariableBased on Production, While Around 55% Are Leases Based on Fixed Monthly Payments

Daily Record Generat ion of 1 .7 GWh Ac hieved in Apri l :

Distributed on Rooftops on Same Site as It Is Consumed

Requiring No Transmission and Distribution

Minimal Maintenance and No Feedstock Costs

Energy Production Up 132% Y/Y in Q1 2013

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

G W

h P r o

d u c t i o n

( W e e

k l y )

Q4-Q1:Lowest Periodsof Production

Q2-Q3:Highest Periodsof Production

Solar production and thereforeoperating lease revenue is seasonal


8/22

Slide 8

Enormous Addressable Market Has Barely Been Penetrated

Range of Potential Market Penetration 0.1% 0.5% 1.0% 2.5%

x Total Number of Buildings in SCTYs 14 Markets (in 000s) 41,855 41,855 41,855 41,855

= Implied Number of Customers (in 000s) 42 209 419 1,046

x Average 6.4 kW Residential System Size (in MWs) .0064 .0064 .0064 .0064

= Implied GW Deployed of Solar Power 0.3 1.3 2.7 6.7

x Annual Hours of Sun Typical in SCTY Markets (kWh/kW) 1,400 1,400 1,400 1,400

= Implied Annual Energy Generation (GWh) 375 1,875 3,750 9,375

See slides 21 and 22 for relevant definitions

Solar Powers Addressable Market Expands as Retail Electricity Costs Rise and Installation Costs Fall

With total electricity consumption above $0.15/kWh in SCTYs 14 Markets at around 340,000 GWh (according to 2010 EIA data), the implied revenue opportunity

at a PPA rate of $0.15/kWh is roughly $58 billion

Note: US Buildings Count. Residential Homes defined as Housing Units, U.S. Bureau of the Census, Population Estimates Program. Commercial buildingsEnergyInformation Administrations 2003 Commercial Buildings Energy Consumption Survey, assumes 110,000 buildings added per year to arrive at 2011 estimated buildings.


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Slide 9

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 theirSheaXero communities. Shea Homes is located in 8 states including AZ, CA, CO, and WA

New Channel Partners

SolarCity systems are installed by the largest North American privately-owned homebuilder based in theUnited States. Taylor Morrison is located in AZ, CA, CO, FL and TX

The nations largest home builder and only multi-branded home builder located in over 60 marketsand 30 states, including AZ, CA, CO, and NJ

Toll Brothers Americas Luxury Home Builder now deploying SolarCity ready homes. Toll Brothers is located in 20 statesincluding AZ, CA, CO and NJ

Preferred partner for installing EV chargers, creating an opportunity to discuss the advantages of cleanercheaper energy for thousands of Model S owners in 2013

Partnership with leading automaker to co-market and finance solar projects for Honda and Acuracustomers and dealerships across SolarCitys service territory

Source: Builder Magazine

Beyond Direct Sales Are Our Expanding Channel Partners


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Slide 10

Massive Opportunity with Large Communities and Retailers

120,000 Home Potential>$1.0 Billion potential contract valueUp to 300MW5 Year Deployment

Over 160 stores completed or under construction

Provide up to 30 percent of each facilitystotal electric needs Announced 12 new projects in Ohio earlier this month

Foothill Ranch, CaliforniaWalmart is partnering with SolarCity as part of its goal

of being supplied by 100 percent renewable energy

Davis Monthan Air Force BaseThe largest solar-powered community in the

continental U.S.


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Slide 11

Economies of Scale Create a Barrier to Entry

Infrastructure 29 operations centers servicing 14states

PeopleClose to 3,000 employees includinghundreds of trained sales consultants,installers, and engineers

TechnologySolar system design, supply chain,project management, billing,permitting, performance monitoring

ProcessReplicable and documented processesbased on lean manufacturingtechniques


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Slide 12

Vertical Integration Improves Customer Experience and Value

Solar Developer Network SolarCity

CustomersArms length, no clear ownership Single company resulting in a better

experience and future upsells

Engineering standardsSystem owner and installer havedifferent incentives

High engineering standards as weinstall and own the systems

CostsHigh costs without economies of scaleplus installer margins

Low costs and retains the developerand installer margins

Value leakage Value generation


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Slide 13

Advanced Software Technology Lowers Costs

SOLARBIDTM

Lowers customer acquisition costsEnergy analysis and proposal generation

Solar production modelUtility rate databaseAccurately predicts savings

SOLARWORKSTM

Enables massive throughput and lowers overhead expensesMassively scalable project management

Project ManagementPermittingEngineering

Supply ChainQuality Assurance

POWERGUIDETM

Ensures system production and continued customer engagement

Continual customer conversationCustomer portal shows real-time production and integrates with socialmedia platformsPlatform to upsell additional servicesMonitors energy usage and solar production in real timeIntegrated with field service and billing


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Slide 14

Operating Leverage Continues to Drive Down Opex/W

Operating Expenses Are Composed of Both Sales & Marketing and General & Administrative CostsIncurred Largely for Investment in the Development of New Solar Energy Systems

$1.45$1.34

$1.02

$0.76 $0.74

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

2009 2010 2011 2012 1Q13

O p e r a t i n g

E x p e n s e s

/ M W

D e p

l o y e

d ( $ / W )


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Slide 15

Many Upsell Opportunities Over Long Customer Relationship

Energy Efficiency Energy Vehicle Charging Battery Storage

Proprietary software performsa whole house simulationusing a 3D model of eachbuilding to diagnose all areasof energy use and wasteRecommendations include air sealing, insulation, highefficiency furnaces, water heating, duct sealing andreplacementOver 15,000 energy efficiencyaudits sold.

