10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  to 

Commission File Number: 001-35758

SolarCity Corporation

(Exact name of registrant as specified in its charter)

Delaware	02-0781046
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3055 Clearview Way San Mateo, California	94402
(Address of principal executive offices)	(Zip Code)

(650) 638-1028

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares outstanding of the registrant’s common stock as of September 30, 2016 was100,739,878.

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Consolidated Balance Sheets	2
	Consolidated Statements of Operations	4
	Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	54
Item 6.	Exhibits	80

i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The discussion in this quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are any statements that look to future events and consist of, among other things, the proposed acquisition by Tesla Motors, Inc., including projections regarding the consummation of such acquisition and the potential impacts on our business prior to the consummation or termination of such acquisition; our business strategies; anticipated future financial results; expected trends in certain financial and operating metrics; our belief that the aggregate megawatt production capacity of our systems is an indicator of the growth rate of our solar energy systems business; the calculation of metrics based on forward-looking projections; projections on growth in the markets that we operate and our growth rates; pricing trends, including our ability to achieve economies of scale in both installation and capital costs; our ability to successfully integrate acquired businesses, operations and personnel; our ability to achieve manufacturing economies of scale and associated cost reductions; our goals reducing our cost per watt; our expectations regarding the Riverbend Agreement, the development and construction of the Manufacturing Facility, anticipated timing and expense related to acquisition of manufacturing equipment, and related assumptions regarding expected capital and operating expenses and the performance of our manufacturing operations; our belief that adequate surplus capacity of non-tariff solar panels is available to suit our future needs and the costs of solar energy system components; our beliefs regarding future regulations and policies affecting our business, such as net energy metering policies; projections relating to our use of and reliance on U.S. Treasury grants and federal, state and local incentives and tax attributes; our regulatory status as a non-utility; our ability to continue to meet the regulatory requirements of a public company; domestic and international expansion, including throughout Mexico, and hiring plans; compliance with federal and international laws and regulations; product development efforts and customer preferences; the fair market value of our solar energy systems, including amounts potentially payable to our fund investors as a result of decreased fair market value determinations by the U.S. Treasury Department; the life and durability of our solar systems and equipment, anticipated contract renewals and warranty obligations; the success of our sales and marketing efforts; our internal control environment; pending litigation and investigations; the payment of future dividends; and our belief as to the sufficiency of our existing cash and cash equivalents, funds available under existing recourse and non-recourse credit facilities and financing funds and our ability to draw on those funds, our ability to raise additional financing funds and recourse and non-recourse credit facilities on acceptable terms, and our ability to refinance existing indebtedness on acceptable terms to meet our working capital and operating resource requirements for the next 12 months.

The forward-looking statements are contained principally in, but not limited to, the sections titled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In addition, forward-looking statements also consist of statements involving trend analyses and statements including such words as “will,” “may,” “anticipate,” “believe,” “could,” “would,” “might,” “potentially,” “estimate,” “continue,” “plan,” “expect,” “intend,” and similar expressions or the negative of these terms or other comparable terminology that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. These forward-looking statements speak only as of the date of this quarterly report on Form 10-Q and are subject to business and economic risks. As such, our actual results could differ materially from those set forth in the forward-looking statements as a result of a number of factors, including those set forth below in “Risk Factors,” and in our other reports filed with the U.S. Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this report may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We undertake no obligation to revise or publically release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

1

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SolarCity Corporation

Consolidated Balance Sheets

(In Thousands, Except Share Par Values)

	September 30,		December 31,
	2016		2015
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	259,342	$	382,544
Short-term investments		—		11,311
Restricted cash		61,079		39,864
Accounts receivable (net of allowances for doubtful accounts of $12,233 and $4,292     as of September 30, 2016 and December 31, 2015, respectively)		65,112		33,998
Rebates receivable (net of reserves of $2,972 and $2,207 as of September 30, 2016     and December 31, 2015, respectively)		11,999		11,545
Inventories		206,205		342,951
Prepaid expenses and other current assets		73,247		79,925
Total current assets		676,984		902,138
Solar energy systems, leased and to be leased – net		5,493,026		4,375,553
Property, plant and equipment – net		250,934		262,387
Build-to-suit lease asset under construction		752,425		284,500
Goodwill and intangible assets – net		472,557		517,109
MyPower customer notes receivable, net of current portion		526,703		488,461
MyPower deferred costs		236,574		215,708
Other assets		271,625		241,262
Total assets(1)	$	8,680,828	$	7,287,118

2

	September 30,			December 31,
	2016			2015
	(Unaudited)
Liabilities and equity
Current liabilities:
Accounts payable	$	253,077		$	364,973
Distributions payable to noncontrolling interests and redeemable noncontrolling interests		25,106			26,769
Current portion of deferred U.S. Treasury grant income		14,549			15,336
Accrued and other current liabilities		236,951			276,506
Current portion of deferred revenue		113,908			103,078
Current portion of long-term debt		285,507			180,048
Current portion of solar bonds		17,385			13,189
Current portion of solar bonds issued to related parties		165,100			165,120
Current portion of solar asset-backed notes		19,658			13,864
Current portion of financing obligation		44,953			34,479
Total current liabilities		1,176,194			1,193,362
Deferred revenue, net of current portion		1,084,442			1,010,491
Long-term debt, net of current portion		1,283,540			1,006,595
Solar bonds, net of current portion		51,488			35,678
Solar bonds issued to related parties, net of current portion		100,100			100
Convertible senior notes		884,679			881,585
Convertible senior notes issued to related parties		12,978			12,975
Solar asset-backed notes, net of current portion		550,695			395,667
Long-term deferred tax liability		71			1,373
Financing obligation, net of current portion		71,772			68,940
Deferred U.S. Treasury grant income, net of current portion		351,738			382,283
Build-to-suit lease liability		752,425			284,500
Other liabilities and deferred credits		361,996			279,006
Total liabilities(1)		6,682,118			5,552,555
Commitments and contingencies (Note 13)
Redeemable noncontrolling interests in subsidiaries		284,158			320,935
Stockholders' equity:
Common stock, $0.0001 par value - authorized, 1,000,000 shares as of September 30, 2016 and    December 31, 2015; issued and outstanding, 100,740 and 97,864 shares as of September 30, 2016    and December 31, 2015, respectively		10			10
Additional paid-in capital		1,315,874			1,195,246
Accumulated deficit		(343,952	)		(316,690	)
Total stockholders' equity		971,932			878,566
Noncontrolling interests in subsidiaries		742,620			535,062
Total equity		1,714,552			1,413,628
Total liabilities and equity	$	8,680,828		$	7,287,118

(1) SolarCity Corporation’s, or the Company’s, consolidated assets as of September 30, 2016 and December 31, 2015 included $3,887,972 and $2,866,882, respectively, of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets included solar energy systems, leased and to be leased - net of $3,731,864 and $2,779,363 as of September 30, 2016 and December 31, 2015, respectively; property, plant and equipment - net of $0 and $21,960 as of September 30, 2016 and December 31, 2015, respectively; cash and cash equivalents of $47,267 and $33,537 as of September 30, 2016 and December 31, 2015, respectively; inventory of $0 and $1,000 as of September 30, 2016 and December 31, 2015, respectively; restricted cash, current, of $20,108 and $522 as of September 30, 2016 and December 31, 2015, respectively; accounts receivable - net of $31,336 and $10,267 as of September 30, 2016 and December 31, 2015, respectively; prepaid expenses and other current assets of $2,321 and $2,713 as of September 30, 2016 and December 31, 2015, respectively; rebates receivable of $7,524 and $6,220 as of September 30, 2016 and December 31, 2015, respectively; and other assets of $47,552 and $11,300 as of September 30, 2016 and December 31, 2015, respectively. The Company’s consolidated liabilities as of September 30, 2016 and December 31, 2015 included $407,740 and $33,475, respectively, of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities included distributions payable to noncontrolling interests in subsidiaries and redeemable noncontrolling interests in subsidiaries of $25,106 and $26,769 as of September 30, 2016 and December 31, 2015, respectively; accounts payable of $7 and $1,954 as of September 30, 2016 and December 31, 2015, respectively; customer deposits of $2,276 and $2,928 as of September 30, 2016 and December 31, 2015, respectively; accrued liabilities and other payables of $4,178 and $1,824 as of September 30, 2016 and December 31, 2015, respectively; current portion of long-term debt of $10,352 and $0 as of September 30, 2016 and December 31, 2015, respectively; long-term debt, net of current portion of $365,821 and $0 as of September 30, 2016 and December 31, 2015, respectively.

See the further description in Note 8, VIE Arrangements.

See accompanying notes.

3

SolarCity Corporation

Consolidated Statements of Operations

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue:
Revenue from periodic billings:
Periodic operating lease billings and incentives	$	96,837		$	63,215		$	245,931		$	158,968
Sale of solar renewable energy credits		7,518			4,455			18,313			10,011
Revenue from solar energy systems under long-term loan    arrangements		18,253			9,071			83,708			18,385
Total revenue from periodic billings		122,608			76,741			347,952			187,364
Solar energy systems and components sales revenue		57,522			19,727			105,219			47,641
Revenue from operating lease prepayments and upfront incentives		20,421			17,389			55,736			49,134
Total revenue		200,551			113,857			508,907			284,139
Cost of revenue:
Cost of periodic billings revenue    (exclusive of depreciation and amortization)		24,189			17,907			59,996			38,397
Cost of solar energy systems and components sales revenue    (exclusive of amortization and warranty)		49,025			20,523			108,851			48,854
Depreciation, amortization and warranty		55,745			50,139			167,180			106,517
Total cost of revenue		128,959			88,569			336,027			193,768
Gross profit		71,592			25,288			172,880			90,371
Operating expenses:
Sales and marketing		102,639			129,284			345,369			329,115
General and administrative		87,423			69,423			260,446			168,288
Pre-production expense		19,335			—			55,107			—
Restructuring and other		34,158			—			63,241			—
Research and development		14,129			17,652			42,423			42,173
Total operating expenses		257,684			216,359			766,586			539,576
Loss from operations		(186,092	)		(191,071	)		(593,706	)		(449,205	)
Interest and other expenses:
Interest expense (excluding amortization of debt discounts    and fees) - recourse debt		10,974			8,215			29,890			19,932
Interest expense (excluding amortization of debt discounts    and fees) - non-recourse debt		20,512			8,096			52,614			19,682
Other interest expense and amortization of debt discounts    and fees, net		10,670			9,551			29,258			25,266
Other (income) expense, net		(2,058	)		16,851			54,143			21,723
Total interest and other expenses		40,098			42,713			165,905			86,603
Loss before income taxes		(226,190	)		(233,784	)		(759,611	)		(535,808	)
Income tax benefit (provision)		848			(482	)		907			(1,128	)
Net loss		(225,342	)		(234,266	)		(758,704	)		(536,936	)
Net loss attributable to noncontrolling interests and redeemable    noncontrolling interests		(278,557	)		(215,193	)		(731,442	)		(473,978	)
Net income (loss) attributable to stockholders	$	53,215		$	(19,073	)	$	(27,262	)	$	(62,958	)
Net income (loss) attributable to common stockholders
Basic	$	53,215		$	(19,073	)	$	(27,262	)	$	(62,958	)
Diluted	$	56,165		$	(19,073	)	$	(27,262	)	$	(62,958	)
Net income (loss) per share attributable to common stockholders
Basic	$	0.53		$	(0.20	)	$	(0.27	)	$	(0.65	)
Diluted	$	0.48		$	(0.20	)	$	(0.27	)	$	(0.65	)
Weighted-average shares used to compute net income (loss) per share    attributable to common stockholders
Basic		100,494,480			97,384,949			99,354,863			97,027,412
Diluted		118,077,365			97,384,949			99,354,863			97,027,412

See accompanying notes.

4

SolarCity Corporation

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

	Nine Months Ended September 30,
	2016			2015
Operating activities:
Net loss	$	(758,704	)	$	(536,936	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and write-offs		233,825			118,091
Change in fair value of interest rate swaps		48,589			12,570
Non-cash interest and other expense		4,368			12,554
Stock-based compensation, net of amounts capitalized		65,686			61,010
Tax impact of stock option exercises		7,738			—
Loss on extinguishment of long-term debt		610			1,093
Deferred income taxes		(1,302	)		(102	)
Non-cash reduction in financing obligation		(37,106	)		(36,431	)
Loss on disposal of property, plant and equipment and construction in progress		1,094			92
Changes in operating assets and liabilities:
Restricted cash		(64,430	)		(19,814	)
Accounts receivable		(31,114	)		(15,623	)
Rebates receivable		(454	)		14,977
Inventories		137,300			(91,624	)
Prepaid expenses and other current assets		9,134			(42,305	)
MyPower deferred costs		(21,325	)		(150,267	)
Other assets		22,614			(12,769	)
Accounts payable		(110,830	)		56,695
Accrued and other liabilities		23,730			92,321
Deferred revenue		44,757			10,151
Net cash used in operating activities		(425,820	)		(526,317	)
Investing activities:
Payments for the cost of solar energy systems, leased and to be leased		(1,230,064	)		(1,134,929	)
Purchase of property, plant and equipment		(53,445	)		(147,784	)
Investment in promissory notes receivable and other advances		—			(1,189	)
Purchases of short-term investments		—			(44,592	)
Proceeds from sales and maturities of short-term investments		11,243			136,560
Acquisition of business, net of cash acquired		—			(9,509	)
Payments for the acquisition of noncontrolling interests		(13,664	)		—
Payments for settlements of interest rate swaps		(12,703	)		—
Net cash used in investing activities		(1,298,633	)		(1,201,443	)

5

	Nine Months Ended September 30,
	2016			2015
Financing activities:
Investment fund financings, bank and other borrowings:
Borrowings under long-term debt		1,002,796			783,123
Repayments of long-term debt		(630,892	)		(211,976	)
Proceeds from issuance of solar bonds		32,613			41,594
Proceeds from issuance of solar bonds issued to related parties		265,010			165,010
Repayments of borrowings under solar bonds		(12,581	)		—
Repayments of borrowings under solar bonds issued to related parties		(165,010	)		—
Proceeds from issuance of solar asset-backed notes		221,035			119,790
Repayments of borrowings under solar asset-backed notes		(61,914	)		(13,859	)
Payment of deferred purchase consideration		—			(3,747	)
Proceeds from financing obligation		41,538			26,398
Repayments of financing obligation		(358	)		(5,136	)
Repayment of capital lease obligations		(7,098	)		(3,223	)
Proceeds from investment by noncontrolling interests and redeemable noncontrolling    interests in subsidiaries		1,022,687			754,916
Distributions paid to noncontrolling interests and redeemable noncontrolling    interests in subsidiaries		(102,377	)		(67,154	)
Net cash provided by financing activities before equity and convertible notes issuances		1,605,449			1,585,736
Equity issuances:
Proceeds from exercise of stock options		3,540			10,391
Tax impact of stock option exercises		(7,738	)		—
Net cash provided by equity issuances		(4,198	)		10,391
Net cash provided by financing activities		1,601,251			1,596,127
Net decrease in cash and cash equivalents		(123,202	)		(131,633	)
Cash and cash equivalents, beginning of period		382,544			504,383
Cash and cash equivalents, end of period	$	259,342		$	372,750
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	79,162		$	34,418
Cash paid during the period for taxes, net of refunds	$	10,843		$	257

See accompanying notes.

6

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements

1. Organization

SolarCity Corporation, or the Company, was incorporated as a Delaware corporation on June 21, 2006. The Company is primarily engaged in the design, manufacture, installation and sale or lease of solar energy systems to residential and commercial customers, or sale of electricity generated by solar energy systems to customers. The Company’s headquarters are located in San Mateo, California.

Merger Agreement with Tesla

On July 31, 2016, the Company entered into an Agreement and Plan of Merger, or the Merger Agreement, with Tesla Motors, Inc., or Tesla, pursuant to which a wholly-owned subsidiary of Tesla would, subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, merge with and into the Company, and the Company would survive the merger as a wholly-owned subsidiary of Tesla. Pursuant to the terms of the Merger Agreement and subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, at the effective time of the merger, each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the merger would be converted into 0.110, or the Exchange Ratio, shares of Tesla’s common stock. The Company’s outstanding option and restricted stock unit awards would be converted into corresponding equity awards of Tesla’s common stock based on the Exchange Ratio, with the awards retaining the same vesting and other terms and conditions as in effect immediately prior to the effective time of the merger (except for certain Founder Awards granted in 2015, which would be cancelled for no consideration). The Company intends the merger to qualify as a “reorganization” for U.S. federal income tax purposes.

The consummation of the merger is subject to, among other things, approval by the stockholders of both Tesla and the Company. If the Company terminates the Merger Agreement, it may be required to pay Tesla a termination fee ranging from $26.1 million to $78.2 million. The Company’s special meeting of stockholders to vote on the merger is scheduled to take place on November 17, 2016.

2. Summary of Significant Accounting Policies and Procedures

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles, including the regulations of the Securities and Exchange Commission, or GAAP. Certain information and disclosures normally included in annual financial statements have been condensed or omitted for these interim financial statements, in accordance with GAAP. As such, these interim financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes included in the Company’s annual report on Form 10-K dated February 10, 2016. These interim financial statements have been prepared on the same basis as annual financial statements and, in the opinion of management, reflect all adjustments (all of which are normal and recurring) necessary to present fairly the Company’s financial results. However, the results of interim periods are not necessarily indicative of the results to be expected for future interim or annual periods.

The condensed consolidated financial statements reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. In accordance with the provisions of Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 810, Consolidation, the Company consolidates any variable interest entity, or VIE, of which it is the primary beneficiary. The Company forms VIEs with its financing fund investors in the ordinary course of business in order to facilitate the funding and monetization of certain attributes associated with its solar energy systems. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company does not consolidate a VIE in which it has a majority ownership interest when the Company is not considered the primary beneficiary. The Company has determined that it is the primary beneficiary of a number of VIEs (see Note 8, VIE Arrangements). The Company evaluates its relationships with all the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

7

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation. In particular, the consolidated statements of operations have been expanded to present revenue generated from periodic billings under long-term contracts, including customer operating leases and MyPower contracts, as well as sales of solar renewable energy credits. Accordingly, the previously presented operating leases and solar energy systems incentives revenue has been separated into (i) revenue generated from periodic billings under operating leases as well as periodic incentives generated by the operating leases; (ii) revenue generated from sales of solar renewable energy credits and (iii) revenue from operating lease prepayments and upfront incentives that is recognized over the term of the operating lease. Additionally, revenue from sales under MyPower contracts, which was previously presented within revenue from solar energy systems and components sales, has been separately presented as revenue from solar energy systems under long-term loan arrangements; this together with periodic operating lease billings and incentives revenue and sales of solar renewable energy credits revenue comprise the total revenue from periodic billings. Furthermore, the cost of revenue line items have been expanded to conform to the current period revenue presentation and to separately present non-cash expenses, including depreciation, amortization and warranty expenses. Also, the previously presented net interest expense has been separated into (i) interest expense on recourse debt excluding the amortization of any debt discounts or fees; (ii) interest expense on non-recourse debt excluding the amortization of any debt discounts or fees and (iii) all other net interest expense including the amortization of all debt discounts and fees.

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Management regularly makes significant estimates and assumptions regarding the selling price of undelivered elements for revenue recognition purposes, the collectability of accounts and rebates receivable, the valuation of inventories, the labor costs for long-term contracts used as a basis for determining the percentage of completion for such contracts, the fair values and residual values of solar energy systems subject to leases, the accounting for business combinations, the fair values and useful lives of acquired tangible and intangible assets, the fair value of contingent consideration payable under business combinations, the useful lives of solar energy systems, property, plant and equipment, the determination of accrued warranty, the determination of accrued liability for solar energy system performance guarantees, the determination of lease pass-through financing obligations, the discount rates used to determine the fair values of investment tax credits, the valuation of stock-based compensation, the determination of valuation allowances associated with deferred tax assets, asset impairment, the valuation of build-to-suit lease assets, the fair value of interest rate swaps and other items. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

As of July 1, 2016, Management increased its estimate of the useful lives of new solar energy systems from 30 years to 35 years. This updated estimate was the result of new engineering studies of recently deployed solar energy systems across the industry. The Company is applying this change in estimate on a prospective basis to solar energy systems placed in service on or after July 1, 2016.

Interest Rate Swaps

In the second quarter of 2015, the Company began entering into fixed-for-floating interest rate swap agreements to swap variable interest payments on certain debt for fixed interest payments, as required by its lenders. The Company has not designated any interest rate swaps as hedging instruments. Accordingly, all interest rate swaps are recognized at fair value on the consolidated balance sheets within other assets or other liabilities and deferred credits, with any changes in fair value recognized as other income or expense in the consolidated statements of operations and with any cash flows recognized as investing activities in the consolidated statements of cash flows. As of and for the periods ended September 30, 2016, the Company had interest rate swaps outstanding as follows (in thousands):

					Gross Gains				Gross Losses
	Aggregate		Gross		Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended
	Notional		Liability at		September 30,		September 30,		September 30,		September 30,
	Amount		Fair Value		2016		2016		2016		2016
Interest rate swaps	$	777,298	$	47,425	$	3,252	$	3,630	$	387	$	52,215

8

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

Fair Value of Financial Instruments

ASC 820, Fair Value Measurements, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

ASC 820 requires that the valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes inputs that may be used to measure fair value as follows:

• Level 1—Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

• Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As of September 30, 2016, the assets and liabilities carried at fair value on a recurring basis included cash equivalents, interest rate swaps and contingent consideration, and their fair values were as follows (in thousands):

	Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	3,437	$	—	$	—
Liabilities:
Interest rate swaps	$	—	$	47,425	$	—
Contingent consideration	$	—	$	—	$	83,973

The Company classified its money market funds within Level 1 because their fair values are based on their quoted market prices. The Company classified its interest rate swaps within Level 2 because their fair values are determined using models that utilized market observable inputs, including current and forward interest rates. The Company classified its contingent consideration within Level 3 because its fair value is determined using unobservable probability estimates and unobservable estimated discount rates applicable to the acquisition. During the nine months ended September 30, 2016, there were no transfers between the levels of the fair value hierarchy.

The contingent consideration is dependent on the achievement of the specified production milestones for the acquired business. The Company determined the fair value of the contingent consideration using a probability-weighted expected return methodology that considers the timing and probabilities of achieving these milestones and uses discount rates that reflect the appropriate cost of capital. The Company reassesses the valuation assumptions each reporting period, with any changes in the fair value accounted for in the consolidated statements of operations. The fair value of the contingent consideration is directly proportional to the estimated probabilities of achieving these milestones. On March 31, 2016, the Company determined that the first milestone was achieved and adjusted the accrued contingent consideration balance associated with the first milestone to the full amount payable of $48.3 million. On May 5, 2016, the Company issued 1.6 million shares of its common stock, valued at $34.2 million based on its stock price on the issuance date, to settle the liability. Accordingly, the Company recognized a gain of $14.1 million upon the settlement of the liability associated with the first milestone, which is included as an offset to general and administrative expense. The fair value of the contingent consideration balance related to the remaining milestones was determined using an estimated probability of achievement of 95% and discount rates ranging between 6% and 7%, which is included under other liabilities and deferred credits in the consolidated balance sheets. The following table summarizes the activity of the Level 3 contingent consideration balance in the nine months ended September 30, 2016 (in thousands):

Balance - beginning of the period	$	123,008
Settlement of liability		(34,170	)
Change in fair value		(4,865	)
Balance - end of the period	$	83,973

9

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

The Company’s financial instruments that are not carried at fair value include accounts receivable, customer notes receivable, rebates receivable, accounts payable, customer deposits, distributions payable to noncontrolling interests and redeemable noncontrolling interests, the participation interest, solar asset-backed notes, solar loan-backed notes, convertible senior notes, Solar Bonds and long-term debt. The carrying values of these financial instruments other than customer notes receivable, the participation interest, solar asset-backed notes, solar loan-backed notes, convertible senior notes, Solar Bonds and long-term debt approximated their fair values due to the fact that they were short-term in nature at September 30, 2016.

The Company estimates the fair value of convertible senior notes based on their last actively traded prices (Level 1) or market observable inputs (Level 2). The Company estimates the fair value of customer notes receivable, the participation interest, solar asset-backed notes, solar loan-backed notes, Solar Bonds and long-term debt based on rates currently offered for instruments with similar maturities and terms (Level 3). The following table presents their estimated fair values and their carrying values (in thousands):

	September 30, 2016
	CarryingValue		Fair Value
Participation interest	$	16,585	$	14,937
Solar asset-backed notes	$	439,988	$	439,082
Solar loan-backed notes	$	130,365	$	134,933
Convertible senior notes	$	897,657	$	697,750
MyPower customer notes receivable	$	533,534	$	533,534
Long-term debt	$	1,569,047	$	1,569,047
Solar bonds	$	334,073	$	334,073

Warranties

The Company provides a warranty on the installation and components of the solar energy systems it sells, including solar energy systems sold under Solar Loans, for periods typically between 10 to 30 years. The manufacturer’s warranty on the solar energy systems’ components, which is typically passed-through to customers, ranges from one to 25 years. For the solar energy systems under lease contracts or power purchase agreements, the Company does not accrue a warranty liability because those systems are owned by consolidated subsidiaries of the Company. Instead, any repair costs on those solar energy systems are expensed when they are incurred as a component of operating leases and solar energy systems incentives cost of revenue. The changes in the accrued warranty balance, recorded as a component of accrued and other current liabilities on the consolidated balance sheets, consisted of the following (in thousands):

	Asofandforthe
	Nine Months Ended
	September 30,
	2016
Balance - beginning of the period	$	22,993
Increase in liability (including 3,772 related to    MyPower contracts)		5,803
Change in estimate		1,587
Less warranty claims		(235	)
Balance - end of the period	$	30,148

Solar Energy Systems Performance Guarantees

The Company guarantees certain specified minimum solar energy production output for certain systems leased or sold to customers generally for a term of up to 30 years. The Company monitors the solar energy systems to ensure that these outputs are being achieved. The Company evaluates if any amounts are due to its customers and makes any payments periodically as specified in the customer contracts. As of September 30, 2016 and December 31, 2015, the Company recorded liabilities of $5.2 million and $3.1 million, respectively, under accrued and other current liabilities in the consolidated balance sheets, relating to these guarantees based on the Company’s assessment of its current exposure.

10

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

Solar Loans

In the second quarter of 2016, the Company began offering Solar Loans, whereby a third-party lender provides financing directly to a qualified customer to enable the customer to purchase and own a solar energy system installed by the Company. The Company and the customer enter into a standard solar energy system sale agreement. Separately, the customer enters into a loan agreement with one of the third-party lenders, who finances the full purchase price. The Company is not a party to the loan agreement between the customer and the third-party lender, and the third-party lender has no recourse against the Company with respect to the loan. Solar Loans are offered as the replacement for the MyPower program. The Company accounts for Solar Loans under its revenue recognition policy for solar energy systems and components sales. However, any fees that are paid or payable from the Company to the lender of a Solar Loan would be recognized as an offset against solar energy systems and components sales revenue, in accordance with ASC 605-50, Customer Payments and Incentives.

Solar Renewable Energy Credits

The Company accounts for solar renewable energy credits, or SRECs, when they are purchased by the Company or sold to third parties. For SRECs generated by solar energy systems owned by the Company and minted by government agencies, the Company does not recognize any specifically identifiable costs for those SRECs as there are no specific incremental costs incurred to generate the SRECs. For SRECs purchased by the Company, the Company carries these SRECs at their cost, subject to testing for impairment. The Company recognizes revenue from the sale of an SREC when the SREC is transferred to the buyer, and the cost of the SREC, if any, is then recorded within cost of periodic billings revenue.

Comprehensive Income (Loss)

The Company accounts for comprehensive income (loss) in accordance with ASC 220, Comprehensive Income. Under ASC 220, the Company is required to report comprehensive income (loss), which includes net income (loss) as well as other comprehensive income (loss). There were no significant other comprehensive income (losses) and no significant differences between comprehensive loss as defined by ASC 220 and net loss as reported in the consolidated statements of operations, for the periods presented.

Segment Information

Operating segments are defined as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the executive team, which is comprised of the chief executive officer, the chief financial officer, the chief technology officer and the chief revenue officer. Based on the financial information presented to and reviewed by the chief operating decision maker in deciding how to allocate the resources and in assessing the performance of the Company, the Company has determined that it has a single operating and reporting segment: solar energy products and services. The Company’s principal operations, revenue and decision-making functions are located in the United States.

Basic and Diluted Net Loss Per Share

The Company’s basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period.

The diluted net loss per share attributable to common stockholders is computed by giving effect to all potential common stock equivalents outstanding for the period determined using the treasury stock method or the if-converted method, as applicable. In periods when the Company incurred a net loss attributable to common stockholders, stock options, restricted stock units and convertible senior notes were considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is antidilutive.

Recently Issued Accounting Standards

In February 2015, the FASB issued Accounting Standards Update, or ASU, No. 2015-02, Amendments to the Consolidation Analysis, to amend the criteria for consolidation of certain legal entities. The Company adopted the ASU retrospectively on January 1, 2016. Adoption of the ASU did not have a material impact on the Company’s condensed consolidated financial statements.

11

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, to change the accounting for subsequent adjustments to the provisional balances recognized in a business combination from retrospective to prospective. However, the ASU requires separate presentation or disclosure of the impact on prior periods had the adjustments been recognized as of the acquisition date. The Company adopted the ASU prospectively on January 1, 2016. Adoption of the ASU did not have a material impact on the Company’s condensed consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, to replace the existing revenue recognition criteria for contracts with customers and to establish the disclosure requirements for revenue from contracts with customers. In August 2015, the FASB issued ASU No. 2015-14, Deferral of the Effective Date, to defer the effective date of ASU No. 2014-09 to interim and annual periods beginning after December 15, 2017, with early adoption permitted. In March, April and May 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations, ASU No. 2016-10, Identifying Performance Obligations and Licensing, ASU No. 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, and ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, to clarify and amend the guidance in ASU No. 2014-09. Adoption of the ASUs is either retrospective to each prior period presented or retrospective with a cumulative adjustment to retained earnings or accumulated deficit as of the adoption date. The Company is currently assessing the impact of the ASUs on its condensed consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Going Concern, to provide guidance within GAAP requiring management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and requiring related disclosures. The ASU is effective for annual periods ending after December 15, 2016. The Company anticipates that the adoption of the ASU will not have a material impact on its condensed consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, to specify that inventory should be subsequently measured at the lower of cost or net realizable value, which is the ordinary selling price less any completion, transportation and disposal costs. However, the ASU does not apply to inventory measured using the last-in-first-out or retail methods. The ASU is effective for interim and annual periods beginning after December 15, 2016. Adoption of the ASU is prospective. The Company anticipates that the adoption of the ASU will not have a material impact on its condensed consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, to mainly change the accounting for investments in equity securities and financial liabilities carried at fair value as well as to modify the presentation and disclosure requirements for financial instruments. The ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is retrospective with a cumulative adjustment to retained earnings or accumulated deficit as of the adoption date. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, to require lessees to recognize most leases on the balance sheet, while recognition on the statement of operations will remain similar to current lease accounting. The ASU also eliminates real estate-specific provisions and modifies certain aspects of lessor accounting. The ASU is effective for interim and annual periods beginning after December 15, 2018. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-06, Contingent Put and Call Options in Debt Instruments, to clarify when a contingent put or call option to accelerate the repayment of debt is an embedded derivative. The ASU is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting,to simplify the accounting for the income tax effects from share-based compensation, the accounting for forfeitures and the accounting for statutory income tax withholding, among others. The ASU is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. Adoption of the ASU is modified retrospective, retrospective and prospective, depending on the specific provision being adopted. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, to require, among others, financial assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions and forecasts. The ASU is effective for interim and annual periods beginning after December 15, 2019,

12

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

with early adoption permitted. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, to reduce the diversity in practice with respect to the presentation of certain cash flows. The ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, to require the recognition of the income tax effects from an intra-entity transfer of an asset other than inventory. The ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

3. Restructuring and Other Activities

In the second quarter of 2016, the Company commenced certain restructuring activities in order to reduce costs and improve efficiency. Consequently, during the nine months ended September 30, 2016, the Company recognized $5.9 million of one-time employee termination benefits.

Additionally, the Company commenced winding-down its solar module manufacturing operations in China due to the tariffs imposed by the U.S. government on solar panels manufactured in China. As a result, the Company revised the remaining useful lives of its manufacturing equipment in China and recognized an impairment charge of $13.9 million during the nine months ended September 30, 2016. Furthermore, the Company concluded that certain acquired sales and marketing-related intangible assets were fully impaired and recognized an impairment charge of $21.2 million during the nine months ended September 30, 2016.

As of September 30, 2016, the outstanding restructuring liability was $3.2 million, which will be substantially settled in the fourth quarter of 2016.

In addition, during the nine months ended September 30, 2016, the Company incurred $5.8 million of pre-acquisition expenses arising from the Tesla Merger Agreement.

Moreover, during the three months ended September 30, 2016, certain amounts due to the Company since 2014 related to an uninstalled commercial project, but not related to any customer contracts or loans, were determined to be unrecoverable. Accordingly, the Company recognized a charge of $16.1 million. Despite this charge, the Company intends to continue its efforts to obtain reimbursement of these amounts.

4. Goodwill and Intangible Assets

Goodwill

As of September 30, 2016, the carrying value of goodwill was $321.9 million. There were no changes to the carrying value of goodwill during the nine months ended September 30, 2016.

13

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

Intangible Assets

The following is a summary of intangible assets as of September 30, 2016 (in thousands):

	Weighted-
	average
	useful life				Accumulated
	(in years)		Gross		amortization			Write-offs			Net
Developed technology - Silevo		10	$	115,000	$	(23,221	)	$	—			91,779
Developed technology - Zep Solar		7		60,100		(24,137	)		—			35,963
Trademarks and trade names		7		24,700		(9,903	)		—			14,797
Marketing database		5		17,427		(11,579	)		(5,848	)		—
PowerSaver agreement		10		17,077		(4,815	)		(12,262	)		—
Non-compete agreements		5		7,189		(4,043	)		(3,035	)		111
Customer relationships		6		6,190		(1,368	)		—			4,822
Other		6		10,028		(6,721	)		(87	)		3,220
Total		8.76	$	257,711	$	(85,787	)	$	(21,232	)	$	150,692

The following is a summary of intangible assets as of December 31, 2015 (in thousands):

	Weighted-
	average
	useful life				Accumulated
	(in years)		Gross		amortization			Net
Developed technology - Silevo		10	$	115,000	$	(14,596	)		100,404
Developed technology - Zep Solar		7		60,100		(17,664	)		42,436
Trademarks and trade names		7		24,700		(7,256	)		17,444
Marketing database		5		17,427		(9,953	)		7,474
PowerSaver agreement		10		17,077		(3,961	)		13,116
Non-compete agreements		5		7,189		(3,272	)		3,917
Customer relationships		6		6,190		(542	)		5,648
Other		6		10,028		(5,223	)		4,805
Total		8.26	$	257,711	$	(62,467	)	$	195,244

All intangible assets are amortized over their estimated useful lives. The changes to the carrying value of intangible assets were as follows (in thousands):

	September 30, 2016
Balance - beginning of the period	$	195,244
Amortization		(23,320	)
Write-offs		(21,232	)
Balance - end of the period	$	150,692

Amortization expense from intangible assets for the nine months ended September 30, 2016 and 2015 was allocated as follows (in thousands):

	Nine Months Ended September 30,
		2016	2015
Included in depreciation, amortization and warranty	$	15,534	$	15,551
Included in sales and marketing		7,786		8,953
Total amortization expense	$	23,320	$	24,504

14

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

The intangible assets related to the PowerSaver agreement, the non-compete agreements and the marketing database were fully impaired during the nine months ended September 30, 2016 following the restructuring of the Company’s operations. The impairment charge is included in restructuring and other expense (see Note 3, Restructuring and Other Activities). No intangible assets were impaired during the nine months ended September 30, 2015.

As of September 30, 2016, the total future amortization expense from intangible assets was as follows (in thousands):

	Depreciation, amortization and warranty		Sales and marketing		Total
Three months ending December 31, 2016	$	5,166	$	1,170	$	6,336
2017		20,541		4,678		25,219
2018		20,541		4,657		25,198
2019		20,541		4,621		25,162
2020		19,821		4,423		24,244
Thereafter		44,533		—		44,533
Total	$	131,143	$	19,549	$	150,692

15

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

5. Selected Balance Sheet Components

Selected components of the consolidated balance sheets were as follows (in thousands):

	September 30, 2016			December 31, 2015
Inventories:
Raw materials	$	182,834		$	335,439
Work in progress		23,371			7,512
Total	$	206,205		$	342,951
Solar Energy Systems, Leased and To Be Leased - Net:
Solar energy systems leased to customers	$	4,675,091		$	3,619,214
Initial direct costs related to customer solar energy system lease acquisition costs		509,487			383,506
		5,184,578			4,002,720
Less accumulated depreciation and amortization		(398,806	)		(275,158	)
		4,785,772			3,727,562
Solar energy systems under construction		364,281			358,010
Solar energy systems to be leased to customers		342,973			289,981
Solar energy systems, leased and to be leased - net(1)(2)	$	5,493,026		$	4,375,553
Property, Plant and Equipment - Net
Manufacturing facilities - Fremont, California:
Manufacturing and lab equipment	$	91,694		$	84,418
Leasehold improvements		55,841			53,902
Manufacturing facilities - China:
Manufacturing and lab equipment(3)		21,793			21,714
Land and buildings		6,706			6,711
Vehicles		35,335			44,036
Computer hardware and software		56,186			41,294
Furniture and fixtures		15,249			13,611
Leasehold improvements - other		23,015			19,546
Other(4)		44,935			30,861
		350,754			316,093
Less accumulated depreciation and amortization		(99,820	)		(53,706	)
Property, plant and equipment - net	$	250,934		$	262,387
Accrued and Other Current Liabilities:
Accrued expenses	$	82,884		$	69,034
Income tax payable		—			41,016
Accrued compensation		83,784			64,988
Current portion of contingent consideration		—			42,912
Accrued warranty		30,148			22,993
Accrued professional services fees		12,327			9,915
Current portion of capital lease obligation		11,588			8,208
Other current liabilities		16,220			17,440
Total	$	236,951		$	276,506

16

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

	September 30, 2016		December 31, 2015
Other Liabilities and Deferred Credits:
Deferred gain on sale-leaseback transactions, net of current portion	$	49,114	$	51,547
Deferred rent expense		14,132		16,184
Interest rate swaps liability		47,425		11,544
Deferred solar renewable energy credits income		20,458		8,855
Capital lease obligation		37,210		39,475
Liability for receipts from an investor(5)		47,088		17,975
Contingent consideration		83,973		80,096
Participation interest		16,585		15,919
Other non-current liabilities		46,011		37,411
Total	$	361,996	$	279,006

(1) Included in solar energy systems leased to customers as of September 30, 2016 and December 31, 2015 was $66.4 million for each period related to capital leased assets with an accumulated depreciation of $12.7 million and $10.6 million, respectively.

(2) Included in solar energy systems, leased and to be leased to customers as of September 30, 2016 and December 31, 2015 was $13.8 million and $6.3 million, respectively, related to energy storage systems with an accumulated depreciation of $0.8 million and $0.5 million, respectively.

(3) The manufacturing equipment in China was fully impaired during the nine months ended September 30, 2016 as the Company restructured its operations in China. The impairment charge is included in restructuring and other expense (see Note 3, Restructuring and Other Activities).

(4) Included in other property, plant and equipment - net as of September 30, 2016 and December 31, 2015 was $37.1 million and $29.1 million, respectively, related to capital leased assets with an accumulated depreciation of $11.0 million and $5.6 million, respectively.

(5) The liability for receipts from an investor represents amounts received from an investor under a lease pass-through fund arrangement for monetization of investment tax credits, or ITCs, for assets not yet placed in service. This amount is reclassified to deferred revenue when the assets are placed in service.

6. Cash Equity Financings

On May 2, 2016, the Company pooled and transferred its interests in certain financing funds into a special purpose entity, or SPE, and issued $121.7 million in aggregate principal of debt of the SPE (see Note 7, Indebtedness) and also issued $100.7 million of equity interests in the SPE, both to the same investor. The debt is secured by, among other things, the SPE’s interests in the financing funds. The Company has determined that the SPE is a variable interest entity and that the Company is the primary beneficiary of the SPE by reference to the power and benefits criterion under ASC 810, Consolidation. Accordingly, the Company consolidates the SPE in its consolidated financial statements and accounts for the investor’s equity interest in the SPE as a noncontrolling interest (see Note 8, VIE Arrangements). The Company did not recognize a gain or loss on the transfer of its interests in the financing funds and continues to consolidate the financing funds. The cash distributed from the financing funds to the SPE is used to service the principal payments, the interest payments, the SPE’s expenses and the distributions to the investor. Any remaining cash would be distributed to a wholly owned subsidiary of the Company. The SPE’s assets and cash flows are not available to the other creditors of the Company, and the investor has no recourse to the Company’s other assets. Of the net proceeds from this transaction, $125.0 million was used to partially prepay the revolving aggregation credit facility due in December 2018, $25.7 million was used to partially prepay the term loan due in December 2016 and the remaining amount was retained by the Company to fund its operations.

On September 8, 2016, the Company pooled and transferred its interests in certain financing funds into a SPE and issued $210.0 million in aggregate principal of debt of the SPE (see Note 7, Indebtedness) to a syndicate of banks and also issued $95.2 million of equity interests in the SPE to an investor. The debt is secured by, among other things, the SPE’s interests in the financing funds. The Company has determined that the SPE is a variable interest entity and that the Company is the primary beneficiary of the SPE by reference to the power and benefits criterion under ASC 810, Consolidation. Accordingly, the Company consolidates the SPE in its consolidated financial statements and accounts for the investor’s equity interest in the SPE as a noncontrolling interest (see Note 8, VIE Arrangements). The Company did not recognize a gain or loss on the transfer of its interests in the financing funds and continues to consolidate the financing funds. The cash distributed from the financing funds to the SPE is used to service the principal payments, the interest payments, the SPE’s expenses and the distributions to the investor. Any remaining cash would be distributed to a wholly owned subsidiary of the Company. The SPE’s assets and cash flows are not available to the other creditors of the Company, and the lenders and the investor have no recourse to the Company’s other assets. Of the net proceeds

17

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

from this transaction, $192.3 million was used to partially prepay the revolving aggregation credit facility due in December 2018 and the remaining amount was retained by the Company to fund its operations.

7. Indebtedness

The following is a summary of the Company’s debt as of September 30, 2016 (dollars in thousands):

	Unpaid						Unused
	Principal		Net Carrying Value				Borrowing
	Balance		Current		Long-Term		Capacity		InterestRate	Maturity Dates
Recourse debt:
Secured revolving credit facility	$	364,000	$	22,769	$	338,562	$	4,920	3.8%-5.8%	December 2016 - December2017
Vehicle and other loans		23,515		15,171		8,344		—	2.9%-7.6%	March 2017 - June2019
2.75% convertible senior notes due in 2018		230,000		—		226,908		—	2.8%	November2018
1.625% convertible senior notes due in    2019		566,000		—		557,941		—	1.6%	November2019
Zero-coupon convertible senior notes    due in 2020		113,000		—		112,808		—	0.0%	December 2020
Solar Bonds		334,407		182,485		151,588	*		1.1%-6.5%	October 2016 - January2031
Total recourse debt		1,630,922		220,425		1,396,151		4,920
Non-recourse debt:
Term loan due in December 2016		86,759		86,488		—		—	4.0%	December2016
Term loan due in December 2017		52,015		—		49,967		68,590	4.0%	December 2017
Term loan due in January 2021		153,841		4,638		144,772		4,001	4.2%	January 2021
MyPower revolving credit facility		134,287		133,552		—		55,713	3.7%-6.2%	January2017
Revolving aggregation credit facility		415,097		—		403,567		344,903	3.8%-4.4%	December2018
Solar Renewable Energy Credit Term Loan		35,866		12,538		22,473		1,542	6.6%-9.9%	April 2017 - July 2021
Cash Equity Debt I		120,582		3,211		116,340		—	5.7%	July 2033
Cash Equity Debt II		210,000		7,140		199,515		—	5.3%	July 2034
Solar Asset-backed Notes, Series 2013-1		43,013		3,400		36,867		—	4.8%	November2038
Solar Asset-backed Notes, Series 2014-1		61,801		2,976		56,247		—	4.6%	April 2044
Solar Asset-backed Notes, Series 2014-2		186,851		7,055		173,569		—	4.0%-Class A 5.4%-Class B	July 2044
Solar Asset-backed Notes, Series 2015-1		119,199		1,511		112,886		—	4.2%-Class A 5.6%-Class B	August 2045
Solar Asset-backed Notes, Series 2016-1		50,119		1,202		44,275		—	5.3%-Class A 7.5%-Class B	September 2046
Solar Loan-backed Notes, Series 2016-A		140,586		3,514		126,851		—	4.8%-Class A 6.9%-Class B	September 2048
Total non-recourse debt		1,810,016		267,225		1,487,329		474,749
Total debt	$	3,440,938	$	487,650	$	2,883,480	$	479,669

* Out of the $350.0 million authorized to be issued by the Company’s board of directors, $15.6 million remained available to be issued. See below and Note 13, Related Party Transactions, for Solar Bonds issued to related parties.

18

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

The following is a summary of the Company’s debt as of December 31, 2015 (dollars in thousands):

	Unpaid						Unused
	Principal		Net Carrying Value				Borrowing
	Balance		Current		Long-Term		Capacity		Interest Rate	Maturity Date
Recourse debt:
Secured revolving credit facility	$	360,000	$	22,320	$	333,287	$	13,053	3.5%-5.8%	December 2016 - December 2017
Vehicle and other loans		28,173		12,562		15,610		—	2.5%-7.6%	January 2016 - June 2019
2.75% convertible senior notes due in 2018		230,000		—		225,795		—	2.8%	November 2018
1.625% convertible senior notes due in    2019		566,000		—		555,981		—	1.6%	November 2019
Zero-coupon convertible senior notes   due in 2020		113,000		—		112,784		—	0.0%	December 2020
Solar Bonds		214,324		178,309		35,778	#		1.3%-5.8%	January 2016 - December 2030
Total recourse debt		1,511,497		213,191		1,279,235		13,053
Non-recourse debt:
Term loan due in May 2016		34,622		33,918		—		—	3.5%	May 2016
Term loan due in December 2016		112,483		111,248		—		—	3.6%-3.7%	December 2016
MyPower revolving credit facility		213,125		—		210,735		26,875	3.0%-5.5%	January 2017
Revolving aggregation credit facility		455,693		—		446,963		194,307	3.1%-3.2%	December 2017
Solar Asset-backed Notes, Series 2013-1		45,845		3,342		39,669		—	4.8%	November 2038
Solar Asset-backed Notes, Series 2014-1		64,431		2,855		58,938		—	4.6%	April 2044
Solar Asset-backed Notes, Series 2014-2		193,755		6,319		181,041		—	4.0%-Class A 5.4%-Class B	July 2044
Solar Asset-backed Notes, Series 2015-1		122,295		1,348		116,019		—	4.2%-Class A 5.6%-Class B	August 2045
Total non-recourse debt		1,242,249		159,030		1,053,365		221,182
Total debt	$	2,753,746	$	372,221	$	2,332,600	$	234,235

# Out of the $350.0 million authorized to be issued by the Company’s board of directors, $135.7 million remained available to be issued. See below and Note 13, Related Party Transactions, for Solar Bonds issued to related parties.

Recourse debt refers to debt that is recourse to the Company’s general assets. Non-recourse debt refers to debt that is recourse to only specified assets or subsidiaries of the Company. The differences between the unpaid principal balances and the net carrying values are due to debt discounts and deferred financing costs. As of September 30, 2016, the Company was in compliance with all financial debt covenants. The Company’s debt is described further below except for the vehicle and other loans and the convertible senior notes, which did not change materially in the nine months ended September 30, 2016.

Recourse Debt Facilities:

Secured Revolving Credit Facility

The Company has entered into a revolving credit agreement with a syndicate of banks to fund working capital, letters of credit and general corporate needs, with a total committed amount of $398.5 million. Borrowed funds bear interest, at the Company’s option, at an annual rate of (a) 3.25% plus LIBOR or (b) 2.25% plus the highest of (i) the federal funds rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%. The fee for undrawn commitments is 0.375% per annum. The secured revolving credit facility is secured by certain of the Company’s accounts receivable, inventory, machinery, equipment and other assets.

Solar Bonds

In October 2014, the Company commenced issuing Solar Bonds, which are senior unsecured obligations that are structurally subordinate to the indebtedness and other liabilities of the Company’s subsidiaries. Solar Bonds have been issued under multiple

19

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

series that have various fixed terms and interest rates. In September 2015, the Company commenced issuing Solar Bonds with variable interest rates that reset quarterly and that can be redeemed quarterly at the option of the bondholder or the Company, with 30-day advance notice. The Company intends to continue to issue Solar Bonds from time to time depending on market conditions.

In March 2015, Space Exploration Technologies Corporation, or SpaceX, purchased $90.0 million in aggregate principal amount of 2.00% Solar Bonds due in March 2016. In June 2015, SpaceX purchased an additional $75.0 million in aggregate principal amount of 2.00% Solar Bonds due in June 2016. In March 2016, $90.0 million in aggregate principal amount of the Solar Bonds held by SpaceX matured, and the proceeds were reinvested by SpaceX in $90.0 million in aggregate principal amount of 4.40% Solar Bonds due in March 2017. In June 2016, $75.0 million in aggregate principal amount of the Solar Bonds held by SpaceX matured, and the proceeds were reinvested by SpaceX in $75.0 million in aggregate principal amount of 4.40% Solar Bonds due in June 2017.

In August 2016, the Chairman of the Company’s board of directors, the Company’s Chief Executive Officer and the Company’s Chief Technology Officer purchased $100.0 million in aggregate principal amount of 6.50% Solar Bonds due in February 2018.

SpaceX, the Chairman of the Company’s board of directors, the Company’s Chief Executive Officer and the Company’s Chief Technology Officer are considered related parties; the Company has also issued Solar Bonds to other related parties; and such Solar Bonds are separately presented on the consolidated balance sheets (see Note 13, Related Party Transactions).

Non-Recourse Debt Facilities:

Term Loan Due in May 2016

On May 23, 2014, a subsidiary of the Company entered into an agreement with a syndicate of banks for a term loan of $125.0 million. The term loan bore interest at an annual rate of 3.00% to 4.00%, depending on the cumulative period the term loan was outstanding, plus LIBOR or, at the Company’s option, plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%. The term loan was secured by certain assets and cash flows of the subsidiary and was non-recourse to the Company’s other assets or cash flows. In the first quarter of 2016, the Company fully repaid the term loan.

Term Loan Due in December 2016

On February 4, 2014, a subsidiary of the Company entered into an agreement with a syndicate of banks for a term loan of $100.0 million. On February 20, 2014, the agreement was amended to increase the maximum term loan availability to $220.0 million. On March 20, 2014, the agreement was further amended to increase the maximum term loan availability to $250.0 million. The term loan bears interest at an annual rate of LIBOR plus 3.25% or, at the Company’s option, 3.25% plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%. The term loan is secured by the assets and cash flows of the subsidiary and is non-recourse to the Company’s other assets. In the first nine months of 2016, the Company repaid $25.7 million of the principal outstanding under the term loan.

Term Loan Due in December 2017

On March 31, 2016, a subsidiary of the Company entered into an agreement for a term loan of $50.0 million. On April 6, 2016, the agreement was amended to increase the maximum term loan availability to $150.0 million. The term loan bears interest at an annual rate of the lender’s cost of funds plus 3.25%. The fee for undrawn commitments is 0.85% per annum. The term loan is secured by substantially all of the assets and cash flows of the subsidiary and is non-recourse to the Company’s other assets and cash flows.

Term Loan Due in January 2021

In January 2016, a subsidiary of the Company entered into an agreement with a syndicate of banks for a term loan of $160.0 million. The term loan bears interest at an annual rate of three-month LIBOR plus 3.50%. The term loan is secured by substantially all of the assets of the subsidiary, including its interests in certain financing funds, and is non-recourse to the Company’s other assets. In the first nine months of 2016, the Company repaid $2.2 million of the principal outstanding under the term loan.

MyPower Revolving Credit Facility

On January 9, 2015, a subsidiary of the Company entered into a $200.0 million revolving credit agreement with a syndicate of banks to obtain funding for the MyPower customer loan program. The MyPower revolving credit facility initially provided up to

20

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

$160.0 million of Class A notes and up to $40.0 million of Class B notes. On December 16, 2015, the committed amount under the Class A notes was increased to $200.0 million. The Class A notes bear interest at an annual rate of (i) for the first $160.0 million, 2.50% and (ii) for the remaining $40.0 million, 3.00%; in each case, plus (a) the commercial paper rate or (b) 1.50% plus adjusted LIBOR. The Class B notes bear interest at an annual rate of 5.00% plus LIBOR. The fee for undrawn commitments under the Class A notes is 0.50% per annum for the first $160.0 million of undrawn commitments and 0.75% per annum for the remaining $40.0 million of undrawn commitments, if any. The fee for undrawn commitments under the Class B notes is 0.50% per annum. The MyPower revolving credit facility is secured by the payments owed to the Company or its subsidiaries under MyPower customer loans and is non-recourse to the Company’s other assets.

Revolving Aggregation Credit Facility

On May 4, 2015, a subsidiary of the Company entered into an agreement with a syndicate of banks for a revolving aggregation credit facility with a total committed amount of $500.0 million. On July 13, 2015, the total committed amount was increased to $650.0 million. On March 23, 2016, the agreement was amended to modify the interest rates, extend the availability period and extend the maturity date. In the second quarter of 2016, the total committed amount was increased to $760.0 million. The revolving aggregation credit facility bears interest at an annual rate of 3.25% plus (i) for commercial paper loans, the commercial paper rate and (ii) for LIBOR loans, at the Company’s option, three-month LIBOR or daily LIBOR. The revolving aggregation credit facility is secured by certain assets and cash flows of certain subsidiaries of the Company and is non-recourse to the Company’s other assets.

Solar Renewable Energy Credit Term Loans

On March 31, 2016, a subsidiary of the Company entered into an agreement for a term loan of $15.0 million. The term loan bears interest at an annual rate of one-month LIBOR plus 9.00% or, at the Company’s option, 8.00% plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the prime rate or (iii) one-month LIBOR plus 1.00%. The term loan is secured by substantially all of the assets of the subsidiary, including its rights under forward contracts to sell solar renewable energy credits, and is non-recourse to the Company’s other assets.

On July 14, 2016, the same subsidiary entered into an agreement for another term loan with a total committed amount of $36.4 million. The term loan bears interest at an annual rate of one-month LIBOR plus 5.75% or, at the Company’s option, 4.75% plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the prime rate or (iii) one-month LIBOR plus 1.00%. The term loan is secured by substantially all of the assets of the subsidiary, including its rights under forward contracts to sell solar renewable energy credits, and is non-recourse to the Company’s other assets.

In the first nine months of 2016, the Company repaid $14.0 million of the principal outstanding under the term loans.

Cash Equity Debt I

In connection with the cash equity financing on May 2, 2016 discussed in Note 6, the Company issued $121.7 million in aggregate principal of debt that bears interest at a fixed rate of 5.65% per annum. This debt is secured by, among other things, the Company’s interests in certain financing funds and is non-recourse to the Company’s other assets.

Cash Equity Debt II

In connection with the cash equity financing on September 8, 2016 discussed in Note 6, the Company issued $210.0 million in aggregate principal of debt that bears interest at a fixed rate of 5.25% per annum. This debt is secured by, among other things, the Company’s interests in certain financing funds and is non-recourse to the Company’s other assets.

Solar Asset-backed Notes, Series 2013-1

In November 2013, the Company pooled and transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $54.4 million in aggregate principal of Solar Asset-backed Notes, Series 2013-1, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets. As of September 30, 2016, these solar assets had a carrying value of $134.4 million and are included under solar energy systems, leased and to be leased — net, in the consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 0.05%. The cash flows generated by these solar assets are used to service the monthly principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any

21

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

remaining cash is distributed to a wholly owned subsidiary of the Company. The Company recognizes revenue earned from the associated customer contracts in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by the qualifying solar energy systems are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets. The Company contracted with the SPE to provide operations and maintenance and administrative services for the qualifying solar energy systems.

In connection with the pooling of the assets that were transferred to the SPE in November 2013, the Company terminated a lease pass-through arrangement with an investor. The lease pass-through arrangement had been accounted for as a borrowing and any amounts outstanding from the lease pass-through arrangement were recorded as a lease pass-through financing obligation. The balance that was then outstanding from the lease pass-through arrangement was $56.4 million. The Company paid the investor an aggregate of $40.2 million, and the remaining balance is to be paid over time. The remaining balance is paid using the net cash flows generated by the same assets previously leased under the lease pass-through arrangement, after payment of the principal and interest on the Solar Asset-backed Notes and expenses related to the assets and the Solar Asset-backed Notes, including asset management fees, custodial fees and trustee fees, and was contractually documented as a right to participate in future cash flows of the SPE. This right to participate in future residual cash flows generated by the assets of the SPE has been recorded as a component of other liabilities and deferred credits for the non-current portion and as a component of accrued and other current liabilities for the current portion under the caption “participation interest.” The Company accounted for the participation interest as a liability because the investor has no voting or management rights in the SPE, the participation interest would terminate upon the investor achieving a specified return and the investor has the option to put the participation interest to the Company on August 3, 2021 for the amount necessary for the investor to achieve the specified return, which would require the Company to settle the participation interest in cash. In addition, under the terms of the participation interest, the Company has the option to purchase the participation interest from the investor for the amount necessary for the investor to achieve the specified return.

Solar Asset-backed Notes, 2014-1

In April 2014, the Company pooled and transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $70.2 million in aggregate principal of Solar Asset-backed Notes, Series 2014-1, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets. As of September 30, 2016, these solar assets had a carrying value of $126.0 million and are included under solar energy systems, leased and to be leased — net, in the consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 0.01%. The cash flows generated by these solar assets are used to service the monthly principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The Company recognizes revenue earned from the associated customer contracts in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by the qualifying solar energy systems are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets. The Company contracted with the SPE to provide operations and maintenance and administrative services for the qualifying solar energy systems.

Solar Asset-backed Notes, Series 2014-2

In July 2014, the Company pooled and transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $160.0 million in aggregate principal of Solar Asset-backed Notes, Series 2014-2, Class A, and $41.5 million in aggregate principal of Solar Asset-backed Notes, Series 2014-2, Class B, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets. As of September 30, 2016, these solar assets had a carrying value of $268.2 million and are included under solar energy systems, leased and to be leased — net, in the consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 0.01%. These solar assets and the associated customer contracts are leased to an investor under a lease pass-through arrangement that the Company has accounted for as a borrowing. The rent paid by the investor under the lease pass-through arrangement is used (and, following the expiration of the lease pass-through arrangement, the cash generated by these solar assets will be used) to service the monthly principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The Company recognizes revenue earned from the associated customer contracts in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by these solar assets are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets. The Company contracted with the SPE to provide operations and maintenance and administrative services for the qualifying solar energy systems.

22

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

Solar Asset-backed Notes, Series 2015-1

In August 2015, the Company pooled and transferred its interests in certain financing funds into a SPE and issued $103.5 million in aggregate principal of Solar Asset-backed Notes, Series 2015-1, Class A, and $20.0 million in aggregate principal of Solar Asset-backed Notes, Series 2015-1, Class B, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets and continues to consolidate the underlying financing funds (see Note 8, VIE Arrangements). The Solar Asset-backed Notes were issued at a discount of 0.05% for Class A and 1.46% for Class B. The cash distributed by the underlying financing funds to the SPE are used to service the semi-annual principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The SPE’s assets and cash flows are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets.

Solar Asset-backed Notes, Series 2016-1

In February 2016, the Company transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $52.2 million in aggregate principal of Solar Asset-backed Notes, Series 2016-1, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets. As of September 30, 2016, these solar assets had a carrying value of $72.4 million and are included under solar energy systems, leased and to be leased — net, in the consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 6.71%. These solar assets and the associated customer contracts are leased to an investor under a lease pass-through arrangement that the Company has accounted for as a borrowing. The rent paid by the investor under the lease pass-through arrangement is used (and, following the expiration of the lease pass-through arrangement, the cash generated by these solar assets will be used) to service the semi-annual principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The Company recognizes revenue earned from the associated customer contracts in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by these solar assets are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets. The Company contracted with the SPE to provide operations and maintenance and administrative services for the qualifying solar energy systems.

Solar Loan-backed Notes, Series 2016-A

On January 21, 2016, the Company pooled and transferred certain MyPower customer notes receivable into a SPE and issued $151.6 million in aggregate principal of Solar Loan-backed Notes, Series 2016-A, Class A, and $33.4 million in aggregate principal of Solar Loan-backed Notes, Series 2016-A, Class B, backed by these notes receivable to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these notes receivable. The Solar Loan-backed Notes were issued at a discount of 3.22% for Class A and 15.90% for Class B. The payments received by the SPE under these notes receivable are used to service the semi-annual principal and interest payments on the Solar Loan-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The SPE’s assets and cash flows are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Loan-backed Note holders, have no recourse to the Company’s other assets.

8. VIE Arrangements

The Company has entered into various arrangements with investors to facilitate funding and monetization of solar energy systems.

23

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

Wholly owned subsidiaries of the Company and fund investors formed and contributed cash or assets to various solar financing funds and entered into related agreements. The following table shows the number of funds by investor classification, carrying value of the solar energy systems in the funds, total investor contributions received and undrawn investor contributions as of September 30, 2016 (in thousands, except for number of funds) for funds that have been determined to be VIEs:

			Total				Carrying
			Investor		Undrawn		Value of
Investor	Number		Contributions		Investor		Solar Energy
Classification	of Funds		Received		Contributions		Systems
Financial institutions		32	$	2,252,194	$	174,116	$	2,420,245
Corporations		7		993,650		3,110		1,021,052
Utilities		4		278,888		35,033		287,441
Other investors		1		1,788		—		3,126.0
Total		44	$	3,526,520	$	212,259	$	3,731,864

The Company has determined that the funds are VIEs and it is the primary beneficiary of these VIEs by reference to the power and benefits criterion under ASC 810, Consolidation. The Company has considered the provisions within the contractual agreements, which grant it power to manage and make decisions that affect the operation of these VIEs, including determining the solar energy systems and associated customer contracts to be sold or contributed to these VIEs, the redeployment of solar energy systems and management of customer receivables. The Company considers that the rights granted to the fund investors under the contractual agreements are more protective in nature rather than participating.

Pursuant to management services, maintenance and warranty arrangements, the Company has been contracted to provide services to the funds, such as operations and maintenance support, accounting, lease servicing and performance reporting. In some instances, the Company has guaranteed payments to the investors as specified in the contractual agreements. A fund’s creditors have no recourse to the general credit of the Company or to that of other funds. None of the assets of the funds have been pledged as collateral for their obligations.

As the primary beneficiary of these VIEs, the Company consolidates in its financial statements the financial position, results of operations and cash flows of these VIEs, and all intercompany balances and transactions between the Company and these VIEs are eliminated in the condensed consolidated financial statements.

Cash distributions of income and other receipts by a fund, net of agreed upon expenses, estimated expenses, tax benefits and detriments of income and loss and tax credits, are allocated to the fund investor and the Company’s subsidiary as specified in contractual agreements.

Generally, the Company’s subsidiary has the option to acquire the fund investor’s interest in the fund for an amount based on the market value of the fund or the formula specified in the contractual agreements.

As of September 30, 2016 the Company was contractually required to make payments to a fund investor in order to ensure the investor is projected to achieve a specified minimum return annually. The amounts of any potential future payments under this guarantee are dependent on the amounts and timing of future distributions to the investor from the fund, the tax benefits that accrue to the investor from the fund’s activities and the amount and timing of the Company’s purchase of the investor’s interest in the fund or the amount and timing of the distributions to the investor upon liquidation of the fund. Due to uncertainties associated with estimating the amount and timing of distributions to the investor and the possibility and timing of the liquidation of the fund, the Company is unable to determine the potential maximum future payments that it would have to make under this guarantee.

Upon the sale or liquidation of a fund, distributions would occur in the order and priority specified in the contractual agreements.

24

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

The Company presents the solar energy systems in the VIEs under solar energy systems, leased and to be leased – net in the consolidated balance sheets. The aggregate carrying values of the VIEs’ assets and liabilities, after elimination of intercompany transactions and balances, in the consolidated balance sheets were as follows (in thousands):

	September 30, 2016		December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	47,267	$	32,105
Restricted cash		20,108		44
Accounts receivable - net		31,336		10,116
Rebates receivable		7,524		6,220
Prepaid expenses and other current assets		2,321		1,740
Total current assets		108,556		50,225
Solar energy systems, leased and to be leased - net		3,731,864		2,779,363
Other assets		47,552		11,204
Total assets	$	3,887,972	$	2,840,792
Liabilities
Current liabilities:
Accounts payable	$	7	$	—
Distributions payable to noncontrolling interests    and redeemable noncontrolling interests		25,106		26,769
Current portion of deferred U.S. Treasury grant income		6,506		6,506
Accrued and other current liabilities		4,178		598
Customer deposits		2,276		2,928
Current portion of deferred revenue		34,986		24,794
Current portion of long-term debt		10,352		—
Total current liabilities		83,411		61,595
Deferred revenue, net of current portion		374,695		308,798
Long-term debt, net of current portion		365,821		—
Deferred U.S. Treasury grant income, net of current    portion		159,292		164,191
Other liabilities and deferred credits		63,320		28,460
Total liabilities	$	1,046,539	$	563,044

The Company is contractually obligated to make certain fund investors whole if they suffer certain losses resulting from the disallowance or recapture of ITCs or U.S. Treasury grants. The Company accounts for distributions due to the fund investors arising from a reduction of anticipated ITCs or U.S. Treasury grants received under distributions payable to noncontrolling interests and redeemable noncontrolling interests in the consolidated balance sheets. As of September 30, 2016 and December 31, 2015, the Company had accrued $2.0 million and $2.7 million, respectively, for this obligation, which is included under distributions payable to noncontrolling interests and redeemable noncontrolling interests on the consolidated balance sheets.

25

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

9. Redeemable Noncontrolling Interests in Subsidiaries

Noncontrolling interests in subsidiaries that are redeemable at the option of the holder are classified as redeemable noncontrolling interests in subsidiaries between liabilities and stockholders’ equity in the consolidated balance sheets. The redeemable noncontrolling interests in subsidiaries balance is determined using the hypothetical liquidation at book value method for the VIE funds or allocation of share of income or losses in other subsidiaries subsequent to initial recognition, however, the noncontrolling interests balance cannot be less than the estimated redemption value. The activity of the redeemable noncontrolling interests in subsidiaries balance was as follows (in thousands):

Balance at December 31, 2015	$	320,935
Contributions from redeemable noncontrolling interests		318,165
Net loss		(304,620	)
Distributions to redeemable noncontrolling interests		(36,658	)
Acquisition of redeemable noncontrolling interests		(13,664	)
Balance at September 30, 2016	$	284,158

The acquisition of redeemable noncontrolling interests above relates to the Company’s purchase of the third party investors’ interest in the Chinese joint venture between one of its subsidiaries, Silevo, and the investors, for $13.7 million.

10. Equity

The changes in total stockholders’ equity and noncontrolling interests in subsidiaries were as follows (in thousands):

	Total			Noncontrolling
	Stockholders'			Interests in			Total
	Equity			Subsidiaries			Equity
Balance, December 31, 2015	$	878,566		$	535,062		$	1,413,628
Contributions from noncontrolling interests		—			704,522			704,522
Tax impact of stock option exercises		(7,738	)		—			(7,738	)
Stock-based compensation expense		90,025			—			90,025
Issuance of common stock upon exercise of stock options    for cash		3,540			—			3,540
Issuance of stock to settle accrued compensation		631			—			631
Issuance of stock on settlement of Silevo contingent    consideration		34,170			—			34,170
Net loss		(27,262	)		(426,823	)		(454,085	)
Distributions to noncontrolling interests		—			(70,141	)		(70,141	)
Balance, September 30, 2016	$	971,932		$	742,620		$	1,714,552

11. Equity Award Plans

Stock Options

On September 15, 2015, the Chief Executive Officer and the Chief Technology Officer, the Company founders, were granted non-statutory stock option awards, or Founder Awards, with both market and performance vesting conditions. The exercise price per share of the Founder Awards is $48.97. The Chief Executive Officer’s Founder Award, when exercised, would entitle him to up to 3.0 million shares of the Company’s common stock, and the Chief Technology Officer’s Founder Award, when exercised, would entitle him to up to 2.0 million shares of the Company’s common stock. The Founder Awards have a maximum term of 10 years from the date of grant and vest in 10 equal tranches based on the achievement of specified operational goals and the 90-trading day average price of the Company’s common stock achieving certain targets on specified measurement dates. In the event of a change in control or a termination of employment, all vesting under the related Founder Award would cease, and any unvested portion would be cancelled.

