SolarCity Corp (SCTY), NV Energy, Inc. (NVE), Duke Energy Corp (DUK) – Disruptive Technology: The Sun

The price per watt for photo voltaic panels fell from $3.80/watt in 2008 to $.86/watt in 2012. This tremendous reduction in price has spurred consumers to jump into the electric generation business, in theory making them competitors to their own utility company.

New kids on the block

SolarCity Corp (NASDAQ:SCTY) is the new cool kid when it comes to solar. It doesn’t have to pay for any real estate, customers offer up their roofs for installations. Customers aren’t getting the short end of the stick either. They sign long term contracts with SolarCity Corp (NASDAQ:SCTY) to purchase electricity, and this gives SolarCity Corp (NASDAQ:SCTY) bond like income for years to come.

SolarCity Corp (NASDAQ:SCTY) has been growing revenue at an astounding clip. The company expects to grow at an annual rate of 60% for at least the next three years, and already has a generation capacity of 250 MW with 46 MW slated to be finished next quarter. The deferred revenue that SolarCity recognizes grew 15% to over $1.22 billion. This means that even if the economy runs into a few bumps, this company can easily hold its own, and just slow down investment in new installments.

SolarCity Corp (NASDAQ:SCTY) is rapidly growing and helping customers reduce their electric bills, while adding generating capacity that is competing with the grid energy already in place. At this point in time, the company is helping alleviate peak energy needs, by providing the most amount of electricity at the hottest point of the day. However, as capacity grows, so does SolarCity Corp (NASDAQ:SCTY) as a competitor in the wholesale electricity market.

If you can’t beat ‘em, join ‘em

NV Energy, Inc. (NYSE:NVE) was just one of the smaller electric utility companies that looked ripe for the picking, and in the second quarter this year, it was scooped up by Berkshire Hathaway’s MidAmerican unit.

NV Energy, Inc. (NYSE:NVE) was located in Navada, with a market cap of $4.6 billion. NV Energy, Inc. (NYSE:NVE) served 2.4 million Navadans, or 90% of the state’s population, in addition to the 40 million tourists annually. NV Energy, Inc. (NYSE:NVE) has 6,078 MW of generation capacity and can generate 82% of peak load, resorting to the retail markets for the rest. In an environment of electric prices that keep falling, this is good news for NV Energy and its customers.

NV Energy, Inc. (NYSE:NVE) has some of the highest gross margins in the industry at 39%, as more and more of its generation capacity comes from solar and wind, its variable costs continued to plummet, increasing its margins. NV Energy, Inc. (NYSE:NVE) pays out 50% of its earnings to support a dividend of 3.2% making it very conservatively managed. It’s no wonder MidAmerica wanted to pick up these assets.

Sweet Carolinas

Duke Energy Corp (NYSE:DUK) operates as the largest regulated utility in the country with a market cap of $45 billion. It stretches over most of the Carolinas, Florida and Indiana. It has a generating capacity of 57,700 MW and supplies this electricity and natural gas to 7.2 million customers.