Level 2 fast chargers for residential customers providea great opportunity to upsellsolar Level 3 fast charge stationsengineered and constructedby SolarCity provide Teslaowners with unparalleledcharge times powered by thesunOver 750 charging locationssold

Proprietary battery controlsystems integrate solar,storage and building demandWall mountable with enoughenergy to power an energyefficient homeProvides backup power during utility outages


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Slide 16

Recurring customer payments recognizedover life of contract, typically 20 years

Condensed Income Statement of Operations

Leased solar systems hardware, installation,and direct sales costs amortized over 30 years

Primarily customer acquisition and other development costs

Investment in growth and developmentconstrain GAAP profitability

Revenue: 2011 2012

Operating leases $23,145 $47,616

Solar energy system sales $36,406 $81,046

Total revenues $59,551 $128,662

Cost of revenue:

Operating leases $5,718 $13,346

Solar energy system sales $41,418 $64,429

Total cost of revenues $47,136 $77,775

Gross profit (loss) $12,415 $50,887

Operating Expenses:

Sales and Marketing $42,004 $69,392

General and Administrative $31,664 $50,355

Total Operating Expenses $73,668 $119,747

Income (loss) from operations ($61,253) ($68,860)


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Slide 17

Cumulative Solar Systems Investments >$1.1b at Q1 2013


Represents SolarCitys Total Investment in Solar Energy Systems, Leased and to Be Leased

$50$112

$269

$561

$1,002

$50$62

$157

$293

$441

$138

$0

$200

$400

$600

$800

$1,000

$1,200

2008 2009 2010 2011 2012 1Q13

S o l a r E n e r g y S y s t e m s I n v e s t m e n t

( $ m

)

$112

$269

$562

$1,002

$1,140


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Slide 18

Condensed GAAP Statements of Cash Flows

$ in thousands Year ended December 31 Three Months ended March 31

Net cash provided by (used in): 2011 2012 2012 2013

Operating activities $18,082 $60,333 ($76,885) $8,898

Investing activities ($304,252) ($449,059) ($86,831) ($140,576)

Financing activities $256,284 $323,129 $122,658 $98,378

Net cash provided (used) before equity issuance ($29,886) ($65,597) ($41,058) ($33,300)

Net cash provided by equity issuance $22,087 $175,206 $81,255 $514

Net increase (decrease) in cash and cashequivalents

($7,799) $109,609 $40,197 ($32,786)



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Slide 19

Retained Value of $569 Million as of Q1 2013

Cumulative Net Retained Value as of March 31, 2013

$ in millions (except per watt)Total Retained Value* $569

Retained Value Under Energy Contract* $305

Retained Value Renewal* $264

Total Retained Value $/watt* $1.25/watt

*NPV at 6%


Measurement of the NPV of Our Forecast for Net Cash to SolarCity


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Questions and Answers


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Slide 21

Appendix DefinitionsBacklog represents the aggregate megawatt capacity of solar energy systems not yet deployed as of the date specifiedpursuant to Energy Contracts and contracts for solar energy system direct sales executed as of such date.

Customers includes all residential, commercial and government buildings where we have installed or contracted to install asolar energy system, or performed or contracted to perform an energy efficiency evaluation or other energy efficiency services.Note that we have previously referred to the foregoing as Buildings and have chosen to redefine as we believe customers is amore appropriate descriptor.

Energy Contracts includes all residential, commercial and government leases and power purchase agreements pursuant towhich 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 anindividual contract. For commercial customers with multiple locations, each location is deemed a contract if we maintain aseparate contract for that location. 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.

Investments in Solar Energy Systems represents the sum of payments for the cost of solar energy systems leased and to beleased, purchase of property and equipment and acquisition of business net of cash required. Investments in Solar EnergySystems does not include solar energy system direct sales or solar energy systems sold via sale-leaseback structures.

MW or megawatts represents the DC nameplate megawatt production capacity.

MW Deployed represents the megawatt production capacity of solar energy systems that have had all required buildingdepartment inspections completed during the applicable period. This metric includes solar energy systems deployed under Energy Contracts as well as solar energy system direct sales.


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Slide 22

Appendix DefinitionsNominal Contracted Payments Remaining equals the estimated sum of cash payments obligated to be paid to us under our EnergyContracts over the remaining term of such contracts. This metric includes Energy Contracts for solar energy systems already deployedand in Backlog. As an example, if a customer is 2 years into her 20 year contract, then 18 years of contract payments remain. As anadditional example, if a customer chose to pre-pay her Energy Contract, then it is included in estimated Nominal Contracted PaymentsRemaining only while it is in Backlog as the pre-payment has not been received. Payments for direct sales are not included.

Retained Value under Energy Contract represents the forecasted net present value of Nominal Contracted Payments Remainingand estimated performance-based incentives allocated to us, net of amounts we are obligated to distribute to our fund investors, upfrontrebates, depreciation, renewable energy certificates, solar renewable energy certificates and estimated operations and maintenance,insurance, administrative and inverter replacement costs. This metric includes Energy Contracts for solar energy systems deployed andin Backlog.

Retained Value Renewal represents the forecasted net present value of the payments SolarCity would receive upon Energy Contractrenewal through a total term of 30 years, assuming all Energy Contracts are renewed at a rate equal to 90% of the contractual rate ineffect at expiration of the initial term. This metric is net of estimated operations and maintenance, insurance, administrative and inverter replacement costs. This metric includes Energy Contracts for solar energy systems deployed and in Backlog.

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scty investor presentation - may 2013

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