26

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

A summary of stock option activity is as follows (in thousands, except per share amounts):

						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
	Stock			Exercise		Contractual		Intrinsic
	Options			Price		Term (Years)		Value
Outstanding - December 31, 2015		18,315		$	38.43		7.74	$	293,855
Granted (weighted-average fair value of $15.14)		1,292			25.97
Exercised		(524	)		6.75				9,173
Canceled		(1,983	)		54.50
Outstanding - September 30, 2016		17,098		$	36.60		7.15	$	73,468
Options vested and exercisable - September 30, 2016		8,454		$	24.86		5.56	$	72,910
Options vested and expected to vest - September 30, 2016		15,222		$	35.38		6.93	$	73,453

As of September 30, 2016, 70.7% of the non-vested stock options outstanding have a performance feature that is required to be satisfied before they become vested and exercisable, including 5.0 million non-vested stock options outstanding under the Founder Awards. The grant date fair market value of the stock options that vested in the three months ended September 30, 2016 and 2015 was $22.8 million and $15.9 million, respectively, and the grant date fair market value of the stock options that vested in the nine months ended September 30, 2016 and 2015 was $71.2 million and $55.0 million, respectively.

As of September 30, 2016 and December 31, 2015, there was $200.8 million and $265.3 million, respectively, of total unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested stock options, which are expected to be recognized over the weighted-average period of 6.03 years and 5.56 years, respectively; including $101.8 million as of September 30, 2016 from the Founder Awards.

Under ASC 718, the Company estimates the fair value of stock options on each grant date using the Black-Scholes option valuation model, except for the Founder Awards for which the Company uses a Monte Carlo simulation performed by an independent expert, and applies the straight-line method of expense attribution, except for stock options with a performance feature, for which the Company applies graded vesting. The fair values were estimated on each grant date with the following weighted-average assumptions used in the Black-Scholes option valuation model:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016	2015			2016			2015
Dividend yield	*		0	%		0	%		0	%
Annual risk-free rate of return	*		2.27	%		1.50	%		2.16	%
Expected volatility	*		55.88	%		61.94	%		58.72	%
Expected term (years)	*		4.97			6.28			5.16

* Assumptions were not applicable since the Company did not grant any stock option awards in the three months ended September 30, 2016.

The expected volatility was calculated based on the average historical volatilities of the Company and publicly traded peer companies determined by the Company. The risk-free interest rate used was based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the stock options to be valued. The expected dividend yield was zero, as the Company does not anticipate paying a dividend within the relevant time frame. The expected term has been estimated using the simplified method allowed under ASC 718.

27

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

Restricted Stock Units

The Company began granting restricted stock units, or RSUs, to employees, directors and consultants in 2012 under the Company’s 2012 Equity Incentive Plan. A summary of RSU activity is as follows (in thousands, except per share amounts):

				Weighted-
	Restricted			Average
	Stock			Fair
	Units			Value
Outstanding - December 31, 2015		3,577		$	49.53
Granted		2,029			19.58
Vested		(838	)		45.80
Cancelled		(1,080	)		41.73
Outstanding - September 30, 2016		3,688		$	36.18
Expected to vest - September 30, 2016		2,246		$	36.73

The grant date fair value of RSUs vested was $13.2 million and $8.1 million for the three months ended September 30, 2016 and 2015, respectively, and $38.4 million and $13.8 million for the nine months ended September 30, 2016 and 2015, respectively. Under ASC 718, the Company determines the fair value of RSUs on each grant date based on the fair value of the Company’s common stock on each grant date and applies the straight-line method of expense attribution. As of September 30, 2016 and December 31, 2015, there was $100.8 million and $121.5 million, respectively, of total unrecognized stock-based compensation expense, net of estimated forfeitures, from RSUs, which are expected to be recognized over the weighted-average period of 3.08 years and 3.31 years, respectively.

Stock-Based Compensation Expense

As part of the requirements of ASC 718, the Company is required to estimate potential forfeitures of equity awards and adjust stock-based compensation expense accordingly. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized in the period of change and will also impact the amount of stock-based compensation expense to be recognized in future periods.

The amount of stock-based compensation expense recognized during the three months ended September 30, 2016 and 2015 was $28.6 million and $33.4 million, respectively, and during the nine months ended September 30, 2016 and 2015 was $89.8 million and $83.4 million, respectively. The amount of capitalized stock-based compensation expense was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Capitalized under:
Inventories	$	169	$	253	$	169	$	253
Other assets	$	30	$	848	$	666	$	2,462
Property, plant and equipment - net	$	1,399	$	711	$	3,780	$	2,096
Solar energy systems, leased and to be leased - net	$	5,809	$	6,902	$	20,137	$	17,555

Stock-based compensation expense was included in cost of revenue and operating expenses as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Total cost of revenue	$	876	$	489	$	2,718	$	1,665
Sales and marketing	$	3,498	$	7,048	$	16,355	$	17,266
General and administrative	$	13,633	$	13,305	$	37,628	$	31,325
Pre-production expense	$	174	$	—	$	322	$	—
Research and development	$	2,997	$	3,866	$	8,038	$	10,754

28

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

12. Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on the differences between the carrying amounts and the tax bases of assets and liabilities and are measured using the enacted tax rate expected to apply to the taxable income in the periods in which the differences are expected to be reversed.

The Company has applied a valuation allowance against its deferred tax assets net of the expected income from the reversal of its deferred tax liabilities. The valuation allowance is determined in accordance with the provisions of ASC 740, Income Taxes, which requires an assessment of both negative and positive evidence when measuring the need for a valuation allowance. Based on the available objective evidence and the Company’s history of losses, the Company believes it is more likely than not that its net deferred tax assets will not be realized.

The income tax provision for the three months ended September 30, 2016 and 2015 was determined based on the Company’s estimated consolidated effective income tax rates of negative 0.11% and 0%, respectively. The income tax provision for the nine months ended September 30, 2016 and 2015 was determined based on the Company’s estimated consolidated effective income tax rates of negative 0.12% and 0.21%, respectively. The differences between the estimated consolidated effective income tax rates and the U.S. federal statutory rates were primarily attributable to the valuation allowance, the amortization of the prepaid tax expense, a true-up of the prepaid tax expense amortization and additional prepaid tax expense due to intra-entity sales.

As part of its asset monetization strategy, the Company has agreements to sell solar energy systems to its financing funds. The gains on the sales are eliminated in the condensed consolidated financial statements because the sales are treated as intra-entity sales. As such, income taxes are not recognized on the sales until the Company no longer benefits from the underlying assets. Specifically, the Company defers the income tax expense and amortizes it over the estimated useful life of the underlying assets, which has been estimated to be 30 to 35 years. The deferral of the income tax expense results in the recognition of a prepaid tax expense that is included in the consolidated balance sheets as other assets. The amortization of the prepaid tax expense makes-up the major component of the income tax provision for each period.

Uncertain Tax Positions

The Company applies a two-step approach with respect to uncertain tax positions. This approach involves recognizing any uncertain tax positions that are more-likely-than-not of being ultimately realized and then measuring those positions to determine the amounts to be recognized.

The Company is subject to taxation and files income tax returns in the U.S. and various state, local and foreign jurisdictions. The U.S. and state jurisdictions have statutes of limitations that generally range from three to five years. Due to the Company’s net losses, substantially all of its federal, state, local and foreign income tax returns since inception are still subject to audit.

13. Related Party Transactions

The Company’s operations included the following related party transactions (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenue:
Solar energy systems sales to related parties	$	—	$	—	$	12	$	79
Expenditures:
Purchases of inventories or equipment    from related parties	$	4,324	$	2,450	$	10,690	$	4,147
Interest paid or payable to related parties (included in    interest expense (excluding amortization of debt discounts    and fees) - recourse debt)	$	2,467	$	828	$	4,682	$	1,298

29

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

Related party balances were comprised of the following (in thousands):

	September 30, 2016		December 31, 2015
Due from related parties (included in accounts receivable)	$	22	$	30
Due to related parties (included in accounts payable)	$	1,080	$	3,961
Solar bonds issued to related parties	$	265,200	$	165,220
Convertible senior notes issued to related parties	$	12,978	$	12,975
Due to related parties (included in accrued and other    current liabilities)	$	1,578	$	1,249

The related party transactions were primarily purchases of batteries from Tesla; issuances and maturities of Solar Bonds held by SpaceX, the Chairman of the Company’s board of directors, the Company’s Chief Executive Officer and the Company’s Chief Technology Officer; and issuances of convertible senior notes to an entity affiliated with the Chairman of the Company’s board of directors and the Company’s Chief Executive Officer. Tesla is considered a related party because the Chairman of the Company’s board of directors is the Chief Executive Officer and Chairman of Tesla, other members of the Company’s board of directors also serve as members of Tesla’s board of directors and some members of the Company’s board of directors and executive management are also investors in Tesla. SpaceX is considered a related party because the Chairman of the Company’s board of directors is the Chief Executive Officer, Chief Designer, Chairman and a significant stockholder of SpaceX; other members of the Company’s board of directors also serve as members of SpaceX’s board of directors; and some members of the Company’s board of directors and executive management are also investors in SpaceX.

In March 2015, SpaceX purchased $90.0 million in aggregate principal amount of 2.00% Solar Bonds due in March 2016. In June 2015, SpaceX purchased an additional $75.0 million in aggregate principal amount of 2.00% Solar Bonds due in June 2016. In March 2016, $90.0 million in aggregate principal amount of the Solar Bonds held by SpaceX matured, and the proceeds were reinvested by SpaceX in $90.0 million in aggregate principal amount of 4.40% Solar Bonds due in March 2017. In June 2016, $75.0 million in aggregate principal amount of the Solar Bonds held by SpaceX matured, and the proceeds were reinvested by SpaceX in $75.0 million in aggregate principal amount of 4.40% Solar Bonds due in June 2017.

In August 2016, the Chairman of the Company’s board of directors, the Company’s Chief Executive Officer and the Company’s Chief Technology Officer purchased $100.0 million in aggregate principal amount of 6.50% Solar Bonds due in February 2018.

14. Commitments and Contingencies

Noncancelable Leases

The Company leases offices, manufacturing and warehouse facilities, equipment, vehicles and solar energy systems under noncancelable leases.

Build-to-Suit Lease Arrangement

In September 2014, a subsidiary of the Company entered into a build-to-suit lease arrangement with the Research Foundation for the State University of New York, or the Foundation, for the construction of an approximately 1.0 million square-feet solar panel manufacturing facility with a capacity of 1.0 gigawatts on an approximately 88.2 acre site located in Buffalo, New York. Under the terms of the arrangement, which has been amended, the Foundation will construct the manufacturing facility and install certain utilities and other improvements, with participation by the Company as to the design and construction of the manufacturing facility, and acquire certain manufacturing equipment designated by the Company to be used in the manufacturing facility. The Foundation will cover (i) construction costs related to the manufacturing facility in an amount up to $350.0 million, (ii) the acquisition and commissioning of the manufacturing equipment in an amount up to $348.1 million and (iii) $51.9 million for additional specified scope costs, in cases (i) and (ii) only, subject to the maximum funding allocation from the State of New York, and the Company will be responsible for any construction and equipment costs in excess of such amounts. The Foundation will own the manufacturing facility and manufacturing equipment purchased by the Foundation. Following completion of the manufacturing facility, the Company will lease the manufacturing facility and the manufacturing equipment owned by the Foundation from the Foundation for an initial period of 10 years, with an option to renew, for $2 per year plus utilities.

Under the terms of the build-to-suit lease arrangement, the Company is required to achieve specific operational milestones during the initial term of the lease, which include employing a certain number of employees at the facility, within western New York

30

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

and within the State of New York within specified time periods following the completion of the facility. The Company is also required to spend or incur approximately $5.0 billion in combined capital, operational expenses and other costs in the State of New York over the 10 years following the achievement of full production. On an annual basis during the initial lease term, as measured on each anniversary of the commissioning of the facility, if the Company fails to meet its specified investment and job creation obligations, then it would be obligated to pay a $41.2 million “program payment” to the Foundation for each year that it fails to meet these requirements. Furthermore, if the agreement is terminated due to a material breach by the Company, then additional amounts might be payable by the Company.

Due to the Company’s involvement with the construction of the facility, its exposure to any potential cost overruns and its other commitments under the agreement, the Company is deemed to be the owner of the facility and the manufacturing equipment owned by the Foundation for accounting purposes during the construction phase. Accordingly, the Company recognizes a non-cash investment in build-to-suit lease asset under construction and a corresponding non-cash build-to-suit lease liability on the consolidated balance sheets. The non-cash investing activities and the non-cash financing activities related to this arrangement in the three months ended September 30, 2016 and 2015 amounted to $75.4 million and $79.4 million, respectively, and in the nine months ended September 30, 2016 and 2015 amounted to $445.9 million and $211.6 million, respectively.

Indemnification and Guaranteed Returns

As disclosed in Note 8, VIE Arrangements, the Company is contractually committed to compensate certain fund investors for any losses that they may suffer in certain limited circumstances resulting from reductions in U.S. Treasury grants or ITCs. Generally, such obligations would arise as a result of reductions to the value of the underlying solar energy systems as assessed by the U.S. Treasury Department for purposes of claiming U.S. Treasury grants or as assessed by the IRS for purposes of claiming ITCs or U.S. Treasury grants. For each balance sheet date, the Company assesses and recognizes, when applicable, the potential exposure from this obligation based on all the information available at that time, including any guidelines issued by the U.S. Treasury Department on solar energy system valuations for purposes of claiming U.S. Treasury grants and any audits undertaken by the IRS. The Company believes that any payments to the fund investors in excess of the amount already recognized by the Company for this obligation are not probable based on the facts known at the reporting date.

The maximum potential future payments that the Company could have to make under this obligation would depend on the difference between the fair values of the solar energy systems sold or transferred to the funds as determined by the Company and the values that the U.S. Treasury Department would determine as fair value for the systems for purposes of claiming U.S. Treasury grants or the values the IRS would determine as the fair value for the systems for purposes of claiming ITCs or U.S. Treasury grants. The Company claims U.S. Treasury grants based on guidelines provided by the U.S. Treasury department and the statutory regulations from the IRS. The Company uses fair values determined with the assistance of independent third-party appraisals commissioned by the Company as the basis for determining the ITCs that are passed-through to and claimed by the fund investors. Since the Company cannot determine future revisions to U.S. Treasury Department guidelines governing system values or how the IRS will evaluate system values used in claiming ITCs or U.S. Treasury grants, the Company is unable to reliably estimate the maximum potential future payments that it could have to make under this obligation as of each balance sheet date.

The Company is eligible to receive certain state and local incentives that are associated with renewable energy generation. The amount of incentives that can be claimed is based on the projected or actual solar energy system size and/or the amount of solar energy produced. The Company also currently participates in one state’s incentive program that is based on either the fair market value or the tax basis of solar energy systems placed in service. State and local incentives received are allocated between the Company and fund investors in accordance with the contractual provisions of each fund. The Company is not contractually obligated to indemnify any fund investor for any losses they may incur due to a shortfall in the amount of state or local incentives actually received.

As disclosed in Note 8, VIE Arrangements, the Company is contractually required to make payments to one fund investor to ensure that the fund investor achieves a specified minimum internal rate of return. The fund investor has already received a significant portion of the projected economic benefits from U.S. Treasury grant distributions and tax depreciation benefits. The contractual provisions of the fund state that the fund has an indefinite term unless the members agree to dissolve the fund. Based on the Company’s current financial projections regarding the amount and timing of future distributions to the fund investor, the Company does not expect to make any payments as a result of this guarantee and has not accrued any liabilities for this guarantee. The amount of potential future payments under this guarantee is dependent on the amount and timing of future distributions to the fund investor and future tax benefits that accrue to the fund investor. Due to the uncertainties surrounding estimating the amounts of these factors, the Company is unable to estimate the maximum potential payments under this guarantee. To date, the fund investor has achieved the specified minimum internal rate of return as determined in accordance with the contractual provisions of the fund.

31

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

The lease pass-through financing funds have a one-time lease payment reset mechanism that occurs after the installation of all solar energy systems in a fund. As a result of this mechanism, the Company may be required to refund master lease prepayments previously received from investors. Any refunds of master lease prepayments would reduce the lease pass-through financing obligation.

Letters of Credit

As of September 30, 2016, the Company had $29.6 million of unused letters of credit outstanding, which carry a fee of 3.4% per annum.

Other Contingencies

In July 2012, the Company, along with other companies in the solar energy industry, received a subpoena from the U.S. Treasury Department’s Office of the Inspector General to deliver certain documents in the Company’s possession that were dated, created, revised or referred to after January 1, 2007 and that relate to the Company’s applications for U.S. Treasury grants or communications with certain other solar energy development companies or with certain firms that appraise solar energy property for U.S Treasury grant application purposes. The Inspector General and the Civil Division of the U.S. Department of Justice are investigating the administration and implementation of the U.S Treasury grant program, including possible misrepresentations concerning the fair market value of the solar energy systems submitted by the Company in U.S. Treasury grant applications. If the Inspector General concludes that misrepresentations were made, the U.S. Department of Justice could decide to bring a civil action to recover amounts it believes were improperly paid to the Company. If the U.S. Department of Justice is successful in asserting this action, the Company could then be required to pay material damages and penalties for any funds received based on such misrepresentations, which, in turn, could require the Company to make indemnity payments to certain fund investors. The Company has accrued a reserve for its potential liability associated with this ongoing investigation as of September 30, 2016.

In February 2013, two of the Company’s financing funds filed a lawsuit in the United States Court of Federal Claims against the United States government, seeking to recover approximately $14.0 million that the United States Treasury was obligated to pay, but failed to pay, under Section 1603 of the American Recovery and Reinvestment Act of 2009. In February 2016, the government filed a motion seeking leave to assert a counterclaim against the two plaintiff funds on the grounds that the government, in fact, paid them more, not less, than they were entitled to as a matter of law. On May 2, 2016, the Court granted the government’s motion and allowed it to add the counterclaim. If the government is successful in asserting the counterclaim, the Company could then be required to make indemnity payments to the plaintiff funds. The Company believes that the government’s claims are without merit and expects the plaintiff funds to litigate the case vigorously. The Court has set the case for trial in January 2017. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On March 28, 2014, a purported stockholder class action lawsuit was filed in the United States District Court for the Northern District of California against the Company and two of its officers. The complaint alleges violations of federal securities laws and seeks unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s securities from March 6, 2013 to March 18, 2014. After a series of amendments to the original complaint, the District Court dismissed the amended complaint and entered a judgment in the Company’s favor on August 9, 2016. The plaintiffs have filed a notice of appeal. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On June 5 and 11, 2014, stockholder derivative actions were filed in the Superior Court of California for the County of San Mateo, purportedly on behalf of the Company and against the board of directors, alleging that the board of directors breached its duties to the Company by failing to prevent the conduct alleged in the pending purported stockholder class action lawsuit. The Company and the individual board member defendants filed a motion to dismiss the complaint, which the Superior Court granted on December 17, 2015, while allowing the plaintiffs an opportunity to file an amended complaint to remedy the defects in the original complaint. On or about March 2, 2016, the plaintiffs informed the Company and the Superior Court that they had sold their shares in the Company during the pendency of the suit. Consequently, the plaintiffs no longer had standing to bring their lawsuit, which they voluntarily dismissed.

On September 18, 2015, a stockholder derivative action was filed in the Court of Chancery of the State of Delaware, purportedly on behalf of the Company and against the board of directors, alleging that the board of directors breached its duties to the Company by approving stock-based compensation to the non-employee directors that the plaintiff claims is excessive compared to the compensation paid to directors of peer companies. At the Company’s 2016 annual meeting of stockholders, the non-employee director compensation plan was approved and ratified, including by a majority of the shares held by disinterested stockholders of the

32

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

Company. As a result, the Company expects that the case will be dismissed and the matter resolved, subject to the settlement of legal fees, which the Company does not expect to be material.

On November 6, 2015, a putative class action lawsuit was filed in the United States District Court for the Northern District of California against the Company. The complaint alleges that the Company made unlawful telephone marketing calls to the plaintiff and others, in violation of the federal Telephone Consumer Protection Act. The plaintiff seeks injunctive relief and statutory damages, on behalf of himself and a certified class. The Company filed a motion to dismiss the complaint, which the District Court denied on April 6, 2016. Discovery has commenced. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On June 1, 2016, a putative class action lawsuit, Gibbs v. SolarCity, alleging that the Company made unlawful telephone marketing calls in violation of the federal Telephone Consumer Protection Act was filed against the Company in the United States District Court for the District of Massachusetts. The two named plaintiffs seek injunctive relief and statutory damages, on behalf of themselves and a certified class. The Company has moved to dismiss the complaint; the hearing on that motion is set for December 8, 2016. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On August 15, 2016, a purported stockholder class action lawsuit was filed in the United States District Court for the Northern District of California against the Company, two of its officers and a former officer. The complaint alleges that the Company made projections of future sales and installations that the Company failed to achieve and that these projections were fraudulent when made. The plaintiffs claim violations of federal securities laws and seek unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s securities from May 5, 2015 to February 16, 2016. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On September 26, 2016, Cogenra Solar Inc., or Cogenra, and Khosla Ventures III, L.P. filed a lawsuit in the United States District Court for the Northern District of California alleging that the Company and its subsidiary, Silevo, had misappropriated trade secrets obtained from Cogenra during interactions governed by non-disclosure agreements and during the course of diligence in 2014, when the Company considered acquiring Cogenra. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

From time to time, claims have been asserted, and may in the future be asserted, including claims from regulatory authorities related to labor practices and other matters. Such assertions arise in the normal course of the Company’s operations. The resolution of any such assertions or claims cannot be predicted with certainty.

33

SolarCity Corporation

Notes to Condensed Consolidated Financial Statements (continued)

15. Basic and Diluted Net Loss Per Share

The following table sets forth the computation of the Company’s basic and diluted net loss per share for the periods presented (in thousands, except share and per share amounts):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015			2016			2015
Net income (loss) attributable to stockholders	$	53,215	$	(19,073	)	$	(27,262	)	$	(62,958	)
Net income (loss) attributable to common stockholders,    basic	$	53,215	$	(19,073	)	$	(27,262	)	$	(62,958	)
Net income (loss) attributable to common stockholders,    diluted	$	56,165	$	(19,073	)	$	(27,262	)	$	(62,958	)
Weighted-average shares used to compute net income (loss)    per share attributable to common stockholders, basic		100,494,480		97,384,949			99,354,863			97,027,412
Weighted-average shares used to compute net income (loss)    per share attributable to common stockholders, diluted		118,077,365		97,384,949			99,354,863			97,027,412
Net income (loss) per share attributable to common    stockholders, basic	$	0.53	$	(0.20	)	$	(0.27	)	$	(0.65	)
Net income (loss) per share attributable to common    stockholders, diluted	$	0.48	$	(0.20	)	$	(0.27	)	$	(0.65	)

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Common stock options		14,474,596		14,197,584		18,057,579		13,852,111
Restricted stock units		3,363,304		2,763,268		3,718,782		2,082,446
Convertible senior notes		—		10,505,947		13,930,186		10,505,947

16. Subsequent Events

On October 11, 2016, the Company formed a new non-recourse financing fund with an existing fund investor with an aggregate financing commitment of $250.0 million. Contemporaneously, the Company committed to loan to an affiliate of the fund investor up to $55.0 million, which would have variable interest rates and would mature on October 31, 2023.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the accompanying notes to those statements included elsewhere in this quarterly report on Form 10-Q and with our annual report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on February 10, 2016. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk Factors” and elsewhere in this quarterly report on Form 10-Q.

Overview

We are the leading installer of residential and commercial solar energy systems in the United States. We offer innovative financing alternatives for our customers. We continually innovate and develop new technologies to facilitate our growth and to enhance the delivery of our products and services. We make it possible to offer energy to our customers at prices below utility rates. Our solar energy systems rely on the energy produced by the sun, allowing our customers to generate energy at their homes and businesses, and to reduce the amount of energy they purchase from utilities. We help put solar energy generation within the reach of our customers by providing a variety of pricing and financing options that minimize or eliminate upfront costs. Our customers have typically achieved a lower overall electricity bill immediately upon installation.

In the second quarter of 2016, we began offering Solar Loans, whereby a third-party lender provides financing directly to a qualified customer to enable the customer to purchase and own a solar energy system installed by us. We and the customer enter into a standard solar energy system sale agreement. Separately, the customer enters into a loan agreement with the third-party lender, who finances the full purchase price. We are not a party to the loan agreement between the customer and the third-party lender, and the third-party lender has no recourse against us with respect to the loan. Solar Loans are offered as the replacement for our MyPower program. We account for Solar Loans under our revenue recognition policy for solar energy systems and components sales. However, any fees that are paid or payable from us to the lender of a Solar Loan would be recognized as an offset against solar energy systems and components sales revenue, in accordance with ASC 605-50, Customer Payments and Incentives.

Merger Agreement with Tesla

On July 31, 2016, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with Tesla Motors, Inc., or Tesla, pursuant to which a wholly-owned subsidiary of Tesla would, subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, merge with and into us, and we would survive the merger as a wholly-owned subsidiary of Tesla. The Merger Agreement was approved by our board of directors following the recommendation by a special committee of our board of directors. The recommendation of the special committee followed a thorough review of our strategic alternatives, which included (i) evaluating our long-term business plan and stand-alone opportunities for value creation, reviewing the capital market and fundraising environment against a broad range of strategic alternatives, including the merger and the improved access to capital and lower capital costs that it would provide, (ii) conducting due diligence on the strength of Tesla’s operations, opportunities for synergies and business prospects, (iii) making outbound inquiries to other potential acquirers and strategic partners and (iv) receiving a fairness opinion from the special committee’s financial advisor that the consideration for in the Merger Agreement is fair, from a financial point of view, to holders of our common stock (other than Mr. Musk and his affiliates and certain other excluded holders).

Pursuant to the terms of the Merger Agreement and subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, at the effective time of the merger, each share of our common stock issued and outstanding immediately prior to the effective time of the merger would be converted into 0.110, or the Exchange Ratio, shares of Tesla’s common stock. Our outstanding option and restricted stock unit awards would be converted into corresponding equity awards of Tesla’s common stock based on the Exchange Ratio, with the awards retaining the same vesting and other terms and conditions as in effect immediately prior to the effective time of the merger (except for certain Founder Awards granted in 2015, which would be cancelled for no consideration). We intend the merger to qualify as a “reorganization” for U.S. federal income tax purposes. Our special meeting of stockholders to vote on the merger is scheduled to take place on November 17, 2016.

Key Operating Metrics

We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

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Installed Customers

We track the number of residential, commercial, government and other customers where we have installed a solar energy system. We track the cumulative number of installed customers as of the end of a given period as an indicator of our historical growth and as an indicator of our rate of expected growth from period to period.

The following table sets forth our cumulative number of installed customers as of the dates presented:

	September 30, 2016	December 31, 2015
Cumulative installed customers	305,936		232,710

Megawatts Deployed and Megawatts Installed

We track megawatts deployed, or the megawatt production capacity of our solar energy systems that have had all required building department inspections completed during the applicable period. This metric includes solar energy systems deployed under energy contracts (residential, commercial or government lease, power purchase agreement or MyPower contracts), as well as solar energy system direct sales and Solar Loans. Because the size of our solar energy systems varies greatly, we believe that tracking the megawatt production capacity of deployed systems is an indicator of our growth rate and cost efficiency of our solar energy system business. We track the megawatts deployed in a given period as an indicator of asset growth and efficiency of the scale of our operations in the period. We track cumulative megawatts deployed as of the end of a given period as an indicator of our historical growth.

The following table sets forth the megawatt production capacity of solar energy systems that we have deployed during the periods presented and the cumulative megawatts deployed as of the end of each period presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Megawatts deployed		189		205		645		525
Cumulative megawatts deployed		2,492		1,594		2,492		1,594

In addition, we track megawatts installed, or the megawatt production capacity of solar energy systems for which (i) all solar panels, inverters, mounting and racking hardware and system wiring have been installed, (ii) the system inverter is connected and a successful direct current string test has been completed confirming the production capacity of the system and (iii) the system is capable of being grid connected (including pending a utility disconnect procedure), in each case, as of the latest of which criteria is completed during the applicable period. This metric includes solar energy systems installed under energy contracts, as well as solar energy system direct sales and Solar Loans. The following table sets forth the megawatt production capacity of solar energy systems that we have installed during the periods presented and the cumulative megawatts installed as of the end of each period presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Megawatts installed		187		256		602		598
Cumulative megawatts installed		2,547		1,674		2,547		1,674

Critical Accounting Policies and Estimates

There were no material changes to our critical accounting policies or estimates during the nine months ended September 30, 2016 from those disclosed in our annual report on Form 10-K for the year ended December 31, 2015, except as described below.

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation. In particular, the consolidated statements of operations have been expanded to present revenue generated from periodic billings under long-term contracts, including customer operating leases and MyPower contracts, as well as sales of solar renewable energy credits. Accordingly, the previously presented operating leases and solar energy systems incentives revenue has been separated into (i) revenue generated from periodic billings under operating leases as well as periodic incentives generated by the operating leases; (ii) revenue generated from sales of solar renewable energy credits and (iii) revenue from operating lease prepayments and upfront incentives that is recognized over the term of the operating lease. Additionally, revenue from sales under MyPower contracts, which was previously presented within

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revenue from solar energy systems and components sales, has been separately presented as revenue from solar energy systems under long-term loan arrangements; this together with periodic operating lease billings and incentives revenue and sales of solar renewable energy credits revenue comprise the total revenue from periodic billings. Furthermore, the cost of revenue line items have also been expanded to conform to the current period revenue presentation and to separately present non-cash expenses, including depreciation, amortization and warranty expenses. The components of the reclassified consolidated statements of operations are as follows:

Periodic operating lease billings and incentives: Periodic operating lease billings and incentives include revenues generated from contractual periodic billings to customers under leases or power purchase agreements that we account for as operating leases. It also includes the proceeds from solar energy system incentives offered by certain state and local governments that are paid based on the system’s performance, which we consider to be part of the proceeds from our operating leases. We recognize revenue from our operating leases over the operating lease term.  For lease arrangements we recognize revenue on a straight-line basis over the lease term and for power purchase agreements we recognize revenue as we generate and sell energy to customers. Periodic operating lease billings and incentives revenue does not include revenue from upfront lease prepayments by customers and upfront incentives paid by certain state and local governments as such revenue is included in revenue from operating lease prepayments and upfront incentives.

Revenue from operating lease prepayments and upfront incentives: Revenue from operating lease prepayments and upfront incentives is comprised of revenue from prepayments by our lease customers, which is recognized on a straight-line basis over the lease term, generally 20 years. It also includes revenue from solar energy system incentives offered by certain state and local governments that are paid upfront based on the power generating capacity of the systems and recognized as revenue over the operating lease term, generally 20 years.

Sale of solar renewable energy credits: Revenue from sale of solar renewable energy credits, or SRECs, represents the proceeds from SRECs transferred to buyers. A solar renewable energy credit is a tradable credit that represents all of the clean energy benefits of electricity generated from a solar energy system. Every time a solar energy system generates 1,000 kWh of electricity, one SREC is issued or minted by a government agency. The SREC can then be sold or traded separately from the energy produced, generally through brokers and dealers facilitating individually negotiated bilateral arrangements. SRECs are primarily valuable because they help utilities and other energy suppliers meet mandatory Renewable Portfolio Standards, or RPS, that have been enacted in certain jurisdictions. These standards require utilities in applicable jurisdictions to sell a specified percentage or amount of electricity from renewable sources, and this requirement can be satisfied by deploying their own renewable energy generating facilities or by purchasing renewable energy credits, such as SRECs, from qualifying installations. Typically, we execute long-term contractual arrangements to deliver to buyers agreed upon quantities of SRECs generated in the future by solar energy systems that we own at agreed-upon pricing. Generally, these buyers pay upfront for these SREC purchases, and, in some instances, if we do not generate sufficient SRECs to meet delivery requirements, then we may buy SRECs from the market to satisfy our delivery obligations under these agreements. Occasionally, we sell SRECs to the market without utilizing long-term contractual arrangements. We record the upfront payments received from buyers of SRECs as deferred revenue, and in all cases, we only recognize SREC revenue upon delivery of the SRECs to the buyers and when all other applicable revenue recognition criteria have been met. We have concluded that our contracts to deliver SRECs to buyers in the future are not derivatives because they either do not allow net settlement or are normal sales.

Revenue from solar energy systems under long-term loan arrangements: Revenue from solar energy systems under long-term loan arrangements comprises revenue from solar energy systems financed under MyPower contracts. We recognize revenue from solar energy systems financed under MyPower over the 30-year term of the contract as the customer pays the loan’s principal and interest.

Solar energy systems and components sales: Solar energy systems and components sales is comprised of revenue from the outright sale of solar energy systems directly to cash paying customers, revenue generated from long-term solar energy system sales contracts, and revenue attributable to our energy-related products and services. We recognize revenue from solar energy systems sold outright to our customers when we install the solar energy system and it passes inspection by the utility or the authority having jurisdiction. We allocate a portion of the proceeds from the sale of the system to the remote monitoring service or maintenance service, if applicable, and recognize the allocated amount (based on relative selling prices) as revenue over the contractual service term. We recognize revenue generated from long-term solar energy system sales contracts on a percentage-of-completion basis, based on the ratio of labor costs incurred to date to total project labor costs. We recognize revenue from our energy-related products and services when we complete the services.

Cost of periodic billings revenue (exclusive of depreciation and amortization): Cost of periodic billings revenue is comprised of maintenance costs associated with solar energy systems under operating leases, customer care expenses, costs associated with cancellations of lease contracts, and direct and allocated costs associated with monitoring services for these systems.

Cost of solar energy systems and components sales revenue (exclusive of amortization and warranty): The substantial majority of solar energy systems and components sales cost of revenue is the costs of solar energy systems components and personnel costs

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associated with system installations or manufacture of components. We have historically purchased the significant component parts of the solar energy systems directly from foreign and domestic manufacturers or distributors. Following the acquisition of Zep Solar, we produce, through contract manufacturers, mounting solutions for photovoltaic panels, which are components of the solar energy systems. Following the acquisition of Silevo, we have commenced limited domestic production of solar cells and modules for use in our solar energy systems.

Cost of solar energy systems and components sales revenue also includes solar energy system installation costs, project-specific engineering and design costs, freight charges and allocated corporate overhead costs, such as facilities costs, vehicle depreciation costs and personnel costs associated with supply chain, logistics, operations management, safety and quality control. Personnel costs include salary, bonus, employee benefit costs and stock-based compensation costs.

Depreciation, amortization and warranty: Depreciation, amortization and warranty is comprised of (i) depreciation of the cost of leased solar energy systems reduced by amortization of U.S. Treasury grants income; (ii) amortization of initial direct costs associated with solar energy systems under operating leases; (iii) amortization of deferred costs of systems sold under MyPower contracts which are recognized in proportion to MyPower revenue recognition and (iv) warranty costs for systems sold outright for cash or systems sold under MyPower contracts. Initial direct costs include allocated incremental contract administration costs, sales commissions and customer acquisition referral fees from the origination of solar energy systems operating leases to customers.

Pre-production expense: Pre-production expense is comprised of salaries and personnel-related costs and the cost of operating our production facilities line before attaining commercial production capability, including the cost of raw materials for solar modules run through the production line during this stage that were not used in commercial production. Upon attaining commercial production capability, and as the production capacity of a production facility increases, we expect the expense to decrease as production costs are capitalized into the cost of inventory. However, we expect that this expense would increase as we start to commission and operate additional production facilities.

Restructuring and other: Restructuring and other expense is comprised of restructuring charges, including impairments of assets and severance for employees, and pre-acquisition costs arising from the Tesla Merger Agreement.

Interest expense (excluding amortization of debt discounts and fees) – recourse debt: Interest expense – recourse debt is comprised of interest we have incurred on our recourse debt and excludes amortization of any fees, discount or premium associated with the debt.

Interest expense (excluding amortization of debt discounts and fees) – non-recourse debt: Interest expense – non-recourse debt is comprised of interest we have incurred on our non-recourse debt and excludes amortization of any fees, discount or premium associated with the debt.

Other interest expense and amortization of debt discounts and fees, net: Other interest expense and amortization of debt discounts and fees, net, is comprised of amortization of financing fees, discounts and any premiums associated with our debt. It also includes imputed interest associated with our financing obligations as well as interest expense associated with our capital leases.

Sales and marketing expenses, general and administrative expenses, research and development expenses, other income (expense), net, income tax benefit (provision) and net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests remain as described in our annual report on Form 10-K for the year ended December 31, 2015.

Updated Estimate of Solar Energy System Useful Life

As of July 1, 2016, we increased our estimate of the useful lives of new solar energy systems from 30 years to 35 years. This updated estimate was the result of new engineering studies of recently deployed solar energy systems across the industry. We are applying this change in estimate on a prospective basis to our solar energy systems placed in service on or after July 1, 2016.

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Results of Operations

The following table sets forth selected consolidated statements of operations data for each of the periods indicated (in thousands, except share and per share amounts).

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue:
Revenue from periodic billings:
Periodic operating lease billings and incentives	$	96,837		$	63,215		$	245,931		$	158,968
Sale of solar renewable energy credits		7,518			4,455			18,313			10,011
Revenue from solar energy systems under long-term    loan arrangements		18,253			9,071			83,708			18,385
Total revenue from periodic billings		122,608			76,741			347,952			187,364
Solar energy systems and components sales revenue		57,522			19,727			105,219			47,641
Revenue from operating lease prepayments and upfront    incentives		20,421			17,389			55,736			49,134
Total revenue		200,551			113,857			508,907			284,139
Cost of revenue:
Cost of periodic billings revenue (exclusive of    depreciation and amortization)		24,189			17,907			59,996			38,397
Cost of solar energy systems and components sales    revenue (exclusive of amortization and warranty)		49,025			20,523			108,851			48,854
Depreciation, amortization and warranty		55,745			50,139			167,180			106,517
Total cost of revenue		128,959			88,569			336,027			193,768
Gross profit		71,592			25,288			172,880			90,371
Operating expenses:
Sales and marketing		102,639			129,284			345,369			329,115
General and administrative		87,423			69,423			260,446			168,288
Pre-production expense		19,335			—			55,107			—
Restructuring and other		34,158			—			63,241			—
Research and development		14,129			17,652			42,423			42,173
Total operating expenses		257,684			216,359			766,586			539,576
Loss from operations		(186,092	)		(191,071	)		(593,706	)		(449,205	)
Interest and other expenses:
Interest expense (excluding amortization of debt discounts and    fees) - recourse debt		10,974			8,215			29,890			19,932
Interest expense (excluding amortization of debt discounts and    fees) - non-recourse debt		20,512			8,096			52,614			19,682
Other interest expense and amortization of debt discounts and    fees, net		10,670			9,551			29,258			25,266
Other (income) expense, net		(2,058	)		16,851			54,143			21,723
Total interest and other expenses		40,098			42,713			165,905			86,603
Loss before income taxes		(226,190	)		(233,784	)		(759,611	)		(535,808	)
Income tax benefit (provision)		848			(482	)		907			(1,128	)
Net loss		(225,342	)		(234,266	)		(758,704	)		(536,936	)
Net loss attributable to noncontrolling interests and    redeemable noncontrolling interests		(278,557	)		(215,193	)		(731,442	)		(473,978	)
Net income (loss) attributable to stockholders	$	53,215		$	(19,073	)	$	(27,262	)	$	(62,958	)
Net income (loss) attributable to common stockholders
Basic	$	53,215		$	(19,073	)	$	(27,262	)	$	(62,958	)
Diluted	$	56,165		$	(19,073	)	$	(27,262	)	$	(62,958	)
Net income (loss) per share attributable to common stockholders
Basic	$	0.53		$	(0.20	)	$	(0.27	)	$	(0.65	)
Diluted	$	0.48		$	(0.20	)	$	(0.27	)	$	(0.65	)
Weighted-average shares used to compute net income (loss) per    share attributable to common stockholders
Basic		100,494,480			97,384,949			99,354,863			97,027,412
Diluted		118,077,365			97,384,949			99,354,863			97,027,412

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Three Months Ended September 30, 2016 and 2015

Revenue

	Three Months Ended September 30,				Change
(Dollars in thousands)	2016		2015		$		%
Revenue from periodic billings:
Periodic operating lease billings and incentives	$	96,837	$	63,215	$	33,622		53	%
Sale of solar renewable energy credits		7,518		4,455		3,063		69	%
Revenue from solar energy systems under    long-term loan arrangements		18,253		9,071		9,182		101	%
Total Revenue from periodic billings		122,608		76,741		45,867		60	%
Solar energy systems and components sales revenue		57,522		19,727		37,795		192	%
Revenue from operating lease prepayments    and upfront incentives		20,421		17,389		3,032		17	%
Total revenue	$	200,551	$	113,857	$	86,694		76	%

Total revenue increased by $86.7 million, or 76%, for the three months ended September 30, 2016 as compared to the three months ended September 30, 2015.

Periodic operating lease billings and incentives revenue increased by $33.6 million, or 53%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was primarily attributable to the increase in solar energy systems placed in service under leases and power purchase agreements. The average aggregate megawatt production capacity of solar energy systems placed in service under leases during the three months ended September 30, 2016 increased by 47% as compared to the average during the three months ended September 30, 2015. In addition, the megawatt hours produced by solar energy systems under power purchase agreements increased by 59% during the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. The impact of the installed base on the increase in revenue varied in part by the mix between solar energy systems under leases, for which revenue is recognized on a straight-line basis over the lease term, and under power purchase agreements, for which revenue is recognized based on energy produced and when the systems were placed in service.

Sale of solar renewable energy credits increased by $3.1 million, or 69%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was primarily due to the cumulative increase in solar energy systems placed in service under leases and power purchase agreements and the resulting increase in solar renewable energy credits generated and sold.

Revenue from solar energy systems under long-term loan arrangements increased by $9.2 million, or 101%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was primarily due to the increase in customer repayments under MyPower contracts, which are recognized into revenue as cash is received, resulting from the cumulative increase in sales under MyPower contracts. In the third quarter of 2016, we completely discontinued offering MyPower contracts, and we have been offering Solar Loans as the replacement, which are accounted for as sales of solar energy systems and components.

Sales of solar energy systems and components increased by $37.8 million, or 192%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was primarily due to the $36.4 million increase in revenue from solar energy systems sold under Solar Loans and the $5.9 million increase in revenue from cash sales to residential customers. These increases were partially offset by the $3.0 million decrease in revenue from sales to commercial customers and the $2.0 million decrease in revenue from sales to government entities. Revenue from sales of solar energy systems and components has varied considerably in the past, and as we expect that direct sales and Solar Loans will increase as a percentage of future customer contracts, we expect revenue from sales of solar energy systems and components to increase in future periods as well..

Revenue from operating lease prepayments and upfront incentives revenue increased by $3.0 million, or 17%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was primarily attributable to the cumulative increase in solar energy systems placed in service under leases and power purchase agreements that qualified for upfront incentives, which resulted in higher periodic amortization.

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Cost of Revenue, Gross Profit and Gross Profit Margin

	Three Months Ended September 30,				Change
(Dollars in thousands)	2016		2015		$		%
Cost of periodic billings revenue    (exclusive of depreciation and amortization)	$	24,189	$	17,907	$	6,282		35	%
Cost of solar energy systems and components sales    (exclusive of amortization and warranty)		49,025		20,523		28,502		139	%
Depreciation, amortization and warranty		55,745		50,139		5,606		11	%
Total cost of revenue	$	128,959	$	88,569	$	40,390		46	%

Cost of periodic billings revenue (exclusive of depreciation and amortization) increased by $6.3 million, or 35%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was primarily due to the increase in costs incurred on customer contracts that were ultimately canceled, costs from our dedicated operations and maintenance department and other costs to maintain our operating leases.

Cost of solar energy systems and components sales (exclusive of amortization and warranty) increased by $28.5 million, or 139%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was mainly due to the introduction of our Solar Loan product offering and an increase in residential sales. Additionally, in the three months ended September 30, 2016, we recorded $7.6 million of additional inventory reserves.

Depreciation, amortization and warranty increased by $5.6 million, or 11%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was primarily due to the $14.5 million increase in depreciation expense arising from the higher aggregate cost of solar energy systems placed in service and generating revenue under solar energy system leases and power purchase agreements. Additionally, the periodic expense recognition of MyPower contract deferred costs increased by $2.0 million. These increases were partially offset by a decrease in warranty expense of $12.8 million. The decrease in warranty expense was related to sales under Solar Loans in the three months ended September 30, 2016 being lower than sales under MyPower contracts in the three months ended September 30, 2015.

Operating Expenses

	Three Months Ended September 30,				Change
(Dollars in thousands)	2016		2015		$			%
Sales and marketing	$	102,639	$	129,284	$	(26,645	)		(21	)%
General and administrative		87,423		69,423		18,000			26	%
Pre-production expense		19,335		—		19,335
Restructuring and other		34,158		—		34,158
Research and development		14,129		17,652		(3,523	)		(20	)%
Total operating expenses	$	257,684	$	216,359	$	41,325			19	%

Sales and marketing expense decreased by $26.6 million, or 21%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This decrease was primarily due to our restructuring and the corresponding decrease in the average number of personnel in sales and marketing departments. As a result of this decline in headcount, employee compensation costs decreased by $14.1 million and facilities & operations costs decreased by $1.0 million. In addition, we reduced promotional marketing expenses by $9.9 million as part of our focus on increasing the efficiency of sales operations.

General and administrative expense increased by $18.0 million, or 26%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was primarily due to the increase in the average number of personnel in general and administrative departments. As a result of this growth in headcount along with increased policy spending, employee compensation costs increased by $5.0 million and facilities & operations costs increased by $8.8 million. Furthermore, Ilioss, which we acquired in August 2015, incurred $1.3 million of additional expenses in the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. However, as a result of our restructuring activities, the number of personnel in general and administrative departments has decreased since June 30, 2016.

Costs we incur at our Fremont, California manufacturing facility prior to achievement of full production capacity (including salaries and personnel-related costs, and other production costs including the cost of raw materials for solar modules run through the

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production line during this period) are treated as pre-production expense. We commenced operations at our Fremont, California manufacturing facility in the fourth quarter of 2015.

We recorded $34.2 million of restructuring and other expenses in the three months ended September 30, 2016, primarily consisting of certain amounts due to us since 2014 related to an uninstalled commercial project (but not related to any customer contracts or loans) that were determined to be unrecoverable, certain acquired sales and marketing-related intangible assets that became fully impaired, a revision of the useful lives of our manufacturing equipment in China, one-time employee termination benefit expenses due to our restructuring activities and pre-acquisition expenses arising from the proposed Tesla acquisition.

Research and development expense decreased by $3.5 million, or 20%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This decrease was primarily due to the on-going shift of Silevo's activities from research and development to pre-production at our Fremont, California manufacturing facility.

Interest and Other Expenses

	Three Months Ended September 30,					Change
(Dollars in thousands)	2016			2015		$			%
Interest expense (excluding amortization of debt    discounts and fees) - recourse debt	$	10,974		$	8,215	$	2,759			34	%
Interest expense (excluding amortization of debt    discounts and fees) - non-recourse debt		20,512			8,096		12,416			153	%
Other interest expense and amortization of debt    discounts and fees, net		10,670			9,551		1,119			12	%
Other (income) expense, net		(2,058	)		16,851		(18,909	)		(112	)%
Total interest and other expenses, net	$	40,098		$	42,713	$	(2,615	)		(6	)%

Interest expense (excluding amortization of debt discounts and fees) – recourse debt increased by $2.8 million, or 34%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was primarily due to the 15% increase in the average carrying balances of interest bearing recourse debt for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015, as well as the increase in interest rates for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015.

Interest expense (excluding amortization of debt discounts and fees) – non-recourse debt increased by $12.4 million, or 153%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was primarily due to the 103% increase in the average carrying balances of non-recourse debt for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015, as well as the increase in interest rates for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015.

Other interest expense and amortization of debt discounts and fees, net, increased by $1.1 million, or 12%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This increase was primarily due to the higher average balances of debt discounts and issuance costs related to our debt for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015.

Other expense, net, decreased by $18.9 million, or 112%, for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015. This decrease was mainly due to the $2.9 million gain from the changes in the fair value of our interest rate swaps in the third quarter of 2016 as compared to the $12.3 million loss from the changes in the fair value of our interest rate swaps in the third quarter of 2015. We account for our interest rate swaps as non-hedging derivatives.

Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests

	Three Months Ended September 30,						Change
(Dollars in thousands)	2016			2015			$			%
Net loss attributable to noncontrolling    interests and redeemable noncontrolling	$	(278,557	)	$	(215,193	)	$	(63,364	)		(29	)%

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The net loss attributable to noncontrolling interests and redeemable noncontrolling interests represents the share of net loss that was allocated to the investors in the joint venture financing funds. This amount was determined as the change in the investors’ interests in the joint venture financing funds between the beginning and end of each reported period calculated primarily using the hypothetical liquidation at book value (the “HLBV”) method, less any capital contributions net of any capital distributions. The calculation depends on the specific contractual liquidation provisions of each joint venture financing fund and is generally affected by, among other factors, the tax attributes allocated to the investors including tax bonus depreciation and ITCs or U.S. Treasury grants in lieu of the ITCs, the existence of guarantees of minimum returns to the investors by us and the allocation of taxable income or losses including provisions that govern the level of deficits that can be funded by the investors in a liquidation scenario. The calculation is also affected by the cost of the assets sold to the joint venture financing funds, which forms the book basis of the net assets allocated to the investors assuming a liquidation scenario. Generally, significant loss allocations to the investors have arisen in situations where there was a significant difference between the fair value and the cost of the assets sold to the joint venture financing funds in a particular period accompanied by the absence of guarantees of minimum returns to the investors by us, since the capital contributions by the investors were based on the fair value of the assets while the calculation is based on the cost of the assets. The existence of guarantees of minimum returns to the investors by us and limits on the level of deficits that the investors are contractually obligated to fund in a liquidation scenario reduce the amount of losses that could be allocated to the investors. In addition, the redeemable noncontrolling interests balance is at least equal to the redemption amount.

The net loss allocation to noncontrolling interests and redeemable noncontrolling interests for the three months ended September 30, 2016 was $278.6 million compared to the $215.2 million loss allocation for the three months ended September 30, 2015. The net loss allocation to noncontrolling interests and redeemable noncontrolling interests for the three months ended September 30, 2016 was primarily due to the $276.5 million loss allocation from new financing funds into which we are selling or contributing assets. The net loss allocation to noncontrolling interests and redeemable noncontrolling interests for the three months ended September 30, 2015 was primarily due to the $214.0 million loss allocation from new financing funds into which we are selling or contributing assets.

Nine Months Ended September 30, 2016 and 2015

Revenue

	Nine Months Ended September 30,				Change
(Dollars in thousands)	2016		2015		$		%
Revenue from periodic billings:
Periodic operating lease billings and incentives	$	245,931	$	158,968	$	86,963		55	%
Sale of solar renewable energy credits		18,313		10,011		8,302		83	%
Revenue from solar energy systems under    long-term loan arrangements		83,708		18,385		65,323		355	%
Total Revenue from periodic billings		347,952		187,364		160,588		86	%
Solar energy systems and components sales revenue		105,219		47,641		57,578		121	%
Revenue from operating lease prepayments    and upfront incentives		55,736		49,134		6,602		13	%
Total revenue	$	508,907	$	284,139	$	224,768		79	%

Total revenue increased by $224.8 million, or 79%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015.

Periodic operating lease billings and incentives revenue increased by $87.0 million, or 55%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily attributable to the increase in solar energy systems placed in service under leases and power purchase agreements. The average aggregate megawatt production capacity of solar energy systems placed in service under leases during the nine months ended September 30, 2016 increased by 50% as compared to the average during the nine months ended September 30, 2015. In addition, the megawatt hours produced by solar energy systems under power purchase agreements increased by 69% during the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. The impact of the installed base on the increase in revenue varied in part by the mix between solar energy systems under leases, for which revenue is recognized on a straight-line basis over the lease term, and under power purchase agreements, for which revenue is recognized based on energy produced and when the systems were placed in service.

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Sale of solar renewable energy credits increased by $8.3 million, or 83%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily due to the cumulative increase in solar energy systems placed in service under leases and power purchase agreements and the resulting increase in solar renewable energy credits generated and sold.

Revenue from solar energy systems under long-term loan arrangements increased by $65.3 million, or 355%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily due to the increase in customer repayments under MyPower contracts, which are recognized into revenue as cash is received, resulting from the cumulative increase in sales under MyPower contracts and customers applying the amounts received from their ITCs towards repayments in the second quarter of 2016. In the third quarter of 2016, we completely discontinued offering MyPower contracts, and we have been offering Solar Loans as the replacement, which are accounted for as sales of solar energy systems and components.

Sales of solar energy systems and components increased by $57.6 million, or 121%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily due to the $40.8 million increase in revenue from solar energy systems due to the introduction of Solar Loans, the $13.0 million increase in revenue from solar energy systems sold under long-term installation contracts recognized on the percentage-of-completion basis and the $10.2 million increase in revenue from cash sales to residential customers. These increases were partially offset by the $4.1 million decrease in revenue from sales to government entities and the $2.5 million decrease in revenue from sales to commercial customers. Revenue from sales of solar energy systems and components has varied considerably in the past, and as we expect that direct sales and Solar Loans will increase as a percentage of future customer contracts, we expect revenue from sales of solar energy systems and components to increase in future periods as well.

Revenue from operating lease prepayments and upfront incentives revenue increased by $6.6 million, or 13%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily attributable to the cumulative increase in solar energy systems placed in service under leases and power purchase agreements that qualified for upfront incentives, which resulted in higher periodic amortization.

Cost of Revenue, Gross Profit and Gross Profit Margin

	Nine Months Ended September 30,				Change
(Dollars in thousands)	2016		2015		$		%
Cost of periodic billings revenue    (exclusive of depreciation and amortization)	$	59,996	$	38,397	$	21,599		56	%
Cost of solar energy systems and components sales    (exclusive of amortization and warranty)		108,851		48,854		59,997		123	%
Depreciation, amortization and warranty		167,180		106,517		60,663		57	%
Total cost of revenue	$	336,027	$	193,768	$	142,259		73	%

Cost of periodic billings revenue (exclusive of depreciation and amortization) increased by $21.6 million, or 56%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily due to the increase in costs incurred on customer contracts that were ultimately canceled, costs from our dedicated operations and maintenance department and other costs to maintain our operating leases.

Cost of solar energy systems and components sales (exclusive of amortization and warranty) increased by $60.0 million, or 123%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was mainly due to higher sales of solar energy systems and components, including sales under Solar Loans. Additionally, in the nine months ended September 30, 2016, we recorded an additional $17.9 million of inventory reserves.

Depreciation, amortization and warranty increased by $60.7 million, or 57%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily due to the $41.5 million increase in depreciation expense arising from the higher aggregate cost of solar energy systems placed in service and generating revenue under solar energy system leases and power purchase agreements. Additionally, the periodic expense recognition of MyPower contract deferred costs increased by $23.0 million. These increases were partially offset by a decrease in warranty expense of $7.6 million. The decrease in warranty expense was related to sales under Solar Loans in the nine months ended September 30, 2016 being lower than sales under MyPower contracts in the nine months ended September 30, 2015.

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Operating Expenses

	Nine Months Ended September 30,				Change
(Dollars in thousands)	2016		2015		$		%
Sales and marketing	$	345,369	$	329,115	$	16,254		5	%
General and administrative		260,446		168,288		92,158		55	%
Pre-production expense		55,107		—		55,107
Restructuring and other		63,241		—		63,241
Research and development		42,423		42,173		250		1	%
Total operating expenses	$	766,586	$	539,576	$	227,010		42	%

Sales and marketing expense increased by $16.3 million, or 5%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily due to the increase in the average number of personnel in sales and marketing departments. As a result of this growth in headcount, employee compensation costs increased by $13.6 million and facilities & operations costs increased by $6.1 million. However, as part of our focus on increasing the efficiency of sales operations, we reduced promotional marketing expenses by $1.8 million. Additionally, the number of personnel in sales and marketing departments has decreased since March 31, 2016.

General and administrative expense increased by $92.2 million, or 55%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily due to the increase in the average number of personnel in general and administrative departments. As a result of this growth in headcount along with increased policy spending, employee compensation costs increased by $43.8 million and facilities & operations costs increased by $20.4 million. Furthermore, Ilioss, which we acquired in August 2015, incurred $8.7 million of additional expenses in the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. In addition, professional fees increased by $10.9 million primarily due to increased legal costs. However, as a result of our restructuring activities, the number of personnel in general and administrative departments has decreased since June 30, 2016.

Costs we incur at our Fremont, California manufacturing facility prior to achievement of full production capacity (including salaries and personnel-related costs, and other production costs including the cost of raw materials for solar modules run through the production line during this period) are treated as pre-production expense. We commenced operations at our Fremont, California manufacturing facility in the fourth quarter of 2015.

We recorded $63.2 million of restructuring and other expenses in the nine months ended September 30, 2016, primarily consisting of certain amounts due to us since 2014 related to an uninstalled commercial project (but not related to any customer contracts or loans) that were determined to be unrecoverable, certain acquired sales and marketing-related intangible assets that became fully impaired, a revision of the useful lives of our manufacturing equipment in China, one-time employee termination benefit expenses due to our restructuring activities and pre-acquisition expenses arising from the proposed Tesla acquisition.

Interest and Other Expenses

	Nine Months Ended September 30,				Change
(Dollars in thousands)	2016		2015		$		%
Interest expense (excluding amortization of debt    discounts and fees) - recourse debt	$	29,890	$	19,932	$	9,958		50	%
Interest expense (excluding amortization of debt    discounts and fees) - non-recourse debt		52,614		19,682		32,932		167	%
Other interest expense and amortization of debt    discounts and fees, net		29,258		25,266		3,992		16	%
Other expense, net		54,143		21,723		32,420		149	%
Total interest and other expenses, net	$	165,905	$	86,603	$	79,302		92	%

Interest expense (excluding amortization of debt discounts and fees) – recourse debt increased by $10.0 million, or 50%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily due to the 26% increase in the average carrying balances of interest bearing recourse debt for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015, as well as the increase in interest rates for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015.

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Interest expense (excluding amortization of debt discounts and fees) – non-recourse debt increased by $32.9 million, or 167%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily due to the 126% increase in the average carrying balances of non-recourse debt for the nine months ended September 30, 2016, as compared to the nine months ended September, 2015, as well as the increase in interest rates for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015.

Other interest expense and amortization of debt discounts and fees, net, increased by $4.0 million, or 16%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was primarily due to the higher average balances of debt discounts and issuance costs related to our debt for the nine months ended September 30, 2016, as compared to the nine months ended June 30, 2015.

Other expense, net, increased by $32.4 million, or 149%, for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015. This increase was mainly due to the $48.6 million loss from the changes in the fair value of our interest rate swaps in the nine months ended September 30, 2016 as compared to the $12.6 million loss from the changes in the fair value of our interest rate swaps in the nine months ended September 30, 2015. We account for our interest rate swaps as non-hedging derivatives.

Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests

	Nine Months Ended September 30,						Change
(Dollars in thousands)	2016			2015			$			%
Net loss attributable to noncontrolling    interests and redeemable noncontrolling	$	(731,442	)	$	(473,978	)	$	(257,464	)		(54	)%

The net loss attributable to noncontrolling interests and redeemable noncontrolling interests represents the share of net loss that was allocated to the investors in the joint venture financing funds. This amount was determined as the change in the investors’ interests in the joint venture financing funds between the beginning and end of each reported period calculated primarily using the HLBV method, less any capital contributions net of any capital distributions. The calculation depends on the specific contractual liquidation provisions of each joint venture financing fund and is generally affected by, among other factors, the tax attributes allocated to the investors including tax bonus depreciation and ITCs or U.S. Treasury grants in lieu of the ITCs, the existence of guarantees of minimum returns to the investors by us and the allocation of taxable income or losses including provisions that govern the level of deficits that can be funded by the investors in a liquidation scenario. The calculation is also affected by the cost of the assets sold to the joint venture financing funds, which forms the book basis of the net assets allocated to the investors assuming a liquidation scenario. Generally, significant loss allocations to the investors have arisen in situations where there was a significant difference between the fair value and the cost of the assets sold to the joint venture financing funds in a particular period accompanied by the absence of guarantees of minimum returns to the investors by us, since the capital contributions by the investors were based on the fair value of the assets while the calculation is based on the cost of the assets. The existence of guarantees of minimum returns to the investors by us and limits on the level of deficits that the investors are contractually obligated to fund in a liquidation scenario reduce the amount of losses that could be allocated to the investors. In addition, the redeemable noncontrolling interests balance is at least equal to the redemption amount.

The net loss allocation to noncontrolling interests and redeemable noncontrolling interests for the nine months ended September 30, 2016 was $731.4 million compared to the $474.0 million loss allocation for the nine months ended September 30, 2015. The net loss allocation to noncontrolling interests and redeemable noncontrolling interests for the nine months ended September 30, 2016 was primarily due to the $698.7 million loss allocation from new financing funds into which we are selling or contributing assets. The net loss allocation to noncontrolling interests and redeemable noncontrolling interests for the nine months ended September 30, 2015 was primarily due to the $466.4 million loss allocation from new financing funds into which we are selling or contributing assets.

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Liquidity and Capital Resources

The following table summarizes our consolidated cash flows:

	Nine Months Ended September 30,
	2016			2015
	(in thousands)
Consolidated cash flow data:
Net cash used in operating activities	$	(425,820	)	$	(526,317	)
Net cash used in investing activities		(1,298,633	)		(1,201,443	)
Net cash provided by financing activities		1,601,251			1,596,127
Net decrease in cash and cash equivalents	$	(123,202	)	$	(131,633	)

We finance our operations, including the costs of acquisition and installation of solar energy systems, mainly through a variety of financing fund arrangements that we have formed with fund investors, recourse and non-recourse credit facilities from banks, asset-backed notes, convertible notes, Solar Bonds, equity issuances from time-to-time and cash generated from our operations. As described below under “Financing Fund Commitments,” as of September 30, 2016, we had $489.7 million of available commitments from our fund investors. Our ability to draw-down the available commitments from our fund investors is dependent on our ability to originate and transfer qualifying solar energy systems and the associated customer lease or power purchase agreements into the financing funds. The available commitments from our fund investors represent funding for approximately 314 megawatts of solar energy systems for future deployment. Some of the financing funds have restrictions regarding the mix of customer leases or power purchase agreements that can be assigned to them, as well as measures of minimum customer credit. We expect to be able to draw-down on substantially all of the available commitments from our fund investors within the next 12 months. The proceeds from our financing fund arrangements are available for general working capital purposes.

As described below under “Financing Fund Commitments,” as of September 30, 2016, we had $424.0 million of unused borrowing capacity available under our credit facilities (or $479.7 million including the $55.7 million available under the MyPower revolving credit facility), subject to our continuing compliance with the terms and covenants of our credit facilities. Of this amount, $4.9 million was available under the secured revolving credit facility and $419.1 million was available under our non-recourse debt facilities (excluding the MyPower revolving credit facility). The secured revolving credit facility requires us to have unused commitments and a sufficient borrowing base in order to both borrow additional amounts and to allow borrowed funds to remain outstanding. We anticipate maintaining a sufficient borrowing base to support substantially all of the committed capital under our secured revolving credit facility in the next 12 months; such borrowings are available for general working capital purposes. Our non-recourse debt facilities require us to have unused commitments, to provide qualified security, such as solar energy systems or our interests in financing funds, and to remain in compliance with the terms of the facilities to make additional borrowings. In the event that we fail to meet specific terms for additional borrowings, our ability to borrow unused commitments may be suspended until we resume compliance. We anticipate that our operations will provide an adequate amount of solar assets and interests in financing funds, and that we will be in compliance with the terms of the facilities to draw on substantially all of the committed capital under our non-recourse debt facilities in the next 12 months; such borrowings are available for general working capital purposes, subject to nominal reserve requirements. The MyPower revolving credit facility is only available for funding costs associated with sales under MyPower arrangements; as we have discontinued offering MyPower arrangements, we do not expect to incur additional borrowings under the MyPower revolving credit facility.

In future periods, we expect to incur additional capital expenditures as we invest further in our solar module manufacturing operations, technology platform and proprietary mounting and racking hardware. At this time we anticipate that an additional $50 million of capital expenses will be required for the manufacturing operations at the Riverbend Manufacturing Facility in Buffalo, New York over the next 12 months.  These estimates are based on our current assumptions regarding the timing of placing orders, the build timeline and payment-based milestones, and our receipt of equipment.  The proposed manufacturing collaboration with Panasonic, which is described in a non-binding letter of intent between Tesla and Panasonic and is contingent upon the consummation of our proposed acquisition by Tesla, is expected to significantly reduce the amounts that we may invest into the Riverbend Manufacturing Facility.

We have agreed to spend or incur approximately $5 billion in combined capital, operational expenses, costs of goods sold and other costs in the State of New York during the 10-year period following full production. Generally, these obligations commence following the manufacturing facility completion date, which occurs upon the arrival of manufacturing equipment, the receipt of certain permits, and other specified items.  These committed amounts commence with $130.0 million in cumulative investments in the first year after the Riverbend manufacturing completion date, and require us to pay a $41.2 million “program payment” in any year that we do not meet these requirements. We anticipate meeting these obligations through our operation of the Manufacturing Facility and

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other operations within the State of New York over the 10-year term of the agreement, and we do not believe that we face a significant risk of default. According to the Solar Energy Industries Association, New York was ranked fourth in total U.S. solar jobs in 2015 and is among the top 10 ranked states based on cumulative installed solar capacity as of December 2015. We are currently New York’s largest residential solar installer and we anticipate New York remaining a key state for our operations. The amounts that we are committed to spend under the Riverbend Agreement and that we believe necessary to meet the operational milestones set forth in the Riverbend Agreement are included in our estimate of amounts to be spent within the next 12 months.

The amount of our liquidity and capital resources as of a given date is also dependent upon, among other things, the relative timing of our investments in solar energy systems and the timing of subsequent draws on our financing funds and utilization of our credit facilities. As a result, the amount of our liquidity and capital resources may significantly fluctuate within a reporting period by amounts that are not reflected by comparing our cash and cash equivalents balances at each balance sheet date. For example, solar energy systems deployed towards the end of a fiscal quarter may not be transferred to a financing fund in sufficient time for the funds to be received and reflected in our cash and cash equivalents balance as of the quarter-end. In addition, any delays in large commercial projects are also likely to impact our liquidity and capital resources, for example, in situations where we have already spent funds to purchase and install components for solar energy systems that are deployed in subsequent periods. As our business grows and the megawatts deployed increases, the amounts by which our liquidity and capital resources may fluctuate within a quarter are likely to increase. As a result of our restructuring activities and installation forecast for the remainder of 2016, we anticipate requiring less working capital in the remainder of 2016 than previously projected.

Our expected cash requirements for the next 12 months are primarily dependent on the cost, number and size of future solar energy systems that we expect to install and our ability to successfully monetize the related future customer payments, as well as the mix of sales that involve upfront cash proceeds and long-term contracted payments. We have provided our forecast of the megawatt capacity of solar energy systems that we anticipate installing in future periods, and our operating plan and projected cash requirements are based on that volume of installations. We believe that the cash requirements of our operations (including repayment or refinancing of our recourse indebtedness) will be satisfied for at least the next 12 months by: (i) our existing cash and cash equivalents of $259.3 million, (ii) an improving mix of direct system sales and solar loan contracts that provide upfront cash proceeds, (iii) the funds available under our recourse and non-recourse credit facilities (excluding amounts available under the MyPower revolving credit facility) that may be drawn-down during this period, (iv) the funds available under our existing financing funds that may be drawn-down during this period, and (v) the continued interest of investors in, and our track record of, entering new financing funds and non-recourse facilities.

