Kaua’i Island Utility Cooperative (KIUC) has signed a power purchase agreement (PPA) with SolarCity Corp (NASDAQ:SCTY) for electricity from the first utility-scale solar array and battery storage system designed to supply power to the grid in the evening, when demand is highest.
The proposed SolarCity project next to KIUC’s Kapaia power plant is believed to be the first utility-scale system in the U.S. to provide dispatchable solar energy, meaning that the utility can count on electricity being available when it’s needed, even hours after the sun goes down.
The 52 MWh battery system will feed up to 13 megawatts of electricity onto the grid to “shave” the amount of conventional power generation needed to meet the evening peak, which lasts from 5 p.m. to 10 p.m. By using the solar energy stored in the battery instead of diesel generators, KIUC will reduce its use of imported fossil fuels and also cut its greenhouse gas emissions.
Under the terms of the 20-year contract, KIUC will pay SolarCity a lower rate than the current cost of conventional generation and only slightly more than the cost of energy from KIUC’s two existing 12 megawatt solar arrays, whose output is available only during the day.
“KIUC has been investigating energy storage options for more than two years and price has always been the biggest challenge,” said David Bissell, President and CEO of KIUC. “This is a breakthrough project on technology and on price that enables us to move solar energy to the peak demand hours in the evening and reduce the amount of fossil fuel we’re using.”
“SolarCity is excited to bring the first dispatchable solar storage system to the island of Kaua’i. Hawai’i has been and continues to be at the forefront of new technology and research for solar and storage,” said Jon Yoshimura, Director of Policy and Electricity Markets for SolarCity. “This solution will allow for more efficient load balancing and will reduce dependence on fossil fuel-based power.”
Pending state and county approvals, the array and battery storage facility will be built on 50 acres of land owned by Grove Farm Company, Inc.adjacent to KIUC’s Kapaia power station off Mā’alo Road, just north of Līhu’e.
KIUC has requested an accelerated timetable for approval by the Hawai’i Public Utilities Commission. To qualify for federal investment tax credits that will substantially reduce the cost of the project, construction work must begin by April 2016 so the project can be in commercial operation byDecember 31, 2016.
SolarCity was the contractor on KIUC’s first 12-megawatt solar array in Kōloa, which went into commercial operation in September 2014 and supplies about 5 percent of Kaua’i’s electricity. (Original Source)
Shares of SolarCity closed yesterday at $47.11. SCTY has a 1-year high of $75.90 and a 1-year low of $34.65. The stock’s 50-day moving average is $51.05 and its 200-day moving average is $54.41.
On the ratings front, SolarCity has been the subject of a number of recent research reports. In a report issued on September 2, Morgan Stanley analyst Stephen Byrd upgraded SCTY to Buy, with a price target of $93, which represents a potential upside of 97% from where the stock is currently trading. Separately, on August 26, Roth Capital’s Philip Shen reiterated a Buy rating on the stock and has a price target of $98.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Stephen Byrd and Philip Shen have a total average return of 2.2% and -15.5% respectively. Byrd has a success rate of 52.9% and is ranked #1871 out of 3752 analysts, while Shen has a success rate of 23.0% and is ranked #3727.
The street is mostly Bullish on SCTY stock. Out of 10 analysts who cover the stock, 8 suggest a Buy rating and 2 recommend to Hold the stock. The 12-month average price target assigned to the stock is $71.00, which implies an upside of 50.7% from current levels.
SolarCity Corp is engaged in designing, sale, engineering, installation, monitoring, maintenance and financing of solar energy systems to residential and commercial customers.