In addition, during the pendency of the proposed Tesla acquisition or if the proposed Tesla acquisition does not occur, we may face uncertainty in the markets for financing fund arrangements, recourse and non-recourse credit facilities from banks, asset-backed notes, convertible notes, other debt and equity issuances. The pendency of the transaction and any developments related to the transaction has caused delays in closing certain financing funds to date and may make it difficult for us to obtain the working capital that we expect or cause us to obtain funding sources on less attractive terms than we expected, and our operations and ability to execute our business strategy could be materially adversely affected.

As of September 30, 2016, we were in compliance with all financial covenants contained in our debt agreements. During the first six months of 2016, the margins of our compliance with these financial covenants decreased, particularly with respect to the amount of unencumbered liquidity. These decreases were largely the result of increased operating expenses, which we anticipate decreasing in the remainder of 2016. Based on our current operating plan; which includes assumptions as to the amount, timing, and terms of new financing funds; entering into new recourse and non-recourse indebtedness; and entering into additional long-term monetization activities (such as issuances of solar asset-backed notes and engaging in cash equity transactions); we expect to remain in compliance with these financial covenants. However, if our assumptions prove inaccurate and we are unable to adjust our operating plan to comply with these financial covenants, then we could be in default under our debt agreements. In that circumstance, the amounts outstanding under our debt agreements could be accelerated, which would negatively impact our liquidity and capital resources. In particular, under the terms of our secured revolving credit facility, the occurrence of an event of default with respect to a credit facility (including both recourse and non-recourse indebtedness) having an aggregate principal amount of more than $10.0 million could trigger a cross-default that could result in the acceleration of or the taking of other remedies under our secured revolving credit facility. In addition, the occurrence of an event of default that results in the acceleration of more than $50.0 million of recourse indebtedness could trigger a cross-default that could result in the acceleration of or the taking of other remedies under our 2.75% convertible senior notes due in 2018, our 1.625% convertible senior notes due in 2019 or our zero-coupon convertible senior notes due in 2020.

Under the terms of our secured revolving credit facility, we are subject to the following financial covenants:

Interest Coverage Ratio: We are obligated to maintain an interest coverage ratio of at least 1.5-to-1 as of the end of each quarter. The interest coverage ratio is measured by dividing (a) an amount equal to the excess of (i) our trailing 12-month

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consolidated gross profit over (ii) 20% of our trailing 12-month consolidated general and administrative expenses by (b) our unconsolidated trailing 12-month cash interest charges excluding interest charges on non-recourse debt.

Unencumbered Liquidity: We are obligated to maintain unencumbered liquidity in an amount equal to at least 20% of the sum of (a) the amounts committed under our secured revolving credit facility plus (b) the aggregate outstanding principal amount of Solar Bonds that mature prior to our secured revolving credit facility’s maturity date, as of the end of each month. However, unencumbered liquidity must always be greater than $50.0 million, as of the end of each month. Unencumbered liquidity is defined as our average daily balance of cash and cash equivalents, in deposit accounts controlled by the borrower or the guarantors of our secured revolving credit facility.

Under the terms of certain borrowings by our subsidiaries, certain of our subsidiaries are subject to the following financial covenants:

Interest Coverage Ratio: One of our subsidiaries is obligated to maintain an interest coverage ratio of at least 1.4-to-1 as of certain specified dates and periods. The interest coverage ratio is measured by dividing (a) such subsidiary’s revenue less certain specified expenses and fees in such specified period by (b) the aggregate outstanding interest due and payable in the specified period.

Debt Service Coverage Ratio: One of our subsidiaries is obligated to maintain a debt service coverage ratio of at least 1.05-to-1 as of certain specified dates and periods. The debt service coverage ratio is measured by dividing (a) the specified cash receipts of such subsidiary less the specified cash payments made by such subsidiary in the specified period by (b) the scheduled principal payments due and payable in the specified period plus the interest payments due and payable in the specified period.

Operating Activities

In the nine months ended September 30, 2016, we utilized $425.8 million in net cash from operations due to our continued growth. This cash outflow primarily resulted from a net loss of $758.7 million, reduced by non-cash items such as depreciation, amortization and write-offs of $233.8 million, change in fair value of interest rate swaps of $48.6 million, stock-based compensation of $65.7 million, the tax impact of stock option exercises of $7.7 million and non-cash interest and other expense of $4.4 million mainly related to financing obligations, and increased by a reduction in financing obligations of $37.1 million. The cash outflow also increased in part due to an increase in restricted cash of $64.4 million, an increase of $21.3 million for MyPower deferred costs, an increase in accounts receivable of $31.1 million, and a decrease in accounts payable of $110.8 million. This cash outflow was offset by a decrease in inventory of $137.3 million, a decrease in prepaid expenses and other current assets of $9.1 million mainly due to collection of state tax credits that had been outstanding in Hawaii, an increase in deferred revenue of $44.8 million relating to upfront lease payments received from customers, solar energy system incentive rebate payments received from various state and local governments and deferred investment tax credits revenue, a decrease in other assets of $22.6 million, and an increase in accrued and other liabilities of $23.7 million.

In the nine months ended September 30, 2015, we utilized $526.3 million in net cash from operations due to our continued rapid growth. This cash outflow primarily resulted from a net loss of $536.9 million, reduced by non-cash items such as depreciation and amortization of $118.1 million, change in fair value of interest rate swaps of $12.6 million, stock-based compensation of $61.0 million and non-cash interest and other expense of $12.6 million mainly related to financing obligations and deferred contingent consideration and increased by a reduction in financing obligations of $36.4 million. The cash outflow also increased in part due to an increase in restricted cash of $19.8 million, an increase in inventories of $91.6 million, an increase of $150.3 million for MyPower deferred costs, an increase in prepaid expenses and other current assets of $42.3 million, an increase in other assets of $12.8 million and an increase in accounts receivable of $15.6 million. This cash outflow was offset by an increase in deferred revenue under our joint venture and lease pass-through structures of $10.2 million relating to upfront lease payments received from customers, solar energy system incentive rebate payments received from various state and local governments and deferred investment tax credits revenue, an increase in accounts payable of $56.7 million, an increase in accrued and other liabilities of $92.3 million and a decrease in rebates receivable of $15.0 million.

Investing Activities

Our investing activities consist primarily of purchases of solar energy systems, capital expenditures for our solar module research and development and our solar panel manufacturing and general corporate purchases to support our standard operations. At this time we anticipate that an additional $50 million of capital expenses will be required for the manufacturing operations at the Riverbend Manufacturing Facility in Buffalo, New York over the next 12 months.

In the nine months ended September 30, 2016, we used $1,298.6 million in investing activities. Of this amount, we used $1,230.1 million on the design, acquisition and installation of solar energy systems under operating leases with our customers and the

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design and installation of solar energy systems under MyPower contracts, and $53.4 million in the purchase of production equipment and renovation of our solar panel manufacturing facilities in Fremont, California and Buffalo, New York. We also paid $13.7 million for the acquisition of noncontrolling interests in the joint venture we had in China and $12.7 million for settlements of interest rate swaps. These outflows were offset by $11.2 million from sales and maturities of short-term investments.

In the nine months ended September 30, 2015, we used $1,201.4 million in investing activities. Of this amount, we used $1,134.9 million on the design, acquisition and installation of solar energy systems under operating leases with our customers, and $147.8 million in the acquisition of solar panel manufacturing equipment, vehicles, office equipment, leasehold improvements and furniture. We also invested $44.6 million in short-term investments in highly rated corporate debt securities and asset-backed securities. These expenditures were offset by $136.6 million from sales and maturities of short-term investments. As we increase our solar panel manufacturing operations, including the start of operations at our one-gigawatt manufacturing facility in Buffalo, New York and our research and development focused Fremont, California manufacturing facility, we estimate investing approximately an additional $60.0 million in the remainder of the 2015 and approximately an additional $120.0 million in 2016 related to the acquisition of solar panel manufacturing equipment.

Financing Activities

In the nine months ended September 30, 2016, we generated $1,601.3 million from financing activities. We received $1,002.8 million, net of lender fees, from long-term debt and repaid $630.9 million of long-term debt.We received $221.0 million, net of issuance costs and discounts, from the issuance of solar asset-backed notes and repaid $61.9 million of the solar asset-backed notes.We received $297.6 million from the issuance of solar bonds and repaid $177.6 million of the solar bonds. We received $41.5 million from fund investors in our financing funds. We paid $7.1 millionfor capital lease obligations.We also generated $1,022.7 million from proceeds from investments by various fund investors in our joint ventures, paid distributions to fund investors of $102.4 million and incurred $7.7 million tax liability of stock option exercises.

In the nine months ended September 30, 2015, we generated $1,596.1 million from financing activities. We received $783.1 million, net of lender fees, from long-term debt and repaid $212.0 million of long-term debt. We received $206.6 million from the issuance of solar bonds. We received $119.8, net of issuance costs, from the issuance of solar asset-backed notes and repaid $13.9 million of solar asset-backed notes. We received $26.4 million from fund investors in our financing funds and paid $5.1 million to fund investors in our financing funds. We also generated $754.9 million from proceeds from investments by various fund investors in our joint ventures and paid distributions to fund investors of $67.2 million.

Debt

For a detailed discussion of our indebtedness, refer to Note 7, Indebtedness, to our condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q.

Financing Fund Commitments

We have financing fund commitments from several fund investors that we can draw upon in the future upon the achievement of specific funding criteria. As of September 30, 2016, we had entered into 60 financing funds that had a total of $489.7 million of undrawn committed capital. We allocate customer leases, power purchase agreements and the related economic benefits associated with the solar energy systems to our financing funds, in accordance with the criteria of each fund. Upon such allocation and upon our satisfaction of the conditions precedent to drawing upon such commitments, we are able to draw down on the financing fund commitments. Once received, these proceeds provide working capital to deliver solar energy systems to our customers and form part of our general working capital.

Off-Balance Sheet Arrangements

We include in our condensed consolidated financial statements all assets, liabilities and results of operations of the financing fund arrangements that we have entered into. We have not entered into any other transactions that have generated relationships with unconsolidated entities, financial partnerships or SPEs. Accordingly, we do not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies and Procedures, to our condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain market risks as part of our ongoing business operations. Our primary exposures include changes in interest rates because certain borrowings bear interest at floating rates plus a specified margin. For fixed-rate debt, interest rate changes do not affect our earnings or cash flows. Conversely, for floating-rate debt, interest rate changes generally impact our earnings and cash flows, assuming other factors are held constant. Pursuant to our risk management policies, in certain cases, we utilize derivative instruments to manage some of our exposures to fluctuations in interest rates on certain floating-rate debt. We do not enter into any derivative instruments for trading or speculative purposes. In addition, we entered into capped call option agreements to reduce the potential dilution to holders of our common stock upon the conversion of our outstanding convertible senior notes.

Changes in economic conditions could result in higher interest rates, thereby increasing our interest expense and reducing our funds available for capital investments, operations or other purposes. In addition, we must use a substantial portion of our cash inflows to service our borrowings, which may affect our ability to make future acquisitions or capital expenditures. A hypothetical 10% change in our interest rates would have increased our interest expense for the nine months ended September 30, 2016 and 2015 by $3.8 million and $1.4 million, respectively.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on our evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2016, our disclosure controls and procedures were designed at a reasonable assurance level and were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In July 2012, the Company, along with other companies in the solar energy industry, received a subpoena from the U.S. Treasury Department’s Office of the Inspector General to deliver certain documents in the Company’s possession that were dated, created, revised or referred to after January 1, 2007 and that relate to the Company’s applications for U.S. Treasury grants or communications with certain other solar energy development companies or with certain firms that appraise solar energy property for U.S Treasury grant application purposes. The Inspector General and the Civil Division of the U.S. Department of Justice are investigating the administration and implementation of the U.S Treasury grant program, including possible misrepresentations concerning the fair market value of the solar energy systems submitted by the Company in U.S. Treasury grant applications. If the Inspector General concludes that misrepresentations were made, the U.S. Department of Justice could decide to bring a civil action to recover amounts it believes were improperly paid to the Company. If the U.S. Department of Justice is successful in asserting this action, the Company could then be required to pay material damages and penalties for any funds received based on such misrepresentations, which, in turn, could require the Company to make indemnity payments to certain fund investors. The Company has accrued a reserve for its potential liability associated with this ongoing investigation as of September 30, 2016.

In February 2013, two of the Company’s financing funds filed a lawsuit in the United States Court of Federal Claims against the United States government, seeking to recover approximately $14.0 million that the United States Treasury was obligated to pay, but failed to pay, under Section 1603 of the American Recovery and Reinvestment Act of 2009. In February 2016, the government filed a motion seeking leave to assert a counterclaim against the two plaintiff funds on the grounds that the government, in fact, paid them more, not less, than they were entitled to as a matter of law. On May 2, 2016, the Court granted the government’s motion and allowed it to add the counterclaim. If the government is successful in asserting the counterclaim, the Company could then be required to make indemnity payments to the plaintiff funds. The Company believes that the government’s claims are without merit and expects the plaintiff funds to litigate the case vigorously. The Court has set the case for trial in January 2017. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On March 28, 2014, a purported stockholder class action lawsuit was filed in the United States District Court for the Northern District of California against the Company and two of its officers. The complaint alleges violations of federal securities laws and seeks unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s securities from March 6, 2013 to March 18, 2014. After a series of amendments to the original complaint, the District Court dismissed the amended complaint and entered a judgment in the Company’s favor on August 9, 2016. The plaintiffs have filed a notice of appeal. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On June 5 and 11, 2014, stockholder derivative actions were filed in the Superior Court of California for the County of San Mateo, purportedly on behalf of the Company and against the board of directors, alleging that the board of directors breached its duties to the Company by failing to prevent the conduct alleged in the pending purported stockholder class action lawsuit. The Company and the individual board member defendants filed a motion to dismiss the complaint, which the Superior Court granted on December 17, 2015, while allowing the plaintiffs an opportunity to file an amended complaint to remedy the defects in the original complaint. On or about March 2, 2016, the plaintiffs informed the Company and the Superior Court that they had sold their shares in the Company during the pendency of the suit. Consequently, the plaintiffs no longer had standing to bring their lawsuit, which they voluntarily dismissed.

In June 2014, the Company along with Sunrun, Inc., or Sunrun, filed a lawsuit in the Superior Court of Arizona against the Arizona Department of Revenue, or DOR, challenging DOR’s interpretation of Arizona state law to impose property taxes on solar energy systems that are leased by customers. On June 1, 2015, the Superior Court issued an order rejecting the interpretation of the Arizona state law under which the DOR had sought to tax leased solar energy systems. In that same order, the Superior Court held that a separate Arizona statute, which provides that such systems are deemed to have no value for purposes of calculating property tax, violated certain provisions of the Arizona state constitution. Both the DOR and the Company have appealed the Superior Court’s ruling, and the Company will continue to vigorously pursue its claims.

On March 2, 2015, the Company filed a lawsuit in the United States District Court for the District of Arizona against the Salt River Project Agricultural Improvement and Power District and the Salt River Valley Water Users’ Association, or SRP, alleging that SRP’s imposition of distribution charges and demand charges on new solar energy customers in its territory violates state and federal antitrust laws. On June 23, 2015, SRP moved to dismiss the complaint. On October 27, 2015, the District Court denied SRP’s motion to dismiss in part and granted it in part. In particular, the District Court held that the Company may proceed on its antitrust claims against SRP to seek an injunction blocking SRP’s new charges and may proceed with claims for damages under state laws other than antitrust laws. Furthermore, the District Court held that the Company may not recover monetary damages on its antitrust theories and

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dismissed two of its antitrust claims while allowing the others to proceed. Discovery has concluded. On September 20, 2016, the District Court entered a stay of the litigation while SRP appeals the District Court’s earlier decision, holding that SRP is subject to state and federal antitrust laws. The Court of Appeals has set arguments to begin on November 18, 2016. The Company intends to pursue its claims vigorously.

In April 2015, Borrego Solar Systems Inc., or Borrego, commenced an arbitration against the Company alleging that the Company wrongfully terminated a construction services agreement. The Company engaged in discovery and participated in an arbitration hearing in February 2016. After the hearing, on April 12, 2016, the arbitrator entered an interim award in favor of Borrego and ultimately entered a final award in the amount of $2.0 million, which the Company has satisfied in full.

On September 18, 2015, a stockholder derivative action was filed in the Court of Chancery of the State of Delaware, purportedly on behalf of the Company and against the board of directors, alleging that the board of directors breached its duties to the Company by approving stock-based compensation to the non-employee directors that the plaintiff claims is excessive compared to the compensation paid to directors of peer companies. At the Company’s 2016 annual meeting of stockholders, the non-employee director compensation plan was approved and ratified, including by a majority of the shares held by the disinterested stockholders of the Company. As a result, the Company expects that the case will be dismissed and the matter resolved, subject to the settlement of legal fees, which the Company does not expect to be material.

On September 21, 2015, the Company filed a lawsuit in the United States District Court for the District of Massachusetts against Seaboard Solar Operations LLC, or Seaboard, and its principal, Stuart Longman, alleging breaches of the various written contracts between the Company and Seaboard, fraud, conversion and unfair business practices. The Company sought a declaratory judgment that it owns and has the right to develop the specified projects and of damages of approximately $16.0 million. In December 2015, the Company settled the lawsuit in exchange for $16.1 million to be paid by Seaboard over the course of 2016; upon making those payments Seaboard will have the rights to the projects.

On November 6, 2015, a putative class action lawsuit was filed in the United States District Court for the Northern District of California against the Company. The complaint alleges that the Company made unlawful telephone marketing calls to the plaintiff and others, in violation of the federal Telephone Consumer Protection Act. The plaintiff seeks injunctive relief and statutory damages, on behalf of himself and a certified class. The Company filed a motion to dismiss the complaint, which the District Court denied on April 6, 2016. Discovery has commenced. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On June 1, 2016, a putative class action lawsuit, Gibbs v. SolarCity, alleging that the Company made unlawful telephone marketing calls in violation of the federal Telephone Consumer Protection Act, was filed against the Company in the United States District Court for the District of Massachusetts. The two named plaintiffs seek injunctive relief and statutory damages, on behalf of themselves and a certified class. The Company has moved to dismiss the complaint; the hearing on that motion is set for December 8, 2016. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On August 15, 2016, a purported stockholder class action lawsuit was filed in the United States District Court for the Northern District of California against the Company, two of its officers and a former officer. The complaint alleges that the Company made projections of future sales and installations that the Company failed to achieve and that these projections were fraudulent when made. The plaintiffs claim violations of federal securities laws and seek unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s securities from May 5, 2015 to February 16, 2016. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On September 26, 2016, Cogenra Solar Inc., or Cogenra, and Khosla Ventures III, L.P. filed a lawsuit in the United States District Court for the Northern District of California alleging that the Company and its subsidiary, Silevo Inc., had misappropriated trade secrets obtained from Cogenra during interactions governed by non-disclosure agreements and during the course of diligence in 2014, when the Company considered acquiring Cogenra. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

From time to time, claims have been asserted, and may in the future be asserted, including claims from regulatory authorities related to labor practices and other matters. Such assertions arise in the normal course of the Company’s operations. The resolution of any such assertions or claims cannot be predicted with certainty. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the Company’s results of operations, prospects, cash flows, financial position and brand.

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ITEM 1A. RISK FACTORS

You should carefully consider the risks described below, together with the other information contained in this quarterly report on Form 10-Q, including our condensed consolidated financial statements and related notes, before investing in our common stock. The risks described below are not the only risks facing our company. Any of the following risks and additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition, results or operations. In such case, you may lose all or part of your original investment.

Risks Related to the Proposed Acquisition by Tesla

The announcement of our agreement to be acquired by Tesla and pendency of the Merger Agreement could have an adverse effect on our business, liquidity and financial condition; and the failure to complete the merger with Tesla could adversely affect our business.

On July 31, 2016, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with Tesla Motors, Inc., or Tesla, pursuant to which a wholly-owned subsidiary of Tesla will, subject to the satisfaction or waiver of the conditions contained in the Merger Agreement, merge with and into SolarCity, and SolarCity will survive the merger as a wholly-owned subsidiary of Tesla, or the Merger. Pursuant to the terms of the Merger Agreement and subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, at the effective time of the merger, each share of common stock of SolarCity issued and outstanding immediately prior to the effective time of the Merger will be converted into 0.110 shares of Tesla common stock.

Completion of the merger with Tesla is subject to several conditions, including many beyond our control, that may prevent, delay or otherwise materially adversely affect its completion, including

(i) the approval of the Merger and Merger Agreement by our stockholders, including by the holders of a majority of the total votes of shares of SolarCity common stock cast on that matter at the special meeting of the stockholders of SolarCity that are not owned by Mr. Elon Musk and the other directors and named executive officers of Tesla and SolarCity, and certain of their affiliates, other than Nancy E. Pfund and Donald R. Kendall, Jr.;

(ii) the approval of the Merger and Merger Agreement by Tesla’s stockholders, including by the holders of a majority of the total votes of shares of Tesla common stock cast on that matter at the special meeting of the stockholders of Tesla that are not owned by Mr. Elon Musk and the other directors and named executive officers of Tesla and certain of their affiliates;

(iii) the approval of the listing on the NASDAQ Global Select Market of the shares of Tesla common stock to be issued in the Merger;

(iv) the absence of any law, regulation or order that has the effect of making the Merger illegal or otherwise preventing the consummation of the Merger; and

(v) our ability to maintain target net working capital balance.

It is also possible that a change, event, fact, effect or circumstance could occur that could lead to a material adverse effect to us, which may give Tesla the ability to not complete the Merger.  We cannot predict with certainty whether and when any of the required closing conditions will be satisfied or if another uncertainty may arise.

If any event occurs delaying or preventing the Merger, such delay or failure to complete the Merger may cause uncertainty or other negative consequences that may materially and adversely constrain our liquidity, affect our sales, financial performance and operating results, and the price per share for our common stock and perceived acquisition value. Additional risks related to the delay or failure of the proposed acquisition include the following:

• we would not realize any or all of the potential benefits of the acquisition, including any synergies that could result from combining the resources of us and Tesla, which could have a negative effect on our stock price;

• to the extent that the current market price of our common stock reflects an increase resulting from a market assumption that the transaction will be completed, the market price of our common stock may decline by the value attributed to this assumption, or could decline further;

• we will remain liable for significant transaction costs, including legal, accounting, financial advisory and other costs relating to the transaction regardless of whether the acquisition is consummated;

• the attention of our management and employees may be diverted from day-to-day operations during the period up to the completion or failure of the acquisition;

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• our business may be disrupted by customer uncertainty over any delay or failure of the acquisition or customers’ and investors’ perception of us as a standalone company; our ability to raise additional financing when needed; and

• our ability to retain current key employees or attract new employees may be harmed by any delay or failure of the proposed acquisition.

Following the announcement of Tesla’s proposal to acquire SolarCity, we initially experienced some delays in obtaining financing and entering into new financing arrangements.  In the event that we continue to experience such delays or encounter additional delays and difficulties in raising new financing funds and credit arrangements, our business, liquidity and financial condition may be materially adversely affected.

In addition, we could be subject to litigation related to any failure to complete the Merger. If it is not completed, these risks may materially and adversely affect our stock price, operating results and ongoing business. Further, a failed transaction may result in negative publicity and a negative impression of us in the investment community. There can be no assurance that our business, these relationships or our financial condition will not be adversely affected, as compared to the condition prior to the announcement of the merger, if the merger is not consummated. The occurrence of any of these events individually or in combination could materially and adversely affect our results of operations and stock price.

While the Merger is pending, we are subject to business uncertainties and contractual restrictions that could materially adversely affect our operations and the future of our business or result in a loss of employees.

The Merger Agreement includes restrictions on the conduct of our business prior to the completion of the Merger, generally requiring us to conduct our businesses in the ordinary course, consistent with past practice, and subjecting us to a variety of specified limitations absent Tesla’s prior written consent. We may find that these and other contractual arrangements in the Merger Agreement may delay or prevent us from or limit our ability to respond effectively to financing needs, competitive pressures, industry developments and future business opportunities that may arise during such period, even if our management and board of directors think they may be advisable. In addition, we have diverted, and will continue to divert, significant management and other resources towards the completion of the transaction, which could materially adversely affect our business and operations. Our employees, customers and financial counterparties may have uncertainties about the effects of the Merger. In connection with the pending Merger, it is possible that some customers, financial counterparties and other persons with whom we have a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationship with us as a result of the Merger (particularly to the extent that such third parties view Tesla as a competitor). Similarly, current and prospective employees may experience uncertainty about their future roles with us following completion of the Merger, which may materially adversely affect our ability to attract and retain key employees. If any of these effects were to occur, it could materially and adversely impact our revenues, earnings and cash flows and other business results and financial condition, as well as the market price of our common stock and our perceived acquisition value, regardless of whether the Merger is completed. In addition, whether or not the Merger is completed, while it is pending we will continue to incur costs, fees, expenses and charges related to the proposed Merger, which may materially and adversely affect our business results and financial condition.

If the Merger Agreement is terminated, we may, under certain circumstances, be obligated to pay a termination fee to Tesla and these costs could require us to use available cash that would have otherwise been available for general corporate purposes.

If the Merger Agreement is terminated, in certain circumstances, we would be required to pay Tesla a termination fee of either $26.1 million or $78.2 million under certain circumstances. If the Merger Agreement is terminated, the termination fee we may be required to pay, if any, under the Merger Agreement may require us to use available cash that would have otherwise been available for general corporate purposes. We do not currently anticipate having to pay such a termination fee, and being forced to do so would have a significant adverse effect on our cash position, liquidity and ability to obtaining financing for our operations.  For these and other reasons, a failed Merger could materially and adversely affect our business, operating results or financial condition, which in turn would materially and adversely affect our business, liquidity or financial condition, the price per share of our common stock or our perceived acquisition value.

Risks Related to our Operations

Existing electric utility industry regulations, and changes to regulations, may present technical, regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for our solar energy systems or adversely impact the economics of existing energy contracts.

Federal, state and local government regulations and policies concerning the electric utility industry, utility rate structures, interconnection procedures, internal policies and regulations promulgated by electric utilities, heavily influence the market for

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electricity generation products and services. These regulations and policies often relate to electricity pricing and the interconnection of customer-owned electricity generation. In the United States, governments and utilities continuously modify these regulations and policies. These regulations and policies could deter potential customers from purchasing renewable energy, including solar energy systems. This could result in a significant reduction in demand for our solar energy systems. For example, utilities commonly charge fees to large, industrial customers for disconnecting from the electric grid or for having the capacity to use power from the electric grid for back-up purposes. These fees could increase our customers’ cost to use our systems and make our product offerings less desirable, thereby harming our business, prospects, financial condition and results of operations. In addition, depending on the region, electricity generated by solar energy systems competes most effectively with higher priced peak-hour electricity from the electric grid, rather than the lower average price of electricity. Modifications to the utilities’ peak-hour pricing policies or other electricity rate designs, such as a lower volumetric rate, would require us to lower the price of our solar energy systems to compete with the price of electricity from the electric grid.

Future changes to government or internal utility regulations and policies that favor electric utilities could also reduce our competitiveness, cause a significant reduction in demand for our products and services, and threaten the economics of our existing energy contracts. For example, in October 2015, the Hawaii Public Utilities Commission capped the state’s net metering program at existing levels and net energy metering no longer is available to new customers. In late-December 2015, the Nevada Public Utilities Commission effectively ended the state’s net metering program and net metering no longer is available to new customers. In addition, Nevada’s new rules include significant additional monthly charges on customers who interconnect their solar energy systems and significant reduction in the amount of bill credit for energy generated by their solar energy system that is exported to the grid in excess of electric load used by customers. These new rules have been challenged in Nevada state court and we are pursuing available remedies under state law. As a result of these new rules we ceased our sales and installation operations in Nevada. If these new rules are not overruled legislatively or otherwise, and challenges to these new rules are unsuccessful, demand for solar energy systems and services in Nevada will continue to be significantly impaired.

In other jurisdictions, it has been proposed that additional fees and other charges be assessed on customers purchasing energy from solar energy systems. In particular, the Salt River Project, or SRP, in Arizona has imposed anticompetitive penalties on new solar customers in an attempt to exclude rooftop solar, and in response in March 2015 we filed a lawsuit in federal court in Arizona, asking the court to stop SRP’s anti-competitive behavior. In 2016, other utilities in Arizona proposed changes to their electric rate designs that would result in a significant reduction in the amount of bill credit for energy generated by a customer’s solar energy system that is exported to the grid in excess of electric load used by the customer and/or require us to lower the price of our solar energy systems to compete with the price of electricity from the electric grid. In the event that effective net metering programs are limited in California, Arizona and other key markets or any such fees or charges are imposed, our ability to attract new customers and compete with the price of electricity generated by local utilities in these jurisdictions may be severely limited, and such unaccounted for increases in the fees or charges applicable to existing customer agreements may increase the cost of energy to those customers and result in an increased rate of defaults under our customer agreements. Any of these results could reduce demand for our solar energy systems, harm our business, prospects, financial condition and results of operations.

We rely on net metering and related policies to offer competitive pricing to our customers in some of our key markets.

Forty-one states, Washington, D.C. and Puerto Rico have a regulatory policy known as net energy metering, or net metering, available to new customers. Each of the states where we currently serve customers has adopted a net metering policy except for Texas, where certain individual utilities have adopted net metering or a policy similar to net metering. Net metering typically allows our customers to interconnect their on-site solar energy systems to the utility grid and offset their utility electricity purchases by receiving a bill credit at the utility’s retail rate for energy generated by their solar energy system that is exported to the grid in excess of the electric load used by the customers. At the end of the billing period, the customer simply pays for the net energy used or receives a credit at the retail rate if more energy is produced than consumed. Utilities operating in states without a net metering policy may receive solar electricity that is exported to the grid when there is no simultaneous energy demand by the customer without providing retail compensation to the customer for this generation.

Our ability to sell solar energy systems and the electricity they generate may be adversely impacted by the failure to expand existing limits on the amount of net metering in states that have implemented it, the failure to adopt a net metering policy where it currently is not in place, the imposition of new charges that only or disproportionately impact customers that utilize net metering or reductions in the amount or value of credit that customers receive through net metering. Our ability to sell solar energy systems and the electricity they generate may also be adversely impacted by the unavailability of expedited or simplified interconnection for grid-tied solar energy systems or any limitation on the number of customer interconnections or amount of solar energy that utilities are required to allow in their service territory or some part of the grid. For example, in October 2015, the Hawaii Public Utilities Commission capped the state’s net metering program at existing levels, and in late-December 2015, the Nevada Public Utilities Commission effectively ended the state’s net metering program and net metering is no longer available to new customers. In addition, utilities in some states, such as SRP in Arizona, imposed additional monthly charges on customers who interconnect solar energy

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systems installed on their homes. If such charges are imposed, the cost savings associated with switching to solar energy may be significantly reduced and our ability to attract future customers and compete with traditional utility providers could be impacted. If such charges are imposed on existing customers in a way that adversely impacts the economics of existing energy contracts, we could further see an increase in the default rate of existing energy contracts or we may find it necessary to renegotiate our pricing of affected customers.

Limits on net metering, interconnection of solar energy systems and other operational policies in key markets could limit the number of solar energy systems installed in those markets. For example, California investor-owned utilities are currently required to provide net metering to their customers until the total generating capacity of net metered systems exceeds 5% of the utilities’ “aggregate customer peak demand.” In January 2016, the California Public Utilities Commission, or the CPUC, issued a decision establishing a new net metering program requiring that new customers utilize a time-of-use tariff with no participation cap after the current 5% cap on the existing program is reached. New York is considering a net metering successor program through the Reforming the Energy Vision docket at the state Public Service Commission. If the caps on net metering in key markets are reached and not extended or if the amount or value of credit that customers receive for net metering is significantly reduced or eliminated, future customers will be unable to recognize the current cost savings associated with net metering and existing customers may not recognize the economic benefits that were available at the time their energy contracts were entered into. We rely substantially on net metering when we establish competitive pricing for our prospective customers and the absence of net metering for new customers could greatly limit demand for our solar energy systems and increase the default rate of existing energy contracts.

Regulatory limitations associated with technical considerations may significantly limit our ability to sell electricity from our solar energy systems in certain markets.

Regulatory limits associated with technical considerations may curb our growth in certain key markets. For example, the Federal Energy Regulatory Commission has promulgated small generator interconnection procedures that recommend limiting customer-sited intermittent generation resources, such as our solar energy systems, to a certain percentage of peak load on a given electrical feeder circuit. Similar limits have been adopted by various states and could constrain our ability to market to customers in certain geographic areas where the concentration of solar installations exceeds the limit. For example, Hawaiian electric utilities have adopted certain policies that limit distributed electricity generation in certain geographic areas. While these limits have constrained our growth in certain parts of Hawaii, policy developments in Hawaii generally have allowed distributed electricity generation penetration despite the electric utility-imposed limitations. Furthermore, in certain areas, we benefit from policies that allow for expedited or simplified procedures related to connecting solar energy systems to the power grid. If such procedures are changed or cease to be available, our ability to sell the electricity generated by solar energy systems we install may be adversely impacted. As adoption of solar distributed generation increases, along with the operation of large-scale solar generation in key markets such as California, the amount of solar energy being fed into the power grid will surpass the amount planned for relative to the amount of aggregate demand. Some utilities claim that within several years, solar generation resources may reach a level capable of causing an over-generation situation that could require some solar generation resources to be curtailed to maintain operation of the grid. The adverse effects of such curtailment without compensation could adversely impact our business, results of operations and future growth.

Our business currently depends on the availability of rebates, tax credits and other financial incentives. The expiration, elimination or reduction of these rebates, credits and incentives would adversely impact our business.

U.S. federal, state and local government bodies provide incentives to end users, distributors, system integrators and manufacturers of solar energy systems to promote solar electricity in the form of rebates, tax credits and other financial incentives such as system performance payments, payments for renewable energy credits associated with renewable energy generation and the exclusion of solar energy systems from property tax assessments. We rely on these governmental rebates, tax credits and other financial incentives to lower our cost of capital and to encourage fund investors to invest in our funds. These incentives enable us to lower the price we charge customers for energy and for our solar energy systems. However, these incentives may expire on a particular date, end when the allocated funding is exhausted or be reduced or terminated as solar energy adoption rates increase. These reductions or terminations often occur without warning.

The federal government currently offers a 30% investment tax credit under Section 48(a)(3) and Section 25D of the IRC, or the Federal ITC, for the installation of certain solar power facilities. Additionally, under Section 48, energy storage systems that are installed at the time of the solar power facility and, as required by IRS guidelines, store the energy of the solar power facility, are also eligible for the Federal ITC.

The credit under Section 48(a)(3) has been modified to remain at 30% of qualified expenditures for a commercial solar energy system that commences construction by December 31, 2019, then decline to 26% for systems that commence construction by December 31, 2020 and to 22% for systems that commence construction by December 31, 2021. The credit is scheduled to decline to

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a permanent 10% effective January 1, 2022. Historically, we have utilized the Section 48 commercial credit when available for both our residential and commercial leases and power purchase agreements, based on ownership of the solar energy system.

The credit under Section 25D has been modified to remain 30% of qualified expenditures for a residential solar energy system owned by the homeowner that is placed in service by December 31 2019, then decline to 26% for systems placed in service by December 21, 2020, and to 22% for systems placed in service by December 31, 2021. The credit is scheduled to expire effective January 1, 2022. Loan product customers can currently claim the Section 25D investment tax credit. Customers who purchase their solar energy systems for cash are also eligible to claim the Section 25D investment tax credit.

Department of Treasury regulations detailing how the commence construction requirements can be satisfied are expected during 2016.

Reductions in, eliminations of, or expirations of, governmental incentives could adversely impact our results of operations and ability to compete in our industry by increasing our cost of capital, causing us to increase the prices of our energy and solar energy systems and reducing the size of our addressable market. In addition, this would adversely impact our ability to attract investment partners and to form new financing funds and our ability to offer attractive financing to prospective customers.

Our business depends in part on the regulatory treatment of third-party owned solar energy systems.

Our leases and power purchase agreements are third-party ownership arrangements. Sales of electricity by third parties face regulatory challenges in some states and jurisdictions. Other challenges pertain to whether third-party owned systems qualify for the same levels of rebates or other non-tax incentives available for customer-owned solar energy systems, whether third-party owned systems are eligible at all for these incentives and whether third-party owned systems are eligible for net metering and the associated significant cost savings. In some states and utility territories, third parties that own solar energy systems are limited in the way that they may deliver solar energy to their customers. In jurisdictions such as Arizona, Florida, Kentucky, North Carolina, Oklahoma and the Los Angeles Department of Water and Power service territory, laws have been interpreted to prohibit the sale of electricity pursuant to our standard power purchase agreement. This has led us and other solar energy system providers that utilize third-party ownership arrangements to offer leases rather than power purchase agreements in such jurisdictions. Imposition of such limitations in additional jurisdictions or reductions in, or eliminations of, incentives for third-party owned systems could reduce demand for our systems, adversely impact our access to capital and cause us to increase the price we charge our customers for energy.

We need to enter into additional substantial financing arrangements to facilitate our customers’ access to our solar energy systems, and if this financing is not available to us on acceptable terms, if and when needed, our ability to grow our business would be materially adversely impacted.

Our future success depends on our ability to raise capital from third-party fund investors to help finance the deployment of our residential and commercial solar energy systems. In particular, our strategy is to reduce the cost of capital through these arrangements to improve our margins, offset future reductions in government incentives and maintain the price competitiveness of our solar energy systems. If we are unable to establish new financing funds when needed, or on desirable terms, to enable our customers’ access to our solar energy systems with little or no upfront cost, we may be unable to finance installation of our customers’ systems, or our cost of capital could increase and our liquidity may be significantly constrained, any of which would have a material adverse effect on our business, financial condition and results of operations. If we are unable to establish new financing funds when needed or at all, or on desirable terms, to enable our customers’ access to our solar energy systems with little or no upfront cost, we may encounter difficulty financing installation of our customers’ systems, or our cost of capital could increase, either of which would have a material adverse effect on our business, financial condition and results of operations. To date, we have raised capital sufficient to finance installation of our customers’ solar energy systems from a number of financial institutions and other large companies (including some that may be considered competitors to Tesla).

Our ability to draw on financing commitments is subject to the conditions of the agreements underlying our financing funds, including the mix of types of energy contracts that we contribute and measures of customer credit. If we do not satisfy such conditions due to events related to our business or a specific financing fund, developments in our industry (including related to the Department of Treasury Inspector General investigation) or otherwise, and as a result we are unable to draw on existing commitments, it could have a material adverse effect on our business, liquidity, financial condition and prospects. If any of the financial institutions or large companies that currently invest in our financing funds decide not to invest in future financing funds to finance our solar energy systems due to concerns regarding our proposed acquisition by Tesla, general market conditions, concerns about our business or prospects, the pendency of the Department of Treasury Inspector General investigation or any other reason, or materially change the terms under which they are willing to provide future financing, we will need to identify new financial institutions and companies to invest in our financing funds and negotiate new financing terms.

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In the past, challenges raising new funds have caused us to delay deployment of a substantial number of solar energy systems for which we had already signed leases or power purchase agreements with customers. For example, following the announcement of Tesla’s proposal to acquire SolarCity, we initially experienced some delays in obtaining some financing and entering into new financing arrangements.  In the event that we continue to experience such delays or encounter additional delays and difficulties in raising new financing funds and credit arrangements, our business, liquidity and financial condition may be materially adversely affected. Our future ability to obtain additional financing depends on the continued confidence of banks and other financing sources in our business model and the solar energy industry as a whole. It could also be impacted by the liquidity needs of such financing sources. In addition, attracting future financing could be more difficult or costly to secure if the quality of our customer contracts, as perceived by our fund investors, were to decrease as a result of an increase in customer default rates, lower credit rating requirements for new customers or other factors. Solar energy has yet to achieve broad market acceptance and depends on continued support in the form of performance-based incentives, rebates, tax credits and other incentives from federal, state, local and foreign governments. If this support diminishes, our ability to obtain external financing, on acceptable terms or otherwise could be materially adversely affected. In addition, we face competition for these third-party investor funds. If we are unable to continue to offer a competitive investment profile, we may lose access to these funds or they may only be available on less favorable terms than are available to our competitors. Our current financing sources may be inadequate to support the anticipated growth in our business plans. Moreover, we will require additional capital in the near term, and we continue to look for opportunities to optimize our capital structure. We plan to pursue sources of such capital through various financing transactions and arrangements. Our inability to secure financing could lead to cancellations and could impair our ability to accept new projects and customers. In addition, our borrowing costs could increase, which would have a material adverse effect on our business, financial condition and results of operations.

Servicing our debt requires a significant amount of cash and we may not have sufficient cash flow from our business to pay our substantial debt; other actions we are forced to take to satisfy our obligations under our indebtedness may not be successful, and the announcement of our proposed acquisition by Tesla and our decreased liquidity may impair our ability to respond.

Our total consolidated indebtedness was $3,440.9 million as of September 30, 2016. Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not be able to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing our operations and operating expenses, selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. In addition, our 2.75% Convertible Senior Notes due 2018 issued in November 2013 (the “2018 Notes”), our 1.625% Convertible Senior Notes due 2019 issued in September and October 2014 (the “2019 Notes”) and our Zero Coupon Convertible Senior Notes due 2020 issued in December 2015 (the “2020 Notes” and together with the 2018 Notes and the 2019, the “Notes”), are convertible into shares of common stock, and we may engage in similar issuances of convertible securities in the future to fund our operating and expansion plans.

Our ability to issue additional securities and to refinance our existing indebtedness will depend on the capital markets and our financial condition at such time, and the occurrence of certain events, such as our proposed acquisition by Tesla, concerns regarding our business and liquidity, and general market conditions may make it difficult for us to access the capital markets or to raise funds on acceptable terms. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations or otherwise significantly limit our ability to respond to periods of increased liquidity pressure.

We expect to incur substantially more debt or take other actions which would intensify the risks discussed above.

Our financial strategy is to monetize the customer payments and incentives associated with the deployment of solar energy systems under our long-term energy contracts to finance our operations. We and our subsidiaries expect to incur substantial additional debt in the future, subject to the restrictions contained in our debt instruments, some of which may be secured debt. Incurring such additional debt could have the effect of diminishing our ability to make payments on existing indebtedness, including the Notes, when due and otherwise limiting our ability to respond to periods of increased liquidity pressure. Although certain of our existing credit facilities restrict our ability to incur additional indebtedness, including secured indebtedness, we may be able to obtain amendments and waivers of such restrictions or may not be subject to such restrictions under the terms of any subsequent indebtedness. As the total amount of recourse and non-recourse indebtedness we carry increases, we may be unable to enter into new credit facilities or refinance existing credit facilities and other indebtedness on acceptable terms, any such failure could constrain our liquidity and adversely impact our business, results of operations and future growth.

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We may have trouble refinancing our credit facilities or obtaining new financing for our working capital, equipment financing and other needs in the future or complying with the terms of existing credit facilities. If credit facilities are not available to us on acceptable terms, if and when needed, or if we are unable to comply with their terms, our ability to respond to periods of constrained liquidity and to operate our business in accordance with current operating plans would be adversely impacted.

As of September 30, 2016, we had the ability to draw up to an additional $479.7 million under all of our credit facilities. Our secured revolving credit facility, our primary working capital facility, currently has a maximum size of $500 million (with $398.5 million currently committed from several lenders and an additional $101.5 million subject to further conditions) that matures in December 2017. The working capital facility requires us to comply with certain financial, reporting and other requirements. During the first and second quarters of 2016, the margins of our compliance with these financial covenants decreased, particularly with respect to the amount of unencumbered liquidity. While our lenders have given us waivers of certain covenants we have not satisfied in the past, there is no assurance that the lenders will waive or forbear from exercising their remedies with respect to any future defaults that might occur. In addition, we have amended our secured revolving credit facility to provide that our proposed acquisition by Tesla would not be treated as a “change of control,” and to engage in other transactions such as the issuance of the 2020 Notes and issue Solar Bonds debt securities. While we believe that some of the financial and other covenants are generally more favorable to us following these changes, a breach of our covenants may still occur in the future.

Further, there is no assurance that we will be able to enter into new financing funds and credit facilities on acceptable terms. If we are unable to satisfy financial covenants and other terms under existing or new facilities or obtain associated waivers or forbearance from our lenders or if we are unable to obtain refinancing or new financings for our working capital, equipment and other needs on acceptable terms if and when needed, our business would be adversely affected.

We may not have the ability to raise the funds necessary to repurchase the Notes, including upon a fundamental change, and one of our current credit facilities prohibits us from repurchasing the issued Notes upon a fundamental change.

Although our proposed acquisition by Tesla in an all-stock transaction is not anticipated to result in a “fundamental change,” holders of the Notes will have the right to require us to repurchase their Notes upon the occurrence of a fundamental change at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. However, at such time that we may be required to repurchase the Notes, we may not have sufficient available cash or be able to obtain sufficient financing to allow for repurchase. In addition, one of our existing credit facilities prohibits us from repurchasing the Notes upon a fundamental change. We may enter into agreements in the future that similarly restrict our ability to repurchase the Notes and other securities. Our failure to repurchase the Notes when required would constitute a default which could also result in defaults under other agreements governing our existing or future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof. Our ability to repurchase the Notes may also be limited by law or by regulatory authority. Although the proposed acquisition by Tesla is structured so as not to result in a “fundamental change,” the potential of being required to repurchase the Notes may deter alternative acquirers seeking alternative structures to an acquisition.

We have incurred losses and may be unable to achieve or sustain profitability in the future.

We have incurred net losses in the past, and we had an accumulated deficit of $344.0 million as of September 30, 2016. We may incur net losses from operations as we increase our spending to finance the expansion of our operations, expand our installation, engineering, administrative, sales and marketing staffs, engage in additional product development activities (including module manufacturing and solar-integrated roofing products) and implement internal systems and infrastructure to support our growth. We do not know whether our revenue will grow rapidly enough to absorb these costs, and our limited operating history makes it difficult to assess the extent of these expenses or their impact on our operating results. Our ability to achieve profitability depends on a number of factors, including:

• growing our customer base;

• finding investors willing to invest in our financing funds;

• maintaining and further lowering our cost of capital;

• reducing the cost of components for our solar energy systems; and

• reducing our operating costs by optimizing our design and installation processes and supply chain logistics.

Even if we do achieve profitability, we may be unable to sustain or increase our profitability in the future.

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The Office of the Inspector General of the U.S. Department of Treasury has issued subpoenas to a number of significant participants in the solar energy installation industry, including us. The subpoena we received requires us to deliver certain documents in our possession relating to our participation in the U.S. Treasury grant program. These documents are being delivered to the Office of the Inspector General of the U.S. Department of Treasury, which is investigating the administration and implementation of the U.S. Treasury grant program.

In July 2012, we and other companies that are significant participants in both the solar industry and the cash grant program under Section 1603 of the American Recovery and Reinvestment Act of 2009 received subpoenas from the U.S. Department of Treasury’s Office of the Inspector General to deliver certain documents in our respective possession. In particular, our subpoena requested, among other things, documents dated, created, revised or referred to since January 1, 2007 that relate to our applications for U.S. Treasury grants or communications with certain other solar companies or certain firms that appraise solar energy property for U.S. Treasury grant application purposes. The Inspector General is working with the Civil Division of the U.S. Department of Justice to investigate the administration and implementation of the U.S. Treasury grant program, including possible misrepresentations concerning the fair market value of the solar power systems submitted for grant under that program made in grant applications by solar companies, including us. We intend to cooperate fully with the Inspector General and the Department of Justice and continue to produce information as requested by the Inspector General. We are unable to anticipate when the Inspector General will conclude its review. If, at the conclusion of the investigation, the Inspector General concludes that misrepresentations were made, the Department of Justice could bring a civil action to recover amounts it believes were improperly paid to us. If the Department of Justice were successful in asserting such an action, we could then be required to pay damages and penalties for any funds received based on such misrepresentations (which, in turn, could require us to make indemnity payments to certain of our fund investors). Such consequences could have a material adverse effect on our business, liquidity, financial condition and prospects. Additionally, the period of time necessary to resolve the investigation is uncertain and this matter could require significant management and financial resources that could otherwise be devoted to the operation of our business.

If the Internal Revenue Service or the U.S. Treasury Department makes additional determinations that the fair market value of our solar energy systems is materially lower than what we have claimed, we may have to pay significant amounts to our financing funds or to our fund investors and such determinations could have a material adverse effect on our business, financial condition and prospects.

We and our fund investors claim the Federal ITC or the U.S. Treasury grant in amounts based on the fair market value of our solar energy systems. We have obtained independent appraisals to support the fair market values we report for claiming Federal ITCs and U.S. Treasury grants. The Internal Revenue Service and the U.S. Treasury Department review these fair market values. With respect to U.S. Treasury grants, the U.S. Treasury Department reviews the reported fair market value in determining the amount initially awarded. The Internal Revenue Service and the U.S. Treasury Department may subsequently audit the fair market value and determine that amounts previously awarded must be repaid to the U.S. Treasury Department or that excess awards constitute taxable income for U.S. federal income tax purposes. A small number of our financing funds are undergoing such audits. With respect to Federal ITCs, the Internal Revenue Service may review the fair market value on audit and determine that the tax credits previously claimed must be reduced. If the fair market value is determined to be less than we reported, we may owe our financing fund or fund investors an amount equal to this difference, plus any costs and expenses associated with a challenge to that valuation. We could also be subject to tax liabilities, including interest and penalties.

The U.S. Treasury Department has previously determined to award U.S. Treasury grants for some of our solar energy systems at a materially lower value than we had established in our appraisals. As a result, we have been required to pay our fund investors a true-up payment or contribute additional assets to the associated financing funds. It is possible that the U.S. Treasury Department will make similar determinations in the future. In response to such shortfalls, two of our financing funds filed a lawsuit in the United States Court of Federal Claims to recover the difference between the U.S. Treasury grants they sought and the amounts the U.S. Treasury paid; to the extent that these lawsuits are successful, any recovery would be used to repay us for amounts we previously reimbursed those funds. Our fund investors have contributed to our financing funds at the amounts the U.S. Treasury Department most recently awarded on similarly situated energy systems in order to reduce or eliminate the need for us to subsequently pay those fund investors true-up payments or contribute additional assets to the associated financing funds.

The Internal Revenue Service or the U.S. Treasury Department may object to the fair market value of solar energy systems that we have constructed, or will construct, including any systems for which grants have already been paid, as a result of:

• any pending or future audit,

• the outcome of the Department of Treasury Inspector General investigation, or

• changes in guidelines or otherwise.

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If the Internal Revenue Service or the U.S. Treasury Department were to object to amounts we have claimed as too high of a fair market value on such systems, it could have a material adverse effect on our business, financial condition and prospects. For example, a hypothetical 5% downward adjustment in the fair market value of the $501.2 million of U.S. Department of Treasury grant applications that have been awarded from the beginning of the U.S. Treasury grant program through September 30, 2016 would obligate us to repay up to $25.1 million to our fund investors.

We have historically benefited from the declining cost of solar panels, and our business and financial results may be harmed as a result of increases in the cost of solar panels or tariffs on imported solar panels imposed by the U.S. government.

The declining cost of solar panels and the raw materials necessary to manufacture them has been a key driver in the pricing of our solar energy systems and customer adoption of this form of renewable energy. With an increase of solar panel and raw materials prices, our growth could slow, and our financial results could suffer. Further, the cost of solar panels and raw materials could potentially increase in the future due to a variety of factors which we cannot control, including the imposition of duties, subsidies and/or safeguards or other trade-related costs or penalties or shortages of essential components. Currently, global production of solar panels is at a point of oversupply, and prices are continuing to decline.  As we increase our solar panel manufacturing operations, future price declines may harm our ability to compete and produce solar panels at prices equal to or less than our competitors.

The U.S. government imposes antidumping and countervailing duties on solar cells manufactured in China and/or Taiwan. Based on determinations by the U.S. government, the antidumping and countervailing duty rates range from approximately 33%-255%. Such antidumping and countervailing duties are subject to annual review and may be increased or decreased.

In addition, the U.S. government imposed additional tariffs on solar modules manufactured in China (with solar cells manufactured in other countries) and solar cells manufactured in Taiwan. In early January 2015, the U.S. government announced its affirmative final determinations in both the countervailing duty and antidumping cases against China and in the antidumping case against Taiwan.

Since these tariffs are reflected in the purchase price of the solar panels and cells, these tariffs are a cost associated with purchasing these solar products. In the past, we purchased a significant number of the solar panels used in our solar energy systems from manufacturers that were based in China. We continue to be affected by these tariffs/duties and any changes to them as many of the solar panels we currently purchase contain components, including solar cells, from China and Taiwan.

If additional tariffs are imposed or other negotiated outcomes occur, our ability to purchase these products on competitive terms or to access specialized technologies from countries like China and Taiwan could be limited. Further, foreign suppliers in other countries could also be the subject of these or future trade cases. Any of these events could harm our financial results by requiring us to account for the cost of trade penalties or to purchase and integrate solar panels or other system components from alternative and potentially higher-priced sources.

In September 2014, we acquired Silevo, a solar panel technology and manufacturing company with manufacturing operations in China. In May 2015, we were contacted by the U.S. Customs and Border Protection (CBP) to provide information regarding our importation of solar panels from China. Based upon the information we provided, CBP agreed that our solar panels were not subject to the scope of antidumping and countervailing duty Orders on Crystalline Silicon Photovoltaic Cells/Modules from China (Orders); however, CBP instructed us to obtain a determination from the Department of Commerce (DOC). In June 2016, the DOC issued its final determination finding that Silevo’s solar panels, manufactured in China, are within the scope of the antidumping and countervailing Orders. We are currently challenging that final determination in the Court of International Trade (CIT). However, until this issue is resolved, we have not and do not intend on importing Silevo solar panels produced in China for our U.S. operations without depositing the applicable antidumping and countervailing duties.

Our ability to provide solar energy systems to new customers on an economically viable basis depends on our ability to finance these systems with fund investors who require particular tax and other benefits.

Our solar energy systems have been eligible for Federal ITCs or U.S. Treasury grants, as well as depreciation benefits. We have relied on, and will continue to rely on, financing structures that monetize a substantial portion of those benefits and provide financing for our solar energy systems. With the lapse of the U.S. Treasury grant program, our reliance on these tax-advantaged financing structures has substantially increased. If, for any reason, we were unable to continue to monetize those benefits through these arrangements, we may be unable to provide and maintain solar energy systems for new customers on an economically viable basis.

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The availability of this tax-advantaged financing depends upon many factors, including:

• our ability to compete with other renewable energy companies for the limited number of potential fund investors, each of which has limited funds and limited appetite for the tax benefits associated with these financings;

• the state of financial and credit markets;

• changes in the legal or tax risks associated with these financings;

• non-renewal of these incentives or decreases in the associated benefits; and

• no adverse changes in the regulatory environment affecting the economics of our existing energy contracts.

Under current law, the Federal ITC will be reduced from 30% of the cost of solar energy systems to 26% of the cost of solar energy systems for systems that commence construction by December 31, 2020, and then reduced again to 22% of the cost of solar energy systems for systems that commence construction by December 31, 2021, until the Section 25D investment tax credit expires and the Section 48(a)(3) investment tax credit declines to a permanent 10% effective January 1, 2022.

In addition, U.S. Treasury grants are no longer available for new solar energy systems. Moreover, potential fund investors must remain satisfied that the structures we offer make the tax benefits associated with solar energy systems available to these investors, which depends both on the investors’ assessment of the tax law and the absence of any unfavorable interpretations of that law. Changes in existing law and interpretations by the Internal Revenue Service and the courts could reduce the willingness of fund investors to invest in funds associated with these solar energy system investments. In addition, changes by state energy regulators impairing the economics of existing energy contracts causing an increased risk of default may also reduce the willingness of fund investors to invest. We cannot assure you that this type of financing will be available to us. If, for any reason, we are unable to finance solar energy systems through tax-advantaged structures or if we are unable to realize or monetize depreciation benefits, we may no longer be able to provide solar energy systems to new customers on an economically viable basis. This would have a material adverse effect on our business, financial condition and results of operations.

A material drop in the retail price of utility-generated electricity or electricity from other sources would harm our business, financial condition and results of operations.

We believe that a customer’s decision to buy renewable energy from us is primarily driven by their desire to pay less for electricity. The customer’s decision may also be affected by the cost of other renewable energy sources. Decreases in the retail prices of electricity from the utilities or other renewable energy sources would harm our ability to offer competitive pricing and could harm our business. The price of electricity from utilities could decrease as a result of:

• the construction of a significant number of new power generation plants, including nuclear, coal, natural gas or renewable energy technologies;

• the construction of additional electric transmission and distribution lines;

• a reduction in the price of natural gas, including as a result of new drilling techniques or a relaxation of associated regulatory standards;

• the development of energy conservation technologies and public initiatives to reduce electricity consumption; and

• the development of new renewable energy technologies that provide less expensive energy.

A reduction in utility electricity prices would make the purchase of our solar energy systems or the purchase of energy under our lease and power purchase agreements less economically attractive. In addition, a shift in the timing of peak rates for utility-generated electricity to a time of day when solar energy generation is less efficient could make our solar energy system offerings less competitive and reduce demand for our products and services. If the retail price of energy available from utilities were to decrease for any reason, we would be at a competitive disadvantage. As a result of these or similar events impacting the economics of our customer agreements, we may be unable to attract new customers and we may experience an increased rate of defaults under our existing customer agreements.

A material drop in the retail price of utility-generated electricity would particularly adversely impact our ability to attract commercial customers.

Commercial customers comprise a significant and growing portion of our business, and the commercial market for energy is particularly sensitive to price changes. Typically, commercial customers pay less for energy from utilities than residential customers. Because the price we are able to charge commercial customers is only slightly lower than their current retail rate, any decline in the

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retail rate of energy for commercial entities could have a significant impact on our ability to attract commercial customers. We may be unable to offer solar energy systems in commercial markets that produce electricity at rates that are competitive with the unsubsidized price of retail electricity. If this were to occur, our business would be harmed because we would be at a competitive disadvantage compared to other energy providers and may be unable to attract new commercial customers.

The terms of our agreement with the Research Foundation for the State University of New York, as amended, pertaining to the construction of the Buffalo Riverbend Manufacturing Facility, among other things, require us to comply with a number of covenants during the term of the agreement. Any failure to comply with these covenants could obligate us to pay significant amounts to the Foundation and result in termination of the agreement.

In September 2014, Silevo entered into an amended and restated research and development alliance agreement, as amended from time to time, referred to as the Riverbend Agreement, with the Research Foundation for the State University of New York, referred to as the Foundation, for the construction of an approximately 1 million square foot manufacturing facility capable of producing 1-gigawatt of solar panels annually on an approximately 88.24 acre site located in Buffalo, New York, referred to as the Manufacturing Facility.

Under the terms of the Riverbend Agreement, the Foundation will construct the Manufacturing Facility and install certain utilities and other improvements, with participation by us as to the design and construction of the Manufacturing Facility, and acquire certain manufacturing equipment designated by us to be used in the Manufacturing Facility and other specified items. The Foundation will cover construction costs related to the Manufacturing Facility and certain manufacturing equipment, in each case up to a maximum funding allocation from the State of New York, as well as additional specified items, and we will be responsible for any construction and equipment costs in excess of such amounts. The Foundation will own the Manufacturing Facility and manufacturing equipment it acquires for the project. We are also responsible for the acquisition of certain manufacturing equipment, which equipment we will own. Following completion of the Manufacturing Facility, we will lease the Manufacturing Facility from the Foundation for an initial period of 10 years for $2 per year plus utilities, and the Foundation will grant us the right to use the manufacturing equipment owned by it during the initial lease term at no charge.

In addition to the other obligations under the Riverbend Agreement, we must (i) use our best commercially reasonable efforts to commission the manufacturing equipment within three months of Manufacturing Facility Completion and reach full production output within three months thereafter, (ii) employ personnel for at least 1,460 jobs in Buffalo, New York, with 500 of such jobs for the manufacturing operation at the Manufacturing Facility, for the initial two years of collaboration commencing after Manufacturing Facility Completion, and we have committed to the retention of these jobs for five years, (iii) employ at least 2,000 other personnel in the State of New York for five years after Manufacturing Facility Completion, (iv) employ a total of 5,000 people in the State of New York by the tenth anniversary of Manufacturing Facility Completion, (v) spend or incur approximately $5 billion in combined capital, operational expenses and other costs in the State of New York during the 10 year period following full production, (vi) make reasonable efforts to provide first consideration to New York-based suppliers, (vii) invest and spend in manufacturing operations at a level that ensures competitive product costs for at least five years from full production, and (viii) negotiate in good faith with the Foundation on an exclusive “first opportunity basis” for 120 days before entering into any agreement for additional solar panel manufacturing capacity that Silevo may wish to develop during the term of the agreement. If we are not able to hire the specified number of employees or identify and qualify local vendors and suppliers, we would face the risk of not only failing to meet the performance criteria under the Riverbend Agreement but also not being capable of running the operations related to the Manufacturing Facility. If we fail in any year over the course of the ten-year term to meet these specified investment and job creation obligations, as described above, we would be obligated to pay a “program payment” of $41.2 million to the Foundation in any such year. In addition, we are subject to other events of defaults, including breach of these program payments and certain insolvency events, that would lead to the acceleration of all of the then unpaid program payments by us to the Foundation. Our failure to meet our contractual obligations under the Riverbend Agreement may result in our obligation to pay significant amounts to the Foundation in scheduled program payments, other contractual damages and/or the termination of our lease of the Manufacturing Facility. Any inability on our part to raise the capital necessary to operate the Manufacturing Facility and meet the specified requirements of the Riverbend Agreement during the 10-year period following full production would also cause a material adverse effect upon our business operations and prospects.

Our expectations as to the cost of building the Manufacturing Facility, acquiring manufacturing equipment and supporting our manufacturing operations may prove incorrect, which could subject us to significant expenses to achieve the desired benefits under the Riverbend Agreement. In the event of any cost overruns in construction, commissioning, acquiring manufacturing equipment or operating the Manufacturing Facility, we may incur additional capital and operating expenses that would have a material adverse effect upon our business operations and prospects.

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Our projections as to the time and expense necessary to build the Manufacturing Facility and acquire the manufacturing equipment may prove incorrect and subject us to significant delay and additional expense.

We currently anticipate commencing solar module manufacturing sooner than previously expected, in the second quarter of 2017 with photovoltaic cells sourced from external vendors.  We are working with the State of New York to finalize orders of manufacturing equipment related to solar module production.

We have recently identified potential modifications to the manufacturing equipment and factory layout related to the solar cell manufacturing line that may offer the ability to increase the production capacity of the Manufacturing Facility above 1 gigawatt per year. We believe that the short delay in finalizing the overall configuration will help maintain the long-term competitiveness of the Manufacturing Facility. However, this is an aggressive schedule and we may experience additional delays.

There are a number of risks which may delay the completion of the Manufacturing Facility and commencement of operations, including:

• delays in placing orders for necessary equipment with long lead times;

• failure or delay in obtaining necessary permits, licenses or other governmental support or approvals;

• the time necessary for the construction of related utility and infrastructure improvements;

• unforeseen engineering problems;

• the inability to identify and hire qualified construction and other workers on a timely basis or at all;

• construction delays and contractor performance shortfalls;

• work stoppages or labor disruptions, including efforts by our employees to enter into collective bargaining agreements;

• availability of raw materials and components from suppliers and any delivery delays in such materials or components;

• delays resulting from environmental conditions, and any design changes or additions necessary to remediate prior environmental hazards at the site; and

• adverse weather conditions, such as an extreme winter, and natural disasters.

Any delay in the completion of the Manufacturing Facility and commencement of our operations will result in us incurring additional expenses and could negatively affect our operating results, financial condition and prospects.

We may not be able to achieve anticipated production yields, efficiencies and quality, which would harm our production volume and increase our costs.

The Manufacturing Facility is expected to be the largest of its kind in the Western Hemisphere. Successfully achieving volume manufacturing of solar cells at our projected yield, efficiency and quality levels will be difficult, and we have little experience in manufacturing at these high volumes. As we expand our manufacturing capacity and qualify additional suppliers to support our projected production volume, we may initially experience lower yields than anticipated. Any deviations in our manufacturing processes may result in significant decreases in production yield, efficiency and quality, and in some cases, may cause production to be suspended or yield no output. If we cannot achieve planned yields over time, our production costs could increase and we may be unable to produce a sufficient amount of our solar panels to meet our installation needs.

In addition, our Triex technology is novel and involves proprietary and complex manufacturing techniques, which may result in undetected errors or defects in the solar cells produced. Any defects in our solar panels delivered to customers could cause us to incur significant warranty, non-warranty and re-engineering costs, divert the attention of our engineering personnel, result in indemnification liability to our fund investors and significantly affect our customer relations and business reputation.

If we are unable to achieve our cost projections or otherwise control the costs associated with operating our manufacturing business, our financial condition and operating results will suffer.

As a result of initial production levels that under-utilize the Manufacturing Facility as we ramp up production, we anticipate that our initial production costs (on a per watt basis) will be relatively high. As we work to achieve full utilization of the Manufacturing Facility, we anticipate that the volume of production will reduce our production costs (on a per watt basis). There is no guarantee that we will be able to achieve planned cost targets, some of which will be beyond our control. For example, the costs of our raw materials and components, such as polysilicon and polysilicon wafers, could increase due to shortages as global demand for these products

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increases. Any failure to achieve our per watt cost projections would cause our financial condition and operating results to suffer. In addition, the pricing of our solar energy systems may become less competitive if our competitors are able to reduce their manufacturing and installation costs faster than we are able to.

Competition in the solar industry is intense, and future success and innovation will require additional research and development expenses.

The Manufacturing Facility is designed to be a high-technology volume-manufacturing facility. In constructing the Manufacturing Facility, including local utility infrastructure upgrades and procurement of manufacturing equipment, the State of New York is making a significant investment in the Buffalo-area economy. However, the solar panel manufacturing market is characterized by continually changing technology that requires improved features, such as increased efficiency, higher power output and enhanced aesthetics. In the time it takes us to achieve volume production of our Triex technology, it is possible that additional innovations in solar technology could result in our technology and the Manufacturing Facility becoming less competitive or obsolete, which could harm our costs and adversely affect our business operations. This risk requires us to continuously focus on research and development, and will require significant on-going research and development expenses. If we cannot continually improve the efficiency and power output of our solar panels and reduce the cost of production, we could become less competitive in the market and our financial condition and operating results could be adversely affected.

A failure to hire, train and retain a sufficient number of skilled employees in current and new geographies would impair our ability to achieve our growth and cost efficiency plans.

To support our growth, we need to hire, train, deploy, manage and retain a substantial number of skilled employees. Competition for qualified personnel in our industry is increasing, particularly for sales professional, skilled installers and other personnel involved in the installation of solar energy systems. In particular, we need to continue to expand and optimize our sales infrastructure to grow our customer base and our business, and we plan to expand our direct sales force. Identifying, recruiting and training qualified personnel requires significant time, expense and attention. It can take several months before a new salesperson is fully trained and productive, particularly in new geographies. If we are unable to hire, develop and retain talented sales personnel or if our sales personnel are unable to achieve desired productivity levels, we may not be able to realize the expected benefits of this investment, grow our business, and we may be unable to achieve anticipated improvements in sales cost efficiencies.

To complete current and future customer projects and to continue to grow our customer base, we need to hire a large number of installers in the relevant markets. We also compete with the homebuilding and construction industries for skilled labor. As these industries seek to hire additional workers, our cost of labor may increase. The unionization of our labor force could also increase our labor costs. Shortages of skilled labor could significantly delay a project or otherwise increase our costs. Because our profit on a particular installation is based in part on assumptions as to the cost of such project (including customer acquisition, installation and on-going maintenance and monitoring), cost overruns, delays or other execution issues may cause us to not achieve our expected margins or cover our costs for that project. In addition, because we are headquartered in the San Francisco Bay Area, we compete for a limited pool of technical and engineering resources that requires us to pay wages that are competitive with relatively high regional standards for employees in these fields.

Any significant failure to successfully execute our growth and expansion plans would materially impair our operations, reputation, business and financial results.

Rising interest rates could adversely impact our business.

Changes in interest rates could have an adverse impact on our business by increasing our cost of capital. For example:

• rising interest rates would increase our cost of capital; and

• rising interest rates may negatively impact our ability to secure financing on favorable terms to facilitate our customers’ purchase of our solar energy systems or energy generated by our solar energy systems.

The majority of our cash flows to date have been from solar energy systems under lease and power purchase agreements that have been monetized under various financing fund structures. One of the components of this monetization is the present value of the payment streams from our customers who enter into these leases and power purchase agreements. If the rate of return required by the fund investor rises as a result of a rise in interest rates, it will reduce the present value of the customer payment stream and consequently reduce the total value that we are able to derive from monetizing the payment stream. Interest rates are at historically low levels, partially as a result of intervention by the U.S. Federal Reserve. The U.S. Federal Reserve has taken actions to taper its

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intervention, and should these actions continue, it is likely that interest rates will rise, which could cause our cost of capital to increase and impede our ability to secure financing. As a result, our business and financial condition could be harmed.

In addition, we evaluate our business with a long-term view based on cash flows relating to our customer agreements, third-party financing funds and other arrangements. To date, we have taken limited actions to mitigate the risk of rising future interest rates. In 2014, we initiated a strategy of purchasing limited long-term derivative securities to economically hedge the effect of future interest rate increases. We may continue to engage in such transactions and the cost and outcomes of such transactions are currently not known.

We are expanding our international activities and customers, and plan to continue these efforts, which subject us to additional business risks, including compliance with international and trade regulations.

Our long-term strategic plans include international expansion and we intend to sell our solar energy products and services in international markets. For example, in August 2015, we acquired Ilioss to expand our operations into Mexico.

Risks inherent to our international operations include the following:

• multiple, conflicting and changing laws and regulations, including energy regulations, export and import restrictions, tax laws and regulations, environmental regulations, labor laws and other government requirements, approvals, permits and licenses;

• trade barriers and trade remedies such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our products and make us less competitive in some countries;

• potentially adverse tax consequences associated with our permanent establishment of operations in more countries, including repatriation of non-U.S. earnings taxed at rates lower than the U.S. statutory effective tax rate;

• difficulties and costs in recruiting and retaining individuals skilled in international business operations;

• changes in general economic and political conditions in the countries where we operate, including changes in government incentives relating to power generation and solar electricity, and availability of capital at competitive rates;

• political and economic instability, including wars, acts of terrorism, political unrest, boycotts, curtailments of trade and other business restrictions;

• the inability to work successfully with third parties with local expertise to co-develop international projects;

• relatively uncertain legal systems, including potentially limited protection for intellectual property rights and laws, changes in the governmental incentives we rely on, regulations and policies which impose additional restrictions on the ability of foreign companies to conduct business in certain countries or otherwise place them at a competitive disadvantage in relation to domestic companies;

• international business practices that may conflict with CBP or other legal requirements enforced by partner government agencies;

• financial risks, such as longer sales and payment cycles and greater difficulty collecting accounts receivable; and

• fluctuations in currency exchange rates relative to the U.S. dollar; for example, some of the manufacturing equipment that we have ordered for the Riverbend Manufacturing Facility has been purchased from international vendors under contracts denominated in local currencies, a significant adverse change in the currency exchange rates may significantly increase the costs of the equipment to us.

Doing business in foreign markets requires us to be able to respond to rapid changes in market, legal, and political conditions in these countries. The success of our business will depend in part on our ability to succeed in differing legal, regulatory, economic, social and political environments. We recognize that we must understand the risks and opportunities relating to trade remedies so that we can develop and implement policies and strategies that will be effective in each location where we do business.

We are subject to the Foreign Corrupt Practices Act of 1977, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, and other anti-bribery and anti-money laundering laws in countries in which we conduct activities. We face significant risks if we fail to comply with the FCPA and other anticorruption laws that prohibit companies and their employees and third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to foreign government officials, political parties, and private-sector recipients for the purpose of obtaining or retaining business. In many foreign countries, particularly in countries with developing economies, it may be a local custom that

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businesses engage in practices that are prohibited by the FCPA or other applicable laws and regulations. We may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. Any violation of the FCPA, other applicable anticorruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from U.S. government contracting, which could have a material adverse effect on our business, financial condition, cash flows and reputation. In addition, responding to any enforcement action may result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.

Our vertically integrated and our continued international expansion efforts may subject us to additional regulatory risks that may impact our operating results. For example, we will have to ensure we are in compliance with any bilateral and/or multilateral free trade agreements in addition to understanding trade remedies that directly affect those products and components involved in the construction of our solar energy systems, which are procured from vendors and manufacturers outside of the United States. Some of these components, particularly solar panels and mounting hardware made from aluminum extrusions, may be subject to antidumping and countervailing duties.

In March 2015, we conducted an internal review of our supply chain and import practices for our subsidiary, Zep Solar, which included a review of the classification of products manufactured overseas. We identified instances in which some of the products and system components imported into the United States were misclassified. As a result of these misclassifications, we discovered that two legacy products might be subject to antidumping and countervailing duties. In September 2015, we submitted a voluntary disclosure to the CBP identifying these and other potential misclassifications, cooperating fully with CBP to finalize this review. In April 2016, we perfected our disclosure tendering $5.3 million to CBP for import duties owed by our acquired subsidiary relating to items imported since August 2012. For items potentially subject to antidumping or countervailing duties, CBP may require us to obtain a determination from the DOC.

In the event that we fail to or are unable to comply with the legal requirements in the jurisdictions in which we operate, we may be subject to significant fines, penalties and other amounts which could materially harm our operations and financial results.

We may not realize the anticipated benefits of past or future acquisitions, and integration of these acquisitions may disrupt our business and management and cause dilution to our stockholders.

In August 2015, we acquired Iliosson S.A. de C.V., a commercial and industrial solar project developer in Mexico. In September 2014, we acquired Silevo, LLC, a solar panel technology and manufacturing company. In 2013, we acquired Zep Solar, Common Assets, certain assets of Paramount Solar and completed other smaller acquisitions. In the future, we may acquire additional companies, project pipelines, products or technologies, including additional photovoltaics companies, or enter into joint ventures or other strategic initiatives. Our ability as an organization to integrate acquisitions is unproven. We may not realize the anticipated benefits of our acquisitions or any other future acquisition or the acquisition may be viewed negatively by customers, financial markets or investors.

Any acquisition has numerous risks, including the following:

• difficulty in assimilating the operations and personnel of the acquired company;

• difficulty in effectively integrating the acquired technologies or products with our current products and technologies;

• difficulty in maintaining controls, procedures and policies during the transition and integration;

• disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues;

• difficulty integrating the acquired company’s accounting, management information and other administrative systems;

• inability to retain key technical and managerial personnel of the acquired business;

• inability to retain key customers, vendors, and other business partners of the acquired business;

• inability to achieve the financial and strategic goals for the acquired and combined businesses;

• incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results;

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• failure of due diligence processes to identify significant issues with product quality, legal and financial liabilities, among other things;

• inability to assert that internal controls over financial reporting are effective; and

• inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions.

In connection with our acquisitions of Silevo, Zep Solar and Paramount Solar, we issued approximately 10.4 million shares of our common stock. We may issue additional common stock with an aggregate value of up to $100.0 million, subject to adjustments and as determined in connection with the merger agreement, upon the timely achievement of future earnout related milestones. In addition, we typically offer additional equity compensation to continuing employees of these businesses. If we are unable to successfully integrate these businesses and technologies or are unable to otherwise achieve the anticipated benefits of these acquisitions, the related issuances of our securities may be highly dilutive to our existing stockholders.

If we are unable to maintain effective internal controls over financial reporting and disclosure controls and procedures, or if material weaknesses are discovered in future periods, the accuracy and timeliness of our financial and operating reporting may be adversely affected, and confidence in our operations and disclosures may be lost.

In connection with the audit of our consolidated financial statements for the year ended December 31, 2013, we identified four material weaknesses in our internal control over financial reporting relating to (i) the costing of our solar system installations, (ii) accounting for and classification of redeemable noncontrolling interests, (iii) segregation of incompatible duties at our lease administrator and our controls over the data received from our administrator, and (iv) certain areas of our financial statement close process. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. These material weaknesses resulted from separate control deficiencies, as well as our misinterpretation of certain accounting standards, and resulted in the restatement of our consolidated financial statements as of and for the years ended December 31, 2012, 2011, 2010 and 2009 and for certain interim periods in 2012 and 2013.

As a result of significant efforts by us and our Audit Committee, we have successfully remediated these material weaknesses and improved our internal control over financial reporting.

In connection with this quarterly report on Form 10-Q, our management has performed an evaluation of our internal control over financial reporting as of September 30, 2016 pursuant to Section 404 of the Sarbanes-Oxley Act, and has concluded that our internal control over financial reporting and our disclosure controls and procedures were effective as of September 30, 2016.

If we are not able to maintain effective internal control over financial reporting and disclosure controls and procedures, or if additional material weaknesses are discovered in future periods, a risk that is significantly increased in light of the complexity of our business and investment funds, we may be unable to accurately and timely report our financial position, results of operations, cash flows or key operating metrics, which could result in additional late filings of our annual and quarterly reports under the Exchange Act, additional restatements of our consolidated financial statements or other corrective disclosures, a decline in our stock price, suspension or delisting of our common stock by The NASDAQ Stock Market, an inability to access the capital and commercial lending markets, defaults under our secured revolving credit facility and other agreements, or other material adverse effects on our business, reputation, results of operations, financial condition or liquidity.

Updates or changes to our IT systems affecting our customer billing and control environment may disrupt our operations.

As we continue to evaluate and implement upgrades and changes to our IT systems affecting our customer billing and control environment, some of which are significant, we may encounter unexpected challenges, outages and other issues. Upgrades involve replacing existing systems with successor systems, making changes to existing systems, or cost-effectively acquiring new systems with new functionality. We are aware of inherent risks associated with replacing these systems, including accurately capturing data and system disruptions, and believe we are taking appropriate action to mitigate the risks through testing, training, and staging implementation, as well as ensuring appropriate commercial contracts are in place with third-party vendors supplying or supporting our IT initiatives. However, there can be no assurances that we will successfully launch these systems as planned or that they will occur without disruptions to our operations. IT system disruptions, if not anticipated and appropriately mitigated, or failure to successfully implement new or upgraded systems, could have a material adverse effect on our results of operations, and our ability to timely and accurately report our financial and operating results.

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We are not currently regulated as a utility under applicable law, but we may be subject to regulation as a utility in the future.

Federal law and most state laws do not currently regulate us as a utility. As a result, we are not subject to the various federal and state standards, restrictions and regulatory requirements applicable to U.S. utilities. In the United States, we obtain federal and state regulatory exemptions by establishing “Qualifying Facility” status with the Federal Energy Regulatory Commission for all of our qualifying solar energy projects. In Canada, we also are generally subject to the regulations of the relevant energy regulatory agencies applicable to all producers of electricity under the relevant feed-in tariff regulations (including the feed-in tariff rates), however we are not currently subject to regulation as a utility. Our business strategy includes the continued development of larger solar energy systems in the future for our commercial and government customers, which has the potential to impact our regulatory position. Any local, state, federal or foreign regulations could place significant restrictions on our ability to operate our business and execute our business plan by prohibiting or otherwise restricting our sale of electricity. If we were subject to the same state, federal or foreign regulatory authorities as utilities in the United States or if new regulatory bodies were established to oversee our business in the United States or in foreign markets, then our operating costs would materially increase.

In our lease pass-through financing funds, there is a one-time reset of the lease payments, and we may be obligated, in connection with the resetting of the lease payments at true up, to refund lease prepayments or to contribute additional assets to the extent the system sizes, costs and timing are not consistent with the initial lease payment model.

In our lease pass-through financing funds, the models used to calculate the lease prepayments will be updated for each fund at a fixed date occurring after placement in service of all solar energy systems in a given fund or on an agreed upon date (typically within the first year of the applicable lease term) to reflect certain specified conditions as they exist at such date, including the ultimate system size of the equipment that was leased, how much it cost and when it went into service. As a result of such a true up, the lease payments are resized and we may be obligated to refund the investor’s lease prepayments or to contribute additional assets to the fund. Any significant refunds or capital contributions that we may be required to make could adversely affect our financial condition.

We have guaranteed a minimum return to be received by an investor in one of our financing funds and could be adversely affected if we are required to make any payments under this guarantee.

We have guaranteed payments to the investor in one of our financing funds to compensate for payments that the investor would be required to make to a certain third party as a result of the investor not achieving a specified minimum internal rate of return in this fund, assessed annually. Although the investor has achieved the specified minimum internal rate of return to date, the amounts of any potential future payments under this guarantee depend on the amounts and timing of future distributions to the investor from the fund and the tax benefits that accrue to the investor from the fund’s activities. Because of uncertainties associated with estimating the timing and amounts of future distributions to the investor, we cannot determine the potential maximum future payments that we could have to make under this guarantee. We may agree to similar guarantees in the future if market conditions require it. Any significant payments that we may be required to make under our guarantees could adversely affect our financial condition.

It is difficult to evaluate our business and prospects due to our limited operating history.

Since our formation in 2006, we have focused our efforts primarily on the sales, financing, engineering, installation and monitoring of solar energy systems for residential, commercial and government customers. We launched our pilot commercial and residential energy storage products and services in late 2013, and revenue attributable to this line of business has not been material compared to revenue attributable to our solar energy systems. We may be unsuccessful in significantly broadening our customer base through installation of solar energy systems within our current markets or in new markets we may enter. Additionally, we cannot assure you that we will be successful in generating substantial revenue from our current energy-related products and services or from any additional products and services we may introduce in the future. Our limited operating history, combined with the rapidly evolving and competitive nature of our industry, may not provide an adequate basis for you to evaluate our operating and financing results and business prospects. In addition, we only have limited insight into emerging trends that may adversely impact our business, prospects and operating results. As a result, our limited operating history may impair our ability to accurately forecast our future performance.

We face competition from both traditional energy companies and renewable energy companies.

The solar energy and renewable energy industries are both highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete with large utilities. We believe that our primary competitors are the traditional utilities that supply energy to our potential customers. We compete with these utilities primarily based on price, predictability of price and the ease by which customers can switch to electricity generated by our solar energy systems. If we cannot offer compelling value to our customers based on these factors, then our business will not grow. Utilities generally have substantially greater financial, technical, operational and other resources than we do. As a result of their greater size, these competitors may be able

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to devote more resources to the research, development, promotion and sale of their products or respond more quickly to evolving industry standards and changes in market conditions than we can. Utilities could also offer other value-added products and services that could help them compete with us even if the cost of electricity they offer is higher than ours. In addition, a majority of utilities’ sources of electricity is non-solar, which may allow utilities to sell electricity more cheaply than electricity generated by our solar energy systems.

We also compete with solar companies in the downstream value chain of solar energy. For example, we face competition from purely finance driven organizations which then subcontract out the installation of solar energy systems, from installation businesses that seek financing from external parties, from large construction companies and utilities and increasingly from sophisticated electrical and roofing companies. Some of these competitors specialize in either the residential or commercial solar energy markets, and some may provide energy at lower costs than we do. Many of our competitors also have significant brand name recognition and have extensive knowledge of our target markets. Competitors have increasingly begun vertically integrating their operations to offer comprehensive products and services offerings similar to ours, and, recently, we have seen increased consolidation of competitors in our primary markets. For us to remain competitive, we must distinguish ourselves from our competitors by offering an integrated approach that successfully competes with each level of products and services offered by our competitors at various points in the value chain. As consolidation in our markets increases and more of our competitors develop an integrated approach similar to ours, our marketplace differentiation may suffer.

We also face competition in the energy-related products and services markets and we expect to face competition in additional markets as we introduce new products and services. As the solar industry grows and evolves, we will also face new competitors who are not currently in the market. Our failure to adapt to changing market conditions and to compete successfully with existing and new competitors could limit our growth and could have a material adverse effect on our business and prospects.

Projects for our significant commercial and government customers involve concentrated project risks that may cause significant changes in our financial results.

During any given financial reporting period, we typically have ongoing significant projects for commercial and governmental customers that represent a significant portion of our potential financial results for such period. For example, Walmart is a significant customer for which we have installed a substantial number of solar energy systems. These larger projects create concentrated operating and financial risks. The effect of recognizing revenue or other financial measures on the sale of a larger project, or the failure to recognize revenue or other financial measures as anticipated in a given reporting period because a project is not yet completed under applicable accounting rules by period end, may materially impact our quarterly or annual financial results. In addition, if construction, warranty or operational issues arise on a larger project, or if the timing of such projects unexpectedly shifts for other reasons, such issues could have a material impact on our financial results. If we are unable to successfully manage these significant projects in multiple markets, including our related internal processes and external construction management, or if we are unable to continue to attract such significant customers and projects in the future, our financial results could be harmed.

We depend on a limited number of suppliers of solar panels and other system components to adequately meet anticipated demand for our solar energy systems. Any shortage, delay or component price change from these suppliers could result in sales and installation delays, cancellations and loss of our ability to effectively compete.

We purchase solar panels, inverters and other system components from a limited number of suppliers, which makes us susceptible to quality issues, shortages and price changes. If we fail to develop, maintain and expand our relationships with existing or new suppliers, we may be unable to adequately meet anticipated demand for our solar energy systems or we may only be able to offer our systems at higher costs or after delays. If one or more of the suppliers that we rely upon to meet anticipated demand ceases or reduces production, we may be unable to satisfy this demand due to an inability to quickly identify alternate suppliers or to qualify alternative products on commercially reasonable terms. In particular, there are a limited number of inverter suppliers. Once we design a system for use with a particular inverter, if that type of inverter is not readily available at an anticipated price, we may incur additional delay and expense to redesign the system.

In addition, production of solar panels involves the use of numerous raw materials and components. Several of these have experienced periods of limited availability, particularly polysilicon, as well as indium, cadmium telluride, aluminum and copper. The manufacturing infrastructure for some of these raw materials and components has a long lead time, requires significant capital investment and relies on the continued availability of key commodity materials, potentially resulting in an inability to meet demand for these components. The prices for these raw materials and components fluctuate depending on global market conditions and demand and we may experience rapid increases in costs or sustained periods of limited supplies.

In addition to purchasing from New York-based suppliers, we anticipate that we will need to purchase supplies globally in order to meet the anticipated production output of the Manufacturing Facility. Despite our efforts to obtain raw materials and components

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from multiple sources whenever possible, many of our suppliers may be single-source suppliers of certain components. If we are not able to maintain long-term supply agreements or identify and qualify multiple sources for raw materials and components, our access to supplies at satisfactory prices, volumes and quality levels may be harmed. We may also experience delivery delays of raw materials and components from suppliers in various global locations. In addition, we may be unable to establish alternate supply relationships or obtain or engineer replacement components in the short term, or at all, at favorable prices or costs. Qualifying alternate suppliers or developing our own replacements for certain components may be time-consuming and costly and may force us to make modifications to our product designs.

Our need to purchase supplies globally in order to meet the anticipated production output of the Manufacturing Facility and our continued international expansion further subjects us to risks relating to currency fluctuations. Any decline in the exchange rate of the U.S. dollar compared to the functional currency of our component suppliers could increase our component prices. In addition, the state of the financial markets could limit our suppliers’ ability to raise capital if they are required to expand their production to meet our needs or satisfy their operating capital requirements. Changes in economic and business conditions, wars, governmental changes and other factors beyond our control or which we do not presently anticipate, could also affect our suppliers’ solvency and ability to deliver components to us on a timely basis. Any of these shortages, delays or price changes could limit our growth, cause cancellations or adversely affect our profitability and ability to effectively complete in the markets in which we operate.

Our operating results may fluctuate from quarter to quarter, which could make our future performance difficult to predict and could cause our operating results for a particular period to fall below expectations, resulting in a severe decline in the price of our common stock.

Our quarterly operating results are difficult to predict and may fluctuate significantly in the future. We have experienced seasonal and quarterly fluctuations in the past. However, given that we are an early-stage public company operating in a rapidly growing industry, those fluctuations may be masked by our recent growth rates and thus may not be readily apparent from our historical operating results. As such, our past quarterly operating results may not be good indicators of future performance.

In addition to the other risks described in this “Risk Factors” section, the following factors could cause our operating results to fluctuate:

• expiration or initiation of any rebates or incentives;

• significant fluctuations in customer demand for our products and services;

• our ability to complete installations in a timely manner due to market conditions resulting in inconsistently available financing;

• our ability to continue to expand our operations, and the amount and timing of expenditures related to this expansion;

• actual or anticipated changes in our growth rate relative to our competitors;

• announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments;

• changes in our pricing policies or terms or changes in those of our competitors, including utilities; and

• actual or anticipated developments in our competitors’ businesses or the competitive landscape.

For these or other reasons, the results of any prior quarterly or annual periods should not be relied upon as indications of our future performance. In addition, our actual revenue, key operating metrics and other operating results in future quarters may fall short of the expectations of investors and financial analysts, which could have a severe adverse effect on the trading price of our common stock.

We act as the licensed general contractor for our customers and are subject to risks associated with construction, cost overruns, delays, regulatory compliance and other contingencies, any of which could have a material adverse effect on our business and results of operations.

We are a licensed contractor or use licensed subcontractors in every community we service, and we are responsible for every customer installation. For our residential projects, we are the general contractor, construction manager and installer. For our commercial projects, we are the general contractor and construction manager, and we have historically relied on licensed subcontractors to install these commercial systems. We may be liable to customers for any damage we cause to their home or facility and belongings or property during the installation of our systems. For example, we frequently penetrate our customers’ roofs during the installation process and may incur liability for the failure to adequately weatherproof such penetrations following the completion

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of construction. In addition, shortages of skilled subcontractor labor for our commercial projects could significantly delay a project or otherwise increase our costs. Because our profit on a particular installation is based in part on assumptions as to the cost of such project, cost overruns, delays or other execution issues may cause us to not achieve our expected margins or not cover our costs for that project.

In addition, the installation of solar energy systems and energy-storage systems requiring building modifications are subject to oversight and regulation in accordance with national, state and local laws and ordinances relating to building codes, safety, utility interconnection and metering, environmental protection and related matters. It is difficult and costly to track the requirements of every individual authority having jurisdiction over our installations and to design solar energy systems to comply with these varying standards. Any new government regulations or utility policies pertaining to our systems may result in significant additional expenses to us and our customers and, as a result, could cause a significant reduction in demand for our systems.

Compliance with occupational safety and health requirements and best practices can be costly, and non-compliance with such requirements may result in potentially significant monetary penalties, operational delays and adverse publicity.

The installation of solar energy systems requires our employees to work at heights with complicated and potentially dangerous electrical systems. The evaluation and installation of our energy-related products requires our employees to work in locations that may contain potentially dangerous levels of asbestos, lead or mold. We also maintain a fleet of thousands of vehicles that our employees use in the course of their work. There is substantial risk of serious injury or death if proper safety procedures are not followed. Our operations are subject to regulation under the U.S. Occupational Safety and Health Act, or OSHA, and equivalent state laws. Changes to OSHA requirements, or stricter interpretation or enforcement of existing laws or regulations, could result in increased costs. If we fail to comply with applicable OSHA regulations, even if no work-related serious injury or death occurs, we may be subject to civil or criminal enforcement and be required to pay substantial penalties, incur significant capital expenditures or suspend or limit operations. In the past, we have had workplace accidents and received citations from OSHA regulators for alleged safety violations, resulting in fines and operational delays for certain projects. Any such accidents, citations, violations, injuries or failure to comply with industry best practices may subject us to adverse publicity, damage our reputation and competitive position and adversely affect our business.

Problems with product quality or performance may cause us to incur warranty expenses and performance guarantee expenses, may lower the residual value of our solar energy systems and may damage our market reputation and adversely affect our financial performance and valuation.

Our solar energy system warranties are lengthy. Customers who buy energy from us under leases or power purchase agreements are covered by warranties equal to the length of the term of these agreements—typically 20 years for leases and power purchase agreements and 30 years for MyPower loan agreements. Depending on the state where they live, customers who purchase our solar energy systems for cash are covered by a warranty up to 10 years in duration. We also make extended warranties available at an additional cost to customers who purchase our solar energy systems for cash. In addition, we provide a pass-through of the inverter and panel manufacturers’ warranties to our customers, which generally range from 5 to 25 years. One of these third-party manufacturers could cease operations and no longer honor these warranties, leaving us to fulfill these potential obligations to our customers. For example, Evergreen Solar, Inc., one of our former solar panel suppliers, filed for bankruptcy in August 2011. Further, we provide a performance guarantee with our leased solar energy systems that compensates a customer on an annual basis if their system does not meet the electricity production guarantees set forth in their lease.

Because of the limited operating history of our solar energy systems, we have been required to make assumptions and apply judgments regarding a number of factors, including our anticipated rate of warranty claims and the durability, performance and reliability of our solar energy systems. We have made these assumptions based on the historic performance of similar systems or on accelerated life cycle testing. Our assumptions could prove to be materially different from the actual performance of our systems, causing us to incur substantial expense to repair or replace defective solar energy systems in the future or to compensate customers for systems that do not meet their production guarantees. Product failures or operational deficiencies would also reduce our revenue from power purchase agreements because they are dependent on system production. Any widespread product failures or operating deficiencies may damage our market reputation and adversely impact our financial results.

In addition, we amortize costs of our solar energy systems over 30 years, which typically exceeds the period of the component warranties and the corresponding payment streams from our operating lease arrangements with our customers. In addition, we typically bear the cost of removing the solar energy systems at the end of the lease term. Furthermore, it is difficult to predict how future environmental regulations may affect the costs associated with the removal, disposal and recycling of our solar energy systems. Consequently, if the residual value of the systems is less than we expect at the end of the lease, after giving effect to any associated removal and redeployment costs, we may be required to accelerate all or some of the remaining unamortized expenses. This could materially impair our future operating results.

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Compliance with environmental regulations can be expensive, and non-compliance with these regulations may result in adverse publicity and potentially significant monetary damages and fines.

We are required to comply with all foreign, federal, state and local laws and regulations regarding pollution control and protection of the environment. In addition, under some statutes and regulations, a government agency, or other parties, may seek recovery and response costs from operators of property where releases of hazardous substances have occurred or are ongoing, even if the operator was not responsible for such release and not otherwise at fault. While we and the State of New York have performed environmental diligence relating to the construction of the Manufacturing Facility, the site where the Manufacturing Facility is to be located is on the former site of Republic Steel and has been considered a “brownfield.”

The operation of our manufacturing and research and development facilities, including in Hangzhou, China, Buffalo, New York and Fremont, California, involves the use of hazardous chemicals and materials which may subject us to liabilities for any releases or other failures to comply with applicable laws, regulations and policies. Any failure by us to maintain effective controls regarding the use of hazardous materials or to obtain and maintain all necessary permits could subject us to potentially significant fines and damages or interrupt our operations.

Product liability claims against us could result in adverse publicity and potentially significant monetary damages.

We would be exposed to product liability claims if one of our solar energy systems or other products injured someone. Because solar energy systems and many of our other current and anticipated products are electricity-producing devices, it is possible that consumers could be injured by our products for many reasons, including product malfunctions, defects or improper installation. We rely on our general liability insurance to cover product liability claims and have not obtained separate product liability insurance. Any product liability claim we face could be expensive to defend and could divert management’s attention. Any product liability claims against us and any resulting adverse outcomes could result in potentially significant monetary damages that could require us to make significant payments, as well as subject us to adverse publicity, damage our reputation and competitive position or adversely affect sales of our systems and other products.

Damage to our brand and reputation would harm our business and results of operations.

We depend significantly on our reputation for high-quality products and services, best-in-class engineering, exceptional customer service and the brand name “SolarCity” to attract new customers and grow our business. Our brand and reputation could be significantly impaired if we fail to continue to deliver our solar energy systems and our other energy products and services within the planned timelines, if our products and services do not perform as anticipated or if we damage any of our customers’ properties or cancel projects. In addition, if we fail to deliver, or fail to continue to deliver, high-quality products and services to our customers through our long-term relationships, our customers will be less likely to purchase future products and services from us, which is a key strategy to achieve our desired growth. In addition to our other marketing efforts, we also depend greatly on referrals from existing customers for our growth. Therefore, our inability to meet or exceed our current customers’ expectations would harm our reputation and growth through referrals.

If we fail to manage our recent and future growth effectively, we may be unable to execute our business plan, maintain high levels of customer service or adequately address competitive challenges.

We have experienced significant growth in recent periods and we intend to continue to expand our business significantly within existing markets and in a number of new foreign and domestic locations in the future. This growth has placed, and any future growth may place, a significant strain on our management, operational and financial infrastructure. In particular, we will be required to expand, train and manage our growing employee base. Our management will also be required to maintain and expand our relationships with customers, suppliers and other third parties and attract new customers and suppliers, as well as to manage multiple geographic locations and regulatory requirements.

In addition, our current and planned operations, personnel, systems and procedures might be inadequate to support our future growth and may require us to make additional unanticipated investments in our infrastructure. Our success and ability to further scale our business will depend in part on our ability to manage these changes in a cost-effective and efficient manner. If we cannot manage our growth, we may be unable to take advantage of market opportunities, execute our business strategies or respond to competitive pressures. This could also result in declines in quality or customer satisfaction, increased costs, difficulties in introducing new products and services or other operational difficulties. Any failure to effectively manage growth could adversely impact our business and reputation.

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We may not be successful in leveraging our customer base to grow our business through sales of other energy products and services.

To date, we have derived substantially all of our revenue and cash receipts from the sale of solar energy systems and the sale of energy under our long-term customer agreements. While we continue to develop and offer innovative energy-related products and services, such as our Demand Logic and residential energy storage products, customer demand for these offerings may be more limited than we anticipate. We may not be successful in completing development of these products as a result of research and development difficulties, technical issues, regulatory issues, availability of third-party products or other reasons. Even if we are able to offer these or other additional products and services, we may not successfully generate meaningful customer demand to make these offerings viable. Our growth will be limited if we fail to deliver these additional products and services, if the costs associated with bringing these additional products and services to market is greater than we anticipate, if customer demand for these offerings is smaller than we anticipate or if our strategies to implement new sales approaches and acquire new customers are not successful.

Our growth depends in part on the success of our strategic relationships with third parties.

A key component of our growth strategy is to develop or expand our strategic relationships with third parties. For example, in an effort to generate new customers, we are investing resources in establishing relationships with leaders in other industries, such as trusted retailers and commercial homebuilders. Identifying partners and negotiating relationships requires significant time and resources. Our ability to grow our business could be impaired if we are unsuccessful in establishing or maintaining our relationships with these third parties. Even if we are able to establish these relationships, we may not be able to execute our goal of leveraging these relationships to meaningfully expand our business and customer base. This would limit our growth potential and our opportunities to generate significant additional revenue or cash receipts.

The loss of one or more members of our senior management or key employees may adversely affect our ability to implement our strategy.

We depend on our experienced management team and the loss of one or more key executives could have a negative impact on our business. In particular, we are dependent on the services of our chief executive officer and co-founder, Lyndon R. Rive, and our chief technology officer and co-founder, Peter J. Rive. We also depend on our ability to retain and motivate key employees and attract qualified new employees. Our founders and our key employees are not bound by employment agreements for any specific term, and as a result, we may be unable to replace key members of our management team and key employees in the event we lose their services. Integrating new employees into our management team could prove disruptive to our operations, require substantial resources and management attention and ultimately prove unsuccessful. An inability to attract and retain sufficient managerial personnel who have critical industry experience and relationships could limit or delay our strategic efforts, which could have a material adverse effect on our business, financial condition and results of operations.

The production and installation of solar energy systems depends heavily on suitable meteorological conditions. If meteorological conditions are unexpectedly unfavorable, the electricity production from our solar energy systems may be substantially below our expectations and our ability to timely deploy new systems may be adversely impacted.

The energy produced and revenue and cash receipts generated by a solar energy system depend on suitable solar and weather conditions, both of which are beyond our control. Furthermore, components of our systems, such as panels and inverters, could be damaged by severe weather, such as hailstorms or tornadoes. In these circumstances, we generally would be obligated to bear the expense of repairing or replacing the damaged solar energy systems that we own. Sustained unfavorable weather also could unexpectedly delay our installation of solar energy systems, leading to increased expenses and decreased revenue and cash receipts in the relevant periods. For example, certain states in which we operate, such as New York and Massachusetts, commonly experience inclement winter weather. Weather patterns could change, making it harder to predict the average annual amount of sunlight striking each location where we install. This could make our solar energy systems less economical overall or make individual systems less economical. Any of these events or conditions could harm our business, financial condition and results of operations.

Our business may be harmed if we fail to properly protect our intellectual property.

We believe that the success of our business depends in part on our proprietary technology, including our hardware, software, information, processes and know-how. We rely on many forms of intellectual property rights to secure our technology, including trade secrets and patents. We cannot be certain that we have adequately protected or will be able to adequately protect our technology, that our competitors will not be able to use our existing technology or develop similar technology independently, that any patents or other intellectual property rights held by us will be broad enough to protect our technology or that foreign intellectual property laws will adequately protect us. Moreover, our patents and other intellectual property rights may not provide us with a competitive advantage.

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Despite our precautions, it may be possible for third parties to obtain and use our intellectual property without our consent. Reverse engineering, unauthorized use or other misappropriation of our proprietary technology could enable third parties to benefit from our technology without compensating us for doing so. In addition, our proprietary technology may not be adequately protected because:

• our systems may be subject to intrusions, security breaches or targeted thefts of our trade secrets;

• people may not be deterred from misappropriating our technology despite the existence of laws or contracts prohibiting it;

• unauthorized use of our intellectual property may be difficult to detect and expensive and time-consuming to remedy, and any remedies obtained may be inadequate to restore protection of our intellectual property;

• the laws of other countries in which we manufacture our solar products, such as China and other countries in the Asia/Pacific region, may offer little or no protection for our proprietary technology; and

• reports we may be required to file in connection with any government-sponsored research contracts may disclose some of our sensitive confidential information because they are or will be generally available to the public.

Any such activities or any other inabilities to adequately protect our proprietary rights could harm our ability to compete, to generate revenue and to grow our business.

Claims of patent and other intellectual property infringement are complex and their outcomes are uncertain, and the costs associated with such claims may be high and could harm our business.

Our success in operating our business, including operation of the Manufacturing Facility, depends largely on our ability to use and develop our proprietary technologies and manufacturing know-how without infringing or misappropriating the intellectual property rights of third parties, many of whom have robust patent portfolios, greater capital resources and decades of manufacturing experience. In addition, as we have gained greater visibility and market exposure as a public company, we face a higher risk of being the subject of intellectual property infringement claims. Any claim of infringement by a third party, even those without merit, could cause us to incur substantial legal costs defending against the claim and could distract our management and technical personnel from our business. In particular, the validity and scope of claims relating to photovoltaic technology patents may be highly uncertain because they involve complex scientific, legal and factual considerations and analysis. Furthermore, we could be subject to a judgment or voluntarily enter into a settlement, either of which could require us to pay substantial damages. A judgment or settlement could also include an injunction, a court order or other agreement that could prevent us from operating the Manufacturing Facility and producing our products. In addition, we might elect or be required to seek a license for the use of third-party intellectual property, which may not be available on commercially reasonable terms or at all, or if available, the payments under such license may harm our operating results and financial condition. Alternatively, we may be required to develop non-infringing technology, redesign our products or alter our manufacturing techniques and processes, each of which could require significant research and development efforts and expenses and may ultimately not be successful. Any of these events could seriously harm our business, operating results and financial condition.

We are subject to legal proceedings and regulatory inquiries and we may be named in additional claims or legal proceedings or become involved in regulatory inquiries, all of which are costly, distracting to our core business and could result in an unfavorable outcome or a material adverse effect on our business, financial condition, results of operations or the trading price for our securities.

We are involved in claims, legal proceedings (such as the class action and derivative lawsuits filed against us) and receive inquiries from government and regulatory agencies (such as the pending Treasury and Department of Labor investigations) that arise from the normal business activities. In addition, from time to time, third parties may assert claims against us. We evaluate all claims, lawsuits and investigations with respect to their potential merits, our potential defenses and counter claims, settlement or litigation potential and the expected effect on us. In the event that we are involved in significant disputes or are the subject of a formal action by a regulatory agency, we could be exposed to costly and time-consuming legal proceedings that could result in any number of outcomes. Although outcomes of such actions vary, any claims, proceedings or regulatory actions initiated by or against us, whether successful or not, could result in expensive costs of defense, costly damage awards, injunctive relief, increased costs of business, fines or orders to change certain business practices, significant dedication of management time, diversion of significant operational resources or some other harm to our business. In any of these cases, our business, financial condition, results of operations or the trading price for our securities could be negatively impacted.

We make a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. In our opinion, resolution of all current matters is not expected to have a material adverse impact on our business, financial

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condition or results of operations. However, depending on the nature and timing of any such controversy, an unfavorable resolution of a matter could materially affect our future business, financial condition or results of operations, or all of the foregoing, in a particular quarter.

We typically bear the risk of loss and the cost of maintenance and repair on solar systems that are owned or leased by our fund investors.

We typically bear the risk of loss and are generally obligated to cover the cost of maintenance and repair on any solar systems that we sell or lease to our fund investors. At the time we sell or lease a solar system to a fund investor, we enter into a maintenance services agreement where we agree to operate and maintain the system for a fixed fee that is calculated to cover our future expected maintenance costs. If our solar systems require an above-average amount of repairs or if the cost of repairing systems were higher than our estimate, we would need to perform such repairs without additional compensation. If our solar systems, a majority of which are located in California, are damaged in the event of a natural disaster beyond our control, losses could be excluded, such as earthquake damage, or exceed insurance policy limits, and we could incur unforeseen costs that could harm our business and financial condition. We may also incur significant costs for taking other actions in preparation for, or in reaction to, such events. We purchase Property and Business Interruption insurance with industry standard coverage and limits approved by an investor’s third-party insurance advisors to hedge against such risk, but such coverage may not cover our losses.

Any unauthorized disclosure or theft of personal customer information we gather, store and use could harm our reputation and subject us to claims or litigation.

We receive, store and use personal information of our customers, including names, addresses, e-mail addresses, credit information and other housing and energy use information. Unauthorized disclosure of such personal information could harm our business, whether through breach of our systems by an unauthorized party, employee theft or misuse, or otherwise. If we were subject to an inadvertent disclosure of such personal information or if a third party were to gain unauthorized access to customer personal information in our possession, our operations could be seriously disrupted and we could be subject to claims or litigation arising from damages suffered by our customers. In addition, we could incur significant costs in complying with the multitude of federal, state and local laws regarding the unauthorized disclosure of personal customer information. Finally, any perceived or actual unauthorized disclosure of such information could harm our reputation, substantially impair our ability to attract and retain customers and have an adverse impact on our business.

Any failure to comply with laws and regulations relating to our interactions with current or prospective residential customers could result in negative publicity, claims, investigations, and litigation, and adversely affect our financial performance.

As the country’s largest residential solar installer, we rely on our ability to engage in transactions with residential customers. In doing so, we must comply with numerous federal, state and local laws and regulations that govern matters relating to our interactions with residential consumers, including those pertaining to privacy and data security, consumer financial and credit transactions, home improvement contracts, warranties and door-to-door solicitation. These laws and regulations change frequently and are interpreted by various federal, state and local regulatory bodies. Changes in these laws or regulations or their interpretation could dramatically affect how and where we conduct our business, acquire customers, and manage and use information we collect from and about current and prospective customers and the costs associated therewith.

Even though we may believe that we maintain effective compliance with all such laws and regulations, we may still be subject to claims, proceedings, litigation and investigations by private parties and regulatory authorities, and could be subject to substantial fines and negative publicity, each of which may materially and adversely affect our business and operations. For example, a putative class action was filed against us in November 2015 alleging violations of the federal Telephone Consumer Protection Act. We have incurred, and will continue to incur, significant expenses to comply with such laws and regulations, and increased regulation of matters relating to our interactions with residential consumers could require us to modify our operations and incur significant additional expenses, which could have an adverse effect on our business, financial condition and results of operations.

In addition, we are subject to federal, state and international laws relating to the collection, use, retention, security and transfer of personal information of our customers. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between one company and its subsidiaries. Several jurisdictions have passed new laws in this area, and other jurisdictions are considering imposing additional restrictions. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing requirements may cause us to incur costs or require us to change our business practices. Any failure by us, our affiliates or other parties with whom we do business to comply with a posted privacy policies or with other federal, state or international privacy-related or data protection laws and regulations could result in proceedings against us by governmental entities or others, which could have a detrimental effect on our business, results of operations and financial condition.

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Risks Related to the Ownership of Our Common Stock

Our stock price has been and may continue to be volatile, and the value of your investment could decline.

The trading price of our common stock has been volatile since our initial public offering. Since shares of our common stock were sold in our initial public offering in December 2012 at a price of $8.00 per share, the reported high and low sales prices of our common stock on The NASDAQ Stock Market has ranged from $9.20 to $88.35 per share, through November 8, 2016. The market price of our common stock may fluctuate widely in response to many risk factors listed in this section and others beyond our control, including:

• the pendency, delay or failure of our proposed acquisition by Tesla;

• changes in laws or regulations applicable to our industry, products or services, including the effects of tariffs and other anti-competitive actions;

• additions or departures of key personnel;

• actual or anticipated changes in expectations regarding our performance by investors or securities analysts;

• price and volume fluctuations in the overall stock market;

• volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable;

• share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;

• addition or loss of significant customers;

• our ability to protect our intellectual property and other proprietary rights;

• sales of our common stock by us or our stockholders, including as a result of recent, proposed or new offerings and acquisitions;

• litigation involving us, our industry or both;

• major catastrophic events; and

• general economic and market conditions and trends.

Further, in recent years the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. In addition, the stock prices of many renewable energy companies have experienced wide fluctuations that have often been unrelated to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, government shutdowns, interest rate changes or international currency fluctuations, may cause the market price of our common stock to decline. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

Our stock price could decline due to the large number of outstanding shares of our common stock eligible for future sale and issuance.

Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could cause the market price of our common stock to decline. These sales could also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. Such sales may occur in connection with our acquisitions, such as our issuance of approximately 10.4 million shares in the aggregate for our acquisitions of Silevo, Zep Solar and certain assets of Paramount Solar. We may issue additional common stock with an aggregate value of up to $100.0 million, subject to adjustments and as determined in connection with the merger agreement, upon the timely achievement of future earnout related milestones. In addition, holders of a substantial amount of our common stock are entitled to rights with respect to registration of these shares under the Securities Act pursuant to an investors’ rights agreement. If these holders of our common stock, by exercising their registration rights, sell a large number of shares, they could adversely affect the market price for our common stock. If we file a registration statement for the purposes of selling additional shares to raise capital and are required to include shares held by these holders pursuant to the exercise of their registration rights, our ability to raise capital may be impaired.

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Insiders have substantial control over us, which could limit your ability to influence the outcome of key transactions, including a change of control.

As of September 30, 2016, our directors and executive officers and their affiliates, in the aggregate, owned approximately 32% of the outstanding shares of our common stock. As a result, these stockholders, if acting together, would be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. They may have interests that differ from yours and may vote in a way with which you disagree and that may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might affect the market price of our common stock.

Provisions in our certificate of incorporation and bylaws and under Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Our certificate of incorporation and bylaws contain provisions that could depress the trading price of our common stock by discouraging, delaying or preventing a change of control of our company or changes in our management that the stockholders of our company may believe advantageous. These provisions include:

• establishing a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;

• authorizing “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt;

• limiting the ability of stockholders to call a special stockholder meeting;

• limiting the ability of stockholders to act by written consent;

• authorizing the board of directors to make, alter or repeal our bylaws; and

• establishing advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

If securities or industry analysts cease publishing research or reports about us, our business or our market, or if they adversely change their recommendations regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock, to some extent, depends on the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who cover us adversely change their recommendation regarding our stock, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who covers us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

We do not intend to pay dividends for the foreseeable future.

We have never declared or paid any dividends on our common stock. We intend to retain any earnings to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the future. As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases.

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ITEM 6. EXHIBITS

The documents listed in the Exhibit Index of this quarterly report on Form 10-Q are incorporated by reference or are filed with this quarterly report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 9, 2016

SOLARCITY CORPORATION
By:	/s/ Lyndon R. Rive
	Lyndon R. Rive
	Chief Executive Officer
	(Principal Executive Officer)

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EXHIBIT INDEX

Exhibit Number	Exhibit Description
2.3	Agreement and Plan of Merger, dated as of July 31, 2016, by and among SolarCity Corporation, Tesla Motors, Inc. and D Subsidiary, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on August 1, 2016).
3.2a	First Amendment to the Amended and Restated Bylaws of SolarCity Corporation, effective as of July 29, 2016 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 1, 2016).
10.5c	Renewal Notice , between RAR2-Clearview Business Park Owner, LLC, as successor-in-interest to Locon San Mateo, LLC, and the Registrant, dated as of July 13, 2016.
10.19t**	Required Group Agent Action No. 21, dated as of July 29, 2016, by and among by and among Megalodon Solar, LLC (an indirect wholly-owned subsidiary of the Registrant), as borrower, the Registrant, as limited guarantor, Bank of America, N.A., as collateral agent and administrative agent, and the group agents party thereto.
10.19u**	Required Group Agent Action No. 22, dated as of September 8, 2016, by and among by and among Megalodon Solar, LLC (an indirect wholly-owned subsidiary of the Registrant), as borrower, the Registrant, as limited guarantor, Bank of America, N.A., as collateral agent and administrative agent, and the group agents party thereto.
10.19v	Required Group Agent Action No. 23, dated as of September 15, 2016, by and among by and among Megalodon Solar, LLC (an indirect wholly-owned subsidiary of the Registrant), as borrower, the Registrant, as limited guarantor, Bank of America, N.A., as collateral agent and administrative agent, and the group agents party thereto.
10.19w**	Required Group Agent Action No. 24, dated as of September 20, 2016, by and among by and among Megalodon Solar, LLC (an indirect wholly-owned subsidiary of the Registrant), as borrower, the Registrant, as limited guarantor, Bank of America, N.A., as collateral agent and administrative agent, and the group agents party thereto.
10.19x**	Administrative Agent Action No. 25, dated as of September 30, 2016, by and among by and among Megalodon Solar, LLC (an indirect wholly-owned subsidiary of the Registrant), as borrower, the Registrant, as limited guarantor, Bank of America, N.A., as collateral agent and administrative agent, and the group agents party thereto.
10.19y**	Required Group Agent Action No. 26, dated as of October 5, 2016, by and among by and among Megalodon Solar, LLC (an indirect wholly-owned subsidiary of the Registrant), as borrower, the Registrant, as limited guarantor, Bank of America, N.A., as collateral agent and administrative agent, and the group agents party thereto.
10.23	Voting and Support Agreement, dated as of July 31, 2016, by and among SolarCity Corporation, Elon Musk and the Elon Musk Revocable Trust dated July 22, 2003 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 1, 2016).
10.24*	Barnard Transition Agreement dated July 29, 2016 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 3, 2016).
31.1	Certification of the Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
32.1†	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2†	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

82

Exhibit Number	Exhibit Description
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Schema Linkbase Document.
101.CAL	XBRL Taxonomy Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Definition Linkbase Document.
101.LAB	XBRL Taxonomy Labels Linkbase Document.
101.PRE	XBRL Taxonomy Presentation Linkbase Document.

* Indicates a management contract or compensatory plan or arrangement.

** Registrant has omitted portions of the relevant exhibit and filed such exhibit separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 406 under the Securities Act of 1933, as amended.

† The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of SolarCity Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

83

EX-10.5C

Exhibit 10.5c

July 13 2016

VIA OVERNIGHT COURIER

RAR2-Clearview Business Park Owner, LLC

c/o Deutsche Asset & Wealth Manager

Attention:  Asset Manager

101 California Street, Suite 2600

San Francisco, CA 94111

Re: 3055 Clearview Way, San Mateo, California (the “Building”): Lease dated as of July 30, 2016 (the “Original Lease”) by and between RAR2-Clearview Business Park Owner, LLC, as successor-in-interest to Locon San Mateo, LLC (“Landlord”) and SolarCity Corporation (“Tenant”), as amended by First Amendment to Lease dated as of November 15, 2010 (the Original Lease, as so amended, the “Lease”) - - Renewal Notice

Ladies and Gentlemen:

This letter is written with respect to the above-referenced Lease; capitalized terms used but not defined herein shall have the meaning given them in the Lease.

This letter constitutes Tenant’s “Renewal Notice” pursuant to Section 36(A)(1) of the Original Lease.  Tenant hereby notifies Landlord of Tenant’s exercise of the Renewal Option.  Pursuant to Section 26(2)(a) of the Original Lease, Landlord is to advise Tenant no later than thirty (30) days after Tenant’s delivery of this Renewal Notice (i.e., on or before August 12, 2016) of Landlord’s good faith determination of the new Base Rent for the Renewal Term.

Please contact the undersigned at your earliest convenience if you have any questions or comments.

	Sincerely, SOLARCITY CORPORATION
	By: /s/ Warrick Taylor
	Its: VP, Infrastructure
cc: Jonathan M. Kennedy John Grady Michael McMillan

EX-10.19T

Exhibit 10.19t

CONFIDENTIAL TREATMENT REQUESTED

Certain portions of this document have been omitted pursuant to a request for Confidential Treatment and, where applicable, have been marked with “[***]” to indicate where omissions have been made. The confidential material has been filed separately with the Securities and Exchange Commission.

REQUIRED GROUP AGENT ACTION NO. 21

This REQUIRED GROUP AGENT ACTION NO. 21 (this “Action”), dated as of July 29, 2016 (the “Effective Date”), is entered into by and among Megalodon Solar, LLC, a Delaware limited liability company (“Borrower”), Bank of America, N.A., as the Administrative Agent (“Administrative Agent”), the Collateral Agent for the Secured Parties (“Collateral Agent”) and each of Bank of America, N.A. (“BA Agent”), Credit Suisse AG, New York Branch (“CS Agent”), Deutsche Bank AG, New York Branch (“DB Agent”), ING Capital LLC (“ING Agent”), KeyBank National Association (“KB Agent”), National Bank of Arizona (“NBAZ Agent”), Silicon Valley Bank (“SVB Agent”) and CIT Bank, N.A. (“CIT Agent” and collectively with BA Agent, CS Agent, DB Agent, ING Agent, KB Agent, NBAZ Agent and SVB Agent, the “Group Agents”), as Group Agents party to the Loan Agreement, dated as of May 4, 2015 (as amended, the “Loan Agreement”), by and among the Borrower, Administrative Agent, Collateral Agent, the Group Agents, the Lenders and the other parties from time to time party thereto.  As used in this Action, capitalized terms which are not defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

A.The Borrower has requested the Required Group Agents to provide their consent to the addition and inclusion to the Loan Agreement and the other Financing Documents of (the “Subject Fund Transactions”):  [***] (“[***]”), as a Subject Fund, and [***] (“[***]”), as a Borrower Subsidiary Party (collectively, [***] and [***], the “New Entities”);

B.The Required Group Agents are willing to provide their consent to the Subject Fund Transactions on the terms and subject to the conditions set forth in this Action; and

C.The Borrower, the Required Group Agents, the Administrative Agent and the Collateral Agent desire to amend the Loan Agreement as set forth herein.

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the conditions set forth herein, the parties hereto hereby agree as follows:

Section 1.Amendments to the Loan Agreement.  Subject to the prior satisfaction of the conditions precedent described in Section 3 hereof, the Loan Agreement will be amended as follows (clauses (a) – (c) below, collectively, the “Loan Agreement Amendments”):

(a)Appendix 1 of the Loan Agreement shall be amended and restated as set forth in Exhibit 1 attached hereto;

(b)Appendix 4 of the Loan Agreement shall be amended and restated as set forth in Exhibit 2 attached hereto; and

(c)Appendix 5 of the Loan Agreement shall be amended and restated as set forth in Exhibit 3 attached hereto.

Required Group Agent Action No. 21

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Section 2.Consents.  Subject to the prior satisfaction of the conditions precedent described in Section 3 hereof:

(a)the Required Group Agents consent to the Loan Agreement Amendments, with acknowledgement by each of the Administrative Agent and the Collateral Agent; and

(b)the Administrative Agent and the Required Group Agents consent to the Subject Fund Transactions pursuant to and in accordance with Section 2.10(a) of the Loan Agreement.

Section 3.Conditions Precedent. This Action shall be effective upon the satisfaction of the following conditions precedent:

(a)The Administrative Agent shall have received counterparts of this Action, executed and delivered by each of the other parties hereto.

(b)The Administrative Agent shall have received a certificate of the Borrower dated as of the Effective Date signed by a Responsible Officer of the Borrower (i) making the Tax Equity Representations with respect to [***] and (ii) certifying that each representation and warranty of the Borrower contained in Article 4 of the Loan Agreement is true and correct in all material respects as of the Effective Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date) other than those representations and warranties that are modified by materiality by their own terms, which shall be true and correct in all respects as of the Effective Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all respects as of such earlier date).

(c)The Borrower shall have delivered or caused to be delivered to the Administrative Agent a Tax Equity Required Consent from [***] and [***] in connection with the Subject Fund Transactions.

(d)Each of the Administrative Agent and each Group Agent shall have received an opinion, dated no earlier than the Effective Date, of Wilson Sonsini Goodrich & Rosati, counsel to the Loan Parties, the Borrower Subsidiary Parties and SolarCity, in form and substance reasonably acceptable to the Administrative Agent, the Collateral Agent and the Majority Group Agents, with respect to the Subject Fund Transactions.

(e)Each of the Administrative Agent and each Group Agent shall have received opinions, dated no earlier than the Effective Date, of Proskauer Rose LLP, special bankruptcy counsel to the Loan Parties, the Borrower Subsidiary Parties and SolarCity, each in form and substance reasonably acceptable to the Administrative Agent, the Collateral Agent and the Majority Group Agents, with respect to the Subject Fund Transactions.

(f)The Administrative Agent and the Collateral Agent shall have received (i) searches of UCC filings in the jurisdiction of incorporation or formation, as applicable, of each of the New Entities and the Borrower and each jurisdiction where a filing would need to be made in order to perfect the security interest of the Collateral Agent (for the benefit of the Secured Parties) in the Collateral in respect of the New Entities (the “New Collateral”), (ii) copies of the financing statements on file in such jurisdictions and evidence that no liens exist on the New Collateral pledged by [***] and the Borrower other than Permitted Liens of the type set forth in clauses (b), (c) or (d) of the definition thereof and (iii) copies of tax lien, judgment and bankruptcy searches in such jurisdictions.

2Required Group Agent Action No. 21

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

(g)The Collateral Agent shall have received all documentation in connection with the New Collateral, including (i) a Joinder Agreement in the form attached as Exhibit C to the Security Agreement, executed by each of [***], the Collateral Agent and the Borrower, dated as of the Effective Date, (ii) a Joinder Agreement in the form attached as Exhibit B-1 to the CADA, executed by each of [***], the Collateral Agent and the Borrower, dated as of the Effective Date, (iii) a Joinder Agreement in the form attached as Exhibit C to the Borrower Subsidiary Party Security Agreement, executed by each of [***] and the Collateral Agent, dated as of the Effective Date and (iv) any other data, documentation, analysis or report reasonably requested by the Administrative Agent with respect to the New Entities.

(h) (i) The UCC financing statements relating to the New Collateral shall have been duly filed in each office and in each jurisdiction where required in order to create and perfect the first priority Lien and security interest set forth in the Collateral Documents (as supplemented and as such term is defined in the Loan Agreement, as amended) and (ii) the Borrower shall have properly delivered or caused to be delivered to the Collateral Agent all New Collateral in which the Lien and security interest described above is permitted to be perfected by possession or control, including delivery of original certificates representing all issued and outstanding Equity Interests in [***] and the pledged interests in [***] pursuant to the Borrower Subsidiary Party Security Agreement, along with the applicable blank transfer powers and proxies.

(i)Each of the other conditions precedent as set forth in Section 3.4 of the Loan Agreement shall have been satisfied with respect to the Subject Fund Transactions.

(j)The Administrative Agent shall have received for its own account all costs and expenses described in Section 6 of this Action, for which invoices have been presented in connection herewith.

Section 4.Reference to and Effect on Financing Documents. Each of the Loan Agreement and the other Financing Documents is and shall remain unchanged and in full force and effect, and, except as expressly set forth herein, nothing contained in this Action shall, by implication or otherwise, limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Administrative Agent or any of the other Secured Parties, or shall alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in each of the Loan Agreement and any other Financing Document. This Action shall also constitute a “Financing Document” for all purposes of the Loan Agreement and the other Financing Documents.

Section 5.Incorporation by Reference.  Sections 10.5 (Entire Agreement), 10.6 (Governing Law), 10.7 (Severability), 10.8 (Headings), 10.11 (Waiver of Jury Trial), 10.12 (Consent to Jurisdiction), 10.14 (Successors and Assigns) and 10.16 (Binding Effect; Counterparts) of the Loan Agreement are hereby incorporated by reference herein, mutatis mutandis.

Section 6.Expenses. The Borrower agrees to reimburse the Administrative Agent in accordance with Section 10.4(b) of the Loan Agreement for its reasonable and documented out-of-pocket expenses in connection with this Action, including reasonable and documented fees and out-of-pocket expenses of legal counsel.

3Required Group Agent Action No. 21

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Section 7.Construction. The rules of interpretation specified in Section 1.2 of the Loan Agreement also apply to this Action, mutatis mutandis.

[Signature Pages Follow]

4Required Group Agent Action No. 21

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the parties hereto have caused this Action to be duly executed by their respective authorized officers as of the day and year first written above.

MEGALODON SOLAR, LLC,

as Borrower

By: /s/Lyndon Rive

Name:Lyndon Rive

Title:President

[Signature Page to Required Group Agent Action No. 21]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

BANK OF AMERICA, N.A.,

as a Group Agent

By: /s/Claudia Correa Welch

Name:Claudia Correa Welch

Title:Director

[Signature Page to Required Group Agent Action No. 21]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

CIT BANK, N.A.,

as a Group Agent

By: /s/Rhys Marsh

Name:Rhys Marsh

Title:Director

[Signature Page to Required Group Agent Action No. 21]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

CREDIT SUISSE AG, NEW YORK BRANCH,

as a Group Agent

By: /s/Oliver Nisenson

Name:Oliver Nisenson

Title:Director

By: /s/Erin McCutcheon

Name:Erin McCutcheon

Title:Vice President

[Signature Page to Required Group Agent Action No. 21]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

ING CAPITAL, LLC,

as a Group Agent

By: /s/Erwin Thomet

Name:Erwin Thomet

Title:Managing Director

By: /s/Thomas Cantello

Name:Thomas Cantello

Title:Director

[Signature Page to Required Group Agent Action No. 21]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

KEYBANK NATIONAL ASSOCIATION,

as a Group Agent

By: /s/Benjamin C. Cooper

Name:Benjamin C. Cooper

Title:Vice President

[Signature Page to Required Group Agent Action No. 21]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

SILICON VALLEY BANK,

as a Group Agent

By: /s/Mona Maitra

Name:Mona Maitra

Title:Vice President

[Signature Page to Required Group Agent Action No. 21]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EXHIBIT 1

APPENDIX 1

ADVANCE RATE

The “Advance Rate” means

(i) For a Subject Fund the following percentages:

Subject Fund	Advance Rate	Cash Sweep Fund or Non-Cash Sweep Fund
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]

(ii) In respect of any Potential New Fund that becomes a Subject Fund, a percentage as shall be determined in accordance with this Appendix 1 following the completion of due diligence by the Administrative Agent, which by way of example shall be:

Advance Rate

For each Cash Sweep Fund, Non-Cash Sweep Fund and Other Structure, the Advance Rate will be the percentage determined for each System in such Subject Fund based on the “Type of Fund,” in accordance with the table below.

Type of Fund

Exhibit 1

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Cash Sweep Fund (baseline: CB (see below))	[***]
Non Cash Sweep Fund ([***]% baseline)	[***]%
Other Non-Financed Structure ([***]% baseline)	[***]%
Other Financed Structure	[***]%

“CB” or “Cash Sweep Fund Baseline” means, the lesser of (a) [***]% and (b) the percentage obtained by dividing (i) the maximum amount of debt that can be fully supported by Net Cash Flows distributable to the Managing Member(s) of such Subject Fund assuming interest is accruing at the Default Rate when applying the ITC Downside Case to that particular Subject Fund and only that Subject Fund by (ii) the Discounted Solar Asset Balance of such Subject Fund.

“ITC Downside Case” means a scenario in which a 30% reduction in fair market value occurs in the first month that a Subject Fund is included in the Available Borrowing Base and the Aggregate Advance Model is adjusted to calculate the Net Cash Flows distributable to the Managing Member(s) of such Subject Fund in light of such reduction in fair market value and any applicable Cash Sweep Event (as defined in Appendix 7).

For avoidance of doubt, the amounts set forth in this clause (ii) are indicative subject to final determination by the Administrative Agent at the time such Subject Fund is included in the Available Borrowing Base;

(iii) [Reserved].

(iv) All PV Systems in any Watched Fund shall have an Advance Rate of [***]% for purposes of calculating the Available Borrowing Base. For avoidance of doubt, this shall include any PV Systems in a Watched Fund that were financed in previous tranches and whose Net Cash Flows were incorporated in previous Available Borrowing Base calculations.

(v) To the extent that, despite negotiating in good faith, the Administrative Agent and the Borrower cannot agree on the Advance Rate under clause (ii) of this Appendix 1, the Advance Rate determined by the Administrative Agent, acting at the direction of the Majority Group Agents, shall prevail.

Exhibit 1

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EXHIBIT 2

APPENDIX 4

TAX EQUITY STRUCTURES, PARTNERSHIPS, LESSOR PARTNERSHIPS, LESSORS, SUBJECT FUNDS, MANAGING MEMBERS, FUNDED SUBSIDIARIES, LESSEES, CASH SWEEP DESIGNATIONS AND INVESTORS

Tax Equity Structure	Partnership / Lessor Partnership (Subject Fund)	Partnership Managing Member / Lessor Partnership Managing Member	Funded Subsidiaries (Subject Fund and Managing Member, if any)	Lessee	Cash-Sweep Fund or Non-Cash Sweep Fund	Investor(s)
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]

Exhibit 2

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Tax Equity Structure	Partnership / Lessor Partnership (Subject Fund)	Partnership Managing Member / Lessor Partnership Managing Member	Funded Subsidiaries (Subject Fund and Managing Member, if any)	Lessee	Cash-Sweep Fund or Non-Cash Sweep Fund	Investor(s)
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]	[***]	[***]	[***]

Exhibit 2

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EXHIBIT 3

APPENDIX 5

PROJECT DOCUMENTS

1. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amendment No. 1 to Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amendment No. 2 to Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Second Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Amendment No. 1 to Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

2. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [***].

• Amendment No. 1 to Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [***].

• Amendment No. 2 to Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [***].

• Second Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Amendment No. 1 to Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Amendment No. 2 to Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [***] and [***].

• Guaranty, dated as of [***], from [On File with Administrative Agent] in favor of [***].

• Asset Management Agreement, dated as of December 24, 2014, by and between SolarCity and [***].

• Affirmation Agreement, dated as of [***], by [On File with Administrative Agent] to [***].

3. [***] Subject Fund

• Master Lease, dated as of [***], by and between [***] and [***].

• Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Amendment to Equity Capital Contribution Agreement, dated as of [***] (to add [***] as a Project State).

• Operating Agreement of [***], dated as of [***], by and between [***] and [***].

• Operating Agreement of [***], dated as of [***], by and among [On File with Administrative Agent], [***] and [***].

• Second Amended and Restated Limited Liability Company Agreement of [***] dated as of [***], by Megalodon Solar, LLC.

• Pass-Through Agreement, dated as of [***], by and between [***] and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent], [***] and [***].

4. [***] Subject Fund

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Master Lease, dated as of [***], by and between [***] and [***].

• Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Amendment to Equity Capital Contribution Agreement, dated as of [***] (to add [***] as a Project State) by and among SolarCity, [***] and [***].

• First Amendment to Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Operating Agreement of [***], dated as of [***], by and between [***] and [***].

• Operating Agreement of [***], dated as of [***], by and between [On File with Administrative Agent] and [***].

• Second Amended and Restated Limited Liability Company Agreement of [***] dated as of [***], by Megalodon Solar, LLC.

• Pass-Through Agreement, dated as of [***], by and between [***] and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent] and [***].

5. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and among [***], [On File with Administrative Agent] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Amendment No. 1 to Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], by SolarCity in favor of [On File with Administrative Agent] and [On File with Administrative Agent].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity and [***].

6. [***] Subject Fund

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Contribution Agreement (Systems), dated as of [***], by and among [***], [***], Megalodon Solar, LLC and [***].

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

7. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amendment No. 1 to Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent].

8. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Amendment No. 1 to Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity Corporation and [***].

9. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

10. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [***].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Capital Modification Rights Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [***] and [***].

• Guaranty, dated as of [***], from [On File with Administrative Agent] in favor of [***].

• Asset Management Agreement, dated as of [***], by and between SolarCity and [***].

11. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and among [***], [On File with Administrative Agent] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], by SolarCity in favor of [On File with Administrative Agent] and [On File with Administrative Agent].

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity and [***].

• SREC Services Agreement, dated as of [***], by and between SolarCity and [***].

12. [***] Subject Fund

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of March 21, 2016, by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent].

13. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EX-10.19U

Exhibit 10.19u

CONFIDENTIAL TREATMENT REQUESTED

Certain portions of this document have been omitted pursuant to a request for Confidential Treatment and, where applicable, have been marked with “[***]” to indicate where omissions have been made. The confidential material has been filed separately with the Securities and Exchange Commission.

REQUIRED GROUP AGENT ACTION NO. 22

This REQUIRED GROUP AGENT ACTION NO. 22 (this “Action”), dated as of September 8, 2016, is entered into by and among Megalodon Solar, LLC, a Delaware limited liability company (“Borrower”), Bank of America, N.A., as the Administrative Agent (“Administrative Agent”) and as the Collateral Agent for the Secured Parties (“Collateral Agent”) and each of Bank of America, N.A. (“BA Agent”), Credit Suisse AG, New York Branch (“CS Agent”), Deutsche Bank AG, New York Branch (“DB Agent”), ING Capital LLC (“ING Agent”), KeyBank National Association (“KB Agent”), National Bank of Arizona (“NBAZ Agent”), Silicon Valley Bank (“SVB Agent”) and CIT Bank, N.A. (“CIT Agent” and collectively with BA Agent, CS Agent, DB Agent, ING Agent, KB Agent, NBAZ Agent and SVB Agent, the “Group Agents”), as Group Agents party to the Loan Agreement, dated as of May 4, 2015 (as amended, the “Loan Agreement”), by and among the Borrower, the Administrative Agent, the Collateral Agent, the Group Agents, the Lenders and the other parties from time to time party thereto.  As used in this Action, capitalized terms which are not defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

A.Pursuant to the Loan Agreement, the Lenders have agreed to extend credit to the Borrower, in each case pursuant to the terms and subject to the conditions set forth in the Financing Documents.

B.Pursuant to Section 9.14(a) of the Loan Agreement, the Borrower has requested that the Group Agents provide their consent to the release and removal in accordance with Section 2.10(b) of the Loan Agreement of (i) the [***] Subject Fund and (ii) the [***] Subject Fund (collectively, the “Released Subject Funds”).

C.The Lenders are willing to provide their consent to the release and removal of the Released Subject Funds and the Collateral with respect thereto (collectively, the “Applicable Transactions”) on the terms and subject to the conditions set forth in this Action.

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the conditions set forth herein, the parties hereto hereby agree as follows:

Section 1.Consent.  Subject to the satisfaction of the Consent Requirements (as defined in Section 3 of this Action), each Agent and Lender party hereto, by its signature below, (i) consents to the Applicable Transactions, (ii) directs the Collateral Agent to execute and deliver each document contemplated to be delivered by the Collateral Agent pursuant to Section 2 of this Action and to otherwise carry out the terms and provisions of this Action, (iii) acknowledges and agrees that the requirements of Section 2.1(f)(iii)(C) of the Loan Agreement have been satisfied in

Required Group Agent Action No. 22

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

all respects in connection with the prepayment referred to in Section 3(a)(i) hereof and (iv) consents to deem the requirements of Section 2.1(f)(iii)(A) of the Loan Agreement satisfied during the period through September 15, 2016 in connection with the prepayment referred to in Section 3(a)(i) hereof; provided, that no such deemed consent shall have been given under this clause (iv) unless the requirements of Section 2.1(f)(iii)(A) of the Loan Agreement shall in fact be satisfied by the Borrower in all respects no later than September15, 2016.

Section 2.Release; Covenants.  Upon satisfaction of the Consent Requirements, without any further action by any party:

(a) the security interest granted to the Collateral Agent by the Borrower  in the Security Agreement with respect to the Equity Interests (and any other rights as specified in Section 3 thereof and together with the Equity Interests, the “Released Subsidiary Party Collateral”) of each of [***] and [***] (the “Released Subsidiary Parties”) shall automatically terminate and be released, all rights to the Released Subsidiary Party Collateral shall revert to the Borrower, and the Collateral Agent shall promptly deliver or cause to be delivered to the Borrower all Released Subsidiary Party Collateral, including original certificates representing all issued and outstanding Equity Interests of the Released Subsidiary Parties along with related blank transfer powers and irrevocable proxies, as applicable;

(b) the Collateral Agent authorizes the Borrower or any other party on behalf of the Borrower, to file UCC financing statement amendments relating to the Released Subsidiary Party Collateral in the form attached hereto as Annex 5 and to prepare and file any additional financing statement amendments and other instruments and documents in form and substance reasonably satisfactory to the Collateral Agent evidencing the consummation of the Applicable Transactions;

(c) the signature pages of the Collateral Agent and Administrative Agent to the Termination Agreement attached hereto as Appendix 1, which terminates the Security Agreement with respect to each Released Subsidiary Party, shall be automatically released;

(d) the signature pages of the Collateral Agent and the Administrative Agent to the Termination Agreement attached hereto as Appendix 2, which terminates the CADA with respect to each Released Subsidiary Party, shall be automatically released;

(e) Schedule 1.1(b) to the Loan Agreement shall be amended by amending and restating the table therein in its entirety:

Partnership Managing Member / Lessor Managing Member / Borrower Subsidiary (Other Non-Financed Structure)	Equity Interests Owned as of date related Partnership or Lessor Partnership becomes a Subject Fund
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]

2Required Group Agent Action No. 22

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]

(f) Appendix 1 to the Loan Agreement shall be amended by amending and restating clause (i) of the definition of “Advance Rate” as follows:

“(i) For a Subject Fund the following percentages:

Subject Fund	Advance Rate	Cash Sweep Fund or Non-Cash Sweep Fund
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]

”;

(g) Appendix 4 to the Loan Agreement shall be replaced with a revised Appendix 4 to the Loan Agreement in the form attached hereto as Annex 1;

(h) Appendix 5 to the Loan Agreement shall be replaced with a revised Appendix 5 to the Loan Agreement in the form attached hereto as Annex 2; and

(i) the Collateral Agent shall, at the sole cost and expense of the Borrower, procure, deliver or execute and deliver to the Borrower, from time to time, all further releases,

3Required Group Agent Action No. 22

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

termination statements, financing statement amendments, certificates, instruments and documents, each in form and substance satisfactory to the Borrower and the Collateral Agent, and take any other actions, as reasonably requested by the Borrower or that are required to evidence the consummation of the Applicable Transactions, including, for the avoidance of doubt, the execution of the “Notice of Change of Loss Payee” with respect to the (i) the Tax Loss Policy of [***] Subject Fund and (ii) the Tax Loss Policy of the [***] Subject Fund.

Section 3.Effectiveness.  This Action shall become effective on the date (the “Effective Date”) on which the following conditions (collectively, the “Consent Requirements”) are satisfied:

(a) the Borrower has paid or has caused to be paid to the Administrative Agent the following (collectively, the “Release Payment”) at or before 2:00 p.m. (Eastern Time) on September 8, 2016 (the “Payment Time”) to the account set forth in Annex 3 hereto:

(i) prepayment of $[***] of the outstanding principal amount of the Loans as of the Payment Time, to be allocated among the Lenders by the Administrative Agent as set forth in Annex 4 hereto; and

(ii) payment of $[***] of the outstanding interest accrued as of the Payment Time with respect to the principal amount described in clause (i) above;

(b) the Administrative Agent shall have received counterparts of this Action, duly executed and delivered by the Borrower and each Group Agent;

(c) the Borrower shall have delivered a duly completed Borrowing Base Certificate to the Administrative Agent; and

(d) all representations and warranties of the Borrower in Section 4 of this Action and all representations and warranties of the Borrower in the Borrowing Base Certificate delivered pursuant to Section 3(c) of this Action shall be true and correct in all material respects as of the Effective Date, other than those representations and warranties that are modified by materiality by their own terms, which shall be true and correct in all respects as of the Effective Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date).

Notwithstanding any failure or inability of the Borrower to satisfy any of the foregoing conditions set forth in Sections 3(c) or (d) of this Action, upon the satisfaction of the conditions set forth in Sections 3(a) and (b) of this Action, (i) all right, title and interest of the Collateral Agent and the Secured Parties in and to the Released Subsidiary Party Collateral shall transfer to and vest in Borrower and any assignee of Borrower without any further action required and (ii) none of the Released Subsidiary Party Collateral shall be “Collateral” under or for purposes of the Loan Agreement or any other Financing Document; provided that the Agents shall be entitled to assert claims against the Borrower as a result of any breach by the Borrower of any of representations, warranties, covenants or statements made by the Borrower in this Action.

4Required Group Agent Action No. 22

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Section 4.Representations and Warranties.  The Borrower hereby represents and warrants as of the Effective Date:

(a) the Borrower has duly authorized, executed and delivered this Action, and none the Borrower’s execution and delivery hereof nor the performance hereof or the consummation of the Applicable Transactions (i) will be in conflict with or result in a breach of the Borrower’s Organizational Documents, (ii) will materially violate any other Legal Requirement applicable to or binding on the Borrower or any of its respective properties, (iii) will result in any breach of or constitute any default under, or result in or require the creation of any Lien (other than Permitted Liens) upon any of the Collateral under any agreement or instrument to which it is a party or by which the Borrower or any of the Collateral may be bound or affected, or (iv) will require the consent or approval of any Person, which has not already been obtained;

(b) this Action is a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and subject to general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law);

(c) no Default or Event of Default has occurred and is continuing or will result from the Release Payment or the consummation of the Applicable Transactions;

(d) no Bankruptcy Event has occurred with respect to SolarCity;

(e) no Material Adverse Effect has occurred or is continuing since the immediately preceding Borrowing Date, and, to the Borrower’s Knowledge, no event or circumstance exists that could reasonably be expected to result in a Material Adverse Effect; and

(f) after giving effect to the Applicable Transactions and the Release Payment, the Borrower is in compliance with the Borrowing Base Requirements.

5Required Group Agent Action No. 22

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Section 5.Reference to and Effect on Financing Documents.  Each of the Loan Agreement and the other Financing Documents is and shall remain unchanged and in full force and effect, and, except as expressly set forth herein, nothing contained in this Action shall, by implication or otherwise, limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Administrative Agent or any of the other Secured Parties, or shall alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in each of the Loan Agreement and any other Financing Document.  This Action shall also constitute a “Financing Document” for all purposes of the Loan Agreement and the other Financing Documents.

Section 6.Incorporation by Reference.  Sections 10.5 (Entire Agreement), 10.6 (Governing Law), 10.7 (Severability), 10.8 (Headings), 10.11 (Waiver of Jury Trial), 10.12 (Consent to Jurisdiction; Service of Process), 10.14 (Successors and Assigns) and 10.16 (Binding Effect; Counterparts) of the Loan Agreement are hereby incorporated by reference herein, mutatis mutandis.

Section 7.Expenses.  The Borrower agrees to reimburse the Administrative Agent in accordance with Section 10.4(b) of the Loan Agreement for its reasonable and documented out-of-pocket expenses in connection with this Action, including reasonable and documented fees and out-of-pocket expenses of legal counsel.

Section 8.Construction.  The rules of interpretation specified in Section 1.2 of the Loan Agreement also apply to this Action, mutatis mutandis.

[Signature Pages Follow]

6Required Group Agent Action No. 22

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the parties hereto have caused this Action to be duly executed by their respective authorized officers as of the day and year first written above.

MEGALODON SOLAR, LLC,

as the Borrower

By: /s/Lyndon Rive

Name:Lyndon Rive

Title:President

[Signature Page to Required Group Agent Action No. 22]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

BANK OF AMERICA, N.A.,

as a Group Agent

By: /s/Sheikh Omer-Farooq

Name:Sheikh Omer-Farooq

Title:Managing Director

[Signature Page to Required Group Agent Action No. 22]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

CREDIT SUISSE AG, NEW YORK BRANCH,

as a Group Agent

By: /s/Patrick J. Hart

Name:Patrick J. Hart

Title:Vice President

By: /s/Chris Fera

Name:Chris Fera

Title:Vice President

[Signature Page to Required Group Agent Action No. 22]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

DEUTSCHE BANK AG, NEW YORK BRANCH,

as a Group Agent

By: /s/Gregory Leveto

Name:Gregory Leveto

Title:Director

By: /s/Vinod Mukani

Name:Vinod Mukani

Title:Director

[Signature Page to Required Group Agent Action No. 22]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

ING CAPITAL LLC,

as a Group Agent

By: /s/Erwin Thomet

Name:Erwin Thomet

Title:Managing Director

By: /s/Thomas Cantello

Name:Thomas Cantello

Title:Director

[Signature Page to Required Group Agent Action No. 22]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

KEYBANK NATIONAL ASSOCIATION,

as a Group Agent

By: /s/Benjamin C. Cooper

Name:Benjamin C. Cooper

Title:Vice President

[Signature Page to Required Group Agent Action No. 22]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

NATIONAL BANK OF ARIZONA,

as a Group Agent

By: /s/Kate Smith

Name:Kate Smith

Title:Vice President

[Signature Page to Required Group Agent Action No. 22]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

SILICON VALLEY BANK,

as a Group Agent

By: /s/Sayoji Goli

Name:Sayoji Goli

Title:Vice President

[Signature Page to Required Group Agent Action No. 22]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

CIT BANK, N.A.,

as a Group Agent

By: /s/Rhys Marsh

Name:Rhys Marsh

Title:Director

[Signature Page to Required Group Agent Action No. 22]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

ANNEX 1

APPENDIX 4

TAX EQUITY STRUCTURES, PARTNERSHIPS, LESSOR PARTNERSHIPS, LESSORS, SUBJECT FUNDS, MANAGING MEMBERS, FUNDED SUBSIDIARIES, LESSEES, CASH SWEEP DESIGNATIONS AND INVESTORS

Tax Equity Structure	Partnership / Lessor Partnership (Subject Fund)	Partnership Managing Member / Lessor Partnership Managing Member	Funded Subsidiaries (Subject Fund and Managing Member, if any)	Lessee	Cash-Sweep Fund or Non-Cash Sweep Fund	Investor(s)
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

ANNEX 2

APPENDIX 5

PROJECT DOCUMENTS

1. [***] Subject Fund

• Master Lease, dated as of [***], by and between [***] and [***].

• Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Amendment to Equity Capital Contribution Agreement, dated as of [***] (to add [***] as a Project State).

• Operating Agreement of [***], dated as of [***], by and between [***] and [***].

• Operating Agreement of [***], dated as of [***], by and among [On File with Administrative Agent], [***] and [***].

• Second Amended and Restated Limited Liability Company Agreement of [***] dated as of [***], by Megalodon Solar, LLC.

• Pass-Through Agreement, dated as of [***], by and between [***] and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent], [***] and [***].

2. [***] Subject Fund

• Master Lease, dated as of [***], by and between [***] and [***].

• Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Amendment to Equity Capital Contribution Agreement, dated as of [***] (to add [***] as a Project State) by and among SolarCity, [***] and [***].

• First Amendment to Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Operating Agreement of [***], dated as of [***], by and between [***] and [***].

• Operating Agreement of [***], dated as of [***], by and between [On File with Administrative Agent] and [***].

• Second Amended and Restated Limited Liability Company Agreement of [***] dated as of [***], by Megalodon Solar, LLC.

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Pass-Through Agreement, dated as of [***], by and between [***] and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent] and [***].

• [***].

3. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and among [***], [On File with Administrative Agent] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Amendment No. 1 to Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], by SolarCity in favor of [On File with Administrative Agent] and [On File with Administrative Agent].

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity and [***].

4. [***] Subject Fund

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Contribution Agreement (Systems), dated as of [***], by and among [***], [***], Megalodon Solar, LLC and [***].

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

5. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amendment No. 1 to Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent].

6. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Amendment No. 1 to Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity Corporation and [***].

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

7. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

8. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [***].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Capital Modification Rights Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [***] and [***].

• Guaranty, dated as of [***], from [On File with Administrative Agent] in favor of [***].

• Asset Management Agreement, dated as of [***], by and between SolarCity and [***].

9. [***] Subject Fund

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Limited Liability Company Agreement of [***], dated as of [***], by and among [***], [On File with Administrative Agent] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], by SolarCity in favor of [On File with Administrative Agent] and [On File with Administrative Agent].

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity and [***].

• SREC Services Agreement, dated as of [***], by and between SolarCity and [***].

10. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent].

11. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

ANNEX 3

Account Information

Pay to:	[***]
Bank	[***]
ABA No.	[***]
Account No.	[***]
Account Name	[***]
Ref.	[***]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

ANNEX 4

SCHEDULE OF PRINCIPAL PREPAYMENT ALLOCATIONS

Lender	Share of Prepayment
Bank of America, N.A.	$ [***]
Credit Suisse AG, Cayman Islands Branch	$[***]
ING Capital LLC	$[***]
Deutsche Bank AG, New York Branch	$[***]
KeyBank National Association	$[***]
National Bank of Arizona	$[***]
Silicon Valley Bank	$[***]
CIT Bank, N.A.	$[***]
Total	$[***]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

ANNEX 5

UCC-3 TERMINATION STATEMENTS

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EX-10.19V

Exhibit 10.19v

REQUIRED GROUP AGENT ACTION NO. 23

This REQUIRED GROUP AGENT ACTION NO. 23 (this “Action”), dated as of September 15, 2016, is entered into by and among Megalodon Solar, LLC, a Delaware limited liability company (“Borrower”), Bank of America, N.A., as the Administrative Agent (“Administrative Agent”) and as the Collateral Agent for the Secured Parties (“Collateral Agent”) and each of Bank of America, N.A. (“BA Agent”), Credit Suisse AG, New York Branch (“CS Agent”), Deutsche Bank AG, New York Branch (“DB Agent”), ING Capital LLC (“ING Agent”), KeyBank National Association (“KB Agent”), National Bank of Arizona (“NBAZ Agent”), Silicon Valley Bank (“SVB Agent”) and CIT Bank, N.A. (“CIT Agent” and collectively with BA Agent, CS Agent, DB Agent, ING Agent, KB Agent, NBAZ Agent and SVB Agent, the “Group Agents”), as Group Agents party to the Loan Agreement, dated as of May 4, 2015 (as amended, the “Loan Agreement”), by and among the Borrower, the Administrative Agent, the Collateral Agent, the Group Agents, the Lenders and the other parties from time to time party thereto.  As used in this Action, capitalized terms which are not defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

A.Pursuant to the Loan Agreement, the Lenders have agreed to extend credit to the Borrower, in each case pursuant to the terms and subject to the conditions set forth in the Financing Documents.

B.Pursuant to Required Group Agent Action No. 22, dated as of September 8, 2016, by and among the parties hereto (“GAA 22”), the Borrower requested and the Group Agents consented to deem the requirements of Section 2.1(f)(iii)(A) of the Loan Agreement satisfied during the period through September 15, 2016, subject to the conditions therein (the “Prior Consent”).

C.The Borrower has requested that the Required Group Agents provide their consent to the extension of the deadline for satisfying the requirements of the Prior Consent as required under GAA 22 (the “Extension”).

D.The Required Group Agents are willing to provide their consent to the Extension on the terms and subject to the conditions set forth in this Action.

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the conditions set forth herein, the parties hereto hereby agree as follows:

Section 1.Consent.  Subject to the satisfaction of the conditions precedent described in Section 2 hereof, each Agent and Lender party hereto, by its signature below, agrees to extend the deadline of the Prior Consent and to deem the requirements of Section 2.1(f)(iii)(A) of the Loan Agreement satisfied during the period through September 22, 2016 in connection with the prepayment made in connection with GAA 22; provided, that no such deemed consent shall have been given under this Section 1 unless the requirements of Section 2.1(f)(iii)(A) of the Loan Agreement shall in fact be satisfied by the Borrower in all respects no later than September 22, 2016.

Required Group Agent Action No. 23

Section 2.Effectiveness.  This Action shall be effective upon the receipt by the Administrative Agent of counterparts of this Action, executed and delivered by each of the other parties hereto.

Section 3.Representations and Warranties.  The Borrower hereby represents and warrants as of the Effective Date:

(a) the Borrower has duly authorized, executed and delivered this Action, and none the Borrower’s execution and delivery hereof nor the performance hereof (i) will be in conflict with or result in a breach of the Borrower’s Organizational Documents, (ii) will materially violate any other Legal Requirement applicable to or binding on the Borrower or any of its respective properties, (iii) will result in any breach of or constitute any default under, or result in or require the creation of any Lien (other than Permitted Liens) upon any of the Collateral under any agreement or instrument to which it is a party or by which the Borrower or any of the Collateral may be bound or affected, or (iv) will require the consent or approval of any Person, which has not already been obtained;

(b) this Action is a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and subject to general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law);

(c) no Bankruptcy Event has occurred with respect to SolarCity; and

(d) no Material Adverse Effect has occurred or is continuing since the immediately preceding Borrowing Date, and, to the Borrower’s Knowledge, no event or circumstance exists that could reasonably be expected to result in a Material Adverse Effect.

Section 4.Reference to and Effect on Financing Documents.  Each of the Loan Agreement and the other Financing Documents is and shall remain unchanged and in full force and effect, and, except as expressly set forth herein, nothing contained in this Action shall, by implication or otherwise, limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Administrative Agent or any of the other Secured Parties, or shall alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in each of the Loan Agreement and any other Financing Document.  This Action shall also constitute a “Financing Document” for all purposes of the Loan Agreement and the other Financing Documents.

Section 5.Incorporation by Reference.  Sections 10.5 (Entire Agreement), 10.6 (Governing Law), 10.7 (Severability), 10.8 (Headings), 10.11 (Waiver of Jury Trial), 10.12 (Consent to Jurisdiction; Service of Process), 10.14 (Successors and Assigns) and 10.16 (Binding Effect; Counterparts) of the Loan Agreement are hereby incorporated by reference herein, mutatis mutandis.

Section 6.Expenses.  The Borrower agrees to reimburse the Administrative Agent in accordance with Section 10.4(b) of the Loan Agreement for its reasonable and documented

2Required Group Agent Action No. 23

out-of-pocket expenses in connection with this Action, including reasonable and documented fees and out-of-pocket expenses of legal counsel.

Section 7.Construction.  The rules of interpretation specified in Section 1.2 of the Loan Agreement also apply to this Action, mutatis mutandis.

[Signature Pages Follow]

3Required Group Agent Action No. 23

IN WITNESS WHEREOF, the parties hereto have caused this Action to be duly executed by their respective authorized officers as of the day and year first written above.

MEGALODON SOLAR, LLC,

as the Borrower

By: /s/ Lyndon Rive

Name:Lyndon Rive

Title:President

[Signature Page to Required Group Agent Action No. 23]

BANK OF AMERICA, N.A.,

as a Group Agent

By: /s/ Sheikh Omer-Farooq

Name:Sheikh Omer-Farooq

Title:Managing Director

[Signature Page to Required Group Agent Action No. 23]

CREDIT SUISSE AG, NEW YORK BRANCH,

as a Group Agent

By: /s/ Erin McCutcheon

Name:Erin McCutcheon

Title:Vice President

By: /s/ Chris Fera

Name:Chris Fera

Title:Vice President

[Signature Page to Required Group Agent Action No. 23]

DEUTSCHE BANK AG, NEW YORK BRANCH,

as a Group Agent

By: /s/ Vinod Mukani

Name:Vinod Mukani

Title:Director

By: /s/ Daniel Fuchs

Name:Daniel Fuchs

Title:Vice President

[Signature Page to Required Group Agent Action No. 23]

ING CAPITAL LLC,

as a Group Agent

By: /s/ Erwin Thomet

Name:Erwin Thomet

Title:Managing Director

By: /s/ Thomas Cantello

Name:Thomas Cantello

Title:Director

[Signature Page to Required Group Agent Action No. 23]

KEYBANK NATIONAL ASSOCIATION,

as a Group Agent

By: /s/ Lisa Anne Ryder

Name:Lisa Anne Ryder

Title:Senior Vice President

[Signature Page to Required Group Agent Action No. 23]

NATIONAL BANK OF ARIZONA,

as a Group Agent

By: /s/ Kate Smith

Name:Kate Smith

Title:Vice President

[Signature Page to Required Group Agent Action No. 23]

SILICON VALLEY BANK,

as a Group Agent

By: /s/ Sayoji Goli

Name:Sayoji Goli

Title:Vice President

[Signature Page to Required Group Agent Action No. 23]

CIT BANK, N.A.,

as a Group Agent

By: /s/ Joseph Gyurindak

Name:Joseph Gyurindak

Title:Director

[Signature Page to Required Group Agent Action No. 23]

EX-10.19W

Exhibit 10.19w

CONFIDENTIAL TREATMENT REQUESTED

Certain portions of this document have been omitted pursuant to a request for Confidential Treatment and, where applicable, have been marked with “[***]” to indicate where omissions have been made. The confidential material has been filed separately with the Securities and Exchange Commission.

REQUIRED GROUP AGENT ACTION NO. 24  

This REQUIRED GROUP AGENT ACTION NO. 24 (this “Action”), dated as of September 20, 2016 (the “Effective Date”), is entered into by and among Megalodon Solar, LLC, a Delaware limited liability company (“Borrower”), Bank of America, N.A., as the Administrative Agent (“Administrative Agent”), the Collateral Agent for the Secured Parties (“Collateral Agent”) and each of Bank of America, N.A. (“BA Agent”), Credit Suisse AG, New York Branch (“CS Agent”), Deutsche Bank AG, New York Branch (“DB Agent”), ING Capital LLC (“ING Agent”), KeyBank National Association (“KB Agent”), National Bank of Arizona (“NBAZ Agent”), Silicon Valley Bank (“SVB Agent”) and CIT Bank, N.A. (“CIT Agent” and collectively with BA Agent, CS Agent, DB Agent, ING Agent, KB Agent, NBAZ Agent and SVB Agent, the “Group Agents”), as Group Agents party to the Loan Agreement, dated as of May 4, 2015 (as amended, the “Loan Agreement”), by and among the Borrower, Administrative Agent, Collateral Agent, the Group Agents, the Lenders and the other parties from time to time party thereto.  As used in this Action, capitalized terms which are not defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

A.The Borrower has requested the Required Group Agents to provide their consent to the addition and inclusion to the Loan Agreement and the other Financing Documents of (the “Subject Fund Transactions”):  [***] (“[***]”), as a Subject Fund, and [***] (“[***]”), as a Borrower Subsidiary Party (collectively, [***] and [***], the “New Entities”);

B.The Required Group Agents are willing to provide their consent to the Subject Fund Transactions on the terms and subject to the conditions set forth in this Action; and

C.The Borrower, the Required Group Agents, the Administrative Agent and the Collateral Agent desire to amend the Loan Agreement as set forth herein.

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the conditions set forth herein, the parties hereto hereby agree as follows:

Section 1.Amendments to the Loan Agreement.  Subject to the prior satisfaction of the conditions precedent described in Section 3 hereof, the Loan Agreement will be amended as follows (clauses (a) – (d) below, collectively, the “Loan Agreement Amendments”):

(a)Section 1.1 of the Loan Agreement shall be amended by amending and restating clause (a)(ii) of the definition of “Repeat Tax Equity Structure” in its entirety as follows:

“(ii) was previously approved by the Administrative Agent and the Majority Group Agents pursuant to Section 2.10 as a Subject Fund (other than the [***] Subject Fund) and”

Required Group Agent Action No. 24

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

(b)Schedule 1.1(b) to the Loan Agreement shall be amended by amending and restating the table therein in its entirety:

Partnership Managing Member / Lessor Managing Member / Borrower Subsidiary (Other Non-Financed Structure)	Equity Interests Owned as of date related Partnership or Lessor Partnership becomes a Subject Fund
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]

(c)Appendix 1 of the Loan Agreement shall be amended and restated as set forth in Exhibit 1 attached hereto;

(d)The definition of “Watched Funds” in Appendix 2 of the Loan Agreement shall be amended by inserting clause (xi) and amending and restating the final paragraph therein as follows:

“(xi)solely with respect to the [***] Subject Fund, upon receipt by the Collateral Agent of a “Trigger Notice” in respect of a “Member Buyout Event” (each as defined in the Tax Equity Required Consent, dated as of September 20, 2016, by and among [***], the Collateral Agent and the Borrower).

For the avoidance of doubt, at such time as none of the conditions set forth in clauses (i) through (xi) above is true in respect of any Subject Fund previously classified as a “Watched Fund”, then such Subject Fund shall no longer be a “Watched Fund” for any purpose under the Loan Agreement to which this Appendix 2 is attached or any other Financing Document referenced therein.”

(e)The definition of “Available Borrowing Base” in Appendix 2 of the Loan Agreement shall be amended by inserting between the first proviso and second proviso therein as follows:

“provided, further, that so long as the [***] Subject Fund is a Subject Fund, the aggregate Subject Fund Borrowing Bases of all full Cash Sweep Funds shall be [***] of the Available Borrowing Base, except as otherwise agreed by the Majority Group Agents at the time of the addition of a full Cash Sweep Fund pursuant to Section 2.10(a);”

2Required Group Agent Action No. 24

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

(f)Appendix 4 of the Loan Agreement shall be amended and restated as set forth in Exhibit 2 attached hereto; and

(g)Appendix 5 of the Loan Agreement shall be amended and restated as set forth in Exhibit 3 attached hereto.

Section 2.Acknowledgment and Consents.  Subject to the prior satisfaction of the conditions precedent described in Section 3 hereof:

(a)the Administrative Agent and the Required Group Agents acknowledge and agree that (i) that certain tax insurance policy, effective as of July 12, 2016 naming JPM Fund MM as named insured (the “Existing Tax Loss Policy”), satisfies the requirements of Section 11.11(b)(iv) of the Loan Agreement and (ii) pursuant to Section 11.11(b) of the Loan Agreement, no Tax Loss Policy is required for [***] so long as the Existing Tax Loss Policy remains in full force and effect;

(b)the Required Group Agents consent to the Loan Agreement Amendments, with acknowledgement by each of the Administrative Agent and the Collateral Agent; and

(c)the Administrative Agent and the Required Group Agents consent to the Subject Fund Transactions pursuant to and in accordance with Section 2.10(a) of the Loan Agreement.

Section 3.Conditions Precedent. This Action shall be effective upon the satisfaction of the following conditions precedent:

(a)The Administrative Agent shall have received counterparts of this Action, executed and delivered by each of the other parties hereto.

(b)The Administrative Agent shall have received a certificate of the Borrower dated as of the Effective Date signed by a Responsible Officer of the Borrower (i) making the Tax Equity Representations with respect to [***] and (ii) certifying that each representation and warranty of the Borrower contained in Article 4 of the Loan Agreement is true and correct in all material respects as of the Effective Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date) other than those representations and warranties that are modified by materiality by their own terms, which shall be true and correct in all respects as of the Effective Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all respects as of such earlier date).

(c)The Borrower shall have delivered or caused to be delivered to the Administrative Agent a Tax Equity Required Consent from [***] in connection with the Subject Fund Transactions.

(d)Each of the Administrative Agent and each Group Agent shall have received an opinion, dated no earlier than the Effective Date, of Wilson Sonsini Goodrich & Rosati, counsel to the Loan Parties, the Borrower Subsidiary Parties and SolarCity, in form and substance reasonably acceptable to the Administrative Agent, the Collateral Agent and the Majority Group Agents, with respect to the Subject Fund Transactions.

(e)Each of the Administrative Agent and each Group Agent shall have received opinions, dated no earlier than the Effective Date, of Proskauer Rose LLP, special bankruptcy counsel to the Loan Parties, the Borrower Subsidiary Parties and SolarCity, each in

3Required Group Agent Action No. 24

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

form and substance reasonably acceptable to the Administrative Agent, the Collateral Agent and the Majority Group Agents, with respect to the Subject Fund Transactions.

(f)The Administrative Agent and the Collateral Agent shall have received (i) searches of UCC filings in the jurisdiction of incorporation or formation, as applicable, of each of the New Entities and the Borrower and each jurisdiction where a filing would need to be made in order to perfect the security interest of the Collateral Agent (for the benefit of the Secured Parties) in the Collateral in respect of the New Entities (the “New Collateral”), (ii) copies of the financing statements on file in such jurisdictions and evidence that no liens exist on the New Collateral pledged by [***] and the Borrower other than Permitted Liens of the type set forth in clauses (b), (c) or (d) of the definition thereof and (iii) copies of tax lien, judgment and bankruptcy searches in such jurisdictions.

(g)The Collateral Agent shall have received all documentation in connection with the New Collateral, including (i) a Joinder Agreement in the form attached as Exhibit C to the Security Agreement, executed by each of [***], the Collateral Agent and the Borrower, dated as of the Effective Date, (ii) a Joinder Agreement in the form attached as Exhibit B-1 to the CADA, executed by each of [***], the Collateral Agent and the Borrower, dated as of the Effective Date, (iii) a Joinder Agreement in the form attached as Exhibit C to the Borrower Subsidiary Party Security Agreement, executed by each of [***] and the Collateral Agent, dated as of the Effective Date and (iv) any other data, documentation, analysis or report reasonably requested by the Administrative Agent with respect to the New Entities.

(h) (i) The UCC financing statements relating to the New Collateral shall have been duly filed in each office and in each jurisdiction where required in order to create and perfect the first priority Lien and security interest set forth in the Collateral Documents (as supplemented and as such term is defined in the Loan Agreement, as amended) and (ii) the Borrower shall have properly delivered or caused to be delivered to the Collateral Agent all New Collateral in which the Lien and security interest described above is permitted to be perfected by possession or control, including delivery of original certificates representing all issued and outstanding Equity Interests in [***] and the pledged interests in [***] pursuant to the Borrower Subsidiary Party Security Agreement, along with the applicable blank transfer powers and proxies.

(i)Each of the other conditions precedent as set forth in Section 3.4 of the Loan Agreement shall have been satisfied with respect to the Subject Fund Transactions.

(j)The Administrative Agent shall have received for its own account all costs and expenses described in Section 6 of this Action, for which invoices have been presented in connection herewith.

Section 4.Reference to and Effect on Financing Documents. Each of the Loan Agreement and the other Financing Documents is and shall remain unchanged and in full force and effect, and, except as expressly set forth herein, nothing contained in this Action shall, by implication or otherwise, limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Administrative Agent or any of the other Secured Parties, or shall alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in each of the Loan Agreement and any other Financing Document. This Action shall also constitute a “Financing Document” for all purposes of the Loan Agreement and the other Financing Documents.

4Required Group Agent Action No. 24

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Section 5.Incorporation by Reference.  Sections 10.5 (Entire Agreement), 10.6 (Governing Law), 10.7 (Severability), 10.8 (Headings), 10.11 (Waiver of Jury Trial), 10.12 (Consent to Jurisdiction), 10.14 (Successors and Assigns) and 10.16 (Binding Effect; Counterparts) of the Loan Agreement are hereby incorporated by reference herein, mutatis mutandis.

Section 6.Expenses. The Borrower agrees to reimburse the Administrative Agent in accordance with Section 10.4(b) of the Loan Agreement for its reasonable and documented out-of-pocket expenses in connection with this Action, including reasonable and documented fees and out-of-pocket expenses of legal counsel.

Section 7.Construction. The rules of interpretation specified in Section 1.2 of the Loan Agreement also apply to this Action, mutatis mutandis.

[Signature Pages Follow]

5Required Group Agent Action No. 24

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the parties hereto have caused this Action to be duly executed by their respective authorized officers as of the day and year first written above.

MEGALODON SOLAR, LLC,

as Borrower

By: /s/ Lyndon Rive

Name:Lyndon Rive

Title:President

[Signature Page to Required Group Agent Action No. 24]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

BANK OF AMERICA, N.A.,

as a Group Agent

By: /s/ Sheikh Omer-Farooq

Name:Sheikh Omer-Farooq

Title:Managing Director

[Signature Page to Required Group Agent Action No. 24]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

CIT BANK, N.A.,

as a Group Agent

By: /s/ Rhys Marsh

Name:Rhys Marsh

Title:Director

[Signature Page to Required Group Agent Action No. 24]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

CREDIT SUISSE AG, NEW YORK BRANCH,

as a Group Agent

By: /s/ Erin McCutcheon

Name:Erin McCutcheon

Title:Vice President

By: /s/ Chris Fera

Name:Chris Fera

Title:Vice President

[Signature Page to Required Group Agent Action No. 24]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

DEUTSCHE BANK AG, NEW YORK BRANCH,

as a Group Agent

By: /s/ Vinod Mukani

Name:Vinod Mukani

Title:Director

By: /s/ Daniel Fuchs

Name:Daniel Fuchs

Title:Vice President

[Signature Page to Required Group Agent Action No. 24]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

ING CAPITAL, LLC,

as a Group Agent

By: /s/ Erwin Thomet

Name:Erwin Thomet

Title:Managing Director

By: /s/ Thomas Cantello

Name:Thomas Cantello

Title:Director

[Signature Page to Required Group Agent Action No. 24]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

KEYBANK NATIONAL ASSOCIATION,

as a Group Agent

By: /s/ Benjamin C. Cooper

Name:Benjamin C. Cooper

Title:Vice President

[Signature Page to Required Group Agent Action No. 24]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

National Bank of Arizona,

as a Group Agent

By: /s/ Kate Smith

Name:Kate Smith

Title:Vice President

[Signature Page to Required Group Agent Action No. 24]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

SILICON VALLEY BANK,

as a Group Agent

By: /s/ Sayoji Goli

Name:Sayoji Goli

Title:Vice President

[Signature Page to Required Group Agent Action No. 24]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EXHIBIT 1

APPENDIX 1

ADVANCE RATE

The “Advance Rate” means

(i) For a Subject Fund the following percentages:

Subject Fund	Advance Rate	Cash Sweep Fund or Non-Cash Sweep Fund
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]

(ii) In respect of any Potential New Fund that becomes a Subject Fund, a percentage as shall be determined in accordance with this Appendix 1 following the completion of due diligence by the Administrative Agent, which by way of example shall be:

Advance Rate

For each Cash Sweep Fund, Non-Cash Sweep Fund and Other Structure, the Advance Rate will be the percentage determined for each System in such Subject Fund based on the “Type of Fund,” in accordance with the table below.

Exhibit 1

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Type of Fund
Cash Sweep Fund (baseline: CB (see below))	[***]
Non Cash Sweep Fund ([***]% baseline)	[***]%
Other Non-Financed Structure ([***]% baseline)	[***]%
Other Financed Structure	[***]%

“CB” or “Cash Sweep Fund Baseline” means, the lesser of (a) [***]% and (b) the percentage obtained by dividing (i) the maximum amount of debt that can be fully supported by Net Cash Flows distributable to the Managing Member(s) of such Subject Fund assuming interest is accruing at the Default Rate when applying the ITC Downside Case to that particular Subject Fund and only that Subject Fund by (ii) the Discounted Solar Asset Balance of such Subject Fund.

“ITC Downside Case” means a scenario in which a 30% reduction in fair market value occurs in the first month that a Subject Fund is included in the Available Borrowing Base and the Aggregate Advance Model is adjusted to calculate the Net Cash Flows distributable to the Managing Member(s) of such Subject Fund in light of such reduction in fair market value and any applicable Cash Sweep Event (as defined in Appendix 7).

For avoidance of doubt, the amounts set forth in this clause (ii) are indicative subject to final determination by the Administrative Agent at the time such Subject Fund is included in the Available Borrowing Base;

(iii) [Reserved].

(iv) All PV Systems in any Watched Fund shall have an Advance Rate of [***]% for purposes of calculating the Available Borrowing Base. For avoidance of doubt, this shall include any PV Systems in a Watched Fund that were financed in previous tranches and whose Net Cash Flows were incorporated in previous Available Borrowing Base calculations.

(v) To the extent that, despite negotiating in good faith, the Administrative Agent and the Borrower cannot agree on the Advance Rate under clause (ii) of this Appendix 1, the Advance Rate determined by the Administrative Agent, acting at the direction of the Majority Group Agents, shall prevail.

Exhibit 1

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EXHIBIT 2

APPENDIX 4

TAX EQUITY STRUCTURES, PARTNERSHIPS, LESSOR PARTNERSHIPS, LESSORS, SUBJECT FUNDS, MANAGING MEMBERS, FUNDED SUBSIDIARIES, LESSEES, CASH SWEEP DESIGNATIONS AND INVESTORS

Tax Equity Structure	Partnership / Lessor Partnership (Subject Fund)	Partnership Managing Member / Lessor Partnership Managing Member	Funded Subsidiaries (Subject Fund and Managing Member, if any)	Lessee	Full Cash-Sweep Fund, Partial Cash-Sweep Fund or Non-Cash Sweep Fund	Investor(s)
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]

Exhibit 2

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Tax Equity Structure	Partnership / Lessor Partnership (Subject Fund)	Partnership Managing Member / Lessor Partnership Managing Member	Funded Subsidiaries (Subject Fund and Managing Member, if any)	Lessee	Full Cash-Sweep Fund, Partial Cash-Sweep Fund or Non-Cash Sweep Fund	Investor(s)
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]

Exhibit 2

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EXHIBIT 3

APPENDIX 5

PROJECT DOCUMENTS

1. [***] Subject Fund

• Master Lease, dated as of [***], by and between [***] and [***].

• Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Amendment to Equity Capital Contribution Agreement, dated as of [***] (to add [***] as a Project State).

• Operating Agreement of [***], dated as of [***], by and between [***] and [***].

• Operating Agreement of [***], dated as of [***], by and among [On File with Administrative Agent], [***] and [***].

• Second Amended and Restated Limited Liability Company Agreement of [***] dated as of [***], by Megalodon Solar, LLC.

• Pass-Through Agreement, dated as of [***], by and between [***] and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent], [***] and [***].

2. [***] Subject Fund

• Master Lease, dated as of [***], by and between [***] and [***].

• Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Amendment to Equity Capital Contribution Agreement, dated as of [***] (to add [***] as a Project State) by and among SolarCity, [***] and [***].

• First Amendment to Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Operating Agreement of [***], dated as of [***], by and between [***] and [***].

• Operating Agreement of [***], dated as of [***], by and between [On File with Administrative Agent] and [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Second Amended and Restated Limited Liability Company Agreement of [***] dated as of [***], by Megalodon Solar, LLC.

• Pass-Through Agreement, dated as of [***], by and between [***] and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent] and [***].

3. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and among [***], [On File with Administrative Agent] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Amendment No. 1 to Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], by SolarCity in favor of [On File with Administrative Agent] and [On File with Administrative Agent].

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity and [***].

4. [***] Subject Fund

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Contribution Agreement (Systems), dated as of [***], by and among [***], [***], Megalodon Solar, LLC and [***].

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

5. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amendment No. 1 to Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent].

6. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Amendment No. 1 to Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity Corporation and [***].

7. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

8. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [***].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Capital Modification Rights Agreement, dated as of [***], by and among SolarCity, [***]and [***].

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [***] and [***].

• Guaranty, dated as of [***], from [On File with Administrative Agent] in favor of [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Asset Management Agreement, dated as of [***], by and between SolarCity and [***].

9. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and among [***], [On File with Administrative Agent] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], by SolarCity in favor of [On File with Administrative Agent] and [On File with Administrative Agent].

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity and [***].

• SREC Services Agreement, dated as of [***], by and between SolarCity and [***].

10. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent].

11. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

12. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Second Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Asset Management Agreement, dated as of [***], by and between SolarCity and [***].

• Master Purchase and Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity Corporation, [***], [***] and [On File with Administrative Agent].

• Amendment Agreement, dated as of [***], by and among SolarCity Corporation, [***], [***] and [On File with Administrative Agent].

• Guaranty, dated as of [***], by SolarCity Corporation in favor of [On File with Administrative Agent].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Accession Agreement, dated as of [***], by and among SolarCity Corporation, [***] and [***].

• SREC Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EX-10.19X

Exhibit 10.19x

CONFIDENTIAL TREATMENT REQUESTED

Certain portions of this document have been omitted pursuant to a request for Confidential Treatment and, where applicable, have been marked with “[***]” to indicate where omissions have been made. The confidential material has been filed separately with the Securities and Exchange Commission.

ADMINISTRATIVE AGENT ACTION NO. 25

This ADMINISTRATIVE AGENT ACTION NO. 25 (this “Action”), dated as of September 30, 2016 (the “Effective Date”), is entered into by and among Megalodon Solar, LLC, a Delaware limited liability company (“Borrower”), [***], a Delaware limited liability company (“[***]”), and Bank of America, N.A., as the Administrative Agent (the “Administrative Agent”) and the Collateral Agent (the “Collateral Agent” and together with the Administrative Agent, the “Agents”) under the Loan Agreement, dated as of May 4, 2015 (as amended, the “Loan Agreement”), by and among the Borrower, the Agents, each of the Lenders and the other parties from time to time parties thereto.  As used in this Action, capitalized terms which are not defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

A.[***] has granted a security interest in substantially all of its assets to the Collateral Agent under the Borrower Subsidiary Party Security Agreement.

B.Pursuant to the Maintenance Services Agreement, dated as of [***], by and between [***] and SolarCity Corporation, as maintenance services provider (“SolarCity”), [***] conveyed and transferred its right, title and interest in and to the SRECs generated by its PV Systems to SolarCity to the extent necessary to permit SolarCity to perform operations and maintenance services with respect to the PV Systems and use commercially reasonable efforts to sell the SRECs on behalf of [***].

C.Pursuant to that certain Limited Termination Agreement dated as of the date hereof (the “Limited Termination Agreement”) by and between [***] and SolarCity, SolarCity has relinquished all right, title and interest in and to a certain portion of the SRECs, and all such right, title and interest in and to such SRECs have reverted to [***] (the “Reverted SRECs”).

D.Immediately upon the effectiveness of the Limited Termination Agreement, [***] intends to sell, convey, assign and transfer the Reverted SRECs pursuant to that certain Assignment Agreement ([***]) dated as of the date hereof (the “Assignment Agreement”), by and among SolarCity Corporation, [***] and [***], a Delaware limited liability company (“[***]”), a copy of which is attached hereto as Exhibit 1.

E.[***] is an Affiliate of [***].

F.The disposition of SRECs contemplated under the Assignment Agreement is permitted without the consent of either Agent or any Lender subject to the terms and conditions set forth in Sections 6.4(c), 6.10(d) and 6.16 of the Loan Agreement.

G.Pursuant to Section 9.10(a)(ii) of the Loan Agreement, the Administrative Agent is authorized to instruct the Collateral Agent to release any Lien on any property granted to or held by the Collateral Agent under any Financing Document that is sold or otherwise disposed of

Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted under any Financing Document.

H.The Borrower has requested that the Collateral Agent release its lien on all of the “Assigned Rights” described in the Assignment Agreement (the “Released Assets”), effective immediately upon execution of this Action.

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the conditions set forth herein, the parties hereto hereby agree as follows:

Section 1.Release; Covenants.  Upon satisfaction of the condition precedent set forth in Section 3 on the Effective Date, without any further action by any party:

(a) the security interest granted to the Collateral Agent by [***] pursuant to the Borrower Subsidiary Party Security Agreement with respect to the Released Assets (and any related rights and assets described in the Assignment Agreement) shall automatically terminate and be released and all rights to the Released Assets shall revert to [***];

(b) the Collateral Agent authorizes the Borrower, [***] or any other party on behalf of the Borrower or [***], to file a UCC financing statement amendment relating to the Released Assets in the form attached hereto as Exhibit 2; and

(c) the Collateral Agent shall, at the sole cost and expense of the Borrower, procure, deliver or execute and deliver to the Borrower, from time to time, all further releases, termination statements, financing statement amendments, certificates, instruments and documents, each in form and substance satisfactory to the Borrower and the Collateral Agent, and take any other actions, as reasonably requested by the Borrower or that are required to evidence the release of the Released Assets.

Section 2.Condition Precedent.  This Action shall be effective upon the Administrative Agent’s receipt of counterparts of this Action, executed and delivered by each of the other parties hereto.

Section 3.Representations and Warranties.  The Borrower hereby represents and warrants as of the Effective Date that (a) the transactions contemplated by the Assignment Agreement are permitted under Sections 6.4(c), 6.10(d) and 6.16 of the Loan Agreement and (b) the Assignment Agreement (i) does not contain any provisions for liquidated damages, contingent liabilities or other damages, or the posting of collateral or other security and (ii) is entered into in the ordinary course of business at prices and on terms and conditions not less favorable to [***] than could be obtained on arm’s-length basis from unrelated third parties.

Section 4.Reference to and Effect on Financing Documents. Each of the Loan Agreement and the other Financing Documents is and shall remain unchanged and in full force and effect, and, except as expressly set forth herein, nothing contained in this Action shall, by implication or otherwise, limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Administrative Agent or any of the other Secured Parties, or shall alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in each of the Loan Agreement and any other Financing Document.  This Action shall also constitute a “Financing Document” for all purposes of the Loan Agreement and the other Financing Documents.

2Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Section 5.Incorporation by Reference.  Sections 10.5 (Entire Agreement), 10.6 (Governing Law), 10.7 (Severability), 10.8 (Headings), 10.11 (Waiver of Jury Trial), 10.12 (Consent to Jurisdiction), 10.14 (Successors and Assigns) and 10.16 (Binding Effect; Counterparts) of the Loan Agreement are hereby incorporated by reference herein, mutatis mutandis.

Section 6.Expenses. The Borrower agrees to reimburse the Administrative Agent in accordance with Section 10.4(b) of the Loan Agreement for its reasonable and documented out-of-pocket expenses in connection with this Action, including reasonable and documented fees and out-of-pocket expenses of legal counsel.

Section 7.Construction. The rules of interpretation specified in Section 1.2 of the Loan Agreement also apply to this Action, mutatis mutandis.

[Signature Pages Follow]

3Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the parties hereto have caused this Action to be duly executed by their respective authorized officers as of the day and year first written above.

MEGALODON SOLAR, LLC,

as Borrower

By: /s/ Lyndon Rive

Name: Lyndon Rive

Title: President

[***],

as a Subject Fund

By: /s/ Lyndon Rive

Name: Lyndon Rive

Title: President

Signature Page to Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

BANK OF AMERICA, N.A.,

as the Administrative Agent and the Collateral Agent

By: /s/ Darleen R. DiGrazia

Name:Darleen R. DiGrazia

Title:Vice President

Signature Page to Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Execution Version

EXHIBIT 1

ASSIGNMENT AGREEMENT

ASSIGNMENT AGREEMENT

([***])

This ASSIGNMENT AGREEMENT (this “Agreement”) is entered into as of September 30, 2016 (the “Effective Date”) by and among SolarCity Corporation, a Delaware corporation (“SolarCity”), [***], a Delaware limited liability company (the “Company” and the “Assignor”) and [***], a Delaware limited liability company (the “Assignee” and together with SolarCity and the Company, the “Parties”).  Capitalized terms used in this Agreement and not otherwise defined herein have the respective meanings assigned to such terms in Annex A to this Agreement.

WITNESSETH

WHEREAS, the Company is the owner of the PV Systems listed on Schedule 1 attached hereto;

WHEREAS, pursuant to that certain Maintenance Services Agreement dated as of June 26, 2015 (the “Services Agreement”) by and between the Company and SolarCity, as maintenance services provider (in such capacity, “Provider”), Company has engaged SolarCity to provide certain operations and maintenance services with respect to the PV Systems, including the sale of RECs generated by such PV Systems (the “SREC Services”);

WHEREAS, in connection with the performance of such SREC Services, pursuant to the Services Agreement, Company conveyed and transferred its right, title and interest in and to the RECs generated by its PV Systems, including, without limitation, the Assigned Rights, to SolarCity to the extent necessary to permit SolarCity to perform the SREC Services and use commercially reasonable efforts to sell the RECs on behalf of the Company;

WHEREAS, pursuant to that certain Limited Termination Agreement dated as of September 30, 2016 (the “Limited Termination Agreement”) by and between the Company and Provider, SolarCity has relinquished all right, title and interest in and to that certain portion of the RECs to be generated by the PV Systems, as specified on Schedule 1 attached hereo, and all such right, title and interest in and to such RECs have reverted to the Company;

WHEREAS, Company desires to absolutely and irrevocably assign, convey and transfer collectively the entire interest in the Assigned Rights to the Assignee.

WHEREAS, this Agreement and the transactions hereunder are being entered into in contemplation of a loan to be extended to Assignee pursuant to the Term Loan Agreement (the “Credit Agreement”), dated as of [***], among Assignee, as Borrower, [***], as Lender, and [***], as Administrative Agent and Collateral Agent (in its capacity as Administrative Agent, the “Third Party Beneficiary”, and in its capacity as the Collateral Agent, the “Collateral Agent”).

Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

NOW, THEREFORE, for value received, in consideration of the mutual agreements herein contained and other good and valuable consideration, receipt and sufficiency thereof being hereby acknowledged, the parties hereto hereby agree as follows:

1.Irrevocable Assignment.

(a)The Company, hereby absolutely and irrevocably sells, conveys, transfers, assigns and delivers unto the Assignee, without recourse to the Company, any and all of the Company’s right, title and interest in and to the Assigned Rights.  The Assignee hereby irrevocably purchases and accepts the Assigned Rights and assumes, to the extent accruing from and after the Effective Date, any and all duties, obligations, responsibilities, claims, demands and other commitments with respect to or otherwise in connection with the Assigned Rights.

(b)It is the intention of the Parties that the Assigned Rights transferred by the Company to the Assignee pursuant to this Agreement shall not be part of the Company’s estate in the event of the filing of a bankruptcy petition by or against the Company under any bankruptcy or similar law.  On and after the Effective Date hereunder, the Assignee shall own the Assigned Rights transferred by the Assignor to the Assignee, and the Assignor shall not take any action inconsistent with such ownership and shall not claim any ownership interest in the Assigned Rights.

(c)This sub-paragraph shall be of no force and effect with respect to an assignment of an Assigned Right unless there has been a final determination in a bankruptcy proceeding where the Assignor is the debtor, that an assignment referred to in this paragraph is not an absolute assignment of the Assigned Right, and all appeal periods (after such final determination) have lapsed without appeal.  In the event that the transfer of the Assigned Rights by the Assignor to the Assignee pursuant to this Agreement is deemed to be a secured financing (or is otherwise determined not to be an absolute assignment of all of Assignor’s right, title and interest in, to and under or transfer of all of Assignor’s equitable interest in, to and under the Assigned Rights transferred, or purportedly transferred hereunder), then (i) the Assignor shall be deemed hereunder to have granted to the Assignee, and the Assignor does hereby grant to the Assignee, a security interest in all of the Assignor’s right, title and interest in, to and under such Assigned Rights, whether now owned or hereafter acquired and (ii) this Agreement shall constitute a security agreement under applicable law.  For the avoidance of doubt: (i) in the event that a court determines that the transfer of the Assigned Rights is not an absolute assignment of the Assigned Rights or a “true sale” and such a determination is appealed, the Assignee shall be deemed to have the benefit of the security interest grant during the pendency of such appeals and (ii) if the appeals court holds, on a final, non-appealable basis that the Assigned Rights is an absolute assignment or a “true sale” then such security grant shall be deemed to have never been granted and shall have no force and effect.

Signature Page to Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

2.Purchase Price.

(a)The purchase price for all of the Assigned Rights conveyed to the Assignee under this Agreement shall be the amount of $[***] (the “Purchase Price”), payable or to be provided on the Effective Date by payment in cash in immediately available funds.

(b)The Purchase Price shall be paid to the Company, in consideration of the Assigned Rights transferred by the Company.

3.Representations and Warranties of SolarCity and the Company.  Each of SolarCity and the Company hereby represents and warrants to the Assignee with respect to itself as follows:

(a)It (i) is duly organized and validly existing under the laws of its jurisdiction of organization, (ii) is in good standing under such laws, and (iii) has full power and authority to execute, deliver and perform its obligations under this Agreement.  

(b)Its execution, delivery and performance of this Agreement have been duly authorized and this Agreement has been duly executed and delivered and constitutes its legal, valid and binding obligation, enforceable against it in accordance with the terms hereof, except as enforceability may be limited by bankruptcy, insolvency and other legal principles pertaining to creditors’ rights.

(c)The Assigned Rights to be conveyed to the Assignee hereunder are, immediately prior to their conveyance hereunder owned by the Company, collectively, free and clear of any adverse claim or restrictions on transferability and the Company has the full right, organizational power and lawful authority to convey its respective portion of the same and interests therein and, upon conveyance thereof hereunder, the Assignee will have acquired good and marketable title to and a valid ownership interest in such Assigned Rights, free and clear of any adverse claim or restrictions on transferability.  No effective financing statement or other instrument similar in effect covering all or any part of any Assigned Rights conveyed hereunder is on file in any filing office, except such as may have been filed in favor of the Assignee as “Secured Party” or “Assignee”.

(d)Other than as previously provided for in the Services Agreement (as supplemented by the Limited Termination Agreement), the Assigned Rights are not subject to any prior sale, transfer, assignment or participation or any agreement with respect to the same.

(e)No consent, approval, order or authorization of, and no filing with or notice to, any party is required which has not been obtained in connection with the authorization, execution, delivery or performance by it of this Agreement or under the transactions contemplated hereunder, including, without limitation, the transfer of the Assigned Rights to Assignee.

Signature Page to Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

(f)Company is solvent and will not become insolvent as a result of the transactions contemplated by this Agreement and, after giving effect to the transactions contemplated by this Agreement, it will not have unreasonably small capital to conduct its business as now conducted or as planned.

(g)For accounting purposes, Company will treat the transactions effected by this Agreement as sales of assets to the Assignee in accordance with GAAP. Its financial records shall reflect that the assets conveyed hereunder have been conveyed to the Assignee, are no longer owned by it.

(h)No tax lien or similar adverse claim has been filed against Company, and no claim is being asserted against it, with respect to any such tax, assessment or other governmental charge. Any taxes, fees and other governmental charges payable by it in connection with the execution and delivery of this Agreement and the transactions contemplated hereby or thereby that are due have been paid.

(i)There is not now, nor will there be at any time in the future, any agreement or understanding between Company and the Assignee (other than as expressly set forth herein) providing for the allocation or sharing of obligations to make payments or otherwise in respect of any taxes, fees, assessments or other governmental charges.

(j)Company has not conveyed any interest in any Assigned Rights to the Assignee with any intent to hinder, delay or defraud any of Assignor’s creditors.

(k)Company has received reasonably equivalent value in exchange for the conveyance of the Assigned Rights conveyed hereunder.

4.Representations and Warranties of Assignee.  The Assignee hereby represents and warrants to SolarCity and the Company that the Assignee (a) is duly organized and validly existing under the laws of its jurisdiction of organization, (b) is in good standing under such laws, (c) has full power and authority to execute, deliver and perform its obligations under this Agreement and (d) has given fair consideration and reasonably equivalent value in exchange for the conveyance of the Assigned Rights conveyed hereunder.

5.Representations of SolarCity.  SolarCity hereby represents and warrants to each of the Company and the Assignee that it has performed all of its duties and obligations under the Services Agreement arising prior to the Effective Date with respect to the Assigned Rights.

6.Metering Data.  SolarCity shall make available to Assignee all data reasonably available to SolarCity that is necessary for Assignee to monitor, measure, verify, calculate, disclose and claim for the benefit of Assignee any matter respecting the RECs included in the Assigned Rights or any aspects thereof pursuant to any present or future protocol, standard, or guidance.  Such data shall include but not be limited to any meter data available from the PV Systems related to the Assigned Rights.  In the event SolarCity is unable to provide such data to

Signature Page to Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Assignee pursuant to this Section 6, SolarCity will use commercially reasonable efforts to ensure that any replacement services provider under the Services Agreement (or any new maintenance services agreement entered into by the Company in replacement of the Services Agreement) will make such data available to Assignee.

7.Consent to Collateral Assignment.  Assignee may, and Assignor hereby acknowledges that Assignee may, pledge, grant a security interest in, and collaterally assign all of its rights under this Agreement to the Collateral Agent as security for the obligations of Assignee under the Credit Agreement and the related financing documents.  Assignor irrevocably consents to any such pledge, grant and collateral assignment by Assignee.  In the event that the Collateral Agent elects to exercise its security interest in this Agreement, the Collateral Agent may by notice to the Assignor assume (or transfer its rights and interests to a designee or assignee that shall assume) all rights of Assignee under this Agreement, and Assignor consents to such assumption or transfer and agrees that upon such assumption the Collateral Agent (or such designee or assignee) shall have the right to exercise directly all rights of Assignee under this Agreement.

8.Indemnity.  SolarCity shall defend, indemnify and hold harmless the Assignee and the Third Party Beneficiary (each an “Indemnified Person”) from and against any and all costs, expenses, losses, damages, claims, and liabilities, suffered or sustained by any Indemnified Person (including reasonable fees and expenses of counsel and other professionals) arising out of or resulting from:  (i) the defense of an action, proceeding, motion or other objection in which the sale, conveyance, transfer, assignment and delivery of the Assigned Rights contemplated hereunder is asserted to be any transaction other than a true sale of the Assigned Rights and (ii) with respect to the enforcement or protection of all of Assignee’s and Third Party Beneficiary’s claims and rights under this Agreement, including as part of any restructuring or bankruptcy.

9.Acknowledgements and Agreements.  Each of SolarCity and the Company hereby agrees and acknowledges that, (a) from and after the Effective Date, it shall have no right, title or interest whatsoever in or to the Assigned Rights and (b) the lien and security interest referenced in Section 2.12(e) of the Services Agreement are hereby terminated and released to the extent of the Assigned Rights.

10.Third Party Beneficiary.  The Third Party Beneficiary shall be entitled to rely upon, shall be an express third party beneficiary of, and shall be entitled to enforce, the provisions of this Agreement, including without limitation, Section 8 and this Section 10.  For the avoidance of doubt, the Agreement shall not be terminated, cancelled, amended, modified, supplemented or changed, or any provision, default, breach or performance waived, or any assignment or novation made in a manner without written consent of the Third Party Beneficiary (to be granted or withheld in its sole discretion).  Notwithstanding any other provision hereof, this Section 10 shall terminate upon the Discharge Date (as defined in the Credit Agreement). The Parties hereto agree that the Third Party Beneficiary shall be an express third-party beneficiary of this Agreement as provided herein.

Signature Page to Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

11.Successor and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

12.Further Assurances.  Each Party shall cooperate with the other and execute such instruments or documents and take such other actions as may reasonably be requested from time to time in order to carry out, evidence or confirm their rights or obligations or as may be reasonably necessary or helpful to give effect to this Agreement.

13.Governing Law. This Agreement shall be governed by, and construed in accordance with the laws of the State of New York without regard to principles of conflicts or choice of laws.

14.Miscellaneous.  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall constitute an original, but all of which counterparts together shall constitute one and the same instrument.  This Agreement cannot be amended, modified or supplemented except by an instrument in writing executed by the Parties (including, for the avoidance of doubt, the Third Party Beneficiary).

[Signature Page Follows]

Signature Page to Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the Parties have each caused this Agreement to be duly executed by their respective officers as of the Effective Date.

SOLARCITY

SolarCity Corporation

By: /s/Lyndon Rive

Name: Lyndon Rive

Title: Chief Executive Officer

COMPANY

[***]

By: /s/Lyndon Rive

Name: Lyndon Rive

Title: President

ASSIGNEE

[***]

By: /s/Lyndon Rive

Name: Lyndon Rive

Title: President

Signature Page to Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

ANNEX A

Definitions

“Assigned Rights” means all right, title and interest in and to any and all RECs that are generated, produced or otherwise created by or from each PV System described on Schedule 1 attached hereto during the period from and including the Effective Date through the applicable “End Date” for such PV System, as set forth on such Schedule 1, including for the avoidance of doubt RECs that are minted on or after the Effective Date as a result of the production of energy by any such PV System prior to the Effective Date.

“Code” means the Internal Revenue Code of 1986.

“Person” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, or governmental entity or any department or agency thereof.

“PV System” means a photovoltaic system, including, as applicable, photovoltaic panels, racks, wiring and other electrical devices, conduit, weatherproof housings, hardware, one or more inverters, remote performance monitoring equipment, connectors, meters, disconnects and over current devices.  For avoidance of doubt, usage-monitoring equipment, if any, shall not be considered a part of the PV System.

“RECs” means solar renewable energy certificates or credits issued under any state renewable portfolio standard or federal renewable energy standard, pollution allowances, carbon credits and similar environmental allowances or credits and green tag or other reporting rights under Section 1605(b) of The Energy Policy Act of 1992 and any present or future federal, state, or local law, regulation or bill, and international or foreign emissions trading program, but excluding, for the avoidance of doubt, (i) investment tax credits under Section 48 of the Code, production tax credits available under Section 45 of the Code or other federal, state or local Tax benefits or credits, (ii) state rebates and performance based incentives and (iii) to the extent accruing prior to the Effective Date, any liabilities, including adverse wildlife or environmental impacts.  

Administrative Agent Action No. 25

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

SCHEDULE 1

Assigned Rights

[***]

Installation ID

Job ID

State

kW

Est Annual kWh

Market Type

Payment

PTO Date

Rebate Status

State Certification

NON ID

MA 1

End Date

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Exhibit 1

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EXHIBIT 2

UCC-3 AMENDMENT STATEMENT

Exhibit 2

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EX-10.19Y

Exhibit 10.19y

CONFIDENTIAL TREATMENT REQUESTED

Certain portions of this document have been omitted pursuant to a request for Confidential Treatment and, where applicable, have been marked with “[***]” to indicate where omissions have been made. The confidential material has been filed separately with the Securities and Exchange Commission.

REQUIRED GROUP AGENT ACTION NO. 26

This REQUIRED GROUP AGENT ACTION NO. 26 (this “Action”), dated as of October 5, 2016 (the “Effective Date”), is entered into by and among Megalodon Solar, LLC, a Delaware limited liability company (“Borrower”), Bank of America, N.A., as the Administrative Agent (“Administrative Agent”), the Collateral Agent for the Secured Parties (“Collateral Agent”) and each of Bank of America, N.A. (“BA Agent”), Credit Suisse AG, New York Branch (“CS Agent”), Deutsche Bank AG, New York Branch (“DB Agent”), ING Capital LLC (“ING Agent”), KeyBank National Association (“KB Agent”), National Bank of Arizona (“NBAZ Agent”), Silicon Valley Bank (“SVB Agent”) and CIT Bank, N.A. (“CIT Agent” and collectively with BA Agent, CS Agent, DB Agent, ING Agent, KB Agent, NBAZ Agent and SVB Agent, the “Group Agents”), as Group Agents party to the Loan Agreement, dated as of May 4, 2015 (as amended, the “Loan Agreement”), by and among the Borrower, Administrative Agent, Collateral Agent, the Group Agents, the Lenders and the other parties from time to time party thereto.  As used in this Action, capitalized terms which are not defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

A.The Borrower has requested the Required Group Agents to provide their consent to the addition and inclusion to the Loan Agreement and the other Financing Documents of (the “Subject Fund Transactions”): [***] (“[***]”), as a Subject Fund, and [***] (“[***]”), as a Borrower Subsidiary Party (collectively, [***] and [***], the “New Entities”);

B.The Required Group Agents are willing to provide their consent to the Subject Fund Transactions on the terms and subject to the conditions set forth in this Action; and

C.The Borrower, the Required Group Agents, the Administrative Agent and the Collateral Agent desire to amend the Loan Agreement as set forth herein.

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and subject to the conditions set forth herein, the parties hereto hereby agree as follows:

Section 1.Amendments to the Loan Agreement.  Subject to the prior satisfaction of the conditions precedent described in Section 3 hereof, the Loan Agreement will be amended as follows (clauses (a) – (f) below, collectively, the “Loan Agreement Amendments”):

(a)Section 1.1 of the Loan Agreement shall be amended by amending and restating clause (a)(ii) of the definition of “Repeat Tax Equity Structure” in its entirety as follows:

Required Group Agent Action No. 26

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

“(ii) was previously approved by the Administrative Agent and the Majority Group Agents pursuant to Section 2.10 as a Subject Fund (other than the [***] Subject Fund and the [***] Subject Fund) and”

(b)Schedule 1.1(b) to the Loan Agreement shall be amended by amending and restating the table therein in its entirety:

Partnership Managing Member / Lessor Managing Member / Borrower Subsidiary (Other Non-Financed Structure)	Equity Interests Owned as of date related Partnership or Lessor Partnership becomes a Subject Fund
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]

(c)Appendix 1 of the Loan Agreement shall be amended and restated as set forth in Exhibit 1 attached hereto;

(d)The definition of “Watched Funds” in Appendix 2 of the Loan Agreement shall be amended by inserting clause (xii) and amending and restating the final paragraph therein as follows:

“(xii)solely with respect to the [***] Subject Fund, upon the occurrence of any breach or default as set forth in clause (h) of the definition of “Removal Event” in the Limited Liability Company Agreement of [***], dated [***] (the “[***]”), and such breach or default is not cured within ninety (90) days of such breach; provided, however, the [***] Subject Fund shall not be a “Watched Fund” if the Class B Member (as defined in the [***]) waives in writing the foregoing “Removal Event” or otherwise confirms in writing that it will not exercise any right to remove the Class A Member (as defined in the [***]) as the [***] of the [***] Subject Fund.

For the avoidance of doubt, at such time as none of the conditions set forth in clauses (i) through (xii) above is true in respect of any Subject Fund previously classified as a “Watched Fund”, then such Subject Fund shall no longer be a

2Required Group Agent Action No. 26

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

“Watched Fund” for any purpose under the Loan Agreement to which this Appendix 2 is attached or any other Financing Document referenced therein.”

(e)Appendix 4 of the Loan Agreement shall be amended and restated as set forth in Exhibit 2 attached hereto; and

(f)Appendix 5 of the Loan Agreement shall be amended and restated as set forth in Exhibit 3 attached hereto.

Section 2.Consents.  Subject to the prior satisfaction of the conditions precedent described in Section 3 hereof:

(a)the Required Group Agents consent to the Loan Agreement Amendments, with acknowledgement by each of the Administrative Agent and the Collateral Agent; and

(b)the Administrative Agent and the Required Group Agents consent to the Subject Fund Transactions pursuant to and in accordance with Section 2.10(a) of the Loan Agreement.

Section 3.Conditions Precedent.  This Action shall be effective upon the satisfaction of the following conditions precedent:

(a)The Administrative Agent shall have received counterparts of this Action, executed and delivered by each of the other parties hereto.

(b)The Administrative Agent shall have received a certificate of the Borrower dated as of the Effective Date signed by a Responsible Officer of the Borrower (i) making the Tax Equity Representations with respect to [***] and (ii) certifying that each representation and warranty of the Borrower contained in Article 4 of the Loan Agreement is true and correct in all material respects as of the Effective Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all material respects as of such earlier date) other than those representations and warranties that are modified by materiality by their own terms, which shall be true and correct in all respects as of the Effective Date (unless such representation or warranty relates solely to an earlier date, in which case it shall have been true and correct in all respects as of such earlier date).

(c)The Borrower shall have delivered or caused to be delivered to the Administrative Agent a Tax Equity Required Consent from [***] in connection with the Subject Fund Transactions.

(d)Each of the Administrative Agent and each Group Agent shall have received an opinion, dated no earlier than the Effective Date, of Wilson Sonsini Goodrich & Rosati, counsel to the Loan Parties, the Borrower Subsidiary Parties and SolarCity, in form and substance reasonably acceptable to the Administrative Agent, the Collateral Agent and the Majority Group Agents, with respect to the Subject Fund Transactions.

(e)Each of the Administrative Agent and each Group Agent shall have received opinions, dated no earlier than the Effective Date, of Proskauer Rose LLP, special bankruptcy counsel to the Loan Parties, the Borrower Subsidiary Parties and SolarCity, each in form and substance reasonably acceptable to the Administrative Agent, the Collateral Agent and the Majority Group Agents, with respect to the Subject Fund Transactions.

3Required Group Agent Action No. 26

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

(f)The Administrative Agent and the Collateral Agent shall have received (i) searches of UCC filings in the jurisdiction of incorporation or formation, as applicable, of each of the New Entities and the Borrower and each jurisdiction where a filing would need to be made in order to perfect the security interest of the Collateral Agent (for the benefit of the Secured Parties) in the Collateral in respect of the New Entities (the “New Collateral”), (ii) copies of the financing statements on file in such jurisdictions and evidence that no liens exist on the New Collateral pledged by [***] and the Borrower other than Permitted Liens of the type set forth in clauses (b), (c) or (d) of the definition thereof and (iii) copies of tax lien, judgment and bankruptcy searches in such jurisdictions.

(g)The Collateral Agent shall have received all documentation in connection with the New Collateral, including (i) a Joinder Agreement in the form attached as Exhibit C to the Security Agreement, executed by each of [***], the Collateral Agent and the Borrower, dated as of the Effective Date, (ii) a Joinder Agreement in the form attached as Exhibit B-1 to the CADA, executed by each of [***], the Collateral Agent and the Borrower, dated as of the Effective Date, (iii) a Joinder Agreement in the form attached as Exhibit C to the Borrower Subsidiary Party Security Agreement, executed by each of [***] and the Collateral Agent, dated as of the Effective Date and (iv) any other data, documentation, analysis or report reasonably requested by the Administrative Agent with respect to the New Entities.

(h) (i) The UCC financing statements relating to the New Collateral shall have been duly filed in each office and in each jurisdiction where required in order to create and perfect the first priority Lien and security interest set forth in the Collateral Documents (as supplemented and as such term is defined in the Loan Agreement, as amended) and (ii) the Borrower shall have properly delivered or caused to be delivered to the Collateral Agent all New Collateral in which the Lien and security interest described above is permitted to be perfected by possession or control, including delivery of original certificates representing all issued and outstanding Equity Interests in [***] and the pledged interests in [***] pursuant to the Borrower Subsidiary Party Security Agreement, along with the applicable blank transfer powers and proxies.

(i)Each of the other conditions precedent as set forth in Section 3.4 of the Loan Agreement shall have been satisfied with respect to the Subject Fund Transactions.

(j)The Administrative Agent shall have received for its own account all costs and expenses described in Section 6 of this Action, for which invoices have been presented in connection herewith.

Section 4.Reference to and Effect on Financing Documents. Each of the Loan Agreement and the other Financing Documents is and shall remain unchanged and in full force and effect, and, except as expressly set forth herein, nothing contained in this Action shall, by implication or otherwise, limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Administrative Agent or any of the other Secured Parties, or shall alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in each of the Loan Agreement and any other Financing Document. This Action shall also constitute a “Financing Document” for all purposes of the Loan Agreement and the other Financing Documents.

4Required Group Agent Action No. 26

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Section 5.Incorporation by Reference.  Sections 10.5 (Entire Agreement), 10.6 (Governing Law), 10.7 (Severability), 10.8 (Headings), 10.11 (Waiver of Jury Trial), 10.12 (Consent to Jurisdiction), 10.14 (Successors and Assigns) and 10.16 (Binding Effect; Counterparts) of the Loan Agreement are hereby incorporated by reference herein, mutatis mutandis.

Section 6.Expenses. The Borrower agrees to reimburse the Administrative Agent in accordance with Section 10.4(b) of the Loan Agreement for its reasonable and documented out-of-pocket expenses in connection with this Action, including reasonable and documented fees and out-of-pocket expenses of legal counsel.

Section 7.Construction. The rules of interpretation specified in Section 1.2 of the Loan Agreement also apply to this Action, mutatis mutandis.

[Signature Pages Follow]

5Required Group Agent Action No. 26

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the parties hereto have caused this Action to be duly executed by their respective authorized officers as of the day and year first written above.

MEGALODON SOLAR, LLC,

as Borrower

By: /s/ Lyndon Rive

Name:Lyndon Rive

Title:President

[ Signature Page to Required Group Agent Action No. 26 ]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

BANK OF AMERICA, N.A.,

as a Group Agent

By: /s/ Sheikh Omer-Farooq

Name:Sheikh Omer-Farooq

Title:Managing Director

[ Signature Page to Required Group Agent Action No. 26 ]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

CIT BANK, N.A.,

as a Group Agent

By: /s/ Rhys Marsh

Name:Rhys Marsh

Title:Director

[ Signature Page to Required Group Agent Action No. 26 ]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

CREDIT SUISSE AG, NEW YORK BRANCH,

as a Group Agent

By: /s/ Erin McCutcheon

Name:Erin McCutcheon

Title:Vice President

By: /s/ Jason Muncy

Name:Jason Muncy

Title:Vice President

[ Signature Page to Required Group Agent Action No. 26 ]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

DEUTSCHE BANK AG, NEW YORK BRANCH,

as a Group Agent

By: /s/ Vinod Mukani

Name:Vinod Mukani

Title:Director

By: /s/ Gregory Leveto

Name:Gregory Leveto

Title:Vice President

[ Signature Page to Required Group Agent Action No. 26 ]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

ING CAPITAL, LLC,

as a Group Agent

By: /s/ Thomas Cantello

Name:Thomas Cantello

Title:Director

By: /s/ Erwin Thomet

Name:Erwin Thomet

Title:Managing Director

[ Signature Page to Required Group Agent Action No. 26 ]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

KEYBANK NATIONAL ASSOCIATION,

as a Group Agent

By: /s/ Benjamin C. Cooper

Name:Benjamin C. Cooper

Title:Vice President

[ Signature Page to Required Group Agent Action No. 26 ]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

National Bank of Arizona,

as a Group Agent

By: /s/ Kate Smith

Name:Kate Smith

Title:Vice President

[ Signature Page to Required Group Agent Action No. 26 ]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

SILICON VALLEY BANK,

as a Group Agent

By: /s/ Sayoji Goli

Name:Sayoji Goli

Title:Vice President

[ Signature Page to Required Group Agent Action No. 26 ]

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EXHIBIT 1

APPENDIX 1

ADVANCE RATE

The “Advance Rate” means

(i) For a Subject Fund the following percentages:

Subject Fund	Advance Rate	Cash Sweep Fund or Non-Cash Sweep Fund
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]
[***]	[***]%	[***]

(ii) In respect of any Potential New Fund that becomes a Subject Fund, a percentage as shall be determined in accordance with this Appendix 1 following the completion of due diligence by the Administrative Agent, which by way of example shall be:

Advance Rate

Exhibit 1

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

For each Cash Sweep Fund, Non-Cash Sweep Fund and Other Structure, the Advance Rate will be the percentage determined for each System in such Subject Fund based on the “Type of Fund,” in accordance with the table below.
Type of Fund
Cash Sweep Fund (baseline: CB (see below))	[***]
Non Cash Sweep Fund ([***]% baseline)	[***]%
Other Non-Financed Structure ([***]% baseline)	[***]%
Other Financed Structure	[***]%

“CB” or “Cash Sweep Fund Baseline” means, the lesser of (a) [***]% and (b) the percentage obtained by dividing (i) the maximum amount of debt that can be fully supported by Net Cash Flows distributable to the Managing Member(s) of such Subject Fund assuming interest is accruing at the Default Rate when applying the ITC Downside Case to that particular Subject Fund and only that Subject Fund by (ii) the Discounted Solar Asset Balance of such Subject Fund.

“ITC Downside Case” means a scenario in which a 30% reduction in fair market value occurs in the first month that a Subject Fund is included in the Available Borrowing Base and the Aggregate Advance Model is adjusted to calculate the Net Cash Flows distributable to the Managing Member(s) of such Subject Fund in light of such reduction in fair market value and any applicable Cash Sweep Event (as defined in Appendix 7).

For avoidance of doubt, the amounts set forth in this clause (ii) are indicative subject to final determination by the Administrative Agent at the time such Subject Fund is included in the Available Borrowing Base;

(iii) [Reserved].

(iv) All PV Systems in any Watched Fund shall have an Advance Rate of [***]% for purposes of calculating the Available Borrowing Base. For avoidance of doubt, this shall include any PV Systems in a Watched Fund that were financed in previous tranches and whose Net Cash Flows were incorporated in previous Available Borrowing Base calculations.

(v) To the extent that, despite negotiating in good faith, the Administrative Agent and the Borrower cannot agree on the Advance Rate under clause (ii) of this Appendix 1, the Advance Rate determined by the Administrative Agent, acting at the direction of the Majority Group Agents, shall prevail.

Exhibit 1

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EXHIBIT 2

APPENDIX 4

TAX EQUITY STRUCTURES, PARTNERSHIPS, LESSOR PARTNERSHIPS, LESSORS, SUBJECT FUNDS, MANAGING MEMBERS, FUNDED SUBSIDIARIES, LESSEES, CASH SWEEP DESIGNATIONS AND INVESTORS

Tax Equity Structure	Partnership / Lessor Partnership (Subject Fund)	Partnership Managing Member / Lessor Partnership Managing Member	Funded Subsidiaries (Subject Fund and Managing Member, if any)	Lessee	Full Cash-Sweep Fund, Partial Cash-Sweep Fund or Non-Cash Sweep Fund	Investor(s)
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]

Exhibit 2

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

Tax Equity Structure	Partnership / Lessor Partnership (Subject Fund)	Partnership Managing Member / Lessor Partnership Managing Member	Funded Subsidiaries (Subject Fund and Managing Member, if any)	Lessee	Full Cash-Sweep Fund, Partial Cash-Sweep Fund or Non-Cash Sweep Fund	Investor(s)
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]
[***]	[***]	[***]	•[***]	[***]	[***]	[***]

Exhibit 2

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EXHIBIT 3

APPENDIX 5

PROJECT DOCUMENTS

1. [***] Subject Fund

• Master Lease, dated as of [***], by and between [***] and [***].

• Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Amendment to Equity Capital Contribution Agreement, dated as of [***] (to add [***] as a Project State).

• Operating Agreement of [***], dated as of [***], by and between [***] and [***].

• Operating Agreement of [***], dated as of [***], by and among [On File with Administrative Agent], [***] and [***].

• Second Amended and Restated Limited Liability Company Agreement of [***] dated as of [***], by Megalodon Solar, LLC.

• Pass-Through Agreement, dated as of [***], by and between [***] and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent], [***] and [***].

2. [***] Subject Fund

• Master Lease, dated as of [***], by and between [***] and [***].

• Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Amendment to Equity Capital Contribution Agreement, dated as of [***] (to add [***] as a Project State) by and among SolarCity, [***] and [***].

• First Amendment to Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Operating Agreement of [***], dated as of [***], by and between [***] and [***].

• Operating Agreement of [***], dated as of [***], by and between [On File with Administrative Agent] and [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Second Amended and Restated Limited Liability Company Agreement of [***] dated as of [***], by Megalodon Solar, LLC.

• Pass-Through Agreement, dated as of [***], by and between [***] and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent]and [***].

3. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and among [***], [On File with Administrative Agent] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Amendment No. 1 to Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], by SolarCity in favor of [On File with Administrative Agent] and [On File with Administrative Agent].

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity and [***].

4. [***] Subject Fund

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Contribution Agreement (Systems), dated as of [***], by and among [***], [***], Megalodon Solar, LLC and [***].

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

5. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amendment No. 1 to Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent].

6. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Amendment No. 1 to Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity Corporation and [***].

7. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

8. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [***].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Capital Modification Rights Agreement, dated as of [***], by and among SolarCity, [***] and [***].

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], from SolarCity in favor of [***] and [***].

• Guaranty, dated as of [***], from [On File with Administrative Agent] in favor of [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Asset Management Agreement, dated as of [***], by and between SolarCity and [***].

9. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and among [***], [On File with Administrative Agent] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Guaranty, dated as of [***], by SolarCity in favor of [On File with Administrative Agent] and [On File with Administrative Agent].

• Transition Manager Agreement, dated as of [***], by and among [***], SolarCity and [***].

• SREC Services Agreement, dated as of [***], by and between SolarCity and [***].

10. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity and [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Guaranty, dated as of [***], from SolarCity in favor of [On File with Administrative Agent].

11. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Guaranty, dated as of [***], by and between SolarCity Corporation and [On File with Administrative Agent].

12. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Second Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity and [***].

• Asset Management Agreement, dated as of [***], by and between SolarCity and [***].

• Master Purchase and Equity Capital Contribution Agreement, dated as of [***], by and among SolarCity Corporation, [***], [***] and [On File with Administrative Agent].

• Amendment Agreement, dated as of [***], by and among SolarCity Corporation, [***], [***] and [On File with Administrative Agent].

• Guaranty, dated as of [***], by SolarCity Corporation in favor of [On File with Administrative Agent].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

• Accession Agreement, dated as of [***], by and among SolarCity Corporation, [***] and [***].

• SREC Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

13. [***] Subject Fund

• Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amendment No. 1 to Limited Liability Company Agreement of [***], dated as of [***], by and between [***] and [On File with Administrative Agent].

• Amended and Restated Limited Liability Company Agreement of [***], dated as of [***], by Megalodon Solar, LLC.

• Maintenance Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Administrative Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Master Development, EPC & Purchase Agreement, dated as of [***], by and between SolarCity Corporation and [***].

• Guaranty, dated as of [***], by SolarCity Corporation in favor of [On File with Administrative Agent].

• Accession Agreement, dated as of [***], by and among [***], SolarCity Corporation and [***].

• SREC Services Agreement, dated as of [***], by and between SolarCity Corporation and [***].

Exhibit 3

[***] Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302(a)

OF THE SARBANES-OXLEY ACT OF 2002

I, Lyndon R. Rive, certify that:

1) I have reviewed this Quarterly Report on Form 10-Q of SolarCity Corporation;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Lyndon R. Rive

Lyndon R. Rive

Chief Executive Officer

(Principal Executive Officer)

Date: November 9, 2016

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302(a)

OF THE SARBANES-OXLEY ACT OF 2002

I, J. Radford Small, certify that:

1) I have reviewed this Quarterly Report on Form 10-Q of SolarCity Corporation;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ J. Radford Small

J. Radford Small

Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: November 9, 2016

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Lyndon R. Rive, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of SolarCity Corporation for the quarterly period ended September 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of SolarCity Corporation.

Date: November 9, 2016

/s/ Lyndon R. Rive

Lyndon R. Rive

Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Radford Small, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of SolarCity Corporation for the quarterly period ended September 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of SolarCity Corporation.

Date: November 9, 2016

/s/ J. Radford Small

J. Radford Small

Chief Financial Officer

(Principal Financial and Accounting Officer)

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2016 shares
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	SCTY
Entity Registrant Name	SOLARCITY CORP
Entity Central Index Key	0001408356
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	100,739,878

XML

Consolidated Balance Sheets - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents		$ 259,342	$ 382,544
Short-term investments			11,311
Restricted cash		61,079	39,864
Accounts receivable (net of allowances for doubtful accounts of $12,233 and $4,292 as of September 30, 2016 and December 31, 2015, respectively)		65,112	33,998
Rebates receivable (net of reserves of $2,972 and $2,207 as of September 30, 2016 and December 31, 2015, respectively)		11,999	11,545
Inventories		206,205	342,951
Prepaid expenses and other current assets		73,247	79,925
Total current assets		676,984	902,138
Solar energy systems, leased and to be leased – net		5,493,026	4,375,553
Property, plant and equipment – net		250,934	262,387
Build-to-suit lease asset under construction		752,425	284,500
Goodwill and intangible assets – net		472,557	517,109
MyPower customer notes receivable, net of current portion		526,703	488,461
MyPower deferred costs		236,574	215,708
Other assets		271,625	241,262
Total assets	[1]	8,680,828	7,287,118
Current liabilities:
Accounts payable		253,077	364,973
Distributions payable to noncontrolling interests and redeemable noncontrolling interests		25,106	26,769
Current portion of deferred U.S. Treasury grant income		14,549	15,336
Accrued and other current liabilities		236,951	276,506
Current portion of deferred revenue		113,908	103,078
Current portion of long-term debt		285,507	180,048
Current portion of solar asset-backed notes		19,658	13,864
Current portion of financing obligation		44,953	34,479
Total current liabilities		1,176,194	1,193,362
Deferred revenue, net of current portion		1,084,442	1,010,491
Long-term debt, net of current portion		1,283,540	1,006,595
Convertible senior notes		884,679	881,585
Convertible senior notes issued to related parties		12,978	12,975
Solar asset-backed notes, net of current portion		550,695	395,667
Long-term deferred tax liability		71	1,373
Financing obligation, net of current portion		71,772	68,940
Deferred U.S. Treasury grant income, net of current portion		351,738	382,283
Build-to-suit lease liability		752,425	284,500
Other liabilities and deferred credits		361,996	279,006
Total liabilities	[1]	6,682,118	5,552,555
Commitments and contingencies (Note 13)
Redeemable noncontrolling interests in subsidiaries		284,158	320,935
Stockholders' equity:
Common stock, $0.0001 par value - authorized, 1,000,000 shares as of September 30, 2016 and December 31, 2015; issued and outstanding, 100,740 and 97,864 shares as of September 30, 2016 and December 31, 2015, respectively		10	10
Additional paid-in capital		1,315,874	1,195,246
Accumulated deficit		(343,952)	(316,690)
Total stockholders' equity		971,932	878,566
Noncontrolling interests in subsidiaries		742,620	535,062
Total equity		1,714,552	1,413,628
Total liabilities and equity		8,680,828	7,287,118
Solar Bonds [Member]
Current liabilities:
Current portion of solar bonds		17,385	13,189
Current portion of solar bonds issued to related parties		165,100	165,120
Solar bonds, net of current portion		51,488	35,678
Solar bonds issued to related parties, net of current portion		$ 100,100	$ 100

[1] SolarCity Corporation’s, or the Company’s, consolidated assets as of September 30, 2016 and December 31, 2015 included $3,887,972 and $2,866,882, respectively, of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets included solar energy systems, leased and to be leased - net of $3,731,864 and $2,779,363 as of September 30, 2016 and December 31, 2015, respectively; property, plant and equipment - net of $0 and $21,960 as of September 30, 2016 and December 31, 2015, respectively; cash and cash equivalents of $47,267 and $33,537 as of September 30, 2016 and December 31, 2015, respectively; inventory of $0 and $1,000 as of September 30, 2016 and December 31, 2015, respectively; restricted cash, current, of $20,108 and $522 as of September 30, 2016 and December 31, 2015, respectively; accounts receivable - net of $31,336 and $10,267 as of September 30, 2016 and December 31, 2015, respectively; prepaid expenses and other current assets of $2,321 and $2,713 as of September 30, 2016 and December 31, 2015, respectively; rebates receivable of $7,524 and $6,220 as of September 30, 2016 and December 31, 2015, respectively; and other assets of $47,552 and $11,300 as of September 30, 2016 and December 31, 2015, respectively. The Company’s consolidated liabilities as of September 30, 2016 and December 31, 2015 included $407,740 and $33,475, respectively, of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities included distributions payable to noncontrolling interests in subsidiaries and redeemable noncontrolling interests in subsidiaries of $25,106 and $26,769 as of September 30, 2016 and December 31, 2015, respectively; accounts payable of $7 and $1,954 as of September 30, 2016 and December 31, 2015, respectively; customer deposits of $2,276 and $2,928 as of September 30, 2016 and December 31, 2015, respectively; accrued liabilities and other payables of $4,178 and $1,824 as of September 30, 2016 and December 31, 2015, respectively; current portion of long-term debt of $10,352 and $0 as of September 30, 2016 and December 31, 2015, respectively; long-term debt, net of current portion of $365,821 and $0 as of September 30, 2016 and December 31, 2015, respectively

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Allowances for doubtful accounts		$ 12,233	$ 4,292
Rebate reserves		$ 2,972	$ 2,207
Common stock, par value		$ 0.0001	$ 0.0001
Common stock, shares authorized		1,000,000,000	1,000,000,000
Common stock, shares issued		100,740,000	97,864,000
Common stock, shares outstanding		100,740,000	97,864,000
Total assets	[1]	$ 8,680,828	$ 7,287,118
Solar energy systems, leased and to be leased – net		5,493,026	4,375,553
Property, plant and equipment – net		250,934	262,387
Cash and cash equivalents		259,342	382,544
Inventories		206,205	342,951
Restricted cash, current		61,079	39,864
Accounts receivable (net of allowances for doubtful accounts of $12,233 and $4,292 as of September 30, 2016 and December 31, 2015, respectively)		65,112	33,998
Prepaid expenses and other current assets		73,247	79,925
Rebates receivable		11,999	11,545
Other assets		271,625	241,262
Distributions payable to noncontrolling interests and redeemable noncontrolling interests		25,106	26,769
Accounts payable		253,077	364,973
Current portion of long-term debt		285,507	180,048
Long-term debt, net of current portion		1,283,540	1,006,595
VIEs [Member]
Total assets		3,887,972	2,866,882
Solar energy systems, leased and to be leased – net		3,731,864	2,779,363
Property, plant and equipment – net		0	21,960
Cash and cash equivalents		47,267	33,537
Inventories		0	1,000
Restricted cash, current		20,108	522
Accounts receivable (net of allowances for doubtful accounts of $12,233 and $4,292 as of September 30, 2016 and December 31, 2015, respectively)		31,336	10,267
Prepaid expenses and other current assets		2,321	2,713
Rebates receivable		7,524	6,220
Other assets		47,552	11,300
Non recourse Variable Interest Entity's (VIE) liabilities		407,740	33,475
Distributions payable to noncontrolling interests and redeemable noncontrolling interests		25,106	26,769
Accounts payable		7	1,954
Customer deposits		2,276	2,928
Accrued liabilities and other payables		4,178	1,824
Current portion of long-term debt		10,352	0
Long-term debt, net of current portion		$ 365,821	$ 0

[1] SolarCity Corporation’s, or the Company’s, consolidated assets as of September 30, 2016 and December 31, 2015 included $3,887,972 and $2,866,882, respectively, of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets included solar energy systems, leased and to be leased - net of $3,731,864 and $2,779,363 as of September 30, 2016 and December 31, 2015, respectively; property, plant and equipment - net of $0 and $21,960 as of September 30, 2016 and December 31, 2015, respectively; cash and cash equivalents of $47,267 and $33,537 as of September 30, 2016 and December 31, 2015, respectively; inventory of $0 and $1,000 as of September 30, 2016 and December 31, 2015, respectively; restricted cash, current, of $20,108 and $522 as of September 30, 2016 and December 31, 2015, respectively; accounts receivable - net of $31,336 and $10,267 as of September 30, 2016 and December 31, 2015, respectively; prepaid expenses and other current assets of $2,321 and $2,713 as of September 30, 2016 and December 31, 2015, respectively; rebates receivable of $7,524 and $6,220 as of September 30, 2016 and December 31, 2015, respectively; and other assets of $47,552 and $11,300 as of September 30, 2016 and December 31, 2015, respectively. The Company’s consolidated liabilities as of September 30, 2016 and December 31, 2015 included $407,740 and $33,475, respectively, of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities included distributions payable to noncontrolling interests in subsidiaries and redeemable noncontrolling interests in subsidiaries of $25,106 and $26,769 as of September 30, 2016 and December 31, 2015, respectively; accounts payable of $7 and $1,954 as of September 30, 2016 and December 31, 2015, respectively; customer deposits of $2,276 and $2,928 as of September 30, 2016 and December 31, 2015, respectively; accrued liabilities and other payables of $4,178 and $1,824 as of September 30, 2016 and December 31, 2015, respectively; current portion of long-term debt of $10,352 and $0 as of September 30, 2016 and December 31, 2015, respectively; long-term debt, net of current portion of $365,821 and $0 as of September 30, 2016 and December 31, 2015, respectively

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Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue from periodic billings:
Periodic operating lease billings and incentives	$ 96,837	$ 63,215	$ 245,931	$ 158,968
Sale of solar renewable energy credits	7,518	4,455	18,313	10,011
Revenue from solar energy systems under long-term loan arrangements	18,253	9,071	83,708	18,385
Total revenue from periodic billings	122,608	76,741	347,952	187,364
Solar energy systems and components sales revenue	57,522	19,727	105,219	47,641
Revenue from operating lease prepayments and upfront incentives	20,421	17,389	55,736	49,134
Total revenue	200,551	113,857	508,907	284,139
Cost of revenue:
Cost of periodic billings revenue (exclusive of depreciation and amortization)	24,189	17,907	59,996	38,397
Cost of solar energy systems and components sales revenue (exclusive of amortization and warranty)	49,025	20,523	108,851	48,854
Depreciation, amortization and warranty	55,745	50,139	167,180	106,517
Total cost of revenue	128,959	88,569	336,027	193,768
Gross profit	71,592	25,288	172,880	90,371
Operating expenses:
Sales and marketing	102,639	129,284	345,369	329,115
General and administrative	87,423	69,423	260,446	168,288
Pre-production expense	19,335		55,107
Restructuring and other	34,158		63,241
Research and development	14,129	17,652	42,423	42,173
Total operating expenses	257,684	216,359	766,586	539,576
Loss from operations	(186,092)	(191,071)	(593,706)	(449,205)
Interest and other expenses:
Interest expense (excluding amortization of debt discounts and fees) - recourse debt	10,974	8,215	29,890	19,932
Interest expense (excluding amortization of debt discounts and fees) - non-recourse debt	20,512	8,096	52,614	19,682
Other interest expense and amortization of debt discounts and fees, net	10,670	9,551	29,258	25,266
Other (income) expense, net	(2,058)	16,851	54,143	21,723
Total interest and other expenses	40,098	42,713	165,905	86,603
Loss before income taxes	(226,190)	(233,784)	(759,611)	(535,808)
Income tax benefit (provision)	848	(482)	907	(1,128)
Net loss	(225,342)	(234,266)	(758,704)	(536,936)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests	(278,557)	(215,193)	(731,442)	(473,978)
Net income (loss) attributable to stockholders	53,215	(19,073)	(27,262)	(62,958)
Net income (loss) attributable to common stockholders
Basic	53,215	(19,073)	(27,262)	(62,958)
Diluted	$ 56,165	$ (19,073)	$ (27,262)	$ (62,958)
Net income (loss) per share attributable to common stockholders
Basic	$ 0.53	$ (0.20)	$ (0.27)	$ (0.65)
Diluted	$ 0.48	$ (0.20)	$ (0.27)	$ (0.65)
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders
Basic	100,494,480	97,384,949	99,354,863	97,027,412
Diluted	118,077,365	97,384,949	99,354,863	97,027,412

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Operating activities:
Net loss	$ (758,704)	$ (536,936)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and write-offs	233,825	118,091
Change in fair value of interest rate swaps	48,589	12,570
Non-cash interest and other expense	4,368	12,554
Stock-based compensation, net of amounts capitalized	65,686	61,010
Tax impact of stock option exercises	7,738
Loss on extinguishment of long-term debt	610	1,093
Deferred income taxes	(1,302)	(102)
Non-cash reduction in financing obligation	(37,106)	(36,431)
Loss on disposal of property, plant and equipment and construction in progress	1,094	92
Changes in operating assets and liabilities:
Restricted cash	(64,430)	(19,814)
Accounts receivable	(31,114)	(15,623)
Rebates receivable	(454)	14,977
Inventories	137,300	(91,624)
Prepaid expenses and other current assets	9,134	(42,305)
MyPower deferred costs	(21,325)	(150,267)
Other assets	22,614	(12,769)
Accounts payable	(110,830)	56,695
Accrued and other liabilities	23,730	92,321
Deferred revenue	44,757	10,151
Net cash used in operating activities	(425,820)	(526,317)
Investing activities:
Payments for the cost of solar energy systems, leased and to be leased	(1,230,064)	(1,134,929)
Purchase of property, plant and equipment	(53,445)	(147,784)
Investment in promissory notes receivable and other advances		(1,189)
Purchases of short-term investments		(44,592)
Proceeds from sales and maturities of short-term investments	11,243	136,560
Acquisition of business, net of cash acquired		(9,509)
Payments for the acquisition of noncontrolling interests	(13,664)
Payments for settlements of interest rate swaps	(12,703)
Net cash used in investing activities	(1,298,633)	(1,201,443)
Financing activities:
Borrowings under long-term debt	1,002,796	783,123
Repayments of long-term debt	(630,892)	(211,976)
Proceeds from issuance of solar asset-backed notes	221,035	119,790
Repayments of borrowings under solar asset-backed notes	(61,914)	(13,859)
Payment of deferred purchase consideration		(3,747)
Proceeds from financing obligation	41,538	26,398
Repayments of financing obligation	(358)	(5,136)
Repayment of capital lease obligations	(7,098)	(3,223)
Proceeds from investment by noncontrolling interests and redeemable noncontrolling interests in subsidiaries	1,022,687	754,916
Distributions paid to noncontrolling interests and redeemable noncontrolling interests in subsidiaries	(102,377)	(67,154)
Net cash provided by financing activities before equity and convertible notes issuances	1,605,449	1,585,736
Equity issuances:
Proceeds from exercise of stock options	3,540	10,391
Tax impact of stock option exercises	(7,738)
Net cash provided by equity issuances	(4,198)	10,391
Net cash provided by financing activities	1,601,251	1,596,127
Net decrease in cash and cash equivalents	(123,202)	(131,633)
Cash and cash equivalents, beginning of period	382,544	504,383
Cash and cash equivalents, end of period	259,342	372,750
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	79,162	34,418
Cash paid during the period for taxes, net of refunds	10,843	257
Solar Bonds [Member]
Financing activities:
Proceeds from issuance of solar bonds	32,613	41,594
Proceeds from issuance of solar bonds issued to related parties	265,010	$ 165,010
Repayments of borrowings under solar bonds	(12,581)
Repayments of borrowings under solar bonds issued to related parties	$ (165,010)

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Organization

9 Months Ended

Sep. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization

1. Organization

SolarCity Corporation, or the Company, was incorporated as a Delaware corporation on June 21, 2006. The Company is primarily engaged in the design, manufacture, installation and sale or lease of solar energy systems to residential and commercial customers, or sale of electricity generated by solar energy systems to customers. The Company’s headquarters are located in San Mateo, California.

Merger Agreement with Tesla

On July 31, 2016, the Company entered into an Agreement and Plan of Merger, or the Merger Agreement, with Tesla Motors, Inc., or Tesla, pursuant to which a wholly-owned subsidiary of Tesla would, subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, merge with and into the Company, and the Company would survive the merger as a wholly-owned subsidiary of Tesla. Pursuant to the terms of the Merger Agreement and subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, at the effective time of the merger, each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the merger would be converted into 0.110, or the Exchange Ratio, shares of Tesla’s common stock. The Company’s outstanding option and restricted stock unit awards would be converted into corresponding equity awards of Tesla’s common stock based on the Exchange Ratio, with the awards retaining the same vesting and other terms and conditions as in effect immediately prior to the effective time of the merger (except for certain Founder Awards granted in 2015, which would be cancelled for no consideration). The Company intends the merger to qualify as a “reorganization” for U.S. federal income tax purposes.

The consummation of the merger is subject to, among other things, approval by the stockholders of both Tesla and the Company. If the Company terminates the Merger Agreement, it may be required to pay Tesla a termination fee ranging from $26.1 million to $78.2 million. The Company’s special meeting of stockholders to vote on the merger is scheduled to take place on November 17, 2016.

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Summary of Significant Accounting Policies and Procedures

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Procedures

2. Summary of Significant Accounting Policies and Procedures

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles, including the regulations of the Securities and Exchange Commission, or GAAP. Certain information and disclosures normally included in annual financial statements have been condensed or omitted for these interim financial statements, in accordance with GAAP. As such, these interim financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes included in the Company’s annual report on Form 10-K dated February 10, 2016. These interim financial statements have been prepared on the same basis as annual financial statements and, in the opinion of management, reflect all adjustments (all of which are normal and recurring) necessary to present fairly the Company’s financial results. However, the results of interim periods are not necessarily indicative of the results to be expected for future interim or annual periods.

The condensed consolidated financial statements reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. In accordance with the provisions of Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 810, Consolidation, the Company consolidates any variable interest entity, or VIE, of which it is the primary beneficiary. The Company forms VIEs with its financing fund investors in the ordinary course of business in order to facilitate the funding and monetization of certain attributes associated with its solar energy systems. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company does not consolidate a VIE in which it has a majority ownership interest when the Company is not considered the primary beneficiary. The Company has determined that it is the primary beneficiary of a number of VIEs (see Note 8, VIE Arrangements). The Company evaluates its relationships with all the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation. In particular, the consolidated statements of operations have been expanded to present revenue generated from periodic billings under long-term contracts, including customer operating leases and MyPower contracts, as well as sales of solar renewable energy credits. Accordingly, the previously presented operating leases and solar energy systems incentives revenue has been separated into (i) revenue generated from periodic billings under operating leases as well as periodic incentives generated by the operating leases; (ii) revenue generated from sales of solar renewable energy credits and (iii) revenue from operating lease prepayments and upfront incentives that is recognized over the term of the operating lease. Additionally, revenue from sales under MyPower contracts, which was previously presented within revenue from solar energy systems and components sales, has been separately presented as revenue from solar energy systems under long-term loan arrangements; this together with periodic operating lease billings and incentives revenue and sales of solar renewable energy credits revenue comprise the total revenue from periodic billings. Furthermore, the cost of revenue line items have been expanded to conform to the current period revenue presentation and to separately present non-cash expenses, including depreciation, amortization and warranty expenses. Also, the previously presented net interest expense has been separated into (i) interest expense on recourse debt excluding the amortization of any debt discounts or fees; (ii) interest expense on non-recourse debt excluding the amortization of any debt discounts or fees and (iii) all other net interest expense including the amortization of all debt discounts and fees.

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Management regularly makes significant estimates and assumptions regarding the selling price of undelivered elements for revenue recognition purposes, the collectability of accounts and rebates receivable, the valuation of inventories, the labor costs for long-term contracts used as a basis for determining the percentage of completion for such contracts, the fair values and residual values of solar energy systems subject to leases, the accounting for business combinations, the fair values and useful lives of acquired tangible and intangible assets, the fair value of contingent consideration payable under business combinations, the useful lives of solar energy systems, property, plant and equipment, the determination of accrued warranty, the determination of accrued liability for solar energy system performance guarantees, the determination of lease pass-through financing obligations, the discount rates used to determine the fair values of investment tax credits, the valuation of stock-based compensation, the determination of valuation allowances associated with deferred tax assets, asset impairment, the valuation of build-to-suit lease assets, the fair value of interest rate swaps and other items. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

As of July 1, 2016, Management increased its estimate of the useful lives of new solar energy systems from 30 years to 35 years. This updated estimate was the result of new engineering studies of recently deployed solar energy systems across the industry. The Company is applying this change in estimate on a prospective basis to solar energy systems placed in service on or after July 1, 2016.

Interest Rate Swaps

In the second quarter of 2015, the Company began entering into fixed-for-floating interest rate swap agreements to swap variable interest payments on certain debt for fixed interest payments, as required by its lenders. The Company has not designated any interest rate swaps as hedging instruments. Accordingly, all interest rate swaps are recognized at fair value on the consolidated balance sheets within other assets or other liabilities and deferred credits, with any changes in fair value recognized as other income or expense in the consolidated statements of operations and with any cash flows recognized as investing activities in the consolidated statements of cash flows. As of and for the periods ended September 30, 2016, the Company had interest rate swaps outstanding as follows (in thousands):

					Gross Gains				Gross Losses
	Aggregate		Gross		Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended
	Notional		Liability at		September 30,		September 30,		September 30,		September 30,
	Amount		Fair Value		2016		2016		2016		2016
Interest rate swaps	$	777,298	$	47,425	$	3,252	$	3,630	$	387	$	52,215

Fair Value of Financial Instruments

ASC 820, Fair Value Measurements, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

ASC 820 requires that the valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes inputs that may be used to measure fair value as follows:

• Level 1—Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

• Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As of September 30, 2016, the assets and liabilities carried at fair value on a recurring basis included cash equivalents, interest rate swaps and contingent consideration, and their fair values were as follows (in thousands):

	Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	3,437	$	—	$	—
Liabilities:
Interest rate swaps	$	—	$	47,425	$	—
Contingent consideration	$	—	$	—	$	83,973

The Company classified its money market funds within Level 1 because their fair values are based on their quoted market prices. The Company classified its interest rate swaps within Level 2 because their fair values are determined using models that utilized market observable inputs, including current and forward interest rates. The Company classified its contingent consideration within Level 3 because its fair value is determined using unobservable probability estimates and unobservable estimated discount rates applicable to the acquisition. During the nine months ended September 30, 2016, there were no transfers between the levels of the fair value hierarchy.

The contingent consideration is dependent on the achievement of the specified production milestones for the acquired business. The Company determined the fair value of the contingent consideration using a probability-weighted expected return methodology that considers the timing and probabilities of achieving these milestones and uses discount rates that reflect the appropriate cost of capital. The Company reassesses the valuation assumptions each reporting period, with any changes in the fair value accounted for in the consolidated statements of operations. The fair value of the contingent consideration is directly proportional to the estimated probabilities of achieving these milestones. On March 31, 2016, the Company determined that the first milestone was achieved and adjusted the accrued contingent consideration balance associated with the first milestone to the full amount payable of $48.3 million. On May 5, 2016, the Company issued 1.6 million shares of its common stock, valued at $34.2 million based on its stock price on the issuance date, to settle the liability. Accordingly, the Company recognized a gain of $14.1 million upon the settlement of the liability associated with the first milestone, which is included as an offset to general and administrative expense. The fair value of the contingent consideration balance related to the remaining milestones was determined using an estimated probability of achievement of 95% and discount rates ranging between 6% and 7%, which is included under other liabilities and deferred credits in the consolidated balance sheets. The following table summarizes the activity of the Level 3 contingent consideration balance in the nine months ended September 30, 2016 (in thousands):

Balance - beginning of the period	$	123,008
Settlement of liability		(34,170	)
Change in fair value		(4,865	)
Balance - end of the period	$	83,973

The Company’s financial instruments that are not carried at fair value include accounts receivable, customer notes receivable, rebates receivable, accounts payable, customer deposits, distributions payable to noncontrolling interests and redeemable noncontrolling interests, the participation interest, solar asset-backed notes, solar loan-backed notes, convertible senior notes, Solar Bonds and long-term debt. The carrying values of these financial instruments other than customer notes receivable, the participation interest, solar asset-backed notes, solar loan-backed notes, convertible senior notes, Solar Bonds and long-term debt approximated their fair values due to the fact that they were short-term in nature at September 30, 2016.

The Company estimates the fair value of convertible senior notes based on their last actively traded prices (Level 1) or market observable inputs (Level 2). The Company estimates the fair value of customer notes receivable, the participation interest, solar asset-backed notes, solar loan-backed notes, Solar Bonds and long-term debt based on rates currently offered for instruments with similar maturities and terms (Level 3). The following table presents their estimated fair values and their carrying values (in thousands):

	September 30, 2016
	CarryingValue		Fair Value
Participation interest	$	16,585	$	14,937
Solar asset-backed notes	$	439,988	$	439,082
Solar loan-backed notes	$	130,365	$	134,933
Convertible senior notes	$	897,657	$	697,750
MyPower customer notes receivable	$	533,534	$	533,534
Long-term debt	$	1,569,047	$	1,569,047
Solar bonds	$	334,073	$	334,073

Warranties

The Company provides a warranty on the installation and components of the solar energy systems it sells, including solar energy systems sold under Solar Loans, for periods typically between 10 to 30 years. The manufacturer’s warranty on the solar energy systems’ components, which is typically passed-through to customers, ranges from one to 25 years. For the solar energy systems under lease contracts or power purchase agreements, the Company does not accrue a warranty liability because those systems are owned by consolidated subsidiaries of the Company. Instead, any repair costs on those solar energy systems are expensed when they are incurred as a component of operating leases and solar energy systems incentives cost of revenue. The changes in the accrued warranty balance, recorded as a component of accrued and other current liabilities on the consolidated balance sheets, consisted of the following (in thousands):

	Asofandforthe
	Nine Months Ended
	September 30,
	2016
Balance - beginning of the period	$	22,993
Increase in liability (including 3,772 related to    MyPower contracts)		5,803
Change in estimate		1,587
Less warranty claims		(235	)
Balance - end of the period	$	30,148

Solar Energy Systems Performance Guarantees

The Company guarantees certain specified minimum solar energy production output for certain systems leased or sold to customers generally for a term of up to 30 years. The Company monitors the solar energy systems to ensure that these outputs are being achieved. The Company evaluates if any amounts are due to its customers and makes any payments periodically as specified in the customer contracts. As of September 30, 2016 and December 31, 2015, the Company recorded liabilities of $5.2 million and $3.1 million, respectively, under accrued and other current liabilities in the consolidated balance sheets, relating to these guarantees based on the Company’s assessment of its current exposure.

Solar Loans

In the second quarter of 2016, the Company began offering Solar Loans, whereby a third-party lender provides financing directly to a qualified customer to enable the customer to purchase and own a solar energy system installed by the Company. The Company and the customer enter into a standard solar energy system sale agreement. Separately, the customer enters into a loan agreement with one of the third-party lenders, who finances the full purchase price. The Company is not a party to the loan agreement between the customer and the third-party lender, and the third-party lender has no recourse against the Company with respect to the loan. Solar Loans are offered as the replacement for the MyPower program. The Company accounts for Solar Loans under its revenue recognition policy for solar energy systems and components sales. However, any fees that are paid or payable from the Company to the lender of a Solar Loan would be recognized as an offset against solar energy systems and components sales revenue, in accordance with ASC 605-50, Customer Payments and Incentives.

Solar Renewable Energy Credits

The Company accounts for solar renewable energy credits, or SRECs, when they are purchased by the Company or sold to third parties. For SRECs generated by solar energy systems owned by the Company and minted by government agencies, the Company does not recognize any specifically identifiable costs for those SRECs as there are no specific incremental costs incurred to generate the SRECs. For SRECs purchased by the Company, the Company carries these SRECs at their cost, subject to testing for impairment. The Company recognizes revenue from the sale of an SREC when the SREC is transferred to the buyer, and the cost of the SREC, if any, is then recorded within cost of periodic billings revenue.

Comprehensive Income (Loss)

The Company accounts for comprehensive income (loss) in accordance with ASC 220, Comprehensive Income. Under ASC 220, the Company is required to report comprehensive income (loss), which includes net income (loss) as well as other comprehensive income (loss). There were no significant other comprehensive income (losses) and no significant differences between comprehensive loss as defined by ASC 220 and net loss as reported in the consolidated statements of operations, for the periods presented.

Segment Information

Operating segments are defined as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the executive team, which is comprised of the chief executive officer, the chief financial officer, the chief technology officer and the chief revenue officer. Based on the financial information presented to and reviewed by the chief operating decision maker in deciding how to allocate the resources and in assessing the performance of the Company, the Company has determined that it has a single operating and reporting segment: solar energy products and services. The Company’s principal operations, revenue and decision-making functions are located in the United States.

Basic and Diluted Net Loss Per Share

The Company’s basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period.

The diluted net loss per share attributable to common stockholders is computed by giving effect to all potential common stock equivalents outstanding for the period determined using the treasury stock method or the if-converted method, as applicable. In periods when the Company incurred a net loss attributable to common stockholders, stock options, restricted stock units and convertible senior notes were considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is antidilutive.

Recently Issued Accounting Standards

In February 2015, the FASB issued Accounting Standards Update, or ASU, No. 2015-02, Amendments to the Consolidation Analysis, to amend the criteria for consolidation of certain legal entities. The Company adopted the ASU retrospectively on January 1, 2016. Adoption of the ASU did not have a material impact on the Company’s condensed consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, to change the accounting for subsequent adjustments to the provisional balances recognized in a business combination from retrospective to prospective. However, the ASU requires separate presentation or disclosure of the impact on prior periods had the adjustments been recognized as of the acquisition date. The Company adopted the ASU prospectively on January 1, 2016. Adoption of the ASU did not have a material impact on the Company’s condensed consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, to replace the existing revenue recognition criteria for contracts with customers and to establish the disclosure requirements for revenue from contracts with customers. In August 2015, the FASB issued ASU No. 2015-14, Deferral of the Effective Date, to defer the effective date of ASU No. 2014-09 to interim and annual periods beginning after December 15, 2017, with early adoption permitted. In March, April and May 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations, ASU No. 2016-10, Identifying Performance Obligations and Licensing, ASU No. 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, and ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, to clarify and amend the guidance in ASU No. 2014-09. Adoption of the ASUs is either retrospective to each prior period presented or retrospective with a cumulative adjustment to retained earnings or accumulated deficit as of the adoption date. The Company is currently assessing the impact of the ASUs on its condensed consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Going Concern, to provide guidance within GAAP requiring management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and requiring related disclosures. The ASU is effective for annual periods ending after December 15, 2016. The Company anticipates that the adoption of the ASU will not have a material impact on its condensed consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, to specify that inventory should be subsequently measured at the lower of cost or net realizable value, which is the ordinary selling price less any completion, transportation and disposal costs. However, the ASU does not apply to inventory measured using the last-in-first-out or retail methods. The ASU is effective for interim and annual periods beginning after December 15, 2016. Adoption of the ASU is prospective. The Company anticipates that the adoption of the ASU will not have a material impact on its condensed consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, to mainly change the accounting for investments in equity securities and financial liabilities carried at fair value as well as to modify the presentation and disclosure requirements for financial instruments. The ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is retrospective with a cumulative adjustment to retained earnings or accumulated deficit as of the adoption date. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, to require lessees to recognize most leases on the balance sheet, while recognition on the statement of operations will remain similar to current lease accounting. The ASU also eliminates real estate-specific provisions and modifies certain aspects of lessor accounting. The ASU is effective for interim and annual periods beginning after December 15, 2018. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-06, Contingent Put and Call Options in Debt Instruments, to clarify when a contingent put or call option to accelerate the repayment of debt is an embedded derivative. The ASU is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting,to simplify the accounting for the income tax effects from share-based compensation, the accounting for forfeitures and the accounting for statutory income tax withholding, among others. The ASU is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. Adoption of the ASU is modified retrospective, retrospective and prospective, depending on the specific provision being adopted. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, to require, among others, financial assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions and forecasts. The ASU is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, to reduce the diversity in practice with respect to the presentation of certain cash flows. The ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, to require the recognition of the income tax effects from an intra-entity transfer of an asset other than inventory. The ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

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Restructuring and Other Activities

9 Months Ended

Sep. 30, 2016

Restructuring And Related Activities [Abstract]

Restructuring and Other Activities

3. Restructuring and Other Activities

In the second quarter of 2016, the Company commenced certain restructuring activities in order to reduce costs and improve efficiency. Consequently, during the nine months ended September 30, 2016, the Company recognized $5.9 million of one-time employee termination benefits.

Additionally, the Company commenced winding-down its solar module manufacturing operations in China due to the tariffs imposed by the U.S. government on solar panels manufactured in China. As a result, the Company revised the remaining useful lives of its manufacturing equipment in China and recognized an impairment charge of $13.9 million during the nine months ended September 30, 2016. Furthermore, the Company concluded that certain acquired sales and marketing-related intangible assets were fully impaired and recognized an impairment charge of $21.2 million during the nine months ended September 30, 2016.

As of September 30, 2016, the outstanding restructuring liability was $3.2 million, which will be substantially settled in the fourth quarter of 2016.

In addition, during the nine months ended September 30, 2016, the Company incurred $5.8 million of pre-acquisition expenses arising from the Tesla Merger Agreement.

Moreover, during the three months ended September 30, 2016, certain amounts due to the Company since 2014 related to an uninstalled commercial project, but not related to any customer contracts or loans, were determined to be unrecoverable. Accordingly, the Company recognized a charge of $16.1 million. Despite this charge, the Company intends to continue its efforts to obtain reimbursement of these amounts.

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

4. Goodwill and Intangible Assets

Goodwill

As of September 30, 2016, the carrying value of goodwill was $321.9 million. There were no changes to the carrying value of goodwill during the nine months ended September 30, 2016.

Intangible Assets

The following is a summary of intangible assets as of September 30, 2016 (in thousands):

	Weighted-
	average
	useful life				Accumulated
	(in years)		Gross		amortization			Write-offs			Net
Developed technology - Silevo		10	$	115,000	$	(23,221	)	$	—			91,779
Developed technology - Zep Solar		7		60,100		(24,137	)		—			35,963
Trademarks and trade names		7		24,700		(9,903	)		—			14,797
Marketing database		5		17,427		(11,579	)		(5,848	)		—
PowerSaver agreement		10		17,077		(4,815	)		(12,262	)		—
Non-compete agreements		5		7,189		(4,043	)		(3,035	)		111
Customer relationships		6		6,190		(1,368	)		—			4,822
Other		6		10,028		(6,721	)		(87	)		3,220
Total		8.76	$	257,711	$	(85,787	)	$	(21,232	)	$	150,692

The following is a summary of intangible assets as of December 31, 2015 (in thousands):

	Weighted-
	average
	useful life				Accumulated
	(in years)		Gross		amortization			Net
Developed technology - Silevo		10	$	115,000	$	(14,596	)		100,404
Developed technology - Zep Solar		7		60,100		(17,664	)		42,436
Trademarks and trade names		7		24,700		(7,256	)		17,444
Marketing database		5		17,427		(9,953	)		7,474
PowerSaver agreement		10		17,077		(3,961	)		13,116
Non-compete agreements		5		7,189		(3,272	)		3,917
Customer relationships		6		6,190		(542	)		5,648
Other		6		10,028		(5,223	)		4,805
Total		8.26	$	257,711	$	(62,467	)	$	195,244

All intangible assets are amortized over their estimated useful lives. The changes to the carrying value of intangible assets were as follows (in thousands):

	September 30, 2016
Balance - beginning of the period	$	195,244
Amortization		(23,320	)
Write-offs		(21,232	)
Balance - end of the period	$	150,692

Amortization expense from intangible assets for the nine months ended September 30, 2016 and 2015 was allocated as follows (in thousands):

	Nine Months Ended September 30,
		2016	2015
Included in depreciation, amortization and warranty	$	15,534	$	15,551
Included in sales and marketing		7,786		8,953
Total amortization expense	$	23,320	$	24,504

The intangible assets related to the PowerSaver agreement, the non-compete agreements and the marketing database were fully impaired during the nine months ended September 30, 2016 following the restructuring of the Company’s operations. The impairment charge is included in restructuring and other expense (see Note 3, Restructuring and Other Activities). No intangible assets were impaired during the nine months ended September 30, 2015.  

As of September 30, 2016, the total future amortization expense from intangible assets was as follows (in thousands):

	Depreciation, amortization and warranty		Sales and marketing		Total
Three months ending December 31, 2016	$	5,166	$	1,170	$	6,336
2017		20,541		4,678		25,219
2018		20,541		4,657		25,198
2019		20,541		4,621		25,162
2020		19,821		4,423		24,244
Thereafter		44,533		—		44,533
Total	$	131,143	$	19,549	$	150,692

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Selected Balance Sheet Components

9 Months Ended

Sep. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Selected Balance Sheet Components

5. Selected Balance Sheet Components

Selected components of the consolidated balance sheets were as follows (in thousands):

	September 30, 2016			December 31, 2015
Inventories:
Raw materials	$	182,834		$	335,439
Work in progress		23,371			7,512
Total	$	206,205		$	342,951
Solar Energy Systems, Leased and To Be Leased - Net:
Solar energy systems leased to customers	$	4,675,091		$	3,619,214
Initial direct costs related to customer solar energy system lease acquisition costs		509,487			383,506
		5,184,578			4,002,720
Less accumulated depreciation and amortization		(398,806	)		(275,158	)
		4,785,772			3,727,562
Solar energy systems under construction		364,281			358,010
Solar energy systems to be leased to customers		342,973			289,981
Solar energy systems, leased and to be leased - net(1)(2)	$	5,493,026		$	4,375,553
Property, Plant and Equipment - Net
Manufacturing facilities - Fremont, California:
Manufacturing and lab equipment	$	91,694		$	84,418
Leasehold improvements		55,841			53,902
Manufacturing facilities - China:
Manufacturing and lab equipment(3)		21,793			21,714
Land and buildings		6,706			6,711
Vehicles		35,335			44,036
Computer hardware and software		56,186			41,294
Furniture and fixtures		15,249			13,611
Leasehold improvements - other		23,015			19,546
Other(4)		44,935			30,861
		350,754			316,093
Less accumulated depreciation and amortization		(99,820	)		(53,706	)
Property, plant and equipment - net	$	250,934		$	262,387
Accrued and Other Current Liabilities:
Accrued expenses	$	82,884		$	69,034
Income tax payable		—			41,016
Accrued compensation		83,784			64,988
Current portion of contingent consideration		—			42,912
Accrued warranty		30,148			22,993
Accrued professional services fees		12,327			9,915
Current portion of capital lease obligation		11,588			8,208
Other current liabilities		16,220			17,440
Total	$	236,951		$	276,506

	September 30, 2016		December 31, 2015
Other Liabilities and Deferred Credits:
Deferred gain on sale-leaseback transactions, net of current portion	$	49,114	$	51,547
Deferred rent expense		14,132		16,184
Interest rate swaps liability		47,425		11,544
Deferred solar renewable energy credits income		20,458		8,855
Capital lease obligation		37,210		39,475
Liability for receipts from an investor(5)		47,088		17,975
Contingent consideration		83,973		80,096
Participation interest		16,585		15,919
Other non-current liabilities		46,011		37,411
Total	$	361,996	$	279,006

(1) Included in solar energy systems leased to customers as of September 30, 2016 and December 31, 2015 was $66.4 million for each period related to capital leased assets with an accumulated depreciation of $12.7 million and $10.6 million, respectively.

(2) Included in solar energy systems, leased and to be leased to customers as of September 30, 2016 and December 31, 2015 was $13.8 million and $6.3 million, respectively, related to energy storage systems with an accumulated depreciation of $0.8 million and $0.5 million, respectively.

(3) The manufacturing equipment in China was fully impaired during the nine months ended September 30, 2016 as the Company restructured its operations in China. The impairment charge is included in restructuring and other expense (see Note 3, Restructuring and Other Activities).

(4) Included in other property, plant and equipment - net as of September 30, 2016 and December 31, 2015 was $37.1 million and $29.1 million, respectively, related to capital leased assets with an accumulated depreciation of $11.0 million and $5.6 million, respectively.

(5) The liability for receipts from an investor represents amounts received from an investor under a lease pass-through fund arrangement for monetization of investment tax credits, or ITCs, for assets not yet placed in service. This amount is reclassified to deferred revenue when the assets are placed in service.

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Cash Equity Financings

9 Months Ended

Sep. 30, 2016

Cash Equity Financings [Abstract]

Cash Equity Financings

6. Cash Equity Financings

On May 2, 2016, the Company pooled and transferred its interests in certain financing funds into a special purpose entity, or SPE, and issued $121.7 million in aggregate principal of debt of the SPE (see Note 7, Indebtedness) and also issued $100.7 million of equity interests in the SPE, both to the same investor. The debt is secured by, among other things, the SPE’s interests in the financing funds. The Company has determined that the SPE is a variable interest entity and that the Company is the primary beneficiary of the SPE by reference to the power and benefits criterion under ASC 810, Consolidation. Accordingly, the Company consolidates the SPE in its consolidated financial statements and accounts for the investor’s equity interest in the SPE as a noncontrolling interest (see Note 8, VIE Arrangements). The Company did not recognize a gain or loss on the transfer of its interests in the financing funds and continues to consolidate the financing funds. The cash distributed from the financing funds to the SPE is used to service the principal payments, the interest payments, the SPE’s expenses and the distributions to the investor. Any remaining cash would be distributed to a wholly owned subsidiary of the Company. The SPE’s assets and cash flows are not available to the other creditors of the Company, and the investor has no recourse to the Company’s other assets. Of the net proceeds from this transaction, $125.0 million was used to partially prepay the revolving aggregation credit facility due in December 2018, $25.7 million was used to partially prepay the term loan due in December 2016 and the remaining amount was retained by the Company to fund its operations.

On September 8, 2016, the Company pooled and transferred its interests in certain financing funds into a SPE and issued $210.0 million in aggregate principal of debt of the SPE (see Note 7, Indebtedness) to a syndicate of banks and also issued $95.2 million of equity interests in the SPE to an investor. The debt is secured by, among other things, the SPE’s interests in the financing funds. The Company has determined that the SPE is a variable interest entity and that the Company is the primary beneficiary of the SPE by reference to the power and benefits criterion under ASC 810, Consolidation. Accordingly, the Company consolidates the SPE in its consolidated financial statements and accounts for the investor’s equity interest in the SPE as a noncontrolling interest (see Note 8, VIE Arrangements). The Company did not recognize a gain or loss on the transfer of its interests in the financing funds and continues to consolidate the financing funds. The cash distributed from the financing funds to the SPE is used to service the principal payments, the interest payments, the SPE’s expenses and the distributions to the investor. Any remaining cash would be distributed to a wholly owned subsidiary of the Company. The SPE’s assets and cash flows are not available to the other creditors of the Company, and the lenders and the investor have no recourse to the Company’s other assets. Of the net proceeds from this transaction, $192.3 million was used to partially prepay the revolving aggregation credit facility due in December 2018 and the remaining amount was retained by the Company to fund its operations.

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Indebtedness

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Indebtedness

7. Indebtedness

The following is a summary of the Company’s debt as of September 30, 2016 (dollars in thousands):

	Unpaid						Unused
	Principal		Net Carrying Value				Borrowing
	Balance		Current		Long-Term		Capacity		InterestRate	Maturity Dates
Recourse debt:
Secured revolving credit facility	$	364,000	$	22,769	$	338,562	$	4,920	3.8%-5.8%	December 2016 - December2017
Vehicle and other loans		23,515		15,171		8,344		—	2.9%-7.6%	March 2017 - June2019
2.75% convertible senior notes due in 2018		230,000		—		226,908		—	2.8%	November2018
1.625% convertible senior notes due in    2019		566,000		—		557,941		—	1.6%	November2019
Zero-coupon convertible senior notes    due in 2020		113,000		—		112,808		—	0.0%	December 2020
Solar Bonds		334,407		182,485		151,588	*		1.1%-6.5%	October 2016 - January2031
Total recourse debt		1,630,922		220,425		1,396,151		4,920
Non-recourse debt:
Term loan due in December 2016		86,759		86,488		—		—	4.0%	December2016
Term loan due in December 2017		52,015		—		49,967		68,590	4.0%	December 2017
Term loan due in January 2021		153,841		4,638		144,772		4,001	4.2%	January 2021
MyPower revolving credit facility		134,287		133,552		—		55,713	3.7%-6.2%	January2017
Revolving aggregation credit facility		415,097		—		403,567		344,903	3.8%-4.4%	December2018
Solar Renewable Energy Credit Term Loan		35,866		12,538		22,473		1,542	6.6%-9.9%	April 2017 - July 2021
Cash Equity Debt I		120,582		3,211		116,340		—	5.7%	July 2033
Cash Equity Debt II		210,000		7,140		199,515		—	5.3%	July 2034
Solar Asset-backed Notes, Series 2013-1		43,013		3,400		36,867		—	4.8%	November2038
Solar Asset-backed Notes, Series 2014-1		61,801		2,976		56,247		—	4.6%	April 2044
Solar Asset-backed Notes, Series 2014-2		186,851		7,055		173,569		—	4.0%-Class A 5.4%-Class B	July 2044
Solar Asset-backed Notes, Series 2015-1		119,199		1,511		112,886		—	4.2%-Class A 5.6%-Class B	August 2045
Solar Asset-backed Notes, Series 2016-1		50,119		1,202		44,275		—	5.3%-Class A 7.5%-Class B	September 2046
Solar Loan-backed Notes, Series 2016-A		140,586		3,514		126,851		—	4.8%-Class A 6.9%-Class B	September 2048
Total non-recourse debt		1,810,016		267,225		1,487,329		474,749
Total debt	$	3,440,938	$	487,650	$	2,883,480	$	479,669

* Out of the $350.0 million authorized to be issued by the Company’s board of directors, $15.6 million remained available to be issued. See below and Note 13, Related Party Transactions, for Solar Bonds issued to related parties.

The following is a summary of the Company’s debt as of December 31, 2015 (dollars in thousands):

	Unpaid						Unused
	Principal		Net Carrying Value				Borrowing
	Balance		Current		Long-Term		Capacity		Interest Rate	Maturity Date
Recourse debt:
Secured revolving credit facility	$	360,000	$	22,320	$	333,287	$	13,053	3.5%-5.8%	December 2016 - December 2017
Vehicle and other loans		28,173		12,562		15,610		—	2.5%-7.6%	January 2016 - June 2019
2.75% convertible senior notes due in 2018		230,000		—		225,795		—	2.8%	November 2018
1.625% convertible senior notes due in    2019		566,000		—		555,981		—	1.6%	November 2019
Zero-coupon convertible senior notes   due in 2020		113,000		—		112,784		—	0.0%	December 2020
Solar Bonds		214,324		178,309		35,778	#		1.3%-5.8%	January 2016 - December 2030
Total recourse debt		1,511,497		213,191		1,279,235		13,053
Non-recourse debt:
Term loan due in May 2016		34,622		33,918		—		—	3.5%	May 2016
Term loan due in December 2016		112,483		111,248		—		—	3.6%-3.7%	December 2016
MyPower revolving credit facility		213,125		—		210,735		26,875	3.0%-5.5%	January 2017
Revolving aggregation credit facility		455,693		—		446,963		194,307	3.1%-3.2%	December 2017
Solar Asset-backed Notes, Series 2013-1		45,845		3,342		39,669		—	4.8%	November 2038
Solar Asset-backed Notes, Series 2014-1		64,431		2,855		58,938		—	4.6%	April 2044
Solar Asset-backed Notes, Series 2014-2		193,755		6,319		181,041		—	4.0%-Class A 5.4%-Class B	July 2044
Solar Asset-backed Notes, Series 2015-1		122,295		1,348		116,019		—	4.2%-Class A 5.6%-Class B	August 2045
Total non-recourse debt		1,242,249		159,030		1,053,365		221,182
Total debt	$	2,753,746	$	372,221	$	2,332,600	$	234,235

# Out of the $350.0 million authorized to be issued by the Company’s board of directors, $135.7 million remained available to be issued. See below and Note 13, Related Party Transactions, for Solar Bonds issued to related parties.

Recourse debt refers to debt that is recourse to the Company’s general assets. Non-recourse debt refers to debt that is recourse to only specified assets or subsidiaries of the Company. The differences between the unpaid principal balances and the net carrying values are due to debt discounts and deferred financing costs. As of September 30, 2016, the Company was in compliance with all financial debt covenants. The Company’s debt is described further below except for the vehicle and other loans and the convertible senior notes, which did not change materially in the nine months ended September 30, 2016.

Recourse Debt Facilities:

Secured Revolving Credit Facility

The Company has entered into a revolving credit agreement with a syndicate of banks to fund working capital, letters of credit and general corporate needs, with a total committed amount of $398.5 million. Borrowed funds bear interest, at the Company’s option, at an annual rate of (a) 3.25% plus LIBOR or (b) 2.25% plus the highest of (i) the federal funds rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%. The fee for undrawn commitments is 0.375% per annum. The secured revolving credit facility is secured by certain of the Company’s accounts receivable, inventory, machinery, equipment and other assets.

Solar Bonds

In October 2014, the Company commenced issuing Solar Bonds, which are senior unsecured obligations that are structurally subordinate to the indebtedness and other liabilities of the Company’s subsidiaries. Solar Bonds have been issued under multiple series that have various fixed terms and interest rates. In September 2015, the Company commenced issuing Solar Bonds with variable interest rates that reset quarterly and that can be redeemed quarterly at the option of the bondholder or the Company, with 30-day advance notice. The Company intends to continue to issue Solar Bonds from time to time depending on market conditions.

In March 2015, Space Exploration Technologies Corporation, or SpaceX, purchased $90.0 million in aggregate principal amount of 2.00% Solar Bonds due in March 2016. In June 2015, SpaceX purchased an additional $75.0 million in aggregate principal amount of 2.00% Solar Bonds due in June 2016. In March 2016, $90.0 million in aggregate principal amount of the Solar Bonds held by SpaceX matured, and the proceeds were reinvested by SpaceX in $90.0 million in aggregate principal amount of 4.40% Solar Bonds due in March 2017. In June 2016, $75.0 million in aggregate principal amount of the Solar Bonds held by SpaceX matured, and the proceeds were reinvested by SpaceX in $75.0 million in aggregate principal amount of 4.40% Solar Bonds due in June 2017.

In August 2016, the Chairman of the Company’s board of directors, the Company’s Chief Executive Officer and the Company’s Chief Technology Officer purchased $100.0 million in aggregate principal amount of 6.50% Solar Bonds due in February 2018.

SpaceX, the Chairman of the Company’s board of directors, the Company’s Chief Executive Officer and the Company’s Chief Technology Officer are considered related parties; the Company has also issued Solar Bonds to other related parties; and such Solar Bonds are separately presented on the consolidated balance sheets (see Note 13, Related Party Transactions).

Non-Recourse Debt Facilities:

Term Loan Due in May 2016

On May 23, 2014, a subsidiary of the Company entered into an agreement with a syndicate of banks for a term loan of $125.0 million. The term loan bore interest at an annual rate of 3.00% to 4.00%, depending on the cumulative period the term loan was outstanding, plus LIBOR or, at the Company’s option, plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%. The term loan was secured by certain assets and cash flows of the subsidiary and was non-recourse to the Company’s other assets or cash flows. In the first quarter of 2016, the Company fully repaid the term loan.

Term Loan Due in December 2016

On February 4, 2014, a subsidiary of the Company entered into an agreement with a syndicate of banks for a term loan of $100.0 million. On February 20, 2014, the agreement was amended to increase the maximum term loan availability to $220.0 million. On March 20, 2014, the agreement was further amended to increase the maximum term loan availability to $250.0 million. The term loan bears interest at an annual rate of LIBOR plus 3.25% or, at the Company’s option, 3.25% plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%. The term loan is secured by the assets and cash flows of the subsidiary and is non-recourse to the Company’s other assets. In the first nine months of 2016, the Company repaid $25.7 million of the principal outstanding under the term loan.

Term Loan Due in December 2017

On March 31, 2016, a subsidiary of the Company entered into an agreement for a term loan of $50.0 million. On April 6, 2016, the agreement was amended to increase the maximum term loan availability to $150.0 million. The term loan bears interest at an annual rate of the lender’s cost of funds plus 3.25%. The fee for undrawn commitments is 0.85% per annum. The term loan is secured by substantially all of the assets and cash flows of the subsidiary and is non-recourse to the Company’s other assets and cash flows.

Term Loan Due in January 2021

In January 2016, a subsidiary of the Company entered into an agreement with a syndicate of banks for a term loan of $160.0 million. The term loan bears interest at an annual rate of three-month LIBOR plus 3.50%. The term loan is secured by substantially all of the assets of the subsidiary, including its interests in certain financing funds, and is non-recourse to the Company’s other assets. In the first nine months of 2016, the Company repaid $2.2 million of the principal outstanding under the term loan.

MyPower Revolving Credit Facility

On January 9, 2015, a subsidiary of the Company entered into a $200.0 million revolving credit agreement with a syndicate of banks to obtain funding for the MyPower customer loan program. The MyPower revolving credit facility initially provided up to $160.0 million of Class A notes and up to $40.0 million of Class B notes. On December 16, 2015, the committed amount under the Class A notes was increased to $200.0 million. The Class A notes bear interest at an annual rate of (i) for the first $160.0 million, 2.50% and (ii) for the remaining $40.0 million, 3.00%; in each case, plus (a) the commercial paper rate or (b) 1.50% plus adjusted LIBOR. The Class B notes bear interest at an annual rate of 5.00% plus LIBOR. The fee for undrawn commitments under the Class A notes is 0.50% per annum for the first $160.0 million of undrawn commitments and 0.75% per annum for the remaining $40.0 million of undrawn commitments, if any. The fee for undrawn commitments under the Class B notes is 0.50% per annum. The MyPower revolving credit facility is secured by the payments owed to the Company or its subsidiaries under MyPower customer loans and is non-recourse to the Company’s other assets.

Revolving Aggregation Credit Facility

On May 4, 2015, a subsidiary of the Company entered into an agreement with a syndicate of banks for a revolving aggregation credit facility with a total committed amount of $500.0 million. On July 13, 2015, the total committed amount was increased to $650.0 million. On March 23, 2016, the agreement was amended to modify the interest rates, extend the availability period and extend the maturity date. In the second quarter of 2016, the total committed amount was increased to $760.0 million. The revolving aggregation credit facility bears interest at an annual rate of 3.25% plus (i) for commercial paper loans, the commercial paper rate and (ii) for LIBOR loans, at the Company’s option, three-month LIBOR or daily LIBOR. The revolving aggregation credit facility is secured by certain assets and cash flows of certain subsidiaries of the Company and is non-recourse to the Company’s other assets.

Solar Renewable Energy Credit Term Loans

On March 31, 2016, a subsidiary of the Company entered into an agreement for a term loan of $15.0 million. The term loan bears interest at an annual rate of one-month LIBOR plus 9.00% or, at the Company’s option, 8.00% plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the prime rate or (iii) one-month LIBOR plus 1.00%. The term loan is secured by substantially all of the assets of the subsidiary, including its rights under forward contracts to sell solar renewable energy credits, and is non-recourse to the Company’s other assets.

On July 14, 2016, the same subsidiary entered into an agreement for another term loan with a total committed amount of $36.4 million. The term loan bears interest at an annual rate of one-month LIBOR plus 5.75% or, at the Company’s option, 4.75% plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the prime rate or (iii) one-month LIBOR plus 1.00%. The term loan is secured by substantially all of the assets of the subsidiary, including its rights under forward contracts to sell solar renewable energy credits, and is non-recourse to the Company’s other assets.

In the first nine months of 2016, the Company repaid $14.0 million of the principal outstanding under the term loans.

Cash Equity Debt I

In connection with the cash equity financing on May 2, 2016 discussed in Note 6, the Company issued $121.7 million in aggregate principal of debt that bears interest at a fixed rate of 5.65% per annum. This debt is secured by, among other things, the Company’s interests in certain financing funds and is non-recourse to the Company’s other assets.

Cash Equity Debt II

In connection with the cash equity financing on September 8, 2016 discussed in Note 6, the Company issued $210.0 million in aggregate principal of debt that bears interest at a fixed rate of 5.25% per annum. This debt is secured by, among other things, the Company’s interests in certain financing funds and is non-recourse to the Company’s other assets.

Solar Asset-backed Notes, Series 2013-1

In November 2013, the Company pooled and transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $54.4 million in aggregate principal of Solar Asset-backed Notes, Series 2013-1, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets. As of September 30, 2016, these solar assets had a carrying value of $134.4 million and are included under solar energy systems, leased and to be leased — net, in the consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 0.05%. The cash flows generated by these solar assets are used to service the monthly principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The Company recognizes revenue earned from the associated customer contracts in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by the qualifying solar energy systems are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets. The Company contracted with the SPE to provide operations and maintenance and administrative services for the qualifying solar energy systems.

In connection with the pooling of the assets that were transferred to the SPE in November 2013, the Company terminated a lease pass-through arrangement with an investor. The lease pass-through arrangement had been accounted for as a borrowing and any amounts outstanding from the lease pass-through arrangement were recorded as a lease pass-through financing obligation. The balance that was then outstanding from the lease pass-through arrangement was $56.4 million. The Company paid the investor an aggregate of $40.2 million, and the remaining balance is to be paid over time. The remaining balance is paid using the net cash flows generated by the same assets previously leased under the lease pass-through arrangement, after payment of the principal and interest on the Solar Asset-backed Notes and expenses related to the assets and the Solar Asset-backed Notes, including asset management fees, custodial fees and trustee fees, and was contractually documented as a right to participate in future cash flows of the SPE. This right to participate in future residual cash flows generated by the assets of the SPE has been recorded as a component of other liabilities and deferred credits for the non-current portion and as a component of accrued and other current liabilities for the current portion under the caption “participation interest.” The Company accounted for the participation interest as a liability because the investor has no voting or management rights in the SPE, the participation interest would terminate upon the investor achieving a specified return and the investor has the option to put the participation interest to the Company on August 3, 2021 for the amount necessary for the investor to achieve the specified return, which would require the Company to settle the participation interest in cash. In addition, under the terms of the participation interest, the Company has the option to purchase the participation interest from the investor for the amount necessary for the investor to achieve the specified return.

Solar Asset-backed Notes, 2014-1

In April 2014, the Company pooled and transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $70.2 million in aggregate principal of Solar Asset-backed Notes, Series 2014-1, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets. As of September 30, 2016, these solar assets had a carrying value of $126.0 million and are included under solar energy systems, leased and to be leased — net, in the consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 0.01%. The cash flows generated by these solar assets are used to service the monthly principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The Company recognizes revenue earned from the associated customer contracts in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by the qualifying solar energy systems are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets. The Company contracted with the SPE to provide operations and maintenance and administrative services for the qualifying solar energy systems.

Solar Asset-backed Notes, Series 2014-2

In July 2014, the Company pooled and transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $160.0 million in aggregate principal of Solar Asset-backed Notes, Series 2014-2, Class A, and $41.5 million in aggregate principal of Solar Asset-backed Notes, Series 2014-2, Class B, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets. As of September 30, 2016, these solar assets had a carrying value of $268.2 million and are included under solar energy systems, leased and to be leased — net, in the consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 0.01%. These solar assets and the associated customer contracts are leased to an investor under a lease pass-through arrangement that the Company has accounted for as a borrowing. The rent paid by the investor under the lease pass-through arrangement is used (and, following the expiration of the lease pass-through arrangement, the cash generated by these solar assets will be used) to service the monthly principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The Company recognizes revenue earned from the associated customer contracts in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by these solar assets are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets. The Company contracted with the SPE to provide operations and maintenance and administrative services for the qualifying solar energy systems.

Solar Asset-backed Notes, Series 2015-1

In August 2015, the Company pooled and transferred its interests in certain financing funds into a SPE and issued $103.5 million in aggregate principal of Solar Asset-backed Notes, Series 2015-1, Class A, and $20.0 million in aggregate principal of Solar Asset-backed Notes, Series 2015-1, Class B, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets and continues to consolidate the underlying financing funds (see Note 8, VIE Arrangements). The Solar Asset-backed Notes were issued at a discount of 0.05% for Class A and 1.46% for Class B. The cash distributed by the underlying financing funds to the SPE are used to service the semi-annual principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The SPE’s assets and cash flows are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets.

Solar Asset-backed Notes, Series 2016-1

In February 2016, the Company transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $52.2 million in aggregate principal of Solar Asset-backed Notes, Series 2016-1, backed by these solar assets to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these solar assets. As of September 30, 2016, these solar assets had a carrying value of $72.4 million and are included under solar energy systems, leased and to be leased — net, in the consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 6.71%. These solar assets and the associated customer contracts are leased to an investor under a lease pass-through arrangement that the Company has accounted for as a borrowing. The rent paid by the investor under the lease pass-through arrangement is used (and, following the expiration of the lease pass-through arrangement, the cash generated by these solar assets will be used) to service the semi-annual principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The Company recognizes revenue earned from the associated customer contracts in accordance with the Company’s revenue recognition policy. The assets and cash flows generated by these solar assets are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to the Company’s other assets. The Company contracted with the SPE to provide operations and maintenance and administrative services for the qualifying solar energy systems.

Solar Loan-backed Notes, Series 2016-A

On January 21, 2016, the Company pooled and transferred certain MyPower customer notes receivable into a SPE and issued $151.6 million in aggregate principal of Solar Loan-backed Notes, Series 2016-A, Class A, and $33.4 million in aggregate principal of Solar Loan-backed Notes, Series 2016-A, Class B, backed by these notes receivable to certain investors. The SPE is wholly owned by the Company and is consolidated in the Company’s financial statements. Accordingly, the Company did not recognize a gain or loss on the transfer of these notes receivable. The Solar Loan-backed Notes were issued at a discount of 3.22% for Class A and 15.90% for Class B. The payments received by the SPE under these notes receivable are used to service the semi-annual principal and interest payments on the Solar Loan-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to a wholly owned subsidiary of the Company. The SPE’s assets and cash flows are not available to the other creditors of the Company, and the creditors of the SPE, including the Solar Loan-backed Note holders, have no recourse to the Company’s other assets.

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VIE Arrangements

9 Months Ended

Sep. 30, 2016

Variable Interest Entity Disclosure [Abstract]

VIE Arrangements

8. VIE Arrangements

The Company has entered into various arrangements with investors to facilitate funding and monetization of solar energy systems.

Wholly owned subsidiaries of the Company and fund investors formed and contributed cash or assets to various solar financing funds and entered into related agreements. The following table shows the number of funds by investor classification, carrying value of the solar energy systems in the funds, total investor contributions received and undrawn investor contributions as of September 30, 2016 (in thousands, except for number of funds) for funds that have been determined to be VIEs:

			Total				Carrying
			Investor		Undrawn		Value of
Investor	Number		Contributions		Investor		Solar Energy
Classification	of Funds		Received		Contributions		Systems
Financial institutions		32	$	2,252,194	$	174,116	$	2,420,245
Corporations		7		993,650		3,110		1,021,052
Utilities		4		278,888		35,033		287,441
Other investors		1		1,788		—		3,126.0
Total		44	$	3,526,520	$	212,259	$	3,731,864

The Company has determined that the funds are VIEs and it is the primary beneficiary of these VIEs by reference to the power and benefits criterion under ASC 810, Consolidation. The Company has considered the provisions within the contractual agreements, which grant it power to manage and make decisions that affect the operation of these VIEs, including determining the solar energy systems and associated customer contracts to be sold or contributed to these VIEs, the redeployment of solar energy systems and management of customer receivables. The Company considers that the rights granted to the fund investors under the contractual agreements are more protective in nature rather than participating.

Pursuant to management services, maintenance and warranty arrangements, the Company has been contracted to provide services to the funds, such as operations and maintenance support, accounting, lease servicing and performance reporting. In some instances, the Company has guaranteed payments to the investors as specified in the contractual agreements. A fund’s creditors have no recourse to the general credit of the Company or to that of other funds. None of the assets of the funds have been pledged as collateral for their obligations.

As the primary beneficiary of these VIEs, the Company consolidates in its financial statements the financial position, results of operations and cash flows of these VIEs, and all intercompany balances and transactions between the Company and these VIEs are eliminated in the condensed consolidated financial statements.

Cash distributions of income and other receipts by a fund, net of agreed upon expenses, estimated expenses, tax benefits and detriments of income and loss and tax credits, are allocated to the fund investor and the Company’s subsidiary as specified in contractual agreements.

Generally, the Company’s subsidiary has the option to acquire the fund investor’s interest in the fund for an amount based on the market value of the fund or the formula specified in the contractual agreements.

As of September 30, 2016 the Company was contractually required to make payments to a fund investor in order to ensure the investor is projected to achieve a specified minimum return annually. The amounts of any potential future payments under this guarantee are dependent on the amounts and timing of future distributions to the investor from the fund, the tax benefits that accrue to the investor from the fund’s activities and the amount and timing of the Company’s purchase of the investor’s interest in the fund or the amount and timing of the distributions to the investor upon liquidation of the fund. Due to uncertainties associated with estimating the amount and timing of distributions to the investor and the possibility and timing of the liquidation of the fund, the Company is unable to determine the potential maximum future payments that it would have to make under this guarantee.

Upon the sale or liquidation of a fund, distributions would occur in the order and priority specified in the contractual agreements.

The Company presents the solar energy systems in the VIEs under solar energy systems, leased and to be leased – net in the consolidated balance sheets. The aggregate carrying values of the VIEs’ assets and liabilities, after elimination of intercompany transactions and balances, in the consolidated balance sheets were as follows (in thousands):

	September 30, 2016		December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	47,267	$	32,105
Restricted cash		20,108		44
Accounts receivable - net		31,336		10,116
Rebates receivable		7,524		6,220
Prepaid expenses and other current assets		2,321		1,740
Total current assets		108,556		50,225
Solar energy systems, leased and to be leased - net		3,731,864		2,779,363
Other assets		47,552		11,204
Total assets	$	3,887,972	$	2,840,792
Liabilities
Current liabilities:
Accounts payable	$	7	$	—
Distributions payable to noncontrolling interests    and redeemable noncontrolling interests		25,106		26,769
Current portion of deferred U.S. Treasury grant income		6,506		6,506
Accrued and other current liabilities		4,178		598
Customer deposits		2,276		2,928
Current portion of deferred revenue		34,986		24,794
Current portion of long-term debt		10,352		—
Total current liabilities		83,411		61,595
Deferred revenue, net of current portion		374,695		308,798
Long-term debt, net of current portion		365,821		—
Deferred U.S. Treasury grant income, net of current    portion		159,292		164,191
Other liabilities and deferred credits		63,320		28,460
Total liabilities	$	1,046,539	$	563,044

The Company is contractually obligated to make certain fund investors whole if they suffer certain losses resulting from the disallowance or recapture of ITCs or U.S. Treasury grants. The Company accounts for distributions due to the fund investors arising from a reduction of anticipated ITCs or U.S. Treasury grants received under distributions payable to noncontrolling interests and redeemable noncontrolling interests in the consolidated balance sheets. As of September 30, 2016 and December 31, 2015, the Company had accrued $2.0 million and $2.7 million, respectively, for this obligation, which is included under distributions payable to noncontrolling interests and redeemable noncontrolling interests on the consolidated balance sheets.

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Redeemable Noncontrolling Interests in Subsidiaries

9 Months Ended

Sep. 30, 2016

Noncontrolling Interest [Abstract]

Redeemable Noncontrolling Interests in Subsidiaries

9. Redeemable Noncontrolling Interests in Subsidiaries

Noncontrolling interests in subsidiaries that are redeemable at the option of the holder are classified as redeemable noncontrolling interests in subsidiaries between liabilities and stockholders’ equity in the consolidated balance sheets. The redeemable noncontrolling interests in subsidiaries balance is determined using the hypothetical liquidation at book value method for the VIE funds or allocation of share of income or losses in other subsidiaries subsequent to initial recognition, however, the noncontrolling interests balance cannot be less than the estimated redemption value. The activity of the redeemable noncontrolling interests in subsidiaries balance was as follows (in thousands):

Balance at December 31, 2015	$	320,935
Contributions from redeemable noncontrolling interests		318,165
Net loss		(304,620	)
Distributions to redeemable noncontrolling interests		(36,658	)
Acquisition of redeemable noncontrolling interests		(13,664	)
Balance at September 30, 2016	$	284,158

The acquisition of redeemable noncontrolling interests above relates to the Company’s purchase of the third party investors’ interest in the Chinese joint venture between one of its subsidiaries, Silevo, and the investors, for $13.7 million.

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Equity

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Equity

10. Equity

The changes in total stockholders’ equity and noncontrolling interests in subsidiaries were as follows (in thousands):

	Total			Noncontrolling
	Stockholders'			Interests in			Total
	Equity			Subsidiaries			Equity
Balance, December 31, 2015	$	878,566		$	535,062		$	1,413,628
Contributions from noncontrolling interests		—			704,522			704,522
Tax impact of stock option exercises		(7,738	)		—			(7,738	)
Stock-based compensation expense		90,025			—			90,025
Issuance of common stock upon exercise of stock options    for cash		3,540			—			3,540
Issuance of stock to settle accrued compensation		631			—			631
Issuance of stock on settlement of Silevo contingent    consideration		34,170			—			34,170
Net loss		(27,262	)		(426,823	)		(454,085	)
Distributions to noncontrolling interests		—			(70,141	)		(70,141	)
Balance, September 30, 2016	$	971,932		$	742,620		$	1,714,552

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Equity Award Plans

9 Months Ended

Sep. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity Award Plans

11. Equity Award Plans

Stock Options

On September 15, 2015, the Chief Executive Officer and the Chief Technology Officer, the Company founders, were granted non-statutory stock option awards, or Founder Awards, with both market and performance vesting conditions. The exercise price per share of the Founder Awards is $48.97. The Chief Executive Officer’s Founder Award, when exercised, would entitle him to up to 3.0 million shares of the Company’s common stock, and the Chief Technology Officer’s Founder Award, when exercised, would entitle him to up to 2.0 million shares of the Company’s common stock. The Founder Awards have a maximum term of 10 years from the date of grant and vest in 10 equal tranches based on the achievement of specified operational goals and the 90-trading day average price of the Company’s common stock achieving certain targets on specified measurement dates. In the event of a change in control or a termination of employment, all vesting under the related Founder Award would cease, and any unvested portion would be cancelled.

A summary of stock option activity is as follows (in thousands, except per share amounts):

						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
	Stock			Exercise		Contractual		Intrinsic
	Options			Price		Term (Years)		Value
Outstanding - December 31, 2015		18,315		$	38.43		7.74	$	293,855
Granted (weighted-average fair value of $15.14)		1,292			25.97
Exercised		(524	)		6.75				9,173
Canceled		(1,983	)		54.50
Outstanding - September 30, 2016		17,098		$	36.60		7.15	$	73,468
Options vested and exercisable - September 30, 2016		8,454		$	24.86		5.56	$	72,910
Options vested and expected to vest - September 30, 2016		15,222		$	35.38		6.93	$	73,453

As of September 30, 2016, 70.7% of the non-vested stock options outstanding have a performance feature that is required to be satisfied before they become vested and exercisable, including 5.0 million non-vested stock options outstanding under the Founder Awards. The grant date fair market value of the stock options that vested in the three months ended September 30, 2016 and 2015 was $22.8 million and $15.9 million, respectively, and the grant date fair market value of the stock options that vested in the nine months ended September 30, 2016 and 2015 was $71.2 million and $55.0 million, respectively.

As of September 30, 2016 and December 31, 2015, there was $200.8 million and $265.3 million, respectively, of total unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested stock options, which are expected to be recognized over the weighted-average period of 6.03 years and 5.56 years, respectively; including $101.8 million as of September 30, 2016 from the Founder Awards.

Under ASC 718, the Company estimates the fair value of stock options on each grant date using the Black-Scholes option valuation model, except for the Founder Awards for which the Company uses a Monte Carlo simulation performed by an independent expert, and applies the straight-line method of expense attribution, except for stock options with a performance feature, for which the Company applies graded vesting. The fair values were estimated on each grant date with the following weighted-average assumptions used in the Black-Scholes option valuation model:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016	2015			2016			2015
Dividend yield	*		0	%		0	%		0	%
Annual risk-free rate of return	*		2.27	%		1.50	%		2.16	%
Expected volatility	*		55.88	%		61.94	%		58.72	%
Expected term (years)	*		4.97			6.28			5.16

* Assumptions were not applicable since the Company did not grant any stock option awards in the three months ended September 30, 2016.

The expected volatility was calculated based on the average historical volatilities of the Company and publicly traded peer companies determined by the Company. The risk-free interest rate used was based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the stock options to be valued. The expected dividend yield was zero, as the Company does not anticipate paying a dividend within the relevant time frame. The expected term has been estimated using the simplified method allowed under ASC 718.

Restricted Stock Units

The Company began granting restricted stock units, or RSUs, to employees, directors and consultants in 2012 under the Company’s 2012 Equity Incentive Plan. A summary of RSU activity is as follows (in thousands, except per share amounts):

				Weighted-
	Restricted			Average
	Stock			Fair
	Units			Value
Outstanding - December 31, 2015		3,577		$	49.53
Granted		2,029			19.58
Vested		(838	)		45.80
Cancelled		(1,080	)		41.73
Outstanding - September 30, 2016		3,688		$	36.18
Expected to vest - September 30, 2016		2,246		$	36.73

The grant date fair value of RSUs vested was $13.2 million and $8.1 million for the three months ended September 30, 2016 and 2015, respectively, and $38.4 million and $13.8 million for the nine months ended September 30, 2016 and 2015, respectively. Under ASC 718, the Company determines the fair value of RSUs on each grant date based on the fair value of the Company’s common stock on each grant date and applies the straight-line method of expense attribution. As of September 30, 2016 and December 31, 2015, there was $100.8 million and $121.5 million, respectively, of total unrecognized stock-based compensation expense, net of estimated forfeitures, from RSUs, which are expected to be recognized over the weighted-average period of 3.08 years and 3.31 years, respectively.

Stock-Based Compensation Expense

As part of the requirements of ASC 718, the Company is required to estimate potential forfeitures of equity awards and adjust stock-based compensation expense accordingly. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized in the period of change and will also impact the amount of stock-based compensation expense to be recognized in future periods.

The amount of stock-based compensation expense recognized during the three months ended September 30, 2016 and 2015 was $28.6 million and $33.4 million, respectively, and during the nine months ended September 30, 2016 and 2015 was $89.8 million and $83.4 million, respectively. The amount of capitalized stock-based compensation expense was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Capitalized under:
Inventories	$	169	$	253	$	169	$	253
Other assets	$	30	$	848	$	666	$	2,462
Property, plant and equipment - net	$	1,399	$	711	$	3,780	$	2,096
Solar energy systems, leased and to be leased - net	$	5,809	$	6,902	$	20,137	$	17,555

Stock-based compensation expense was included in cost of revenue and operating expenses as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Total cost of revenue	$	876	$	489	$	2,718	$	1,665
Sales and marketing	$	3,498	$	7,048	$	16,355	$	17,266
General and administrative	$	13,633	$	13,305	$	37,628	$	31,325
Pre-production expense	$	174	$	—	$	322	$	—
Research and development	$	2,997	$	3,866	$	8,038	$	10,754

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Income Taxes

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on the differences between the carrying amounts and the tax bases of assets and liabilities and are measured using the enacted tax rate expected to apply to the taxable income in the periods in which the differences are expected to be reversed.

The Company has applied a valuation allowance against its deferred tax assets net of the expected income from the reversal of its deferred tax liabilities. The valuation allowance is determined in accordance with the provisions of ASC 740, Income Taxes, which requires an assessment of both negative and positive evidence when measuring the need for a valuation allowance. Based on the available objective evidence and the Company’s history of losses, the Company believes it is more likely than not that its net deferred tax assets will not be realized.

The income tax provision for the three months ended September 30, 2016 and 2015 was determined based on the Company’s estimated consolidated effective income tax rates of negative 0.11% and 0%, respectively. The income tax provision for the nine months ended September 30, 2016 and 2015 was determined based on the Company’s estimated consolidated effective income tax rates of negative 0.12% and 0.21%, respectively. The differences between the estimated consolidated effective income tax rates and the U.S. federal statutory rates were primarily attributable to the valuation allowance, the amortization of the prepaid tax expense, a true-up of the prepaid tax expense amortization and additional prepaid tax expense due to intra-entity sales.

As part of its asset monetization strategy, the Company has agreements to sell solar energy systems to its financing funds. The gains on the sales are eliminated in the condensed consolidated financial statements because the sales are treated as intra-entity sales. As such, income taxes are not recognized on the sales until the Company no longer benefits from the underlying assets. Specifically, the Company defers the income tax expense and amortizes it over the estimated useful life of the underlying assets, which has been estimated to be 30 to 35 years. The deferral of the income tax expense results in the recognition of a prepaid tax expense that is included in the consolidated balance sheets as other assets. The amortization of the prepaid tax expense makes-up the major component of the income tax provision for each period.

Uncertain Tax Positions

The Company applies a two-step approach with respect to uncertain tax positions. This approach involves recognizing any uncertain tax positions that are more-likely-than-not of being ultimately realized and then measuring those positions to determine the amounts to be recognized.

The Company is subject to taxation and files income tax returns in the U.S. and various state, local and foreign jurisdictions. The U.S. and state jurisdictions have statutes of limitations that generally range from three to five years. Due to the Company’s net losses, substantially all of its federal, state, local and foreign income tax returns since inception are still subject to audit.

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Related Party Transactions

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

Related Party Transactions

13. Related Party Transactions

The Company’s operations included the following related party transactions (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenue:
Solar energy systems sales to related parties	$	—	$	—	$	12	$	79
Expenditures:
Purchases of inventories or equipment    from related parties	$	4,324	$	2,450	$	10,690	$	4,147
Interest paid or payable to related parties (included in    interest expense (excluding amortization of debt discounts    and fees) - recourse debt)	$	2,467	$	828	$	4,682	$	1,298

Related party balances were comprised of the following (in thousands):

	September 30, 2016		December 31, 2015
Due from related parties (included in accounts receivable)	$	22	$	30
Due to related parties (included in accounts payable)	$	1,080	$	3,961
Solar bonds issued to related parties	$	265,200	$	165,220
Convertible senior notes issued to related parties	$	12,978	$	12,975
Due to related parties (included in accrued and other    current liabilities)	$	1,578	$	1,249

The related party transactions were primarily purchases of batteries from Tesla; issuances and maturities of Solar Bonds held by SpaceX, the Chairman of the Company’s board of directors, the Company’s Chief Executive Officer and the Company’s Chief Technology Officer; and issuances of convertible senior notes to an entity affiliated with the Chairman of the Company’s board of directors and the Company’s Chief Executive Officer. Tesla is considered a related party because the Chairman of the Company’s board of directors is the Chief Executive Officer and Chairman of Tesla, other members of the Company’s board of directors also serve as members of Tesla’s board of directors and some members of the Company’s board of directors and executive management are also investors in Tesla. SpaceX is considered a related party because the Chairman of the Company’s board of directors is the Chief Executive Officer, Chief Designer, Chairman and a significant stockholder of SpaceX; other members of the Company’s board of directors also serve as members of SpaceX’s board of directors; and some members of the Company’s board of directors and executive management are also investors in SpaceX.

In March 2015, SpaceX purchased $90.0 million in aggregate principal amount of 2.00% Solar Bonds due in March 2016. In June 2015, SpaceX purchased an additional $75.0 million in aggregate principal amount of 2.00% Solar Bonds due in June 2016. In March 2016, $90.0 million in aggregate principal amount of the Solar Bonds held by SpaceX matured, and the proceeds were reinvested by SpaceX in $90.0 million in aggregate principal amount of 4.40% Solar Bonds due in March 2017. In June 2016, $75.0 million in aggregate principal amount of the Solar Bonds held by SpaceX matured, and the proceeds were reinvested by SpaceX in $75.0 million in aggregate principal amount of 4.40% Solar Bonds due in June 2017.

In August 2016, the Chairman of the Company’s board of directors, the Company’s Chief Executive Officer and the Company’s Chief Technology Officer purchased $100.0 million in aggregate principal amount of 6.50% Solar Bonds due in February 2018.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

14. Commitments and Contingencies

Noncancelable Leases

The Company leases offices, manufacturing and warehouse facilities, equipment, vehicles and solar energy systems under noncancelable leases.

Build-to-Suit Lease Arrangement

In September 2014, a subsidiary of the Company entered into a build-to-suit lease arrangement with the Research Foundation for the State University of New York, or the Foundation, for the construction of an approximately 1.0 million square-feet solar panel manufacturing facility with a capacity of 1.0 gigawatts on an approximately 88.2 acre site located in Buffalo, New York. Under the terms of the arrangement, which has been amended, the Foundation will construct the manufacturing facility and install certain utilities and other improvements, with participation by the Company as to the design and construction of the manufacturing facility, and acquire certain manufacturing equipment designated by the Company to be used in the manufacturing facility. The Foundation will cover (i) construction costs related to the manufacturing facility in an amount up to $350.0 million, (ii) the acquisition and commissioning of the manufacturing equipment in an amount up to $348.1 million and (iii) $51.9 million for additional specified scope costs, in cases (i) and (ii) only, subject to the maximum funding allocation from the State of New York, and the Company will be responsible for any construction and equipment costs in excess of such amounts. The Foundation will own the manufacturing facility and manufacturing equipment purchased by the Foundation. Following completion of the manufacturing facility, the Company will lease the manufacturing facility and the manufacturing equipment owned by the Foundation from the Foundation for an initial period of 10 years, with an option to renew, for $2 per year plus utilities.

Under the terms of the build-to-suit lease arrangement, the Company is required to achieve specific operational milestones during the initial term of the lease, which include employing a certain number of employees at the facility, within western New York and within the State of New York within specified time periods following the completion of the facility. The Company is also required to spend or incur approximately $5.0 billion in combined capital, operational expenses and other costs in the State of New York over the 10 years following the achievement of full production. On an annual basis during the initial lease term, as measured on each anniversary of the commissioning of the facility, if the Company fails to meet its specified investment and job creation obligations, then it would be obligated to pay a $41.2 million “program payment” to the Foundation for each year that it fails to meet these requirements. Furthermore, if the agreement is terminated due to a material breach by the Company, then additional amounts might be payable by the Company.

Due to the Company’s involvement with the construction of the facility, its exposure to any potential cost overruns and its other commitments under the agreement, the Company is deemed to be the owner of the facility and the manufacturing equipment owned by the Foundation for accounting purposes during the construction phase. Accordingly, the Company recognizes a non-cash investment in build-to-suit lease asset under construction and a corresponding non-cash build-to-suit lease liability on the consolidated balance sheets. The non-cash investing activities and the non-cash financing activities related to this arrangement in the three months ended September 30, 2016 and 2015 amounted to $75.4 million and $79.4 million, respectively, and in the nine months ended September 30, 2016 and 2015 amounted to $445.9 million and $211.6 million, respectively.

Indemnification and Guaranteed Returns

As disclosed in Note 8, VIE Arrangements, the Company is contractually committed to compensate certain fund investors for any losses that they may suffer in certain limited circumstances resulting from reductions in U.S. Treasury grants or ITCs. Generally, such obligations would arise as a result of reductions to the value of the underlying solar energy systems as assessed by the U.S. Treasury Department for purposes of claiming U.S. Treasury grants or as assessed by the IRS for purposes of claiming ITCs or U.S. Treasury grants. For each balance sheet date, the Company assesses and recognizes, when applicable, the potential exposure from this obligation based on all the information available at that time, including any guidelines issued by the U.S. Treasury Department on solar energy system valuations for purposes of claiming U.S. Treasury grants and any audits undertaken by the IRS. The Company believes that any payments to the fund investors in excess of the amount already recognized by the Company for this obligation are not probable based on the facts known at the reporting date.

The maximum potential future payments that the Company could have to make under this obligation would depend on the difference between the fair values of the solar energy systems sold or transferred to the funds as determined by the Company and the values that the U.S. Treasury Department would determine as fair value for the systems for purposes of claiming U.S. Treasury grants or the values the IRS would determine as the fair value for the systems for purposes of claiming ITCs or U.S. Treasury grants. The Company claims U.S. Treasury grants based on guidelines provided by the U.S. Treasury department and the statutory regulations from the IRS. The Company uses fair values determined with the assistance of independent third-party appraisals commissioned by the Company as the basis for determining the ITCs that are passed-through to and claimed by the fund investors. Since the Company cannot determine future revisions to U.S. Treasury Department guidelines governing system values or how the IRS will evaluate system values used in claiming ITCs or U.S. Treasury grants, the Company is unable to reliably estimate the maximum potential future payments that it could have to make under this obligation as of each balance sheet date.

The Company is eligible to receive certain state and local incentives that are associated with renewable energy generation. The amount of incentives that can be claimed is based on the projected or actual solar energy system size and/or the amount of solar energy produced. The Company also currently participates in one state’s incentive program that is based on either the fair market value or the tax basis of solar energy systems placed in service. State and local incentives received are allocated between the Company and fund investors in accordance with the contractual provisions of each fund. The Company is not contractually obligated to indemnify any fund investor for any losses they may incur due to a shortfall in the amount of state or local incentives actually received.

As disclosed in Note 8, VIE Arrangements, the Company is contractually required to make payments to one fund investor to ensure that the fund investor achieves a specified minimum internal rate of return. The fund investor has already received a significant portion of the projected economic benefits from U.S. Treasury grant distributions and tax depreciation benefits. The contractual provisions of the fund state that the fund has an indefinite term unless the members agree to dissolve the fund. Based on the Company’s current financial projections regarding the amount and timing of future distributions to the fund investor, the Company does not expect to make any payments as a result of this guarantee and has not accrued any liabilities for this guarantee. The amount of potential future payments under this guarantee is dependent on the amount and timing of future distributions to the fund investor and future tax benefits that accrue to the fund investor. Due to the uncertainties surrounding estimating the amounts of these factors, the Company is unable to estimate the maximum potential payments under this guarantee. To date, the fund investor has achieved the specified minimum internal rate of return as determined in accordance with the contractual provisions of the fund.

The lease pass-through financing funds have a one-time lease payment reset mechanism that occurs after the installation of all solar energy systems in a fund. As a result of this mechanism, the Company may be required to refund master lease prepayments previously received from investors. Any refunds of master lease prepayments would reduce the lease pass-through financing obligation.

Letters of Credit

As of September 30, 2016, the Company had $29.6 million of unused letters of credit outstanding, which carry a fee of 3.4% per annum.

Other Contingencies

In July 2012, the Company, along with other companies in the solar energy industry, received a subpoena from the U.S. Treasury Department’s Office of the Inspector General to deliver certain documents in the Company’s possession that were dated, created, revised or referred to after January 1, 2007 and that relate to the Company’s applications for U.S. Treasury grants or communications with certain other solar energy development companies or with certain firms that appraise solar energy property for U.S Treasury grant application purposes. The Inspector General and the Civil Division of the U.S. Department of Justice are investigating the administration and implementation of the U.S Treasury grant program, including possible misrepresentations concerning the fair market value of the solar energy systems submitted by the Company in U.S. Treasury grant applications. If the Inspector General concludes that misrepresentations were made, the U.S. Department of Justice could decide to bring a civil action to recover amounts it believes were improperly paid to the Company. If the U.S. Department of Justice is successful in asserting this action, the Company could then be required to pay material damages and penalties for any funds received based on such misrepresentations, which, in turn, could require the Company to make indemnity payments to certain fund investors. The Company has accrued a reserve for its potential liability associated with this ongoing investigation as of September 30, 2016.

In February 2013, two of the Company’s financing funds filed a lawsuit in the United States Court of Federal Claims against the United States government, seeking to recover approximately $14.0 million that the United States Treasury was obligated to pay, but failed to pay, under Section 1603 of the American Recovery and Reinvestment Act of 2009. In February 2016, the government filed a motion seeking leave to assert a counterclaim against the two plaintiff funds on the grounds that the government, in fact, paid them more, not less, than they were entitled to as a matter of law. On May 2, 2016, the Court granted the government’s motion and allowed it to add the counterclaim. If the government is successful in asserting the counterclaim, the Company could then be required to make indemnity payments to the plaintiff funds. The Company believes that the government’s claims are without merit and expects the plaintiff funds to litigate the case vigorously. The Court has set the case for trial in January 2017. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On March 28, 2014, a purported stockholder class action lawsuit was filed in the United States District Court for the Northern District of California against the Company and two of its officers. The complaint alleges violations of federal securities laws and seeks unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s securities from March 6, 2013 to March 18, 2014. After a series of amendments to the original complaint, the District Court dismissed the amended complaint and entered a judgment in the Company’s favor on August 9, 2016. The plaintiffs have filed a notice of appeal. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On June 5 and 11, 2014, stockholder derivative actions were filed in the Superior Court of California for the County of San Mateo, purportedly on behalf of the Company and against the board of directors, alleging that the board of directors breached its duties to the Company by failing to prevent the conduct alleged in the pending purported stockholder class action lawsuit. The Company and the individual board member defendants filed a motion to dismiss the complaint, which the Superior Court granted on December 17, 2015, while allowing the plaintiffs an opportunity to file an amended complaint to remedy the defects in the original complaint. On or about March 2, 2016, the plaintiffs informed the Company and the Superior Court that they had sold their shares in the Company during the pendency of the suit. Consequently, the plaintiffs no longer had standing to bring their lawsuit, which they voluntarily dismissed.

On September 18, 2015, a stockholder derivative action was filed in the Court of Chancery of the State of Delaware, purportedly on behalf of the Company and against the board of directors, alleging that the board of directors breached its duties to the Company by approving stock-based compensation to the non-employee directors that the plaintiff claims is excessive compared to the compensation paid to directors of peer companies. At the Company’s 2016 annual meeting of stockholders, the non-employee director compensation plan was approved and ratified, including by a majority of the shares held by disinterested stockholders of the Company. As a result, the Company expects that the case will be dismissed and the matter resolved, subject to the settlement of legal fees, which the Company does not expect to be material.

On November 6, 2015, a putative class action lawsuit was filed in the United States District Court for the Northern District of California against the Company. The complaint alleges that the Company made unlawful telephone marketing calls to the plaintiff and others, in violation of the federal Telephone Consumer Protection Act. The plaintiff seeks injunctive relief and statutory damages, on behalf of himself and a certified class. The Company filed a motion to dismiss the complaint, which the District Court denied on April 6, 2016. Discovery has commenced. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On June 1, 2016, a putative class action lawsuit, Gibbs v. SolarCity, alleging that the Company made unlawful telephone marketing calls in violation of the federal Telephone Consumer Protection Act was filed against the Company in the United States District Court for the District of Massachusetts. The two named plaintiffs seek injunctive relief and statutory damages, on behalf of themselves and a certified class. The Company has moved to dismiss the complaint; the hearing on that motion is set for December 8, 2016. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On August 15, 2016, a purported stockholder class action lawsuit was filed in the United States District Court for the Northern District of California against the Company, two of its officers and a former officer. The complaint alleges that the Company made projections of future sales and installations that the Company failed to achieve and that these projections were fraudulent when made. The plaintiffs claim violations of federal securities laws and seek unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s securities from May 5, 2015 to February 16, 2016. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

On September 26, 2016, Cogenra Solar Inc., or Cogenra, and Khosla Ventures III, L.P. filed a lawsuit in the United States District Court for the Northern District of California alleging that the Company and its subsidiary, Silevo, had misappropriated trade secrets obtained from Cogenra during interactions governed by non-disclosure agreements and during the course of diligence in 2014, when the Company considered acquiring Cogenra. The Company believes that the claims are without merit and intends to defend itself vigorously. The Company is unable to estimate the possible loss, if any, associated with this lawsuit.

From time to time, claims have been asserted, and may in the future be asserted, including claims from regulatory authorities related to labor practices and other matters. Such assertions arise in the normal course of the Company’s operations. The resolution of any such assertions or claims cannot be predicted with certainty.

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Basic and Diluted Net Loss Per Share

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Basic and Diluted Net Loss Per Share

15. Basic and Diluted Net Loss Per Share

The following table sets forth the computation of the Company’s basic and diluted net loss per share for the periods presented (in thousands, except share and per share amounts):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015			2016			2015
Net income (loss) attributable to stockholders	$	53,215	$	(19,073	)	$	(27,262	)	$	(62,958	)
Net income (loss) attributable to common stockholders,    basic	$	53,215	$	(19,073	)	$	(27,262	)	$	(62,958	)
Net income (loss) attributable to common stockholders,    diluted	$	56,165	$	(19,073	)	$	(27,262	)	$	(62,958	)
Weighted-average shares used to compute net income (loss)    per share attributable to common stockholders, basic		100,494,480		97,384,949			99,354,863			97,027,412
Weighted-average shares used to compute net income (loss)    per share attributable to common stockholders, diluted		118,077,365		97,384,949			99,354,863			97,027,412
Net income (loss) per share attributable to common    stockholders, basic	$	0.53	$	(0.20	)	$	(0.27	)	$	(0.65	)
Net income (loss) per share attributable to common    stockholders, diluted	$	0.48	$	(0.20	)	$	(0.27	)	$	(0.65	)

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Common stock options		14,474,596		14,197,584		18,057,579		13,852,111
Restricted stock units		3,363,304		2,763,268		3,718,782		2,082,446
Convertible senior notes		—		10,505,947		13,930,186		10,505,947

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Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

16. Subsequent Events

On October 11, 2016, the Company formed a new non-recourse financing fund with an existing fund investor with an aggregate financing commitment of $250.0 million. Contemporaneously, the Company committed to loan to an affiliate of the fund investor up to $55.0 million, which would have variable interest rates and would mature on October 31, 2023.

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Summary of Significant Accounting Policies and Procedures (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles, including the regulations of the Securities and Exchange Commission, or GAAP. Certain information and disclosures normally included in annual financial statements have been condensed or omitted for these interim financial statements, in accordance with GAAP. As such, these interim financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes included in the Company’s annual report on Form 10-K dated February 10, 2016. These interim financial statements have been prepared on the same basis as annual financial statements and, in the opinion of management, reflect all adjustments (all of which are normal and recurring) necessary to present fairly the Company’s financial results. However, the results of interim periods are not necessarily indicative of the results to be expected for future interim or annual periods.

The condensed consolidated financial statements reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. In accordance with the provisions of Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 810, Consolidation, the Company consolidates any variable interest entity, or VIE, of which it is the primary beneficiary. The Company forms VIEs with its financing fund investors in the ordinary course of business in order to facilitate the funding and monetization of certain attributes associated with its solar energy systems. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company does not consolidate a VIE in which it has a majority ownership interest when the Company is not considered the primary beneficiary. The Company has determined that it is the primary beneficiary of a number of VIEs (see Note 8, VIE Arrangements). The Company evaluates its relationships with all the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation. In particular, the consolidated statements of operations have been expanded to present revenue generated from periodic billings under long-term contracts, including customer operating leases and MyPower contracts, as well as sales of solar renewable energy credits. Accordingly, the previously presented operating leases and solar energy systems incentives revenue has been separated into (i) revenue generated from periodic billings under operating leases as well as periodic incentives generated by the operating leases; (ii) revenue generated from sales of solar renewable energy credits and (iii) revenue from operating lease prepayments and upfront incentives that is recognized over the term of the operating lease. Additionally, revenue from sales under MyPower contracts, which was previously presented within revenue from solar energy systems and components sales, has been separately presented as revenue from solar energy systems under long-term loan arrangements; this together with periodic operating lease billings and incentives revenue and sales of solar renewable energy credits revenue comprise the total revenue from periodic billings. Furthermore, the cost of revenue line items have been expanded to conform to the current period revenue presentation and to separately present non-cash expenses, including depreciation, amortization and warranty expenses. Also, the previously presented net interest expense has been separated into (i) interest expense on recourse debt excluding the amortization of any debt discounts or fees; (ii) interest expense on non-recourse debt excluding the amortization of any debt discounts or fees and (iii) all other net interest expense including the amortization of all debt discounts and fees.

Use of Estimates

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Management regularly makes significant estimates and assumptions regarding the selling price of undelivered elements for revenue recognition purposes, the collectability of accounts and rebates receivable, the valuation of inventories, the labor costs for long-term contracts used as a basis for determining the percentage of completion for such contracts, the fair values and residual values of solar energy systems subject to leases, the accounting for business combinations, the fair values and useful lives of acquired tangible and intangible assets, the fair value of contingent consideration payable under business combinations, the useful lives of solar energy systems, property, plant and equipment, the determination of accrued warranty, the determination of accrued liability for solar energy system performance guarantees, the determination of lease pass-through financing obligations, the discount rates used to determine the fair values of investment tax credits, the valuation of stock-based compensation, the determination of valuation allowances associated with deferred tax assets, asset impairment, the valuation of build-to-suit lease assets, the fair value of interest rate swaps and other items. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

As of July 1, 2016, Management increased its estimate of the useful lives of new solar energy systems from 30 years to 35 years. This updated estimate was the result of new engineering studies of recently deployed solar energy systems across the industry. The Company is applying this change in estimate on a prospective basis to solar energy systems placed in service on or after July 1, 2016.

Interest Rate Swaps

Interest Rate Swaps

In the second quarter of 2015, the Company began entering into fixed-for-floating interest rate swap agreements to swap variable interest payments on certain debt for fixed interest payments, as required by its lenders. The Company has not designated any interest rate swaps as hedging instruments. Accordingly, all interest rate swaps are recognized at fair value on the consolidated balance sheets within other assets or other liabilities and deferred credits, with any changes in fair value recognized as other income or expense in the consolidated statements of operations and with any cash flows recognized as investing activities in the consolidated statements of cash flows. As of and for the periods ended September 30, 2016, the Company had interest rate swaps outstanding as follows (in thousands):

					Gross Gains				Gross Losses
	Aggregate		Gross		Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended
	Notional		Liability at		September 30,		September 30,		September 30,		September 30,
	Amount		Fair Value		2016		2016		2016		2016
Interest rate swaps	$	777,298	$	47,425	$	3,252	$	3,630	$	387	$	52,215

Fair Value of Financial Instruments

Fair Value of Financial Instruments

ASC 820, Fair Value Measurements, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

ASC 820 requires that the valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes inputs that may be used to measure fair value as follows:

• Level 1—Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

• Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As of September 30, 2016, the assets and liabilities carried at fair value on a recurring basis included cash equivalents, interest rate swaps and contingent consideration, and their fair values were as follows (in thousands):

	Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	3,437	$	—	$	—
Liabilities:
Interest rate swaps	$	—	$	47,425	$	—
Contingent consideration	$	—	$	—	$	83,973

The Company classified its money market funds within Level 1 because their fair values are based on their quoted market prices. The Company classified its interest rate swaps within Level 2 because their fair values are determined using models that utilized market observable inputs, including current and forward interest rates. The Company classified its contingent consideration within Level 3 because its fair value is determined using unobservable probability estimates and unobservable estimated discount rates applicable to the acquisition. During the nine months ended September 30, 2016, there were no transfers between the levels of the fair value hierarchy.

The contingent consideration is dependent on the achievement of the specified production milestones for the acquired business. The Company determined the fair value of the contingent consideration using a probability-weighted expected return methodology that considers the timing and probabilities of achieving these milestones and uses discount rates that reflect the appropriate cost of capital. The Company reassesses the valuation assumptions each reporting period, with any changes in the fair value accounted for in the consolidated statements of operations. The fair value of the contingent consideration is directly proportional to the estimated probabilities of achieving these milestones. On March 31, 2016, the Company determined that the first milestone was achieved and adjusted the accrued contingent consideration balance associated with the first milestone to the full amount payable of $48.3 million. On May 5, 2016, the Company issued 1.6 million shares of its common stock, valued at $34.2 million based on its stock price on the issuance date, to settle the liability. Accordingly, the Company recognized a gain of $14.1 million upon the settlement of the liability associated with the first milestone, which is included as an offset to general and administrative expense. The fair value of the contingent consideration balance related to the remaining milestones was determined using an estimated probability of achievement of 95% and discount rates ranging between 6% and 7%, which is included under other liabilities and deferred credits in the consolidated balance sheets. The following table summarizes the activity of the Level 3 contingent consideration balance in the nine months ended September 30, 2016 (in thousands):

Balance - beginning of the period	$	123,008
Settlement of liability		(34,170	)
Change in fair value		(4,865	)
Balance - end of the period	$	83,973

The Company’s financial instruments that are not carried at fair value include accounts receivable, customer notes receivable, rebates receivable, accounts payable, customer deposits, distributions payable to noncontrolling interests and redeemable noncontrolling interests, the participation interest, solar asset-backed notes, solar loan-backed notes, convertible senior notes, Solar Bonds and long-term debt. The carrying values of these financial instruments other than customer notes receivable, the participation interest, solar asset-backed notes, solar loan-backed notes, convertible senior notes, Solar Bonds and long-term debt approximated their fair values due to the fact that they were short-term in nature at September 30, 2016.

The Company estimates the fair value of convertible senior notes based on their last actively traded prices (Level 1) or market observable inputs (Level 2). The Company estimates the fair value of customer notes receivable, the participation interest, solar asset-backed notes, solar loan-backed notes, Solar Bonds and long-term debt based on rates currently offered for instruments with similar maturities and terms (Level 3). The following table presents their estimated fair values and their carrying values (in thousands):

	September 30, 2016
	CarryingValue		Fair Value
Participation interest	$	16,585	$	14,937
Solar asset-backed notes	$	439,988	$	439,082
Solar loan-backed notes	$	130,365	$	134,933
Convertible senior notes	$	897,657	$	697,750
MyPower customer notes receivable	$	533,534	$	533,534
Long-term debt	$	1,569,047	$	1,569,047
Solar bonds	$	334,073	$	334,073

Warranties

Warranties

The Company provides a warranty on the installation and components of the solar energy systems it sells, including solar energy systems sold under Solar Loans, for periods typically between 10 to 30 years. The manufacturer’s warranty on the solar energy systems’ components, which is typically passed-through to customers, ranges from one to 25 years. For the solar energy systems under lease contracts or power purchase agreements, the Company does not accrue a warranty liability because those systems are owned by consolidated subsidiaries of the Company. Instead, any repair costs on those solar energy systems are expensed when they are incurred as a component of operating leases and solar energy systems incentives cost of revenue. The changes in the accrued warranty balance, recorded as a component of accrued and other current liabilities on the consolidated balance sheets, consisted of the following (in thousands):

	Asofandforthe
	Nine Months Ended
	September 30,
	2016
Balance - beginning of the period	$	22,993
Increase in liability (including 3,772 related to    MyPower contracts)		5,803
Change in estimate		1,587
Less warranty claims		(235	)
Balance - end of the period	$	30,148

Solar Energy Systems Performance Guarantees

Solar Energy Systems Performance Guarantees

The Company guarantees certain specified minimum solar energy production output for certain systems leased or sold to customers generally for a term of up to 30 years. The Company monitors the solar energy systems to ensure that these outputs are being achieved. The Company evaluates if any amounts are due to its customers and makes any payments periodically as specified in the customer contracts. As of September 30, 2016 and December 31, 2015, the Company recorded liabilities of $5.2 million and $3.1 million, respectively, under accrued and other current liabilities in the consolidated balance sheets, relating to these guarantees based on the Company’s assessment of its current exposure.

Solar Loans

Solar Loans

In the second quarter of 2016, the Company began offering Solar Loans, whereby a third-party lender provides financing directly to a qualified customer to enable the customer to purchase and own a solar energy system installed by the Company. The Company and the customer enter into a standard solar energy system sale agreement. Separately, the customer enters into a loan agreement with one of the third-party lenders, who finances the full purchase price. The Company is not a party to the loan agreement between the customer and the third-party lender, and the third-party lender has no recourse against the Company with respect to the loan. Solar Loans are offered as the replacement for the MyPower program. The Company accounts for Solar Loans under its revenue recognition policy for solar energy systems and components sales. However, any fees that are paid or payable from the Company to the lender of a Solar Loan would be recognized as an offset against solar energy systems and components sales revenue, in accordance with ASC 605-50, Customer Payments and Incentives.

Solar Renewable Energy Credits

Solar Renewable Energy Credits

The Company accounts for solar renewable energy credits, or SRECs, when they are purchased by the Company or sold to third parties. For SRECs generated by solar energy systems owned by the Company and minted by government agencies, the Company does not recognize any specifically identifiable costs for those SRECs as there are no specific incremental costs incurred to generate the SRECs. For SRECs purchased by the Company, the Company carries these SRECs at their cost, subject to testing for impairment. The Company recognizes revenue from the sale of an SREC when the SREC is transferred to the buyer, and the cost of the SREC, if any, is then recorded within cost of periodic billings revenue.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

The Company accounts for comprehensive income (loss) in accordance with ASC 220, Comprehensive Income. Under ASC 220, the Company is required to report comprehensive income (loss), which includes net income (loss) as well as other comprehensive income (loss). There were no significant other comprehensive income (losses) and no significant differences between comprehensive loss as defined by ASC 220 and net loss as reported in the consolidated statements of operations, for the periods presented.

Segment Information

Segment Information

Operating segments are defined as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the executive team, which is comprised of the chief executive officer, the chief financial officer, the chief technology officer and the chief revenue officer. Based on the financial information presented to and reviewed by the chief operating decision maker in deciding how to allocate the resources and in assessing the performance of the Company, the Company has determined that it has a single operating and reporting segment: solar energy products and services. The Company’s principal operations, revenue and decision-making functions are located in the United States.

Basic and Diluted Net Loss Per Share

Basic and Diluted Net Loss Per Share

The Company’s basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period.

The diluted net loss per share attributable to common stockholders is computed by giving effect to all potential common stock equivalents outstanding for the period determined using the treasury stock method or the if-converted method, as applicable. In periods when the Company incurred a net loss attributable to common stockholders, stock options, restricted stock units and convertible senior notes were considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is antidilutive.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In February 2015, the FASB issued Accounting Standards Update, or ASU, No. 2015-02, Amendments to the Consolidation Analysis, to amend the criteria for consolidation of certain legal entities. The Company adopted the ASU retrospectively on January 1, 2016. Adoption of the ASU did not have a material impact on the Company’s condensed consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, to change the accounting for subsequent adjustments to the provisional balances recognized in a business combination from retrospective to prospective. However, the ASU requires separate presentation or disclosure of the impact on prior periods had the adjustments been recognized as of the acquisition date. The Company adopted the ASU prospectively on January 1, 2016. Adoption of the ASU did not have a material impact on the Company’s condensed consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, to replace the existing revenue recognition criteria for contracts with customers and to establish the disclosure requirements for revenue from contracts with customers. In August 2015, the FASB issued ASU No. 2015-14, Deferral of the Effective Date, to defer the effective date of ASU No. 2014-09 to interim and annual periods beginning after December 15, 2017, with early adoption permitted. In March, April and May 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations, ASU No. 2016-10, Identifying Performance Obligations and Licensing, ASU No. 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, and ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, to clarify and amend the guidance in ASU No. 2014-09. Adoption of the ASUs is either retrospective to each prior period presented or retrospective with a cumulative adjustment to retained earnings or accumulated deficit as of the adoption date. The Company is currently assessing the impact of the ASUs on its condensed consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Going Concern, to provide guidance within GAAP requiring management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and requiring related disclosures. The ASU is effective for annual periods ending after December 15, 2016. The Company anticipates that the adoption of the ASU will not have a material impact on its condensed consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, to specify that inventory should be subsequently measured at the lower of cost or net realizable value, which is the ordinary selling price less any completion, transportation and disposal costs. However, the ASU does not apply to inventory measured using the last-in-first-out or retail methods. The ASU is effective for interim and annual periods beginning after December 15, 2016. Adoption of the ASU is prospective. The Company anticipates that the adoption of the ASU will not have a material impact on its condensed consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, to mainly change the accounting for investments in equity securities and financial liabilities carried at fair value as well as to modify the presentation and disclosure requirements for financial instruments. The ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is retrospective with a cumulative adjustment to retained earnings or accumulated deficit as of the adoption date. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, to require lessees to recognize most leases on the balance sheet, while recognition on the statement of operations will remain similar to current lease accounting. The ASU also eliminates real estate-specific provisions and modifies certain aspects of lessor accounting. The ASU is effective for interim and annual periods beginning after December 15, 2018. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-06, Contingent Put and Call Options in Debt Instruments, to clarify when a contingent put or call option to accelerate the repayment of debt is an embedded derivative. The ASU is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting,to simplify the accounting for the income tax effects from share-based compensation, the accounting for forfeitures and the accounting for statutory income tax withholding, among others. The ASU is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. Adoption of the ASU is modified retrospective, retrospective and prospective, depending on the specific provision being adopted. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, to require, among others, financial assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions and forecasts. The ASU is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, to reduce the diversity in practice with respect to the presentation of certain cash flows. The ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, to require the recognition of the income tax effects from an intra-entity transfer of an asset other than inventory. The ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. Adoption of the ASU is modified retrospective. The Company is currently assessing the impact of the ASU on its condensed consolidated financial statements.

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Summary of Significant Accounting Policies and Procedures (Tables)

9 Months Ended

Sep. 30, 2016

Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]

Summary of Interest Rate Swaps Outstanding

As of and for the periods ended September 30, 2016, the Company had interest rate swaps outstanding as follows (in thousands):

					Gross Gains				Gross Losses
	Aggregate		Gross		Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended
	Notional		Liability at		September 30,		September 30,		September 30,		September 30,
	Amount		Fair Value		2016		2016		2016		2016
Interest rate swaps	$	777,298	$	47,425	$	3,252	$	3,630	$	387	$	52,215

Company's Assets and Liabilities Carried at Fair Value on Recurring Basis included Cash Equivalents, interest rate swaps and Contingent Consideration

As of September 30, 2016, the assets and liabilities carried at fair value on a recurring basis included cash equivalents, interest rate swaps and contingent consideration, and their fair values were as follows (in thousands):

	Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	3,437	$	—	$	—
Liabilities:
Interest rate swaps	$	—	$	47,425	$	—
Contingent consideration	$	—	$	—	$	83,973

Schedule of Estimated Fair Values and Carrying Values

The following table presents their estimated fair values and their carrying values (in thousands):

	September 30, 2016
	CarryingValue		Fair Value
Participation interest	$	16,585	$	14,937
Solar asset-backed notes	$	439,988	$	439,082
Solar loan-backed notes	$	130,365	$	134,933
Convertible senior notes	$	897,657	$	697,750
MyPower customer notes receivable	$	533,534	$	533,534
Long-term debt	$	1,569,047	$	1,569,047
Solar bonds	$	334,073	$	334,073

Schedule of Product Warranty Liability

The changes in the accrued warranty balance, recorded as a component of accrued and other current liabilities on the consolidated balance sheets, consisted of the following (in thousands):

	Asofandforthe
	Nine Months Ended
	September 30,
	2016
Balance - beginning of the period	$	22,993
Increase in liability (including 3,772 related to    MyPower contracts)		5,803
Change in estimate		1,587
Less warranty claims		(235	)
Balance - end of the period	$	30,148

Contingent Consideration Liability [Member]

Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]

Summary of the Activity of the Level 3 Contingent Consideration

The following table summarizes the activity of the Level 3 contingent consideration balance in the nine months ended September 30, 2016 (in thousands):

Balance - beginning of the period	$	123,008
Settlement of liability		(34,170	)
Change in fair value		(4,865	)
Balance - end of the period	$	83,973

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets

The following is a summary of intangible assets as of September 30, 2016 (in thousands):

	Weighted-
	average
	useful life				Accumulated
	(in years)		Gross		amortization			Write-offs			Net
Developed technology - Silevo		10	$	115,000	$	(23,221	)	$	—			91,779
Developed technology - Zep Solar		7		60,100		(24,137	)		—			35,963
Trademarks and trade names		7		24,700		(9,903	)		—			14,797
Marketing database		5		17,427		(11,579	)		(5,848	)		—
PowerSaver agreement		10		17,077		(4,815	)		(12,262	)		—
Non-compete agreements		5		7,189		(4,043	)		(3,035	)		111
Customer relationships		6		6,190		(1,368	)		—			4,822
Other		6		10,028		(6,721	)		(87	)		3,220
Total		8.76	$	257,711	$	(85,787	)	$	(21,232	)	$	150,692

The following is a summary of intangible assets as of December 31, 2015 (in thousands):

	Weighted-
	average
	useful life				Accumulated
	(in years)		Gross		amortization			Net
Developed technology - Silevo		10	$	115,000	$	(14,596	)		100,404
Developed technology - Zep Solar		7		60,100		(17,664	)		42,436
Trademarks and trade names		7		24,700		(7,256	)		17,444
Marketing database		5		17,427		(9,953	)		7,474
PowerSaver agreement		10		17,077		(3,961	)		13,116
Non-compete agreements		5		7,189		(3,272	)		3,917
Customer relationships		6		6,190		(542	)		5,648
Other		6		10,028		(5,223	)		4,805
Total		8.26	$	257,711	$	(62,467	)	$	195,244

Summary of Carrying Value of Intangible Assets

The changes to the carrying value of intangible assets were as follows (in thousands):

	September 30, 2016
Balance - beginning of the period	$	195,244
Amortization		(23,320	)
Write-offs		(21,232	)
Balance - end of the period	$	150,692

Summary of Amortization Expense for Intangible Assets

Amortization expense from intangible assets for the nine months ended September 30, 2016 and 2015 was allocated as follows (in thousands):

	Nine Months Ended September 30,
		2016	2015
Included in depreciation, amortization and warranty	$	15,534	$	15,551
Included in sales and marketing		7,786		8,953
Total amortization expense	$	23,320	$	24,504

Summary of Future Amortization Expense for Intangible Assets

As of September 30, 2016, the total future amortization expense from intangible assets was as follows (in thousands):

	Depreciation, amortization and warranty		Sales and marketing		Total
Three months ending December 31, 2016	$	5,166	$	1,170	$	6,336
2017		20,541		4,678		25,219
2018		20,541		4,657		25,198
2019		20,541		4,621		25,162
2020		19,821		4,423		24,244
Thereafter		44,533		—		44,533
Total	$	131,143	$	19,549	$	150,692

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Selected Balance Sheet Components (Tables)

9 Months Ended

Sep. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Components of Balance Sheet

Selected components of the consolidated balance sheets were as follows (in thousands):

	September 30, 2016			December 31, 2015
Inventories:
Raw materials	$	182,834		$	335,439
Work in progress		23,371			7,512
Total	$	206,205		$	342,951
Solar Energy Systems, Leased and To Be Leased - Net:
Solar energy systems leased to customers	$	4,675,091		$	3,619,214
Initial direct costs related to customer solar energy system lease acquisition costs		509,487			383,506
		5,184,578			4,002,720
Less accumulated depreciation and amortization		(398,806	)		(275,158	)
		4,785,772			3,727,562
Solar energy systems under construction		364,281			358,010
Solar energy systems to be leased to customers		342,973			289,981
Solar energy systems, leased and to be leased - net(1)(2)	$	5,493,026		$	4,375,553
Property, Plant and Equipment - Net
Manufacturing facilities - Fremont, California:
Manufacturing and lab equipment	$	91,694		$	84,418
Leasehold improvements		55,841			53,902
Manufacturing facilities - China:
Manufacturing and lab equipment(3)		21,793			21,714
Land and buildings		6,706			6,711
Vehicles		35,335			44,036
Computer hardware and software		56,186			41,294
Furniture and fixtures		15,249			13,611
Leasehold improvements - other		23,015			19,546
Other(4)		44,935			30,861
		350,754			316,093
Less accumulated depreciation and amortization		(99,820	)		(53,706	)
Property, plant and equipment - net	$	250,934		$	262,387
Accrued and Other Current Liabilities:
Accrued expenses	$	82,884		$	69,034
Income tax payable		—			41,016
Accrued compensation		83,784			64,988
Current portion of contingent consideration		—			42,912
Accrued warranty		30,148			22,993
Accrued professional services fees		12,327			9,915
Current portion of capital lease obligation		11,588			8,208
Other current liabilities		16,220			17,440
Total	$	236,951		$	276,506

	September 30, 2016		December 31, 2015
Other Liabilities and Deferred Credits:
Deferred gain on sale-leaseback transactions, net of current portion	$	49,114	$	51,547
Deferred rent expense		14,132		16,184
Interest rate swaps liability		47,425		11,544
Deferred solar renewable energy credits income		20,458		8,855
Capital lease obligation		37,210		39,475
Liability for receipts from an investor(5)		47,088		17,975
Contingent consideration		83,973		80,096
Participation interest		16,585		15,919
Other non-current liabilities		46,011		37,411
Total	$	361,996	$	279,006

(1) Included in solar energy systems leased to customers as of September 30, 2016 and December 31, 2015 was $66.4 million for each period related to capital leased assets with an accumulated depreciation of $12.7 million and $10.6 million, respectively.

(2) Included in solar energy systems, leased and to be leased to customers as of September 30, 2016 and December 31, 2015 was $13.8 million and $6.3 million, respectively, related to energy storage systems with an accumulated depreciation of $0.8 million and $0.5 million, respectively.

(3) The manufacturing equipment in China was fully impaired during the nine months ended September 30, 2016 as the Company restructured its operations in China. The impairment charge is included in restructuring and other expense (see Note 3, Restructuring and Other Activities).

(4) Included in other property, plant and equipment - net as of September 30, 2016 and December 31, 2015 was $37.1 million and $29.1 million, respectively, related to capital leased assets with an accumulated depreciation of $11.0 million and $5.6 million, respectively.

(5) The liability for receipts from an investor represents amounts received from an investor under a lease pass-through fund arrangement for monetization of investment tax credits, or ITCs, for assets not yet placed in service. This amount is reclassified to deferred revenue when the assets are placed in service.

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Indebtedness (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Summary of Debt

The following is a summary of the Company’s debt as of September 30, 2016 (dollars in thousands):

	Unpaid						Unused
	Principal		Net Carrying Value				Borrowing
	Balance		Current		Long-Term		Capacity		InterestRate	Maturity Dates
Recourse debt:
Secured revolving credit facility	$	364,000	$	22,769	$	338,562	$	4,920	3.8%-5.8%	December 2016 - December2017
Vehicle and other loans		23,515		15,171		8,344		—	2.9%-7.6%	March 2017 - June2019
2.75% convertible senior notes due in 2018		230,000		—		226,908		—	2.8%	November2018
1.625% convertible senior notes due in    2019		566,000		—		557,941		—	1.6%	November2019
Zero-coupon convertible senior notes    due in 2020		113,000		—		112,808		—	0.0%	December 2020
Solar Bonds		334,407		182,485		151,588	*		1.1%-6.5%	October 2016 - January2031
Total recourse debt		1,630,922		220,425		1,396,151		4,920
Non-recourse debt:
Term loan due in December 2016		86,759		86,488		—		—	4.0%	December2016
Term loan due in December 2017		52,015		—		49,967		68,590	4.0%	December 2017
Term loan due in January 2021		153,841		4,638		144,772		4,001	4.2%	January 2021
MyPower revolving credit facility		134,287		133,552		—		55,713	3.7%-6.2%	January2017
Revolving aggregation credit facility		415,097		—		403,567		344,903	3.8%-4.4%	December2018
Solar Renewable Energy Credit Term Loan		35,866		12,538		22,473		1,542	6.6%-9.9%	April 2017 - July 2021
Cash Equity Debt I		120,582		3,211		116,340		—	5.7%	July 2033
Cash Equity Debt II		210,000		7,140		199,515		—	5.3%	July 2034
Solar Asset-backed Notes, Series 2013-1		43,013		3,400		36,867		—	4.8%	November2038
Solar Asset-backed Notes, Series 2014-1		61,801		2,976		56,247		—	4.6%	April 2044
Solar Asset-backed Notes, Series 2014-2		186,851		7,055		173,569		—	4.0%-Class A 5.4%-Class B	July 2044
Solar Asset-backed Notes, Series 2015-1		119,199		1,511		112,886		—	4.2%-Class A 5.6%-Class B	August 2045
Solar Asset-backed Notes, Series 2016-1		50,119		1,202		44,275		—	5.3%-Class A 7.5%-Class B	September 2046
Solar Loan-backed Notes, Series 2016-A		140,586		3,514		126,851		—	4.8%-Class A 6.9%-Class B	September 2048
Total non-recourse debt		1,810,016		267,225		1,487,329		474,749
Total debt	$	3,440,938	$	487,650	$	2,883,480	$	479,669

* Out of the $350.0 million authorized to be issued by the Company’s board of directors, $15.6 million remained available to be issued. See below and Note 13, Related Party Transactions, for Solar Bonds issued to related parties.

The following is a summary of the Company’s debt as of December 31, 2015 (dollars in thousands):

	Unpaid						Unused
	Principal		Net Carrying Value				Borrowing
	Balance		Current		Long-Term		Capacity		Interest Rate	Maturity Date
Recourse debt:
Secured revolving credit facility	$	360,000	$	22,320	$	333,287	$	13,053	3.5%-5.8%	December 2016 - December 2017
Vehicle and other loans		28,173		12,562		15,610		—	2.5%-7.6%	January 2016 - June 2019
2.75% convertible senior notes due in 2018		230,000		—		225,795		—	2.8%	November 2018
1.625% convertible senior notes due in    2019		566,000		—		555,981		—	1.6%	November 2019
Zero-coupon convertible senior notes   due in 2020		113,000		—		112,784		—	0.0%	December 2020
Solar Bonds		214,324		178,309		35,778	#		1.3%-5.8%	January 2016 - December 2030
Total recourse debt		1,511,497		213,191		1,279,235		13,053
Non-recourse debt:
Term loan due in May 2016		34,622		33,918		—		—	3.5%	May 2016
Term loan due in December 2016		112,483		111,248		—		—	3.6%-3.7%	December 2016
MyPower revolving credit facility		213,125		—		210,735		26,875	3.0%-5.5%	January 2017
Revolving aggregation credit facility		455,693		—		446,963		194,307	3.1%-3.2%	December 2017
Solar Asset-backed Notes, Series 2013-1		45,845		3,342		39,669		—	4.8%	November 2038
Solar Asset-backed Notes, Series 2014-1		64,431		2,855		58,938		—	4.6%	April 2044
Solar Asset-backed Notes, Series 2014-2		193,755		6,319		181,041		—	4.0%-Class A 5.4%-Class B	July 2044
Solar Asset-backed Notes, Series 2015-1		122,295		1,348		116,019		—	4.2%-Class A 5.6%-Class B	August 2045
Total non-recourse debt		1,242,249		159,030		1,053,365		221,182
Total debt	$	2,753,746	$	372,221	$	2,332,600	$	234,235

# Out of the $350.0 million authorized to be issued by the Company’s board of directors, $135.7 million remained available to be issued. See below and Note 13, Related Party Transactions, for Solar Bonds issued to related parties.

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VIE Arrangements (Tables)

9 Months Ended

Sep. 30, 2016

Variable Interest Entity Disclosure [Abstract]

Summary of Number of Current VIE Funds by Classification of Investor, the Carrying Value, Total Investor Contributions Received and Undrawn Investor Contributions

The following table shows the number of funds by investor classification, carrying value of the solar energy systems in the funds, total investor contributions received and undrawn investor contributions as of September 30, 2016 (in thousands, except for number of funds) for funds that have been determined to be VIEs:

			Total				Carrying
			Investor		Undrawn		Value of
Investor	Number		Contributions		Investor		Solar Energy
Classification	of Funds		Received		Contributions		Systems
Financial institutions		32	$	2,252,194	$	174,116	$	2,420,245
Corporations		7		993,650		3,110		1,021,052
Utilities		4		278,888		35,033		287,441
Other investors		1		1,788		—		3,126.0
Total		44	$	3,526,520	$	212,259	$	3,731,864

Carrying Values of Assets and Liabilities of Subsidiary in Consolidated Balance Sheets

The aggregate carrying values of the VIEs’ assets and liabilities, after elimination of intercompany transactions and balances, in the consolidated balance sheets were as follows (in thousands):

	September 30, 2016		December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	47,267	$	32,105
Restricted cash		20,108		44
Accounts receivable - net		31,336		10,116
Rebates receivable		7,524		6,220
Prepaid expenses and other current assets		2,321		1,740
Total current assets		108,556		50,225
Solar energy systems, leased and to be leased - net		3,731,864		2,779,363
Other assets		47,552		11,204
Total assets	$	3,887,972	$	2,840,792
Liabilities
Current liabilities:
Accounts payable	$	7	$	—
Distributions payable to noncontrolling interests    and redeemable noncontrolling interests		25,106		26,769
Current portion of deferred U.S. Treasury grant income		6,506		6,506
Accrued and other current liabilities		4,178		598
Customer deposits		2,276		2,928
Current portion of deferred revenue		34,986		24,794
Current portion of long-term debt		10,352		—
Total current liabilities		83,411		61,595
Deferred revenue, net of current portion		374,695		308,798
Long-term debt, net of current portion		365,821		—
Deferred U.S. Treasury grant income, net of current    portion		159,292		164,191
Other liabilities and deferred credits		63,320		28,460
Total liabilities	$	1,046,539	$	563,044

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Redeemable Noncontrolling Interests in Subsidiaries (Tables)

9 Months Ended

Sep. 30, 2016

Noncontrolling Interest [Abstract]

Activity of Redeemable Noncontrolling Interests in Subsidiaries

The activity of the redeemable noncontrolling interests in subsidiaries balance was as follows (in thousands):

Balance at December 31, 2015	$	320,935
Contributions from redeemable noncontrolling interests		318,165
Net loss		(304,620	)
Distributions to redeemable noncontrolling interests		(36,658	)
Acquisition of redeemable noncontrolling interests		(13,664	)
Balance at September 30, 2016	$	284,158

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Equity (Tables)

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Schedule of Changes in Total Stockholders' Equity and Noncontrolling Interests

The changes in total stockholders’ equity and noncontrolling interests in subsidiaries were as follows (in thousands):

	Total			Noncontrolling
	Stockholders'			Interests in			Total
	Equity			Subsidiaries			Equity
Balance, December 31, 2015	$	878,566		$	535,062		$	1,413,628
Contributions from noncontrolling interests		—			704,522			704,522
Tax impact of stock option exercises		(7,738	)		—			(7,738	)
Stock-based compensation expense		90,025			—			90,025
Issuance of common stock upon exercise of stock options    for cash		3,540			—			3,540
Issuance of stock to settle accrued compensation		631			—			631
Issuance of stock on settlement of Silevo contingent    consideration		34,170			—			34,170
Net loss		(27,262	)		(426,823	)		(454,085	)
Distributions to noncontrolling interests		—			(70,141	)		(70,141	)
Balance, September 30, 2016	$	971,932		$	742,620		$	1,714,552

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Equity Award Plans (Tables)

9 Months Ended

Sep. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Option Activity

A summary of stock option activity is as follows (in thousands, except per share amounts):

						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
	Stock			Exercise		Contractual		Intrinsic
	Options			Price		Term (Years)		Value
Outstanding - December 31, 2015		18,315		$	38.43		7.74	$	293,855
Granted (weighted-average fair value of $15.14)		1,292			25.97
Exercised		(524	)		6.75				9,173
Canceled		(1,983	)		54.50
Outstanding - September 30, 2016		17,098		$	36.60		7.15	$	73,468
Options vested and exercisable - September 30, 2016		8,454		$	24.86		5.56	$	72,910
Options vested and expected to vest - September 30, 2016		15,222		$	35.38		6.93	$	73,453

Summary of Fair Value of Stock Options Granted Using Weighted-Average Assumptions used in the Black-Scholes Option Valuation Model

The fair values were estimated on each grant date with the following weighted-average assumptions used in the Black-Scholes option valuation model:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016	2015			2016			2015
Dividend yield	*		0	%		0	%		0	%
Annual risk-free rate of return	*		2.27	%		1.50	%		2.16	%
Expected volatility	*		55.88	%		61.94	%		58.72	%
Expected term (years)	*		4.97			6.28			5.16

Summary of RSU Activity

A summary of RSU activity is as follows (in thousands, except per share amounts):

				Weighted-
	Restricted			Average
	Stock			Fair
	Units			Value
Outstanding - December 31, 2015		3,577		$	49.53
Granted		2,029			19.58
Vested		(838	)		45.80
Cancelled		(1,080	)		41.73
Outstanding - September 30, 2016		3,688		$	36.18
Expected to vest - September 30, 2016		2,246		$	36.73

Summary of Capitalized Stock-Based Compensation Expense

The amount of capitalized stock-based compensation expense was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Capitalized under:
Inventories	$	169	$	253	$	169	$	253
Other assets	$	30	$	848	$	666	$	2,462
Property, plant and equipment - net	$	1,399	$	711	$	3,780	$	2,096
Solar energy systems, leased and to be leased - net	$	5,809	$	6,902	$	20,137	$	17,555

Summary of Stock-Based Compensation Expense Recognized

Stock-based compensation expense was included in cost of revenue and operating expenses as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Total cost of revenue	$	876	$	489	$	2,718	$	1,665
Sales and marketing	$	3,498	$	7,048	$	16,355	$	17,266
General and administrative	$	13,633	$	13,305	$	37,628	$	31,325
Pre-production expense	$	174	$	—	$	322	$	—
Research and development	$	2,997	$	3,866	$	8,038	$	10,754

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

Components of Related Party Transactions

The Company’s operations included the following related party transactions (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenue:
Solar energy systems sales to related parties	$	—	$	—	$	12	$	79
Expenditures:
Purchases of inventories or equipment    from related parties	$	4,324	$	2,450	$	10,690	$	4,147
Interest paid or payable to related parties (included in    interest expense (excluding amortization of debt discounts    and fees) - recourse debt)	$	2,467	$	828	$	4,682	$	1,298

Summary of Related Party Balances

Related party balances were comprised of the following (in thousands):

	September 30, 2016		December 31, 2015
Due from related parties (included in accounts receivable)	$	22	$	30
Due to related parties (included in accounts payable)	$	1,080	$	3,961
Solar bonds issued to related parties	$	265,200	$	165,220
Convertible senior notes issued to related parties	$	12,978	$	12,975
Due to related parties (included in accrued and other    current liabilities)	$	1,578	$	1,249

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Basic and Diluted Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Computation of Company's Basic and Diluted Net Loss Per Share

The following table sets forth the computation of the Company’s basic and diluted net loss per share for the periods presented (in thousands, except share and per share amounts):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015			2016			2015
Net income (loss) attributable to stockholders	$	53,215	$	(19,073	)	$	(27,262	)	$	(62,958	)
Net income (loss) attributable to common stockholders,    basic	$	53,215	$	(19,073	)	$	(27,262	)	$	(62,958	)
Net income (loss) attributable to common stockholders,    diluted	$	56,165	$	(19,073	)	$	(27,262	)	$	(62,958	)
Weighted-average shares used to compute net income (loss)    per share attributable to common stockholders, basic		100,494,480		97,384,949			99,354,863			97,027,412
Weighted-average shares used to compute net income (loss)    per share attributable to common stockholders, diluted		118,077,365		97,384,949			99,354,863			97,027,412
Net income (loss) per share attributable to common    stockholders, basic	$	0.53	$	(0.20	)	$	(0.27	)	$	(0.65	)
Net income (loss) per share attributable to common    stockholders, diluted	$	0.48	$	(0.20	)	$	(0.27	)	$	(0.65	)

Schedule of Weighted-Average Outstanding Shares of Common Stock Equivalents Excluded from Computation of Diluted Net Loss Per Share

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Common stock options		14,474,596		14,197,584		18,057,579		13,852,111
Restricted stock units		3,363,304		2,763,268		3,718,782		2,082,446
Convertible senior notes		—		10,505,947		13,930,186		10,505,947

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Organization - Additional Information (Detail) - USD ($)		9 Months Ended
	Jul. 31, 2016	Sep. 30, 2016
Schedule Of Organization Consolidation And Presentation Of Financial Statements [Line Items]
SolarCity corporation, date of incorporation		Jun. 21, 2006
Merger Agreement with Tesla [Member]
Schedule Of Organization Consolidation And Presentation Of Financial Statements [Line Items]
Business combination, common stock conversion basis		Each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the merger would be converted into 0.110, or the Exchange Ratio, shares of Tesla’s common stock.
Business combination, stock conversion shares issued	0.110
Merger Agreement with Tesla [Member] | Minimum [Member]
Schedule Of Organization Consolidation And Presentation Of Financial Statements [Line Items]
Merger agreement, termination fee	$ 26,100,000
Merger Agreement with Tesla [Member] | Maximum [Member]
Schedule Of Organization Consolidation And Presentation Of Financial Statements [Line Items]
Merger agreement, termination fee	$ 78,200,000

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Summary of Significant Accounting Policies and Procedures - Additional Information (Detail) - USD ($) $ in Thousands, shares in Millions		3 Months Ended	6 Months Ended	9 Months Ended
	May 05, 2016	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2016	Mar. 31, 2016	Dec. 31, 2015
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Fair Value Inputs, Probability of Default				95.00%
Accrued and other current liabilities		$ 236,951		$ 236,951		$ 276,506
Liability recorded relating to guarantees		$ 5,200		$ 5,200		$ 3,100
MyPower Program [Member]
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Company generally provides a warranty on the generating and non-generating parts of the solar energy systems				10 to 30 years
Manufacturer [Member]
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Company generally provides a warranty on the generating and non-generating parts of the solar energy systems				one to 25 years
Level 3 [Member]
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Accrued and other current liabilities					$ 48,300
Minimum [Member]
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Fair Value Inputs, Discount Rate				6.00%
Maximum [Member]
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Property and equipment, Useful Lives				30 years
Fair Value Inputs, Discount Rate				7.00%
General and Administrative Expenses [Member]
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Gain related to settlement of contingent consideration liability	$ 14,100
Common Stock [Member]
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Stock issued, shares	1.6
Stock issued, value	$ 34,200
New Solar Energy Systems [Member]
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Property and equipment, Useful Lives		35 years	30 years

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Summary of Significant Accounting Policies and Procedures - Summary of Interest Rate Swaps Outstanding (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Derivatives Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	$ 47,425	$ 47,425	$ 11,544
Interest Rate Swap [Member]
Derivatives Fair Value [Line Items]
Derivative, Notional Amount	777,298	777,298
Derivative Liability, Fair Value, Gross Liability	47,425	47,425
Gross Gains	3,252	3,630
Gross Losses	$ 387	$ 52,215

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Summary of Significant Accounting Policies and Procedures - Assets and Liabilities Carried at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Liabilities:
Derivative Liability, Fair Value, Gross Liability	$ 47,425	$ 11,544
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Liabilities:
Derivative Liability, Fair Value, Gross Liability	47,425
Fair Value, Measurements, Recurring [Member] | Level 3 [Member]
Liabilities:
Contingent consideration	83,973
Fair Value, Measurements, Recurring [Member] | Money Market Funds [Member] | Level 1 [Member]
Cash equivalents:
Cash equivalents	$ 3,437

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Summary of Significant Accounting Policies and Procedures - Summary of the Activity of the Level 3 Contingent Consideration (Detail) - Contingent Consideration Liability [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Balance - beginning of the period	$ 123,008
Settlement of liability	(34,170)
Change in fair value	(4,865)
Balance - end of the period	$ 83,973

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Summary of Significant Accounting Policies and Procedures - Schedule of Estimated Fair Values and Carrying Values (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Carrying Value	$ 2,883,480	$ 2,332,600
MyPower customer notes receivable [Member]
Debt Instrument [Line Items]
Carrying Value	533,534
Fair Value	533,534
Long-term debt [Member]
Debt Instrument [Line Items]
Carrying Value	1,569,047
Fair Value	1,569,047
Participation interest [Member]
Debt Instrument [Line Items]
Carrying Value	16,585
Fair Value	14,937
Solar asset-backed notes [Member]
Debt Instrument [Line Items]
Carrying Value	439,988
Fair Value	439,082
Solar Loan-backed Notes [Member]
Debt Instrument [Line Items]
Carrying Value	130,365
Fair Value	134,933
Convertible senior notes [Member]
Debt Instrument [Line Items]
Carrying Value	897,657
Fair Value	697,750
Solar Bonds [Member]
Debt Instrument [Line Items]
Carrying Value	334,073
Fair Value	$ 334,073

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Summary of Significant Accounting Policies and Procedures - Schedule of Changes in Accrued Warranty Balance (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance - beginning of the period	$ 22,993
Increase in liability (including 3,772 related to MyPower contracts)	5,803
Change in estimate	1,587
Less warranty claims	(235)
Balance - end of the period	$ 30,148

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Summary of Significant Accounting Policies and Procedures - Schedule of Changes in Accrued Warranty Balance (Parenthetical) (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Product Warranty Accrual [Line Items]
Increase in liability (including 3,772 related to MyPower contracts)	$ 5,803
MyPower Program [Member]
Product Warranty Accrual [Line Items]
Increase in liability (including 3,772 related to MyPower contracts)	$ 3,772

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Restructuring and Other Activities - Additional Information (Detail) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015
Restructuring Cost And Reserve [Line Items]
One-time employee termination benefits		$ 5,900,000
Intangible assets impairment			$ 0
Outstanding restructuring liability	$ 3,200,000	3,200,000
Merger Agreement with Tesla [Member]
Restructuring Cost And Reserve [Line Items]
Pre-acquisition expenses		5,800,000
Uninstalled Commercial Project [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring charge	$ 16,100,000
Sales and Marketing Related Intangible Assets [Member]
Restructuring Cost And Reserve [Line Items]
Intangible assets impairment		21,200,000
Manufacturing Facilities - China [Member] | Manufacturing and Lab Equipment [Member]
Restructuring Cost And Reserve [Line Items]
Asset impairment charges		$ 13,900,000

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Goodwill and Intangible Assets - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
Carrying value of goodwill	$ 321,900,000
Changes to carrying value of goodwill	$ 0
Intangible assets impairment		$ 0

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Goodwill and Intangible Assets - Summary of Intangible Assets (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Finite Lived Intangible Assets [Line Items]
Intangible Assets acquired, Gross	$ 257,711	$ 257,711
Intangible Assets, Accumulated Amortization	(85,787)	(62,467)
Intangible Assets, Write offs	(21,232)
Intangible Assets, Net	$ 150,692	$ 195,244
Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Estimated useful lives	8 years 9 months 4 days	8 years 3 months 4 days
Developed Technology Rights [Member] | Silevo, Inc. [Member]
Finite Lived Intangible Assets [Line Items]
Intangible Assets acquired, Gross	$ 115,000	$ 115,000
Intangible Assets, Accumulated Amortization	(23,221)	(14,596)
Intangible Assets, Net	$ 91,779	$ 100,404
Developed Technology Rights [Member] | Silevo, Inc. [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Estimated useful lives	10 years	10 years
Developed Technology Rights [Member] | Zep Solar [Member]
Finite Lived Intangible Assets [Line Items]
Intangible Assets acquired, Gross	$ 60,100	$ 60,100
Intangible Assets, Accumulated Amortization	(24,137)	(17,664)
Intangible Assets, Net	$ 35,963	$ 42,436
Developed Technology Rights [Member] | Zep Solar [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Estimated useful lives	7 years	7 years
Trademarks and Trade Names [Member]
Finite Lived Intangible Assets [Line Items]
Intangible Assets acquired, Gross	$ 24,700	$ 24,700
Intangible Assets, Accumulated Amortization	(9,903)	(7,256)
Intangible Assets, Net	$ 14,797	$ 17,444
Trademarks and Trade Names [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Estimated useful lives	7 years	7 years
Marketing database [Member]
Finite Lived Intangible Assets [Line Items]
Intangible Assets acquired, Gross	$ 17,427	$ 17,427
Intangible Assets, Accumulated Amortization	(11,579)	(9,953)
Intangible Assets, Write offs	$ (5,848)
Intangible Assets, Net		$ 7,474
Marketing database [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Estimated useful lives	5 years	5 years
Power Saver Agreement [Member]
Finite Lived Intangible Assets [Line Items]
Intangible Assets acquired, Gross	$ 17,077	$ 17,077
Intangible Assets, Accumulated Amortization	(4,815)	(3,961)
Intangible Assets, Write offs	$ (12,262)
Intangible Assets, Net		$ 13,116
Power Saver Agreement [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Estimated useful lives	10 years	10 years
Non-compete Agreements [Member]
Finite Lived Intangible Assets [Line Items]
Intangible Assets acquired, Gross	$ 7,189	$ 7,189
Intangible Assets, Accumulated Amortization	(4,043)	(3,272)
Intangible Assets, Write offs	(3,035)
Intangible Assets, Net	$ 111	$ 3,917
Non-compete Agreements [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Estimated useful lives	5 years	5 years
Customer relationships [Member]
Finite Lived Intangible Assets [Line Items]
Intangible Assets acquired, Gross	$ 6,190	$ 6,190
Intangible Assets, Accumulated Amortization	(1,368)	(542)
Intangible Assets, Net	$ 4,822	$ 5,648
Customer relationships [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Estimated useful lives	6 years	6 years
Other [Member]
Finite Lived Intangible Assets [Line Items]
Intangible Assets acquired, Gross	$ 10,028	$ 10,028
Intangible Assets, Accumulated Amortization	(6,721)	(5,223)
Intangible Assets, Write offs	(87)
Intangible Assets, Net	$ 3,220	$ 4,805
Other [Member] | Weighted Average [Member]
Finite Lived Intangible Assets [Line Items]
Estimated useful lives	6 years	6 years

XML

Goodwill and Intangible Assets - Summary of Carrying Value of Intangible Assets (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Finite Lived Intangible Assets Future Amortization Expense [Abstract]
Balance - beginning of the period	$ 195,244
Amortization	(23,320)	$ (24,504)
Write-offs	(21,232)
Balance - end of the period	$ 150,692

XML

Goodwill and Intangible Assets - Amortization Expense for Identifiable Purchased Intangible Assets (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Finite Lived Intangible Assets [Line Items]
Total amortization expense	$ 23,320	$ 24,504
Depreciation, Amortization and Warranty [Member]
Finite Lived Intangible Assets [Line Items]
Total amortization expense	15,534	15,551
Sales and Marketing [Member]
Finite Lived Intangible Assets [Line Items]
Total amortization expense	$ 7,786	$ 8,953

XML

Goodwill and Intangible Assets - Summary of Future Amortization Expense for Intangible Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Finite Lived Intangible Assets [Line Items]
Three months ending December 31, 2016	$ 6,336
2017	25,219
2018	25,198
2019	25,162
2020	24,244
Thereafter	44,533
Total	150,692	$ 195,244
Depreciation, Amortization and Warranty [Member]
Finite Lived Intangible Assets [Line Items]
Three months ending December 31, 2016	5,166
2017	20,541
2018	20,541
2019	20,541
2020	19,821
Thereafter	44,533
Total	131,143
Sales and Marketing [Member]
Finite Lived Intangible Assets [Line Items]
Three months ending December 31, 2016	1,170
2017	4,678
2018	4,657
2019	4,621
2020	4,423
Total	$ 19,549

XML

Selected Balance Sheet Components - Components of Consolidated Balance Sheet (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Inventories:
Raw materials	$ 182,834	$ 335,439
Work in progress	23,371	7,512
Total	206,205	342,951
Solar Energy Systems, Leased and To Be Leased - Net:
Solar energy systems leased to customers	4,675,091	3,619,214
Initial direct costs related to customer solar energy system lease acquisition costs	509,487	383,506
Solar energy systems, leased and to be leased, gross	5,184,578	4,002,720
Less accumulated depreciation and amortization	(398,806)	(275,158)
Solar energy systems, leased and to be leased gross, less accumulated depreciation and amortization	4,785,772	3,727,562
Solar energy systems under construction	364,281	358,010
Solar energy systems to be leased to customers	342,973	289,981
Solar energy systems, leased and to be leased - net	5,493,026	4,375,553
Property, Plant and Equipment - Net
Property, plant and equipment, gross	350,754	316,093
Less accumulated depreciation and amortization	(99,820)	(53,706)
Property, plant and equipment - net	250,934	262,387
Accrued and Other Current Liabilities:
Accrued expenses	82,884	69,034
Income tax payable		41,016
Accrued compensation	83,784	64,988
Current portion of contingent consideration		42,912
Accrued warranty	30,148	22,993
Accrued professional services fees	12,327	9,915
Current portion of capital lease obligation	11,588	8,208
Other current liabilities	16,220	17,440
Total	236,951	276,506
Other Liabilities and Deferred Credits:
Deferred gain on sale-leaseback transactions, net of current portion	49,114	51,547
Deferred rent expense	14,132	16,184
Interest rate swaps liability	47,425	11,544
Deferred solar renewable energy credits income	20,458	8,855
Capital lease obligation	37,210	39,475
Liability for receipts from an investor	47,088	17,975
Contingent consideration	83,973	80,096
Participation interest	16,585	15,919
Other non-current liabilities	46,011	37,411
Total	361,996	279,006
Vehicles [Member]
Property, Plant and Equipment - Net
Property, plant and equipment, gross	35,335	44,036
Computer hardware and software [Member]
Property, Plant and Equipment - Net
Property, plant and equipment, gross	56,186	41,294
Furniture and fixtures [Member]
Property, Plant and Equipment - Net
Property, plant and equipment, gross	15,249	13,611
Leasehold Improvements Other [Member]
Property, Plant and Equipment - Net
Property, plant and equipment, gross	23,015	19,546
Other [Member]
Property, Plant and Equipment - Net
Property, plant and equipment, gross	44,935	30,861
Manufacturing Facilities - Fremont, California [Member] | Manufacturing and Lab Equipment [Member]
Property, Plant and Equipment - Net
Property, plant and equipment, gross	91,694	84,418
Manufacturing Facilities - Fremont, California [Member] | Leasehold Improvements [Member]
Property, Plant and Equipment - Net
Property, plant and equipment, gross	55,841	53,902
Manufacturing Facilities - China [Member] | Manufacturing and Lab Equipment [Member]
Property, Plant and Equipment - Net
Property, plant and equipment, gross	21,793	21,714
Manufacturing Facilities - China [Member] | Land and Buildings [Member]
Property, Plant and Equipment - Net
Property, plant and equipment, gross	$ 6,706	$ 6,711

XML

Selected Balance Sheet Components - Components of Consolidated Balance Sheet (Parenthetical) (Detail) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Solar Energy Systems [Member]
Components Of Balance Sheet [Line Items]
Capital leased assets	$ 66.4	$ 66.4
Accumulated depreciation on capital leased assets	12.7	10.6
Energy Storage Systems [Member]
Components Of Balance Sheet [Line Items]
Capital leased assets	13.8	6.3
Accumulated depreciation on capital leased assets	0.8	0.5
Property, Plant and Equipment - Net [Member]
Components Of Balance Sheet [Line Items]
Capital leased assets	37.1	29.1
Accumulated depreciation on capital leased assets	$ 11.0	$ 5.6

XML

Cash Equity Financings - Additional Information (Detail) - USD ($) $ in Thousands			1 Months Ended	9 Months Ended
	Sep. 08, 2016	May 02, 2016	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015
Cash Equity Financings [Line Items]
Repayments of long-term debt				$ 630,892	$ 211,976
Special purpose entity [Member]
Cash Equity Financings [Line Items]
Convertible senior notes aggregate principal amount	$ 210,000	$ 121,700
Stock issued, value	$ 95,200	$ 100,700
Special purpose entity [Member] | Revolving aggregation credit facility [Member]
Cash Equity Financings [Line Items]
Repayments of long-term debt			$ 192,300	$ 125,000
Maturity Date				Dec. 31, 2018
Special purpose entity [Member] | Term loan due in December 2016 [Member]
Cash Equity Financings [Line Items]
Repayments of long-term debt				$ 25,700
Maturity Date				Dec. 31, 2016

XML

Indebtedness - Summary of Debt (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Sep. 08, 2016	May 02, 2016
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 3,440,938	$ 2,753,746
Current, Carrying Value, Net of Fees	487,650	372,221
Long-Term, Carrying Value, Net of Fees	2,883,480	2,332,600
Unused Borrowing Capacity	479,669	234,235
Solar Bonds [Member]
Debt Instrument [Line Items]
Long-Term, Carrying Value, Net of Fees	$ 334,073
MyPower revolving credit facility [Member] | Class A [Member]
Debt Instrument [Line Items]
Interest Rate	2.50%
Cash Equity Debt - I [Member]
Debt Instrument [Line Items]
Interest Rate				5.65%
Cash Equity Debt - II [Member]
Debt Instrument [Line Items]
Interest Rate			5.25%
Recourse debt [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 1,630,922	1,511,497
Current, Carrying Value, Net of Fees	220,425	213,191
Long-Term, Carrying Value, Net of Fees	1,396,151	1,279,235
Unused Borrowing Capacity	4,920	13,053
Recourse debt [Member] | Secured revolving credit facility [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	364,000	360,000
Current, Carrying Value, Net of Fees	22,769	22,320
Long-Term, Carrying Value, Net of Fees	338,562	333,287
Unused Borrowing Capacity	$ 4,920	$ 13,053
Maturity Date, Start	Dec. 31, 2016	Dec. 31, 2016
Maturity Date, End	Dec. 31, 2017	Dec. 31, 2017
Recourse debt [Member] | Secured revolving credit facility [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest Rate	3.80%	3.50%
Recourse debt [Member] | Secured revolving credit facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest Rate	5.80%	5.80%
Recourse debt [Member] | Vehicle and other loans [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 23,515	$ 28,173
Current, Carrying Value, Net of Fees	15,171	12,562
Long-Term, Carrying Value, Net of Fees	$ 8,344	$ 15,610
Maturity Date, Start	Mar. 31, 2017	Jan. 31, 2016
Maturity Date, End	Jun. 30, 2019	Jun. 30, 2019
Recourse debt [Member] | Vehicle and other loans [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest Rate	2.90%	2.50%
Recourse debt [Member] | Vehicle and other loans [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest Rate	7.60%	7.60%
Recourse debt [Member] | 2.75% convertible senior notes due in 2018 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 230,000	$ 230,000
Long-Term, Carrying Value, Net of Fees	$ 226,908	$ 225,795
Maturity Date	Nov. 30, 2018	Nov. 30, 2018
Interest Rate	2.80%	2.80%
Recourse debt [Member] | 1.625% convertible senior notes due in 2019 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 566,000	$ 566,000
Long-Term, Carrying Value, Net of Fees	$ 557,941	$ 555,981
Maturity Date	Nov. 30, 2019	Nov. 30, 2019
Interest Rate	1.60%	1.60%
Recourse debt [Member] | Zero-Coupon Convertible Senior Notes Due in 2020 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 113,000	$ 113,000
Long-Term, Carrying Value, Net of Fees	$ 112,808	$ 112,784
Maturity Date	Dec. 31, 2020	Dec. 31, 2020
Interest Rate	0.00%	0.00%
Recourse debt [Member] | Solar Bonds [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 334,407	$ 214,324
Current, Carrying Value, Net of Fees	182,485	178,309
Long-Term, Carrying Value, Net of Fees	$ 151,588	$ 35,778
Maturity Date, Start	Oct. 31, 2016	Jan. 31, 2016
Maturity Date, End	Jan. 31, 2031	Dec. 31, 2030
Recourse debt [Member] | Solar Bonds [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest Rate	1.10%	1.30%
Recourse debt [Member] | Solar Bonds [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest Rate	6.50%	5.80%
Non-recourse debt [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 1,810,016	$ 1,242,249
Current, Carrying Value, Net of Fees	267,225	159,030
Long-Term, Carrying Value, Net of Fees	1,487,329	1,053,365
Unused Borrowing Capacity	474,749	221,182
Non-recourse debt [Member] | Term loan due in December 2016 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	86,759	112,483
Current, Carrying Value, Net of Fees	$ 86,488	$ 111,248
Maturity Date	Dec. 31, 2016	Dec. 31, 2016
Interest Rate	4.00%
Non-recourse debt [Member] | Term loan due in December 2016 [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest Rate		3.60%
Non-recourse debt [Member] | Term loan due in December 2016 [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest Rate		3.70%
Non-recourse debt [Member] | Term loan due in December 2017 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 52,015
Long-Term, Carrying Value, Net of Fees	49,967
Unused Borrowing Capacity	$ 68,590
Maturity Date	Dec. 31, 2017
Interest Rate	4.00%
Non-recourse debt [Member] | Term loan due in January 2021 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 153,841
Current, Carrying Value, Net of Fees	4,638
Long-Term, Carrying Value, Net of Fees	144,772
Unused Borrowing Capacity	$ 4,001
Maturity Date	Jan. 31, 2021
Interest Rate	4.20%
Non-recourse debt [Member] | MyPower revolving credit facility [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 134,287	$ 213,125
Current, Carrying Value, Net of Fees	133,552
Long-Term, Carrying Value, Net of Fees		210,735
Unused Borrowing Capacity	$ 55,713	$ 26,875
Maturity Date	Jan. 31, 2017	Jan. 31, 2017
Non-recourse debt [Member] | MyPower revolving credit facility [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest Rate	3.70%	3.00%
Non-recourse debt [Member] | MyPower revolving credit facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest Rate	6.20%	5.50%
Non-recourse debt [Member] | Revolving aggregation credit facility [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 415,097	$ 455,693
Long-Term, Carrying Value, Net of Fees	403,567	446,963
Unused Borrowing Capacity	$ 344,903	$ 194,307
Maturity Date	Dec. 31, 2018	Dec. 31, 2017
Non-recourse debt [Member] | Revolving aggregation credit facility [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest Rate	3.80%	3.10%
Non-recourse debt [Member] | Revolving aggregation credit facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest Rate	4.40%	3.20%
Non-recourse debt [Member] | Solar Renewable Energy Credit Term Loan [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 35,866
Current, Carrying Value, Net of Fees	12,538
Long-Term, Carrying Value, Net of Fees	22,473
Unused Borrowing Capacity	$ 1,542
Maturity Date, Start	Apr. 30, 2017
Maturity Date, End	Jul. 31, 2021
Non-recourse debt [Member] | Solar Renewable Energy Credit Term Loan [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest Rate	6.60%
Non-recourse debt [Member] | Solar Renewable Energy Credit Term Loan [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest Rate	9.90%
Non-recourse debt [Member] | Cash Equity Debt - I [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 120,582
Current, Carrying Value, Net of Fees	3,211
Long-Term, Carrying Value, Net of Fees	$ 116,340
Maturity Date	Jul. 31, 2033
Interest Rate	5.70%
Non-recourse debt [Member] | Solar Asset-backed Notes, Series 2013-1 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 43,013	$ 45,845
Current, Carrying Value, Net of Fees	3,400	3,342
Long-Term, Carrying Value, Net of Fees	$ 36,867	$ 39,669
Maturity Date	Nov. 30, 2038	Nov. 30, 2038
Interest Rate	4.80%	4.80%
Non-recourse debt [Member] | Cash Equity Debt - II [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 210,000
Current, Carrying Value, Net of Fees	7,140
Long-Term, Carrying Value, Net of Fees	$ 199,515
Maturity Date	Jul. 31, 2034
Interest Rate	5.30%
Non-recourse debt [Member] | Solar Asset-backed Notes, Series 2014-1 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 61,801	$ 64,431
Current, Carrying Value, Net of Fees	2,976	2,855
Long-Term, Carrying Value, Net of Fees	$ 56,247	$ 58,938
Maturity Date	Apr. 30, 2044	Apr. 30, 2044
Interest Rate	4.60%	4.60%
Non-recourse debt [Member] | Solar Asset-backed Notes, Series 2014-2 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 186,851	$ 193,755
Current, Carrying Value, Net of Fees	7,055	6,319
Long-Term, Carrying Value, Net of Fees	$ 173,569	$ 181,041
Maturity Date	Jul. 31, 2044	Jul. 31, 2044
Non-recourse debt [Member] | Solar Asset-backed Notes, Series 2014-2 [Member] | Class A [Member]
Debt Instrument [Line Items]
Interest Rate	4.00%	4.00%
Non-recourse debt [Member] | Solar Asset-backed Notes, Series 2014-2 [Member] | Class B [Member]
Debt Instrument [Line Items]
Interest Rate	5.40%	5.40%
Non-recourse debt [Member] | Solar Asset-backed Notes, Series 2015-1 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 119,199	$ 122,295
Current, Carrying Value, Net of Fees	1,511	1,348
Long-Term, Carrying Value, Net of Fees	$ 112,886	$ 116,019
Maturity Date	Aug. 31, 2045	Aug. 31, 2045
Non-recourse debt [Member] | Solar Asset-backed Notes, Series 2015-1 [Member] | Class A [Member]
Debt Instrument [Line Items]
Interest Rate	4.20%	4.20%
Non-recourse debt [Member] | Solar Asset-backed Notes, Series 2015-1 [Member] | Class B [Member]
Debt Instrument [Line Items]
Interest Rate	5.60%	5.60%
Non-recourse debt [Member] | Solar Asset-backed Notes, Series 2016-1 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 50,119
Current, Carrying Value, Net of Fees	1,202
Long-Term, Carrying Value, Net of Fees	$ 44,275
Maturity Date	Sep. 30, 2046
Non-recourse debt [Member] | Solar Asset-backed Notes, Series 2016-1 [Member] | Class A [Member]
Debt Instrument [Line Items]
Interest Rate	5.30%
Non-recourse debt [Member] | Solar Asset-backed Notes, Series 2016-1 [Member] | Class B [Member]
Debt Instrument [Line Items]
Interest Rate	7.50%
Non-recourse debt [Member] | Solar Loan-backed Notes, Series 2016-A [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value	$ 140,586
Current, Carrying Value, Net of Fees	3,514
Long-Term, Carrying Value, Net of Fees	$ 126,851
Maturity Date	Sep. 30, 2048
Non-recourse debt [Member] | Solar Loan-backed Notes, Series 2016-A [Member] | Class A [Member]
Debt Instrument [Line Items]
Interest Rate	4.80%
Non-recourse debt [Member] | Solar Loan-backed Notes, Series 2016-A [Member] | Class B [Member]
Debt Instrument [Line Items]
Interest Rate	6.90%
Non-recourse debt [Member] | Term loan due in May 2016 [Member]
Debt Instrument [Line Items]
Unpaid Principal Balance, Carrying Value		$ 34,622
Current, Carrying Value, Net of Fees		$ 33,918
Maturity Date		May 31, 2016
Interest Rate		3.50%

XML

Indebtedness - Summary of Debt (Parenthetical) (Detail) - Solar Bonds and Solar Bonds Issued to Related Parties [Member] - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Maximum amount to be borrowed	$ 350,000,000	$ 350,000,000
Remaining Borrowing Capacity	$ 15,600,000	$ 135,700,000

XML

Indebtedness - Additional Information (Detail) - USD ($)						1 Months Ended											9 Months Ended
	Jul. 14, 2016	Mar. 31, 2016	Jan. 21, 2016	Dec. 16, 2015	Mar. 20, 2014	Aug. 31, 2016	Jun. 30, 2016	Mar. 31, 2016	Feb. 29, 2016	Jan. 31, 2016	Aug. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Jul. 31, 2014	Apr. 30, 2014	Nov. 30, 2013	Sep. 30, 2016	Sep. 30, 2015	Sep. 08, 2016	May 02, 2016	Apr. 06, 2016	Dec. 31, 2015	Jul. 13, 2015	May 04, 2015	Jan. 09, 2015	May 23, 2014	Feb. 20, 2014	Feb. 04, 2014
Debt Instrument [Line Items]
Repayments of long-term debt																	$ 630,892,000	$ 211,976,000
Solar Bonds [Member]
Debt Instrument [Line Items]
Debt instrument redeemed description																	the Company commenced issuing Solar Bonds with variable interest rates that reset quarterly and that can be redeemed quarterly at the option of the bondholder or the Company, with 30-day advance notice.
Proceeds from issuance of solar bonds issued to related parties																	$ 265,010,000	$ 165,010,000
Aggregate principal amount matured																	$ 165,100,000					$ 165,120,000
Solar bonds due in March 2016 [Member] | Space Exploration Technologies Corporation [Member]
Debt Instrument [Line Items]
Proceeds from issuance of solar bonds issued to related parties													$ 90,000,000
Interest Rate		2.00%						2.00%					2.00%
Debt instrument maturity date																	Mar. 31, 2016
Aggregate principal amount matured		$ 90,000,000						$ 90,000,000
Solar bonds due in March 2017 [Member] | Space Exploration Technologies Corporation [Member]
Debt Instrument [Line Items]
Proceeds from issuance of solar bonds issued to related parties								$ 90,000,000
Interest Rate		4.40%						4.40%
Debt instrument maturity date																	Mar. 31, 2017
Solar bonds due in June 2016 [Member] | Space Exploration Technologies Corporation [Member]
Debt Instrument [Line Items]
Proceeds from issuance of solar bonds issued to related parties												$ 75,000,000
Interest Rate		2.00%						2.00%				2.00%
Debt instrument maturity date																	Jun. 30, 2016
Aggregate principal amount matured							$ 75,000,000
Solar bonds due in June 2017 [Member] | Space Exploration Technologies Corporation [Member]
Debt Instrument [Line Items]
Proceeds from issuance of solar bonds issued to related parties							$ 75,000,000
Interest Rate							4.40%
Debt instrument maturity date																	Jun. 30, 2017
Solar bonds due in February 2018 [Member] | Chairman of the Company's board of directors, the Company's Chief Executive Officer and the Company's Chief Technology Officer [Member]
Debt Instrument [Line Items]
Proceeds from issuance of solar bonds issued to related parties						$ 100,000,000
Interest Rate						6.50%
Debt instrument maturity date																	Feb. 28, 2018
Term loan due in May 2016 [Member] | May 23, 2014 agreement [Member]
Debt Instrument [Line Items]
Maximum amount to be borrowed																										$ 125,000,000
Debt Instrument, interest rate terms																	Company’s option, plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%.
Term loan due in May 2016 [Member] | Minimum [Member] | May 23, 2014 agreement [Member]
Debt Instrument [Line Items]
Basis interest rate																	3.00%
Term loan due in May 2016 [Member] | Maximum [Member] | May 23, 2014 agreement [Member]
Debt Instrument [Line Items]
Basis interest rate																	4.00%
Term loan due in December 2016 [Member] | February 4, 2014 agreement [Member]
Debt Instrument [Line Items]
Maximum amount to be borrowed					$ 250,000,000																						$ 220,000,000	$ 100,000,000
Debt Instrument, interest rate terms																	Company’s option, 3.25% plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%.
Repayments of long-term debt																	$ 25,700,000
Term loan due in December 2017 [Member] | March 31, 2016 agreement [Member]
Debt Instrument [Line Items]
Maximum amount to be borrowed		$ 50,000,000						$ 50,000,000													$ 150,000,000
Basis interest rate																	3.25%
Percentage of fee for undrawn commitments																	0.85%
Term loan due in January 2021 [Member] | January 2016, agreement [Member]
Debt Instrument [Line Items]
Maximum amount to be borrowed										$ 160,000,000
Repayments of long-term debt																	$ 2,200,000
Revolving aggregation credit facility [Member]
Debt Instrument [Line Items]
Maximum amount to be borrowed							$ 760,000,000																$ 650,000,000	$ 500,000,000
Credit facility interest rate terms																	The revolving aggregation credit facility bears interest at an annual rate of 3.25% plus (i) for commercial paper loans, the commercial paper rate and (ii) for LIBOR loans, at the Company’s option, three-month LIBOR or daily LIBOR.
Basis interest rate																	3.25%
Solar Renewable Energy Credit Term Loan [Member]
Debt Instrument [Line Items]
Maximum amount to be borrowed		$ 15,000,000						$ 15,000,000
Credit facility interest rate terms																	Company’s option, 8.00% plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the prime rate or (iii) one-month LIBOR plus 1.00%.
Basis interest rate		9.00%
Repayments of long-term debt																	$ 14,000,000
Solar Renewable Energy Credit Term Loan [Member] | Second Term Loan [Member]
Debt Instrument [Line Items]
Maximum amount to be borrowed	$ 36,400,000
Credit facility interest rate terms																	Company’s option, 4.75% plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the prime rate or (iii) one-month LIBOR plus 1.00%.
Solar Renewable Energy Credit Term Loan [Member] | Minimum [Member]
Debt Instrument [Line Items]
Basis interest rate		8.00%
Solar Renewable Energy Credit Term Loan [Member] | Minimum [Member] | Second Term Loan [Member]
Debt Instrument [Line Items]
Basis interest rate	4.75%
Cash Equity Debt - I [Member]
Debt Instrument [Line Items]
Interest Rate																				5.65%
Debt principal issued																				$ 121,700,000
Cash Equity Debt - II [Member]
Debt Instrument [Line Items]
Interest Rate																			5.25%
Debt principal issued																			$ 210,000,000
Solar Asset-backed Notes, Series 2013-1 [Member]
Debt Instrument [Line Items]
Debt principal issued																$ 54,400,000
Collateral value of solar assets																	$ 134,400,000
Debt discount percentage																0.05%
Lease pass-through financing obligation [Member]
Debt Instrument [Line Items]
Lease financing obligations																	56,400,000
Lease financing obligation termination																	40,200,000
Solar Asset-backed Notes, Series 2014-1 [Member]
Debt Instrument [Line Items]
Debt principal issued															$ 70,200,000
Collateral value of solar assets																	126,000,000
Debt discount percentage															0.01%
Solar Asset-backed Notes, Series 2014-2 [Member]
Debt Instrument [Line Items]
Collateral value of solar assets																	268,200,000
Debt discount percentage														0.01%
Solar Asset-backed Notes, Series 2016-1 [Member]
Debt Instrument [Line Items]
Debt principal issued									$ 52,200,000
Collateral value of solar assets																	$ 72,400,000
Debt discount percentage									6.71%
LIBOR [Member] | Term loan due in December 2016 [Member] | February 4, 2014 agreement [Member]
Debt Instrument [Line Items]
Basis interest rate					3.25%
LIBOR [Member] | Term loan due in January 2021 [Member] | January 2016, agreement [Member]
Debt Instrument [Line Items]
Basis interest rate										3.50%
Federal Funds Rate [Member] | Term loan due in May 2016 [Member]
Debt Instrument [Line Items]
Basis interest rate																	0.50%
Federal Funds Rate [Member] | Solar Renewable Energy Credit Term Loan [Member]
Debt Instrument [Line Items]
Basis interest rate		0.50%
Federal Funds Rate [Member] | Solar Renewable Energy Credit Term Loan [Member] | Second Term Loan [Member]
Debt Instrument [Line Items]
Basis interest rate	0.50%
LIBOR Option 2 [Member] | Solar Renewable Energy Credit Term Loan [Member] | Second Term Loan [Member]
Debt Instrument [Line Items]
Basis interest rate	5.75%
Class A [Member] | MyPower revolving credit facility [Member]
Debt Instrument [Line Items]
Interest Rate																	2.50%
Basis interest rate																	3.00%
Class A [Member] | Solar Asset-backed Notes, Series 2014-2 [Member]
Debt Instrument [Line Items]
Debt principal issued														$ 160,000,000
Class A [Member] | Solar Asset-backed Notes, Series 2015-1 [Member]
Debt Instrument [Line Items]
Debt principal issued											$ 103,500,000
Debt discount percentage											0.05%
Class A [Member] | Solar Loan-backed Notes, Series 2016-A [Member]
Debt Instrument [Line Items]
Debt principal issued			$ 151,600,000
Debt discount percentage			3.22%
Class B [Member] | Solar Asset-backed Notes, Series 2014-2 [Member]
Debt Instrument [Line Items]
Debt principal issued														$ 41,500,000
Class B [Member] | Solar Asset-backed Notes, Series 2015-1 [Member]
Debt Instrument [Line Items]
Debt principal issued											$ 20,000,000
Debt discount percentage											1.46%
Class B [Member] | Solar Loan-backed Notes, Series 2016-A [Member]
Debt Instrument [Line Items]
Debt principal issued			$ 33,400,000
Debt discount percentage			15.90%
Revolving credit facility [Member] | MyPower revolving credit facility [Member]
Debt Instrument [Line Items]
Maximum amount to be borrowed																									$ 200,000,000
Credit facility interest rate terms																	Company entered into a $200.0 million revolving credit agreement with a syndicate of banks to obtain funding for the MyPower customer loan program. The MyPower revolving credit facility initially provided up to $160.0 million of Class A notes and up to $40.0 million of Class B notes. On December 16, 2015, the committed amount under the Class A notes was increased to $200.0 million. The Class A notes bear interest at an annual rate of (i) for the first $160.0 million, 2.50% and (ii) for the remaining $40.0 million, 3.00%; in each case, plus (a) the commercial paper rate or (b) 1.50% plus adjusted LIBOR.
Revolving credit facility [Member] | LIBOR [Member] | MyPower revolving credit facility [Member]
Debt Instrument [Line Items]
Basis interest rate																	1.50%
Revolving credit facility [Member] | Class A [Member] | MyPower revolving credit facility [Member]
Debt Instrument [Line Items]
Maximum amount to be borrowed				$ 200,000,000
Credit facility interest rate terms																	The fee for undrawn commitments under the Class A notes is 0.50% per annum for the first $160.0 million of undrawn commitments and 0.75% per annum for the remaining $40.0 million of undrawn commitments,
Percentage of fee for undrawn commitments																	0.50%
Debt principal issued																									160,000,000
Revolving credit facility [Member] | Class B [Member] | MyPower revolving credit facility [Member]
Debt Instrument [Line Items]
Credit facility interest rate terms																	The fee for undrawn commitments under the Class B notes is 0.50% per annum.
Basis interest rate				5.00%
Percentage of fee for undrawn commitments																	0.75%
Debt principal issued																									$ 40,000,000
Syndicated revolving bank agreement [Member] | LIBOR Option 2 [Member] | Solar Renewable Energy Credit Term Loan [Member]
Debt Instrument [Line Items]
Basis interest rate		1.00%
Syndicated revolving bank agreement [Member] | LIBOR Option 2 [Member] | Solar Renewable Energy Credit Term Loan [Member] | Second Term Loan [Member]
Debt Instrument [Line Items]
Basis interest rate	1.00%
Syndicated revolving bank agreement [Member] | Secured revolving credit facility [Member]
Debt Instrument [Line Items]
Maximum amount to be borrowed																	$ 398,500,000
Credit facility interest rate terms																	The Company has entered into a revolving credit agreement with a syndicate of banks to fund working capital, letters of credit and general corporate needs, with a total committed amount of $398.5 million. Borrowed funds bear interest, at the Company’s option, at an annual rate of (a) 3.25% plus LIBOR or (b) 2.25% plus the highest of (i) the federal funds rate plus 0.50%, (ii) Bank of America’s published “prime rate” or (iii) LIBOR plus 1.00%.
Basis interest rate																	2.25%
Percentage of fee for undrawn commitments																	0.375%
Syndicated revolving bank agreement [Member] | Secured revolving credit facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis interest rate																	3.25%
Syndicated revolving bank agreement [Member] | Secured revolving credit facility [Member] | Federal Funds Rate [Member]
Debt Instrument [Line Items]
Basis interest rate																	0.50%
Syndicated revolving bank agreement [Member] | Secured revolving credit facility [Member] | LIBOR Option 2 [Member]
Debt Instrument [Line Items]
Basis interest rate																	1.00%
Syndicated revolving bank agreement [Member] | Revolving credit facility [Member] | LIBOR Option 2 [Member]
Debt Instrument [Line Items]
Basis interest rate																	1.00%

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VIE Arrangements - Summary of Number of Current VIE Funds by Classification of Investor, the Carrying Value, Total Investor Contributions Received and Undrawn Investor Contributions (Detail)	9 Months Ended
	Sep. 30, 2016 USD ($) Fund	Dec. 31, 2015 USD ($)
Variable Interest Entity [Line Items]
Carrying Value of Solar Energy System	$ 5,493,026,000	$ 4,375,553,000
VIEs [Member]
Variable Interest Entity [Line Items]
Number of Funds | Fund	44
Total Investor Contributions Received	$ 3,526,520,000
Undrawn Investor Contributions	212,259,000
Carrying Value of Solar Energy System	$ 3,731,864,000	$ 2,779,363,000
VIEs [Member] | Financial Institutions [Member]
Variable Interest Entity [Line Items]
Number of Funds | Fund	32
Total Investor Contributions Received	$ 2,252,194,000
Undrawn Investor Contributions	174,116,000
Carrying Value of Solar Energy System	$ 2,420,245,000
VIEs [Member] | Corporations [Member]
Variable Interest Entity [Line Items]
Number of Funds | Fund	7
Total Investor Contributions Received	$ 993,650,000
Undrawn Investor Contributions	3,110,000
Carrying Value of Solar Energy System	$ 1,021,052,000
VIEs [Member] | Utilities [Member]
Variable Interest Entity [Line Items]
Number of Funds | Fund	4
Total Investor Contributions Received	$ 278,888,000
Undrawn Investor Contributions	35,033,000
Carrying Value of Solar Energy System	$ 287,441,000
VIEs [Member] | Other Investors [Member]
Variable Interest Entity [Line Items]
Number of Funds | Fund	1
Total Investor Contributions Received	$ 1,788,000
Carrying Value of Solar Energy System	$ 3,126,000

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VIE Arrangements - Additional Information (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Variable Interest Entity [Line Items]
Accrued in distribution payable	$ 2,000,000	$ 2,700,000
VIEs [Member]
Variable Interest Entity [Line Items]
Fund assets pledged as collateral	$ 0

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VIE Arrangements - Carrying Values of Assets and Liabilities of Subsidiary in Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents		$ 259,342	$ 382,544	$ 372,750	$ 504,383
Restricted cash		61,079	39,864
Accounts receivable - net		65,112	33,998
Rebates receivable		11,999	11,545
Inventories		206,205	342,951
Prepaid expenses and other current assets		73,247	79,925
Total current assets		676,984	902,138
Solar energy systems, leased and to be leased – net		5,493,026	4,375,553
Other assets		271,625	241,262
Property, plant and equipment – net		250,934	262,387
Total assets	[1]	8,680,828	7,287,118
Current liabilities:
Accounts payable		253,077	364,973
Distributions payable to noncontrolling interests and redeemable noncontrolling interests		25,106	26,769
Current portion of deferred U.S. Treasury grant income		14,549	15,336
Current portion of deferred revenue		113,908	103,078
Current portion of long-term debt		285,507	180,048
Total current liabilities		1,176,194	1,193,362
Deferred revenue, net of current portion		1,084,442	1,010,491
Long-term debt, net of current portion		1,283,540	1,006,595
Deferred U.S. Treasury grant income, net of current portion		351,738	382,283
Other liabilities and deferred credits		361,996	279,006
VIE's assets and liabilities [Member]
Current assets:
Cash and cash equivalents		47,267	32,105
Restricted cash		20,108	44
Accounts receivable - net		31,336	10,116
Rebates receivable		7,524	6,220
Prepaid expenses and other current assets		2,321	1,740
Total current assets		108,556	50,225
Solar energy systems, leased and to be leased – net		3,731,864	2,779,363
Other assets		47,552	11,204
Total assets		3,887,972	2,840,792
Current liabilities:
Accounts payable		7
Distributions payable to noncontrolling interests and redeemable noncontrolling interests		25,106	26,769
Current portion of deferred U.S. Treasury grant income		6,506	6,506
Accrued and other current liabilities		4,178	598
Customer deposits		2,276	2,928
Current portion of deferred revenue		34,986	24,794
Current portion of long-term debt		10,352
Total current liabilities		83,411	61,595
Deferred revenue, net of current portion		374,695	308,798
Long-term debt, net of current portion		365,821
Deferred U.S. Treasury grant income, net of current portion		159,292	164,191
Other liabilities and deferred credits		63,320	28,460
Total liabilities		$ 1,046,539	$ 563,044

[1] SolarCity Corporation’s, or the Company’s, consolidated assets as of September 30, 2016 and December 31, 2015 included $3,887,972 and $2,866,882, respectively, of assets of variable interest entities, or VIEs, that can only be used to settle obligations of the VIEs. These assets included solar energy systems, leased and to be leased - net of $3,731,864 and $2,779,363 as of September 30, 2016 and December 31, 2015, respectively; property, plant and equipment - net of $0 and $21,960 as of September 30, 2016 and December 31, 2015, respectively; cash and cash equivalents of $47,267 and $33,537 as of September 30, 2016 and December 31, 2015, respectively; inventory of $0 and $1,000 as of September 30, 2016 and December 31, 2015, respectively; restricted cash, current, of $20,108 and $522 as of September 30, 2016 and December 31, 2015, respectively; accounts receivable - net of $31,336 and $10,267 as of September 30, 2016 and December 31, 2015, respectively; prepaid expenses and other current assets of $2,321 and $2,713 as of September 30, 2016 and December 31, 2015, respectively; rebates receivable of $7,524 and $6,220 as of September 30, 2016 and December 31, 2015, respectively; and other assets of $47,552 and $11,300 as of September 30, 2016 and December 31, 2015, respectively. The Company’s consolidated liabilities as of September 30, 2016 and December 31, 2015 included $407,740 and $33,475, respectively, of liabilities of VIEs whose creditors have no recourse to the Company. These liabilities included distributions payable to noncontrolling interests in subsidiaries and redeemable noncontrolling interests in subsidiaries of $25,106 and $26,769 as of September 30, 2016 and December 31, 2015, respectively; accounts payable of $7 and $1,954 as of September 30, 2016 and December 31, 2015, respectively; customer deposits of $2,276 and $2,928 as of September 30, 2016 and December 31, 2015, respectively; accrued liabilities and other payables of $4,178 and $1,824 as of September 30, 2016 and December 31, 2015, respectively; current portion of long-term debt of $10,352 and $0 as of September 30, 2016 and December 31, 2015, respectively; long-term debt, net of current portion of $365,821 and $0 as of September 30, 2016 and December 31, 2015, respectively

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Redeemable Noncontrolling Interests in Subsidiaries - Activity of Redeemable Noncontrolling Interests in Subsidiaries (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Redeemable Noncontrolling Interest [Line Items]
Beginning balance			$ 1,413,628
Contributions from redeemable noncontrolling interests			704,522
Net loss	$ (225,342)	$ (234,266)	(758,704)	$ (536,936)
Distributions to redeemable noncontrolling interests			(70,141)
Ending balance	1,714,552		1,714,552
Redeemable Noncontrolling Interests [Member]
Redeemable Noncontrolling Interest [Line Items]
Beginning balance			320,935
Contributions from redeemable noncontrolling interests			318,165
Net loss			(304,620)
Distributions to redeemable noncontrolling interests			(36,658)
Acquisition of redeemable noncontrolling interests			(13,664)
Ending balance	$ 284,158		$ 284,158

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Redeemable Noncontrolling Interests in Subsidiaries - Additional Information (Detail) - Redeemable Noncontrolling Interests [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Redeemable Noncontrolling Interest [Line Items]
Acquisition of redeemable noncontrolling interests	$ (13,664)
Silevo, Inc. [Member]
Redeemable Noncontrolling Interest [Line Items]
Acquisition of redeemable noncontrolling interests	$ (13,700)

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Equity - Schedule of Changes in Total Stockholders' Equity and Noncontrolling Interests (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Schedule Of Capitalization Equity [Line Items]
Beginning balance	$ 1,413,628
Contributions from noncontrolling interests	704,522
Tax impact of stock option exercises	(7,738)
Stock-based compensation expense	90,025
Issuance of common stock upon exercise of stock options for cash	3,540
Issuance of stock to settle accrued compensation	631
Issuance of stock on settlement of Silevo contingent consideration	34,170
Net loss	(454,085)
Distributions to noncontrolling interests	(70,141)
Ending balance	1,714,552
Total Stockholders' Equity [Member]
Schedule Of Capitalization Equity [Line Items]
Beginning balance	878,566
Tax impact of stock option exercises	(7,738)
Stock-based compensation expense	90,025
Issuance of common stock upon exercise of stock options for cash	3,540
Issuance of stock to settle accrued compensation	631
Issuance of stock on settlement of Silevo contingent consideration	34,170
Net loss	(27,262)
Ending balance	971,932
Noncontrolling Interests in Subsidiaries [Member]
Schedule Of Capitalization Equity [Line Items]
Beginning balance	535,062
Contributions from noncontrolling interests	704,522
Net loss	(426,823)
Distributions to noncontrolling interests	(70,141)
Ending balance	$ 742,620

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Equity Award Plans - Additional Information (Detail) $ / shares in Units, $ in Millions		3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 15, 2015 Tranche $ / shares shares	Sep. 30, 2016 USD ($) shares	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) shares	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Non-statutory stock option awards share | shares				1,292,000
Percentage of outstanding stock options, before vested and exercisable					70.70%
Grant date fair market value of options that vested		$ 22.8	$ 15.9	$ 71.2	$ 55.0
Total unrecognized stock-based compensation , net of estimated forfeitures		200.8		$ 200.8		$ 265.3
Weighted-average period				6 years 11 days		5 years 6 months 22 days
Expected dividend yield			0.00%	0.00%	0.00%
Stock-based compensation expense		$ 28.6	$ 33.4	$ 89.8	$ 83.4
Chief Executive Officer [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Non-statutory stock option awards share | shares	3,000,000
Chief Technology Officer [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Non-statutory stock option awards share | shares	2,000,000
Founder Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Non-statutory stock option awards exercise price per share | $ / shares	$ 48.97
Non-statutory stock option awards equal tranches | Tranche	10
Non-statutory stock option awards trading period	90 days
Non-vested stock options outstanding | shares		5,000,000		5,000,000
Total unrecognized stock-based compensation , net of estimated forfeitures		$ 101.8		$ 101.8
Founder Awards [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Non-statutory stock option awards term	10 years
Restricted Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total unrecognized stock-based compensation , net of estimated forfeitures		100.8		$ 100.8		$ 121.5
Weighted-average period				3 years 29 days		3 years 3 months 22 days
Grant date fair value of RSUs vested		$ 13.2	$ 8.1	$ 38.4	$ 13.8

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Equity Award Plans - Summary of Stock Option Activity (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Roll Forward
Stock Options, Outstanding, Balance	18,315
Stock Options, Granted	1,292
Stock Options, Exercised	(524)
Stock Options, Canceled	(1,983)
Stock Options, Outstanding, Balance	17,098	18,315
Stock Options, Vested and exercisable	8,454
Stock Options, Vested and expected to vest	15,222
Weighted-Average Exercise Price, Outstanding, Balance	$ 38.43
Weighted-Average Exercise Price, Granted	25.97
Weighted-Average Exercise Price, Exercised	6.75
Weighted-Average Exercise Price, Canceled	54.50
Weighted-Average Exercise Price, Outstanding, Balance	36.60	$ 38.43
Weighted-Average Exercise Price, Options vested and exercisable	24.86
Weighted-Average Exercise Price, Options vested and expected to vest	$ 35.38
Weighted-Average Remaining Contractual Term Years, Outstanding	7 years 1 month 24 days	7 years 8 months 27 days
Weighted-Average Remaining Contractual Term Years, Options vested and exercisable	5 years 6 months 22 days
Weighted-Average Remaining Contractual Term Years, Options vested and expected to vest	6 years 11 months 5 days
Aggregate Intrinsic Value, Outstanding, Balance	$ 293,855
Aggregate Intrinsic Value, Exercised	9,173
Aggregate Intrinsic Value, Outstanding, Balance	73,468	$ 293,855
Aggregate Intrinsic Value, Options vested and exercisable	72,910
Aggregate Intrinsic Value, Options vested and expected to vest	$ 73,453

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Equity Award Plans - Summary of Stock Option Activity (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2016 $ / shares
Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Roll Forward
Weighted-average fair value, Options Granted	$ 15.14

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Equity Award Plans - Summary of Fair Value of Stock Options Granted Using Weighted-Average Assumptions used in the Black-Scholes Option Valuation Model (Detail)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Dividend yield	0.00%	0.00%	0.00%
Annual risk-free rate of return	2.27%	1.50%	2.16%
Expected volatility	55.88%	61.94%	58.72%
Expected term (years)	4 years 11 months 19 days	6 years 3 months 11 days	5 years 1 month 28 days

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Equity Award Plans - Summary of RSU Activity (Detail) - Restricted Stock Units [Member] shares in Thousands	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted Stock Units, Outstanding, Beginning balance | shares	3,577
Restricted Stock Units, Granted | shares	2,029
Restricted Stock Units, Vested | shares	(838)
Restricted Stock Units, Cancelled | shares	(1,080)
Restricted Stock Units, Outstanding, Ending balance | shares	3,688
Restricted Stock Units, Expected to vest - September 30, 2016 | shares	2,246
Weighted-Average Fair Value, Outstanding, Beginning balance | $ / shares	$ 49.53
Weighted-Average Fair Value, Granted | $ / shares	19.58
Weighted-Average Fair Value, Vested | $ / shares	45.80
Weighted-Average Fair Value, Cancelled | $ / shares	41.73
Weighted-Average Fair Value, Outstanding, Ending balance | $ / shares	36.18
Weighted-Average Fair Value, Expected to vest - September 30, 2016 | $ / shares	$ 36.73

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Equity Award Plans - Summary of Capitalized Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Inventories [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation, amounts capitalized	$ 169	$ 253	$ 169	$ 253
Other Assets [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation, amounts capitalized	30	848	666	2,462
Property, Plant and Equipment - Net [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation, amounts capitalized	1,399	711	3,780	2,096
Solar Energy Systems [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation, amounts capitalized	$ 5,809	$ 6,902	$ 20,137	$ 17,555

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Equity Award Plans - Summary of Stock-Based Compensation Expense Recognized (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 28,600	$ 33,400	$ 89,800	$ 83,400
Cost of Revenue [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	876	489	2,718	1,665
Sales and Marketing [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	3,498	7,048	16,355	17,266
General and Administrative [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	13,633	13,305	37,628	31,325
Pre-production Expense [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	174		322
Research and Development [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 2,997	$ 3,866	$ 8,038	$ 10,754

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Income Taxes - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Tax Contingency [Line Items]
Estimated consolidated effective income tax rates	(0.11%)	0.00%	(0.12%)	0.21%
Minimum [Member] | U.S. and State Jurisdictions [Member]
Income Tax Contingency [Line Items]
General term of statutes of limitations			3 years
Maximum [Member]
Income Tax Contingency [Line Items]
Property and equipment, Useful Lives			30 years
Maximum [Member] | U.S. and State Jurisdictions [Member]
Income Tax Contingency [Line Items]
General term of statutes of limitations			5 years
Solar Energy Systems Leased and to be Leased [Member] | Minimum [Member]
Income Tax Contingency [Line Items]
Property and equipment, Useful Lives			30 years
Solar Energy Systems Leased and to be Leased [Member] | Maximum [Member]
Income Tax Contingency [Line Items]
Property and equipment, Useful Lives			35 years

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Related Party Transactions - Components of Related Party Transactions (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue:
Solar energy systems sales to related parties			$ 12	$ 79
Expenditures:
Purchases of inventories or equipment from related parties	$ 4,324	$ 2,450	10,690	4,147
Interest paid or payable to related parties (included in interest expense (excluding amortization of debt discounts and fees) - recourse debt)	$ 2,467	$ 828	$ 4,682	$ 1,298

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Related Party Transactions - Summary of Related Party Balances (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Related Party Transactions [Abstract]
Due from related parties (included in accounts receivable)	$ 22	$ 30
Due to related parties (included in accounts payable)	1,080	3,961
Solar bonds issued to related parties	265,200	165,220
Convertible senior notes issued to related parties	12,978	12,975
Due to related parties (included in accrued and other current liabilities)	$ 1,578	$ 1,249

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Related Party Transactions - Additional Information (Detail) - USD ($) $ in Millions	1 Months Ended					9 Months Ended
	Aug. 31, 2016	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2016
Space Exploration Technologies Corporation [Member] | Solar bonds due in March 2016 [Member]
Related Party Transaction [Line Items]
Proceeds from issuance of solar bonds issued to related parties					$ 90.0
Interest Rate			2.00%		2.00%
Debt instrument maturity date						Mar. 31, 2016
Aggregate principal amount matured			$ 90.0
Space Exploration Technologies Corporation [Member] | Solar bonds due in March 2017 [Member]
Related Party Transaction [Line Items]
Proceeds from issuance of solar bonds issued to related parties			$ 90.0
Interest Rate			4.40%
Debt instrument maturity date						Mar. 31, 2017
Space Exploration Technologies Corporation [Member] | Solar bonds due in June 2016 [Member]
Related Party Transaction [Line Items]
Proceeds from issuance of solar bonds issued to related parties				$ 75.0
Interest Rate			2.00%	2.00%
Debt instrument maturity date						Jun. 30, 2016
Aggregate principal amount matured		$ 75.0
Space Exploration Technologies Corporation [Member] | Solar bonds due in June 2017 [Member]
Related Party Transaction [Line Items]
Proceeds from issuance of solar bonds issued to related parties		$ 75.0
Interest Rate		4.40%
Debt instrument maturity date						Jun. 30, 2017
Board of directors, Chief Executive Officer and Chief Technology Officer | Solar bonds due in February 2018 [Member]
Related Party Transaction [Line Items]
Proceeds from issuance of solar bonds issued to related parties	$ 100.0
Interest Rate	6.50%
Debt instrument maturity date						Feb. 28, 2018

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Commitments and Contingencies - Additional Information (Detail) ft² in Millions	1 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2014 USD ($) ft² a $ / yr GW	Feb. 28, 2013 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)
Long Term Purchase Commitment [Line Items]
Letters of credit outstanding			$ 29,600,000		$ 29,600,000
Letters of credit, fee percentage					3.40%
Obligation to be paid by United States Treasury		$ 14,000,000
Law suit filing date					March 28, 2014
Company, Two of its Officers and a Former Officer [Member]
Long Term Purchase Commitment [Line Items]
Law suit filing date					August 15, 2016
Minimum [Member]
Long Term Purchase Commitment [Line Items]
Initial direct costs related to solar energy systems leased to customers					10 years
Build-to-suit Lease Arrangement [Member] | Construction in Progress [Member]
Long Term Purchase Commitment [Line Items]
Non-cash investing and non-cash financing activities			$ 75,400,000	$ 79,400,000	$ 445,900,000	$ 211,600,000
Build-to-suit Lease Arrangement [Member] | Research Foundation [Member]
Long Term Purchase Commitment [Line Items]
Area of manufacturing facility | ft²	1.0
Capacity to produce solar panels | GW	1.0
Number of acres producing solar panels | a	88.2
Acquisition of manufacturing equipment	$ 348,100,000
Additional specified scope costs	$ 51,900,000
Initial direct costs related to solar energy systems leased to customers					10 years
Operating lease, option to renew, amount per year | $ / yr	2
Contractual obligation	$ 41,200,000
Lease arrangement, amount required to spend or incur	5,000,000,000
Build-to-suit Lease Arrangement [Member] | Research Foundation [Member] | Maximum [Member]
Long Term Purchase Commitment [Line Items]
Construction cost committed	$ 350,000,000

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Basic and Diluted Net Loss Per Share - Computation of Company's Basic and Diluted Net Loss Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Abstract]
Net income (loss) attributable to stockholders	$ 53,215	$ (19,073)	$ (27,262)	$ (62,958)
Net income (loss) attributable to common stockholders, basic	53,215	(19,073)	(27,262)	(62,958)
Net income (loss) attributable to common stockholders, diluted	$ 56,165	$ (19,073)	$ (27,262)	$ (62,958)
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders, basic	100,494,480	97,384,949	99,354,863	97,027,412
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders, diluted	118,077,365	97,384,949	99,354,863	97,027,412
Net income (loss) per share attributable to common stockholders, basic	$ 0.53	$ (0.20)	$ (0.27)	$ (0.65)
Net income (loss) per share attributable to common stockholders, diluted	$ 0.48	$ (0.20)	$ (0.27)	$ (0.65)

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Basic and Diluted Net Loss Per Share - Schedule of Weighted-Average Outstanding Shares of Common Stock Equivalents Excluded from Computation of Diluted Net Loss Per Share (Detail) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Common stock options [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Common stock equivalents excluded from the computation of diluted net income (loss) per share	14,474,596	14,197,584	18,057,579	13,852,111
Restricted stock units [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Common stock equivalents excluded from the computation of diluted net income (loss) per share	3,363,304	2,763,268	3,718,782	2,082,446
Convertible debt securities [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Common stock equivalents excluded from the computation of diluted net income (loss) per share		10,505,947	13,930,186	10,505,947

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Subsequent Events - Additional Information (Detail) - Subsequent Event [Member] - New Non-recourse Financing Fund [Member]	Oct. 11, 2016 USD ($)
Subsequent Event [Line Items]
Aggregate finance commitment amount	$ 250,000,000
Debt instrument maturity date	Oct. 31, 2023
Maximum [Member]
Subsequent Event [Line Items]
Committed loan amount to an affiliate of fund investor	$ 55,000,000